From the category archives:

Business

Deconstructing Thomas Edison

by John on May 4, 2010

I’m reading Remarkable Engineers to write a review for a web site. The prose is pretty bland, though it got spicier in the chapter on Thomas Edison. It seems the author felt he needed to take Edison down a notch.

The career of Thomas Edison was not that of a great man of science, or even that of an inventive genius … His only major scientific discovery was the fact that a vacuum lamp could act as a rectifier, passing only negative electric currents. … He was said to have invented the business of invention.

So Edison was an engineer rather than a scientist. This criticism seems odd in a book devoted to remarkable engineers.

Surely Edison was an inventive genius; he held over a thousand patents, more than anyone has ever held. That is not to say anyone believes he came up with over a thousand unprecedented ideas completely by himself. He built on the work of others. He coordinated the work of his employees. He took ideas that were not being used and commercialized them. Perhaps he was more of an entrepreneurial genius than a scientific genius, but he was a genius nonetheless.

Related posts:

Don’t try to be God, try to be Shakespeare
Variations on a theme of Newton
Thomas Edison’s fire

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Anti-antitrust

by John on May 4, 2010

Rumor has it that “a federal antitrust probe of Apple is days away” according to PCWorld. I do not want to see this. Even though I criticized Steve Jobs’ statements about Flash in my previous post, it’s the hypocrisy I find most offensive. I would respect Jobs if he said

Hey, it’s my platform. I can do whatever I want with it. If you don’t like it, buy someone else’s stuff. Or better yet, go make your own platform.

That might make me want go out and buy an iPad.

However, such a statement may not hold water legally. No, you can’t do whatever you want with your own platform. Perhaps you should be able to, but that’s not the law. Hank Williams makes an interesting argument this morning that Apple may guilty of illegal restraint of trade through their use of warranties.

I’m suspicious of antitrust cases. They are often a way for competitors to win in court what they were unable to win in the marketplace. I don’t want to see Apple go through the antitrust wringer just because Microsoft had to. On the other hand, given the Microsoft precedent, it would be almost impossible to overlook Apple. The discussion of whether Microsoft should have included its web browser as part of the operating system seems absolutely trivial compared to the control Apple exerts over its devices.

Related posts:

Tragedy of the anti-commons
Apple and multi-platform apps
Inside Steve Jobs’ brain

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Apple and multi-platform apps

by John on May 3, 2010

Steve Jobs has said developers won’t be allowed to write multi-platform apps for Apple devices. Software for the iPad, iPod, or iPhone has to be written specifically for those devices because developers are incapable porting software worthy of running on an Apple device.

I doubt Steve Jobs is sincere in the reasons he gives for blocking cross-platform applications. It seems more plausible that he simply wants to keep certain players (e.g. Adobe) off his devices. But let’s take his reasons at face value for the remainder of this post.

Apple is judging one piece of software by the existence of other software. Here’s an application X. It runs on the iPhone. Is it kosher? Well, that depends on whether another application Y exists that has similar functionality but runs on a different operating system! Application X is not being judged on its own merits. It’s as if there were some sort of quantum entanglement between applications X and Y. Like two particles separated at birth, they remain connected to each other in some spooky way.

Imagine applying for a job at Apple. You made a good impression in the interview, but before they make you a job offer, they have one more question: Do you have a sister who works for Adobe? They cannot hire you based on your credentials alone. They have to know first whether you have a sibling who works for a competitor.

This post defends Apple as follows:

Multiplatform applications are bad.

They look alien. They are not stable. Their main code is not native to the OS they are running. They cause confusion to some users and they can destabilize the whole OS.

I partially agree. I would say that multi-platform applications are often bad. They often look alien and are not stable.Years ago I could immediately spot an application were written in Java. (Since that time things have improved.) I don’t mind whether my software is written in Java, I only mind if I can tell it’s written in Java.

If Steve Jobs’ only concern were protecting the experience of his customers, he should ban software that acts like a port from another operating system, i.e. software that looks alien or is unstable, regardless of whether it runs on another platform. What matters is the quality of the software, not the existence of some sibling application.

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Freebies and entitlement

by John on April 24, 2010

Take away a freebie and people will hate you.

The latest EconTalk podcast relates a story of people who harbored a grudge against the Red Cross for decades. What did the Red Cross do that was so bad? They sold doughnuts at cost.

The Red Cross had given soldiers doughnuts for a while. Then at some point they started charging a nickle. They were not making a profit, only selling the doughnuts at cost. And they only started charging because the U. S. Army asked them to. Even so, some veterans and their families remained angry about this for many years. To this day, some Red Cross workers bring free doughnuts to meetings trying make up for hard feelings.

If you give away something but make it clear from the beginning that it’s only free temporarily — a free sample, a trial version, etc. — then you may charge money later without causing resentment. But if people ever get the idea that your product will remain free, they feel entitled to it.

If Facebook, for example, decided to charge even $1 a year for an account, they would lose millions of members. People would burn Mark Zuckerberg in effigy. Presumably they could have charged $1 a year without criticism when they started. But since the service has been free, they can never charge for it without creating enormous ill will.

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Burnout

by John on April 19, 2010

Here’s the best explanation of burnout I’ve seen:

… burning out isn’t just about work load, it’s about work load being greater than the motivation to do work.

The context is a former consultant saying that heavy course loads at MIT did not burn him out, but an easy job doing dishonest consulting work did.

From The story BCG offered me $16,000 not to tell.

Related post:

The most subtle of the seven deadly sins

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Idea people versus results people

by John on April 13, 2010

I liked this quote from Hugh MacLeod the other day:

Idea-Driven People come up with Ideas (and Results), more often than Results-Driven People come up with Results (and Ideas).

His quote brings up two related fallacies.

  1. People who are good at one thing must be bad at something else.
  2. People who specialize in something must be good at it.

Neither of these is necessarily true. It’s wrong to assume that because someone is good at coming up with ideas, they must be bad at implementing them. It’s also wrong to assume that someone produces results just because they call themselves results-driven.

The first fallacy comes up all the time in hiring. Job seekers may leave credentials off their résumé to keep employers from assuming that strength in one area implies weakness in another area. When I was looking for my first programming job, some companies assumed I must be a bad programmer because I had a PhD in math. One recruiter suggested I take my degree off my résumé. I didn’t do that, and fortunately I found a job with a company that needed a programmer who could do signal processing.

Andrew Gelman addressed the second fallacy in what he calls the Pinch-Hitter Syndrome:

People whose job it is to do just one thing are not always so good at that one thing.

As he explains here,

The pinch-hitter is the guy who sits on the bench and then comes up to bat, often in a key moment of a close game. When I was a kid, I always thought that pinch hitters must be the best sluggers in baseball, because all they do (well, almost all) is hit. But … pinch hitters are generally not the best hitters.

This makes sense in light of the economic principle of comparative advantage. You shouldn’t necessarily do something just because you’re good at it. You might be able to do something else more valuable. When people in some area don’t do their job particularly well, it may be because those who can to the job better have moved on to something else.

Related post:

Self-sufficiency is the road to poverty

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Best management decision

by John on April 12, 2010

In his book The Design of Design, Frederick Brooks describes his most productive decision as a manager at IBM.

My most productive single act as an IBM manager had nothing to do with product development. It was sending a promising engineer to go as a full-time IBM employee in mid-career to the University of Michigan to get a PhD. This action … had a payoff for IBM beyond my wildest dreams.

That engineer was E. F. Codd, father of relational databases.

Related post:

Many hands make more work

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Rewarding complexity

by John on April 5, 2010

Clay Shirky wrote an insightful article recently entitled The Collapse of Complex Business Models. The last line of the article contains the observation

… when the ecosystem stops rewarding complexity, it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.

It’s interesting to think how ecosystems reward complexity or simplicity.

Academia certainly rewards complexity. Coming up with ever more complex models is the safest road to tenure and fame. Simplification is hard work and isn’t good for your paper count.

Political pundits are rewarded for complex analysis, though politicians are rewarded for oversimplification.

The software market has rewarded complexity, but that may be changing. There’s a growing demand for simpler products, and software vendors are responding. For example, no one has ever accused Microsoft of having a minimalist aesthetic, but Window Phone 7 looks like a bold departure from Microsoft’s bloatware past.

Related posts:

Organizational scar tissue
Good, fast, or cheap: Can you really pick two?
Maybe NASA could use some buggy software

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Maintenance costs

by John on March 31, 2010

No engineered structure is designed to be built and then neglected or ignored. — Henry Petroski

The quote above comes from Henry Petroski’s recent interview on Tech Nation. In the same interview, Petroski says that a common rule of thumb is that maintenance costs about 4% of construction cost per year. For a structure as old as the Golden Gate Bridge (completed in 1937), for example, that’s a lot of 4%’s.

Golden Gate Bridge

Painting the bridge has cost far more than building it. The bridge is painted continuously: as soon as the painters reach the end of the bridge, they turn around and start over. The engineers who designed the bridge knew this would happen. When you build something out of steel and put it outside, it will need to be painted. It was all part of the design.

Image credit: Wikipedia

Related links:

Two kinds of software challenges
Do you really want to be indispensable?
Upcoming Y2K-like problems
The Essential Engineer, Henry Petroski’s new book

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The latest episode of the Startup Success Podcast features Seth Godin talking about his new book Linchpin.

Bob Walsh: What’s next for Seth Godin?

Seth Godin: This. This is my life’s work. This is what I didn’t realize I was working on for the last ten years but I am. There’s no new book in the works. There’s just this mission to help people see how the world just changed really violently and to encourage them to do work that matters.

Seth Godin has always been passionate about his projects, but this one is different. His clarity and intensity are remarkable.

Related posts:

How to avoid being outsourced
Self-sufficiency is the road to poverty

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“Noncommercial” is fuzzy

by John on February 18, 2010

It is common for software, photos, and other creative works to be free for noncommercial use. I appreciate the generosity of those who want to give away their creations, and I appreciate the business savvy of those who see giving some things away as a way to make more money elsewhere. But “noncommercial” is a fuzzy term.

What exactly is noncommercial use? If I include a photo in software that I’m give away, is that noncommercial use? What if someone includes the photo in  iTunes? That’s software that is freely given away, although it’s clearly a distribution channel for Apple music sales. What about Internet Explorer? Microsoft gives away IE, and it’s not an obvious distribution channel for Microsoft, but most people would call IE commercial software. Is it the nature of the organization rather than the nature of the product that determines whether something is non-commercial?

Sometimes “noncommercial” is used as an opposite of “professional.” But what about employees of charitable organizations such as the American Red Cross? Is a Red Cross relief worker in Haiti doing noncommercial work? What about a lawyer working at Red Cross headquarters? Would it change anything if the lawyer were a volunteer?

Sometimes “educational” is used as a synonym for noncommercial. But if your profession is education, is your work professional or educational? Does it matter whether a school is public or private? Most people would agree that a student doing a homework assignment is engaged in noncommercial activity. What if the student is a teaching assistant receiving a small salary? In that case is it noncommercial use when the student is doing his own homework but commercial use when he’s preparing to teach a class? Isn’t education almost always a commercial activity? After all, why are students in school? They’re preparing to make a living at something. They may have blatant commercial motives for doing their homework.

Not only can you argue that educational use is commercial, you can argue that commercial use is educational. If an accountant looks up a tax regulation, they’re trying to learn something. Isn’t that educational? Is it educational use when a student looks up a tax regulation but commercial use when an accountant looks up the same regulation?

Individuals and organizations are free to define “commercial” or “noncommercial” use however they please. Personally, I’d rather either sell something or give it away without regard for how it’s going to be used.

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Self-sufficiency is the road to poverty

by John on February 17, 2010

In his podcast Roberts on Smith, Ricardo, and Trade, Russ Roberts states that self-sufficiency is the road to poverty. Roberts elaborates on the economic theories of Adam Smith and David Ricardo to explain how specialization and trade create wealth and how how radical self-sufficiency leads to poverty.

Suppose you decide to grow your own food. Are you going to buy your gardening tools from Ace Hardware? If you really want to be self-reliant, you should make your own tools. Are you going to take your chances with what water happens to fall on your property, or are you going to rely on municipal water? Are you going to forgo fertilizer or rely on someone else to sell it to you? Carried to extremes, self-reliance ends in a Robinson Crusoe-like existence.

People in poor countries are often poor because they are self-reliant in the sense that they must do many things for themselves. They do not have the opportunities for specialization and trade that are available to those who live in more prosperous countries.

Some degree of self-reliance makes economic sense. Transaction costs, for example, make it impractical to outsource small tasks. It also makes sense to do some things that are not economically feasible. For example, an orthodontist may choose to make some of her own clothing or keep a garden for the pleasure of doing so, not because these activities are worth her time. In general, however, specialization and large trading communities are the road to prosperity. Without a large economic community, no one can become an orthodontist (or an accountant, barrista, electrician, …)

Why do we so often value self-sufficiency more than specialization and trade? Here are a three reasons that come to mind.

  1. In America, self-sufficiency is deeply rooted in our culture. We admire the pioneer spirit, and this leads to seeing as virtues actions that were once a necessity.
  2. Self-sufficient people are generally well liked, especially if they’re not too prosperous.  Conversely, those who create wealth by leveraging the labor of others are often treated with suspicion and jealously.
  3. Our school system encourages “well roundedness” rather than excellence. The way to succeed is to be moderately good at everything, even if you’re not outstanding at anything. (More on this idea here.)

Update: After writing this post, I read Russ Robert’s book The Choice: A Fable of Free Trade and Protectionism. I discovered one of the later chapters is entitled “Self-Sufficiency Is the Road to Poverty.” Excellent book.

Related posts:

Evaluate people at their best or at their worst?
Make something and sell it
Do something dull
Transaction costs

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Economics rap

by John on January 30, 2010

The debate between economists John Maynard Keynes and F. A. Hayek set to rap.

Related post:

The one thing to remember in economics

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Make something and sell it

by John on January 22, 2010

I’ve run across a couple podcasts this week promoting the radical idea that you should sell what you make.

The latest Entrepreneurial Thought Leaders podcast features David Heineimeier Hansson’s talk Unlearn Your MBA which he gave to a room full of MBA students.

The latest Tech Nation podcast from IT Conversations is an interview with Jaron Lanier. Lanier is a virtual reality pioneer and the author of You Are Not A Gadget.

Both Hansson and Lanier have contributed to the “free” culture but both are also critical of it. Hansson says he has benefited greatly from open source software and make his Ruby on Rails framework open source as a way to contribute back to the open source community. But he is also scathingly critical of businesses that think they can make money by giving everything away.

Lanier was an early critic of intellectual property rights but has reversed his original position. He says he’s an empiricist and that data have convinced him he was dead wrong. He now says that the idea of giving away intellectual property as advertising bait is unsustainable and will have dire consequences.

Giving away content to make money indirectly works for some businesses. But it’s alarming that so many people believe that is the only rational or moral way to make money if you create intellectual property. Many people are saying things such as the following.

  • Musicians should give away their music and make money off concerts and T-shirts.
  • Authors should give away their books and make money on the lecture circuit.
  • Programmers should give away their software and make money from consulting.

There’s an anti-intellectual thread running through these arguments. It’s a materialistic way of thinking, valuing only tangible artifacts and not ideas. It’s OK for a potter to sell pots, but a musician should not sell music. It’s OK for teachers to make money by the hour for teaching, but they should not make money from writing books. It’s OK for programmers to sell their time as consultants, and maybe even to sell their time as a programmers, but they should not sell the products of their labor. It’s OK to sell physical objects or to sell time, but not to sell intellectual property.

Related post:

Software profitability in the middle
Emily Dickinson versus Paris Hilton
How to avoid being outsourced or open sourced

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Do something dull

by John on January 9, 2010

Here’s a short video from Tom Peters on starting an exciting business in a dull industry.

Tom Peter’s video reminds me of one of my favorite quotes from Richard Feynman:

… nearly everything is really interesting if you go into it deeply enough …

Related posts:

Too much time on their hands?
Six quotes on digging deep
God is in the details

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