Quality and Innovation

John Hunter shared some excerpts from Warren Buffett’s 2009 Letter to Shareholders. I particularly liked this one part where he reflects on the outcomes of economic modeling and forecasting:

Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.

I’d like to amend this: Beware of geeks bearing formulas who a) can’t tell you what every part of the derivation means, b) don’t know the model’s underlying assumptions, and c) don’t know what “threats to validity” are. (And if you’re the geek in question, be able to explain how your models and forecasts work!!)

Models can be a great way to capture the dynamics of social and technical systems, and simulations can help us explore how these systems will evolve over time – but how those models are initialized, and the simplifying assumptions they use to generate results, are just as important as the answers they propose.

Are you an expert? According to tradition and research, it takes 10,000 hours of focused effort and a dedication to continuous improvement to become one. On October 2, 2007, Bill Harrison described the phenomenon well:

I’ve been immersed in a fascinating book called This Is Your Brain On Music. The author, Daniel J. Levitin, is a musician/recording engineer/producer turned neuroscientist. Despite the unfortunate title, the book is a serious exploration of the connections between music (from both a listening and playing perspective) and the brain… The emerging conclusion is that experts in many fields (sports, literature, composition, performance of every kind) need about 10,000 hours of practice time to achieve world-class levels of proficiency. 10,000 hours is the equivalent of 3 hours a day, seven days a week, for a period of 10 years. These studies do not address the differences in the efficacy of practicing for different people (which is known to vary widely).

It might seem like this is a revelation from modern neuroscience, but the idea is not new. New research only serves to support a concept that is ages old. Time magazine notes that the concept appeared as early as 1899, citing the academic journal Psychological Review. Herbert Simon, a pioneer in the field of artificial intelligence and socio-technical systems who was awarded the Nobel Prize for Economics in 1978, “said that to become an expert required about 10 years of experience and he and colleagues estimated that expertise was the result of learning roughly 50,000 chunks of information.” More recently, this idea has been popularized by Malcolm Gladwell in Outliers: The Story of Success – it’s also described on the gladwell.com blog.

The concept of the 10,000 hours has been described at many levels of detail. For example, in July 2006, Philip E. Ross wrote about “The Expert Mind” for Scientific American. In this article, he described work by K. Anders Ericsson of Florida State, a collaborator of Herbert Simon’s, in a very accessible way:

Ericsson argues that what matters is not experience per se but “effortful study,” which entails continually tackling challenges that lie just beyond one’s competence. That is why it is possible for enthusiasts to spend tens of thousands of hours playing chess or golf or a musical instrument without ever advancing beyond the amateur level and why a properly trained student can overtake them in a relatively short time.”

“Even the novice engages in effortful study at first, which is why beginners so often improve rapidly in playing golf, say, or in driving a car. But having reached an acceptable performance–for instance, keeping up with one’s golf buddies or passing a driver’s exam– most people relax. Their performance then becomes automatic and therefore impervious to further improvement. In contrast, experts-in-training keep the lid of their mind’s box open all the time, so that they can inspect, criticize and augment its contents and thereby approach the standard set by leaders in their fields.”

These can all be summarized by the following statement:

Focused Attention + Reflection + Knowledge of What Constitutes High Quality

+ Commitment to Improvement  =  Expertise

There is no reason why this principle cannot be applied beyond individuals – this statement provides practical lessons for the development of group expertise, organizational expertise, and the expertise of a society or civilization. (Granted, the way to measure 10,000 hours would vary between individuals, groups, organizations and societies – this is an open question.)

So, are you an expert? Is your organization an expert in its domain?

The California Zephyr, Amtrak train 6 out of Denver, stopped for about 5 minutes this morning at the tiny little station of Osceola, Iowa. It was just enough time for me to turn my wireless on, surf around for an unsecured network with a good signal, and check my email, the weather radar, and this morning’s news – all before we quickly chugged out of town and the connection dropped. But it was all the time I needed to get a few critical things done that I don’t typically do on my Blackberry. (Thank you, Belkin_51_Wireless of Osceola!) I told Ron how happy I was to be able to do this, and he mentioned that this was a good example of why he’s thinking about unsecuring his personal network – so he can contribute to this pool of “random acts of kindness”.

Sharing wireless is a perfect example of doing something for personal good (installing a wireless network in your house) which can also contribute to the good of society (making the network unsecured so strangers can use it when they’re passing through). Like any other sociotechnical system described by Brian Whitworth, for a “free wireless for all” system to be sustainable, you’d like for those strangers to be good citizens who don’t commit anti-social acts of sabotage in response to your generosity. Cybersecurity experts might have a fit thinking about such risky behavior (as you can tell, I’m not one of them and so haven’t thought through these implications at all).

I don’t mind if my neighbors use my wireless network. In fact, sometimes (when my router has been down) I’ve even used theirs to Google for information so I can get my system up and running again. (Thanks Steve). Without this emergency capability, I would have been sunk.

OK – so a wireless sharing strategy is not technically free wireless for all. Many people would still be paying for their connections. But people who would pay for internet access anyway can help bridge the digital divide, even if that divide is caused not by socioeconomic differences, but spatial differences – like one person just being away from their home turf for a little while. The big loser here would be the service providers (because a group of neighbors could even negotiate to split the cost of monthly service). But what’s more important – broadening access to information, or padding the profit margins? Of course the answer to this question is relative, but in an atmosphere of economic crisis, now is the time to start brainstorming solutions in terms of non-traditional variables other than money.

Today’s Washington Post includes an article on “How We Can Restore Confidence” in our economy. Confidence, after all, is one of the energetic drivers of the economy – without it, spending grinds to a halt, and the delicate equilibrium of economic flow is jeopardized. The author, Charles T. Munger, reflects on the reasons for the meltdown:

Many contributors to our over-the-top boom, which led to the gross bust, are known. They include insufficient controls over morality and prudence in banks and investment banks; undesirable conduct among investment banks; greatly expanded financial leverage, aided by direct or implied use of government credit; and extreme excess, sometimes amounting to fraud, in the promotion of consumer credit. Unsound accounting was widespread.

How did we, as a society, collectively allow these things to happen? Because many people were motivated by the huge profit potentials associated with real estate speculation, new financial instruments, and expanded financial leverage. This motivation towards self-interest, according to sociotechnical researcher Brian Whitworth of Massey University in New Zealand, tends to destabilize society by breaking down institutions and other systems intended to promote social order.In “A Social Environment Model of Socio-Technical Performance” he explains why [with my annotations in brackets]:

“While traditional technology like word processing supports individual competence, socio-technical systems support some sort of community synergy and have defenses against anti-social defection” [that is, acting against the interests of the group in a detrimental way (e.g. violation of human dignity, theft, cheating)]. “The social environment model suggests that people in society recognize both [social good and self-interest], and [tend to]combine them by anchoring one and applying the other. Anchoring social good then applying self-interest explains the highly profitable market trade systems of the last century, where individuals seek profit under social good laws. However contented individuals could anchor individual good, and then seek community benefit [through their positive, pro-social, individual contributions; Whitworth suggests that systems like online troubleshooting boards exemplify this approach because individuals have no incentive other than "good citizenship" to help others]. The latter is proposed to underlie the surprising successes of socio-technical systems.“

“Anchoring social good” is an intended outcome of public policy, which seeks to curb acts against society by instituting punishments. “Anchoring individual good” and seeking to apply one’s personal motivations for the greater good is a defining characteristic of successful socio-technical systems (like Amazon and eBay). The latter is aided by effective community policing where people take it upon themselves to enforce the rules of “good citizenship”.

This leads me to ask: what’s the socio-technically inspired public policy equivalent that might help us rectify the global financial crisis? I don’t have any good answers, but I think this research provides an interesting backdrop to analyze the situation against.

Tom Erickson, in his introduction to one of the sections in the forthcoming Handbook of Research on Socio-Technical Design and Social Networking Systems, explains socio-technical design well:

“Socio-technical design is not just about designing things, it is about designing things that participate in complex systems that have both social and technical aspects. Furthermore, these systems and the activities they support are distributed across time and space. One consequence of this is that the systems that are the sites for which we are designing are in constant flux. And even if we were to ignore the flux, the distributed nature of the systems means that they surface in different contexts, and are used by different people for different (and sometimes conflicting) purposes.”

Socio-technical design is, understandably, related to sociotechnology. There is much work to be done to develop the processes and techniques that will be required to manage quality and continuous improvement in the context of socio-technical design!

Technology is the “sum of ways in which social groups construct the material objects of their civilizations.” The things that we use – the “design artifacts” of the processes used to build them – are socially constructed to the same extent that they are technically constructed. The convergence of technological and social insights in the creation, construction and use of artifacts is sociotechnology.

For example, we typically build a bridge when there’s some expectation that people need to get from Point A to Point B, and there’s something they need to bypass along the way (e.g. a river, a canyon, another road). Failure to consider the social factors as well as the technical factors could lead to a “bridge to nowhere” – and we all know at least one person who’s had a problem with those. Non-technical factors pertaining to the environment in which an idea is created and implemented are crucial.

According to Bunge (1998), sociotechnology is the process of applying insights from the social sciences to design policies and programs. More specifically, this is how Gingras & Niosi (1990) explain Bunge’s perspective:

Ten years ago we were talking about the convergence of customer touch points: phone, fax, web, cell phones, email and regular mail. With handhelds and mobile devices becoming more and more ubiquitous, and services like Facebook becoming more integrated into our daily lives, the next convergence is between people and the technologies we use. The boundaries are becoming increasingly blurred, and the impact of this convergence on business must be explored. Reviewing research by pioneers like Tom Erickson is a good place to start. We are all becoming sociotechnical.

(Note: Sociotechnology is an important part of socio-technical design.)