Paradox: Embracing Decentralization while Hailing the CEO as Corporate Savior

Some companies claim to embrace decentralization and bottom-up mechanisms and yet they then turn around and treat their CEO as superheroes and as the “corporate savior.”

CEOs are given massive salaries and are hyped as the one person who will lead the company to prosperity.

The problem is that people actually believe the hype, taking it on faith that putting the right individual at the top is the key to corporate success.

What’s perplexing about this faith is how little evidence there is that a single individual can consistently make superior forecasts or strategic decisions in the face of a genuine uncertainty.

If companies were to truly embrace the virtues of decentralization then the CEO would have a much smaller role (and paid much less) and there would be more emphasis on collective decision-making.

– Extracted from The Wisdom of Crowds by James Suroweicki

Be a skeptic, not a cynic or a naive person

When confronted with a factual claim:

• A skeptic demands evidence
• A cynic doesn’t demand evidence, he just automatically assumes the claim is false
• A naive person also doesn’t demand evidence, but he automatically assumes the claim is true

Both cynicism and naivete are forms of gullibility:

• A cynic is easily led to believing that any claims made by xyz are false and not to be trusted
• A naive person is easily led to believing that any claims made by abc are true and should be trusted

Be a skeptic.  Demand and weigh evidence and keep your mind open.

– Extracted from Unspun by Brooks Jackson and Kathleen Hall Jamieson

Judge an idea by its merit, not by the status of the person making it

Alfred Sloan of General Electric refused to allow the merit of an idea be determined by the status of the person making it.

– The Wisdom of Crowds by James Suroweicki

Don’t hire people who are only or mostly in it for the money

“If they come for the money, they’ll leave for the money.”  [James Treybig]

If you had a choice, when confronting a serious, possibly life-threatening illness, of going to see one of two doctors, which would you choose: (a) a doctor who had entered medicine primarily to make a lot of money, or (b) a doctor who had entered medicine because he or she was interested in the subject matter and had a desire to serve people?

Don McCabe and his colleagues have conducted numerous studies of college student cheating over the years.  They have found that students who are in school or have chosen a major for instrumental reasons — in order to get a better job or to make more money — are much more likely to cheat than students who have chosen a course of study because of their interest in the subject matter.  This result makes perfect sense if you think about it.  It I am trying to master a subject because of my intrinsic interest, cheating makes no logical sense — it defeats my desire to learn the material.  If I am, on the other hand, studying just to get a credential, then what matters is the credential — getting out with the piece of paper — not necessarily what I learn.

The implications for companies are clear.  If people are there for the money then they will do what it takes to get the money, regardless of what that is.  Much better, it would seem, to have people who actually have some interest in the company, its customers, its products and services, and its values.

– Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Using money as an incentive is not necessarily a good idea

The growing use of variable pay and other financial incentives and the belief in their effectiveness stems in part from something that researcher Chip Heath calls an “extrinsic incentive bias.” This is the tendency to overestimate how much employees care about extrinsic job features such as pay and underestimate how much employees are motivated by intrinsic job features like being able to make decisions or having meaningful work.

• A survey by Kaplan Educational Centers of almost 500 prospective lawyers preparing to take the Law School Admissions Test revealed that 64% of the respondents said they were pursuing a legal career because it was intellectually appealing or because they were interested in the law.
• In data collected from surveys over a 25-year period, respondents to the General Social Survey (a representative sample of people in the United States) rated “important work” that “gives a feeling of accomplishment” as the most important aspect of their jobs, with pay typically ranking third.

Management places excessive faith in the motivational magic of extrinsic rewards.

Organizations ought to offer members sufficient — and correct — inducements to motivate and direct their efforts.

– Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Word of the day: Sword of Damocles

Sword of Damocles, a constant and immanent peril; a popular metaphor for any great and threatening evil that may befall one at any time.

Example usage: “the possibility hangs over their heads like the sword of Damocles”

Origin: it comes from Roman times, where an individual was seated at a banquet with a sword suspended over his head by a single hair to to remind him of the precariousness of the power and privilege which he envied.

Sources:
http://users.tinyonline.co.uk/gswithenbank/sayingss.htm
http://wordnet.princeton.edu/perl/webwn?s=sword%20of%20damocles
http://dictionary.reference.com/browse/Sword%20of%20Damocles

Each citizen produces 3.3 tons of e-waste over the course of a lifetime

The European Commission estimates that each European citizen produces 3.3 tons of e-waste over the course of an average lifetime, trash that piles up in landfills and leeches toxins into the earth and water. That waste comes from discarded computers, cell-phones, DVD players, toasters, refrigerators, clock radios, medical devices — most everything powered by electricity.

The ingredients used in many of these devices: mercury, cadmium, lead, chromium, and two chemical flame retardants called polybrominated biphenyl flame retardants. These heavy metals and chemicals have been [for years] integral to the circuitry, solder, and casting of thousands of small and large electronic devices.

Studies suggest the ingredients could have potent carcinogenic and endocrine-disrupting effects.

– Exposed by Mark Shapiro

Dealing with ideas as squishy as pattern recognition, learning, and analogy making

In a previous post I described the differences between induction and deduction: Humans are relatively good at induction and relatively poor at deduction; computers are just the opposite

The discussion of induction vs deduction is quite interesting and relevant to most everyone.  Here are further ideas from the book The Origin of Wealth by Eric Beinhocker:

Deduction only works on very well-defined problems such as chess moves; for deduction to work, the problem cannot have any information missing or ambiguity.  Deduction is thus a powerful method of reasoning, but inherently brittle.

While induction is more error prone, it is also more flexible and better suited for incomplete and ambiguous information that the world throws at us.  It thus makes evolutionary sense that we would be built this way.

Through induction, humans are able to deal with ideas as squishy as pattern recognition, learning, and analogy making.

Note that models of induction featuring pattern recognition and learning have become a staple of computer science research, and many of these models are used in practical applications that range from recognizing the faces of terrorists at airports, to recognizing fraudulent charge patterns on credit cards.

Aligning worker and corporate interests

Here are two approaches to solve the problem of aligning worker interests with the corporate interests:

1. Home owners are, in general, more likely to take good care of their property than renters are. Similarly, workers who have an ownership in a company are more likely to be interested and productive than if they simply “work there.” Give workers stock options.
2. When someone else makes all the decisions (about how to solve a problem, which alternative to take, etc.) then workers have no incentive to be creative and are not motivated. Give workers real decision-making power.

– Extracted from The Wisdom of Crowds by James Suroweicki

Absolute certainty is elusive

You might think that all swans are white because you have never seen a black one. But there are black swans, in Australia. Karl Popper, a famous philosopher, held that even the so-called laws of science are hypothetical, subject to being disproved someday by new evidence. You only need one counterexample to disprove a claim of “never” or “always.” All swans are white — until you see a black one. But you can never tell when that will happen.Perfect knowledge is seldom if ever available to humans. For one thing, new information is constantly arriving, and human learning is constantly expanding.

While we can’t be absolutely certain, we can be certain enough to make a reasonable decision.

In the U.S. court system there are various standards of certainty. A criminal trial requires a much higher level of certainty than a civil trial to convict a person. (Consequently, an individual may be found not guilty in a criminal trial and guilty in a civil trial, e.g. O. J. Simpson).

In our everyday lives, we have to pick an appropriate standard of certainty. With trivial matters the level of certainty can be low, but for nonreversible decisions such as when choosing a spouse or a president, a much higher level of certainty is required.

Be as certain as you need to be.

– Unspun by Brooks Jackson and Kathleen Hall Jamieson