Eels and salmon symbolise enterpreneurs and corporate employees who move between the two realms

CorporateNature No 153

By George ELIOT

If RIVERS are a metaphor for the startup world (fresh, fast flowing and ever changing), the OCEAN is analogous to the corporate world (stagnant, vast but occasionally tempestuous).

Most fish species live in either rivers or  the ocean. However, there are two interesting fish families that move between the two: eels and salmon.

A) EELS

Eels are born in the ocean but spend their adult life in rivers. They are a metaphor for a corporate employee who at some point becomes an entrepreneur. 

B) SALMON

Salmon are born in rivers but spend their life in the ocean. They are a metaphor for an entrepreneur who moves into the corporate world. 

Just as both fish species are highly valued and important for the ecosystem, both types of professionals create value for the economy and society. Which of the two is more interesting remains up to you.

Eel (Source: Wikipedia)

Humans, companies and trees race to the top - with some unintended consequences

CorporateNature No 152

By George ELIOT

1. COMPETITION LEADS TO A "RACE TO THE TOP"

Free market competition in capitalism creates a "race to the top" just like trees in a forest race to outgrow their neighbours and reach the top of the canopy, in order to maximise each individual tree's access to sunlight. This is clearly a very resource-intensive and energy-intensive process: 

- humans have to constantly develop new skills;

- companies have to innovate and iterate their products and services;

- and trees need to grow heavy trunks to reach higher and higher.

2. CARTELS CAN LIMIT COMPETITION TEMPORARILY

Trees are unable to strike a deal to limit the height of every tree in the forest, thus leaving everything to natural competition. While humans and companies could agree such a deal amongst themselves but it would result in a temporary and unstable equilibrium (as the video below about baggage carousel crowds and competing trees shows): everybody would have a strong incentive to break the pact. Furthermore, anti-monopoly laws forbid such cartel agreements in the corporate world.

3. GOVERNMENTS CAN LIMIT COMPETITION PERMANENTLY

One key stakeholder that can actually impose such levelling rules is the government. For example, the Chinese Government banned private for-profit tutoring of school subjects for school-age children in July 2021, thus putting a cap on the competitive pressure on parents (and students) to constantly upskill their children.

4. HOW "RACE TO THE TOP" BECOMES "RACE TO THE BOTTOM"

Why do we often see unbridled capitalism as a "race to the bottom" when it should in principle be a "race to the top"? Most human and natural systems function as a "winner-takes-all" game in the immediate enviroment of the winning person, company or tree. So while the successful individuals race to the top, they cast a shadow on those left behind, thus relegating them to the second or third division - which can be seen as pushing them towards the bottom. As a result, in the perception of an external observer, the big pool of players who are "pushed to the bottom" cannot outweigh the smaller pool of winning players who race to the top.

Why Trees Are Taller Than They Need To Be

According to Quantum Finance, asset valuations are unknowable until fixed by a market transation

CorporateNature No 151

The world of finance bears a striking resemblance to the quantum world, which has led to the emergence of a new discipline: Quantum Finance. Here are three examples:

A) CONTINUOUS VS. DISCRETE

A beam of light may seem continuous but is actually a stream of photons, which are discrete packets of energy. Similarly, an organisation's cash flows appear to be a constant trickle but each payment forms a distinct chunk.

B) CHANGE THROGH MEASUREMENT

Just like the position of a particle in quantum uncertainty is unknown until the moment of measuring it, the real price of an asset is unknowable until it is measured through a market transaction. Yet, this very transaction changes the valuation, just like pinning down the particle to measure it changes its characteristics.

C) UNCERTAINTY IN THE SYSTEM 

Uncertainty in the quantum world and Risk in the finance world are not a peripheral source of error, but are a fundamental feature of the system.

---

Canadian mathematician and writer David Orrell has a forthcoming book on this subject: “Money, Magic, and How to Dismantle a Financial Bomb” in which he models markets using the toolbox of quantum mechanics. A summary has been published in The Economist ("A quantum walk down Wall Street")

Charts of the most probable locations of finding an electron in a hydrogen atom

(Source: Wikipedia)

Cities can be "Stars" or "Diamonds", depending on whether they generate their own energy and light

CorporateNature No 150

"STAR" CITIES SHINE LIKE STARS

All cities are network hubs of some magnitude. However, cities that are at the intersection of many networks often become self-sufficient: they develop a life of their own through the interplay of these networks. In this way, such cities resemble the stars: they emit light from the thermonuclear reactions that take place inside them. The energy released by the stars then powers other systems in the universe (including Earth, for example).

"DIAMOND" CITIES ONLY REFLECT LIGHT, LIKE DIAMONDS

In complete contrast, cities that are the terminus / entrypoint of a single network (e.g. a port at the end of a railway line, whose only purpose is to ship iron ore out of Australia) are like diamonds. A diamond only reflects the light of an external source and can never shine with light of its own. In other words, diamond cities depend entirely on the network and do not take on a life of their own.

KEY TAKEAWAY

A city that wants to continue developing for centuries should focus on joining diverse networks and emitting its own light, thus becoming a "star" city. This will power progress elsewhere and create positive externalities. While "diamond" cities that reflect light that comes from a single network are not sustainable in the long run.

So, don’t be a diamond. Be a star. Or, failing that, at least be a light bulb.

Tokyo: a prime example of a "star" city (Image source: Wikipedia) 

Congestion leads to inefficiency and system failure but does extra capacity restore circulation?

CorporateNature No 149

Congestion leads to inefficiency and failure but it takes systemic measures to unclog gridlocked streets.

1) CONGESTED FRIDGE

If you overfill your fridge, you would struggle to find inside it the food you are looking for. A congested fridge also means that every time you open it, you would have to keep the door open for longer and thus waste energy. And so it goes, until one day you start exploring the source of the bad smell and find a rotten head of broccoli at the back of the bottom shelf. 

2) CONGESTED BODY

If you regularly overeat, excess fat builds up in your arteries, putting increasingly more stress on your cardio-vascular system. Soon something as simple as climbing up the stairs requires a strenuous effort. While the body is sturdy, congestion eventually catches up until one day the heart has had enough. 

3) CONGESTED CITY

If you overfill a city, it becomes not only inefficient but also unwelcoming. Neighbourhoods become overpopulated and polluted, main roads become a time-consuming nightmare to navigate, parks become stressful instead of relaxing. Eventually, the city stagnates economically and degrades culturally until one day people decide to move elsewhere.

4) CAN EXTRA CAPACITY RESTORE CIRCULATION?

In each of these cases, congestion is clearly undesirable. To unclog the system, it often helps to increase circulation capacity:

A) Blood thinning drugs make the five litres of blood run more smoothly around your body.

B) Some 37% of the area of Manhattan is taken up by streets, while aisles take up 75% of the store area of Walmart supermarkets.

Yet, if the anti-congestion measures are not applied in a systemic way, stopgap patches may fail. Hence one of the favourite jokes of stuck-in-traffic Americans is that building more highway lanes to mitigate traffic congestion is like loosening your belt to fight obesity.

Traffic jam in Delhi (image source: Wikipedia) 

Without flow, lakes turn into swamps; Without development, cities become ruins

CorporateNature No 148

If water stops flowing, it turns into a swamp.

If a city stops developing, it turns into ruins.

Both of these "end states" have their role in nature and society: swamps are important habitats for wetland species; while ruins can evolve into tourism hubs or degenerate into quarries for construction material. 

Neither of these would ever be completely still: there will be movement in the swamp when a frog or a bird disturbs the surface; and tourists will shuffle around the columns and arches of city ruins. Yet, these disturbances do not equal progression in a determined direction, as in when a river flows and a living city develops.

Roman ruins (image source: Wikipedia)

It is easiest to find a job if you already have a job

CorporateNature No 147

When you go to a restaurant, would you prefer to order your dish and wait for it to be cooked, or would you say to the waiter “Bring me something quick! If nothing is available, give me whatever leftovers you have from other tables!”

This is the difference between hiring somebody who currently has a job (and you may have to wait for three months for them to join you) and hiring someone who is currently unemployed. Employers play safe and constantly look for endorsement by other employers that a candidate is skilled and work-focused enough to be able to stick around in a job.

What should an unemployed job seeker do then? A possible shortcut is setting up your own company while looking for a job. A successful startup may come out of this, but even if  it doesn't (most likely), at least there would be a filler on your CV to plug the gap.

Leftovers (image source: Wikipedia)

A city is a self-organising system, similar to a flock of starlings

CorporateNature No 146 

Self-organising systems of a feather flock together.

Ever wondered how starlings coordinate perfectly with each other to create flocks of such beautiful shapes? The driving principle is that of self-organising systems.

A flock of starlings is a self-organising system where each bird interacts with a fixed number of its neighbours. When a bird reacts to an external stimulus (a gust of wind or an approaching predator) by changing its direction of flight, this triggers an immediate response from its neighbours, which in turn triggers the other neighbours in a chain reaction. Very quickly, the initial response becomes an avalanche-like reaction of the whole flock. So, what looks like a masterfully choreographed dance is nothing more than well-organised chaos.

Chaos theory describes the elements of a self-organising system as “islands of predictability in a sea of chaotic unpredictability”. In a flock of starlings, each bird is an “island of predictability”, while what the flock will do next is the sea of “chaotic unpredictability”.

Just like a flock of birds, a city can be viewed as a self-organising system. The “islands of predictability” in a city are the individual people and the social norms they live by. The “sea of unpredictability” is the way in which the whole city develops over time. Examples of such developments are:

- the gentrification of some neighbourhoods (but not of others);

- the clustering of ethnic minorities in some parts of the city (e.g. Chinatowns, Little Italy, etc.);

- the decline and disappearance of entire cities in history.

A flock of birds (image source: Wikipedia) 

Settled civilisations leave a legacy; Nomadic ones leave no trace

CorporateNature No 145

Most of what we know about ancient civilisations is from the remains of their settlements. Nomadic people leave almost no trace. In a similar way, army ants and forest ants can be observed as long as they are alive but it is the "cities" of termite mounds that change the landscape.

Leading a nomadic lifestyle, both professionally and personally, is good when you are young. It makes perfect sense to try out many new places, experiences, and career paths as possible in your youth, in order to find out what you enjoy. However, to build anything of substance, you need to find your place, settle down, and pull your sleeves up.

To illustrate this, let’s look at two species that predate us by millions of years and that will probably outlast us.

1. ARMY ANTS

The life of a colony of army ants passes in a constant cycle between two phases - nomadic and stationary. The nomadic phase starts about 10 days after the queen has laid her eggs. During this time, the whole colony covers long distances in search of food for the new larvae. The ants are always on the move during the day and only settle down in temporary camps at night. Once the larvae are big enough, the whole colony settles down for the stationary phase. This only lasts a few weeks and, in no time, the colony is out foraging again.

2. MOUND-BUILDING TERMITES

In sharp contrast to the destructive army ants, some species of termite are best-known for their impressive building abilities. Termite mounds are true engineering masterpieces, which have inspired architects to build more efficiently. A termite mound is essentially an insect-scale skyscraper, which acts as the external lungs for the whole termite colony living below. The mound helps control the temperature, humidity, and the exchange of carbon dioxide and oxygen within the nest. Building such a complex structure is only possible with a settled lifestyle.

***

TAKEAWAYS:

A nomadic lifestyle is consumer-based but not sustainable in the long run and does not leave much trace.

Significant achievements, such as building a termite mound, take time and considerable effort but also leave a long-lasting legacy.

Termite mound (image source: Wikipedia) 

Clouds with their silver linings and storms are like Cities with their opportunities and hardships

CorporateNature No 144

Clouds produce both beautiful views and rainstorms depending on your relative position as observer. Cities create opportunities and offer hardship depending on your social status.

1. CLOUDS

Does every cloud have a silver lining? It depends on your point of observation.

You may get to see a silver lining if you are under a cloud looking up towards the sun but this is nothing compared with the vast expanse of silver and silk that you would see if you were flying by plane above the clouds. The way the cookie crumbles is:

A) If you are high up, you are bound to enjoy the resplendent brightness of the clouds beneath you.

Z) If you are under the clouds, you may occasionally see some silver linings but you are quite likely to get soaked by the rain.

2. CITIES

The same principle applies to the world’s cities:

A) If you are well-off or well-positioned in society, you are likely to see cities as exciting places full of opportunities: higher earning potential, access to education and social networks, beautiful architecture and parks, glamorous restaurants, offices and conference venues.

Z) If you are lower in the social hierarchy and at the bottom of the wealth distribution pyramid, you will hardly see many of these opportunities and you will experience a lot of the hardships: high rents, relatively expensive transportation and food, long commutes, crime and insecurity. 

The higher you go, the more the skies beneath will open up for you in your city. The lower you are, the more exposed to the elements you'll be. Sadly, this is how "the cloud crumbles and the city thunders."

Every cloud has a silver lining (image source: Wikipedia) 

Tale of Three Cities: Oak Forests, Aspen Colonies, Bamboo Groves (Part 3: Shenzhen)

CorporateNature No 143

Cities come in different shapes and sizes. If global cities were groups of plants, they could be divided into three categories: old oak forests, colonies of quaking aspens, and fast-growing bamboo groves. 

Shenzhen as a bamboo grove

Bamboo is the fastest-growing plant in the world. Some species of bamboo can grow up to 9 centimetres an hour. 

Shenzhen, in southern China, has emerged as a city as rapidly as a bamboo grove. It was only founded in 1979 when Chinese leader Deng Xiaoping started the policy of opening up China to the world. However, only after 40 years, its population is now 13 million and its GDP of around USD 400 billion is bigger than that of neighbouring Hong Kong. Remarkably, it has also managed to reinvent itself economically: starting from low-cost manufacturing, it has moved up the value-added chain and is now a global hub for computer hardware, finance and fintech.

Bamboo Grove (image source: Wikipedia) 

Tale of Three Cities: Oak Forests, Aspen Colonies, Bamboo Groves (Part 2: New York)

CorporateNature No 142

Cities come in different shapes and sizes. If global cities were groups of plants, they could be divided into three categories: old oak forests, colonies of quaking aspens, and fast-growing bamboo groves. 

New York as an aspen colony

The quaking aspens of North America are the kings of adaptation. They reproduce mainly by growing root sprouts, so an individual tree can create a vast colony of clones. In Utah, the Pando aspen colony is a single quaking aspen (about 8,000 years old) and is the heaviest known living organism on Earth.

Global network cities like New York are the quintessential aspen colony: adapting and changing with the times. It is now the biggest financial centre in the world, but as recently as the 1950s, New York was the hub of the biggest industrial cluster in the US and the industry was garments.

       

Quaking aspen colony (image source: Wikipedia)                     

Tale of Three Cities: Oak Forests, Aspen Colonies, Bamboo Groves (Part 1: Detroit)

CorporateNature No 141

Cities come in different shapes and sizes. If global cities were groups of plants, they could be divided into three categories: old oak forests, colonies of quaking aspens, and fast-growing bamboo groves. 

Detroit as an old oak forest

Detroit is a prime example of a city in decline. It boomed a century ago when Henry Ford founded his Ford Motor Company there in 1903. After Ford, a range of companies set up shop in the city: Dodge, Chrysler and Packard, making Detroit the fourth largest city in the US. But the automotive industry has fallen on hard times in recent decades and the fortunes of the city sank with car-making. In 2013 Detroit filed for bankruptcy.

Downtown Detroit, 1905 (image source: Wikipedia)

Big Cities and Modern Democracies are like Cars: All three need regular maintenance

CorporateNature No 140

1. NEW YORK CITY AND THE “BROKEN WINDOWS” APPROACH

When crime rates in New York City skyrocketed in the 1980s and early 1990s, the local government launched a law enforcement campaign based on the “broken windows” theory. The idea is simple: when you reduce low-level offences such as graffiti, vandalism, loitering, and general public disorder, this creates the perception of a better urban environment, which in turn deters more serious crime. By the late 1990s, violent crime in New York City had dropped by a staggering 56%, compared to a drop of 28% in the US as a whole.

While there is no hard data on the size of the impact of the “broken windows” policy and although other factors such as economic growth played a key role in crime reduction, it seems that improved quality of life for New Yorkers translated into a more orderly society.

2. DEMOCRACIES AND WHAT MAKES THEM TICK

For a modern democratic country to function properly, it needs to implement fundamental principles such as rule of law, freedom of expression, pluralism, freedom of participation in the electoral process, etc. It takes time, effort and multiple iterations to set up such complex cultural and institutional constructs. Once we get them (somewhat) right, we must strive to keep them in good working order. Running a democracy is a continuous process which involves maintaining the overall structure and adjusting to the current times.

Analogous to the New York example, if we live in a democratic environment of sub-par quality, the cracks in the system would make true democracy difficult to maintain.

3. CITIES AND DEMOCRACIES REQUIRE "CAR MAINTENANCE"

Big cities and modern democracies are complex social machines. Your car is a less complicated machine, but its need for maintenance is not all that different.

A brand-new car is like the conceptual idea of a democracy that exists in theory: they are both in perfect working condition. However, as time passes and the car gets driven, it picks up small dents, it gets exposed to the elements, and its mechanisms start to deteriorate. Soon these minor issues add up and if there is no regular maintenance, it gets to a point where the car becomes a road safety concern.

Wouldn't it be better if we took care of the minor issues promptly, rather than wait for them to stack up and overwhelm the system?

Manhattan skyline (image source: Wikipedia) 

Cities are ecosystems of constructive and destructive forces: think of bees and flies

CorporateNature No 139

There are two extremes in human behaviour: constructive and destructive. Constructive activities develop and produce new things, e.g. knowledge, infrastructure and all kinds of human structures that reduce entropy (chaos). On the other hand, destructive activities reduce to ruin existing structures and add to chaos - from a human point of view at least (nature would be free to disagree with us what is constructive and what is destructive).

In the animal world, two insects can represent reasonably well these two extremes: bees and flies.

1. THE CONSTRUCTIVE HONEY BEE

Honey bees are notoriously hardworking, disciplined and organised, as well as forming incredibly complex societies. The result of their productivity is complex structures (honeycombs) and sophisticated products such as honey, royal jelly, beeswax and propolis.

2. THE DESTRUCTIVE HOUSEFLY

To a human, the common housefly is the destructive yin to the honey bee’s constructive yang. Flies spread disease and lay eggs that grow into larvae in the dirtiest places in your house. There is a neat way to get rid of flies, though, without getting your hands dirty: all you need to do is open the window and let it fly back to nature, where the destructive/constructive equation is not a given and not clear-cut.

3. CITIES ON THE CONSTRUCTIVE-DESTRUCTIVE SPECTRUM

Just like beehives, some cities are orderly and productive: think of the Swiss cities of Zurich and Geneva which consistently rank at the top of global quality of life indices. Other cities, especially in tropical regions and developing countries, are a giant mess, with ghettos and favelas. Even the sprawling southern US cities are not a paragon of orderliness, with their notorious traffic jams in rush hour. Therefore, we should be able to forgive Gandhi for being anti-city, having experienced the squalor of cities in India.

Yet, even messy and squalid cities are more productive compared with nomadic communities or farming communities in the countryside. If cities weren't making good use of their human capital, people wouldn't be living there. Cities create their own ecosystems, just as nature does. The constructive/destructive forces in them form a broad and diffuse spectrum, just as nature accommodates both bees and flies.

Honeycomb (image source: Wikipedia) 

SpaceTime after the Big Bang has parallels with 2020 and post-pandemic life

CorporateNature No 138

In physics, the concepts of space and time are fused together into a single four-dimensional spacetime mathematical model that describes our universe. Einstein’s theory of special relativity has made it impossible to look at space without considering time, and vice-versa.

The idea that space and time are different sides of the same coin can also be useful on a more everyday level. Consider the following:

1. THE CONDENSED SPACE OF THE BIG BANG VS. THE CONDENSED TIME OF MODERN LIFE

According to the big bang theory, all of the matter in our universe started its expansion from one single point. For hundreds of thousands of years, matter was so dense and the universe so hot that only subatomic particles existed (and for short periods of time). What is more, even if we were to go back and observe this period in the history of our universe, we wouldn’t be able to see anything.

As astrophysicist Neil deGrasse Tyson explains “in this early epoch, photons didn’t travel far before encountering an electron. Back then, if your mission had been to see across the universe, you couldn’t. Any photon you detected had careened off an electron right in front of your nose, nano- and picoseconds earlier.”

Similarly, 21st-century life in a developed society is typically characterised by an overabundance of condensed time. We easily get swept away by the overwhelming current of day-to-day responsibilities and worries.  Everything has to happen now (even yesterday, if possible). When we are immersed in a constant state of information overload, it is easy to lose sight of what really matters in life. This constant stream of information we receive is just like the electrons knocking photons in our eyes.

2. THE EXPANDING UNIVERSE VS. THE EXPANSION OF TIME DURING THE PANDEMIC

As the universe expanded and cooled down, matter eventually became diluted enough to allow for atoms and different elements to form. This, in turn, led to the emergence of stars, galaxies, planets and, ultimately, living beings. The ideal environment for this creation process was one of less density.

The events of 2020 have forced a similar sort of expansion of our time and dilution of our daily tasks. The state of pandemic lockdown that a large part of the developed world was forced into has given us a chance to slow down. In fact, time during lockdown seems to have almost stopped compared with the pace just a few months earlier.

Living this new reality, we have come to recognise that certain lifestyle choices from the past don’t seem that appealing anymore. Suddenly, all those work emails and conferences have lost their perceived previous importance. Maybe some of us have been put off by the clutter both in our homes and in our previously hectic daily schedules. Maybe others have decided to take a new career path. But hopefully, a lot of us have learned to place greater importance on our relationships with loved ones, rather than on material possessions and social status.

This period of expanded time can be viewed as the catalyst to new opportunities. It has certainly given us plenty of time to think and plan for the future.

***

According to some theorists, the universe will expand to a certain point and then start condensing back to that point before the big bang. This is one of the great mysteries that astrophysicists face today.

What is certain, however, is that as the world returns to normalcy after the pandemic, our time will once again begin condensing into the way it was before. It is ultimately up to us to decide how we want to live once that happens.

Hopefully, we are not too quick to forget the lessons we have learned over the past few months.

Timeline of the expansion of space (image source: Wikipedia)

Selfless and self-serving jobs resemble wheat stalks and rivers

CorporateNature No 137

There are two types of jobs: selfless and self-serving. They have a lot in common with wheat and water in the metaphorical realm.

1. SELFLESS JOBS RESEMBLE SEEDS THAT SCATTER

Professions such as teaching and nursing benefit society: these vocations exist for the greater good of all people. People working in these positions spend their time and energy selflessly, often driven by the conviction that their noble efforts must help those around them. In financial slang, these people "leave money on the table" (for others to pick up), i.e. they create value that is not appropriated by themselves.

Such occupations resemble a wheat stalk that shatters and sheds its seeds on the ground. While this is not beneficial for the farmer who planted the wheat, it helps propagate future generations. 

2. SELF-SERVING JOBS ARE SEEDS THAT DO NOT SHATTER

Bankers work hard, just like nurses and teachers. However, they appropriate most of the results of their efforts for their own benefit. Ironically, they are people who work with money, yet they "don't leave money on the table" as they are better at extracting value for themselves. 

This profession resembles cereal plants that do not shatter and whose grains stay on the stalk after ripening. Although this is good for the farmer who planted the cereals as it allows harvesting the grain,  the natural process of propagating the seeds is put in jeopardy.

3. SELFLESS JOBS RESEMBLE RIVERS THAT DON'T REACH THE SEA

Another example from nature can illustrate this parallel: most rivers reach the sea and deliver their water to the ocean, give or take some evaporation and human consumption. Such rivers are like the “bankers” who keep resources to themselves.

On the other hand, a handful of rivers never reach the ocean, e.g. the Okavango in southern Africa. The Okavango irrigates a vast inland delta and subsumes itself into it. The Okavango disperses all its water into a vast and fertile wetland that creates habitats for myriads of animals and plants, just like teachers and the nurses give themselves away for the benefit of humankind.

Wheat stalk (image source: Wikipedia) 

Dividing Walls vs. House Walls symbolise Fixed Mindset vs. Growth Mindset

CorporateNature No 136

Opportunities in life come and go. These opportunities are not equal for everyone. But while you cannot pick your parents or choose where to be born, you have control over using what you have. You can use your assets and skills productively or destructively. Would you choose to unite or to divide?

1. The Wall as a Dividing Barrier

Building a wall as a barrier is the epitome of negativity: its purpose is to divide, not to unite. Your wall may be guarding what you already have or blocking others from accessing what you have, but it will also be keeping anything new and valuable from coming to you from the outside. In the short run a wall may work to your advantage but in the long run it will limit your potential to reach out to the world and achieve more.

2. The Walls of a House

Building walls to support the roof of a building is an entirely different type of wall. The walls of a house also serve as a divider but they merely separate the inside from the weather conditions outside. The walls of a house create a hospitable place for a home or a family within them. A house also connects to the outside world through the gaps in the walls we call windows and doors.

3. Fixed vs. Growth Mindset

The difference between dividing walls and constructive walls is the same difference as between the fixed mindset and the growth mindset. The Chinese proverb says it all: 

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风向转变时,有人筑墙,有人造风车

"When the wind of change blows, some build walls, while others build windmills."

House (image source: Wikipedia) 

Dung beetles and Notepad apps remove all paraphernalia

 CorporateNature No 135

1. Dung Beetle

Dung beetles are known for collecting dung and rolling it into balls which they use for food or for breeding their larvae in it. By acting out this behaviour, they play an important role in nutrient recycling: removing waste and improving soil structure and fertility. They create a level playing field out of the diverse processes in life.

2. Notepad App

The humble Notepad app performs a similar role in the computer world. By removing all formatting, fonts and styles, the Notepad programme removes the distracting bells and whistles of the internet era. This allows you to concentrate on the ideas and real writing can flourish. It is a very egalitarian and meritocratic type of tool because it makes everything equal in format. 

3. Death: the ultimate leveller

People may be rich or poor while alive, but once they are dead they are equally dead and nothing else matters. This is a universal truth we often forget or choose to ignore: It doesn’t matter how much “crap” (material or otherwise) you accumulate in a lifetime, the outcome is all the same.

Dung Beetle (image source: Wikipedia)

Tunnel vision results from tunnel focus

CorporateNature No 134

Taking a break can help break up tunnel vision; 
While exercise is best done on an empty stomach.

We've all been there. Working on a project, you encounter a seemingly unsolvable problem which drains all your mental energy. You get frustrated and take a break, grab a coffee and a snack or go for a walk. After the short break, you come back to the desk, start working again and then something miraculous happens. The solution to that tricky problem suddenly pops up in your mind effortlessly. It was almost as if there was no problem in the first place. What's that all about? 

TUNNEL VISION - TUNNEL FOCUS

When you are involved in focused mental work (studying, writing or any type of problem solving) your brain tends to zoom in on the task at hand. Most of your efforts go into trying to solve the issue you see "at the end of the tunnel", and there is no energy and processing capacity left for your brain to make sense of the full array of information available. At a certain point, when the amount of incoming information becomes too much for the brain to cope with, you become overwhelmed. The brain starts to falter.

EXERCISE COMPETES WITH DIGESTION

A similar process happens if you exercise on a full stomach:

"When you exercise, your body isn't using its energy for digestion. Instead, it slows any digestion currently taking place so it can divert as much blood as it can to feed your muscles and your lungs. If you've just eaten before exercising, you can experience gastrointestinal problems."

BREAKS & RETREATS HELP

Just as your body cannot digest food when you are exercising, so you cannot digest your thoughts and focus on the bigger picture while doing your day job. You need a break, a strategic retreat, a change of scenery. 

Albert Einstein famously played the violin whenever he encountered a problem while working on his theories. This activity gave his hands something to do and at the same time gave his brain a chance to relax, process the new information and see things with fresh eyes.

Keep this in mind the next time you're stuck on a particularly stubborn problem. The solution is very simple: take a break, change the pace, change the scenery, give your brain time to digest all that information. 

Aerobics
(image source: Wikipedia)

Three types of water taps resemble fiscal, monetary and microeconomic policy

CorporateNature No 133

Control is a fundamental concept in management and public policy. It is a continuous process of setting objectives and collecting feedback based on the results recorded in the implementation of these objectives. Ultimately, a well-functioning system of control is the key to long-term success.

There are different approaches to control, some more sophisticated than others. To illustrate these various levels of sophistication of control, let us look at an everyday metaphor: water taps.

1. Traditional British hot and cold water taps are separate:
Having hot and cold water coming out separately meant that you had to mix the water in your hands to get the right temperature, often risking scolding your hands under the hot water tap if you were unable to skillfully cool your hands with water from the cold tap at the same time. This anachronistic solution dates back to the time when the technology did not exist to separate the higher-pressure hot water from flowing into the cold water pipe if the two were connected inside the tap.

An example of such a slow-control system is macroeconomic fiscal policy, where the Government tweaks the tax rates but the results are only observed in the real economy a year or two later. The observed outcomes then inform policy, which can be adjusted in turn.

2. Old European taps mix the water but have two separate knobs:

The traditional tap familiar to most Europeans consists of a mixer and two separate control knobs for hot and cold water. Although the water comes out mixed, there is still some initial adjustment required to get the temperature right. This is a step in the right direction: the entire process is simplified, which cuts water waste and ensures a higher probability of getting consistent temperature every time. However, there is still room for improvement in the system.

An example of this system in the economy is Central Bank monetary policy. When a Central Bank reduces interest rates, the added liquidity takes about six months to work its way through the economy. 

3. Modern mixed tap with a single lever:

Modern technology allows using a single lever to set the exact temperature of a single flow of water. The modern tap saves time and keeps water waste to a minimum. This setup represents an efficient, streamlined system which allows for greater control over the whole process and guarantees an effortless experience and a consistently high standard for the user.

An example of this type of systems are the microeconomic decisions of company owners: the changes they adopt take a week to trickle down the organisational hierarchy.

4. Conclusion

If faced with the task of setting up a system of control, whether it be for personal or corporate purposes, consider the water tap metaphor. Or if you want to go a step further, follow the Chinese saying: 饮水思源 (yǐn shuǐ sī yuán) - when you drink water, think about its source. 

Water tap
(image source: Wikipedia)

Experts and Mammoths are prone to falling into traps and becoming extinct

Experts who specialise too deeply become less resilient. Mammoths who fall into deep traps tend to become extinct.
CorporateNature No 132

We live in times when deep specialisation is highly valued. Experts are traditionally associated with academia but the idea of knowing more and more about less and less (until you know everything about nothing) has also found its way into the corporate world. Yet, being an expert is not necessarily a good thing.

Many corporate jobs require an initial employee training period. These are usually designed to teach narrow skills that are mostly (if not only) useful in the employee’s current role. Thus the employee becomes an expert at their job, but for them to advance professionally, further training is required. This gives rise to a continuous process in which people specialise deeper and deeper in one area. Ultimately they end up developing narrow expertise in that area but very little else.

While deep expertise makes people more efficient at their job, becoming a narrow expert is a dangerous proposition. A narrow expert in a single area resembles a woolly mammoth that falls into a dug-out trap. If the trap is deep enough, the mammoth cannot climb out and ends up as steak on Neanderthal camp fires. Similarly, an expert developing a deep specialisations knows more and more about less and less. If they go too far down this path, they eventually end up knowing everything about nothing.

Wouldn't it be wiser and more resilient if we divided our energy and time and invested them in developing competence in multiple overlapping fields, rather than becoming a narrow expert in a single domain? Skills development benefits from diversification as much as an investment portfolio does. This would help keep the mammoth in the tundra, rather than in the trap dug out by our primitive ancestors.

Woolly mammoth
(image source: Wikipedia)

People of low ability are half-empty wine bottles that make the most noise

CorporateNature No 131

Ullage is the headspace of air between a liquid and the container holding that liquid. The ullage level is particularly important in winemaking, as too much ullage may lead to excessive oxidation which worsens the quality of the wine.

Minimising ullage makes the relationship between bottle and content more straightforward, or else a false impression about the whole package may be created. In the human world this has a parallel known as the Dunning Kruger effect: the cognitive bias of low-ability people to overestimate their abilities.

The Chinese have captured the Dunning-Kruger effect brilliantly in the expression 半瓶水响叮当 (bànpíngshuǐ xiǎng dīngdāng): "empty vessels make the most noise". Literally, this translates as “if you tap a half-empty bottle it makes a sound”. The metaphor here is that a person of low ability resembles a half-empty bottle: self-aggrandising and insecure executives are noticeably more noisy than the capable executives.

Philosopher Bertrand Russel put this even more eloquently:

“One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision.”

So can we try to make sure that our “ullage level” is always kept to a minimum? After all, nobody would like to open an expensive bottle of wine only to discover that its content has turned into vinegar.

Bordeaux wines with different ullage levels
(image source: Wikipedia)

Unintended Consequences: Cobras, College Grades, Potato PR

CorporateNature No 130

There are two types of unintended consequences:
1) The long tail of a probability distribution of outcomes, when the rare outcome happens to occur.

2) A chain of events that creates its own loop of consequences.

The previous CorporateNature blog post (No 129) was about some unintended consequences that occur in complex environments such as our human social systems, including the Peltzman Effect of risk-seeking behaviour when one is feeling safe.

Continuing this topic, here are three more examples of unintended consequences:

1. The Cobra Effect

The Cobra Effect is a case when an intended solution to a problem exacerbates the problem. The name "cobra effect" comes from a story from colonial India. To solve the problem of the large population of venomous snakes in Delhi, the British colonial government set a bounty for each dead cobra. At first this strategy was successful, as many snakes were killed for the reward. However, soon people started breeding cobras to profit from turning them in to the local government. The government eventually noticed it was being taken for a ride and scrapped the reward programme. This made breeders release the cobras they had been breeding into the wild, which led to an increase in the cobra population.

2. The Vietnam War & Grade Inflation

In the US, during the era of the Vietnam War in the 1960s, students with high grades were exempted from the draft for the war (conscription). This meant that giving someone a low grade could send someone to war, and possibly cost their life. As a result, professors became much more hesitant to give someone a C and gravitated towards handing out higher grades.

3. Potato PR

Potatoes were domesticated in South America some 10,000 years ago and were introduced to Europe after the voyages of Columbus. However, local European farmers and peasants did not take to them. Appreciating the nutritious potential of this new plant, Prussian king Frederick the Great came up with a public relations stunt to convince people that potatoes are worth it. He had his servants plant a field of potatoes and stationed a heavy guard tasked with pretending to be guarding the field. Naturally, the local peasants assumed that the crop on the king's land must be valuable and started to sneak into the field and steal potatoes for their own gardens. This had exactly been Frederick's intention and the mission was accomplished exactly because the peasants thought their stealing of potatoes was an unintended consequence.

Indian cobra
(image source: Wikipedia)

Human systems are rife with unintended consequences

CorporateNature No 129

As the name suggests, the sociological term “unintended consequences” refers to unforeseen  outcomes of purposeful actions. They occur in complex social systems due to the large number of variables involved in the functioning of these systems.

In the simplified world of Newtonian physics, for every action in nature, there is an equal and opposite reaction (Newton's 3rd Law of Motion). In such a system, outcomes are easy to predict.

In contrast, human social systems are complex, sometimes bordering on chaotic, so the action-reaction equation does not necessarily hold true. More often than not, there are unintended consequences.

A classic source of unintended consequences is the Peltzman Effect. The Peltzman Effect, or risk compensation, occurs after the implementation of safety measures intended to reduce injury or death (e.g. bike helmets, seat belts, etc.). While people may feel safer than they really are, they take additional risks which they would not have taken without the safety measures in place. This may result in an increase in mortality, rather than the decrease that was initially intended.

Here are some examples of the Peltzman Effect:

1. Anti-lock brakes

Anti-lock brakes were introduced in Germany in the late 1970s. Contrary to government expectations, instead of decreasing fatal car accidents by 10-15%, the drivers of cars fitted with anti-lock brakes became more likely to engage in risky driving. Studies found that drivers would trust their new braking technology too much and as a result would curves at a higher speed, which increased rollovers and accidents.

2. American football helmets 

Helmets became mandatory in American football in 1943 and the risk of injury was expected to go down. Indeed, the helmets decreased the number of broken noses, teeth and jaws. However, concussion and spinal injuries actually increased and broken necks saw a staggering rise by 400%. The reason for these counterintuitive statistics was the better protection that helmets gave to players, so the players actually started using the helmets as an offensive weapon, just like battering rams.

3. Airbags and children left in cars

Airbags are another pertinent example of the Peltzman Effect. Passenger-side airbags were intended to increase safety but actually started hurting and killing child passengers as children were vulnerable to being hit by a deploying airbag during a collision. This led to the child seat being moved to the back of cars, which in turn resulted in another unexpected consequence: an increase in the number of babies and children inadvertently left behind in locked vehicles.

1959 Volvo 122, the first mass-produced car with seatbelts as standard equipment
(image source: Wikipedia)