Have I Lost My Mind? PID Control of the Economy

Reading through Umair Haque's post, The Efficient Community Hypothesis, I was struck by a seeming parallel between markets and my own world of process control.  Umair first describes the Efficient Market Hypothesis (EMH):

Much maligned, often misunderstood, here, paraphrased, is what the EMH really says.

"The EMH, originally put forth by Eugene Fama of the University of Chicago in the 1960s, states that the prices of securities reflect all known information that impacts their value. No matter what definition is used, the hypothesis does not claim that the market price is always right."

The upshot? Even when markets are efficient, they can still be of little social use, because they can result in dramatic mispricing. The result? Bubble, crash, and collapse: welcome back to 2009, 1989, or 1929.

Isn't this the same thing that happens in a Proportional-only control algorithm?  Your PV (in this case, price) ends up offset from your set point (value).

Umair argues that by using communities as filters, markets can use the best known information (instead of all known information) to essentially make a better value sensor.

If this analogy actually works, though, the better sensor can help, but only if 1 of two things happen:

  1. Some extra market dynamics are taken into account to add an integral (time) component to the equation.  In effect, you can't just lower the price until it sells, then raise the price until it doesn't sell (on-off control), and you can't make the price changes proportional to inventories (P-only control).  There needs to be an additional consideration.
  2. Proportional-only control stays as it is, but you move to value-based pricing (using that better sensor) so that you hit closer to your setpoint and hopefully converge on the real product value.

Disclaimer:  Whenever I have a thought like this it occurs to me that I am likely to be completely misguided.  I'm just putting this out there.  Do any economists or engineers care to set me straight?

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Are we seeing a trend?

   
Click here to download:
Are_we_seeing_a_trend.zip (46 KB)

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Overcoming the Resistance

Of late I've found myself in the middle of a flood of big ideas, initiatives, committees, and goals.  All of these are I think incredibly important.  They're important for a variety of reasons - not the least of which is that my future livelihood depends greatly on their success.  Others are the manifestations of principles that I hold in high regard or ideas that I believe truly innovate - that is, they improve delivery of business goals (as opposed to making your job easier).

As I'm undergoing this awakening of ideas, I find myself starting to lack focus.  Beyond that, I feel a creeping fear that I'm getting spread too thin and that, despite the best intentions, all of these great ideas will just slip away along with the great promises they held.

Serendipitously today at lunch I found myself listening to the 43 folders podcast with Merlin Mann interviewing Seth Godin.  The topic? Shipping.  That is, the only thing that matters is not your creative idea or your complaint or your ideals but what you actually produce.  I totally agree.  It's time to (as my project manager says) kill some stuff.  After all, it's the only way we reap the benefits.

Now doing this isn't easy.  There's a natural resistance to shipping.  It's easy to see why - when you finish, you put yourself out there.  You invite criticism.  You feel like you're effectively saying "this is all I've got," and if others don't like it, well, what's left?  How do you overcome this fear and get to that dream you have?

Well, as Seth argues, all the self-doubt and self-sabotaging is just survival instinct, and the first step to overcoming it is to understand that that's what it is.  It's your lizard brain telling you to go hide, to get out while you still can, and that the indignity of being a cog in a machine is better than the indignity of being rejected.

Once your realize what's going on, you find that it's much easier to overcome it.  You can quell those thoughts knowing that the worst case isn't as scary as your lizard brain thinks it is.  This isn't about survival.  You're not going to die.

There's more to this idea, though.  Consistent creativity and consistent shipping takes a change in mindset.  Seth details that change in this talk.  This really is an almost systematic approach to projects, and it's one that I'll use as I evaluate and attempt projects going forward.
  1. Thrash at the beginning.  Establish the goals and the features at the front end, while everyone's using the proper part of their brains.
  2. There are no changes after the thrashing session.
  3. Make darn sure you want to start.
  4. Everything you start, you finish.
That's an important change.  Make sure it's worth starting.  If it's worth starting, it's worth finishing.  Even if it fails in the end, it's ok.  The only way you'll know if it'll succeed is if you ship.
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Andrew Hargadon: Career skills in the new (networked) world

Innovation is about recombining existing resources in new ways and always has been. 
via andrewhargadon.typepad.com

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Gaming the System

I read this long but pretty insightful post from Rands about using games to solve your dire problems.  I think games are a great way to get things done, especially when you can't come up with another ounce of motivation.  I make my own little games in the office to hit my goals sometimes.  The geekier and/or more competitive your group is, the more effective games are, obviously.  My wife and I are extremely competitive and, by nature, poor housekeepers (although we try our best).  Finally, we got to our "grim circumstance" where there was just too much clutter around the house.  Our solution? A game.  The rules were as follows:
  1. Put a "price sticker" on any item that we believed was not where it belonged. (we did this individually so that the net result was up to both of our standards)
  2. Assign a point value (1-5) to the item depending on how difficult we believed it would be to put it away, and write the point value on the sticker. (we had some things that didn't seem to have any real home in our house)
  3. Any time you put away something, take off the sticker and post it on the scoreboard under our name.
  4. Most points wins
Originally we were going to have a prize for the winner, like maybe we could go buy something we wanted within a budget, or we could pick a restaurant to go to or something.  As it turned out, we didn't even need a prize to motivate us - just the competition was enough.  I'm not sure what that says about my wife and I and our relationship, but at least we ended up with a clean house :)

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Social Media Marketing and Sustainability

Yesterday during lunch I sat in on a webcast from Jive and Deirdre Walsh, who is community/social media manager for National Instruments.  She talked about the success they've had in building a strong community around NI and Labview.  I was pretty impressed by the numbers - over 125,000 people are part of the community, and it seems like Deirdre's staying at the forefront when it comes to innovation and success in social media marketing.

Deirdre had some good advice about integrating social media as an ingredient in the other marketing/pr efforts.  I think that's a great way to build legitimacy and increase the effectiveness of those efforts.  Actually, I just read an article today that lists the same idea as the next big thing.

Anyway, the thing that struck me most about what she talked about was the fact that the NI.com/community site was the centerpiece of their strategy.  She mentioned the fact that they didn't want to be chasing and spending energy developing on top of one platform after another, and, although they want to be where their customers are and to help them there, they subscribe to a "2-minute rule," where if they can't handle an interaction/solve a customer's problem in 2 minutes or less then they send them through the appropriate channels.

I think that what NI is doing is actually innovative in that it's a proper blend of traditional and new media, and that it is a thoughtful, sustainable strategy.  Of course there's a problem here when it comes to emulating their strategy in the hope of having the same success, and that is that you have to first have built up your home community.  That's no easy task.  Actually, it's the hardest part - one that (even though NI already had active user forums) required them to dedicate an internal project to with real engineers doing real work providing real source code and resources to the community in order to kick start.  It's not just money and resources, either - it takes time to build your own community.

And there's the problem when it comes to social media strategy these days.  No one has the time, the money, or the resources to foster real community building in their own domain, especially considering the economic conditions.  As a result, marketers put themselves out on the "easy" social media islands, where one person can represent a brand, spreading themselves thin and hunting and pecking for interactions and opportunities.  I think that strategy can have some short-term success and that it can build awareness at the wide end of the marketing funnel, but ultimately I think there has to be a clear bridge with resources and interaction every step of the way for companies to convert this awareness into sales.  Without that, I think you end up with an off-balance strategy that's not sustainable.

This bridge runs both ways.  In Jim Cahill's recent InTech article he talks about bringing experts and employees to the surface of your organization.  There are big barriers between the inner workings at a company and sharing your expertise on twitter or facebook.  I think by building a strong core community internally and bridging between internal and external communities and then again between external communities and the various social media islands then you are providing a mechanism for the distribution of people, ideas, and expertise.  This is a virtuous cycle because as ideas flow out, they contribute to the social media "surface area" you're covering, and they bring innovators and enthusiasts back to your domain, where they can collaborate and contribute with each other and with your experts.
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kung fu grippe : An Incomplete Education

Listen. Hear what she’s saying. Synthesize what you hear in your head, but be slow to offer advice or “solutions.” Women (like many men, including me) often think by talking — or, if you like, by being heard. Shut up and listen. Seriously.
via kungfugrippe.com

Being an engineer and always looking for solutions for things that are just observations (not necessarily problems) is the number 1 thing that gets me in trouble with my wife.

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The Knowledge Management Toolbox

This is a quick mind map of how I think KM tools (in green) might address knowledge gaps and barriers in the organization.  My focus for this is on the technology side of the people/process/technology triangle.  The idea is to strategically choose the right technologies to introduce based on what barriers to knowledge sharing we identify.

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We Remember 11-18-99

via youtube.com

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The Texas A&M Bonfire Tragedy

Bonfire Letter
by Eric Opiela, UT Student Body Vice President

I had the great privilege of attending the memorial service at A&M tonight and was deeply moved by the events I experienced. The A&M student body is truly one of the great treasures of our State.

As part of the UT delegation, we sat on the floor of Reed Arena, and immediately following the end of the service, I heard this rustling sound behind me. I looked over my shoulder and saw the sight of close to 20,000 students spontaneously putting their arms on their neighbor’s shoulders, forming a great circle around the arena.

The mass stood there in a pin-drop silence for close to five minutes, then, from somewhere, someone began to hum quietly the hymn "Amazing Grace". Within seconds, the whole arena was singing. I tried too—I choked, I cried.

This event brought me to tears. It was one if not the defining moment of my college career. I learned something tonight. For all us Longhorns discount A&M in our neverending rivalry, we need to realize one thing. Aggieland is a special place, with special people. It is infinitely better equipped than us at dealing with a tragedy such as this for one simple reason. It is a family. It is a family that cares for its own, a family that reaches out, a family that is unified in the face of adversity; a family that moved this Longhorn to tears. My heart, my prayers; and the heart of the UT student body go out tonight to Aggies and their family and friends as they, recover, from this great loss. Texas A&M, The Eyes of Texas are Upon You—and they look with sincere sympathy upon a family that has been through so much  tragedy this semester.

via acct.tamu.edu

I was at Reed Arena then, too. It was the most moving thing I have ever witnessed.

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engineer, Dad to twin 2 year old boys | amateur photographer, cartoonist, programmer, photoshopper | interested in college football, music, technology