Birds of a feather: nectar-robbing bumblebees and rent-seeking investment banks

"Nec-tarred" with the same brush: Robbers learn their way to take advantage of nectar and Muppets*
George ILIEV

Bumblebees rob flowering plants of their nectar by cutting holes on the side of the flower, rather than entering  through the pollen-covered opening as the other bees and insects do. As a result, bumblebees do not contribute to the pollination of the plant. This was known to Darwin 150 years ago. A recent discovery, however, shows that this behaviour is not innate: bumblebees learn  from other bumblebees how to rob flowers. This has been proven by the fact that the hole is always cut on the same side (right or left) of all flowers in a given meadow - a sign that the flower-cutting technique is being passed from one bumblebee to another.

In a similar way, investment banks did not invent independently the plethora of rent-seeking financial innovations that led to the 2007-08 financial crisis. They copied each other. Once an instrument, such as the securitisation of subprime mortgages, collateralised debt obligations (CDO), or credit default swaps (CDS) appeared at one bank (usually in America), the others would copy the model so as not to lag behind. Thus by robbing their gullible clients (referred to as "Muppets"*), they damaged the global financial system - just like the bumblebees hinder the pollination of plants and reduce the efficiency of their ecosystem.

*Investment Bank Goldman Sachs came in the news in 2012 with the nickname bankers gave to unsophisticated clients who could be easily taken for a ride: Muppets.

(Photo: Bumblebee cutting its way into a flower, Wikipedia)

Apple’s product-launch pattern resembles memory recall in young people’s brains

Too frequent switching between different areas slows down memory and hampers companies
George ILIEV

As people age, their memory worsens partly because when they try to recall things, their brain flits between different areas and categories more often than necessary/optimal, research by Warwick University shows. If an old person would be asked to name 100 animals, he/she would switch too often between predators, herbivores, pets, marsupials etc. without exhausting each category, while a young person would be more focused and would exhaust the category before moving on to the next.

Apple’s product launch strategy thus resembles the pattern of functioning of a young person’s brain, as Apple does not flit between categories unnecessarily: Six years after the iPod came the iPhone, three years after the iPhone came the iPad. Google, on the other hand, used to move between various product categories a lot more and has only recently started to narrow down its focus to a few core areas.

(Photo: The old Apple logo, Wikipedia)

Short-term hearing loss resembles bursting of asset bubbles: No physical damage in either case

Temporary loss of hearing and reduction in asset value are both psychological mechanisms
George ILIEV

Reversible short-term hearing loss after a concert or a night in the club is not the result of damage to our hearing, groundbreaking research published in the Proceedings of the National Academy of Sciences shows. It is instead a protective psychological mechanism with which the body temporarily reduces hearing sensitivity in order to continue performing normally.

This resembles the bursting of asset bubbles. When a bubble starts to deflate, the underlying assets are not lost - be they houses, IT companies or railway lines. They are simply psychologically re-evaluated in a period of moderation which is needed for the economy to continue functioning normally.

(Photo: Human ear, Wikipedia)

Bacteria form protective biofilm in same way as companies engender loyal workforce

Molecular glue keeps bacteria together just like incentives keep employees cooperating
George ILIEV

When in danger, some bacteria shield themselves by creating a biofilm of slime that protects them from physical threats and from antibiotics, research published in the Journal of Biological Chemistry reveals. Such biofilms cause dental plaque and sinusitis in humans, as well as antibiotic-resistant infections. A protein switch triggers the production of the film-forming molecular glue that keeps the bacteria together and isolates them from the outside world. When the glue-production mechanism is not activated, the bacteria carry on living independently.

In the business world, this molecular glue exists in the form of "incentives". Companies which use incentives to reward cooperation and long-term performance fare better in the dog-eat-dog corporate world. Partnerships are the best in engendering a loyal workforce, according to Colin Mayer, the former dean of Oxford Said Business School, and his book "Firm Commitment". In a partnership structure, the incentives are more likely to ensure alignment between the interests of the employees and the organisation, thus promoting cooperation among the stakeholders. 

Even business schools have cottoned on this idea. Some schools have a policy of non-disclosure of the GPA of MBA students to potential employers in order to enhance cooperation (e.g. Chicago Booth). Other schools do not even calculate a GPA for the graduates, so that the MBAs have an incentive to work together during business school and after graduation (e.g. Emory University).

(Photo: New York Stock Exchange, old trading floor. Source: Wikipedia)

Rate of oxidation defines flesh colour; Cash turnover rate defines corporate culture

Fish muscles burn oxygen; companies and banks churn cash
George ILIEV

The flesh of salmon, mackerel and other fish species is darker in some parts and whiter in others. This depends on the oxidation rate in the muscles. Muscles that contract a lot require a lot of oxygen. Oxygen is stored in the protein myoglobin, which makes the flesh darker. Farmed salmon does not move much so even its most active muscles do not contain as much myoglobin as the corresponding muscles of wild salmon. Overall, the flesh of fish is whiter than the meat of land animals and birds as fish are supported by the water they live in and do not need additional muscular strength to support their weight. In the same way, the breast meat of birds that do not fly much (turkeys and chickens) is white as they do not need to move their wings, while the meat of their legs is dark as these birds primarily move by walking.

Oxidation in the muscles is the fundamental process underlying movement. In the business world, the corresponding fundamental process is the turnover of cash at companies and banks. Cash turnover does not change the colour of an organisation but impacts its corporate culture. The organisations with the highest turnover rates can be expected to have the most aggressive culture and vice versa (See the book "Business at the Speed of Molasses" by Joey Reiman). Cash turnover rates are astronomical (and volatile) in the banking industry as money often changes hands multiple times a day. Therefore, banks do not even use "turnover" as a metric.

Slowing down can make the colour of meat whiter and the culture of companies and banks more agreeable.

(Photo: cooked wild Alaskan salmon, April 2013)