Brian Frank » economics

Uncertainty and Hubris in Business

Brian — Wed, 14 Jul 2010 22:15:03 +0000

The lesson of the economic crisis ought to have been that there’s a lot of inherent uncertainty. Always has been and always will be. Even when we assume things are certain, or nearly certain.

The problems were all caused or enabled by people having too much faith in the bets they were making, in the “efficient market,” and the supposed stabilizing effects of increasing complexity (for a while I believed the last notion too). But instead of learning from those mistakes and dealing differently with uncertainty, executives are still pretending it’s still just a temporary thing, for which others are at fault, invoking it as a reason to do nothing:

For a long time, businesses have been complaining that they can’t hire and they can’t invest because of all the uncertainty the Obama Administration has injected into the system. Who can make plans when no one knows what the American health care system will look like or how various prongs of our financial system will be forced to change?

That’s from Barbara Kiviat at Time‘s Curious Capitalist blog, arguing that “the uncertainty excuse needs to come to an end” (via Economist’s View): the uncertainty about what regulation will look like is falling away, as the regulation appears close to passing it’s time for business leaders to do what they’re supposed to do:

Now, I am sympathetic to businesses being somewhat hamstrung by economic uncertainty. Are we coming out of this recession once and for all, or are we headed toward a double dip? That is the sort of thing that makes it tough to decide whether or not to hire or open a new plant. But where we are in the business cycle is far from anything the President controls. As people with a sense of history like to point out, the U.S. economy has grown and contracted under all sorts of Presidents and policies.

Executives love to go on TV nowadays and talk about how the President should show more confidence in the economy. That probably wouldn’t hurt. But you know what would actually help? If these same executives did that themselves by going out, taking some risks (what they’re paid millions of dollars to do!) and expanding their companies.

This seems to be exactly the same attitude that made a mess of things in the first place: taking credit when things are going well and then blaming problems on someone or something else. The psychological roots of this self-serving bias are further reinforced by the need to puff up for shareholders. Both the culture and the mechanisms of business today make honesty very difficult to pull off.

But that’s no excuse not to try. At least if everyone admitted that much we’d see needed steps in the right direction.

These flaws were obvious when the Dotcom Bubble collapsed and then again after Enron imploded. The ensuing fallout in accounting and finance ought to have eroded more of the old mindsets and caused some deeper soul-searching among executives. To me it seemed like people would finally have to deal with the problem of “irrational exuberance.” That’s when we should have seen the start of what Richard Florida has been alerting us to as “the Great Reset,” which the global economy seems, finally, to be going through now.

But something totally unexpected happened: Islamic extremists crashed planes into the heart of global capitalism — both literally and figuratively.

By the end of 2001, even with the dust of Enron’s collapse still in the air and accounting scandals looming elsewhere, the chairman’s letters of annual reports highlighted the “difficult operating environment” caused by 9/11 and other external factors, rather than suggesting deeper undercurrents. Almost invariably, they went on to say their perseverance through such challenges was testament to their firm’s strength, reassuring shareholders they “emerged stronger than ever before,” as Hank Paulson’s letter put it. Jimmy Cayne’s brief letter to shareholders of Bear Stearns implies 9/11 was directly responsible for every challenge they faced that year, dedicating the entire opening paragraph to the attacks — a feature that was repeated in the report’s strategic review, noting that the “industry as a whole suffered in the wake of the terrorist attacks…”

Indeed it did, and it’s impossible for me to fully appreciate how those tragic events affected people living and working there — who lost loved ones and colleagues — but the question still remains: to what degree were the challenges of 2001 caused by the hubris that still smoldered throughout the finance industry and among executivess in general?

Instead of being forced to look at the effects of their own attitudes and practices, which they can change, business leaders exploited the opportunity to pass off blame to factors that were completely beyond their control, enabling them to double-down on many of the same erroneous assumptions that eventually led to the financial collapse in 2008.

I suppose that glossing everything over — hiding weaknesses, blaming external factors, taking credit for being lucky and embellishing their strengths rather than identifying weaknesses and recognizing their own mistakes — is to be expected. It’s simply how executives behave and how businesses are expected to communicate with shareholders and the public.

But that gets straight to the underlying problem in this ongoing state of affairs. The key flaw throughout is their unwillingness (or inability) to take responsibility and assume more initiative towards long term solutions. Until business leaders show signs of addressing those deeper problems, no statistical indicator will turn me into an optimist.

If they keep this up, it won’t merely be a near-term “double dip recession” we’ll be worrying about, but rather an eventual collapse that’ll be even wider and deeper than what we saw in 2008. Every business built on the ethos of hubris and persuasion rather than openness and the creation of genuine value is vulnerable.

The sense of certainty has always been false and always will be. Long term economic success can’t be founded on external factors we can’t control. We need to cultivate genuine mastery and integrity of what we can.

What I’m Reading

Brian — Sat, 12 Jun 2010 17:02:47 +0000

Reality Hunger: A Manifesto by David Shields

One of 2010′s most talked written-about books. For anyone interested in writing and storytelling this might be worth owning and occasionally flipping through for inspiration.
A lot of great insights about truth and fiction — and whether either can really exist in pure form — much of which are cut-and-pasted and paraphrased from others (in most cases the reader has to flip to the end-notes to learn who).
My must-read list has grown by at least a dozen books after this…

On Deep History and the Brain by Daniel Lord Smail

I picked this up from the library a couple of days ago while wandering aimlessly through the stacks, kind of frustrated that I’m having trouble being interested in anything. I gravitated to the shelf of “big history” something I’ve wanted to read for a few years and finally got nudged towards after watching the doc based on Jared Diamond’s Guns, Germs, and Steel last week (excellent, btw).
It combines history, anthropology, neuroscience (and other disciplines) into a very fascinating account of how we cope with “deep time” — i.e. all those hundreds of thousands (or millions, or billions, depending on where you decide to start your story) of years of so-called “pre-history.” The notion of a Deluge was a way to deal with all of that uncertainty: people didn’t have to explain much of what came before (other than the cause of the Deluge itself) because it wouldn’t have effected anything that happened since. More recently, historians talked about the Dark Ages as a point at which history was apparently reset. I’ve noticed the First World War can be presented with Deluge-like qualities in some accounts of 20th century history.
No doubt the time we’re living in right now will have the same sort of effect on future people’s historical consciousness…

The Shallows: What the Internet is Doing to Our Brains by Nicholas Carr

I skimmed this at the book store enough to know I’ll have to sit down and actually read it. It isn’t merely a rant or an expanded version of his famous Atlantic essay. The takeaway from most of the reviews I’ve read is that Carr makes a fairly good case, but he leaves some very big questions open: “So what?” and “What should we do about it?”
Ultimately I think when we try to answer questions like those, we’ll end up discarding much of Carr’s argument as essentially moot. At the very least it’s supposed to be well written and apparently a pleasure to read, and I’m grateful we have at least one source of lucid and somewhat sensible dissent…

Cognitive Surplus: Creativity and Generosity in a Connected Age by Clay Shirky

Not out in Canada until next week, so I can’t say much about it.
Shirky’s concept of “cognitive surplus” (which he presented at the 2008 Web 2.0 Expo) was a great boost to my general point in Truth, Will & Relevance. I get a sense that my thinking is very close to Shirky’s — albeit lacking his brilliance in formulating simple phrases to convey complex, moving ideas.

Connected: The Surprising Power of Social Networks and How They Shape Our Lives by Nicholas Christakis & James Fowler

The promotional push behind this book focused on their “obesity is contagious” idea.
The single-word title led me to expect Connected to be a the kind of non-fiction book that only needs to be 25 pages long but stretches out with + 175 pages of anecdotes and repetition, but there’s a lot of sociological substance in it — more like Bowling Alone than Blink.

The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity by Richard Florida

Skimming the book and reading the reviews suggests it brings together much of what Florida was blogging around the worst of the economic crisis in 2008 (much of which I re-blogged here).
I’m honestly having trouble motivating myself to read something I assume I’m already in full agreement with — though I certainly recommend it to anyone else…

Tastes Like Authenticity

Brian — Wed, 09 Jun 2010 17:18:02 +0000

There are some valuable lessons in Andrew Potter’s Authenticity Hoax — lessons most people probably don’t want and won’t accept. Here’s some of the synopsis from the AuthHoax blog (I don’t see the need to rewrite it):

For many, the search for the authentic is a powerful source of meaning in a secular age, fostering a unique personal identity and value system in a world that seems indiffernent to their deepest spiritual desires. This demand for authenticity — the honest or the real — is one of the most powerful movements in contemporary life, influencing our moral outlook, political views, and consumer behavior. Yet according to Andrew Potter, when examined closely, “authentic” lifestyles or activities—from the cult of the organic to ecotourism, Oprah to Obama, yoga to artisan cheese—are actually a form of exclusionary status-seeking.

Plumbing threads of pop culture, history, and philosophy, The Authenticity Hoax reveals how our misguided pursuit of the authentic exacerbates the artificiality of contemporary life that we decry. At best, it results in an endless cycle of status-seeking; at worst, it leads to a reactionary and stagnant political agenda that rejects the best of what the modern world has to offer.

Yeah, it’s exactly the kind of discussion I enjoy. This came out as I was putting my book together (but waited to read it — or I’d never finish, as there would be another book after this, another after that, and so on). It very closely overlaps with a lot of the research I did.

Specifically, one of my late finds was an article by Dan Ariely and Michael Norton on “Conceptual Consumption.” It’s an interesting idea, using an economic metaphor as a lens for various identity and experiential needs — for example, when we’re consuming a meal, we’re not just physically consuming the food but also “consuming” ideas that frame that experience, such as how a choice might reflect one’s identity (e.g. people will order food they will enjoy less for the sake of not ordering the same thing they did last time, or the same as someone else at the table).

Most fascinating to me is the fact that we can never really get outside of conceptual consumption (or whatever you want to call it). Criticism and theory are kinds of conceptual consumption too. The aspects of our nature and heritage that lead us to obsess over authenticity might be the very same factors influencing skeptics and antagonists to scoff. People who ridicule organic food have their own tastes, and I would assume those are just as deeply influenced (albeit quite differently) by the ideas connected to those preferences. There’s always a kind of narrative involved, whether it’s a narrative about one’s impact on the environment, or a narrative about being sensibly frugal, a narrative tied to a particular experience (e.g. ballpark hotdogs and movie popcorn can’t really be that good), or a narrative integrated into one’s family and ethnic background.

Whether it’s the 100 Mile Diet, the Paleolithic Diet, Veganism, Fruitarianism, Baconism, the Mediterranean Diet, the Secret French Diet, the Atkins Diet, or the South Beach Diet (or whatever it’s going to be next month); whether you’re into sushi, Big Macs, arugula, Timbits, power colon cleansing, carbo loading, raw food, slow food, soul food, barbeque, Stouffer’s Lean Cuisine, or home cookin’… you’re probably justifying your choices with a ceremonial story you tell yourself as part of the experience, and that story is essentially dictating your choices and tastes to you.

Ultimately, the fact that we’re “just” telling ourselves stories isn’t the problem. It’s actually a necessary and often very positive part of the process. The problems only develop when we give these stories titles with capital letters and control over our lives. Then it becomes story-vs-story, we start mistaking theories as iron-clad dictates — one month eggs are the enemy, the next month they’re miracle food – and we get into these arms races by which, as Potter pointed out, someone devises a 50 Mile Diet to compete with the 100 Mile Diet, and then someone tries to better that, and so on.

These ideas are all useful in pointing us towards better ways of living — and better ways of living together — but in that regard they are only tools for helping us in the ongoing process of learning and building something better. This is what I ultimately came up with while putting my book together. Like our physical tools, it takes time and practice to learn how to use these ideas effectively. The fact that we tend to be clumsy in how we handle them is not simply an indication they’re absolutely “wrong,” it means we need to keep working on our ability to manage them.

The notion of authenticity is a heuristic for making quick judgements, or a broad brush for painting some experiences that tend to generate a more vivid sense of fulfillment than others. It helps us work out the general shape of things, but we still need to think critically, work out the details, and keep our minds open to better opportunities.

Much of what we label “authentic” really is worthwhile. But it isn’t a quality that permanently adheres within things. Authenticity isn’t a promised land. There are no easily understood schemes for living authentically (no, not urban agriculture either).

If anything, authenticity means freeing ourselves from these fads and simple answers, thinking critically and making the best of what we have — and the best we can make together.

In Praise of Copyright

Brian — Thu, 03 Jun 2010 22:42:46 +0000

Yesterday’s announcement of new copyright legislation in Canada was met with the expected array of complaints from complainers, aka bloggers, slackers, n’er-do-wells, social deviants, hipsters, and cultural parasites. They received the news as an affront to their supposed “freedom” to exchange intellectual and aesthetic work and reshape existing artifacts into new “creations.”

The dispute comes down to different perceptions of “rights.” One side claims primacy of the right to share and participate in the creative process, rather than consume info and entertainment via the terms carefully chosen for them by the wisdom of corporate and governmental bureaucracies; the other side claims primacy of the right to own and control bits and pieces of information and experience. One side is composed of (or at least ideologically infected by) parasites maximizing their own ends thanks to the creativity and information provided by others; on the other side are people who are primarily motivated by creative, intellectual, and social development.

What the impatient hackers and remixers don’t appreciate is that not everybody can be as creative as they want to be: some people just want a 9-to-5 job, some people just want to be rich, some people just want the sense of status and control conferred by a job title. Organizations have evolved as comfortable nests for many of these people to sit on their eggs. A lot of these organizations are in industries affected by copyright — think of record labels, TV networks, publishers and newspapers — and they absolutely depend on all of the barriers and constraints provided by copyright law for their survival.

Of course it’s somewhat ironic that copyright laws originally protected writers and composers from exploitation by printers and distributors; now it’s the means of distribution that are being protected. Anyhow…

You only need to walk into your local cineplex, or turn on the radio or watch network television for an evening to recognize how much cultural value is being produced by large organizations and protected by rules and regulations. And look at the artists themselves: it’s hard to even argue about the system’s fairness when Ben Stiller and whatshisname from Harry Potter can each make over $40 million in one year.

These are the sorts of realities that copyright rules are meant to preserve. Especially in Canada. Our creative economy has become a safe and comfortable place for a lot of executives, administrators, lawyers, IT and HR staffers, various people who like clip-boards, PowerPoint, and a sense of orderliness, occupying offices owned by deep-pocketed foreign conglomerates that are apparently more innovative and aggressive than Canadian companies. It wouldn’t be very nice if that system changed and all of those people had to give up careers they so dearly and passionately love.

Now that writers, musicians, film-makers (and people inventing whole new categories by mashing-up different mediums) can easily produce and distribute their work independently — now that organizational structures are becoming increasingly outdated and redundant — if we want to conserve the non-creativity of our creative economy it’s imperative that the Canadian government empower organizations with the ability to maintain the artificial barriers and conditions of scarcity on which their existence depends.

/satire

Motivation Reconsidered

Brian — Mon, 31 May 2010 11:18:38 +0000

Eric Schmidt shared this video via Twitter, depicting the gist of Dan Pink’s Drive: The Surprising Truth About What Motivates Us:

I feel like it shouldn’t be such a big surprise. Maybe I’m an extreme case, but most rewards seem offensive to me — like bribes — or condescending: “Hey boy, go fetch!” They have always turned me off (and my whole project here has essentially been an attempt to understand what motivates me — i.e. “what’s wrong with me” — and how it relates to conventional styles).

So I felt a real sense of affirmation when I found Deci & Ryan’s work on intrinsic motivation a few years ago. Pink explains it in a recent interview Wired conducted with him and Clay Shirky:

Both of us cite research from University of Rochester psychologist Edward Deci showing that if you give people a contingent reward—as in “if you do this, then you’ll get that”—for something they find interesting, they can become less interested in the task. When Deci took people who enjoyed solving complicated puzzles for fun and began paying them if they did the puzzles, they no longer wanted to play with those puzzles during their free time. And the science is overwhelming that for creative, conceptual tasks, those if-then rewards rarely work and often do harm.

But I don’t think they go far enough, or deep enough, or comprehensive enough, or ambitious enough. I’ve been all over these ideas for years. The more I see and learn, the more confidently I keep returning to the concept of “will to relevance.”

It underlies almost everything I write (first described in detail here; used earlier here and here), and is at the core of the book about truth, will & relevance I published.

“Relevance” incorporates “autonomy, mastery, and purpose” onto one axis — one value we can use to effectively assess why one experience will be more motivational than another, or how likely someone is to be motivated by something.

If physicists seek a single unified theory, why not psychologists?

A Book About Truth, Will & Relevance

Brian — Mon, 24 May 2010 17:16:13 +0000

My book is finished and available for purchase, download, or reading online. Sorry if you don’t follow me on Twitter or Facebook, where I already mentioned it a few days ago. This is the formal “announcement.”

Description:

Truth, Will & Relevance outlines an innovative way to understand human nature and conduct — conceived specifically to address today’s complex opportunities and challenges using the technology that defines our time.

Reading Options:

purchase the printed soft-cover book priced at US$9.99 at Lulu.com
download a free PDF via Scribd
read chapter-by-chapter online

Background:

This is a unique book. On one hand, much of the content originated in the form of essays and blog posts; on the other hand, most of the research and tough thinking behind all of them — the “heavy lifting” — was done earlier, before any of these essays were written, with an eye on eventually fusing everything into a single, “big picture” argument.

So now?…

The rest of my writing will focus largely on the ideas outlined in the book, which is really a germ or a seed from which to expand. A lot of sources, arguments, and elaborations were left out of it — consciously (though somewhat unwillingly), knowing that I would have ample opportunity to develop those in blog posts and maybe articles.

In the process of putting this together I also managed to spin off a couple of rough outlines for books with more mass appeal, as well as more comprehensive rigour, which I would approach in a more conventional way, i.e. looking for financial and editorial support.

Thanks to everyone who provided comments & encouragement along the way.

Apple’s Problems: As Long As We Care

Brian — Sun, 11 Apr 2010 06:33:44 +0000

Steven Johnson has an excellent column in the New York Times, on the iPhone and the mixed merits of open and closed platforms.

He begins with a reference to Jonathan Zittrain’s work on “generativity,” (familiar to readers of this blog) i.e. “the ability of a self-contained system to provide an independent ability to create, generate or produce content without any input from the originators of the system.” [Wikipedia]

Zittrain wrote The Future of the Internet after the iPhone was released but before Apple launched the app store. He introduced the book with the story of how Apple went from making products that exemplified generativity, to the iPhone, which exemplifies “sterility”:

Rather than a platform that invites innovation, the iPhone comes preprogrammed. You are not allowed to add programs to the all-in-one device that Steve Jobs sells you. Its functionality is locked in, though Apple can change it through remote updates. Indeed, to those who managed to tinker with the code to enable the iPhone to support more or different applications,⁴ Apple threatened (and then delivered on the threat) to transform the iPhone into an iBrick.⁵The machine was not to be generative beyond the innovations that Apple (and its exclusive carrier, AT&T) wanted. Whereas the world would innovate for the Apple II, only Apple would innovate for the iPhone. (A promised software development kit may allow others to program the iPhone with Apple’s permission.)

Well the development kit was released, the app store was launched, and Zittrain quickly made qualified concessions (which he had already left the door open for) — calling the iPhone a “tethered appliance” rather than a completely sterile one: an improvement, but not ideal. It’s far from open.

Fear and loathing of Apple’s authoritarianism has been climaxing since the company solidified its commitment to control with the iPad. It’s hard not to be swayed by critics like Cory Doctorow:

The way you improve your iPad isn’t to figure out how it works and making it better. The way you improve the iPad is to buy iApps. Buying an iPad for your kids isn’t a means of jump-starting the realization that the world is yours to take apart and reassemble; it’s a way of telling your offspring that even changing the batteries is something you have to leave to the professionals.

… intensifying this past week with announcements placing further restrictions on app developers, including effectively banning Flash development — just one episode in that particular battle.

This is complex stuff. People’s beliefs can be unambiguously pro or con, but when we talk about what we should do about enforcing or encouraging openness, we get into these nasty paradoxes. Consider the net neutrality debate, for example. As as Jeff Jarvis put it:

Here’s the rub: On the one hand, I do not want government regulation of the internet. On the other hand, I do not want monopoly discrimination against bits on the internet. I see it as a principle that all bits are, indeed, created equal. But how is this enforced when internet service is provided by monopolies? Regulation. But I don’t want regulation. But… That is the vicious cycle of the net neutrality debate.

So what do we do? [One way is to] “let the market decide”: if developers want to develop mobile apps in Flash and they’re afraid Apple will potentially do harm to the generative internet if they keep doing things this way, then developers can make apps for Android and Blackberry and whatever else, forget about Apple, and the company would be worse off for it — at least until Jobs sees his market share slide, recognizes the error of his ways, and tears down his closed app ecosystem’s wall.

Hypothetically.

For now things seem to be working out pretty well for them — not just in terms of sales, but in terms of generative innovation, as Johnson points out in his piece:

… by just about any measure, the iPhone software platform has been, out of the gate, the most innovative in the history of computing. More than 150,000 applications have been created for it in less than two years, transforming the iPhone into an e-book reader, a flight control deck, a musical instrument, a physician’s companion, a dictation device and countless other things that were impossible just 24 months ago.

Johnson gets down to the notion that innovations can come from constraints (as I’ve discussed in depth). Creativity cycles between open and closed, divergent and convergent, evolving and developing, etc.

What can be interpreted as freedoms taken away by Apple may also be interpreted as giving app developers freedom from having to think about things that don’t directly go towards making the best possible application.

As long as we’re talking just in terms of “freedom and democracy,” we’re just going to perpetuate disagreement and confusion (see Matthew Yglesias’s recent post about how the right often opposes free markets, and

political conflict much more commonly breaks down around “some stuff some businessmen want to do” vs “some stuff businessmen hate”

Anything can be construed as being free or unfree, democratic or undemocratic by people merely trying to get ahead. John Gruber noted that Adobe and Apple are both jockeying for market control (for the full background, see Tim O’Reilly’s overview of all of the maneuvering to eventually control the “internet operating system”) so who’s really the champion of openness? Google? Maybe — but could we really trust any competitor’s rhetoric?

Talking about openness is a little better, but still vague. This is why I write about it in terms of generativity and innovation: at least then we’re talking about results, which we can talk about and evaluate more objectively. But generativity isn’t enough — or at least it isn’t enough in itself.

What we need to be talking and thinking about is critical responsibility — by which I mean, actually caring about qualitative outcomes, paying attention as the process plays out, thinking critically, trusting our own judgement about what’s good, right, and beautiful (and actually working at cultivating good judgement before we fully trust it) and being willing to change our minds.

This is what Apple has that sets them apart. Steve Jobs cares a lot about the quality of the products his company produces: [the spirit of craftsmanship is alive at Apple.]

It’s also what Jonathan Zittrain and Cory Doctorow and the best critics and theorists have too. [They aren't trying to score politically (at least that isn't their primary goal -- though they might try to get political traction for the sake of promoting what they genuinely think is best for society). They care about the outcome and the process itself, not just how much money and control they'll have at the end of it.]

It’s what we should all aspire to.

I think ultimately we’ll overcome the current challenges when we develop a better vocabulary — concepts for talking about the process in qualitative terms, exercising personal judgement, and engaging in genuine dialog, rather than having to base our assessments entirely on either profitability or abstract principles — both of which are far too easy to game for the sake of hidden, political, acquisitive purposes.

For now I’m just happy to be reminded every day that people like these care about quality, whether it’s the quality of a product or the quality of our society — or both — as well as the quality of our conversations and debates.

I thank Jay Rosen and Felix Salmon for the link.

Minor changes made April 11, 2010 for elaboration and clarity.

Minds for Sale

Brian — Thu, 04 Mar 2010 08:53:56 +0000

This talk is causing me to reconsider many assumptions and ideals.

For the most part I still believe in cultivating more creative and educational autonomy for ourselves in order to overcome the digital sharecropping and sweatshop-type mind labour that critics are warning us about.

Ultimately I keep coming back to my belief (for now it is based largely on faith) that there must be enough people like me out there (somewhere) who are apathetic about games and incentives — and passionate enough about being responsible and doing genuinely valuable things — to maintain a balance.

The web can and should be used to reveal consequences and open things up for scrutiny, not hide them.

At this point things might go either way, so if we like openness, responsibility, and genuine value so much (as I do), then let’s not waste any time developing good platforms and communities to keep people’s attention preoccupied from the potentially bad ones.

Our challenge is to create and provide experiences (rather than impose them) that will shape social norms to favour moral accountability before too many people get comfortable not having any.

Generativity & Prosperity

Brian — Mon, 15 Feb 2010 10:37:52 +0000

Generativity: maybe the most important word we’ll use in the next 10 years. It applies to all aspects of the challenges we face: social, technological, cultural, intellectual, economic.

There’s a big article in the newest Atlantic that got me thinking about it: How a New Jobless Era Will Transform America:

If it persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults—and quite possibly those of the children behind them as well. It will leave an indelible imprint on many blue-collar white men—and on white culture. It could change the nature of modern marriage, and also cripple marriage as an institution in many communities. It may already be plunging many inner cities into a kind of despair and dysfunction not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years.

The recession is technically over but we know the situation is more complicated than that. There are no economic models for seeing where we’re going. These are unprecedented times; our thinking will have to be unprecedented too.

Regardless of what you expect from the future, the best way to deal with uncertainty is to make things with ”an independent ability to create, generate or produce content without any input from the originators of the system.” That’s what generativity means.

Technology provides the clearest examples of how generativity works (think of how the internet developed through many contributions that combined in unexpected ways). The concept is often associated with Jonathan Zittrain. Lately there’s been a lot to write and speak out about, with controversies about net neutrality, and open standards, closed vs open platforms, etc.

Look at the iPhone. Much of its success is due to the additional value offered by third party apps. No company alone — not even Apple — would have the imagination or expertise to produce more than a fraction of these.

But Apple’s approach isn’t completely generative. While not completely sterile either, it’s still what Zittrain calls a “tethered appliance.” Dave Winer has been on a role about this dilemma. I think his post on whether we should trust the iPad captures it pretty well. On one hand the iPad is an interesting (and downright seductive) platform to develop for. There’s going to be some awesome stuff that we’re not even able to conceive yet. But on the other hand, Apple controls the platform (and it’s also not tinker-friendly), which puts constraints on how generative it can become.

Putting artificial constraints on generativity can stifle growth (imagine Twitter without third party applications, e.g. TweetDeck, or user-generated syntax, e.g. @replies and #hasthtags), and it can also introduce the risk of wiping out an entire creative system all at once. As Winer pointed out:

The problem is this — if Facebook goes away — and it could, so does everything everyone created with it.

The same might be said about Twitter, but in their case many of the third party applications are already working with similar services, and the service can easily be replicated elsewhere.

As for users, if you’ve merely been collecting subscriber counts, then you run the risk of instantly losing years of work; Twitter might suddenly cease to exist or kick you off by changing its terms of use. But if you’ve been developing genuine relationships with real people, based on the exchange of real value, then you’ll have generated connections beyond Twitter and you’ll have the means to recovering the community you helped build. In that case, change won’t be such a problem, and may even present some great new opportunities.

Note that genuine and generative (as well as genius) come from the same root: “beget.”

Relationships, complex competencies (developed through experience and understanding, not merely simple techniques and repetition) and communities of practice are generative things we can invest in that don’t just retain value in an uncertain future, but tend to create it.

Think about losing your job. What do you have left? It’s best to invest in generative possessions — relationships, reputation, mastery — things that go beyond the bounds of any particular office or shop. These are the things we need to focus our time and energy in. Human civilization has always thrived through generative processes (and keeps failing whenever things became too sterile and closed).

Technology might provide the clearest examples of generativity, but the truest examples are family and community.

Predating the concept of The Generative Internet is the term’s use in the context of social and psychological development. Psychologists Erik Erickson and Dan McAdams are associated with it. David Brooks invoked it a couple of weeks ago in a column about the need for older generations to help the younger ones — not just for the sake of young people, but for the good of society and their own personal well-being:

One of the keys to healthy aging is what George Vaillant of Harvard calls “generativity” — providing for future generations. Seniors who perform service for the young have more positive lives and better marriages than those who don’t. As Vaillant writes in his book “Aging Well,” “Biology flows downhill.” We are naturally inclined to serve those who come after and thrive when performing that role.

Working with the next generation isn’t about giving them (us) absolute freedom, nor is it about controlling or trying to have them do everything as you did before. It’s about providing the framework, then stepping back to see what independent creators will make of it… then stepping in with an updated framework, then stepping back, and so on.

We’re different people in a different world, addressing different challenges, creating new opportunities. You can set certain conditions for growth, but ultimately the best outcomes are generated when those conditions are deliberately open enough for people to play, learn new tricks, make new models, and discover new forms of interaction and value.

No specific solutions are guaranteed to get us through whatever’s brewing for the next few years… whether the next few years turn out better or worse than people expect, we know at the very least a lot will be unprecedented.

The very least we can do to prepare for an uncertain future is give ourselves the freedom and discipline to build — something original — on what came before.

My forthcoming book will elaborate, with a lot more background on this. Make sure you subscribe by RSS or by email or follow me on Twitter to stay in-the-know (hint: it’s in the design stage now).

Why Would a Twenty-Something Stay in London?

Brian — Mon, 01 Feb 2010 00:21:44 +0000

Chantelle Diachina, Gina Farrugia, and Grant Hopcroft discuss the opportunities and challenges for retaining young people in London. Photo: Kevin Van Lierop

Today I was trying to answer this question in a group discussion at AgendaCamp. Most of the time we talked about reasons to not stay in London.

Personally, I moved back to London in 2000 after finishing school to regroup before figuring out what to do with my life… And I stayed in London because I’m still figuring out what to do with my life.

To be honest I don’t think there is an answer to that question (I mean, the question about retaining young people — though I’m increasingly inclined to think the other question doesn’t have an answer either).

There is no reason for a 20-something to stay in London.

But at the same time, there are lots of reasons.

While there’s no magnetic attraction to draw masses of young people, there are also an infinite number of possible niches and opportunities to retain a few of the right individuals who are naturally suited for London’s character and pace.

The answer our group came up with (notes are here and earlier ones here) can be summarized roughly as

London offers opportunities to have an impact than a young person would have in a larger city. Social networks can be more intimate and diverse at the same time, with more access to the kind of dialogs we had today.

[Update: To be clear, credit for that goes to the group but it was Kevin Van Lierop who nailed the "opportunities to have an impact" phrase, building on James Wilkinson's comments and with elaboration mostly my Jodi Simpson. I contributed very little.]

It sort of contradicted a lot of our criticism in that session and others that the older generations’ established power networks are too comfortable (that was expressed by both young and old alike) with the notion that young people, regardless of talent, need to “wait their turn.”

Of course, the most talented tend to chose to go wait in a city that’s a lot more fun in the mean time.

Either way, I think we can best resolve the situation by coming back to the idea articulated by Kevin in the session that it’s about personal impact through genuine human connections, embracing people who are the right fit, sending the right signals to students so they know exactly what kind of city London is, and demonstrating we’re willing to invest in their future — our future.

Any attempt at setting up top-down programs will be inherently difficult — if not completely counterproductive — especially if they are explicitly targeting young people.

Young people don’t want to be targeted. They don’t want to be young people. They want to be whoever they decide they’re going to be, on their own terms.

I remember reading a case study — can’t find it now — explaining that Teen Spirit deodorant failed because teens, in a sense, didn’t think of themselves as teens. Young people aspire to be older. Marketing needs to aim a few years higher if it’s going to be explicit about demographics.

Or we could just keep demographics out of the message and simply start doing more things right. If we want to appeal to young people the first thing we need to do is give them the impression the city is moving forward.

If they see London moving forward more of them will want to be a part of that.

Most of these steps are things that London — and any city — should constantly try to improve anyways: continuing to vitalize the core, becoming more eco-conscious, making sure there’s decent and affordable places to live available in vibrant neighbourhoods, enabling diversity to continue thriving, facilitating healthy lifestyles, and becoming a more digitally connected city (not just in terms of hard wires and wifi but in terms of becoming a lot more digitally active, sophisticated and savvy).

By comparison, if younger generations see the city simply preserving existing structures and mindsets (whether or not that’s the case; what’s important is what people perceive), it will always be an uphill battle trying to attract & retain them.

If London promotes a positive identity (genuinely, not just in the form of platitudes) and people choose to live here for positive and appropriate reasons (not apathetic ones like mine) and they’re are allowed to invest their skills and interests in suitable challenges — to experience a sense of personal growth and belonging — then the rest starts taking care of itself and the strategic outlook becomes more clear.

Growing London’s appeal to young people is going to be won by margins, constantly building individual success upon individual success. To put it simply, we need to retain just enough graduates from this year’s classes so they can send the message to next year’s graduates… and so on.

Progress is going to occur largely on a personal level. It’s going to have to go through the channels young people are already hooked into and where they’ve already invested their trust.

This is just the kind of hyper-connected, hyper-personal world we live in now.

It’s the lesson every marketer has had to learn with the advent of social media. Every decent book on the subject — from Cluetrain to Trust Agents — makes essentially the same case.

Looking at the bigger picture, these principles are good in themselves. Making our civic life more open & engaging has all kinds of benefits in terms of quality, sustainability, and effectiveness of governance going beyond talent retention.

It’s something we need to be working on, like, today.

Oh right — we are…

Tune in to tomorrow night’s episode of the TVO’s The Agenda, live from UWO. Today was a great experience and I can’t wait to see what fruit it might bear — not just tomorrow but through the course of the year and beyond, keeping the momentum up with similar events.

P.S. Jobs certainly don’t hurt either.

Update: Photo by Kevin Van Lierop via Flickr.

Making It a Great Year

Brian — Fri, 01 Jan 2010 11:20:10 +0000

Literally!

Out of all the things buzzing in my head for a “new decade” post, the idea I want to highlight most is the increasing importance of making stuff.

It’s been germinating in my mind via MakerCulture in the Making by UWO + Ryerson’s online journalism classes. Last week it was crystalized by Umair Haque’s “Builders’ Manifesto” for HBR:

Today’s builders are igniting the distant grandchild of yesterday’s industrial revolution: an institutional revolution for a post-industrial world. They are forging the new building blocks — from ethical investment, to deep journalism, to socially useful finance, to universally accessible communication — that a rusting economy, society, and polity so urgently demand.

The 21st century doesn’t need more leaders – nor more leadership. Only Builders can kickstart the chain reaction of a better, more authentic kind of prosperity.

Our culture has already become very goal-driven in a pernicious way: the numbers and titles are often treated as more valuable than real value. Look at Enron, look at AIG. Look at the gamesmanship in politics. Look at what people are not learning at school…

But this week I’ve noticed a change in the way people are assessing their past-year performance and setting their New Year goals.

It isn’t just about hitting targets within institutional frameworks, I’m seeing more of us talking about learning and stretching beyond given boundaries… making stuff with the resources at hand — things we can actually own and control — creating bits of value that might be small, but at least we can keep…

It’s another example of the web as our way to understanding. I’m watching people use it as a platform for tinkering and trying things, learning and taking on new challenges, putting their work out in the open for feedback and discoverability, collaborating on projects and sharing knowledge, and growing in the process.

This isn’t new (remember this is one of my earliest public predictions) but the fact it is becoming more deliberate and openly accountable is noteworthy. There seem to be new conventions emerging (i.e. replacing resumés with reputation and digital breadcrumbs).

Eventually organizations will learn to incorporate makership, or constructivism, or whatever you want to call it. Entrepreneurship will eventually be brought within institutional bounds… eventually. For now, they still have a lot of learning to do.

Locally I noticed Scott Webb contrast his creative and entrepreneurial endeavours with the institutional apathy he sees at his “day job”:

within my corporate cubicle life, my job usually requires us to do an annual review and most people don’t care about it. It’s a time they despise and try to avoid.

Compare that attitude with what we see around the blogosphere, especially in everyone’s annual reviews.

Look at Pat Dryburgh’s post written in the wee hours of Christmas morning, outlining how he’s going to work on making his approach to design more purposeful and strategic in the new year.

One of Kevin Van Lierop’s year-end posts is what made all this click for me:

This past year has been a productive one for me in terms of photography. Not only did I purchase my first DSLR, but I started a community group, have had a number of images published and have even made a little bit on money on the side because of my photos.

The number of people whom I have met because of photography has increased within the last few months and I am glad to have met each and everyone of them.

All in all this past year has been, what I will call, an overwhelming success.

The success we make for ourselves is so much more generative and sustainable than the kind that’s merely won and awarded “in recognition.”

And surprise surprise, research shows that making progress is the number one motivator at work. According to an article in the current Harvard Business Review, this part by Teresa M. Amabile and Steven J. Kramer:

On days when workers have the sense they’re making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive and their drive to succeed is at its peak.

Ironically, I’m deeply skeptical about our macro-economic prospects for the next couple of years, yet I’m writing a very positive post.

I’m optimistic because I know that despite the worst that could happen, as long as we’ve adopted the spirit of makership and mastered autonomous creativity, we have the will and means to adapt and endure anything.

So bring it on…

Thinking in the 21st Century: Progress Report

Brian — Sun, 27 Dec 2009 23:31:13 +0000

The premise of this series is to work out a new way of looking at our changing world»

Part of the reason we’ve had so much difficulty making sense of the complex events of the past decade is that our ways of thinking — specifically, the metaphors, analogies, and images we resort to — have not caught up to the technologies and practices of our age.

We live in a world that consists of distributed, decentralized, and constantly-changing networks of real-time connections, but we still think in terms of simple one- and two-dimensional polarities, velocities, pressures, and collisions.

It’s like we’re trying to draw three-dimensions without knowing anything about linear perspective. It would be easy if someone could just show us the tricks — but nobody has quite figured those out yet.

Overcoming the old habits, learning new ones, is an incremental process. Think of it as replacing planks on a platform one-by-one rather than tearing the whole thing down. We still need something to base our thinking on, it’s impossible to simply clear everything away at once. Or you can think of this as either bootstrapping or disentanglement: we need to get the new ideas through the old; ratcheting ourselves up gradually, using the old habits as leverage for learning new ones.

Specifically, digital media needs to serve as a metaphor for appreciating the new ideas about human nature; at the same time, the updated understanding of human nature is required to fully appreciate a socially dynamic world connected by digital media… back-and-forth until both aspects become intuitive.

The series itself was inspired by a more recent post about social media and the creative/intellectual cycle»

Everyone has a slightly different interpretation, with a slightly different vocabulary (that is constantly evolving). Batches of books keep coming out that say essentially the same things in different ways, suited to slightly different needs (which is natural). There’s a lot of corroboration and consistency but it’s mostly tacit and subjective, difficult to get an objective grasp on.

So when we find ourselves in disagreement — like Chris Brogan and Robert Scoble recently have (see here and here) — we have to be nice to each other, agree to disagree, and wait for new features to come along and reframe the disagreement or make it irrelevant. We lack the basis for objectively placing each other’s interpretations in relation to each other.

Most disagreements don’t even matter very much because people inhabit different spaces within the domain. That helps everyone get along, but a lack of friction also indicates a lack of scientific traction. There’s no rigorous, canonical framework for figuring out who’s right and decisively eliminating the bad ideas (other than watching them try and fail).

There’s little in the way of unifying structure — no definitive map, no architecture that shows exactly how everything connects.

We’re well into the digital age but still camped in tents.

That might be acceptable (and probably necessary for a time) but I don’t think it’s optimal or sustainable. It has to change eventually.

A new lightning rod

There’s a lot of electricity in the air.

It’s going to ground itself somehow — whether we wait for sparks to fly or whether we construct some kind of theory, structure, or apparatus for conducting it in the most generative (or least destructive) way.

But it isn’t just about social media or even the web. I’ve been working on the “grounding” thing since well before I began blogging. The web definitely factored into it, but as one of many other cultural aspects, e.g. as I wrote in my first post, a week after the start of 2007′s credit crisis that transpired towards 2008′s financial collapse… I expressed concern that our ideas are on the same shaky ground»

It’s the same with ideas as it is with money: it isn’t wise to go from fad to fad, investing with borrowed wealth; we need long-term vehicles for learning and understanding that retain some of their value when markets lose their footings — or rather, such long-term enterprises are the stabilizing force that markets need.

I’m referring to both ‘knowledge markets’ and financial markets: the former is a foundation for the latter…

To address arguments that thinking is a waste of time and action is universally superior to theory, I made a case for why ideas need to be managed» (while accepting it’s ok if most people don’t want to do it).

This idea of investing in and managing ideas was elaborated most fully in a post outlining a new kind of pragmatism»

Think of how much life goes by without being harnessing for educational or intellectual use. There are ways to turn anything towards more generative, sustainable, and manageable ends. All experience is in a sense learning experience, but it is predominantly undisciplined and unproductive; we tend to let most things come and go without effecting us or our ideas and habits.

Meanwhile, we allow ideas and habits become important parts of our lives without accounting for them. We learn some of our most influential habits, preferences, and beliefs by accident. Most people have no clue how these were formed, nor would they know how to evaluate or correct them. When these habits, preferences, and beliefs are challenged, people will stand up for “who they are,” they’ll go to war over “what they believe,” but they are hardly able to make any account of the sources of their identity or beliefs, nor make the even the minutest adjustments needed to turn a destructive confrontation into a generative conversation. Instead, most people are content merely to be “who they are,” and “agree to disagree” with anyone who’s different. This goes nowhere.

The ultimate good of pragmatism is not profit or truth; the ultimate good of pragmatism is social. Pragmatism is the attitude by which individuals humanize the organizations and institutions where they work, learn, and live. As these institutions become more humane, it becomes easier to be humane ourselves. As we “unstiffen our theories” we are better able to communicate and collaborate – resolving differences, overcoming challenges, and addressing new opportunities, both in our private lives and as part of larger public enterprise.

A ‘pragmatic plasticity’ is required to be both tough and soft – rigid at times and malleable at others. On one hand we need to use hard facts and rules to avoid or overcome subjective excesses. On the other hand, the desired aim of life is subjective well-being and freedom.

So I’m going to suggest a couple of terms to describe two complementary aspects of the pragmatic approach to working, learning, and living: ‘open objectivity’ and ‘tempered subjectivity.’ Tempered subjectivity is the supposed end, and open objectivity is the means to that end.

Open objectivity recognizes that we can’t accomplish anything together unless we have hard structures and facts to serve as common points of reference. When disputes arise, we need to be able to say, “Well, let’s see how X turns out, then we’ll know if either one of us is right.” But this is no way to enjoy life; merely knowing what’s right and following hard rules is not the whole point of living, so this objectivity needs to be open-ended, incomplete, liberating.

The point of working, learning, and living in those objective structures is to develop enough personal knowledge and competence so that we’re not totally bound by those structures. The aim is to learn how to make spontaneous decisions and evaluations that are just as fair and effective as those calculated by objective instruments. This is what I mean by tempered subjectivity, whereby free thinking has been (in)formed by objective structures and facts, and those structures and facts are always readily available to keep thinking from wandering back towards past mistakes.

Creative freedom is both experienced as enjoyable in itself and serves practical necessity – just like owning your own home. At its simplest, a good and happy life is about having the freedom (which, don’t forget, also means having security and stability) to enjoy spontaneous moments of beauty, discovery, laughter, and love.

At the same time, emergencies and surprises inevitably occur, whether we want them to or not, and these cannot totally be accounted for by objective means in advance. The most effective response to new realties is performed by people who have been trained to just know what to do without being paralysed by analysis.

Ultimately, a society of human minds is smarter than anything we could ever design. But our minds can’t function without conceptual facilities, and these facilities are designed. If they’re designed poorly, we think poorly; if they’re designed well, we think well.

A lot of what I’ve written since then is an attempt to refine and rephrase and illustrate those points in relevant contexts. Most prominent is my attempt to frame web as our way to understanding»

I’ve been learning a lot more from the web than merely web-stuff — and so have you, whether you know it or not.

First, our tools, activities and surroundings literally teach us how to think. We constantly absorb metaphors and images that go on to inform our intuition and reason. [...]

In the past, the most dominant metaphors in civic and commercial spheres were from machines, war, and sports. Now the metaphors are becoming more organic (e.g. concepts like “streams” and “cloud computing”). As life and work gets more networked and dynamic via the web, life and work via the web also supplies the metaphors for making sense of the new structures and systems.

Like nothing else, social media provides a working model of life’s yin and yang»

Imagine there are two essential aspects of everything (that go by many names): space and time, body and soul, object and subject, rest and motion, permanence and change, solid and fluid, stable and dynamic, being and becoming, existence and experience…

These two aspects exist for each-others’ sake. Space couldn’t happen without time, while time couldn’t be measured or observed without space. The object can’t exist without a subject experiencing it, while the subject couldn’t experience without the existence of objects, etc.

Think in the practical terms of the web: if a site isn’t used, then it dies; if an event occurs but doesn’t leave a permanent record, then it dies too. The optimal arrangement is events-generating-artifacts, artifacts-generating-events.

The importance of the subjective, moving, living aspect should be self-evident: we’ve all experienced it — especially people who’ve nurtured relationships online before meeting in person…

Conversely, we sometimes forget how important it is to make permanent stuff. It’s more of a long-term investment (or maybe just an insurance policy that could never pay off — but just might…), the benefits of which aren’t immediately evident. It’s great to just enjoy life but activities that generate artifacts and monuments tend to be the ones that spread, replicate, repeat, and survive.

If necessary, I’m not afraid to get deeply cosmological to address the life’s vital and flowing character»

To understand why we do things, we have to appreciate why things happen at all.

It’s ridiculously simple: things happen because time exists.

I’ve found this principle to be a useful heuristic for grounding uncertainty and making random occurrences continuous with the rest of experience.

If something weird happens — e.g. someone acts crazily, markets go haywire — rather than guessing wildly at causes or dismissing the event as completely unexplainable, we can start by reminding ourselves that “something had to happen” and organize our thoughts from there.

It isn’t so much an explanation as it is a way to overcome some of the old ideas and biases that prevent us from recognizing and understanding new opportunities. On the deepest level, we need to be careful we’re not resting on false assumptions of concrete objectivity»

There is no logic that compels us to explain everything logically, there is no purely objective account of why or how we can be purely objective; instead we have deep undeniable feelings that we must make ideas objectively explained.

Start with that simple fact and work backwards: instead of obeying the rules of objectivity, account for them.

Evolution is the ultimate explanation for all of our knowledge and beliefs.

It’s about what’s practical — whatever works in the long run, whatever manages to survive and succeed.

We’re the species that happened to acquire imagination and memory capable of transposing the real world into a conceptual world of symbols — abstract objects that aren’t subject to the physical laws of change and motion affecting the rest of reality.

The impulse for manipulating abstract objects and transposing them back into real-world action eventually developed into principles and laws, which in turn provided frameworks for civilizations.

Civilizations themselves are conceived as objects that come into contact with other communities — “the barbarians,” etc.

History indicates that (at least where and when the environment allowed), civilizations which accommodated the most complex systems of abstract objects tended to persevere and succeed over those that used less complex abstractions.

Occasionally there have been exceptional disruptions, but in general the civilizations which dominated have tended to have the most effective systems of ethics and discipline, the most sophisticated mastery of science and engineering, and the most powerful religious symbols.

A hypothetical pre-historic group that wasn’t comfortable with abstractions like “freedom” or “justice” (or “me” or “us” and “them” — or truth itself) may have been more empirically sound but they wouldn’t have been as effective at communicating and collaborating.

Such a group would have found it more difficult to surviving — especially if they lived in the same area as proto-humans better-developed systems for working, living, and fighting together.

But eventually our objective systems reach a point of diminishing returns.

At some point, rather than expanding, the system starts to require more and more energy to merely maintain the integrity of the structures, rules, and information they already have.

Large empires find themselves with infrastructure and other resources that need to be protected. Monuments deteriorate and need to be rebuilt. Institutions acquire their own momentum, making them difficult to steer.

Meanwhile knowledge accumulates and becomes hyper-specialized.

One teacher might have a hundred students, each working in their own narrow sub-specialty. When the teacher passes away there’s nobody left who remembers how all the paths once parted — and anyone who tries to reunify the field will have to contend with ninety-nine accusations of ignorance and meddling.

I’m afraid this is the point we’re at now: earlier generations built amazing things, but as we work with the ideas and institutions they passed onto us, nobody knows how how it all works together.

It’s time we take a close look at all of our ideas and institutions with an evolutionary appreciation.

The ideas and institutions of the past aren’t permanently true and good, they simply worked for some time. Now it’s time to reassess whether they’re still as generative and sustainable as they once were.

But we also need to be careful of new ideas and institutions.

We may recognize a problem but then become attracted to the first new abstraction that occurs to us — and sometimes we might be attracted to a new abstraction even while the old ones still work fine.

We have to assess every idea that occurs to us by reminding ourselves how powerfully attractive abstractions can be to our imaginations — especially the simplest and most obvious ones — and evaluate every idea with the question, “What are the real effects of this idea?”

Even the idea of object bias is subject to object bias, we have to consider this as well.

By turning the idea of object bias on itself you might send yourself in seemingly endless circles.

It might seem meaningless and futile.

It isn’t futile.

It’s possible, with practice, to overcome the discomfort of uncertainty. It’s possible to cultivate the habit of doubting ideas without dismissing them altogether. The hard-earned ability to manage ideas is more valuable than any idea will ever be.

Accept it and move forward, develop techniques to take advantage of concrete objectivity without trusting it absolutely»

It’s by working with the static slices of time and learning how to interpret them that we learn to understand what’s happening.

Understanding isn’t a thing we hold, it’s an activity we learn and maintain through practice.

It’s also worth considering that putting data and intuitions together isn’t just prescriptive, it’s descriptive; i.e. we never handle facts without affecting them with emotions or intuitions. [...]

That’s the ultimate verification or falsification we should be watching for: not just how accurate the ideas themselves are themselves, but how effective we are at managing our ideas.

That idea of managing effectiveness isn’t just prescriptive, it’s based on a basic fact that personal efficacy is what actually motivates and gratifies people»

A number of theories have extended that insight. Probably the most widely known is Mihaly Csikszentmihalyi’s idea of flow (1990), which means to become fully absorbed in a challenging-yet-doable activity that requires concentration and skill but seems effortless, involves goals, and generates constant feedback and growth.

Complementing flow is the notion of intrinsic motivation, specifically self-determination theory described by Edward Deci and Richard Ryan (1985).

As with the ideas of White and Csikszentmihalyi, the need for competence is key to self-determination theory. Deci and Ryan also emphasized the importance of personal autonomy — i.e. to recognize that outcomes result from personal decisions, not from external interference.

Deci and Ryan also include the need for relatedness, or “organismic integration” — a process of assimilating environmental elements inwards and accommodating oneself back outwards to the environment.

The reason why those ideas from psychology have not had as much influence as they deserve in business, politics, economics, etc, is that we haven’t had the metaphors and models to make them intuitive.

But we do now — thanks to the social web and its well-defined networks of relationships and ongoing interactions. A couple of years ago I proposed we should think of ourselves as motivated by a kind of will to relevance»

The problem with the simplified good-evil accounts of human nature is that they treat people as hard, static, well-defined mechanical units — wealth maximizing machines — whereas our behaviour is affected by all kinds of dynamic, ongoing, subjective processes and interactions that are difficult to define and control.

So I stumbled on the term “relevance” to replace “power.” It’s essentially in the same spirit as Nietzsche’s original, but “relevance” changes the connotation fromdomination and control to connectedness and meaning. Mind you, connectedness and meaning may just happen to manifest itself as domination and control, but connectedness may also manifest itself as altruism, etc.

In my original notebook entry from March 1, 2005, I wrote that “the tendency of individuals persists to an (unknown) end of maximum social relevance — peer-level connections.”

Google’s search engine (especially PageRank) acts as a metaphor for this theory the same way that mechanical engines provided metaphors for nineteenth century psychology, and, for that matter, the same way that older computing vocabularies in the mid-twentieth century provided metaphors for cognitive psychology.

And it isn’t just the search engine itself. Witness all the effort that goes into maximizing websites’ “relevance” to increase and sustain traffic. It isn’t just search engine optimization: consider the absurd amount of friending on MySpace, whereby people accumulate tens or even hundreds of thousands of “friends”; or witness bloggers jockeying for “authority” ratings on Technorati by exchanging links and RSS feed subscriptions (which, if you read any of the countless blogs devoted to the topic of how to make your blog popular — another absurdity — too many bloggers seem to value stats far more than actual readers).

But relevance means more than just maximizing connections and links, it’s also about optimizing the appropriateness, context, integrity, vitality, richness, and reciprocity of those relations: it’s about how effective and alive our connections are. The value of the subjective relevance of “1000 True Fans” may be far greater than the value of the objective relevance of 10,000,000 “friends” in MySpace, or “authority” points on Technorati…

This is where I’m at… much more to come.

Dynamic Motivation

Brian — Sat, 12 Dec 2009 10:13:28 +0000

Continuing the series…

Trying to understand human motivation and behaviour, a few years ago I finally came across this article: Motivation Reconsidered: The Concept of Competence, by Robert White (1959).

According to the current APA abstract:

Theories of motivation built upon primary drives cannot account for playful and exploratory behavior. The new motivational concept of “competence” is introduced indicating the biological significance of such behavior. It furthers the learning process of effective interaction with the environment. While the purpose is not known to animal or child, an intrinsic need to deal with the environment seems to exist and satisfaction (“the feeling of efficacy”) is derived from it.

White’s appreciation of the continuity of experience is what I found especially compelling:

Dealing with the environment means carrying on a continuing transaction which gradually changes one’s relation to the environment. Because there is no consummatory climax, satisfaction has to be seen as lying in a considerable series of transactions, in a trend of behavior rather than a goal that is achieved. It is difficult to make the word “satisfaction” have this connotation, and we shall do well to replace it by “feeling of efficacy” when attempting to indicate the subjective and affective side of effectance [motivation].

A number of theories have extended that insight. Probably the most widely known is Mihaly Csikszentmihalyi’s idea of flow (1990), which means to become fully absorbed in a challenging-yet-doable activity that requires concentration and skill but seems effortless, involves goals, and generates constant feedback and growth.

Complementing flow is the notion of intrinsic motivation, specifically self-determination theory described by Edward Deci and Richard Ryan (1985).

As with the ideas of White and Csikszentmihalyi, the need for competence is key to self-determination theory. Deci and Ryan also emphasized the importance of personal autonomy — i.e. to recognize that outcomes result from personal decisions, not from external interference.

Deci and Ryan also include the need for relatedness, or “organismic integration” — a process of assimilating environmental elements inwards and accommodating oneself back outwards to the environment.

Of course, it almost goes without saying. Any theory of development (i.e. usually focused on childhood) involves a process of interacting with the environment and vice versa — and there is no shortage of variations on theories of cognitive/ego/identity/moral development in which the individual and the environment affect each other — but these theories seem underutilized outside of professional psychology and education.

Look at economics and political theory — or simply day-to-day politics — and the conversations about the “future of media.” A lot of our conversations about motivation are still framed in Freudian and Jungian vocabularies. It might be wanting too much by me to hope to change “folk psychology,” but as the world gets more sophisticated and influence becomes more distributed, I think we could stand to use some more robust insight from this corner.

The trick to fully understanding these concepts (in a way that’s forward-compatible to future challenges) is to overcome the habit of looking for something objective and specific — whether it’s an object that’s supposedly pulling from outside or something pushing from within. As Richard deCharms (whose work influenced Deci & Ryan) argued in Personal Causation (1963):

The notions of motivation and motive are left over from the philosophic notions of will and volition which psychology has banned… There simply is no objective phenomenal reality that can be identified as a motive. You cannot point to a physical object and say that is a motive…

While concrete objects might frame motivation, I don’t think they are motives — at least not in any ultimate or absolute way. A trophy, a cheque, or a bottle of beer might seem to motivate, but only temporarily (i.e. not once you have it); things’ motivational qualities are not stable or sustained.

To really understand motivation we must appreciate that our existence is complex and emergent — something Csikszentmihalyi elaborated on in The Evolving Self, describing flow as an “autotelic” process analogous to biological evolution.

Because flow “fosters the expansion of an individual’s set of enjoyed pursuits,” it’s dynamic and unstable. It’s difficult to define from one moment to the next precisely how compelling an experience will be [quote is from "The Construction of Meaning Through Vital Engagement," Nakamura & Csikszentmihalyi, in Flourishing, 2002].

Something that’s too easy or too difficult one instant might become interesting enough to engage with a moment later (say, if someone else comes along and starts doing it — it becomes social), then the person might learn to like it enough to do it independently, it might become a regular activity, which might lead to others, etc…

This basic and thorough instability is why I proposed and elaborated a heuristic “uncertainty principle.” We have to navigate a middle way by balancing the two extremes.

On hand there’s a risk that by making accounts too concrete, they’ll be wrong.

On the other hand there’s a risk that by making accounts too ambiguous, we won’t be able to say anything that wasn’t already said thousands of years ago; we’d simply be reiterating what Hinduism, Taoism, and Buddhism have said for ages, in deliberately vague and often contradictory ways — for exactly this reason: it’s too hard to say anything on the matter with more than a partial degree of certainty.

Which brings us back to philosophy…

Note: this isn’t anything like an adequately general account of motivation; my aim for now is to make a case for understanding the temporal aspect better — I can always come back later for the hedonic treadmill, etc.

Applying Social Uncertainty

Brian — Thu, 10 Dec 2009 20:58:39 +0000

Continued from the social uncertainty principle post, using the analogy of Heisenberg’s uncertainty principle.

Like virtually all of the ideas I’m describing in this series, the social uncertainty principle is a heuristic for observing ideas-in-action and overcoming fallacies that affect them.

Specifically it’s a rule of thumb for working out a balance between ideas that are based exclusively on statistics and ideas that are generated exclusively via intuition.

Heisenberg veralised it as “the more precisely the position [of a particle] is determined, the less precisely the momentum is known, and conversely…”

Thanks to Phronk’s comment I recognize an adjustment needs to be made to that — emphasizing what we should do rather than what we don’t know.

Heisenberg would have taken for granted there’s still work to be done, but when it comes to understanding human dynamics, there’s always a temptation to assume we already understand things so we don’t need to look further — which is precisely the opposite of what I meant.

So for my purposes the principle should be stated “the more precisely we’ve determined quantitative factors, the more we must qualitatively consider possibilities, and vice versa.”

Consider the rational choice model in economics, according to which agents are supposed to maximize the utility of their decisions within certain boundary conditions.

It’s an abstract slice of time in which the decision-maker is supposed to be a static object calculating a bunch of static variables.

Life doesn’t happen like that.

In reality a decision-maker’s mind is humming with thoughts and feelings, the circumstances would be undulated by an ever-varying drama of nudges, irritations and stimuli.

But rational choice serves as a baseline of reference. Without it we’d have a much harder time recognizing the variations caused by irrationality; we wouldn’t have an objective framework for assessing and comparing qualitative factors (not to mention our perception of those qualitative factors).

As a partial aside, some things we might assume are irrational can be interpreted as attempts to optimize utility. For example the willingness to pay more for a red car might seem irrational (or “merely” aesthetic) but it can also be interpreted as an investment in future status and bargaining power, signaling virility which can maximize attention, choice of potential mates, etc. Ultimately I don’t think we can reduce and quantify mating decisions (at least not most) but by framing it like that we get a clearer and more usable understanding of the storybook aspect of romance.

There’s another huge difference between applying an uncertainty principle to physics vs applying it to social and economic circumstances (stress the word applying, I’m not necessarily referring to pure academic research): when we apply statistical models we can significantly determine what kind of responses we’ll get.

There’s supposed to be an observer effect in physics too but this goes way beyond that. It’s more like a “designer effect.”

Products are framed to consumers in ways that direct them (often quite aggressively) according to which factors the seller believes are most important. When only given those options, consumers will select accordingly because they can only choose from within the framework that’s offered.

There are always more untested variables than anyone in the market is aware of.

While the basic models might work for a while, eventually a black swan is going to come along and break the framework (do I even have to mention the finance crisis as a still-looming reminder).

Think of how American car manufacturers marketed vehicles a few decades ago, think of how confident they were that they knew the American consumer better than the Japanese or European companies entering the market.

American companies underestimated the value of quality, safety, and fuel efficiency because they were too busy trying to beat each other on other factors.

They weren’t seeing all of the information that was potentially available, they weren’t trying hard enough to think of new questions to ask. It wasn’t even that they weren’t listening; consumers can’t be expected to ask for something that doesn’t exist yet, sometimes someone has to offer them something before they know they want it.

Think of how Southwest Airlines disrupted their industry by reframing how people can choose to fly. Go down the list of disruptive and highly successful companies and you’ll find people using a bit of imagination and trusting their own judgement.

Likewise within organizations.

Your survey feedback is affected by which questions you ask. If you ask employees to rank the relative importance of, say, 6 different measures of job satisfaction, those statistics aren’t going to tell you how to satisfy employees, those statistics should primarily be a tool for making personal-level interactions more informative.

In turn, the information coming out of informal interactions (as it pertains to professional decisions) should be formalized and tested as objectively as possible.

The imaginative folks who started Southwest and all the rest didn’t move forward without a lot of diligent research to corroborate (and correct) their instinct and judgement.

It’s too hard to control the sample and ensure information is coming from an appropriate selection of sources, and second because we can’t see how our attitude and biases are subtly affecting those conversations, and third because our biases and intuitions can further affect our interpretations.

It’s by working with the static slices of time and learning how to interpret them that we learn to understand what’s happening.

Understanding isn’t a thing we hold, it’s an activity we learn and maintain through practice.

It’s also worth considering that putting data and intuitions together isn’t just prescriptive, it’s descriptive; i.e. we never handle facts without affecting them with emotions or intuitions.

Look at politics and conspiracy theories.

Look at how some Republican extremists have taken hold of a few bits of information (if “information” is even the right word) about Obama and his policies, which have interpreted through their existing feelings and biases. Going a step further they’ve arrived at theories about how the “facts” fit together, then converted those theories themselves into supposedly certain facts.

The same thing happens on the left.

What ought to happen is instead of using little bits of information as reasons to be outraged, people should stop for a moment and ask what information might disprove these theories and actively look to see if that information exists.

If and when it becomes clear the theories are false, then everything becomes information for assessing what went wrong, it becomes a platform for improving intuitive judgement for the future.

For example, the idea that Obama was setting up “death panels” is untrue as it pertains to Obama, but as it pertains to people who believed the stories it’s useful information — it’s data for understanding those people’s biases and intuitions.

Specifically, it’s information they should be looking at themselves, using it to try and monitor and ameliorate their irrational impulses.

That’s the ultimate verification or falsification we should be watching for: not just how accurate the ideas themselves are themselves, but how effective we are at managing our ideas.

Social Uncertainty Principle

Brian — Thu, 10 Dec 2009 06:56:49 +0000

Continuing the previous discussion of object bias and conceptions of time…

As a very rough rule of thumb I like to apply a kind of generalized version of Heisenberg’s uncertainty principle:

“the more precisely the position is determined, the less precisely the momentum is known, and conversely…” [via SEP]

Applied to social and economic models, replace “momentum” with any type of progress or change.

The more statistically rigorous we think we understand a market or an organization, the less we know about the human factors surging through it.

When it comes to understanding the human side, the best instrument we have is human judgement and intuition (ironically, how the mind works so well is itself subject to considerable uncertainty).

And conversely, personal impressions and intuitions aren’t enough either; we need hard facts to keep biases and errors in check.

Same with individuals.

The more clearly we think we have someone or something defined, the more attentive we should be to unexpected changes.

It’s really an oscillating process between quantification and qualification: we need hard data and definitions, but those should only guide and discipline our judgement, not determine it.

Bottom line: we have to keep thinking.

Going From Cargo Cult to Cluster Culture

Brian — Thu, 03 Dec 2009 06:55:09 +0000

Looking at the news, everyone in London seems to be very excited about the

CARGO HUB PLAN: Ottawa and the city will unveil big bucks to help London become an international air cargo gateway

Whether or not this plan makes solid business sense in the near term is not my concern [clarification: I should say, of course I have concerns but I can't address them in this post]. I couldn’t possibly know one way or the other.

For the sake of getting to my point I’m going to grant benefit of the doubt and assume there has been demand for this from the business community — despite the fact I’ve never seen any mention of it in the press — and move on to question why this has been persistently celebrated and brought to the very forefront of the conversation about growing London’s economy.

Why?

Investing money in it is one thing — fine — but investing so much attention and prominence in the discussion is another. I don’t see how it distinguishes the city among others of similar size.

Celebrating London as a transit hub is like celebrating it as a “business hub” or a “residential hub” — it’s just something cities are supposed to be, e.g. Windsor and Hamilton, which apparently are ahead on expansion.

The cargo hub is dominating the city’s economic narrative at the expense of more generative ideas. The more attention we spend on this, the less we have to spend on initiatives that might truly capture the public’s imagination and cultivate a more entrepreneurial mindset.

Attention is something that can be invested or wasted just like money, and we seem to be throwing it down a hole. The cargo expansion has a low rate of return in terms of keeping people interested, spreading the word, and getting noticed by people from elsewhere (coverage in national media, etc).

Where are the symbols that resonate on a human level to generate civic pride? Where are the signals that encourage an entrepreneurial spirit?

One answer would be Stratford.

Here’s a must-read, must-bookmark article on innovation clusters in the Financial Post:

Whatever the case, in key sectors such as manufacturing — where job losses have hit 218,000, representing an 11% drop over the past 12 months — innovation clusters are being viewed as an economic lifeline. Stratford is just one of the new cluster darlings. Digital media has been seen as the next technology boom, with a potential global market of US$2.2 trillion by 2012. As a result, the Ontario Ministry of Research and Innovation and the local municipality have each parceled out $10 million to build the new institute that will focus on growing our expertise in the sector.

UWO has agreed to some form of partnership in the Stratford Institute, and the article also mentions $5 million going towards an Institute for Chemicals and Fuels from Alternative Resources at Western, but these aren’t the kinds of things that are being trumpeted the loudest here.

People don’t quite know what those things are, they don’t resonate. We need something that resonates — and we need leaders who will lead the innovation narrative.

Instead of talking about incubating entrepreneurial enterprises and fostering a culture of innovation, we’re seeing the wrong ideas reinforced. We’re being conditioned not to be creative, not to do something ourselves, not to invent new opportunities, not to take risks…

There are some exceptions; we need to celebrate those — and talk about their further potential — to get the innovation narrative rolling.

Look at digital interactive gaming — an industry that currently employs a relatively small number of people but packs a huge punch in terms of generating attention both within and from outside the city.

You know how excited everyone gets whenever a movie or something is partially shot in the area, and how much pride people have in performers who were born here? Video games are in that kind of space — and quickly gaining stature in the entertainment industry.

In November, the Call of Duty sequel set entertainment industry sales records. A couple of weeks earlier, CBC called the Assassin’s Creed sequel “the pride of Montreal.”

Here in London, Antic Entertainment just won the Canadian New Media Award for best innovative web-based game for Junk Battles and Digital Extremes (their Unreal Tournament is one of my all-time favs) was recently picked by the National Post as one of Canada’s top 10 employers.

How many Londoners even realize what’s happening in London’s gaming cluster?

I sort of did but didn’t know the extent of it until I hung out at the DIG London conference last month, presented by the LEDC. Kadie Ward set the stage on the Tech Alliance blog:

The Digital Interactive Gaming industry is poised for tremendous growth – Ubisoft Executive Yves Guillemot believes that the industry will grow 50% over the next four years. Are London and Ontario ready to take advantage of this opportunity? Home to several game-design and digital media companies including Big Blue Bubble, Digital Extremes, and Antic Entertainment, with access to talent from Western, Fanshawe, and tirOS College, London is stepping up its game with DIG London 2009.

In June The Free Press had a good article on London’s stature in the industry (the link is to a site that scraped it: I can’t find the original since LFPress.com was redesigned):

… Danielle Parr said London is emerging as a “quite significant” centre for video games in Ontario

Parr said a few established companies tend to spin off talented people that form their own firms to create a cluster.

“ When you form a pool of talented people, you can build on that,” she said.

Parr is executive director of the Entertainment Software Association of Canada, representing publishers & distributors (not necessarily developers).

Here’s their report on the industry — worth $1.7 billion and employs 14,000, with past annual growth at 23% and expected growth at 29%.

London has 6 game developers (according to that report) including Digital Extremes with over 100 employees and a very high profile.

Toronto has a lot of companies, but relative to the city’s whole economy digital gaming doesn’t really register (compared to big presences in Vancouver with EA and Montreal with Ubisoft).

Other than London and Toronto, the only other Ontario city with a number of developers is Ottawa — though compared to London I don’t know if Ottawa’s companies are making as big a splash.

There’s an opportunity here to brand London as the place in Ontario known for digital games– and by extension, digital media more generally.

This is something that should be on everyone’s talking points. The message “gaming cluster” should automatically come up in any conversation about London’s future economy.

It signals innovation and creativity, it has a coolness factor — and a hotness factor — that resonates with people in a way that’s remembered and passed on, it’s cutting edge, it’s collaborative and inspiration-driven, it bridges the arts with technology and business….

Put simply, people love gaming (in a way that they do not love cargo) and will go out to preach London’s gospel without being asked — but they have to be made more aware of everything that’s happening here.

Not everybody will understand the value of video games, and the immediate returns may not be obvious, but anything that gets us talking about clusters of entrepreneurship [read Ed Glaeser's pdf] will help us get to the next level in the new economy.

There are plenty successes and more good ideas with potential in London. We just haven’t hit on a narrative that resonates yet.

Everything that gets our attention should feed back into that.

How to Take the World Back from Corporatism

Brian — Fri, 09 Oct 2009 07:17:38 +0000

Just finished perusing Douglas Rushkoff’s Life Inc: How the World Became a Corporation and How to Take it Back.

Note the villain is “corporatism,” not simply corporations. Even corporations themselves are victimized; they get tilted into self-destructive acts by decision frameworks that benefit nobody — only roughly satisfying some people’s abstract sense that “the market decides” (when in fact the market is usually corrupted by asymmetries and regulatory privileges).

Rushkoff’s greatest area of strength is that he sees and articulates important nuances, knows the answers will not be simple (or even possible from an abstract level), and points out that often the best of intentions tend to perpetuate the problem even further:

We’d each like to launch a national movement, create the website that teaches the world how to build community from the bottom up, develop the curriculum that saves public schools, or devise the clever antimarketing campaign that breaks the spell of advertising once and for all. But these ego trips are the artifacts of the strident individualism we were taught to embrace. The temptation to save the whole world — and get the credit — comes at the expense of steps we might better take to make our immediate world a more fruitful, engaging, sustainable, and satisfying place…

The problem with audacious solutions is illustrated by examples such as the fact that big charitable foundations can only donate so much money at a time so most of it gets invested — which feeds back into the corporatist system that’s doing the harm in the first place.

Rushkoff ends with some positive suggestions for making society more localized and human — e.g. using more local and complementary currencies — but I can’t help wondering if those suggestions would have been most effective five or ten years ago and now we need to dig a little deeper into the popular psyche.

The underlying idea seems absolutely correct though: we need to think much more in terms of social ecology, less in terms of market economy.

I mean, I’m not “against” the market economy — what I’m against is defining our very lives by it.

I have a feeling the best practices (see: I can’t help using corporate language) will eventually be as nuanced and counter-intentional as the worst have been. Head-on assaults won’t work. We’ll have to master Jujitsu.

For example, while it might be assumed that biotechnology is part of the problem, it isn’t simply biotechnology that’s to blame, it’s the corporatisation of biotechnology. I wrote some very optimistic things about science a few weeks ago and I believe that cultivating a science-mindset (at least among those who are inclined to that) will be one important aspect (out of many) for making things better.

(Note as well that Rushkoff’s agent is John Brockman, uber-agent of the science community.)

Corporatism can be infuriatingly frustrating to think about, but we should recognize and be grateful for how many positive resources we have at our disposal. The web, for example (as Rushkoff points out). There are tremendous opportunities and endless reasons to be hopeful…

Besides, if it was easy, it wouldn’t be life.

Why Undermine the Economy for Free?

Brian — Tue, 06 Oct 2009 22:26:24 +0000

Somehow I missed a whole summer of Paul Graham essays. Anyways I’m on top of things again — and after reading one of his latest I browsed over to see what’s new at Y Combinator.

If you don’t know (I might not nail all the details but here’s the gist), Y Combinator provides seed-stage funding and support for web startups. They do funding in batches — which means twice per year they bring a whole bunch (20 – 30 startup companies, each with 2 or 3 partners) to Silicon Valley and run a camp for 3 months. Y Combinator gives each $17,000 – $20,000 in exchange for about a 1-digit percent of ownership.

Small but beautiful.

Reddit and Loopt both started there. So did Disqus and BackType, Posterous (which I use almost daily for my “asides“), as well as Scribd (which I use for publishing my longer stuff), and Dropbox for syncing/sharing/backing up files online…

That’s only a handful of the most successful ones — and YC only got up and running in 2005.

It’s funny — almost ridiculous — to think about all this generative stuff that’s created by a bunch of college-age people (mostly) working with less money than they’d earn at a restaurant for the summer. And obviously the YC companies aren’t the only ones turning out very cheap, or free, but very useful apps and platforms like this…

Until now I’ve been a vocal enthusiast for this kind of thing, but I’m starting to have pangs of doubt. Maybe it’s because — let’s not forget — I’m doing this for free and I’m in the process of trying to transition towards something more, um, “cashflow positive.”

I had one of those “duh” moments, asking myself, “How sustainable is an economy in which so many people aren’t generating any income from their work?”

Maybe my skepticism was triggered by Jason Fried’s hilarious satire, writing that 37signals is suddenly worth $100 billion:

“Once you have profits, it’s impossible to just make stuff up. That’s why we’re switching to a ‘freeconomics’ model. We’ll give away everything for free and let the market speculate about how much money we could make if we wanted to make money.”

And then Chris Brogan had a great post, The Audacity of Free:

Free can be a wonderful thing, and there are some really great things that are (and should be) free. But free is a choice, and it’s not your buyers who decide this, no matter what we like to think in social media kumbaya-ville… costs are part of life.

What I’m struggling with is how to charge someone for something I’m willing to do anyways — whether for fun, or for the learning experience, or the challenge, whatever. Not just that, but how do I charge for things I wouldn’t want to pay for… i.e. I’m satisfied with my own second-rate (or third- or fourth-rate) web design because I simply can’t afford to hire anyone — but more generally, when it comes to anything creative, I’ve always been inclined to assume I can do it myself.

Or rather, I want to do it myself because I enjoy the challenge and the opportunity to learn.

But through my uncertainty I’m coming to appreciate the benefits of for-pay professional models and how unsustainable this willingness to work for free might be — both for myself and for our economy and society as a whole.

But then again the question becomes, why can’t I find a career in an existing organization? Obviously there are a lot of highly motivated people out there; why are existing organizations and institutions failing to accommodate us? Why do they let us disrupt their industries from underneath and eat away at their business from the outside?

Why weren’t Twitter or FriendFeed developed at Google? Why did those founders leave? How have news and magazine publishers allowed a bunch of bloggers and entrepreneurs undermine their business models? Why haven’t more of the innovations occurred within previously existing organizations?

I have a few answers I’m tempted to speculate on but I’ll hold on to those, for now…

Finance Crisis Nostalgia

Brian — Mon, 05 Oct 2009 10:19:51 +0000

Can’t sleep.

So I open up my computer and there’s a new post from Felix Salmon, “When Morgan Stanley almost died,” saying that even in this “orgy of one-year-later reminiscing,” decision-makers still need vivid reminders “just how close the entire financial world came to collapse.”

No doubt. Canadians can’t forget it either — even though we’re better-off than the Americans… Macleans just ran an article explaining Why the recession is here to stay; the Globe & Mail asks, Is the recovery faltering?

Not just the topic but this experience reminds me of last year.

Every Sunday night from mid-September through October I’d find myself awake until dawn, reading about the latest mind-boggling news — I’m pretty sure it was Felix who usually wrote whatever it was that kept me up — and getting myself all anxious and excited, despite not having direct connections to the situation.

Here I am again. I mean, here we are — here still…

Out of nostalgic curiosity I browsed some of last year’s posts. On October 14, I quoted something from Paul Kedrosky that seems kind of funny now. He pointed out that while the fear of finance system collapse had been addressed, the fear of a global recession had not:

Having saved the credit system we are not going to return to the days of yore, with too many banks, too much leverage, and too much consumer debt.

Exactly.

But what’s funny now is that instead of too many banks now we’re worried about too big banks; instead of too much consumer debt there’s growing political turmoil over too much government debt.

The more things change the more they stay the same.

Meanwhile those circumstantial changes haven’t done much to change our cultural mindsets and attitudes. The end of recession was declared at the slightest whiff of GDP growth; voices over the airwaves are telling us it’s safe to come out of the shelters.

Nobody really believes it though. Everyone at least senses the effects of growing unemployment, for example, even if we aren’t personally affected — it’s just that people don’t really know exactly what to say or do.

We’ve learned not to trust the headlines but we have no idea what or who to trust instead.

We’ve been conditioned for years to think and act a certain way with money that’s different from earlier generations… Um sorry – I feel like this is turning into a David Brooks-like column, might as well just excerpt what he wrote last week:

Evidence of this shift in values is all around. Some of the signs are seemingly innocuous. States around the country began sponsoring lotteries: government-approved gambling that extracts its largest toll from the poor. Executives and hedge fund managers began bragging about compensation packages that would have been considered shameful a few decades before. Chain restaurants went into supersize mode, offering gigantic portions that would have been considered socially unacceptable to an earlier generation.

Other signs are bigger. As William Galston of the Brookings Institution has noted, in the three decades between 1950 and 1980, personal consumption was remarkably stable, amounting to about 62 percent of G.D.P. In the next three decades, it shot upward, reaching 70 percent of G.D.P. in 2008.

During this period, debt exploded. In 1960, Americans’ personal debt amounted to about 55 percent of national income. By 2007, Americans’ personal debt had surged to 133 percent of national income.

And it isn’t merely that we are conditioned; our whole economic situation in general is systematized to support and perpetuate what we’ve been doin. It isn’t just “evidence” (as Brooks says) that’s all around, we’re surrounded by cues and incentives to continue thinking and acting the same way.

We still have the same decision frameworks, the underlying information problem hasn’t been addressed.

Returning to what Felix Salmon was saying, “these crises can come out of nowhere, and it’s imperative that the next time round, we have institutions capable of dealing with them…”

No small task. It’s going to take a lot of learning and probably a considerable amount of fighting — but there’s really no way to know exactly what’s best from where we are now. We’ll have to work it out gradually.

Fortunately, while we’re plugging away at that, Andrew Ross Sorkin’s new book about Morgan Stanley looks like a great read.

Update On That Project Provisionally Called A Book

Brian — Mon, 14 Sep 2009 05:44:44 +0000

The book project has evolved from the “world-turned-upside-down” concept to a more general, but better-organized, case for blogging — by which I mean any kind of social, citizen-driven media.

[Update: Seconds after publishing I realized what a profound understatement that is... I guess I'll just leave it to readers to figure out exactly what it's about by getting a sense from the list of posts to be included.]

Below is a rough provisional order. Keep in mind I’ll be adding commentary before, after, and throughout, which will highlight my errors and frame some of my statements as examples of how blogging works not just despite mistake-making but because of it.

If you read that early Résumé/Manifesto you might recognize most of the same themes. It was essentially a rough outline for everything that followed — which is exactly what I intended (hence “manifesto”) — which likewise was derived from years spent reading and working out ideas. I imagine I’ll still be writing on the same themes if I’m still alive 50 or even 70 years from now — only with different points of reference.

Brian Frank » economics

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