Outsource it or do it in-house?

When should an organization outsource a job and when should an organization do the job in-house? Let’s consider an example.

Consider a book publisher. Rather than having a staff of full-time writers whom it would pay to write books, the publisher bids for books and negotiates with agents.

Book publishers outsource because they want to have access to the maximum diversity of ideas and information. A publisher thinks its chances of publishing interesting books are better it leaves the door open to lots of different writers, and so it’s willing to endure the hassle of having to sign each book on a case-by-case basis. The benefits of leveraging the actions and intelligence of the crowds outweigh the costs.

Need to tap into the collective intelligence? Then outsource it.

Need things done quickly? Then do it in-house.

– Extracted from The Wisdom of Crowds by James Suroweicki

Joint Discoveries Are Common

Joint discoveries are quite common in science.

Discoveries are not in general made before they have been led up to by the previous trend of thought, and by that time many minds are in hot pursuit of the important idea.

Examples of joint discoveries:

• Law of natural selection: Darwin and Wallace
• Discovery of Neptune: Adams and Leverrier
• Creation of differential calculus: Newton and Leibniz

– An Introduction to Mathematics by Alfred North Whitehead

Myth: talent is completely fixed and predetermined at birth

Despite all the myths, talent is not completely fixed or predetermined at birth or at a young age. Talent depends on:

• a person’s motivation
• a person’s experience
• how a person is managed or led

Assessment of talent depends on:

• how it is defined by a culture
• how it is defined by an era

Talent depends more on effort and having access to the right information and techniques than on natural ability.

Talent, in other words, is far more malleable than many people want us to believe.

– Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Best reader in the world?

What do I mean by best? First, let me say what I don’t mean. I don’t mean, necessarily, a fast reader.

A good reader is able to take an article that is above him and bootstrap himself up to the level of the author. A good reader teaches himself new things by reading.

I have no statistics, but I imagine that a good reader can learn ten times more than an average reader. (Do you have any statistics on this?)

I read a lot, but I know that I still have a long way to go to be classified as a “superior reader.” How do I know this? Well, here’s how: I subscribe to several Internet lists. Oftentimes I read a list message and think, “Huh, what in the world is he saying?” I can’t begin to parse the message. And yet, invariably, someone else will be able to parse it, make sense of it, and respond. Clearly that person is a better reader than me.

Do you find yourself baffled by some messages, or are you able to grasp even the most obscure messages?

Who would you nominate as the best reader in the world?

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Here is a related blog: The Best Are Much Better Than The Rest

And here’s another related blog: Good Books Are Over Your Head

The “great-people-attract-more-great-people” fallacy

Advocates of the talent mind-set emphasize that, if you bring into an organization great people, they will attract and bring in more great people. This argument is especially dear to consultants and executives who recommend that employees be sorted into:

1. star “A’s,”
2. ho-hum but acceptable “B’s,” and
3. “C’s” who need to shape up or ship out.

Bradford Smart contends, based on over 100 consulting engagements, that “in practice, A players hire other A players. B players hire C players. C players hire F players. If you can woo a small critical mass of A players, you can start a favorable chain reaction and build a strong company.” Smart’s book Topgrading emphasizes that the “fact” that “C players don’t hire A players” is the biggest single hurtle to building a company filled with A players.

Despite claims in Topgrading and numerous other books on hiring the best people, the talent mind-set is rooted in a set of assumptions and empirical evidence that are incomplete, misleading, and downright wrong. The only rigorous research on this topic is the similar-to-me effect. Study after study shows that birds of a feather flock together, not that opposites attract. This similar-to-me effect helps explain why most organizations unwittingly “bring in the clones.” Male interviewers prefer hiring males, white interviewers prefer white candidates to black and Hispanics, and so on. The only hard evidence available indicates that A players will hire people like themselves. There is no evidence that those people that are hired will also be A players.

– Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Progress of the History of Thought

The progress of science is divided between

• periods characterized by a slow accumulation of ideas, and
• periods when, owing to the material of thought that has been patiently collected, some genius by the invention of a new method or point-of-view suddenly transforms the whole subject on to a higher level.

The genius who has the good fortune to produce the final idea which transforms a whole region of thought does not necessarily excel all his predecessors who have worked at the preliminary formation of ideas. In considering the history of science it is both silly and ungrateful to confine our admiration with a gaping wonder to those men who have made the final advances toward a new epoch.

– An Introduction to Mathematics by Alfred North Whitehead

The Best Are Much Better Than the Rest

• One study showed that a mere 16 composers produced about 50% of the classical music that is performed and recorded today
• Another study found that 10% of the authors had written about 50% of the books in the Library of Congress
• Research on computer programmers showed that the most productive programmers were 10 times more productive than the least productive, and 5 times more productive than average programmers

– Hard Facts by Jeffrey Pfeffer and Robert I Sutton

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I wonder how much better good readers are than average readers. I know that I am a much better reader today than I was, say, 10 years ago. But I realize that there is still room for a lot of improvement. For example, I subscribe to several Internet lists. Oftentimes someone will post a message; I read it and think, “Huh? What is this message saying? I have no idea what this message is saying.” And yet, invariably someone else will be able to make sense of it and respond to it. This tells me that I still have a long ways to go in developing my reading skills.

Organizations: Implement the No Asshole Rule

In a Harvard Business Review essay, Robert Sutton urged companies to implement no asshole rules: to refuse to hire people – even superstars – who are known jerks, and when insiders had episodes in which they belittled and bullied others – especially those with less power – they should be called on immediately. Sutton pointed out that firms that applied such rules would likely enjoy less turnover and absenteeism, lower health care costs, and reduced litigation risks. He also pointed out that some companies already have such rules, and such rules do help them maintain more civilized workplaces.

– Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

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Here’s a related blog: Do Rules of Polite, Civilized Behavior Apply at Work?

Zara: exploiting adaptation, evolution, and user-feedback in the clothing industry

In the book The Wisdom of Crowds the author talks about a clothing manufacturer in La Coruna, Spain called Zara. Zara has revolutionized the clothing industry. Below I have summarized the “old manufacturing model” (which is how most clothing manufacturers operate) and Zara’s model. Although I am not particularly interested in clothing manufacturing, I do find Zara’s evolutionary, adaptation approach very exciting.

Old Model	Zara Model
200-300 different products each year	More than 20,000 products each year
Piles of unsold inventory that has to be marked down or shipped off to the outlet stores	No overstocking. Unsuccessful designs are whisked off shelves in the space of a week, so the company doesn’t have to discount or slash prices
Design for the future (6-9 months)	Design for today (10-15 days)
Quarterly reports on sales	Store managers are equipped with handheld devices that are linked directly to the company’s design rooms in Spain, so that managers can make daily reports on what customers are buying, what they’re scorning, and what they’re asking for but not finding
The lag time between designing a dress and getting it in the store and selling it: 6-9 months	The lag time between designing a dress and getting it in the store and selling it: 10-15 days
Clothes are manufactured by subcontractors in Asia or Latin America	Fabrics are turned into products in-house. The company owns 14 highly automated factories where robots work 24 hours a day stamping, cutting, and dyeing. This gives control over what the company does and doesn’t make
Gamble on 10,000 pairs of those new Capri pants	Make a small lot (300-400) to see how they sell. If the product looks like a hit then crank up production
Carry 3 months of inventory	Carry 1 month of inventory
High inventory = high cost of clothes	Low inventory = low cost of clothes
Continually out of sync with customer demands	Quickly adjusts to its customers ever-changing demands

An alphabetical arrangement is a cowardly retreat …

An alphabetical arrangement of anything is a cowardly retreat from an intelligible ordering of the material.

– Mortimer J. Adler