More on this book
Community
Kindle Notes & Highlights
by
Safi Bahcall
Perfectly efficient markets—a Newton-style, fundamental belief—don’t have bubbles and crashes. Boyle-style emergent markets, on the other hand, with certain reasonable assumptions, almost always do.
The stalls that mysteriously appear with no apparent cause are called phantom jams. They have been confirmed not only by careful observation on highways but by experiment. In 2013, a group of researchers in Japan tracked cars circling inside the Nagoya Dome, an indoor baseball field. They found, as predicted, that when the density of cars exceeded a critical threshold, spontaneous jams suddenly appeared.
It is a truth universally acknowledged that a single man in possession of a good fortune must be in want of a wife. —Jane Austen, Pride and Prejudice
His disciple Lenny Susskind, my former graduate advisor, took that advice seriously. Lenny once explained to me a complex idea in topology, the study of surfaces, by saying, “Imagine an elephant, then take its trunk and shove it up its a—. That’s your surface.”
Traffic engineers use these ideas to design better highways. Reducing speed limits in heavy traffic may seem counterintuitive, but it reduces the likelihood that a small disruption will cause a jam
(Golf balls are dimpled because a little turbulence near a surface layer reduces drag—which is why, if you have a great swing, you can drive a modern dimpled golf ball over four hundred yards. Smooth golf balls would travel roughly half that distance.)
The researchers found a middle ground by creating a model that was simple, but not simplistic. Throw away too much detail, and you explain nothing. Retain all the detail—same thing.
The frequency of small fires in a forest is sometimes called the sparking rate. The park managers’ policy of reducing the sparking rate, although well intentioned, had allowed the forest to grow dense with old trees. They had inadvertently pushed the forest across the dashed line in the diagram above. Their policy had made contagion—a massive outbreak like the 1988 fire—inevitable. Today
Strogatz specialized in quirky applications of advanced mathematical techniques (he once wrote a paper on the mathematics of Romeo and Juliet).
Textbooks on the behavior of stock markets often begin, like the Bible, with a declaration of faith. In the beginning, there were efficient markets.
Physicists love fat tails. Random systems with no hidden connections, like coin tosses, have thin tails. They’re kind of boring. Fat tails signal interesting dynamics in a network.
From the early emergence of ISIS in 2014 through the end of 2015, Johnson’s team collected minute-by-minute data on the online behavior of 108,086 individual followers linked to a total of 196 of these virtual terror cells.
In the two decades since Joseph Smith’s first visions in the early 1820s in a small farm town in upstate New York, the Mormon Church had grown to over 25,000 followers. Announcing a vision and organizing believers in the New England of this era was not uncommon. In Maine, the visions of Ellen White launched Seventh-day Adventism. In New York, visions of Revelation inspired followers of Jemima Wilkinson to build a town called Jerusalem.
Gore Associates, the maker of Gore-Tex fabric, which limits how many people work together in one building. “We put a hundred and fifty parking spaces in the lot,” the president, Bill Gore, said. “When people start parking on the grass, we know it’s time to build a new plant.”
Part of the blessing, or curse, of a physics overeducation is the inability to let a good thought experiment lie without trying to raise the stakes.
In US companies, the average management span has been between five and seven for many years, although recent studies have suggested the span has grown as high as ten. (I show a span of three so the picture can fit on the page.) Now we need
Imagine an organization with an enormous span, more than one hundred direct reports (we will discuss one such example in the next chapter). Promotions happen so rarely that it’s not worth spending any time politicking. With a span of two, however, you are constantly in competition with your peer.
The greater your skill on the projects to which you have been assigned, which we can call project–skill fit, the more likely you are to choose project work. The lower your project–skill fit, the more likely you are to choose politics.
A final fitness control parameter is difficult to measure, but every employee feels it. Let’s call it return-on-politics: how much politics matters in promotion decisions.
E Equity fraction S Management span F Organizational fitness G Salary growth rate up the hierarchy Let’s see how this works.
If you’re part of a group that assembles planes, for example, you don’t want to launch ten planes and see which eight fall from the sky. The manufacture and assembly of planes belongs in the franchise group. The loonshot group is for developing the crazy new technologies that might go inside those planes.
The New York Times declared a triumph for communism; Newsday declared, “Russia Wins the Space Race”; the Washington Post declared that a secret report “portrays a United States in the gravest danger in its history.” Interviewed on television, Edward Teller, the father of the hydrogen bomb, offered that the launch was an even greater disaster than Pearl Harbor.
Eventually he came up with the idea of shows that housewives could watch during the day, which P&G could use to deliver ads directly to their living rooms. “The problem of improving literary taste is one for the schools,” he explained. “Soap operas sell lots of soap.” His loonshot made billions for P&G. McElroy was also the father of brand management,
On February 7, 1958, McElroy’s new organization officially began operations. He called it the Advanced Research Projects Agency. Bush’s OSRD had been reborn.
McKinsey & Company’s surgery has been more limited, but still effective. The company is something like a halfway house for academics taking their first steps off campus
Leaders who order their employees to be more innovative without first investing in organizational fitness are like casual joggers who order their bodies to run a marathon.
Large companies, for example, often use a steep equity grant curve: they award large stock options or cash bonuses at the highest levels (as much as 100 percent of base salary), and tiny amounts at junior and mid-levels (below 10 percent). That creates exactly the wrong incentive for the most vulnerable part of the organization—the dangerous middle.
Tilting the rewards more toward projects and away from promotion means celebrating results, not rank. Examples of celebrating rank include not just big increases in base salary, but any kind of special privilege: parking spots, a special cafeteria, trips to Hawaii for “executive workshops,” and so
The problem with most of the literature on the right management span for companies is the same as the problem with the question “What’s the right temperature for tea?” The answer to the tea question, averaged over a large sample of people, might be room temperature. It’s the wrong question and a useless answer. Half like hot tea, half like iced tea.
For example, judges ordering longer jail times after rolling a high number on dice appears to be irrational. But underneath that apparent irrationality is a rule about how the brain makes decisions that has evolved to help us complete ordinary tasks efficiently. (Sentencing criminals after rolling dice is not an ordinary task.)
When the British approached China to expand trade in the eighteenth century, the Qianlong emperor wrote to King George III, “There is nothing we lack. We have never set much store on strange or ingenious objects, nor do we need any more of your country’s manufactures.”
In medicine or biology or zoology, the enormous variety of objects of study and the range of their behaviors leave little room for general laws. There is no universal theory of kidneys or of cats.
Haiti’s economy, for example, declined over much of the twentieth century. The per-capita GDP of the Dominican Republic grew fivefold over the same period. Yet they are two halves of the same island.
The industry survives and thrives because of the web of partnerships connecting the two markets (dynamic equilibrium, #2). Without the certainties of franchises, the high failure rates of loonshots would bankrupt the industry. But franchises grow stale. Without fresh loonshots, the large Majors would disappear.
Insulin changed medicine. Proteins were no longer just the targets of drugs; they could be drugs.
If government intervention broke apart the Hollywood studio system, genetic engineering broke apart the pharma system. It separated production (the scientists who invent new drugs) from distribution (the pharmas that market them).
Tycho, a Danish nobleman, won support from the king of Denmark. The king awarded him the island of Hven and funds to hire a large staff and purchase the best equipment.
After Tycho left Denmark, he hunted around Europe for a new patron. King Rudolf II in Prague eventually raised his hand. Tycho moved his observatory there, which is where he brought Kepler and continued the work that ultimately led to Kepler’s War on Mars and his “reformation of all of astronomy.”
After Shen left government, on the other hand, he had nowhere to go. There were no other rulers who could support astronomy. And private support for astronomy was illegal—the study of the heavens was reserved for the emperor.
What makes baseball unique is that the US Supreme Court has awarded baseball a special exemption from antitrust law. That exemption allows the Major League to control its membership, which keeps the Minor Leagues minor league.
in 1675, Boyle hired a new assistant, a French medical doctor named Denis Papin. Papin continued the air-pump experiments, but added a twist. He was curious if he could add a piston to the pump and somehow create a working cycle of compression and decompression. In 1687, Papin published a book describing how to use the Hooke-Boyle air pump to cook food. He called his new device a “Digester of Bones,” since it squashed bones into edible bits.
In 1712, Newcomen turned Papin’s movable piston inside a pump into the first practical, workable steam engine. Newcomen’s invention rapidly spread throughout England.
He ended up in Bentonville, Arkansas, population: 3,000, in part because “I wanted to get closer to good quail hunting, and with Oklahoma, Kansas, Arkansas, and Missouri all coming together right there it gave me easy access to four quail seasons in four states.”
Furniture-store owners retaliated by forbidding designers to work with Kamprad. He was forced to hire his own designers. That led to original IKEA brands and style—furniture you own but can’t pronounce: Poäng, Alvangen, Grundvattnet.
rheumatoid arthritis (RA). Nearly all the major pharma companies dismissed new drugs for treating RA when they were first developed, because RA was considered an “old lady” disease, a tiny market. Today the leading category of drugs for treating RA sells just over $30 billion annually.
