Super Crunchers

Host's Note: This is the first time, I am hosting a "Guest Post" in my blog and I must confess that I am only too happy to do so. Mukund's comments about a book he finished recently. 

After reading his comments, I am tempted to think innumeracy may equal illiteracy very soon in future.

Comments are more than welcome in the blog.

regards,

madhu.

SUPER CRUNCHERS  by  IAN AYRES  

In this day and age, number crunching is no longer restricted to the class room or the text books. Unknown to thee, there is a customization happening at every walk of life - whether one likes it or not. That, in essence, is what "Super Crunchers" by Ian Ayres is all about. 

Before getting into the crux of the matter (or data), I have to commend the author on one dimension. In this era of being politically correct to further one's own interests, the author comes across brutally honest. Ayres has no problem laying the truth as is - quoting Sun chief's 90's statement of "there is no privacy, just get over it" - or taking on his fiercest of academic critics and laying behind-the-scenes events threadbare: like the exchange between the infamous Mary Rosh, and Ayres-Donahue combine. 

Now, onto where the real fun is....the book opens to an interesting wine collection story, to entice the audience, like a good on-stage presenter would with a nice, personal anecdote. Then on, all the way to the "distraction techniques" at Duke, in the end game of the book, the author keeps the audience hooked. Ayres also seems to have a way with anecdotes. Having heard the term 'Standard Definition' over two-dozen years in a variety of contexts and contents, I have not seen a simpler way of describing than he does in the words of his daughter Anna. Not just that; for working class readers that want to be hands-on, there's an exercise on what the mean and standard deviation are, for adult males in the US. In the interest of not providing a spoiler alert, I will not provide the answers here!

Another area where the author excels is delving into the human psyche. To quote: "humans are not only prone to make biased predictions; we are also damnably overconfident about those predictions and slow to change them in the face of new evidence". How very true! The example mock test he makes you take on the verge of explaining this concept and how we play "safe" when defining boundaries of error are truly eye opening. 

The beauty of number crunching, for even the non-believers, is that it is for real. Behavioral modeling or targeted messaging has never been in greater prominence as it is, today. Starting from a professional context, to routine tasks like shopping, watching / following sport, there is a set of lurking machine-eyes behind the scenes - to make that experience better, improve retention, etc. Privacy was/is always a concern, but when statistics show that folks apparently were willing to share social insurance number for a 50-cents off coupon, you know that collective opposition does not translate to individual behavior. Again, an instance of data debunking a 'myth'!

Selling the WHEEL

Selling the WHEEL By Jeff Cox and Howard Stevens

This book is about SELLING. It is written to read like a novel. Authors have distilled the essence into an eminently readable and enjoyable form.

Let me try to briefly summarize part of the story.  Max invents a device what we now know as “Wheel”. He thinks it would change the world for the better. Incidentally, he also names that device as Wheel . He makes a few samples and then borrows money from in-laws and makes more Wheels. Max thinks if technology is path breaking people line up and pick it up. Alas, he was in for utter disappointment. He and his wife Minnie, driven to the corner, think of oracle. 

They would have to undergo a grueling journey to the forests-of-nowhere to meet him – they endure it and end up meeting him. By the way, in those days, meeting the local oracle when you are struck is a very approved process. Oracle asks a few bed rock questions which sets the pace. He points out while Max knows a lot about new technology, he has no clue on sales and hence they would do better if they hire some sales anchor. They hire a first sales person called Ben the builder who turns out to be a flop. Next one who is a certified wizard also fails. Having used up the entire loan amount and nearly nothing to lose, they again make “oracle” trip. He points out that the type of sales person they choose was wrong and recommends a person called Cassius – the closer.When they ask him if he was any good, Oracle replies, "Who do you think sold me this cave!".  From then on,business picks up. Cassius makes a huge impact - selling to people at a very high margin. After the initial aura surrounding the new technology wanes, Cassius calls it a day very gracefully by closing it with the biggest sale ever. Soon Ben is back and he builds the business empire and by now technology becomes a commodity and many competitors come up all over the place. Prices start plummeting as it gets produced cheaply from China. Imum Wheels one of the arch rivals starts flirting with bankruptcy. They finally merge creating a behemoth MaxImum . All of a sudden Max is run over by a speeding chariot and goes to coma state, but don’t worry - he recovers after two years.

Let me leave the last part of the story. The story takes the reader all through cycles of business. In the end, we also get to meet Archimedes (of Eureka fame).

1. Minnie takes notes during various stages in the story. Most of them are worth reading many times over.

2. End of the book contains a neat appendix which summarizes the cycles of Technology, Customers, Sales people, Strategy, Selling approach, Marketing, Getting the sale and Service - perhaps 90% of the value of the book resides here.

3. There is no such species called universal sales person. Make sure you hire the right person based on the company offerings.

Peter F Drucker wearing the management consultant hat once remarked:  If a client leaves my room with a feeling that he has learnt a lot that was not known to him before, he is either a stupid client or I have done a poor job. He should leave the room saying:  “I know all this – why I have not done anything about it?”
This story is likely to leave you with a latter type of question.

Thanks for reading this far.

Regards

madhu

PS: Please feel free to share your "sales" episodes.

Reverse Innovation

Reverse Innovation:  Create far from Home, Win everywhere.

Authors:  Vijay Govindarajan and Chris Trimble.

Let us say you ask an engineering team to build a bridge that would handle a normal load of say, 1000 vehicles an hour each weighing two tons for city A. After the design is done, you want to reuse the design for city B. Based on city B's requirements, if you enhance your requirements to handle the heavy duty traffic both in terms of tonnage and traffic, most of the structural assumptions used in original design would no longer be valid. Very likely, it would have to start everything from ground zero – simply, the structure is not suited for an upgrade but needs full revamp.  Hence, engineers would rather prefer to design the bridge to sustain the target load from the outset rather than start with a rooftop bridge and enhance it to support the railroad level traffic. Nevertheless, innovation’s history, specially in business, has been mostly focused on high affordability regions and then it migrates to medium and low affordability regions by systematically “de-featuring” the product or service as the case may be.

Conceptually, I felt reverse innovation is antithesis of the aforementioned design principle.  It betokens an approach where innovation would originate from low affordability regions and systematically migrates to high affordability regions.  Prof Vijay Govindarajan (VG) and Chris Trimble talk about this concept in a detailed fashion with copious number of compelling case studies some of which read like a novel. Case studies are from Logitech, EMC, Harman, GE, Pepsi, P&G, Deere and host of such well known corporations.

Per authors, there are 5 levels of thinking.

Level-1: Only the rich world matters. Poor regions are too small a market to worry about.

Level-2: In poor regions, there is an opportunity only at the top of the pyramid.

Level-3: For emerging markets, we would customize our current offerings to match differing needs

Level-4: Emerging markets’ needs are vastly different. We have to design things from the scratch.

Level-5: Stakes are global and not local.

They also talk about 5 gaps that get closed over time. (1) Performance (2) Infrastructure (3) Sustainability (4) Regulatory (5) Preference

This categorization provides a robust conceptual framework to build the narration.  Rest of the book is replete with case studies followed by couple of appendixes that would neatly serve as a tool kit to try our ideas. 

In short, if you export – you lose. If you innovate – you win.

The main idea is this:  Decide the market price that you would sell at and work backwards towards the desirable cost structure. Counter intuitive, it may seem, but it puts a set of market verified constraints and hence if they are met, usually it turns out well and becomes a blockbuster at times. It means, being resourceful matters more than access to copious set of resources. The stress is on “Frugal, Functional and good enough quality” as opposed to “Cutting edge, features rich, new and fancy applications”. To support this point, I cannot resist telling a story (not in the book).

One of the high growth corporations opened its first European branch in the heart of London. While the location was great, the road had lot of pubs. Hence, in the nights, people after drinking started throwing up in front of the office as they passed by. It became a routine practice to start most mornings  with a major clean up. Obviously, this nuisance would have to be fixed. The chief administrative person raised this topic in every meeting possible but cost of implementing a fix, like fixing a camera(s), monitoring that area and informing police proved very expensive and couldn’t be taken up. Finally, a shoe string budget was given to him to fix it. Instead of complaining about that budget, he tried an interesting experiment. He put a conspicuous camera and a big warning board that people who defile that place could be potentially prosecuted. The Camera, however, was powered but not connected anywhere to monitor! Yet, it served the purpose of bringing down misdemeanor to a near-zero level - a clear case of frugal and functional.

One of the major assumptions the authors debunk is that poor regions would follow the same trajectory as rich regions. Invariably, it is not so.They skip certain steps. For example, direct investment in mobile infrastructure rather than in old telephone networks (POTS) now. Table 3-1 in chapter 3, comprehensively summarizes the dominant logic and reverse innovation strategies. It is very easy to intuitively feel that the authors have it correct. But,our mental models and other orientation are so diametrically opposite, it would take a while to put it in practice.

Celebrated German mathematician Carl Gustav Jacobi once remarked that, “man muss immer umkehren” which translates to “Invert, always invert.” Jacobi believed that the solution for many difficult and intractable problems in mathematics could be found if the problems were expressed in the inverse. Prof VG and team are giving us the Jocobian version for innovation and it is evident from the emerging case studies, we will benefit phenomenally through such inversion.

Thanks for reading this far.

Regards

madhu

PS: Please feel free to share your reverse innovation stories in your comments

Infinite in ALL directions by Freeman J Dyson

Freeman J Dyson is an eminent physicist and this book is a collection of lectures he gave as a part of Gifford lectures series which has been happening for more than a century based on Gifford’s will. The prime focus of the lecture series is to “promote and diffuse the study of Natural Theology”. If someone is a Gifford lectures speaker, that in itself indicates where that person stands in his scholarly achievements. Dyson has worked with some of the world’s most respected scientists. When you work with the best minds as well as work hard for about seven decades in the same or related area, the output is bound to be astonishing.

While the scope of the book is technically unlimited, the core message can be summed up not even in a sentence but in a word: DIVERSITY. The range he covers is also really wide – akin to catching the lighting in a bottle!

Like E.O.Wilson, Dyson is a serious proponent of diversity. A sample snap shot:  “God loves diversity. Prevalence of evil is the price we pay for diversity”. Let us see some nuggets which are picked up randomly from the book.

Everything in the universe seems to be related to everything else in some way – if it doesn't appears to be, perhaps we have not thought long and hard about it. {Please see the photo taken by P.Varadarajan on his trip to Alaska which conveys this message. Since photo cannot be included in comments,I attached it in the main post after reference } Dyson relates super strings and the butterflies. (FYI: Super-string is something that would form the basis for electrons, protons and other fundamental particles). He reasons (1) everybody has seen the butterflies – no one has seen super-string (2) from the scientific point both are poorly understood (3) butterflies are at the extreme end of concreteness and superstrings are at the extreme end of abstractness. He goes on in detail about both.

Life is an evasive thing to define. Dyson manages to define it as two logically separate activities: Metabolism and Replication. To quote him: “Cells can reproduce, but molecules can only replicate”. Hardware he says has to exist before software(!) and gives an example of pocket calculator which was there before software. Hardware processes info and software embodies it. Hardware is the host and its survival is a precondition for the survival of parasites. His view is not too different from biology’s view that sees life in two skills (1) ability to create an order (2) ability to replicate and then goes on to DNA /RNA driven explanations.

He strongly believes it is a question of time humans would start migrating to other planets. When life starts spreading to other planets, comets, asteroids we would face the same question as our ancestors who left forests of chimps in order to evolve. Shall we externally retain our common bodily shape or diversify into various intelligent species based on where we migrate? Only difference I see, from forests of chimps to man, our evolution was not planned and conscious whereas here, it may be. It may knock out the surprise element. But if it is well thought out and carried out as carefully controlled experiment, then why not? I think by the time caste, religion and other differences in earth are well settled and peace is about to rein in, this kind diversification may start. Then, we would embark on next generation of fighting. On the other hand, I could visualize the software services manager who has to handle a request from one of this team members, something like “Hello, I am fed up with earth. I need an onsite assignment at Jupiter, else I would like to quit.” J By the way, at that time on-site would imply outside of earth, just as it is now outside of the country. I surmise, this manager has to find something at least in one of the many moons of Jupiter – well, the search area is going to be huge.

This book has so many fundamental concepts thrown in including anthropic principle, super strings, Oort cloud and a host of such things. If you try to fathom all of that, it may prove daunting. Euclid had such a difficulty about 2000 years back. He wanted to convey the idea of “geometrical point” and ended up with neat definition as “A point is one which has no parts and has no magnitude”. It is not at all helpful for someone who is totally ignorant of geometry and wanted to understand what “point” is all about. It is helpful only when you go past the definition and start relating to how points are related in space, circles, planes etc. It is a “math abstraction” that exists only in the world of Euclid’s geometry! So, it is better to pose a question “How points fit the overall logical system?”  Same approach is advised to avoid the long detours. Just ask yourself “How these concepts fit the overall message?” – and you will be fine. For people who are innately depth intensive or deep dive category, a dilettante feeling is inevitable.

I used to think sci-fi and such genre of books are so much into future it has no immediate relevance to be useful. After reading a few works of Dyson, I am now tempted to think it is well worth the effort due to the mental liberation it afforded me. It would be really helpful if you read such a book before going to an off-site meeting where you would discuss the next 3 years plan.

I would say, Dyson followed the Neil Bohr advice: “One should never write more clearly than one can think”.

Thanks for reading so far.

Regards

madhu

References:

1.       http://www.giffordlectures.org/

2.       http://en.wikipedia.org/wiki/Freeman_Dyson

3.       http://en.wikipedia.org/wiki/Oort_cloud

4.       http://en.wikipedia.org/wiki/Super_strings

The Art of Choosing by Sheena Iyengar

Max Born once made a famous remark: “I think chance is a more fundamental conception than causality”. Taking that cue along after reading this book, I think “choice is a more fundamental concept than constraint!”

If you are expecting specific research insights from the author’s work, perhaps this is not the book. Most of the experiments (like Jam tasting etc.) are familiar ones. But the stories are well articulated. Her prologue about her own immigrant life with poor eye sight bordering blindness turns out to be a serious start. Her last chapter is about her marriage wherein her experience with a famous astrologer is indeed engaging. Overall, this book defies any attempt to summarize it. Still, let me persist and come up with a few points.

“We all have a buffet mentality” she firmly declares and so argues that choices are critical. (By the way, Mr. Buffet always goes for A la carte when it comes to picking stocks. J) In her view, there is an optimal level in terms of the number of choices beyond which any additional choices available is nearly of no consequence and in fact add to our woes. Decision making then, becomes more complicated than it needs to be.

She quotes Mathematician Henri Poincaré: “Invention consists in avoiding the construction of useless combinations and in constructing useful combinations. To invent is to discern, to choose”. She does propose a nice corollary based on that: “To choose is to invent”. Trouble with such a simple dictum is that it takes a Poincaré, arguably one of the best mathematicians of the century, to reject useless combinations. Nice try anyway.

“We have biases to support our biases” she asserts. It reminds me of Groucho Marx quip “Here are my principles. If you don’t like them here is another”. After all, it is essential to simplify the world around us so that we can make sense out of it and get along with life - biases are here to stay. They rapidly reduce the cognitive overhead for us. She gives interview process and other examples where biases come in the way –very insightful.

We know how much one can miss the mark predicting how other people would react given a set of circumstances. A sample story presented is refreshing since it was not a pre-designed experiment: A male student of the author was visiting India with a female friend of his, with whom he had romantic interest. However, she was not reciprocating. He decided to take the matter into his own hands. He decided that a thrill ride through Delhi in a fast and dangerous auto rickshaw was just the thing to get the blood pumping. The plan was near perfect. He waved for an auto driven by a large, loud man in a turban. He gave him the directions which led to narrow, noisy and curved streets. His friend held on tightly, her eyes wide and hair loosened by the wind. When they finally came to a stop, she stumbled out and smoothed down her clothes. “Well”, he said rather pleased with himself, “how was that?” She leaned close, looked him in the eye, and said, “Wasn’t that rickshaw driver just gorgeous?”

She talks about priming and framing with good examples. As to framing, most of us know that we rarely change the question we are asked. That is once the question is framed or given to us, we try to answer the question rather than question the question itself. As to priming, her point is worth a recap: The effectiveness of priming lays in its subtlety not its strength. It affects our choices at the margins rather than causing us to act against our strongly held beliefs. A prime may influence whether you drink Pepsi or Coke but prime alone would never make you sell your belongings and spend your life in a monastery in Himalayas.

You will think a while for some time about the “puffery” in packaged drinking water industry. Puffery means making claims that ordinary people do not take seriously. For example, “Best”, “Revolutionary”, “Latest”, “Gourmet” and other such buzzwords fall into this category. I was shocked to learn that bottled water customers pay 1000 times more per-gallon than they do for tap water. She cites few experiments where in blind tests the packaged water was no better than the humble tap water. It is clear at least in this industry, people have taken the puffery seriously.

“To appreciate the value of shade, you need hot sunlight” says one Tamil proverb. How true? You need limitations to appreciate the value of choices. Let me end with a serious observation from I-Ching:

“Unlimited possibilities are not suited to man. If they existed, his life would only dissolve in the boundless. To become strong, man’s life needs limitation ordained by duty and voluntarily accepted. The individual attains significance as a free spirit surrounding himself within the limitations and determining himself what his duty is”.

Thanks for reading this far….

Regards,

madhu