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Meditations

teva fashionista

Recently, personal matters have replaced doing research for my essays. But I’ve still been pondering about the world we live in and want to share those thoughts. Instead of a full essay this week, the following are four short musings/questions to get us thinking:

FASHION: Now that it’s summer, Teva sandals are everywhere. The terrible ’90s fashion statement is back in full force, but how are they still a thing? It’s like a hippie scourge on the community—an ancient fashion statement with modern velcro amenities. And don’t even get me started on wearing socks with sandals. It all begs the question: What’s the point of keeping up with fashion trends if nothing really changes for thousands of years?

BUSINESS: “…but how do they monetize it?” This was the only piece of a conversation I heard between two gentlemen in suits walking downtown. And what a question—a question that sums up so much of our current age. First, there’s how the question is asked. It’s at once a valid question and concocted jargon. Using the word “monetize” feels like contemporary boasting, like spitting out questions on ROI, A/B testing, or running lean—valid yet trite buzzwords to show that we “get” it, that we’re business savvy, that we ask the right questions in the right ways. In a strange way, it has become trendy to use pretentious business-speak. Second, there’s the economic dilemma of the question. In a world of “free” online content—a digital sharing glut—there seems to be this underlying (maybe unconscious) feeling that if we get enough users or followers, tap into the network effect like Zuckerberg did, then we make it rich. Simple. Except there’s still that nagging detail of how to grow a money tree from a foundation of nonpaying consumers. Google, a company notorious for asking tough interview questions, is cited as asking interviewees, “If ads were removed from YouTube, how would you monetize it?” And that’s really hitting the nail on the head, isn’t it? The business challenge of our era is that we, as customers, expect things to be free, but we, as businesspeople, do not know how “free” can sustainably make money (sorry, “be monetized”).

LANGUAGE: Horny is the word for feeling sexual arousal, but it’s hormones that cause the feeling. Wouldn’t it make more sense to say “hormy”?

HISTORY: Let’s assume Elon Musk’s vision of technologically-advanced humans plays out in the way he wants. We all become enhanced cyborgs living in a world of robots and super intelligent A.I. Who then will be the legends of today—the heroes that go down in the history books? If “history is written by the victors,” as Winston Churchill allegedly said, then will the superstars of our current era be remembered not as the Steve Jobs and the Elon Musks, but as the digital tools they created? It is not the climbing gear that gets the glory of being the first to climb Mt. Everest; it is the climber (but only because we are the victors—the tellers of the story). In Elon’s future, are modern humans merely the tools that machines will use to accomplish their historic feats? Will it be the implanted Neuralink brain chips of influential people that are remembered as the important historic figures rather than the people themselves?

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Business & Biology

The Noncompetitive Advantage

hunter_hunted

Have you ever been chased by a bear? Heart racing, adrenaline pumping, looking for the nearest tree to climb to avoid almost certain death? Yeah, me neither. And that fact—that lack of being chased or having natural predators or competition—is precisely why humans have such long lifespans, and why some companies dramatically outlive their peers.

For years, biologist have made the simple observations that “bigger animals live longer lives.” The idea is that the bigger an animal becomes the more efficient they become. It’s a fact of biology, which extends into the world of business, urban planning, and organizational ecology. As theoretical physicist, Geoffrey West, puts it, “This might also explain the drive for corporations to merge. Small may be beautiful but it is more efficient to be big.” As with all rules, however, there are exceptions. But before we discuss the anomalies, let’s examine our options for survival.

There are three main strategies for small animals, organizations, businesses, cities, or powerless individuals to survive in the world of Big: (1.) direct competition, (2.) indirect competition, and (3.) noncompetition.

Direct competition is the easiest to understand, but is also the least effective (lowest survival). This is like turning toward that grizzly we talked about earlier and fighting back. There’s a chance of survival, but it’s not great. And at what cost? In business, small companies that use this strategy are labeled sustaining entrants. They compete in an established market against powerful incumbents by making some improvement to mainstream products.

As Clayton Christensen noted when developing the theory of disruptive innovation back in 1995, in the case of “the disk drive industry, only 6% of sustaining entrants managed to succeed.” And this makes sense, right? To directly compete for high-end or mainstream customers in an established market is going to draw attention from much more established players who have the ability to either defend (kill us) or acquire (eat us). Either way, survival and longevity are limited.

Indirect competition is a different game. We can view this as the dog eating food scraps that have fallen from the dinner table. While direct competition between small, young entrants and large, established incumbents is inherently unfair, indirect competition serves customers that are of little interest to large incumbents. Young firms appeal to low-value customers by providing lower quality products outside the mainstream market. This type of business calls less attention to itself, because it serves customers that would be a “waste of time” to larger incumbents.

Noncompetition is the anomaly in our discussion. This strategy is exactly what it sounds like—not competing. It’s finding or creating a niche that insulates us from hazards and outside competition. In business, as you might have guessed, noncompetition is rare.

In biology, it’s extremely rare for small animals to live for long periods, but birds and bats seem to break all the rules when it comes to life expectancy. Despite being small and having rapid metabolic rates—both significant indicators of short lifespan—birds and bats live 3-3.5x longer than animals of a similar size. In a world where corporate life expectancy is decreasing, many in business would be happy with a three-fold increase in survival.

For birds and bats, it’s a matter of flying. They’ve taken themselves out of the terrestrial equation, out of reach of countless potential predators and hazards. They’ve developed a mechanism to explore the sky, a niche above us land-based creatures. Their competitive advantage is simply not competing. They just fly away.

When we look at businesses that have defied the odds of survival, our view turns east toward Japan, where a handful of companies are over 1,000 years old. Just as flying has insulated birds and bats from harm below, older Japanese companies benefit from insulation. They are often small, primarily serve Japanese markets, run on values beyond profit-at-all-costs, and operate in a culture where acquisitions and mergers are avoided (compared to the West’s seeming love of M&As). Thousand-year-old Japanese enterprises are much different than the S&P 500, like the difference between earth and sky or mammals and birds.

Google, Amazon, Apple—These are the big game animals, the predators, the bears chasing us up a tree. Perhaps we (and our businesses) can thrive for decades without becoming or competing with giants. Humans transcended the law of the jungle; birds and bats transcended the limitations of land. In order to be exceptional, we must strive to be an exception, no matter how small. Rather than competing head-on in an unfair fight, why not learn to fly?

Christensen, Clayton M., Michael E. Raynor, and Rory McDonald. “Disruptive Innovation.” Harvard Business Review 93.12 (2015): 44-53. (Source)

Daepp, Madeleine I.G., et al. “The Mortality of Companies.” Journal of The Royal Society Interface 12.106 (2015): 20150120. (Source)

Munshi-South, Jason, and Gerald S. Wilkinson. “Bats and Birds: Exceptional Longevity Despite High Metabolic Rates.” Ageing Research Reviews 9.1 (2010): 12-19. (Source)

West, Geoffrey B., and James H. Brown. “Life’s Universal Scaling Laws.” Physics Today 57.9 (2004): 36-42. (Source)

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The Global Schoolhouse

Globalization University: Time to Pack Our Bags

moving up?

People can have several layers of loyalty. You can be loyal to your family and your community and your nation. So why can’t you also be loyal to humankind as a whole? Of course, there are occasions when it becomes difficult—what to put first—but, you know, life is difficult; handle it.

—Yuval Noah Harari, “Nationalism vs. Globalism: The New Political Divide” (2017)

The world is changing. It’s moving from a patchwork of individual nations to a collective mix of nations, corporations, and power brokers. It’s moving from nationalization to globalization. People may argue that this shift has been going on for decades, which it has, but now the excitement has worn off and the reality of change—that daunting task that underlies any big move—is setting in. We’re graduating from The Global Schoolhouse of the 20th Century and enrolling in the Globalization University of the 21st.

For some this transition is fraught with anxiety. Others see it as an exciting time full of opportunity and a better future. Regardless of our feelings, the actual transition can be painful. There are costs to change.

Think of the last time you moved: There was the time-consuming packing process, where we boxed everything up; the moving process, which left our backs sore and our muscles achy; followed by the unpacking process, which felt like deja vu after packing in the first place. Where do the boxes go? Where does the stuff inside the boxes go? Why do we have so much crap?! But possibly the hardest part of the whole moving process is the initial step: We must first decide what stays and what goes.

From my vantage point, this is where humanity finds itself today. We are trying to determine what to keep and what to throw out. This is an extremely difficult task for a world where we’ve accumulated enormous amounts of “stuff”—various different languages, religions, and cultural identities; unique customs, clothing, and holidays; separate currencies, laws, and governing bodies; and often differing political wills, motivations, and priorities. A global world requires that some of these historical accumulations are thrown out, some are kept, and most (if not all) are restructured, repurposed, and relocated.

The world is moving house. We’re going away to college. We’re moving into a crowded dorm with all sorts of people from all around the world. This is Globalization University, where navigating our own national heritage is just as awkward and messy as 18-year-old co-eds trying to “find themselves” at a Freshman kegger.

It is certainly an exciting time to be alive, but that doesn’t mean that it’s an easy time. We’re merely in the packing process—just getting started—and already there is global backlash. Much of this outcry comes from a combination of what psychologists call the endowment effect and loss aversion. Respectively, we put more value on things that are ours simply because they’re ours (endowment effect). And consequently, we perceive a more significant loss when our stuff is taken away. This includes ownership of concrete entities like factories and jobs becoming “redundant,” as well as abstract ownership like specific ways of life or cultural identity. When our way is in jeopardy, emotions run high, objections flow freely, and we fight like hell not to avoid loss.

It’s important to remember, however, that while packing and moving are difficult, we’re not alone. When we show up to Globalization University on move-in day and look around at all the other students unpacking in front of our dorm, we should remember that all those fresh faces went through the same process. They’re going through it now. Our global peers are struggling with this move too. Whatever nation we come from, global dorm life is something none of us have ever experienced. It’s not nations that solely cause globalization; technology stretches beyond political and geographic borders. We’re in this together (for better or for worse).

Harari, Yuval Noah. “Nationalism vs. Globalism: The New Political Divide.” TED. Feb. 2017. Lecture. (Source)

*This essay is a follow up to the series, “The Global Schoolhouse,” originally published on December 2016. You can read Part 1 here.

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Too Smart for Your Own Good

Beliefs (or lack thereof)

fairy-stareWhat is religion? It’s community, history, cultural identity; it’s a way to make sense of the world. Some of us use religion as our primary source of answers; others use mysticism; others: science; and still others use a combination of methods. This is not an argument for one way over the others, but rather a look at beliefs through several different lenses:

We all try to make sense of the world. Our methods may differ, but we are all seeking to understand the same universe:

People find themselves in a mysterious and mysteriously ordered universe. They find themselves equipped with sort of intense moral instincts.  They have religious experiences, and they develop systems that explain those.

—Ross Douthat, author of Bad Religionspeaking on Real Time with Bill Maher (2012)

Religion plays a comforting role for some people:

[P]eople who lose personal control take comfort in religion, because it suggests to them that the world is under God’s control and, therefore, predictable and nonrandom.

—Zuckerman et al., “The Relation Between Intelligence and Religiosity” (2013)

But the comfort of belief is not confined to religious doctrine:

Human beings are believing animals, period. […] Even secular liberals have their [beliefs…] What is the idea of universal human rights if not a metaphysical principle? Can you find universal human rights under a microscope? Is it in the laws of physics?”

—Ross Douthat, author of Bad Religion, speaking on Real Time with Bill Maher (2012)

It is becoming more difficult to understand a world defined by modern technology:

The modern technologies of the day are a bit of a black box for the average person. […] the average person I meet on the street doesn’t feel any kind of connection to the technologies that are defining their world and shaping the fabric of society.

—Steve Jurveston, billionaire tech investor, “Acclerating Rich-Poor Gap,” Solve for X (2013)

But humans are resilient creatures: Make the world incomprehensible, and they will find a way to comprehend it:

The explosion in communication technologies over the past decades has re-oriented society and put more psychological strain on us all to find our identities and meaning. For some people, the way to ease this strain is to actually reject complexity  and ambiguity for absolutist beliefs and traditional ideals.

—Mark Manson, author, “The Rise of Fundamentalist Belief” (2013)

While we are getting better at adapting to the ever-changing world…:

“The rate at which we can adapt is increasing,” said Teller. “A thousand years ago, it probably would have taken two or three generations to adapt to something new.” By 1900, the time it took to adapt got down to one generation. “We might be so adaptable now,” said Teller, “that it only takes ten to fifteen years to get used to something new.”

—Thomas Friedman quoting Astro Teller, CEO of Google’s X Research & Development Laboratory

…the world is changing at an ever-increasing rate:

An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense “intuitive linear” view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate).

—Ray Kurzwell, computer scientist,“The Law of Accelerating Returns” (2001)

Technology may soon make everyone feel as if they’ve lost control:

“If the technology platform for society can now turn over in five to seven years, but it takes ten to fifteen years to adapt to it,” Teller explained, “we will all feel out of control, because we can’t adapt to the world as fast as its changing.
—Astro Teller, CEO of Google X, quoted in Thank You for Being Late (2016)
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And while some people think the world is still divided into those who “understand” and those who don’t…:

[Disconnection from technology is] a different kind of estrangement. It’s almost like a cognitive separation—those who know and those who don’t know about the world they live in.

—Steve Jurveston, billionaire tech investor, “Acclerating Rich-Poor Gap,” Solve for X (2013)

…technological advancement will eventually humble even our brightest minds:

“None of us have the capacity to deeply comprehend more than one of these fields [genomic cloning, medical robotics, artificial intelligence]—the sum of human knowledge has far outstripped any individual’s capacity to learn—and even experts in these fields can’t predict what will happen in the next decade or century.”

—Astro Teller, CEO of Google X, quoted in Thank You for Being Late (2016)

For, at the end of the day, we are all humans (no matter how intelligent). And that is the thesis of this entire “Too Smart for Your Own Good” series:

You are never too smart to be humble.

Intelligence does not make a person immune to faulty logicinsensitivity, poor timing, or technological change. There are biological limitations to being human. However we choose to make sense of the world—whatever strategies for life we employ—we are making a personal choice. So remember: “Judge not, lest ye be judged.”


Additional Reading:

Urban, Tim. “Religion for the Nonreligious.” waitbutwhy.com (2014): (Source)

Sharov, Alexei A., and Richard Gordon. “Life before earth.” arXiv preprint arXiv:1304.3381 (2013). (Source) (Summary)

Zuckerman, Miron, Jordan Silberman, and Judith A. Hall. “The Relation Between Intelligence and Religiosity: A meta-analysis and some proposed explanations.” Personality and Social Psychology Review 17.4 (2013): 325-354. (Source)

This is the fifth installment of a series titled “Too Smart  for Your Own Good.

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The Global Schoolhouse

Part 3 of 3: The Global Schoolhouse

[M]any critics of globalization make America the wicked villain in the tale. They portray the U.S. forcing Nike, McDonald’s and Baywatch down the throats of the unwilling world, shredding ancient cultures for the sake of empire and cash. But […] Multinational corporations are just that, multinational; they don’t represent American interests or American culture. Just as much as they changed the tastes and economies of other countries, they have tried to change the tastes and economy of the United States.

—Franklin Foer, How Soccer Explains the World

To begin Part 3, let’s review: The world is a schoolhouse; the global economy is its schoolyard; the game being played is economics/commerce; the schoolchildren who compete in this game are individual countries; their social cliques are based largely on history and finances; and multinational corporations? Well, they’re schoolchildren, too (but in a whole new way).

Multinational corporations are the younger siblings of our schoolhouse nations. They are smaller, have learned from the mistakes of their older siblings, and are more skilled at the schoolyard game of economics. Corporations share geographic, cultural, and historic parents with their older siblings (like Amazon with the United States), but that’s where the similarities end.

Just like younger students, multinationals have fewer obligations than their older counterparts—fewer classes to take, fewer school dances to attend, fewer extracurriculars. They have fewer distractions, in general. Instead, corporations mostly spend their time playing out on the schoolyard, focused on one thing—their game, how to efficiently make a profit.

This focus is what allows for a new paradigm, one of inclusion rather than exclusion. As we discussed in Part 2, nations have a tendency to favor their “in-group” clique. This leads to discrimination on the grounds of historical allegiances, rivalries, or economics.  Corporations, on the other hand, have different goals. They require outsiders (emerging markets), in order to continue growing. They want as many participants playing on the schoolyard as possible.

In the book The Better Angels of Our Nature: Why Violence Has Declined, Steven Pinker cites “commerce” as one of five reasons why we cooperate with one another instead of act aggressively. Multinationals understand this; it’s why they exist, why they are multi-national. It is in our economic best interest to cooperate globally. But commerce does more than give developing countries a chance to participate.

In November, The Wall Street Journal ran an article titled, “Netflix, Amazon Take Divergent Paths to Reach Indian Audience.” It was a quick read but highlighted this shift from traditional exclusion to emerging inclusion. The brief piece described Netflix’s cost-effective strategy to keep content production “in-house” at their California studio. The idea being that if the shows they make have multinational appeal, then Indian audiences, as well as other countries, will watch (in turn, saving the studio money). Conversely, Amazon has set up shop in Mumbai creating content in India with Indian actors and an Indian audience in mind.

The story of Amazon’s strategy in India is a hopeful one. It’s hopeful because in an attempt to grow, they are seeking a competitive advantage—to truly learn and understand their audience’s perspective. As we discussed in Part 1, all people want respect, and for the first time, those countries previously shut out of the established economies clique are starting to receive some.

If respecting the diversity and richness of the world’s cultures creates a competitive advantage for businesses, then there is hope for the billions of people within the developing world. Binge watching television may be a waste of time, but the Netflix-Amazon example shows a broader trend. Regardless of the business, the point is this: Emerging markets are finally being included in the game (if only as consumers to start).

Before we get carried away with the salvation of commerce, it’s prudent to acknowledge the elephant in the room—unbridled capitalism. The subject is a heavily debated one. Even the Pope has weighed in.  But rather than taking a Marxist view of inherent failure or Wall Street’s belief that “The Market is always right,” let’s assume for a moment that capitalism, like most things, has an equilibrium point.

Commerce cannot answer the world’s woes alone. While the inclusive strategy of multinational corporations may lead the charge, countries still need to decide for themselves that cooperation trumps aggression. It may feel ironic that a game that creates overpaid mega-CEOs could equalize the global divide, but perhaps it could.  Perhaps commerce can help create more global balance. There is an equilibrium point between corporations and nations that could help both to be successful—to learn, mature, and graduate from the global schoolhouse.

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