The 10 Immutable Laws of Nanoeconomics

I am about to go all Hammurabi on you and deliver unto you a 10-law summary model of the economy that is taking shape around you at a frenetic pace today: the nanoneconomy. I call it that because its fundamental behavior is determined by the behavior of the human individual rather than the firm (the practical unit of analysis in microeconomics). Many of the dominant themes of this blog — virtual geography (aka globalization) the future of economics, the changing nature of work, and the role of the individual in the economy, all came together for me last week as I pondered the lessons of the political-economy (I love that archaic term) train wreck that is the US Congress’ bailout plan for Wall Street (and Main Street, we are being told). Let me transcribe my tablets for you. For fun, I am calling these laws immutable, but I hope some of you treat this as a mutable blog-meme discussion of the economy, and propose your own amendments.

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Predictably Irrational by Dan Ariely

[This detailed, chapter-by-chapter précis of Dan Ariely’s Predictably Irrational: The Hidden Forces That Shape Our Decisions is a guest post by George Gibson, a colleague of mine at Xerox. George originally posted it on our internal blogs as a series, and I found it so much fun to read, I asked if I could repost it on ribbonfarm. So here you go.]

Chapter 1: The Truth About Relativity

This was clearly the most interesting of the books from my summer reading list. Let me be clear that though I don’t buy all of the points Dan tries to make, I find them all interesting and worthy of thought. With any luck we can begin a real discussion of his ideas and observations in the commentary. That means I’ll attempt (not always successfully) to keep my opinion out of the body of this piece, and reserve that for any commentary that might develop. The real point here is to get you interested enough to read the book yourself.

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How to Measure Information Work

Continuing my exploration of information overload, in this piece, I’ll further develop the argument that it is not the real problem, but a mis-framing of a different problem (call it X) that has nothing to do with “overload” of any sort. Most people who start their thinking with the “information overload” frame look outward at the information coming at them. One aspect of the real problem is terrible feedback control systems for looking inward at your work. On the feedback side of things, we measure capacity for work with the wrong metric (headcount, or in shorthand managerese, “HC”). I’ll explain why HC is terrible at the end of this piece (and I’ve also written a separate article on HC).

So, can you measure information work? Yes. Here is a graph, based on real data, showing the real cumulative quantity of information work in my life during two years and some months of my life, between January 2004 and about March 2006.

Quantity of work over one year

Figure 1: Quantity of work over one year

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Organizing to Disrupt

Clayton Christensen’s The Innovator’s Dilemma has helped frame an entire decade of thinking on innovation. His taxonomy of radical/incremental//sustaining/disruptive, despite being very widely misunderstood, has been the filter through which all of the popular innovation literature has been viewed in recent years. Now, more than a decade later, finally companies are figuring out how to systematically organize to disrupt. Three recent books (one blessed by Clay himself) address bits and pieces of this theme, so let’s try to synthesize an overall view of what it takes, and along the way, talk about these three new books (and a bunch of older ones that have play key roles in this story).

First, recall what disruption actually means. I made up a mnemonic graphic, based on the against-the-grain metaphor, to help me remember.

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Maslow for Market Segmentation

It suddenly struck me today that I’ve never seen a visualization of a very obvious way to understand markets at the broadest level: segment all products and services based on what customer need they serve on the Maslow hierarchy. Though I’ve seen Maslow discussed in the marketing/sales literature, I’ve never seen a graphic like the one below, that actually draws the famous Maslow triangle with areas sized to represent dollar value of corresponding markets. I include in my broad notion of “market” the demand for things supplied by governments and organized religions, rather than private enterprise. Here we go. Should be self-explanatory. I’ve sized the areas in this example roughly based on what I think the market sizes are in a developed economy, and included examples of businesses that deliver products and services to that level in the hierarchy. Some explanatory comments follow, for tricky bits.

Maslow-Based Segmentation for Markets

Maslow-Based Segmentation for Markets

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The Impossibility Triangle in Talent Management

I have taken to asking an unfair question in interviews in recent months: as a manager, how can you make sure you help people play to their strengths, while making sure the organization meets its goals on time? The question is unfair because I believe the right answer is you can’t. I haven’t yet gotten that answer from anybody. Most of the time, I get carefully noncommittal answers couched in terms of “there are always trade offs” or faux-pragmatic ones of the form, “well at some point people have to get on the same page and realize that a company is in business to make money.” Both answers are misguided. By trade-off people usually mean deterministically balancing coupled motivations in the presence of some sort of scarcity; they do not usually factor in uncertainty. Talent management introduces competing uncertainties, which are more complex beasts. The second answer is faux-pragmatic because everybody already understands tautological statements about companies being in business to make money. The realization makes no difference at all in how the psychological calculus of strengths and motivations plays out. In other words, yelling business realities out from the rooftops won’t help you attract talent or prevent you from hemorrhaging it.

So let’s keep ourselves honest here, by beginning our search for a next-generation talent management theory, Theory W, by acknowledging the fundamental limits in play. I represent these in the Theory W Triangle (if you are curious, this is inspired by the well-known Pizza triangle and the less well-known Spreng triangle, which I discussed before).

The Theory W Triangle

The Theory W Triangle

Let’s dig in.

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The Future of the Internet according to Jonathan Zittrain

“Be wary of SaaS and Internet-connected appliances, and it’s a good thing if the legal innovation never catches up with technological innovation.” That would serve as a rough summary of the thesis Jonathan Zittrain, cyberlaw Professor at Oxford, seeks to defend. In The Future of the Internet–And How to Stop It he develops an elaborate and densely-argued socio-legal doctrine designed to do one thing: protect the generativity of the Internet without letting it becoming prey to its own power or the anxieties of regulators. This is no quick and dirty treatment of GPL vs. Proprietary. It isn’t your grandmother’s elementary lecture on free as in speech vs. free as in beer. This is a demanding book written by a lawyer, unapologetically full of long, complex sentences that throws the full complexity of cyberlaw problems at you. I was drinking a pretty stiff vodka as I was going through the toughest part, Part III. That is not a good idea, since you need to be pretty alert when reading this part. Still, I think I was sober enough to make this a roughly accurate review/summary.

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Peter Cappelli’s “Talent On Demand”

There is a compelling scene in HBO’s quasi-fictional Western, Deadwood, which qualifies as an instant lesson in the essentials of talent management. The 1870s mining boom town of Deadwood, which is just emerging from Wild West state-of-nature conditions, has attracted the attention of the robber baron George Hearst. Al Swearengen, the town’s incumbent strongman, adapts nimbly and switches from a governance-by-murder strategy to a more artful one, and in the process very effectively shifts power between his two key reports to reflect the priorities of the new situation. Dan Doherty, his dim and violent second from the lawless past, is gracefully shunted aside, while the more suave, but restless and underutilized Silas Adams is handed the tricky and critical “stretch” task of managing the relationship with George Hearst. Somehow, Al keeps both men motivated and loyal. Modern executives will recognize all sorts of very current themes in this little vignette. So how do you master these timeless elements of talent management, while operating in modern business conditions? You read Talent On Demand by Wharton’s Peter Cappelli, a book that completely validates my belief that talent management is the issue of the next decade (the purchasing function ranks a close second).

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From Bubbles to Cloud: The Evolution of Enterprise 2.0

Since New York Times columnist/blogger Marci Alboher just praised my ‘whimsical and thoughtful’ drawings and my previous article was all text, I thought I’d better hurry up and invite NYT readers onboard with a whimsical-and-thoughtful. Here’s my attempt at a right-brained model of Enterprise 2.0 capability maturity:

Bubbles to cloud

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Theory W, Theory X and Theory Y

For real estate agents, it is location, location, location. For businesses, it is talent, talent, talent. Neither of Douglas McGregor’s classic pair, Theory X and Theory Y, works anymore, and neither does any clever combination thereof. Whether you are a free agent, or a manager in a larger company, your ability to understand and orchestrate your corner of the talent economy will make or break you and your company. Kicking and screaming, anybody with half a brain has accepted that the “fungible headcount” mental model must necessarily be replaced with a “people are unique” mental model. But this uplifting let’s-all-self-actualize strengths message has brought with it the demanding task of mass-customized management, all in the face of revolving-door dynamics. In this series, I offer up the outlines of a new beta theory, Theory W, that I hope will help, and which you’ll have to help me finish.

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