Showing posts with label workplace. Show all posts
Showing posts with label workplace. Show all posts
Wednesday, August 10, 2016
Colorado State University and its On Campus Stadium
A few disclaimers and clarifications before I begin. I have been watching the CSU on-campus stadium saga for some time and I am currently a member of the joint CSU/Fort Collins Stadium Advisory Group formed to mitigate any untoward effects of the new stadium on its neighbors.
This essay is NOT connected to the advisory group in any way and reflects, in its rambling way, my own opinions about the stadium process and university funding. All of my analysis and speculations are strictly that, analysis and speculations. They are based on the best information I have and I try to be factually correct, but I have no special knowledge.
Finally, I have found that all the people associated with CSU and the City of Fort Collins appear to be acting in ways they feel will genuinely improve, in the medium term, the university and the city.
LARGE SCALE FORCES ON CSU
Universities in general are in trouble. The reason, as is often the case, is money. State funding of the higher education system is drying up. There are four main sources of money for higher education:
- Student Tuition and Fees
- Faculty Research Grants
- State Government Funding
- Alumni and Large Donor Giving/Endowments
A couple of major forces related to funding of the university system are at work. The first is consolidation of wealth and power.
Astoundingly, wealth distribution in societies throughout the world and throughout time has followed a single pattern, a Pareto distribution. http://colin-quodlibet.blogspot.com/2010/09/wealth-distribution-and-work-week.html. The Pareto distribution is a self-similar curve where quantities are concentrated. For example, the top 10% of the population might control 70% of the wealth. If you take all of the wealth of that top 10%, the top 10% of those richer folks will have 70% of the wealth of the rich folks. Throughout the world, this basic curve can be used to describe wealth distributions. The differences are in the constants. In a highly egalitarian society, the top 10% may have 50% of the wealth. In a kleptocracy, the top 10% may have 95% of the wealth. For the past couple generation's wealth in the US has become increasingly concentrated in fewer hands. In 2012 the top 10% in the US had about 76% of all wealth.
The same concentration of wealth applies to institutions. There are an increasing number of college students. Before World War II, the entire university system was smaller relative to the population and fewer people received higher education. The system expanded after WWII to include a much larger percentage of the population. This was extremely successful economically. We met the need for additional seats by making existing institutions larger rather than increasing the number of institutions. In the 1970's the average size of a state university was probably about 20,000 students. In the past decade or so we have seen this increase to 30,000 or 35,000 students. Hand in hand with this increase in institution size there has been a growing concentration of alumni giving. The lion's share of giving is going to a smaller and smaller set of universities. In 2015 about 30% of the all donations went to just 20 schools. The more successful graduates you have, the more likely your university will move up on the alumni giving list. Within each school there is a smaller and smaller set of donors who give the lion's share of all donations, and hence have a larger and larger voice in the direction of the institution.
A second force is cultural. In the U.S. we tend to view all aspects of culture through the lens of commerce. This has become even more pronounced over the last 30 years. The primacy of commerce extends to all aspects of culture. Even religion has corners, like the "prosperity gospel" based on prayer as commerce. Government is seen as inherently inefficient (bad) because it does not operate in a marketplace. This has become accepted to such an extent that we have starved every civic institution that is not directly involved in commerce. Prestige and power are associated with wealth. In effect, we are creating a new feudal society where wealthy merchants have become the noble class.
Universities are not exempt from this cultural lens. Every few years a drumbeat starts announcing that college graduates are not ready for the workplace. That is, a university education is viewed as job training. This push to commercialize everything has also hit university administration. Universities are increasingly run as a business. This seems to be inevitable. Basic management training in the US is based on the business model. There are specializations for non-profit organizations, but the models of organization, motivation, and feedback are based on the current business model fads. Along with this comes a top-down approach to management with power and money concentrated in as few hands as possible. The university president acts as a CEO. As such, he or she is charged the operation of the institution and all true decision making is made at the top. An effective CEO will listen to advisors, but this is more to counteract opposition and build consensus than to alter direction.
As a business, the university must do what it can to satisfy its customers. It competes against other, similar institutions. To be financially sound, each university must turn a profit so it can support current operations and expand in the future. In this view, the funding sources can be viewed as customers and, like a successful business, the institution should be customer focused.
Taking each customer in turn:
Students are ostensibly the raison d'être of the university but not all students are alike. Because they pay higher tuition, out of state students are more desirable, and CSU is competing against universities in the student's home state. For marketing reasons, higher achieving students are also more valuable. The product that CSU is marketing to students is the experience on campus. To satisfy these students, the experience should be comfortable and stimulating. That is one of the reasons so much money has been spent on improving dorms, the recreation center, and the student union.
Faculty research grants serve several functions. They fund labs, faculty, and graduate students. Grants serve a marketing function by increasing the international visibility and prestige of the organization. Grants follow grants. The more grants a university has, the more likely other grants will follow. There is an easy way to incentivize faculty to bring in more grants. You simply measure the size of the grants and reward the faculty who bring in the most. In terms of grants, each department is either a profit center or a loss. Sometimes unprofitable departments simply have to be funded (English, Art...) but they can be put under pressure in the normal ways to be more efficient. For example: increasing the number of adjunct faculty, automating instruction, increasing class size ...
While still a comparatively small portion of research grants, corporate funding of research is becoming more important. This leaves the university exposed to pressure to support the funding corporations. See the recent scandal at Brown University. https://www.aaup.org/article/academic-freedom-and-corporate-university#.V6sczJMrKgQ
When you hear that CSU is a research institution, be aware that this a sales pitch to both students (we are on the cutting edge) and to grant organizations (we can effectively use your money). The goal may be research, but only in so far as that research provides funding either by attracting more grants or attracting more students. Research tends to be concentrated in areas that might be commercially viable in a decade or so. Too long for strictly commercial enterprises, but not pure research untied to commerce.
Because it is a funding source for the school, state government can be considered a customer of the university. In this sense, lobbying is "marketing" to the government. State government is in a rather unique position because it owns the institution even if it doesn't provide much support. In Colorado, the state government has a number of constraints that limit the amount of money it can spend on higher education. State government is thus the worst kind of customer: cheap, demanding, impossible to dump.
Finally, there is alumni and large donor giving. Donor funding is discretionary and based on whim. First you have to find the wealthy, then you have to persuade them that your institution is worth funding. If wealthy alumni feel the institution has helped them in their life or helped a community they care about, it will be worth funding. If a donor has a particular interest that can be furthered by funding, they will give. As an example, the equine department(s) at CSU have greatly benefitted from donor funding.
ON CAMPUS STADIUM
As far as I can discern there is very little overt corruption in Fort Collins. I find city employees well educated and thoughtful. They value information and when making decisions they look for other comparable situations and try to find best practices. The city as a whole is conservative in the sense that it likes the comfortable and conventional. We try to do the same as everybody else, just do it a little better.
Under Tony Frank, CSU is following a similar strategy. I think the CSU administration is well aware of the forces shaping the university system and is doing its conventional best to make sure that CSU ends up large enough and well enough endowed to survive the coming storms in higher education.
Tony Frank was made president of CSU in 2008. He has spearheaded the largest CSU expansion in decades, perhaps ever. The last major expansion was part of the post WWII restructuring of higher education. This is a perfect time for expansion largely because interest rates are at historic lows. The Board of Regents has viewed Tony Frank’s tenure positively and in 2015 he was made chancellor of the CSU system, which includes multiple campuses throughout the state.
During his tenure Frank devoted attention to all CSUs customers. Increasing enrollment brings in increasing tuition and fees. Much of the capital improvement money has been spent on the student tuition leg of the funding sources, improving and updating dorms, the rec center and the student union. Dorms have been improved. Faculty is aligned to the goal of bringing in more research grants. In the past few years a concerted campaign has aimed, successfully, at bringing in more donor money. Let's not talk about state government.
Sometime around 2011 Tony Frank made a marketing decision that both out of state student enrollment and large donor giving would be improved with a more visible and successful athletic program including an on-campus football stadium. Let me make this clear. I think the on campus stadium was a marketing decision made around 2011 before any public deliberation. Tony Frank as university president chose to build an on campus stadium. The only question afterwards was how to best implement that decision.
In December 2011 Jack Graham was hired as Athletic Director to implement this marketing plan. Within two months a "feasibility study" was started for a new stadium. The study was duly produced and in late 2012 Tony Frank recommended a new stadium to the CSU Board. This was followed by two years of PR bungling.
The stadium was popular with rich CSU donors and the athletics department. It was popular with no one else. The faculty members I have spoken with think the stadium is idiotic. The student body is divided, but largely opposed. Within the city a group, "Save our Stadium" formed to oppose the new stadium.
CSU and the city created a committee to look at stadium impacts. I had the bad fortune to watch one of these meetings on cable television. Representatives from CSU and the architecture/construction firms simply refused to answer any questions. My recollection of one exchange is: "How tall will the stadium be?" "We don't have an exact answer for that. We'll try to find out some information and get it to you later."
There is a real science to getting buy in for an existing decision. The stadium outreach violated many of the rules and it failed. One basic rule is to never give opponents the notion that the basic decision can be changed. Rather than creating support, the outreach created resentment and opposition. Fund raising proceeded but slower than hoped.
In a bold move, on August 8 of 2014 Frank simply fired his athletic director, Jack Graham. Within four months a new decision making process looking at alternatives was created and completed. The committee was given four alternatives and chose two of those as most viable. In the end, Tony Frank modified the options and chose to go with his original 2011 decision. A new stadium owned and operated by CSU would be built on campus.
Ground was broken and, in agreement with the city, a new Stadium Advisory Committee was created. This committee has the limited scope of trying to improve the operation of the already approved stadium. CSU has bent over backwards to be transparent, listen to the neighbors and not make the same mistakes twice. The stadium will be quieter and less bright than it might have been because CSU listened and spent money to satisfy its neighbors.
ANY COMPLAINTS?
If my analysis is correct, all of this seems rational and perhaps even inevitable given the cultural environment. There is only one real casualty, the university itself.
There are probably as many opinions on the nature and purpose of a university as there are people. I am giving my point of view as someone who spent a lot of time as a student, both undergraduate and graduate. I am a parent of four children who graduated from college. I am currently owner of a business that caters to the university crowd. When my children started college I thought a lot about what I hoped for them to learn in their higher education http://colin-quodlibet.blogspot.com/2008/05/what-to-learn-in-college.html.
Historically, universities have been self-perpetuating institutions based on both educating societal elites and allowing intellectuals the freedom to advance human knowledge. I contend that the institutions have been successful in inverse proportion to their integration into the commercial structure of the society. There are exceptions. Land grant colleges in the United States have focused on practical farm research and, along with farm extension programs, have revolutionized agriculture in the U.S. multiple times. On the whole though, the most successful research programs have been those where the goal is pure knowledge. The application of that knowledge has not been the concern of the school or the professors.
It is on the science side where commercial results are most immediately apparent, but the academic developers of calculus, differential geometry, physics (classical, relativistic, and quantum), chemistry, evolution, and genetics have been concerned with basic understanding the world. All of these areas, which underlie so much of our commerce, were created without any possible awareness of commercial applications. Academic competition, jealousy, and infighting is as old as the institutions. Holding research private and patenting academic discoveries is relatively new. These developments potentially make some needed money for the institutions, but hinder long-term human advancement. Einstein once said, "I refuse to make money out of my science. My laurel is not for sale like so many bales of cotton."
On the education side, particular skills have always been less important than the ability to understand and adapt to the world. It is important to have a deep understanding or skill in something or other, but the importance comes from the fact that once you have one deep skill, it is easier to acquire a second or third. When the WWII veterans came out of college, they created a vital society
There were many factors involved: monetary policy, size of cohort, delay in starting families... Higher education helped the veterans by giving them particular knowledge and skills, but also because they understood more broadly and could see further than the less educated.
The emphasis on running the university as a business enhances funding and fosters efficiency. It also ties research to commercial results and chokes off longer-term thinking. It reduces the quality of education by increasing class sizes and putting more responsibility for basic education onto the least experienced members of the faculty community. If you read the Feynman lectures on physics one of the most illuminating aspects is the sheer clarity of mind and broadness of vision that is apparent from simply being in the presence of well educated genius. Fewer undergraduates experience this as we put more graduate students, adjunct faculty, and junior faculty members in charge of teaching.
Big college athletics serves no research or educational purpose. Very few students participate in the marquee sports and those students are largely segregated from the rest of the campus. Every dispassionate study of finances shows that the programs never pay for themselves. Many people get rich off college athletics, but the only function of big athletics within the university is marketing to two audiences: modern day barons who can contribute to endowments and potential out of state students who bring more revenue when they enroll.
The direct appeal to the barons is obvious in the design of the CSU stadium. Roughly one quarter of the facility is set aside for luxury accommodations some served by a separate elevator to keep the moneyed from the hoi polloi. The more you pay the university, the better your experience will be: better seats, more amenities and better parking. Students sit in the cheap seats across from their betters. In addition to watching, cheering, and identifying with the university, they can stare and wish for riches that will enable them to join the barons. Those with money can use a display of wealth as a way to court influence within their circles. This is a standard feature of modern spectator sports. In the Stadium Advisory Group some members have suggested that the prices are too low and that raising prices to the maximum level possible will make the most desirable spots a better way to display wealth and influence. It will also help pay for the stadium.
The choice of football as the main sport to market is obvious, trite, and tragic. It is obvious because of the popularity of the sport. It is trite, because every institution trying to make it to the top tier is doing exactly the same thing. It is tragic for a number of reasons. The first is consolidation of sports money is already occurring. Fewer institutions are getting larger and larger shares of the pie. That means that many second tier schools, perhaps CSU, will fail in their attempts to cover stadium costs by using sports to lure out of state students and donor money.
The choice of football is also tragic because it plays to the worst part of human nature and actually hinders the education of students. Football is a purely spectator sport. People feel kinship based on team affiliation, but they do not do anything to actually improve themselves or the team (except spending money). In football, the identification comes at the expense of the athletes themselves. The vast majority of athletes, even at the top ranks of university athletics, do not make a career of their sports. CSU makes a genuine attempt through its academic programs to support these young people who are trying to get an education at the same time as having a physically demanding, unpaid, full time athletic job. Time after time we have seen in college athletics that as the money pressures rise, so does the temptation to cut corners and win at the expense of the athletes. With what we have discovered about Chronic Traumatic Encephalopathy, the current form of the game cannot continue for more than a generation or so. The fans are rabid, the money is great, but more and more parents will stop allowing their children to risk brain injury to play. This will dry the pool of available talent.
Learning how to take care of ourselves and others is an important part of becoming an educated functioning adult. If you look at people in their forties, fifties, and beyond you will find healthy adults who run, swim, bike, play tennis, golf, baseball, basketball, racquetball, ski, and snowboard. You do not find football players. The activity is simply not consonant with maintaining health. The notion of spectator sports instead of participatory sports is at antithetical to the core of the university missions.
PEOPLE MONEY AND SKILLS
One of my rules of thumb is: If you want a great organization, don't put the money men/women in charge. In any organization, the money must work out. If you put the money men/women in charge, only the money works out. Everything else, including the reasons the organization exists, suffers.
As a software professional, my career has centered on new product development. Often this is as a consultant to large organizations that wish to update their technology. The obvious reason to bring in outsiders is to get specialized expertise, but there is a cultural reason as well. People who are charged with maintaining and incrementally improving existing systems develop a conservative mindset. Many people charged with operational systems cannot cope with the uncertainty of new development. Conversely, many people in new development cannot cope with being confined to meticulously tracking potential problems.
The same kind of cultural dynamic probably occurs within the university. The skills necessary for the maintenance and gradual change of a university are different from the skills needed for major expansions. Major expansions require expensive and risky decisions that are made quickly. It is inherently a gamble on the future. The decision makers have to create a political environment where people feel involved but the pace of change is not slowed or halted.
In big college athletics the game is to quickly build a team and win more than you lose. As a coach, you either win or you are fired. If you win, you can leave and move up the coaching ladder to a bigger program with more resources. If you get fired, you move down the ladder.
In new software product development, once the job is done, the excitement subsides and the developers most instrumental in getting things done quickly move on. They are invested in the problem solving and the building, not the end result or the institution. The same is probably true for people involved in university expansion. The thrill is building the physical assets, creating the winning team. When that is completed, the tendency is to move on to the next place that needs this type of expansion.
The average tenure of a university president is about 8.5 years. Athletic directors last about 5 years. Football coaches, 4 years. For all these positions, the professional track usually moves the person from institution to institution. It is rare that these professionals "grew up" in the institution where he or she is president/athletic director/coach. Because their job tenure is much shorter than a career, people in these professions have to be more concerned with the job and their personal progress rather than the institution. Contrast this with faculty who tend to marry their institution and may very well stay with the same school for their entire professional life.
The highest paid people at CSU are associated with big budget sports (men's football and basketball coaches) and university administrators. These areas take increasing amounts of the overall labor budget. That is, we are paying the most for the people whose ties to the institution are weakest.
Following conventional wisdom gives a conventional strategy. Everyone following the same strategy competes for talent, driving up prices. When institutional loyalty is low, a larger paycheck and personal advancement are even greater lures. In addition, people naturally value their own work and value those who are like them. Administrators are likely to pay administrators more.
The end result of the current strategy is to invest large amounts of money into activities (athletics, creature comforts, administration) that are, at best, peripheral to the core of the university mission. The focus on money and business related metrics undermine faculty morale and lose the long-term research focus of the institution. The course may be inevitable in a culture based on business that does not value learning or education except as it helps commerce. The course may be inevitable, but it is also regrettable.
Monday, September 20, 2010
Wealth Distribution and The Work Week
In this post I have quite a few links. They vary in political slant and probably somewhat in numerical values, but the overall picture is largely consistent. Often I reference an article rather than the base data because I found the article itself interesting. Sometimes the general articles contain other useful links.
I read a quote a while ago - but cannot find it now. It went something like "Every successful person says they got that way by dint of hard work, intelligence and perseverance. I never met an unsuccessful person who did not blame circumstance and bad luck."
I can interpret this statement in at least three ways, all of which have some truth. One is that successful people work hard and meet adversity with intelligence and persistence while unsuccessful people blame the world around them. A second interpretation is that successful people are likely to pat themselves on the back and attribute to themselves results that may have come from simple luck. A third interpretation is that both sides are correct. Hard work, intelligence and perseverance may be necessary precursors of self earned success. While these traits may be necessary, they are not sufficient. Many people are defeated by events beyond their control.
In my last blog post I requested a 1950 lifestyle in exchange for a work week that corresponds to current productivity compared to 1950 (11 hours per week). With steady increases in productivity it is a reasonable to question why life is as hard as it is and why the work week has not gotten any shorter, and may have gotten longer. I saw an analysis (unfortunately not very good) of hunter-gatherers that estimated they spent about 40 hours a week on survival. That means that in the past 4000 years we have we made no progress on shortening the labor needed to survive. Admittedly "survival" now is much different than 4000 years ago. Life is much more comfortable, longer and, for most of us, less brutish. Still... something seems wrong.
About a century ago an economist named Wilfried Pareto noticed than many phenomena including income and wealth follow what is now called a Pareto Distribution. This is often known as the 80/20 rule and says that 20% of the population have 80% of the wealth/income... The distribution is self similar in that if you take the top 20% it will follow the same distribution. That is, 20% of the most wealthy people will have 80% of the wealth in the wealthy group.
The distribution of wealth is not exactly a Pareto Distribution but it is close, particularly at the high end of the income/wealth scales. This is true in many societies around the globe including medieval Hungary.
When something is this widespread it argues for a common mechanism. This mechanism could be the distribution of brains/work ethic/persistence or it could be something having to do with the nature of economic systems. In 2002 the Harvard Business Review published an article "Wealth Happens" . Simulations based on a few assumptions about money flow show a Pareto Distribution occurring strictly by chance. That is, a few chance events may cause one person to become wealthy while another becomes poor. In their simulations, the basic feedback mechanism was investment. If you gained enough wealth to start investing in things that provided more wealth, you headed up the wealth chain. Wealth is compounding, so the more you have the more you get.
The numbers 80%/20% are really just an example. Different societies have different percentages. Most people underestimate how skewed wealth is and overestimate social mobility (moving from poor to rich or vice versa).
Net worth is the value of everything you own minus all debt. In 2007 the median net worth of a family was $120,000. If this were a stack of $100 bills, it would be a little less than six inches tall. The 400th richest American in 2007 was Kenny Troutt of Excel Communications with a net worth of 1.3 billion. That would be a stack of $100 bills just over a mile tall. Bill Gates topped the world list that year at 59 billion, a stack of $100 bills about 45.5 miles tall.
It is worth a moment to talk about "mean" and "median". In the last paragraph I said the median net worth in 2007 was $120,000. The median is the middle number. That is, if you have 11 different numbers then 5 numbers will be less than the median and 5 numbers will be greater than the median. The "mean" is the average you get by adding up all the numbers and dividing by the total. For the numbers (1,2,3,4, 10000) the median is 3. There are two numbers (1, 2) that are less than the median and two numbers (4, 100000) that are greater than the median. The mean of these numbers is 2002 = (1 + 2 + 3 + 4 + 10000)/5. The difference between the median and the mean is an indication of how skewed a distribution is.
In the case of US family net worth in 2007, the median was $120,000. The mean was $556,380. The Pareto Distribution is quite skewed. If we confiscated all wealth and redistributed it evenly among all families, every family in the US would be around the current 80th percentile of net worth. That is, every single family would be better off than about 80% of the families today.
Before you start the revolution remember the Harvard Business Review article. It indicates that inequality would quickly reassert itself and we would be in the same position as today in relatively short order. Many people would lose almost all their money and a few people would become fabulously wealthy.
Over the past 20 years the US has become less equal in terms of wealth distribution, but the absolute wealth of each class may have increased. That is, the economic pie has gotten bigger so that even though the very wealthy have increased their percentage of the pie, the rest of us still got a little more pie than we used to.
In social mobility there is a general trend for poor families to improve their lot over several generations. In the US it takes about four generations to move from 20% of the average income to about 90% of the average income. There is more social mobility in much of the developed world than in the United States. That is, families pull themselves out of poverty significantly faster in France, Canada, and Denmark than they do in the US.
On a macroeconomic level, measurements indicate productivity and wages are somewhat linked. At and industry level, this correlation does not hold. This can be seen in agriculture. Agricultural production has increased many fold over the past century and a half, but farm wages remain among the lowest of any industry.
I have said that Pareto Distributions of wealth and income probably have some basic underlying cause. That means we will always have a lot of relatively poor people and a very very few fabulously wealthy. However the percentages can and do vary from society to society. I believe that much of the difference is a result of government policy. In a Kleptocracy, 95% of the wealth may be owned by 5% of the population. Social welfare states (most of Western Europe) tend to have less wealth inequality than we have in the US.
The difference between median and mean income in the United States indicates there is plenty of room for increasing the general welfare of people and, at the same time, shortening the work week. The average American worker works 500 hours per year more than the average German worker, yet German quality of life and social security is at least as high. The difference is social policy.
The Pareto Distribution ensures that there will always be a pool of less well off people who may be willing to work more hours or for less pay. Decisions on the length of the work week are political and are based in part on how the populace feels about wealth redistribution. In US politics this topic cannot be discussed rationally. Because structural changes to the economy are likely to further concentrate wealth (possible topic of another blog post) and lack of rational discussion, you can expect to be working even longer hours in the near future.
I read a quote a while ago - but cannot find it now. It went something like "Every successful person says they got that way by dint of hard work, intelligence and perseverance. I never met an unsuccessful person who did not blame circumstance and bad luck."
I can interpret this statement in at least three ways, all of which have some truth. One is that successful people work hard and meet adversity with intelligence and persistence while unsuccessful people blame the world around them. A second interpretation is that successful people are likely to pat themselves on the back and attribute to themselves results that may have come from simple luck. A third interpretation is that both sides are correct. Hard work, intelligence and perseverance may be necessary precursors of self earned success. While these traits may be necessary, they are not sufficient. Many people are defeated by events beyond their control.
In my last blog post I requested a 1950 lifestyle in exchange for a work week that corresponds to current productivity compared to 1950 (11 hours per week). With steady increases in productivity it is a reasonable to question why life is as hard as it is and why the work week has not gotten any shorter, and may have gotten longer. I saw an analysis (unfortunately not very good) of hunter-gatherers that estimated they spent about 40 hours a week on survival. That means that in the past 4000 years we have we made no progress on shortening the labor needed to survive. Admittedly "survival" now is much different than 4000 years ago. Life is much more comfortable, longer and, for most of us, less brutish. Still... something seems wrong.
About a century ago an economist named Wilfried Pareto noticed than many phenomena including income and wealth follow what is now called a Pareto Distribution. This is often known as the 80/20 rule and says that 20% of the population have 80% of the wealth/income... The distribution is self similar in that if you take the top 20% it will follow the same distribution. That is, 20% of the most wealthy people will have 80% of the wealth in the wealthy group.
The distribution of wealth is not exactly a Pareto Distribution but it is close, particularly at the high end of the income/wealth scales. This is true in many societies around the globe including medieval Hungary.
When something is this widespread it argues for a common mechanism. This mechanism could be the distribution of brains/work ethic/persistence or it could be something having to do with the nature of economic systems. In 2002 the Harvard Business Review published an article "Wealth Happens" . Simulations based on a few assumptions about money flow show a Pareto Distribution occurring strictly by chance. That is, a few chance events may cause one person to become wealthy while another becomes poor. In their simulations, the basic feedback mechanism was investment. If you gained enough wealth to start investing in things that provided more wealth, you headed up the wealth chain. Wealth is compounding, so the more you have the more you get.
The numbers 80%/20% are really just an example. Different societies have different percentages. Most people underestimate how skewed wealth is and overestimate social mobility (moving from poor to rich or vice versa).
Net worth is the value of everything you own minus all debt. In 2007 the median net worth of a family was $120,000. If this were a stack of $100 bills, it would be a little less than six inches tall. The 400th richest American in 2007 was Kenny Troutt of Excel Communications with a net worth of 1.3 billion. That would be a stack of $100 bills just over a mile tall. Bill Gates topped the world list that year at 59 billion, a stack of $100 bills about 45.5 miles tall.
It is worth a moment to talk about "mean" and "median". In the last paragraph I said the median net worth in 2007 was $120,000. The median is the middle number. That is, if you have 11 different numbers then 5 numbers will be less than the median and 5 numbers will be greater than the median. The "mean" is the average you get by adding up all the numbers and dividing by the total. For the numbers (1,2,3,4, 10000) the median is 3. There are two numbers (1, 2) that are less than the median and two numbers (4, 100000) that are greater than the median. The mean of these numbers is 2002 = (1 + 2 + 3 + 4 + 10000)/5. The difference between the median and the mean is an indication of how skewed a distribution is.
In the case of US family net worth in 2007, the median was $120,000. The mean was $556,380. The Pareto Distribution is quite skewed. If we confiscated all wealth and redistributed it evenly among all families, every family in the US would be around the current 80th percentile of net worth. That is, every single family would be better off than about 80% of the families today.
Before you start the revolution remember the Harvard Business Review article. It indicates that inequality would quickly reassert itself and we would be in the same position as today in relatively short order. Many people would lose almost all their money and a few people would become fabulously wealthy.
Over the past 20 years the US has become less equal in terms of wealth distribution, but the absolute wealth of each class may have increased. That is, the economic pie has gotten bigger so that even though the very wealthy have increased their percentage of the pie, the rest of us still got a little more pie than we used to.
In social mobility there is a general trend for poor families to improve their lot over several generations. In the US it takes about four generations to move from 20% of the average income to about 90% of the average income. There is more social mobility in much of the developed world than in the United States. That is, families pull themselves out of poverty significantly faster in France, Canada, and Denmark than they do in the US.
On a macroeconomic level, measurements indicate productivity and wages are somewhat linked. At and industry level, this correlation does not hold. This can be seen in agriculture. Agricultural production has increased many fold over the past century and a half, but farm wages remain among the lowest of any industry.
I have said that Pareto Distributions of wealth and income probably have some basic underlying cause. That means we will always have a lot of relatively poor people and a very very few fabulously wealthy. However the percentages can and do vary from society to society. I believe that much of the difference is a result of government policy. In a Kleptocracy, 95% of the wealth may be owned by 5% of the population. Social welfare states (most of Western Europe) tend to have less wealth inequality than we have in the US.
The difference between median and mean income in the United States indicates there is plenty of room for increasing the general welfare of people and, at the same time, shortening the work week. The average American worker works 500 hours per year more than the average German worker, yet German quality of life and social security is at least as high. The difference is social policy.
The Pareto Distribution ensures that there will always be a pool of less well off people who may be willing to work more hours or for less pay. Decisions on the length of the work week are political and are based in part on how the populace feels about wealth redistribution. In US politics this topic cannot be discussed rationally. Because structural changes to the economy are likely to further concentrate wealth (possible topic of another blog post) and lack of rational discussion, you can expect to be working even longer hours in the near future.
Thursday, September 16, 2010
Productivity and Lifestyle - Are We Being Shafted?
If we are to believe productivity statistics it should take 11 hours of work per week to have an output that is equivalent to a 40 hour work week in 1950. It should take 23 hours per week to equal 40 hours in 1975. http://groups.csail.mit.edu/mac/users/rauch/worktime/
I am writing this in my house, built in 1956. In front of the house is our single car, a ten year old Honda. Something seems wrong either with the statistics or with my life. Currently I am starting a new business, so I expect to be working a lot without much (any) monetary gain. That said, I have worked at least 40 hours per week for decades and I have never been four times as well off as the equivalent worker in 1950.
There are explanations (aside from the obvious one that I have been shafted for my entire adult life). Mostly these revolve around the difficulty of comparing time periods. On the measurement side, we have shifted from a manufacturing to a service economy. How do you compare my productivity as a software engineer (a white collar position that did not exist in 1950) with that of a mid level manager at a blender manufacturer in 1950. Within an industry we can more easily measure productivity gains, but as one industry becomes more productive, workers are laid off and shift to new industries.
On the consumption side, the goods and services we use have changed drastically. Instead of an expensive, crummy, black and white TV, I have a a big screen high definition TV that I can use to stream movies off the internet. Instead of a single phone line with expensive long distance, we have multiple cell phones and the internet. My 10 year old car is undoubtedly more efficient, comfortable and reliable than a brand new car in 1950. We have several computers in the house all of which are wirelessly connected to the internet.
Despite these difficulties, I personally believe the "we are all being shafted" theory. Honestly, my life is not that much different from life in the 1950's or the 1970s. My house was built in 1956 and has no air conditioning. The heater has changed several times, but is still a natural gas burning central system. My car, while of higher quality, is still just a car. I do not own that many appliances. Those that I do own are of higher quality and probably more reliable than anything available a couple decades ago, but their basic design and operation is essentially the same.
On the working side, I have always worked at a full time job, but these days most households have every adult member working outside the home for wages. In 1950 a primary white collar wage earner would have supported a household on 40 hours a week. Now we need two wage earners working close to 80 hours for my household. On top of that, many of the tasks that used to be someone else's job are now mine. For example, in the grocery store I used to wheel my cart up to a check out lane and someone would ring up my purchases. Now I have to ring it up myself. A business traveler in the 1950s or even the 1970s would have a travel agency - either external or internal - book travel. Now even highly paid executives book their own travel. White collar workers in 1950 or 1970 had secretaries for clerical work, now we do it all ourselves.
I would trade my current lifestyle for a 1950 lifestyle working 11 hours per week. It is true that I enjoy modern conveniences, so I am willing to double my work week to get some of that (computers and the internet). That brings me up to 22 hours per week. Heck, I'll throw in a couple hours for free and make it an even 24 hours of work a week - but that is my final offer.
Don't even get me started on the flying car that all visions of the future thought we would have by now.
I am writing this in my house, built in 1956. In front of the house is our single car, a ten year old Honda. Something seems wrong either with the statistics or with my life. Currently I am starting a new business, so I expect to be working a lot without much (any) monetary gain. That said, I have worked at least 40 hours per week for decades and I have never been four times as well off as the equivalent worker in 1950.
There are explanations (aside from the obvious one that I have been shafted for my entire adult life). Mostly these revolve around the difficulty of comparing time periods. On the measurement side, we have shifted from a manufacturing to a service economy. How do you compare my productivity as a software engineer (a white collar position that did not exist in 1950) with that of a mid level manager at a blender manufacturer in 1950. Within an industry we can more easily measure productivity gains, but as one industry becomes more productive, workers are laid off and shift to new industries.
On the consumption side, the goods and services we use have changed drastically. Instead of an expensive, crummy, black and white TV, I have a a big screen high definition TV that I can use to stream movies off the internet. Instead of a single phone line with expensive long distance, we have multiple cell phones and the internet. My 10 year old car is undoubtedly more efficient, comfortable and reliable than a brand new car in 1950. We have several computers in the house all of which are wirelessly connected to the internet.
Despite these difficulties, I personally believe the "we are all being shafted" theory. Honestly, my life is not that much different from life in the 1950's or the 1970s. My house was built in 1956 and has no air conditioning. The heater has changed several times, but is still a natural gas burning central system. My car, while of higher quality, is still just a car. I do not own that many appliances. Those that I do own are of higher quality and probably more reliable than anything available a couple decades ago, but their basic design and operation is essentially the same.
On the working side, I have always worked at a full time job, but these days most households have every adult member working outside the home for wages. In 1950 a primary white collar wage earner would have supported a household on 40 hours a week. Now we need two wage earners working close to 80 hours for my household. On top of that, many of the tasks that used to be someone else's job are now mine. For example, in the grocery store I used to wheel my cart up to a check out lane and someone would ring up my purchases. Now I have to ring it up myself. A business traveler in the 1950s or even the 1970s would have a travel agency - either external or internal - book travel. Now even highly paid executives book their own travel. White collar workers in 1950 or 1970 had secretaries for clerical work, now we do it all ourselves.
I would trade my current lifestyle for a 1950 lifestyle working 11 hours per week. It is true that I enjoy modern conveniences, so I am willing to double my work week to get some of that (computers and the internet). That brings me up to 22 hours per week. Heck, I'll throw in a couple hours for free and make it an even 24 hours of work a week - but that is my final offer.
Don't even get me started on the flying car that all visions of the future thought we would have by now.
Sunday, October 19, 2008
Rules Schmules
There is a joke among business consultants that when you go into an organization, figure out if they are a top down organization where decisions flow from above, or a bottoms up organization where individual units have a great deal of autonomy. If a business is top down you recommend it become more bottoms up so that individual units can understand and respond to the marketplace more quickly. If it is bottoms up you recommend that it become more top down to avoid chaotic redundancy and lack of focus.
There is a lot of truth in this. There is no ideal organization. Every organizational structure has problems. Over time, organizations tend to oscillate between structures based on the current set of problems. The same is true in other aspects of life. Should dictionaries be descriptive or prescriptive? How much freedom should parents allow their children?
This note is about the balance between individual freedom and enforced order. Based on what I see in the United States, I think the pendulum has swung too far toward order and it is time to move toward more freedom of action. I think the current situation is largely based on unreasonable fears combined with a desire to make the world safer for ourselves and our children. The end result is not a safer society, but a society with less freedom and more rigidity of thought.
I think the current situation is based on widespread misunderstanding of humans and their capabilities. As a species we are remarkable in our ability to exist in social groups and to flexibly react to each other and the environment. Despite the fact that we are capable of unspeakable cruelty, on the whole we are extremely kind and cooperative with each other. We are also protective, particularly of the most vulnerable among us. I do not deny the atrocities and cruelty, the scams, the sociopathic behavior of both individuals and groups. I merely say that these are anomalies. Bad behavior makes the news and becomes a focus of our thoughts precisely because it is uncommon in a stable society like the US.
As individuals we also misunderstand risk and emotionally overreact to perceived danger. Lately Hans Monderman has been in the news. For example, Wired Magazine. Monderman was a Dutch traffic engineer who died in January 2008. Monderman improved safety by removing traffic controls. That's right, he removed speed limit and other traffic signs and signals to make the roads safer. At a busy intersection there is nothing to segregate pedestrian, bicycle, auto and truck traffic. He has a stunt to prove his point to reporters. I have seen several separate reports on this, but from the wired article:
From the International Tribune.
When asked, people who use these uncontrolled intersections say they are not safe, despite the statistics to the contrary. The fact that people do not feel as safe, as controlled, leads them to be more careful. Take off the explicit controls and people use their own judgment to behave in ways that increase safety rather than the perception of safety.
We have allowed our fears to distort our behavior and our society in ways that I find unacceptable. One example of this is the way we treat our children. As a seven or eight year old child I had large amounts of time that were unsupervised. My mother had a bell to call us in for dinner. As long as I was within earshot of the bell at that time, I could do what I wanted. When I got my first bicycle at about the age of seven, my world expanded and I was allowed to roam at will as long as I was home at designated times. Because our family was a large tribe I had more freedom than most, but I was not alone. At Halloween groups of children, without parental accompaniment, roamed miles from their homes to scour the best neighborhoods for candy. Neighborhood children organized their own games without supervision.
The United States has changed, but it has not become less safe. I do not believe that the rate of child kidnapping or abuse by strangers has increased. There is more traffic, but I do not believe that our neighborhoods present more dangers. What has changed is the level of fear. We have institutionalized the belief that the world is unsafe and children cannot be trusted to operate without constant supervision. As a result, elementary school children are not allowed to walk a quarter mile to school by themselves. Because parents believe that children can never be left alone, activities outside of school are supervised and, as a result, expensive. The constant supervision also diminishes the development of conflict resolution skills. I am not saying that adults should not look out for children. To the contrary, each of us has a responsibility to keep everyone around us safe, especially the young and defenseless. The world is unsafe. Children do not understand much of what is going on around them. But it is safe enough and we are here to help them.
The same attitudes and fears have helped turn children into incipient economic units. The current school debates focus on more time in school and more controlled school environments. This regimentation devalues the children and, in the long run, will hurt us economically. The genius of the American economy is our flexibility and inventiveness. As we become more regimented, as children's education become more standardized, I believe we lose that flexibility and inventiveness.
I recognize that I am neither typical nor a role model. In a sense that is my point. Few of us are typical. Only a few people think I am stupid or incompetent. I do well in a field that requires both constant education and inventiveness. I consider myself to be reasonably well educated. I also didn't do homework until I entered the university. Homework was assigned, I just never did it. My grades through high school were spotty, but performance on tests seemed to overrule the bad homework grades. As far as I know, no one ever considered holding me back. Based on college entrance tests, I was admitted to the university after my junior year in high school.
In junior high school instead doing my homework, I was reading a book a day. I read all the science fiction, "boy in the country", and biographies in the school library. In high school I was reading the daily newspaper, two to three weekly news magazines, and several monthly magazines including Scientific American and the Atlantic Monthly (it used to be a monthly). I also studied mathematics on my own. Had I spent more supervised time in school or had more structured after school activities, I would not have had time to get my real education. Looking back, I think I could have benefited from better schools. By better schools I mean those populated by more educated, and flexible teachers. I do not believe I would have benefited by more structure or more hours in school.
As a society we seem to have grown more and more rule bound. By rule bound I mean respecting and enforcing rules without looking at the sense of the situation. I have always followed Bob Dylan's dictum "To live outside the law you must be honest". A simple example from my masters swim group. We rent lanes at one of the pools in town. In addition to the pool life guards, we provide our own coach on the deck. The lifeguards and pool administration have recently gotten upset because some of our swimmers did not enter the pool feet first as the rules require. This is an experienced group of swimmers, many of them competitive. In my several years of swimming with the group, I have not seen a dangerous entry into the pool. The lifeguards either have no idea what is dangerous, have no idea why the rule exists, or are simply complaining about infractions for the sake of the rule itself.
As Monderman's practical experiments with traffic show us, posting and enforcing rules does not always make us safer. We are at our best when we take the time and effort to understand and respond to the particular circumstances in which we find ourselves.
Rules are a means to an end, not the end itself. The valid reasons behind the rules should be obeyed and enforced. If a rule is about safety and you are in a position to enforce, enforce safety not the rule. This is not a slide down a slippery slope toward anarchy. It is a slide down the slope toward respect and humanity. As with all things, you must do this intelligently and with awareness of your own limitations. Don't let your like or dislike of a person cause you to abuse your power and selectively enforce the rules.
If you are in a position to make rules, make sure that you are addressing a real problem, not the perception of a problem. Do not make rules in the mistaken belief that you can enforce conflict out of existence (the homeowners association fallacy). In work environments, try not to rigidly enforce standard practice at the expense of better solutions.
In our day to day lives each of us should remember the old saying, "People who like sausage and respect the law should never watch either of them being made". Rigid order is both impossible and overrated. Do the right thing. Help and protect those around you. This has nothing to do with rules, it has to do with humanity.
There is a lot of truth in this. There is no ideal organization. Every organizational structure has problems. Over time, organizations tend to oscillate between structures based on the current set of problems. The same is true in other aspects of life. Should dictionaries be descriptive or prescriptive? How much freedom should parents allow their children?
This note is about the balance between individual freedom and enforced order. Based on what I see in the United States, I think the pendulum has swung too far toward order and it is time to move toward more freedom of action. I think the current situation is largely based on unreasonable fears combined with a desire to make the world safer for ourselves and our children. The end result is not a safer society, but a society with less freedom and more rigidity of thought.
I think the current situation is based on widespread misunderstanding of humans and their capabilities. As a species we are remarkable in our ability to exist in social groups and to flexibly react to each other and the environment. Despite the fact that we are capable of unspeakable cruelty, on the whole we are extremely kind and cooperative with each other. We are also protective, particularly of the most vulnerable among us. I do not deny the atrocities and cruelty, the scams, the sociopathic behavior of both individuals and groups. I merely say that these are anomalies. Bad behavior makes the news and becomes a focus of our thoughts precisely because it is uncommon in a stable society like the US.
As individuals we also misunderstand risk and emotionally overreact to perceived danger. Lately Hans Monderman has been in the news. For example, Wired Magazine. Monderman was a Dutch traffic engineer who died in January 2008. Monderman improved safety by removing traffic controls. That's right, he removed speed limit and other traffic signs and signals to make the roads safer. At a busy intersection there is nothing to segregate pedestrian, bicycle, auto and truck traffic. He has a stunt to prove his point to reporters. I have seen several separate reports on this, but from the wired article:
We drive on to another project Monderman designed, this one in the nearby village of Oosterwolde. What was once a conventional road junction with traffic lights has been turned into something resembling a public square that mixes cars, pedestrians, and cyclists. About 5,000 cars pass through the square each day, with no serious accidents since the redesign in 1999. "To my mind, there is one crucial test of a design such as this," Monderman says. "Here, I will show you." With that, Monderman tucks his hands behind his back and begins to walk into the square - backward - straight into traffic, without being able to see oncoming vehicles. A stream of motorists, bicyclists, and pedestrians ease around him, instinctively yielding to a man with the courage of his convictions.
From the International Tribune.
"Who has the right of way?" he asked rhetorically. "I don't care. People here have to find their own way, negotiate for themselves, use their own brains."
When asked, people who use these uncontrolled intersections say they are not safe, despite the statistics to the contrary. The fact that people do not feel as safe, as controlled, leads them to be more careful. Take off the explicit controls and people use their own judgment to behave in ways that increase safety rather than the perception of safety.
We have allowed our fears to distort our behavior and our society in ways that I find unacceptable. One example of this is the way we treat our children. As a seven or eight year old child I had large amounts of time that were unsupervised. My mother had a bell to call us in for dinner. As long as I was within earshot of the bell at that time, I could do what I wanted. When I got my first bicycle at about the age of seven, my world expanded and I was allowed to roam at will as long as I was home at designated times. Because our family was a large tribe I had more freedom than most, but I was not alone. At Halloween groups of children, without parental accompaniment, roamed miles from their homes to scour the best neighborhoods for candy. Neighborhood children organized their own games without supervision.
The United States has changed, but it has not become less safe. I do not believe that the rate of child kidnapping or abuse by strangers has increased. There is more traffic, but I do not believe that our neighborhoods present more dangers. What has changed is the level of fear. We have institutionalized the belief that the world is unsafe and children cannot be trusted to operate without constant supervision. As a result, elementary school children are not allowed to walk a quarter mile to school by themselves. Because parents believe that children can never be left alone, activities outside of school are supervised and, as a result, expensive. The constant supervision also diminishes the development of conflict resolution skills. I am not saying that adults should not look out for children. To the contrary, each of us has a responsibility to keep everyone around us safe, especially the young and defenseless. The world is unsafe. Children do not understand much of what is going on around them. But it is safe enough and we are here to help them.
The same attitudes and fears have helped turn children into incipient economic units. The current school debates focus on more time in school and more controlled school environments. This regimentation devalues the children and, in the long run, will hurt us economically. The genius of the American economy is our flexibility and inventiveness. As we become more regimented, as children's education become more standardized, I believe we lose that flexibility and inventiveness.
I recognize that I am neither typical nor a role model. In a sense that is my point. Few of us are typical. Only a few people think I am stupid or incompetent. I do well in a field that requires both constant education and inventiveness. I consider myself to be reasonably well educated. I also didn't do homework until I entered the university. Homework was assigned, I just never did it. My grades through high school were spotty, but performance on tests seemed to overrule the bad homework grades. As far as I know, no one ever considered holding me back. Based on college entrance tests, I was admitted to the university after my junior year in high school.
In junior high school instead doing my homework, I was reading a book a day. I read all the science fiction, "boy in the country", and biographies in the school library. In high school I was reading the daily newspaper, two to three weekly news magazines, and several monthly magazines including Scientific American and the Atlantic Monthly (it used to be a monthly). I also studied mathematics on my own. Had I spent more supervised time in school or had more structured after school activities, I would not have had time to get my real education. Looking back, I think I could have benefited from better schools. By better schools I mean those populated by more educated, and flexible teachers. I do not believe I would have benefited by more structure or more hours in school.
As a society we seem to have grown more and more rule bound. By rule bound I mean respecting and enforcing rules without looking at the sense of the situation. I have always followed Bob Dylan's dictum "To live outside the law you must be honest". A simple example from my masters swim group. We rent lanes at one of the pools in town. In addition to the pool life guards, we provide our own coach on the deck. The lifeguards and pool administration have recently gotten upset because some of our swimmers did not enter the pool feet first as the rules require. This is an experienced group of swimmers, many of them competitive. In my several years of swimming with the group, I have not seen a dangerous entry into the pool. The lifeguards either have no idea what is dangerous, have no idea why the rule exists, or are simply complaining about infractions for the sake of the rule itself.
As Monderman's practical experiments with traffic show us, posting and enforcing rules does not always make us safer. We are at our best when we take the time and effort to understand and respond to the particular circumstances in which we find ourselves.
Rules are a means to an end, not the end itself. The valid reasons behind the rules should be obeyed and enforced. If a rule is about safety and you are in a position to enforce, enforce safety not the rule. This is not a slide down a slippery slope toward anarchy. It is a slide down the slope toward respect and humanity. As with all things, you must do this intelligently and with awareness of your own limitations. Don't let your like or dislike of a person cause you to abuse your power and selectively enforce the rules.
If you are in a position to make rules, make sure that you are addressing a real problem, not the perception of a problem. Do not make rules in the mistaken belief that you can enforce conflict out of existence (the homeowners association fallacy). In work environments, try not to rigidly enforce standard practice at the expense of better solutions.
In our day to day lives each of us should remember the old saying, "People who like sausage and respect the law should never watch either of them being made". Rigid order is both impossible and overrated. Do the right thing. Help and protect those around you. This has nothing to do with rules, it has to do with humanity.
Sunday, September 7, 2008
Rules and Reality
For the past few years I have been consulting with large businesses on software projects. As a result, I see a lot of different companies and cultures. Recently I have been working with a very profitable media company with a more extreme schizophrenia than most companies.
Part of the business involves coordinated release of merchandise from many different manufacturers. The list of manufacturers is constantly shifting. The product standards are high and manufacturers must work off the latest artwork. The artwork is constantly being refined and the time-lines are short and getting shorter. This creates a business need for rapid processes. In addition to a shifting cast of manufacturers, the company relies on contractors to do much of its essential work. Many contractors have worked in the same capacity for years, but there is also a churn of contractors and contractor employees.
Another part of the business is concerned with protection of intellectual property. Protection often requires tight control on access. That is, no one should be allowed access to company property until all the correct agreements have been drafted, reviewed, revised, and finally approved. This desire for protection has bred a culture of slow deliberation. Every formal decision involves slow and ponderous study and documentation (with periodic formal reviews).
These two strains, the need for rapid response and the slow processes that protect, exist in many organizations. In the case of this media company the culture has fractured. The protective processes are so slow and insular that they must be subverted. As an example, access to buildings is controlled by key cards. Getting permission to issue a key card is difficult and slow. The need for access may evaporate before a card can be approved. As a matter of common practice, those without key cards simply follow a carded employee into the building. Carded employees understand the situation and do not question when someone enters behind them. One morning I followed someone to the door only to find that neither of us had cards, so we both waited by the door for a carded employee. That employee let us in without question or hesitation.
For the software system I am examining, the development process involves asking people who use the system for their requirements. A fair number of those requirements are essentially "We have a way to subvert company policy because we cannot possibly follow it, but it is difficult and cumbersome. Could you make the subversion easier?"
For both individuals and organizations there is often a disconnect between our rules and what we actually do. Because people and the world are more complicated than our notions of them, some disconnect is inevitable. The healthy side is when we recognize the need to be flexible to accommodate novel situations. The unhealthy side is hypocrisy and self deception. If you cannot follow the rules the fault may be yours, but do not discount the possibility that the rules or their implementation is broken. Besides, strict adherence to any set of rules is not much of a virtue.
Part of the business involves coordinated release of merchandise from many different manufacturers. The list of manufacturers is constantly shifting. The product standards are high and manufacturers must work off the latest artwork. The artwork is constantly being refined and the time-lines are short and getting shorter. This creates a business need for rapid processes. In addition to a shifting cast of manufacturers, the company relies on contractors to do much of its essential work. Many contractors have worked in the same capacity for years, but there is also a churn of contractors and contractor employees.
Another part of the business is concerned with protection of intellectual property. Protection often requires tight control on access. That is, no one should be allowed access to company property until all the correct agreements have been drafted, reviewed, revised, and finally approved. This desire for protection has bred a culture of slow deliberation. Every formal decision involves slow and ponderous study and documentation (with periodic formal reviews).
These two strains, the need for rapid response and the slow processes that protect, exist in many organizations. In the case of this media company the culture has fractured. The protective processes are so slow and insular that they must be subverted. As an example, access to buildings is controlled by key cards. Getting permission to issue a key card is difficult and slow. The need for access may evaporate before a card can be approved. As a matter of common practice, those without key cards simply follow a carded employee into the building. Carded employees understand the situation and do not question when someone enters behind them. One morning I followed someone to the door only to find that neither of us had cards, so we both waited by the door for a carded employee. That employee let us in without question or hesitation.
For the software system I am examining, the development process involves asking people who use the system for their requirements. A fair number of those requirements are essentially "We have a way to subvert company policy because we cannot possibly follow it, but it is difficult and cumbersome. Could you make the subversion easier?"
For both individuals and organizations there is often a disconnect between our rules and what we actually do. Because people and the world are more complicated than our notions of them, some disconnect is inevitable. The healthy side is when we recognize the need to be flexible to accommodate novel situations. The unhealthy side is hypocrisy and self deception. If you cannot follow the rules the fault may be yours, but do not discount the possibility that the rules or their implementation is broken. Besides, strict adherence to any set of rules is not much of a virtue.
Saturday, July 26, 2008
Bad Smells and Complexity
I work with software. A few years ago a couple of influential folks, Kent Beck and Martin Fowler, started using the term "bad smell" to describe a situation where something doesn't seem quite right. When you pour a glass of milk, you may catch an odor. Everything may be fine, but you probably don't want to gulp it down until you have investigated a little further. The notion of bad smells can be used in any complex human endeavor. Experienced people quickly recognize when something is off, even if they cannot express exactly what it is.
Sometimes it is hard to figure out whether something is just complex or if the investigators are simply lost. Migraine headaches are a good example. A few years ago I started getting occasional migraine auras though, thankfully, not the headaches. When I researched the topic I found that there were several proposed causes and any number of proposed treatments or ameliorations. Sufferers look for triggers of the headaches. Different people have proposed different triggers. Trigger lists include: changes in air pressure, bright light, smells, foods including meat, wine, chocolate, beans, cheese, pickled or marinated food, nuts, herring, figs, raisins, citrus, tea, coffee, chicken livers. Of course the old standby "stress" is included in the trigger list.
Lists like the migraine triggers are a bad smell. If you stop any person on the street, you will undoubtedly find they have been exposed to one or more of these triggers in the past 24 hours. It may be that triggers are quite individual and that different people have a small set of different triggers. I find it more likely that people in pain are grasping at straws to find something that might enable them to avoid the pain in the future.
Sometimes complexity is not a bad smell, but just complexity. For a long time I have been interested in questions that different people answer differently. I live in a place without a lot of crime. A number of years ago I asked folks whether they locked their doors when they were in their house. I thought the answer might give an indication of risk tolerance. Sure enough, some people answered always, some answered never. One person said he only locked the doors when he was home because he cared about his own safety, not that of his possessions. I don't know if this was a truthful answer, but it was an interesting point of view.
It is an open question whether we can use some relatively small set of traits to characterize our behavior. Even identifying traits that influence behavior is problematic.
For about a century western society has been very interested in measuring "intelligence" (http://en.wikipedia.org/wiki/Intelligence_testing). A Welsh friend of mine used to say that people in the United States have a peculiar fascination with reducing complex phenomena to a single number. Certainly intelligence testing fits this pattern. It is not clear what "intelligence" is and how many aspects of it there are (http://en.wikipedia.org/wiki/Theory_of_multiple_intelligences), but that doesn't stop us from measuring and assigning a single number.
There have also been attempts to measure both moral beliefs (Moral Judgment Test) and religiosity (The internal structure of the Post-Critical Belief scale). As it turns out, these may not be correlated (Religiosity, moral attitudes and moral competence).
Psychologists have tried a number of personality characterizations. There are classifications of pathologies and personality disorders (http://en.wikipedia.org/wiki/Personality_disorder). Some of this is clearly cultural. For example, homosexuality was listed for a time as a personality disorder. There are tests, Minnesota Multiphasic Personality Inventory for example, to help diagnose these disorders.
There are also more general classifications. The Myers Briggs Type Indicator test is based on Jung's analysis of perception (sensation and intuition) and judgment (thinking and feeling). Based on this, four dichotomies were established: Extroversion/Introversion, Sensing/iNtuition, Thinking/Feeling, Judging/Perceiving. I always joke that Myers Briggs test is much better than astrology because astrology has only 12 categories to explain us, but Myers Briggs has 16.
The "Big Five" model comes from linguistic analysis. The thought is that essentials of personality are expressed in language so an analysis of language can lead to a understanding of personality. The big five are: openness, conscientiousness, extroversion, agreeableness and neuroticism.
In looking at all of this I don't detect that much bad science or even many bad smells. I come to the conclusion that people are just complicated. The theories project this complexity onto a number of different spaces, but none of them fully encompass us. We are just too complicated for simple analysis.
Sometimes it is hard to figure out whether something is just complex or if the investigators are simply lost. Migraine headaches are a good example. A few years ago I started getting occasional migraine auras though, thankfully, not the headaches. When I researched the topic I found that there were several proposed causes and any number of proposed treatments or ameliorations. Sufferers look for triggers of the headaches. Different people have proposed different triggers. Trigger lists include: changes in air pressure, bright light, smells, foods including meat, wine, chocolate, beans, cheese, pickled or marinated food, nuts, herring, figs, raisins, citrus, tea, coffee, chicken livers. Of course the old standby "stress" is included in the trigger list.
Lists like the migraine triggers are a bad smell. If you stop any person on the street, you will undoubtedly find they have been exposed to one or more of these triggers in the past 24 hours. It may be that triggers are quite individual and that different people have a small set of different triggers. I find it more likely that people in pain are grasping at straws to find something that might enable them to avoid the pain in the future.
Sometimes complexity is not a bad smell, but just complexity. For a long time I have been interested in questions that different people answer differently. I live in a place without a lot of crime. A number of years ago I asked folks whether they locked their doors when they were in their house. I thought the answer might give an indication of risk tolerance. Sure enough, some people answered always, some answered never. One person said he only locked the doors when he was home because he cared about his own safety, not that of his possessions. I don't know if this was a truthful answer, but it was an interesting point of view.
It is an open question whether we can use some relatively small set of traits to characterize our behavior. Even identifying traits that influence behavior is problematic.
For about a century western society has been very interested in measuring "intelligence" (http://en.wikipedia.org/wiki/Intelligence_testing). A Welsh friend of mine used to say that people in the United States have a peculiar fascination with reducing complex phenomena to a single number. Certainly intelligence testing fits this pattern. It is not clear what "intelligence" is and how many aspects of it there are (http://en.wikipedia.org/wiki/Theory_of_multiple_intelligences), but that doesn't stop us from measuring and assigning a single number.
There have also been attempts to measure both moral beliefs (Moral Judgment Test) and religiosity (The internal structure of the Post-Critical Belief scale). As it turns out, these may not be correlated (Religiosity, moral attitudes and moral competence).
Psychologists have tried a number of personality characterizations. There are classifications of pathologies and personality disorders (http://en.wikipedia.org/wiki/Personality_disorder). Some of this is clearly cultural. For example, homosexuality was listed for a time as a personality disorder. There are tests, Minnesota Multiphasic Personality Inventory for example, to help diagnose these disorders.
There are also more general classifications. The Myers Briggs Type Indicator test is based on Jung's analysis of perception (sensation and intuition) and judgment (thinking and feeling). Based on this, four dichotomies were established: Extroversion/Introversion, Sensing/iNtuition, Thinking/Feeling, Judging/Perceiving. I always joke that Myers Briggs test is much better than astrology because astrology has only 12 categories to explain us, but Myers Briggs has 16.
The "Big Five" model comes from linguistic analysis. The thought is that essentials of personality are expressed in language so an analysis of language can lead to a understanding of personality. The big five are: openness, conscientiousness, extroversion, agreeableness and neuroticism.
In looking at all of this I don't detect that much bad science or even many bad smells. I come to the conclusion that people are just complicated. The theories project this complexity onto a number of different spaces, but none of them fully encompass us. We are just too complicated for simple analysis.
Saturday, May 3, 2008
Averages and Actuals - Groups and Individuals
Periodically news comes out that [group X] scores lower than [group Y] on the [test of Z]. The groups and tests differ depending on who is doing the testing and where it is done. In a way it is like ethnic jokes. The group that scores higher is usually a dominant group at the time and place where the study is done. The group that scores lower is generally of some concern to the dominant group. Sometimes the work stems from real societal concern. For example: [women] score lower than [men] in [math tests]. If you are interested in math education, or sex linked traits this is a legitimate concern.
I see references to these studies in the news. Usually if follows a common news pattern:
• It is inflammatory. Everyone in the group that scores lower is bound to be insulted. The reporter can create an objective report filled with outrage on all sides "You are calling all of us stupid!" and "You are misrepresenting the work!".
• The headline and the perhaps the lead paragraph are terrible simplifications of the work and are easy to misinterpret.
• Further study and clarification show flaws in the original work or provide evidence that something unexpected is at work. These clarifications do not get the same attention as the initial headlines.
• The news is irrelevant to anyone but specialists in the field.
This particular news pattern is also present in most national crime stories (missing child, grisly murder...) and lawsuits (man sues for a gazilion dollars upon death of tropical fish).
The part that interests me today is the irrelevance of the information. To see this, let me invent a story and pretend it is true. "Women score significantly lower than men in spatial reasoning tests. Scores on spatial reasoning tests are among the best indicators of success in engineering graphics." Let me also posit that I am a manager in an engineering graphics firm that is looking for new employees. How does this information help me?
Almost any test taken by a large population shows a wide variance in skill. In most cases the results form what is called a normal distribution, the familiar bell shaped curve. This expresses the fact that there is an average level of skill and that most people's scores cluster to some degree around that average. The ends of the bell curve show that there are a some people who do extremely well (or extremely poorly) on the test.
When we hear that [group X] scores lower than [group Y] on the [test of Z], what that really means is that when we compare the curves for the two groups, the average score is lower in one group than the other. Even with a perfect test, depending on how many people take the test and who they are, we can expect some differences. Statisticians have been studying this for a few centuries and they have developed measures for how likely it is that the the differences between the averages of the test scores is just an accident of who happened to take the test or whether there may be some real underlying phenomena. Usually news that [group X] scores lower than [group Y] on the [test of Z] involves differences larger than we would expect by chance, but sometimes not by much. In our case, let's assume that women, on average, score WAY below men and that chance is extremely unlikely to be the cause of the difference.
As the hiring manager, I do not hire an average man or an average woman. I hire a specific man or a specific woman. When I am interviewing a particular person, I may be faced with a man who scores much lower than the women's average or I may be faced with a woman who scores much higher than the men's average. Here is another way to put it. Women, on average, may score lower than men. But given any particular man, regardless of how well he scores on the test, I can almost certainly find a particular woman who scores even higher.
It is hard to imagine someone more concerned with the results of testing than our hiring manager, but it turns out that our study of the difference between men and women is completely irrelevant. What matters is the particular man or woman across the desk.
I see references to these studies in the news. Usually if follows a common news pattern:
• It is inflammatory. Everyone in the group that scores lower is bound to be insulted. The reporter can create an objective report filled with outrage on all sides "You are calling all of us stupid!" and "You are misrepresenting the work!".
• The headline and the perhaps the lead paragraph are terrible simplifications of the work and are easy to misinterpret.
• Further study and clarification show flaws in the original work or provide evidence that something unexpected is at work. These clarifications do not get the same attention as the initial headlines.
• The news is irrelevant to anyone but specialists in the field.
This particular news pattern is also present in most national crime stories (missing child, grisly murder...) and lawsuits (man sues for a gazilion dollars upon death of tropical fish).
The part that interests me today is the irrelevance of the information. To see this, let me invent a story and pretend it is true. "Women score significantly lower than men in spatial reasoning tests. Scores on spatial reasoning tests are among the best indicators of success in engineering graphics." Let me also posit that I am a manager in an engineering graphics firm that is looking for new employees. How does this information help me?
Almost any test taken by a large population shows a wide variance in skill. In most cases the results form what is called a normal distribution, the familiar bell shaped curve. This expresses the fact that there is an average level of skill and that most people's scores cluster to some degree around that average. The ends of the bell curve show that there are a some people who do extremely well (or extremely poorly) on the test.
When we hear that [group X] scores lower than [group Y] on the [test of Z], what that really means is that when we compare the curves for the two groups, the average score is lower in one group than the other. Even with a perfect test, depending on how many people take the test and who they are, we can expect some differences. Statisticians have been studying this for a few centuries and they have developed measures for how likely it is that the the differences between the averages of the test scores is just an accident of who happened to take the test or whether there may be some real underlying phenomena. Usually news that [group X] scores lower than [group Y] on the [test of Z] involves differences larger than we would expect by chance, but sometimes not by much. In our case, let's assume that women, on average, score WAY below men and that chance is extremely unlikely to be the cause of the difference.
As the hiring manager, I do not hire an average man or an average woman. I hire a specific man or a specific woman. When I am interviewing a particular person, I may be faced with a man who scores much lower than the women's average or I may be faced with a woman who scores much higher than the men's average. Here is another way to put it. Women, on average, may score lower than men. But given any particular man, regardless of how well he scores on the test, I can almost certainly find a particular woman who scores even higher.
It is hard to imagine someone more concerned with the results of testing than our hiring manager, but it turns out that our study of the difference between men and women is completely irrelevant. What matters is the particular man or woman across the desk.
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