Robin's Interesting Thoughts

Steven Johnson (via Daring Fireball): “Steve Jobs, Jony Ive, Larry Page, Sergey Brin, Travis Kalanick—these people didn’t just accumulate wealth [by inventing technology]; they accumulated dynastic wealth, wealth that could keep their descendants in the one percent for centuries.”

It’s clear that those startup founders are brilliant people, but it’s equally clear that those people by themselves were not responsible for creating millions of times more value than the thousands or millions of other people who helped make their companies possible — from scientists working under government funding to invent the Internet and GPS, to open-source programmers creating widely-used code libraries, to finally all of the employees who worked to create better products, year after year.

As Clayton Christensen and others have noted, one reason we compensate executives so extremely is because we make the attribution error that top managers actually have significant control over company performance. That is, we thank the CEO when an organization is performing well, and several years later when it’s crashing we blame the very same CEO for causing the problems. (Much of Christensen’s research into the causes of success and failure grew out of his dissatisfaction with the theory that the very same CEO is brilliant one year and an idiot the next.)

“Over the past 40 years, the average pay ratio — the gap between the highest and median employee — inside an American corporation has increased from 30:1 to more than 300:1. […] If you want to defend Silicon Valley in a discussion about inequality, [note] that Silicon Valley has a much more sensible pay ratio than most other industries in the United States — closer to 40:1, not so far from the ratio that predominated in the age of Big Labor. [Also,] the top 100 tech companies granted 19% of their total ownership to non-senior-executive employees (i.e., everyone excluding the CEO and four lieutenants). For the rest of corporate America, that number was 2%.”

“Let’s say we decided as a society that no private company should have a pay ratio above 40:1. That would lead to a radical decrease in income inequality, and it wouldn’t involve a cent of additional taxes.”

Sounds reasonable. And even if this particular idea turns out to be impractical, it raises the point that there’s a lot of creativity to apply to the problem of income inequality.

Whether in business or academia, there are usually far more good ideas than there is time and money to explore them. So decisions must be made about who and what will get the limited funds to proceed with a novel idea. In science, these decisions are made via grants and research funding boards. In corporations, these decisions are usually made by executives and middle managers. And for many startups, these decisions are made by venture capitalists and angel investors who network with founders and review business plans and “pitch decks”.

As a result, the culture usually becomes competitive. Researchers compete for limited funds, corporate teams compete for executive approval, and startups compete for venture financing. In some ways, this is like any other market economy. “May the best idea win.” The problem is that scarcity, pressure, and stress inhibit creativity. Many studies have shown that under such conditions our minds tend to focus more narrowly, causing us to perform better at well-practiced tasks but worse at generating new ideas.

By contrast, in order to be maximally creative, we need to be relaxed and feel that resources are abundant — basically the opposite of a competitive situation with limited funds.

This is a major paradox of our innovation economy. The rewards of innovation are huge — businesses and scientific careers succeed or fail on the strength of their ability to innovate. But that very pressure causes these innovators to underperform. The more desperately you want to innovate, the more difficult it is to do so.

For most innovators stuck in an environment of scarcity, a “jedi mind trick” is necessary, similar to the one I wrote about in The Paradox of Customer Focus. Namely: to innovate, stop trying so hard to innovate. Instead, relax, work on hard problems, and assume everything will work out. All while battling off requests for progress reports, 3-year plans, and reminders that your scarce funding and position are up for renewal.

“These organizations manage to operate at very large scales — some have thousands or tens of thousands of employees — entirely without the pyramid, entirely without anyone being the boss of anyone else. And I know that sounds extraordinary — it sounds like a recipe for chaos. I mean, how could you run a large organization without hierarchy? It doesn’t make any sense. I wasn’t expecting this when I started the research. [But] what I found out the truth is: yes, you need structure, but no, you don’t need a boss. This is really a place where we need to upgrade our thinking.”

-Frederic Laloux, Reinventing Organizations
(excerpt from his talk)

“An over-focus on resource efficiency [leads to chain reactions of superfluous work that does not add value]. The efficiency paradox is that [by focusing on] utilizing our resources efficiently, we are actually being inefficient since much of that utilization comes from superfluous work. […] Paradoxically, not focusing on utilizing resources makes it possible to free up resources.”

“The efficiency paradox exists at an individual level [and] on an organizational level. What if it also exists at the societal level? […] How many resources could we avoid wasting if we started to see the ‘big picture’ and focus on flow efficiency?”

-Niklas Modig and Pär Ahlström, This is Lean (p.58-65)

See also: the paradox of customer focus.

Paraphrased from Quiet, p. 218.

1. What did you love to do as a child? (Focus on the underlying impulses.)
2. What optional work or side projects have you gravitated to? (Work you chose even if it was outside your comfort zone.)
3. Who do you envy? (Jealousy doesn’t lie.)

“There’s only one problem with group brainstorming: it doesn’t actually work. […] Forty years of research has […] shown that performance gets worse as group size increases: groups of nine generate fewer and poorer ideas compared to groups of six, which do worse than groups of four, [which do worse than people working individually].”

“[Despite] all these years of evidence that conventional brainstorming groups don’t work, they remain as popular as ever. Participants in brainstorming sessions usually believe that their group performed much better than it actually did.”

-Susan Cain, Quiet (p. 88-89)

“If you’re that rare engineer who’s an inventor and also an artist, I’m going to give you some advice that might be hard to take. That advice is: Work alone. You’re going to be best able to design revolutionary products and features if you’re working on your own. Not on a committee. Not on a team.”

-Steve Wozniak (via Quiet, p. 73)

Advice offered to Harvard Business School students (via Quiet, p. 47):

“Speak with conviction. Even if you believe something only fifty-five percent, say it as if you believe it a hundred percent.”

It drives me nuts when people do this in meetings. It’s dishonest and inauthentic. The fact that it’s being taught at the leading business schools fills me with sadness.

Speak to me with false conviction, and it will have little effect except to shatter my trust in you.

“Data, no matter how big, can only tell you what happened in the past. Unless you’re a historian, you actually care about the future — what will happen, what could happen, what would happen if you did this or that. Exploring these questions will always require models. Let’s get over ‘big data’ — it’s time for ‘big modeling’.”

-Bret Victor (link)

This reminds me of a similar point I made in 2008, about Graph Sketcher.

“In the future, artificial intelligence may obviate the need for certain skills. However, the act of learning is a human process that proceeds at human pace.”

-me (via sticky note, circa 2004)