Gill Eapen's Blog, page 73

old wine, older bottle

Innovation has been in the air – consulting firms who help companies become more "innovative," have been springing up like mushrooms after a heavy rain. Many have devised "new processes," to jump start innovation. The managers of aging and antiquated firms have been turning to innovation experts to "move" their companies again. Even academics have been writing about how innovation can be jump started and the venerable "business review" and "management review" magazines can't stop talking about it.

This is misguided. Innovation is not a process, it is a culture. It cannot be jump started by shock treatment. There is a reason the generation Z is more creative than the generations before them. They do not have the baggage of the 80s and early 90s. They did not live in companies with pyramidal structures and disheartening politics. They understand the value of innovation and care little about next quarters' earning per share. The latter takes a measurable GDP of the country in measuring, tracking and reporting. I am sure the pyramid makers had similar efficiency metrics – perhaps, how many people were needed to move a block of rock a few yards and it is likely that they employed many to measure, track and report it. In the process, nobody asked if the pyramid was really needed (1).

Jump starting innovation by the application of older business processes is a myth. It is time that the kings of the metro jungle and the brains of the ivy campuses understood the reality.

1. Flexibility : Flexible Companies for the Uncertain World.

http://www.crcpress.com/product/isbn/9781439816325

Evolving from a two party system

A political system that allows only two rational choices works in a regime that provides only binary choices. Even in such a case, it substantially constraints the voters with overlapping considerations. In the US, for example, this inflexibility has created an apathetic middle – nearly half the country – who do not vote. In the past, most dealt with this rigid constraint by projecting their desired outcome on the characteristics of the individual who ran for office. It appears that the country is entering a period in which the individual choices are unlikely to map across the policy landscape.

It is time to think differently. The other extreme – such as the French and Indian systems – where anybody with more than one supporter can create a party and run for office – is highly inefficient. Confusion leads to fragmented representation, followed by horse trading and unstable coalitions with no policy teeth. A happy middle in the offing in the US, where the populace seems to map into four distinct categories – Republicans, Democrats, Libertarians and Socialists. Such a categorization, with equal powers to raise money and get on the ballot in every state will substantially increase the voting participation. More importantly, this will lead to representation that a high percentage of the country believes in.

Industrial revolution is over and we are in an information economy. The younger generation has substantially improved abilities to gather information, analyze it and make choices. Systems based on assumptions from the past are unlikely to be optimal. It is time for the US to move into a four party system with a higher level of choices that also avoids the problems from fragmentation.

Fortune tellers' misfortune

Last decade has been good to fortune tellers. Smart ones stuck with dooms day forecasts consistently – running out of oil, terrorists taking over the world, financial meltdown, infinite prices for gold and many others. Many fortune tellers also provide financial advice and the pessimistic ones have been calling for selling everything during that time. Just as Nostradamus, many of these modern doomsayers have been riding a wave of luck and coincidences.

Last two years have been tough. The shine on the gold bugs has faded and the ones that boldly drove their unsuspecting investors into net short positions, have suffered. Accounting oriented analysts who are great at counting every drop of oil in the ground, every bushel of wheat in storage and every penny in the quarterly income statements, have not only wasted time and money but also led unsuspecting public into rabbit holes.

Doomsayers have a tangible negative effect on the economy, that is not driven by oil and gold but by innovation and ideas. Policymakers have to seriously consider a tax on those doling out advice when all empirical advice is clear that there is no information content in these forecasts. More importantly, they hurt not only those who blindly follow them but also the general psyche and this may delay the economy achieving its true potential.

Limiting smartness

A recent study (1) argues that there is a limit to human smartness by sighting examples such as the correlation between IQ and diseases and the performance loss seen with cognition enhancing drugs in those with good baseline abilities. These observations have nothing to do with the hypothesis that there is a limit to human smartness. The article also seems to suggest that the ability to memorize is part of smartness. Those who made ground breaking contributions to Science have never shown great abilities to memorize. From an evolutionary perspective, the ability to memorize should have had survival advantages. However, in the modern context, the ability to conceptualize is an order of magnitude more important than the ability to remember. Crude metrics such as the size of the head and the size of the human pelvis were sighted as limiting constraints on smartness as if size has a pronounced effect on smartness. It is true that a bigger brain to body ratio proxies higher IQ among animals but this is more related to operating system effects. It is unclear that those humans with bigger heads are actually smarter.

However, the question whether there is an inherent limit to human smartness, with any definition, is an interesting one. This may have to be studied in the context of the system and the society, the human is part off. If a human is significantly smarter than the society that envelopes her, it is likely that the society will shun (or terminate) her. Thus an increase in smartness in a random person will not be passed on and the society will assure a reversion to the mean in terms of average IQ. Thus the limit to human smartness may not be related to any inherent hardware limitation but rather a property of the complex societies that will not tolerate random increases in intelligence in small subsets within it.

(1) Why aren't we smarter already? Evolutionary limits on cognition. Published: Wednesday, December 7, 2011 - 14:37 in Psychology & Sociology

In your face

A recent study (1) demonstrates that people who are adept at remembering faces, are holistic processers of information. They also show proclivity to Composite Face Effect (CFE) and Whole-part effect (WPE), traits that further illustrate holistic processing. It has been noted that those who can remember names and segmented technical details are generally less able to remember faces and vice versa. This study provides a clear framework to differentiate between those who process information holistically and those who do not.

Holistic processing may be less costly and more effective in reaching decisions quickly and this may have had survival benefits. However, it does appear that such a process also disadvantages the individual from more precise tactics, as these abilities appear mutually exclusive. It will be interesting to correlate traits such as innovation and curiosity against holistic processing. If a correlation exists, it may provide valuable insights into organization and societal structures that may be optimal.

As most people have suspected, there appears to be a divide between those who could describe the specific details of the components of a face and those who can only recognize the face in whole. Both of these skills may be useful and there may be an optimal combination of them for successful organizations.

(1) Why Do Some People Never Forget A Face? Liu  Ruosi Wang, Jingguang Li, Huizhen Fang, and Moqian Tian. Psychological Science. For more information about this study, please contact: Jia Liu at liujia@bnu.edu.cn.

Flexible replication

A recent study (1) highlights the difficulty in replicating scientific experiments to prove the initial conclusions in the presence of large amounts of data, changing environments and technologies. This is fair enough but these conditions also point to the flexibility afforded to scientists in experiments. Industries with high information content created by experiments in the presence of uncertainty, such as pharmaceuticals, show significant bias toward confirmation of earlier results in repeated experiments. Replication, thus, has become easier and not harder with large amounts of data and improving technologies to collect and store data. In systems with high uncertainty and non-linearity, where conclusions are reached by statistical testing, the growth of data in repeated experiments have allowed a higher flexibility in replication.

Thus, replication is not necessarily challenging when data grow and conditions change. In many cases, these make replication easier. At the limit, then, one has to question if experimentation is a good way to reach conclusions. As has been shown many times in the past, statisticians, given sufficient time, can prove anything. Experiment designers, given sufficient time and money, can also replicate anything. This is a significant problem for the advancement of science and knowledge. Most educational systems around the world are training the next generation of scientists on how to collect and analyze data according to traditional principles. It is, however, unclear, that traditional principles are good enough to reach conclusions and to create insights.

It is not the difficulty in replicating scientific experiments we have to worry about. It is the flexibility afforded by data and technology to prove anything that is more troublesome.

(1) Again, and Again, and Again …

Science 2 December 2011: Vol. 334 no. 6060 p. 1225
DOI: 10.1126/science.334.6060.1225 Barbara R. Jasny, Gilbert Chin, Lisa Chong, Sacha Vignieri

Sleep, and then weep

A recent study (1) that demonstrates that sleeping has significant therapeutic benefits in erasing and mending difficult emotions is not new. However, it further reinforces the idea that sleeping has been fundamentally important to the human psyche all through history. Most biological systems, humans included, deal mostly with pain most of their life. As the painful memories have no beneficial effect on the system, the optimal action is to get rid off it. Akin to a computer, "the garbage," need to be collected and disposed off.

Reduction in sleep can be considered a leading indicator for pain build-up. Such an outcome has catastrophic effects not only on the individual but also on the society as a whole. Since pain is unambiguously bad, any process that slows down discharging it is suboptimal. Humans, with large unused brains, are particularly vulnerable, as they seemingly have an infinite capacity to remember. There may be an an average optimal sleep time for a biological system as well as the society it is part off. If changes in technology and social structures are moving against this optimal target, it is a bit like winding up a spring – it will have to break some time with disastrous effects.

Sleep has to be a policy issue for the design of better societies. Those who lose sleep over the "consumption economy," may be well served to sleep the black Friday out.

(1) Dreaming takes the sting out of painful memories. Justin Yao, Shubir Dutt, Vikram Rao and Jared Saletin.

http://esciencenews.com/articles/2011/11/23/dreaming.takes.sting.out.painful.memories

Economic loss from grumpiness

Recent findings that young chimps develop very similar to human children by playing with siblings and friends, further illustrate the importance of lightheartedness in learning and creativity. The youth do not take themselves too seriously and thus have a higher capacity for learning. As they mature, it appears that they lose this playfulness and this erode their ability to learn and innovate.

More importantly, the loss to the economy from grumpy adults is significant. Those who take themselves too seriously have a negative effect not only on themselves but everybody around them. If adults can delay the onset of grumpiness and pretenses of seriousness, they may be able to improve their creative content. This has implications for policy both in education and organization structures.

In education, this implies that social development of children is as important as the technical content. More importantly, exposure to diverse cultures and experiences is dominant. In organization structures, this implies that companies should seek out those who inspire than the ones who can manage (2). Large contemporary companies are dominated by grumpy managers who are adept at counting but are unable to inspire the people around them.

Long time ago, the founders of Hewlett-Packard Company instituted the concept of management by walking around and created an inspiring company. Elimination of grumpiness has to be an important strategic intent of organizations who want to succeed in the future.

(1) Chimps Play Like Humans: Playful Behavior of Young Chimps Develops Like That of Children. Science Daily Nov 16. 2011 http://www.sciencedaily.com/releases/2011/11/111116174735.htm

(2) Flexibility : Flexible Companies for the Uncertain World. http://www.amazon.com/Flexibility-Flexible-Companies-Uncertain-World/dp/1439816328/ref=sr_1_1?ie=UTF8&qid=1321833816&sr=8-1

Penniless

For many decades now, some economists, using robust analyses, have argued that a passive monetary policy is the best prescription for assuring sustainable long term growth. However, this has been too "simple," for those who seek to fine tune interest rates to move toward a state of optimum employment and inflation. The record of these people have been dismal but this has not helped them learn from their mistakes. On the other hand, some others, while correctly diagnosing the problem, had called for a return to the "gold standard," as if whatever worked in the past is the only solution in front of us. The idea of the shiny metal setting the value of money is as inexplicable as the committees of bureaucrats setting interest rates.

The concept of money is an antiquated one. It has been with us for many 1000s of years as humans moved away from bartering into setting standards of value that can be counted and accounted for. Modern technologies allow money to be electronic and we may be close to eliminating all physical money. This has to move in tandem with countries finally deciding to give up control over their segmented monetary regimes, that are, by definition, suboptimal. In an integrated world economy, that is mobile and value maximizing, country specific monetary policies do not make sense.

Countries should move to an integrated and passive monetary policy – essentially eliminating the need for such policies. The first step toward this is those countries with inefficient and value destroying active policies, deciding to set clear, well articulated and stable money supply targets and getting out of the business of interest rate tweaking.

Is it an ant? Is it a car? No, it is a molecule.