27 April 2017

Adam Smith on What Disturbs the Peace of Society

The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.
- Adam Smith, The Theory of Moral Sentiments

[from Antonio Garcia Martinez's Chaos Monkeys.]

20 April 2017

Gays, Chechnya and Accepting Reality

Gay men are being rounded up in Chechnya for harassment, arrest, torture, detention and even death. The Kremlin has said that there is no reason to believe this is happening.  Chechnyan officials have variously denied these charges and claimed that there are no gays in Chechnya. In the midst of this cruelty and madness, this last claim deserves to be considered.

Christian Rudder, cofounder of OK Cupid and author of Dataclysm, reports on a curious thing about gays in the US. A Google engineer discovered that searches for gay porn are fairly constant, at 5%, across states, from Alabama to Wyoming, California to Massachusetts.

(How rare is 5%? Less rare than naturally occurring blondes, who show up in the population at a rate of about 2%.)

Even though searches for gay porn - and, presumably, gays - is fairly constant across states, the rate at which the population self-reports as gay varies wildly. 1.7 percent of the folks in North Dakota and 5.1 percent of the folks in Hawaii claim to be gay (Per Gallup's numbers.) Reality varies little but the ability to report on it does.

What determines whether people report as gay? Public acceptance. Gays in Mississippi or North Dakota are less free to admit to their orientation than are gays in Rhode Island or Hawaii because their neighbors are less likely to accept them. (One of the more poignant things that Rudder reports is this: women's search for "is my husband gay?" go up in states that are less tolerant of gays.)

The claim that there are no gays in Chechnya is of course a denial of reality. It also, of course, sustains a reality, one in which 5% of the population loses the lottery that says, "Winners get to be open and honest about who they love and find attractive."

Progress results in autonomy. A person with a computer has more options, more choice about what to do with her evening than person who only has a typewriter. A person with an education has more career options than someone who never learned to read. A person in a tolerant community has more options about who to marry - or even whether to get or stay married - than someone in an intolerant community. Progress means more freedom to define a life and less pressure to conform to the ideals of strangers who don't only fail to understand you but don't even love you.

There are 7 billion people on the planet. It's impossible to keep track of what they're all doing with their genitals or sexual imaginations and absurd to try. Beyond the absurdity of it, though, is this cruelty of telling people that it's a crime to be who they are. One of evolution's most curious tricks is this matter of making each person an individual. The societies that most thrive are the ones that accept this and find a way to leverage what's unique in each person rather than ignore or suppress it. While only 5% of the population is gay, their demand to be accepted for who they are ought to resonate with everyone for this simple reason: everyone has something about them that even close friends and family might find confusing, perhaps offensive.

And you don't even have to be this interested in what is marginal in each of us to care about any marginal population. There is a simple acceptance of reality that is required in dealing with minorities in your population and in dealing with technology and science. Reality is what it is and people who start with a denial of reality tend to have a poor track record in technological or scientific breakthroughs. Not many Nobel Prize winners come out of Chechnya. Until they begin accepting reality rather than denying it, not many ever will.

17 April 2017

A Root of Evil

I wonder if one root of evil isn't as simple as believing that our own lives don't make a difference. Once you believe that, it doesn't really matter what you do, what battles you walk away from, what innocents you fail to stand up for, what effort you do or don't make.

By contrast, believing that your life makes a difference makes you responsible for making an effort, for doing good, for finding meaning. That may not be the fruit of all that is good but it could be a root.

[It's been rightfully pointed out to me that this assumes a measure of compassion or empathy for other people. That is, it assumes that you're not a Hitler or inspired to be like him, making a difference by extracting revenge, real or imagined, on the French or the Jews or Muslims or women ... It turns out that some people are quite convinced that their lives make a difference only the difference to which they're committed isn't exactly a positive one.]

Why Democracies Never Move as Fast as Business, Science, Technology or Culture

Politics is likely to progress at a glacial pace compared to every other important way that the modern world is defined and created.

Architecture, music, business, science, athletics, engineering are all examples of fields that are defined and furthered by elites, by people who are in the top 1%. You don't have to get 55% of your population to master genetics in order to enjoy the benefits of genetic engineering. If even 1% of your population becomes skilled in genetic engineering, you can see transformative benefits.

By contrast, political policy and philosophy in a democracy depend on the majority. It's not enough for an elite few to gain special compassion or policy wisdom. Whatever story encapsulates this compassion or wisdom has to translate into the language of the crowd.

We are motivated by impulses that we don't really understand, impulses like the ones that make TV reporters, crowds and columnists cheer bombing raids, impulses that make us more distrustful of people with different coloring than us, impulses that make us more likely to empathize with someone beautiful with a petty need than someone ugly with a great need. Worse, we live in and depend on systems as complex as global climate, local ecosystems, a global economy and local housing market and our understanding of these systems is at best partial and at worst distorted. Even the best among us take on policy questions with some mix of distorted personal judgments and poor systems appreciation. And it is not our best who determine votes: it is the 51%.

It's a scary combination. Our technology advances at the speed of the top percentile and our policies advance at the speed of the 51st percentile.

10 April 2017

What a Manager Should Know: Deming's Four Elements of Profound Knowledge

Deming argued that there are four elements of profound knowledge that define a what managers should know.
1. Appreciation for a system
2. Understanding of variation
3. Psychology, and
4. A theory of knowledge

To effectively manage or understand an organization, you don't need a deep understanding of any one of these but you need some understanding of all of these. Also, each of these elements makes more sense within the context of the other three; the four form a system.

"A bad system will beat a good person every time."
- Deming 

1. Appreciation for a system and 2. understanding of variation
Deming used things like control charts that tracked data over time to determine what was common cause and what was special cause. To understand variation is to understand the difference between what comes from the system and what does not. People in 2000 in the US were 6X more productive than people in 1900 in the US. It wasn't because they worked harder (in fact, average work weeks dropped from about 60 hours a week to about 38 hours a week in that time). It's because they had better systems. You'll never get as far trying to make people work harder in an old system as you will by improving that system.

Here is a set of 100 data points representing rework (imagine an auto assembly line that created 1,000 cars a day, say) that mostly varies from about 10 to 40 cars that need to be reworked each day That much variation yields a control chart that suggests that normal variation falls within a range of 1 to 47 cars. (Normal variation is what we can expect from the system.)

Only one data point in the above chart - the one on day 16 that hits 57 - appears to come from special cause. All the rest of the variation is just a normal part of the day to day variation. 

Normal variation can still be explained as special by people who don’t understand it. It often is. "Orlando was not paying attention and we had 6 cars in a row assembled with the brake pads swapped. That's what happened." There is always a story to go with the data. And there is often a person we can name in that story. Normal variation can be explained but those explanations are themselves randomly associated with outcomes of a stable system. (This does not just happen on assembly lines. Each day, regardless of whether it goes up or down, moves a lot of moves a little, analysts say things like, "Investors were skittish today because of ..." What would actually be remarkable would be a day in which the major indices finished exactly where they started. Variation is normal. It is only over longer periods of time that you can spot a general direction.)

The only story for a data point that deserves explanation in the above graph is what happened on day 16. That is unusual and the explanation for that day will likely tell you something. It is special, meaning that what happened on that day isn’t explained by the normal rise and fall of our system, is variation that lies outside the normal bounds of daily variation.

Meanwhile, if you don't like it when you have to rework more than, say, 25 cars in a day, you need to look at the system. Is the process you're using dependent on guys like Orlando performing four different assembly steps every 5 minutes for 2 hours in a row before he gets a break? Is there any data suggesting that the average person can sustain focus and accuracy for that long without attention wandering? It's easy to say that Orlando should focus but do you have any data suggesting the average person hired for this role does? If that part of the process is consistently contributing to, say, 4 to 15 of the rework events each day, then we know that changing that process has the potential to reduce rework by about 10 units a day. (Note that this goal of ten is not the product of some arbitrary goal that came of the fact that we have ten fingers but instead comes from examination of the data that suggests we get an average of 10 errors a day from the process Orlando works.)

Once we know what is wrong with the system, rather than blame Orlando for the errors, we can brainstorm solutions. What if we gave Orlando breaks every 90 minutes instead of every 120? What if we rotated the person responsible for this really demanding process step so that no one had to do this task more than 2 hours a day? What if we changed the process so that Orlando has to do just 3 steps every 5 minutes instead of 4 steps? And so on. If we find a plausible theory for improvement, we can implement it for, say, another 30 to 100 days to see if this brought down errors. If it did, we have made progress and we can turn to some other issue within the system.

The behavior of the system is typically stable even as we change who we hire. (And the hiring process is part of the system. If we make a real change in what we screen for when we interview candidates, that too, might improve our system.) Systems define most outcomes. Changing teachers or politicians, employees or bankers is often like changing the cast in your play in the hopes that Romeo & Juliet will end happily.

Also, systems can behave in unexpected ways. A system has emergent properties that none of its part have. For instance, an engine cannot get you across town, nor can a steering wheel nor tires nor an axle. But when these parts are brought together in a system like a car, they can. Organizations are made up of knowledge workers who have to coordinate in order to create value. The person who designs a new product is worthless unless there is a person who can make it. Even those two are worthless if someone can't sell what they make, and so on. Just like the parts of the car cannot get you across town, the parts of an organization can't create value; through coordination, though, these people can create enormous value that emerges from their interactions. As a manager, you need to understand their current output as something that has lots of normal variation and you need to appreciate that the efforts in one part of the process can create problems in another step. (For instance, optimizing each part of the car could result in 87 different size bolts. This complexity could make it more difficult to keep all your parts stocked and even errors in assembly as you raise the risk of someone using the wrong bolt that is just fractionally off in size. Doing what is best for the system - changing the design so that it relies on just 3 different size bolts for instance - might mean doing what is less than optimal for a specific part.) The point is to optimize the system and that depends on people within it cooperating rather than competing.

Which brings us to psychology. 

If you have people within a system compete for promotions and raises rather than cooperate to create a fabulous product, you lay land mines for issues. If you have people work towards local goals rather than cooperate to create a success for the whole organization, you can easily encourage sub-optimization. Worse, you can disengage people through the use of extrinsic motivation.

The worst kind of motivation focuses people so much on the rewards that they don’t pay much attention to the task itself. One study of four-year-old children who tend to love a drum at that age broke the kids into three groups. One group was told that the box in front of them had a special gift for them for playing the drum. They stared at it distractedly the whole time they were pounding. Another group was told, almost in passing, that they’d get a prize for playing the drum. The third group was told nothing but was turned loose in the same toy room that included a drum. The second group was most likely to later identify the drum as their favorite toy, which gave rise to a notion of minimal sufficiency principle, [Mark Lepper] “using rewards or threats that are minimally sufficient to get kids to do the desired behaviors, but not so strong that the kids view the threats or rewards as the reason they are acting that way.”

As with systems or variation, psychology is rich with much more than the simple considerations I’ve mentioned. Deming felt that so much of what we do in school and work undermines the intrinsic motivation of people to learn, engage, cooperate, and create. He often showed this chart (video to follow).

This psychological question of how the system you have designed engages or disengages people might be the most important question of all.

"90% of what matters cannot be measured."
- Deming 

Finally, the fourth element of profound knowledge is the theory of knowledge. How do you know what you know? Your data and people’s behavior might be stable but what if the environment changes? How do you know that customers like your product? What about it do they like? The advances in UX since the time of Deming (he died in the early 1990s) have taken this question seriously. It’s worth remembering that he made his name as a management consultant but first got to Japan as a person to help with the census (“How do we know how many people live in Nara?” “How do we count people staying in a hotel on the night of the census? Are they counted as residents of the city of the hotel or the city they claim as home?”). And he got into the position to help to define this after getting a PhD in Physics. He studied phenomenon and tried to understand how we knew what we knew, and carried that basic inquiry into the question of how to count the population of an entire nation and how to measure quality in a product or service.

Evidence for what you know comes from data but data comes after you’ve formulated a theory. If you change what you are trying to measure or what you believe about the phenomenon, the data may suddenly be made obsolete or you’ll need to collect it differently. Your theory of knowledge is bound up in how you measure variation and how you define and understand the system you expect people to engage in.

Theory of knowledge, psychology, variation and systems. You can start anywhere and go everywhere but the real goal is to understand what you are dealing with in terms of a system and how that enables or disables people from realizing their potential within that system. This means understanding the difference between common cause and special cause variation and even a deeper understanding of how you know anything at all. All of it is humbling but it also leads to continuous learning and improvement as you continue to inquire on all of those fronts. Systems evolve with the people within them and the environment around them … or they become obsolete.

Ultimately, a successful social inventor or entrepreneur creates a system that outlasts them. The US didn’t collapse when Thomas Jefferson and John Adams died hours apart on the country’s 50th anniversary. Apple’s stock didn’t fall to zero when Steve Jobs died. The real value is less about your efforts within a system than your ability to improve or create the system. It’s true that some people run much faster than others but no one outruns a jet; what you want to do in improving or creating a system is to create something that performs much better than the people within it could hope to on their own.  A great manager does the same and I’m not sure how you’d do any of it without at least some intuitive or learned understanding of Deming’s profound knowledge.

09 April 2017

Post-Capitalist Market Economy (or why markets obsolete everything - even capitalism)

I recently heard Dr. Katharine Hayhoe speak about why people are climate change deniers. She said that when people don't see or don't like a solution, they'll deny the problem. An example she didn't use but that seems appropriate is that of a poor woman in a abusive relationship who brushes away claims that her man is a threat because she can't imagine raising the children on her own. Given the solution seems untenable, she doesn't admit to the problem.

What's curious about climate change deniers who inevitably are fans of gas and coal is that they seem to see an admission that carbon emissions are dangerous as an admission that capitalism is over. This, this notion that the communists would win because of some science issue seems like something that McCarthy would have warned them about had he the foresight to see how clever the foes of capitalism were.

This misses something really important about markets, though. Markets proceed through sustained drives of incremental improvement punctuated by bouts of creative destruction. Little is safe from the force of markets. Bicycles and roads get better and better every year and then ... we get cars. Gas engines get better and better every year and then ... we get electric cars. Markets are so disruptive that they're even making capitalism obsolete.

People often use the terms capitalism and markets interchangeably. I don't. To me, capitalism defined the market economy that was limited by capital. The West went through a capitalist period from about 1700 to 1900. During this period it wasn't just discovery of how to harness energy from coal and oil that helped to fuel the first real gains in productivity in thousands of years. It was a relentless automation of manual work with machines and factories. Life sped up and output increased. We went from battling starvation and having very few material goods to battling obesity and having an abundance of goods.

By that definition, capitalism is over. It became eclipsed by the information economy that simply assumed the presence of an abundance of capital. In the third, information economy, retirement plans made tens of millions of Americans new capitalists. We now have trillions of dollars in capital in search of returns and the limit is not capital but good investments in which to pour that capital. What is the source of good investments? Good entrepreneurship (and not just private sector entrepreneurship, but public sector as well). The creation of new infrastructure and businesses that generates a return to capital is the new task. Worry about financing such ventures is almost incidental.

And here is the problem with seeing the problem of climate change as meaning an end to capitalism. Capitalism is already over. Not even capitalism was safe from the creative destruction of markets, so it is hard to imagine how carbon fuels could be. Markets don't show anymore respect for carbon fuels than evolution pays respect to dinosaurs.

08 April 2017

Polarized or Zero-Sum Politics?

Our politics has become more divisive. Republicans and Democrats seem to look at each as aliens and look back at the past as a kinder, gentler time.

Stagnating wages have contributed to this. Call it take-home pay economics. You could argue that since 1980 politicians have been giving tax cuts because employers aren't giving pay raises. (You could argue this. It doesn't really match the facts but it does seem to match popular perceptions.)

Assume Pradeep and Martina each make $50,000 a year. It turns out that Martina is very conservative and just doesn't understand why the government needs more of her money. Well, she understands it sort of but isn't a big fan. Pradeep thinks we should have better roads and schools and help for the homeless. He's a fan of government.

Now they each get a raise of 10%. An extra $5,000. Pradeep argues that 50% of this raise should go to government, a full $2,500. Martina thinks that is ridiculous. She thinks that 15% is more than enough. It's reasonable to think that in spite of their different values and passions, they might reach a compromise to, say, split the difference and pay about a third in taxes, less than Pradeep's $2,500 but more than Martina's $750. $1,500 say.

This goes on for years, heated debates culminating in some sort of compromise that neither one sees as particularly awful. In that world, politics are not so bad.

Now imagine a parallel economy where our heroes also make $50,000 a year. Again, Martina is very conservative and Pradeep is very liberal. That has not changed. What is different, though, is that in this world, wages are stagnant. Instead of a raise of 10%, they get a raise of only 2%. In the prosperous economy, their gross pay bumped up $5,000; in this stagnant economy their pay bumped up only $1,000. Pradeep sees how hard it is on people to live in this economy; he'd still like to give $2,500 but his raise is only a portion of that, so he thinks that maybe $500 of his $1,000 raise?  Martina? She thinks that $1,000 is already too little and isn't about to give any of it to the government. She doesn't want to give any of her tiny raise away. Well, maybe $100, $150 tops. The more she listens to Pradeep's inane proposals to take most of her raise, the more she feels inclined to just keep it all. She thinks he's nuts.

Maybe it is because they are fighting over such small amounts, but this question of how much they'll support the larger community vs. be allowed to keep to themselves is contentious. Already Pradeep knows that there won't be enough money to build the new school that he thinks the neighborhood deserves. He's appalled that not only will his neighborhood not get a new school but they might actually have to layoff some teachers and go from 22 kids per classroom to 32. Martina is appalled that not only will she not be able to afford her new car but it looks like she might not even have enough extra to get the repair she's been putting off. The debate about building a new school or buying a new car is heated but it is not viscous; the debate about teacher layoffs or car repair is.

It's probable that fragmentation of news sources has reinforced and magnified the differences in our politics. It's probable that politicians playing to primaries, making the effort to win their party's voters rather than the voters in a general election has made us more polarized. It's probable that the big divide into different communities, liberals who shop at Whole Foods and conservatives who dine at Cracker Barrel each self-segregating into their own neighborhoods has made us more polarized. Too rarely mentioned, though, is the effect of stagnating wages over the last 17 years.

There are numerous approaches to diminishing polarization and there is likely no one solution to this. That said, as policies create more prosperity, politics could become less viscous.

07 April 2017

Group Names for Birds ... and for People

My friend Norman shared with me some of these delightful group names for birds:

  • a charm of finches 
  • an exaltation of larks 
  • a murmuration of starlings 
  • an ostentation of peacocks 
  • a pitying of turtledoves 
  • an unkindness of ravens 
  • a wisp of snipe

It seems like someone should do something similar with group names for people. Something like this:

  • a bafflement of Republicans
  • an embarrassment of Republicans
  • an entanglement of Republicans
  • an electoral of Republicans
  • a morality of Republicans

Okay, so I didn't manage to diversify the groups of people like I'd planned. I'd initially considered  a cistern of plumbers, a retirement of seniors, a tyranny of toddlers and a fuse of electricians. I didn't get that far. I got stuck on Republicans.   I might be part of a perturbation of liberals. 

05 April 2017

Development, Social Evolution, and a Post-Economic Community

Apparently it is bad form to talk about communities being at different stages of development. It is supposedly demeaning of "less developed" communities. To me, though, this stage of history is so transitory that the differences between poor and rich countries is almost incidental.

One of the more important people in the Pharaoh's Court:
The Royal Manicurist
If you had a smattering of parents talking about their young children, the conversation would gravitate towards the perils of potty training, sleepless nights, tantrums, and speculation about whether toddlers are natural tyrants. No one would think it demeaning to suggest that it'd be a good idea for your two year old to learn how to control her bladder before heading to university. And no one would think for a moment that the fact that all the toddlers were going through nearly identical stages of development suggested that they were - or would grow up to be - nearly identical people.  Or that the child who is three years younger is going to be perpetually less developed than the older children. We all go through similar, necessary stages of development but we will end up with very different lives.

Communities that give their people fewer options about how to live a life - whether in the form of letting women stay single or providing young people with enough income to afford a place of their own - are less developed. Development involves an overlapping series of steps like accumulating and creating capital, educating children to become knowledge workers and popularizing entrepreneurship. (Something even our most advanced communities haven't quite done. Yet.) There is reason to believe that the roughly 7 or 8 centuries from about 1300 to 2100, a period in which we transition from abject poverty to something like widespread abundance, will take us from a starting point of a community based on shared superstitions through the creation of communities focused on overcoming economic scarcity into a post-economic community in which the questions of economic scarcity give way to larger, more interesting questions about how to live and what sorts of communities to create.

Social evolution has been playing out for thousands of years, since well before Assyrians, Persians, Egyptians, Jews, and Greeks brought humanity into history with writing, giving us a continuity beyond the scope of our own lives. Our own lives play out within a tiny little window of this evolution that is likely to continue for thousands - possibly hundreds of thousands - more years.

Our society doesn't represent  the culmination of evolution. We are not the product of evolution: we are just part of a process that has and will play out for a longer time than we could ever imagine.

01 April 2017

Want to be More Productive? Try Shorter Days with Longer Naps

Alex Soojung-Kim Pang published a fascinating piece - Darwin was a slacker and you should be too - in Nautilus about the work habits of the folks who have made a huge difference in their field. Darwin wrote 19 books, including perhaps the most famous science book of all time - The Origin of Species - on a schedule that essentially included 3 1.5 hour sessions and one 1-hour nap between 8 and 5:30. During the normal work day he worked about 4.5 hours and slept one hour.

Warren Buffet estimates that he spends at least 4 hours a day reading - corporate reports, articles, and books. He just closes the door and reads. Uninterrupted. This unorthodox practice has been profitable. If you do the math, he has - on average - increased his net worth by about one billion per year. His work is profitable.

As Soojung-Kim points out, a schedule like Darwin's would likely get you fired at most corporations. Curiously, I've been in dozens - hundreds? - of corporations and can attest to two things. One, this schedule likely would raise eyebrows and perhaps even get you a warning or get you fired. Two, it would represent far more focused time than most employees get inside a corporation. And it is this focused time that demands extra sleep that so often gets missed in the middle of emails and meetings.

Many of my clients are double and tripled booked for meetings throughout the day. Additionally, they will get 150 to 200 emails in a day.  They are busy. So busy. What they rarely get in their long days, though, is 3 90 minute chunks of intense focus.

My own experience with intense projects and tasks suggests that one of the many obstacles to such immersive focus, though, is a place where one can nap. More than once, my working from the home office has allowed me to punctuate my work with a nap. Curiously, I don't feel the urge for such a thing when I'm working on less demanding tasks (like, for instance, being in a meeting). When I sustaining intense focus for longer periods of time, I need more sleep. And often in the form of a 20 to 40 minute nap.

Maybe the biggest boon to productivity would be a proliferation of hammock rooms. Or at least blocking out 2 (not everyone is of Darwin's caliber) to 3 90 minute blocks of time per day during which nothing is expected to be done but the one thing that requires the deepest thought.