Sunday, September 20, 2009

Are you looking for the right things?

Bill Gates left Harvard in his junior year, Paul Allen dropped out of the University of Washington. Steve Ballmer graduated from Harvard with a bachelor’s in math and economics.

These three started with an idea and turned it into a major corporation.

If someone with the credentials of any of these three (two college dropouts and and a math major with no practical experience) came to you with the idea for Microsoft would you have bankrolled them? More importantly will you recognize the next Gates, Allen, or Ballmer?

I promise you that the Steves (Wozniak and Jobs) started in their garage because they had to, not because working in a garage was the “best” place to start. They believed, rightly or wrongly, that they couldn’t get any investor to give them the money to do what they wanted to do. Not because what they wanted to do was all that risky, but because the investors they could find had a lack of vision and were much more interested in the creator’s presentation skills than the fundamental idea.

What process do you have for the janitor to tell you about some hip, slick and cool new thing he found? Do you restrict your pool of new ideas to a select few managers at your staff meetings? And most importantly of all, will you remember that it’s your staff’s job to find the ideas, it's your job to pick the winner and figure out how to make money from it?

One of the problems with the economy today is the understandable urge to reduce risk. While managing and reducing risk seems like something any business should be doing, when you forget that without risk there is no growth, your business and the whole economy stop growing! One of the reasons Silicon Valley has had so many startups is the collection of people willing to take risks in that one small area.

The biggest blockage to a new idea is that a great idea is useless without someone else with money and a willingness to risk that money supporting the new idea.

Wednesday, September 16, 2009

Your gut check is most likey right

I correspond (email) with my elder son quite a lot about various business issues. I like testing my experience-based ideas against his MBA trained thinking.

Our last discussion was about the missing data in the reports about unemployment. I believe that underemployment is the one of the biggest components in the current economic crunch. I also believe that the economy has to generate about 250,000 new jobs every month just to accommodate the people entering the workforce for the first time. You can see my blog post Digging Out for details.

When I complained that the reports don’t deal with either element very well and that the popular press doesn't tell the readers that this is critical but missing information, his reply was that collecting the underemployment data was difficult and would, probably, be lost in the noise of the bigger out-of-work number anyway.

I think this misapplication of the idea “if it can’t be measured it ain’t science” completely that ignores the fact that just because you don’t know how to measure it doesn’t mean that it isn’t critical. I also think that not including it has caused too many decision makers to miss key elements that are creating unintended consequences and pushing up unemployment numbers dramatically.

Just as you can see the differences between my poor writing and real art, your individual judgment will spot trends and underlying information that cannot be measured, reduced to numbers, and plugged into the currently popular economic equation. As long as you are analyzing the available information and not trimming to fit your pet theory, conspiracy or otherwise, your “gut check” much more likely to be right than the folks starting with a theory and complex math.

An if you think the complex math is more likely to be right, remember that John Nash, who shared the 1994 Nobel prize in economic science, developed the mathematical theory that underlies the complex equations that allows the development of derivatives trading. The same derivatives that drove the market collapse because those Nobel Prize winning equations didn’t really capture all the critical elements.

Alan Greenspan, former Chairman of the Federal Reserve Bank is a pretty smart guy and Wikipedia has this quote from him: In Congressional testimony on October 23, 2008, Greenspan acknowledged that he was "partially" wrong in opposing regulation [..of financial derivatives..] and stated, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief." Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

The other quote that comes to mind is from Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Monday, September 7, 2009

You’re supposed to find your passion, you’re supposed have a passion for your work.

How many really do?

If you didn’t go to college, your first job was probably whatever you could get. That job led to other jobs that turned into a career. Mostly life handed you lemons, you made lemonade and your career progressed by Hobson’s choice.

If you went to college, you took what you thought you liked – at 17! As you studied you may have changed direction but you graduated at 21 or 22 and then began to find many new and surprising directions that you never new about, much less considered when you picked your major.

Now, in the middle of a recession with jobs hard to find, you are being told that you must find a job that fits your passion. You’ve been too busy making whatever your Hobson’s choice got you into work to find out what you love. That also means a career change in a job climate were employers are not looking for crossover skills, they are looking for a “perfect match”.

You will find that most of the people claiming that you should find work you are passionate about are in social professions – psychologists or psychiatrists – or sales. You will never hear an engineer, a chemist or truck driver tell you to follow your passion. You rarely see “must have a passion for driving a fork lift or accounting” in a job description. The only jobs I remember seeing talk about passion is sales. All the push for job passion is driven by our workplace change from maker to designers and sellers.

I am writing this on a Mac book and in the process of making this laptop computer someone sat at a workbench checking resisters. Measuring the resistance value of some percentage of the incoming parts to make sure that they are correct. How passionate would you be about measuring the resistance of these small parts?

You might get a lot of satisfaction from doing your job well and knowing that you are part of making a great laptop for some unknown guy to write on.

But, passion? Not so much.