On the Efficiencies of Business

So, I’ve been going to therapy for a few months now to deal with depression. One of thing that has come up is how I don’t really release a lot of the emotions that I am feeling and one of them is anger. I typically swallow that to stay diplomatic and deal with whatever situation as well as I can. I think that I’ve been stewing about this for a while and mentioning it to my friends periodically. I don’t feel that business leaders respect my career path and don’t understand how to actually make their businesses more efficient.

Excluding the past two years, the majority of my career has been focused on Lean, Six Sigma, or Lean Six Sigma (yes all of them are different in terms of how you approach continuous improvement). I have run projects, developed courses, facilitated strategic planning events for companies like AMD, but the entire time, I never truly felt secure in my role. At Samsung, we had lay-offs and last some employees, at AMD, we definitely lost some and my Director actually decided to be let go to save a number of my coworkers. This is in spite of the fact that our group had saved the company measurably millions of dollars over the 1.5 years I worked at AMD. We were always on the chopping block. Then while working at Cambia (Regence Blue Cross Blue Shield) I was laid off, even though the result of my training program included winning a national Blues award and saved the company a lot of time and money. My team easily paid for itself more than once over while we were there (my team was me and my employee Phil).

As we all know Insurance companies are always raising premiums. The underlying assumption is that these businesses are actually working to continually drive down their financial overhead, but those damn regulations keep getting in the way to drive up cost. This is just flat out wrong. These businesses don’t actually know how to drive improvement in their organizations. The only way they can even imaging improving their business is to hire an organization like McKinsey or BCG which costs millions and gets little to no result. The results they do provide are typically brought about by recommendations internally to the organization that leadership is unwilling to implement unless told about them by an expensive consulting group.

This is problematic because it doesn’t actually change the culture of the organization to drive continual improvement and innovation. As I’ve written in the past Innovation and Improvement are positively correlated. Furthermore, these training classes help expand people’s networks, which also significantly improve innovation as well.

So, first of all, I’m pissed off at corporate leaderships for not understanding the value of continuous improvement. Second, I’m pissed off that it’s just accepted that businesses always figure out ways to be more efficient. This isn’t true. If it was true there wouldn’t be a large number of people in their mid-50’s looking for work after a very successful career in continuous improvement. If these businesses didn’t think that the best way to improve efficiencies was to cut costs and then have someone else do two people’s work, this wouldn’t be a problem.

You can reduce headcount and drive up efficiencies, but only if you provide your people with the right tools and the requires true investment in the business. Although, all continuous improvement efforts pay for themselves if you aren’t just looking at how much a few people cost that are part of the team. You need to weight that against the positive gains they are making for the organization.

I’m pissed off about this because I feel like Michael Bolton from Office Space “I shouldn’t have to change, he’s the one who sucks.” I have had to completely change my career, which I was really passionate about because I don’t trust corporate leaders to try invest and buy in to continuous improvement. Maybe this is short sighted and I just need to find the right company. But I’ve looked I’ve been at a number of them and I’ve heard stories from other people that have been laid off (while i was interviewing for the position Phil filled) for exactly what I’m talking about here. So as a response I’ve tried to protect myself from that by avoiding applying for those jobs.

I loved doing that work because I knew at the end of each day and each project, I made someone’s work life better. Which is awesome. You listen to their problems, which helps them, but then you provide them with the tools to make change and to fix their current situation. When they look at how that aspect of their job is going to work after you finish the project, you can just see how much happier they are. You can see that it allows them to focus on the thing they were hired to do, not deal with some bullshit that was there because it’s always been there.

Businesses need more of this. The culture needs to change from top to bottom. It’s the role of the Lean Manager to change the culture so that people want to do continuous improvement. It’s the role of the business leader to provide the right incentives to do this as well.

“Infighting” in the Democratic Party or Who represents the future of the Dems?

Today, I’ve been seeing a lot of people saying that Bernie supports need to just give up the “Bernie would have won” attitude. I find this exceedingly problematic. First, it’s an opinion and like assholes everyone has one. Second, there is some evidence, based on the polling that Bernie would have crushed Trump. Third, there’s anecdotal evidence of people switching from Bernie to Trump or just stayed home from voting. Finally, this implicitly means that these folks need to just shut up and get back in line with everyone else.

This last point simply pisses me off. I’ve always had something of a chip on my shoulder when it comes to authority or the status quo. I get really pissed off when people talk about how these giant cities are god’s gift to man, when the smaller cities i’ve lived in are amazing places in their own right. Places that have a lot of character and the difference of perspective is important. I wrote about this irritation in my article right after the election.

The Democratic party needs this discussion, this in fighting. There can and should be general alignment over general resistance to Trump. The policies that are proposed to counter their proposals can and should have serious discussion about what the future should be. The reason why people bring up the primary and that Bernie would have won, is that they support his policy positions and believes that these positions should be the dominant theme when challenging the Republican run Government. The idea being that Clinton’s ideas are a continuation of the status quo, the status quo that lost and lost badly in the electoral college – which is the only vote that matters right now.

Bernie and Clinton represent two different potential futures for the Democratic party, we need to look at it that way. I believe under the Bush years, the Democratic party essentially was the Party of Clinton, which really was a centrist party that was easily pulled to the right. During the Obama administration this held true as well, where the Democrats tried to pull the country a little left, but stayed towards the center in hopes of getting something through. Which resulted in a great deal of center right policies simply through obstructionism.

Now, if the Democratic party wants to learn from the Republican party, rather than working to meet with them half way, which will ultimately pull them to the right, again. They need to start with a stated position which is significantly farther left than what they might be when they are in power. This would mean that when the policy finally gets approved, that it’ll be much more centrist. Furthermore, most of those policies would help the people that need it the most, that ended up voting for Trump, because they believed he would help him.

The fight over Bernie v. Clinton is a battle over the heart and soul of the Democratic party. If you aren’t willing to talk with the people that are saying that Bernie and thus his ideals could have beaten Trump, then you aren’t willing to listen at all and should not be in a position of power in the Democratic party. The party needs to be inclusive of radically different views, take advantage of that diversity and use it as a way to drive change in Washington to help everyone.

Universal Basic Income Won’t Solve All of Automation’s Woes

In my last blog where I looked back at the election, I included a short discussion about universal basic income being part of the solution to the continued automation of jobs. While, I think that Universal Basic Income will really help address a large number of the issues we’re seeing due to automation, it will not solve all of them. This is multifaceted, but partially it’s because the people that need it the most in rural areas won’t accept it.

No, it’s not because they are dumb, but it’s because they don’t want hand outs. The right has been demonizing “entitlement” programs and the taxes needed to pay for them for decades now. Universal basic Income will be the largest such program ever. So, the first step would be to get them to accept the program. Which will be difficult. Jobs every where hold a measure of self worth and a way to define who you are. If there are no jobs, because all the long distance trucking jobs were automated, then these folks are going to have serious reservations taking money because they can’t find jobs. In some rural communities your job defines you in ways that don’t happen in large cities, mostly because everyone knows you in these small towns. In a large city, you can more than one completely different group of friends that have no connection to your professional career. You an have hobbies that are 30 minutes away from your house or your job and still be in the same city. In rural towns, a 30 minute drive may take you to three different towns without relatively closed communities.

So, let’s say we get all these folks to accept taking this government money, then what? How are these people going to be spending their time? We’re already having something of an epidemic of small town drug over doses that are heart wrenching. Children are in the car while their mother is passed out in the front seat from a drug over dose in the Wal-mart parking lot. In other cases they passed out in the aisle at Dollar Store.

In a large city, it’s easy for you to find hobbies to spend your time. You can volunteer, go to classes at one of the many local colleges or training centers to learn new skills or keep yourself occupied. Rural areas have a significantly smaller amount of opportunities like that. Even if people in rural areas decide to learn new skills, many of those skills may not lead to jobs in the same area. The jobs for those skills may be in a city which a lot of people that live outside of cities wouldn’t like. There is a reason why they still live outside of cities, they have no desire to live in one. They enjoy being able to go out to the woods, not to see anyone else. Love hunting and fishing or simply do not enjoy being around people that much.

Finally, even if every accepted universal basic income, it doesn’t mean that the sense of hopelessness will go away. It may make it worse because there is a dependence on someone else for everything. Furthermore, it’s not like universal basic income will be enough to allow you to buy a home or buy a space that’s yours. It will help you live and live above poverty, but not truly comfortably.

In the long run we will have to figure out how to make life meaningful when people are living on basic income.

Capitalism vs. Robots – which is more terrifying?

In an article that recently resurfaced on Reddit, Famed Astrophysicists Stephen Hawking argues that we should fear capitalism more than robots. I think the timing of this is somewhat interesting, being an election cycle and the two populist candidates are opposites in many regards especially in terms of Democratic Socialism vs. Crony Capitalism (Sanders v Trump). In the broader context of emerging technology this is important as well though, as many other technology leaders have expressed fear of AI, such as Elon Musk, while other leaders are running full steam ahead towards more and more automation.

Hawking isn’t the only person thinking about the economy and technology though. Warren Buffet just released Berkshire Hathaway’s annual report with some pretty stark warnings about the future of capitalism in action at the corporate level. Indicating that innovation does have a darkside. While he’s speaking as a manager, there are economists looking into this and in the book Second Machine age, the authors argue that the best is still to come, because man and machine work best together, not separately.

Unfortunately, this will only push the ceiling up on skills required for jobs, rather than expanding opportunities. A perfect example of this will be Uber. Being an Uber driver isn’t a difficult job because of skill requirements, but because it’s a boring job that is relatively tiring. Uber has been pushing down their prices over a multi-month/year process which will continue through the introduction of “Autonomous” Cars, or RobotCars. At this time a large number of low skilled workers will find themselves out of a job, including people I know and probably people you know. This has been Uber’s plan for a long time as they understand that people are the biggest costs and risk for the company. Especially in light of the mass shooting in Michigan.

Uber isn’t the only major company looking to replace workers like this. In fact, it’s likely that a lot of White Collar jobs are going to go this route as well, including in industries that notoriously relied on people that then made unethical decisions, such as the financial industry.  We’ve heard of High Frequency Trading, which is basically a set of algorithms to make decisions on buying and selling stocks based on microtrends. However, this is going to continue to expand into newer areas. It’s been well remarked that most brokers are no better than a coin flip (Black Swan; Drunkards Walk; Thinking, Fast and Slow; all reference this) so it is highly likely that algorithms will do better than people in picking winners and losers on the stock market. It’s also likely that those algorithms will have access to more data faster than any person could eve analyze and act upon.

This interaction between capitalism and automation creates huge risks for the economy. A few years ago, there was a “flash crash” which was basically caused by those HFT I mentioned above. As more and more portions of the financial industry come under the purview of robo-traders, these sorts of events are going to be more likely. These institutions still have pushed most of the risk to the public, while retaining the bulk of the profits from these robots.

As these trends continue across industries, the local optimization of companies to automate and create more robots is going to gradually push people out of jobs at a more and more rapid pace than new categories of jobs can be opened. I think it likely that will be likely that we’ll see more companies going the route of Uber. Using tools like Amazon’s Mechanical Turk to get processes started before they invest effort and energy into automating processes. Once they are shown to be successful, the effort to remove the human element will continually increase until those workers are out of a job. What we will eventually see is a white collar migratory worker going from one type of tech job to another only to be replaced by automation in the long run.

The impact to the economy in the long run and the human condition in the short term will be catastrophic as our current institutions are not designed to handle this sort of change in labor type. The incentives for this behavior has been in place for decades and have been pushing bad actors to be worse, such as the Turing Pharmaceuticals’ CEO price gouging dying patients, because the market could support it.

Privacy, Government, and Business

This week there were two big moments for privacy. First, was a ruling by a court that Apple had to unlock in some manner, call it decrypt or creating a backdoor into this specific phone. Second, was the fact that Apple, and now Google, has given the state a big middle finger saying “No!” These are important because of the gravity of both of these. The FBI is using “The All Writs Act” something from the 18th century and definitely not written to support dealing with difficult technological issues on technology that would appear to be magic to the author’s of the act. This is definitely stretching this law to its limits and likely beyond what is realistic, but it sets a precedence which is dangerous. The second part is important as both of these companies have been working with the government to provide data to them in the past.

While both of these companies are standing up to the government is great, it’s not enough. With a limited number of powerful players, it’s only a matter of time before they lose to the government or be threatened in some way that will require them to play ball with the government. On the other hand, smaller companies won’t have the money to fight the government, so even if you want to support a smaller company with privacy as its core values, there is no guarantee that they will be able to follow through. Furthermore, if the government forces the company to re-write its operating system, like Apple effectively has to do, the company might go bankrupt. With a precedence set by the Apple decision, a small phone company like Silent Circle and their Blackphone, would be forced to capitulate unless they were able to show that this was unduly burdensome.

The other issues with this case is that businesses are only fighting for what is “right” here because it will help them improve their bottom line. Of course, they are also fighting for their own personal privacy as an employee of the company and consumer of its products, but the goal is to improve profitability. Across the world it has been shown that privacy and protection from agencies like the NSA (US) and GCHQ (UK) is something that people are willing to pay for. Apple learned this from Blackberry during the Arab Spring – they emulated the encryption of the Blackberry Messenger with their iMessage application. This help transition some of the last hold-outs to Apple and eventually spurred other similar apps.

I believe it is likely that the Electric Frontier Foundation will be a strong advocate for Apple, so if you want to support Apple in their battle with the government I recommend donating to the EFF, especially if you don’t support Apple for its other business practices. I know I will.

Economics are Tools

I read an interesting article on The Atlantic the other day, probably read it in the past as it was an OpEd written in 2013, but is still as important as ever. The article’s premise is that there are no Economic Laws.

This of course is obvious, as in hard science we never refer to anything as “Laws” any more, other than antiquated theories that represent paradigmal thinking from great minds of the past. For example, the Law of Gravity has been significantly modified with the Theory of Relativity. Sure, the underlying math of the “Law” works for the most part, but breaks down under certain conditions. Meaning that it’s not actually an unbreakable law.

Even in Mathematics there are no true laws, there are theorems that are true, however not all those theorems can be proven to be true, according to Godel’s Incompleteness Theorem.

If we are unwilling to say that there are no laws in Mathematics and Physics, how can we so willingly say there are laws in Economics? This is foolish as it pushes us to think that the Economics is unchangeable and thus works consistently across all conditions and times. Recently the IMF released a report essentially arguing that the trickle down effect doesn’t work as it truly doesn’t “raise all boats”.

We must instead look at Economics as a tool, one that is imperfect and should not be used to moralize. However, it can be used in policy as long as we are willing to abandon the tool once we see that it does not work. Furthermore, tools that worked once don’t always work in every situation. There are tools that are more flexible and likely to work than others, similarly to specific frameworks. This is true in Process Improvement as it is in Development and Economics.

We need to seriously look at our policy tools and think about abandoning some of our economic frameworks as they are hurting the economy.

Innovation and Lean

I’ve been doing a lot of reading around Disruption Theory, Lean product develop, and Lean Startup theory including the application of all three. One of the more interesting aspects of Disruption theory is that people hire products to do specific jobs. This is fairly similar to the questions that Lean Startup and product development ask, what problem are you trying to solve. This hired to solve a job approach seems to instill some limitations if these jobs aren’t continually re-evaluated. For example, in the Innovator’s Solution they talk about RIM and their Blackberry device, now this book was written in the early 2000s, which means that there was an actual debate if they should include cellular service or not. They argue that the job RIM is hired to do is to provide short periods of distraction to business people.

The risk of not re-evaluating these jobs on an extremely frequent basis, such as quarterly or annually, would likely lead to missing out on something like the iPhone. What I found interesting in this section of the book is that they argue against cramming every type of feature into a single device. I think that, at the time, this was sound advice due to the limitations of the technology, the costs of doing that, and immaturity of the markets still.

I believe this is where the Lean Startup approach really would help. Innovator’s Solution basically argues for the minimum viable product for a given job. Afterwards, through collecting data on how the users actively use the product the team can learn in which direction the product should mature. Through engaging continually with the customers it’s possible to understand and, with the right questions, determine if and when the job the product is hired to do is starting to change over time.

For example, iTunes was originally designed to be a light weight music playing piece of software. The job was to play music. Over time, because of the goal to move up market and capture other markets, Apple added new features, changing the jobs that iTunes was capable to fulfill. In some cases this lead to clear overserving customers and has since been accused of becoming bloatware. Using the correct metrics Apple would know if they were losing market share or if their market share was being artificially maintained because of the iPhone/iPad. This means that the music playing space is clearly ripe for disruption. The most popular product is over serving most of the market and causes excess performance drain on systems using the software. This is clearly why, despite iTunes popularity, services like Last.fm, Pandora, and Google Music are so popular. They are meeting the market where the market is and moving.

Over the next few weeks I plan to explore these theories and techniques in more detail. I plan to work towards something of a unifying theory and then attempt to deploy them in a startup of my own and write a book about the process. I have no idea what startup I plan to start but that’ll be half the fun! As a writer for KBMOD, I plan to work with the leaders of that team and deploy these theories with them. Hopefully seeing positive results for those guys.