Tag Archive - complexity

Managers as servants

http://www.kottke.org/09/02/managers-as-servants

Another Google Reader shared item from Patri that relates to group behavior (and the work environment), a discussion of “non-hierarchical management in the workplace:”

Instead of the standard “org chart” with a CEO at the top and employees growing down like roots, turn the whole thing upside down. Employees are at the top — they’re the ones who actually get stuff done — and managers are underneath them, helping them to be more effective. (The CEO, who really does nothing, is of course at the bottom.)

Swartz also quotes a friend who believes that people who act like jerks in the workplace are not worth the trouble.

I have a “no asshole rule” which is really simple: I really don’t want to work with assholes. So if you’re an asshole and you work on my team, I’m going to fire you.

I have worked with (and near) several assholes in my time and I’m convinced that firing one unpleasant person, even if they perform a vital function, is equivalent to hiring two great employees.

This hits on two points. One reminds me of how leaders, as central decision-making nodes in a system, tend to have considerably less “freedom” than many think. They work within a delicate eco-system of employees/followers, resource/time constraints, personal and system goals, etc. Thus even as it appears the manager may do very little “work,” he/she is spending a great deal of time balancing a slew of complex demands.

Enter in this great advice I read last night from William Glasser in Control Theory regarding child-rearing (Chapter 18, Control Theory and Raising Children):

Try as hard as possible to teach, show, and help your children to gain effective control of their lives.

Apply that concept to managing employees (or team members). You want to empower your employees to have more control. You do this by teaching them how to substitute their own good judgment for yours. This makes the hierarchical system less centralized and more robust. The worst managers I have seen strip control from employees. It’s not that any manager should just tell their employees to go buck wild and do what they want, rather they should mentor and teach them which will give them greater control, and more freedom to you, the manager to spend time considering more important decisions.

Which brings me back to all the talk about regulation and centralization (and how I think decentralization makes more sense).

Less related is the comment on “assholes;” moving fast and eliminating bad apples from your group is a good way to improve the odds of success. I know that has been the case in my own experience.

Paul Volcker: “Not an Ordinary Recession”

http://www.ritholtz.com/blog/2009/02/paul-volcker/

Paul Volcker recently gave a speech that has gotten a lot of replay action on the blogosphere. I believe most are saying that Volcker is calling for a return to “narrow banking” (see Jesse).

A lot of people listen to Volcker as he led the charge at the Fed over taming inflation back in the late 70s and early 80s. I wonder more if he wasn’t just at the right place at the right time, doing what had to be done — raising rates. I’m convinced that most people give entirely too much credit both on blame and accolades. Don’t get me wrong, the Fed has enormous power, but my estimation is that they are almost always messing things up. The Fed is reactionary always and almost always reacts too far.

Therein lies the problem. The Fed fails at regulating. Hardly surprising, really. Is it not a joke to pay lip service to free markets, which are incredibly dynamic decentralized systems, and then use a central body to regulate the blood of the system, money? It’s a sad joke.

I could go on, but I’ll hold off. There are two pieces of Volcker’s recent speech I want to quote and comment on briefly. First:

One of the saddest days of my life was when my grandson – and he’s a particularly brilliant grandson – went to college. He was good at mathematics. And after he had been at college for a year or two I asked him what he wanted to do when he grew up. He said, “I want to be a financial engineer.” My heart sank. Why was he going to waste his life on this profession?

A year or so ago, my daughter had seen something in the paper, some disparaging remarks I had made about financial engineering. She sent it to my grandson, who normally didn’t communicate with me very much. He sent me an email, “Grandpa, don’t blame it on us! We were just following the orders we were getting from our bosses.” The only thing I could do was send him back an email, “I will not accept the Nuremberg excuse.”

There was so much opaqueness, so many complications and misunderstandings involved in very complex financial engineering by people who, in my opinion, did not know financial markets. They knew mathematics. They thought financial markets obeyed mathematical laws. They have found out differently now. You know, they all said these events only happen once every hundred years. But we have “once every hundred years” events happening every year or two, which tells me something is the matter with the analysis.

So I think we have a problem which is not an ordinary business cycle problem. It is much more difficult to get out of and it has shaken the foundations of our financial institutions. The system is broken.

The system is broken. The system was too opaque. Finance is incredibly complex. It is here where I actually started wondering if Volcker “gets it” as far as understanding that our system is far from robust as centrally controlled and designed. As it is, Nassim Taleb is the only person I’ve seen who seems to glimpse the complexity of the financial system. However, I’ve seen even Taleb defer in theory to people “who saw this coming,” like Nouriel Roubini, for potential ways to “fix” the system.

Volcker’s comment about his grandson also hits home with me as I went into finance/accounting. When everyone you know is running into a field, that may be cause to rethink your choice of education (Everyone I knew in college was getting into Real Estate — this was back in 2001). Then again, I still wish I had gone and pursued computer science, but the dotcom crash (2000) scared me away.

More from Volcker:

What do I mean by different? I think a primary characteristic of the system ought to be a strong, traditional, commercial banking-type system. Probably we ought to have some very large institutions – or at least that’s the way the market is going – whose primary purpose is a kind of fiduciary responsibility to service consumers, individuals, businesses and governments by providing outlets for their money and by providing credit. They ought to be the core of the credit and financial system. …

What has happened recently just underscores that. And I think we’re at the point where we can no longer fool ourselves by saying that is not the case. The government will support these institutions, which in turn implies a closer supervision and regulation of those institutions, a more effective regulation than we’ve had, at least in the United States, in the recent past. And that may involve a lot of different agencies and so forth. I won’t get into that.

So just as soon as I thought maybe Volcker “gets it,” he goes and says we should have a strong core (read: centralized) system of banking that is heavily regulated. He wants this core to be firewalled from entrepreneurial finance to eliminate conflicts of interest.

I’ll be brief. Regulation has failed. The Federal Reserve is a monstrous regulatory body that has repeatedly exemplified failure, and I’ve already mentioned its innate centralization. The SEC? Failure at every turn. More regulation? More centralization? How many examples do we need whereby larger organizations display a need for more regulation, and when more regulation is presented, said regulatory agency is either captured by the body it intends to regulate or is inept?

What we need are decentralized banking systems that are free enough and unencumbered enough to fix themselves or self-destruct without taking down the entire network.

The great centralization experiment has failed. Let’s move on (and follow the example of the internet, which exemplifies the power of decentralization).

Enough for now.

Update 2/24/09: Saw a youtube clip of Volcker’s speech. Wanted to get this quote down:

The description of a fat tail reflects a kind of analysis that isn’t appropriate. They think that financial markets follow normal distributions. pattern like the law of physics. The one remark I’ll leave with you: if you think the financial world follows a normal distribution pattern like the laws of physics. If you think that you’re a financial engineer but you’re not a very good financial analyst.

So he recognizes how inherently unpredictable financial markets are but then goes on to suggest that the Federal Reserve can fix imbalances that present themselves.

Cognitive dissonance.

@ http://www.youtube.com/watch?v=O3ROf8ln9rg

Nassim Taleb and Nouriel Roubini on CNBC

http://www.cnbc.com/id/15840232?video=1027496846

Video from CNBC. Hard to glean anything particularly new from this. It is maddening to watch the CNBC pundits try and talk over Roubini and Taleb and then demand investment advice from them. What a bunch of whiny, idiotic children.

Interview with Leonard Mlodinow (part 3)

http://www.blog.sethrober…lodinow-part-3/

There are 15 parts and counting to this interview with writer, scientist Leonard Mlodinow (they are all about a page long). He’s wrote The Drunkard’s Walk, which I’ve ordered from Amazon — it sounds similar to Taleb’s The Black Swan, which was fantastic and crystallized some thoughts that had been racing around in the ether of my brain. Saving this one down as I particularly liked Mlodinow’s commentary on writing here.

For the rest, here’s the current directory:

  1. part 1
  2. part 2
  3. part 3
  4. part 4
  5. part 5
  6. part 6
  7. part 7
  8. part 8
  9. part 9
  10. part 10
  11. part 11
  12. part 12
  13. part 13
  14. part 14
  15. part 15

Also mentioned in part 15 is a documentary about Cal-Tech basketball that sounds intriguing — it is called “Quantum Hoops.” Might be worth renting.

MLODINOW I think that in a way . . . I guess there’s two components to being able to write. One is your natural proclivity, I try not to say talent, but it’s your voice or the way you express yourself. And the other is the craft part of it that you learn by doing. I think I always had a good sense of humor and maybe a way to say things colorfully or think in terms of dramatic or powerful situations and I guess that’s the first part and served well. The other part is the things you learn as you go, such as what puts people to sleep or how to abandon what you think are good ideas but really aren’t. That’s a hard lesson to learn because it’s difficult to let go of things you might like and to realize that it just doesn’t belong or goes on too far or the idea that sometimes it’s hard to recognize things that may be good but just don’t belong there–that are tangents and they take away the dramatic thrust of where you’re going and they really have to be cut even though they’re good and you like them. You know, lessons like that, lessons about pacing–you learn by doing, by failing. You learn more about pacing, all sorts of technical aspects of writing, whether its fiction or nonfiction or TV or books; there are certain principles that you just learn by repeatedly doing and doing wrong and realizing, absorbing what went wrong and fixing it and you grow that way. In book writing you’re able to do that a lot with rough drafts so a lot of your mistakes don’t end up getting published–you know? TV writing can be so fast that often you don’t see the problems with the script until you actually watch it on the air and then you go, ‘Next time I think I won’t have that guy climbing the stairs for four minutes in the middle of the scene; I think five seconds is enough to get the idea across.’

ROBERTS Yes, that kind of brings us back to the very beginning. I feel like somehow the times have changed and people are smarter. Now you can make a living from what you’re doing. You’re writing this very entertaining intellectual history; finally there’s a market for it. Finally people are smart enough to be at your level so that you can write a book that you respect but you can get a wide enough audience.

MLODINOW Are you saying that in the 50s that couldn’t have been done? I don’t know.

ROBERTS Well, nobody did it; let’s put it that way.

MLODINOW No, nobody did it. I don’t know why.

ROBERTS As I said before we started recording, you’re the first person to ever do this. Will you be the last? I don’t know but you’re the first. You’re the first person to write intellectual histories that actually are popular and that people want to read, that they’re not forced to read by their teachers. It’s not just a tiny group of people reading them. Professors of course write them but they’re not well written and it’s just their job to write them; they get a salary from the government to write those books. You’re not getting any salary. You’re an entrepreneur and it’s just so different. Your books have to be popular or your job goes away. It’s just a different level of competence; your books are just infinitely more accessible, infinitely better than a professor would normally write. A professor is subsidized and that’s what is basically comes down to. Practically everybody who writes about science is subsidized but you’re not.

The No-Stats All-Star

http://www.nytimes.com/20…&pagewanted=all

Interesting article on Shane Battier, Houston Rockets b-ball player whose conventional stats are totally unimpressive but unconventionally, he makes all his teams much better. Interesting read from many angles.

The 3-point shot from the corner is the single most efficient shot in the N.B.A. One way the Rockets can tell if their opponents have taken to analyzing basketball in similar ways as they do is their attitude to the corner 3: the smart teams take a lot of them and seek to prevent their opponents from taking them. In basketball there is only so much you can plan, however, especially at a street-ball moment like this. As it happened, Houston’s Rafer Alston was among the most legendary street-ball players of all time — known as Skip 2 My Lou, a nickname he received after a single spectacular move at Rucker Park, in Harlem. “Shane wouldn’t last in street ball because in street ball no one wants to see” his game, Alston told me earlier. “You better give us something to ooh and ahh about. No one cares about someone who took a charge.” The Rockets’ offense had broken down, and there was no usual place for Alston, still back near the half-court line, to go with the ball. The Lakers’ defense had also broken down; no player was where he was meant to be. The only person exactly where he should have been — wide open, standing at the most efficient spot on the floor from which to shoot — was Shane Battier. When Daryl Morey spoke of basketball intelligence, a phrase slipped out: “the I.Q. of where to be.” Fitting in on a basketball court, in the way Battier fits in, requires the I.Q. of where to be. Bang: Alston hit Battier with a long pass. Bang: Battier shot the 3, guiltlessly. Nothing but net.

Page 2 of 2«12