SAST Wingees

The Wisdom of Crowds by James Surowiecki

Updated Oct 3 with links to key concepts/articles: Just finished reading this must-read book. Surowiecki has done a fantastic job of compiling a great set of insights about crowds and groups. He hooks you into the book with Francis Galton’s analysis of the “guess the weight of the ox” contest. Galton discovers that when he averaged the guesstimates of all the 800 entries, it was eerily close to the actual weight of the ox. Surowiecki then goes on to categorize problems into cognition problems (of the ox type above), cooperation problems (like paying taxes) and coordination problems (like financial markets that coordinate buyers and sellers). Surowiecki proves with some fascinating examples under what conditions crowds make good decisions – independence of opinion, diversity of opinion, decentralization to enable usage of local knowledge and finally an aggregation mechanism to form the collective decision out of the individual ones.  For instance, how the stock market beat down Morton Thiokol’s stock[PDF] right after the Space Shuttle Challenger’s explosion within minutes aftet the incident. Amazingly, 6 months later investigators laid the blame on the “O” ring made by Thiokol. He then covers Information Cascades (fads) with another set of great examples like the Plank Road Fever, Internet Bubble, Sellers’s Standard Screw, [PDF]Munshi’s Analysis of Green Revolution farmers of India…
The key insight he derives is that Information Cascades are less likely to happen the more important the decision. .
On the coordination problems front, Surowiecki again comes up with some compelling ones – Thomas Schelling’s experiment of asking students to meet in NYC without telling them the location and the students picking Grand Central Station (such converging focal points are called Schelling Points), how a giant flock of starlings coordinate their flying with a few simple rules. He then goes on to cover Vernon Smith’s experiments that prove how a market comes with the correct price for anything. On the cooperation problems front, Surowiecki uses examples like the Ultimatum Game, the Public Goods Game, the Dictator Game and uncovers some great insights like pro-social behavior, reciprocity, the principle of fairness, and that durability of relationships is more important than trust for cooperation. Surowiecki covers how small groups work in chapter 9 on committees, juries and teams. Again laden  with great examples from the space shuttle Columbia disaster, Blinder and Morgan’s experiments($$)..  This chapter has some key lessons for people in management. Overall its a fast-read type of book with page after page of insights explained with great clarity with examples. I’d say it changes your viewpoint on how you look at experts and expertise.

India’s supreme court goes “e”

Starting Oct 2nd you can e-file a petition in the highest court of India. You can pay the Rs.1.50 per page filing fees by credit card. Petitioner also needs to scan in a proof of identity – ration card, PAN card, driving license or voter identity card. Now we only need to figure out a way to clear the mountain of cases backlogged across the legal system in India! http://www.supremecourtofindia.nic.in (Via Times of India, Oct 1, 2006)

Services ecosystem

Had the privilege of meeting Prof. Bala Iyer of Babson College a few weeks ago when he was visiting the key services companies  in  India. He is an avid Google watcher – he shared his Google  Talk  presentation (as he calls it) which had a lot of insights about Google. He maintains a blog as well. On his blog, he has recently published the entire software services ecosystem  as a network using the partnerships between the companies as the underlying data. Over 300 firms and 600 alliances are represented.  You can see all the major services companies with an India play as well as the traditional software and services companies. Interestingly Google which has major enterprise ambitions is  alone in one corner.   It will be interesrtng to see how Google tackles the enterprise market without a dedicated sales force and partnerships  with major services companies  (they  have a few like  Bearing Point lined up). Prof. Bala also publishes  another interesting chart frequently on the mashups  ecosystem  – has 119 nodes and more than 1000 links represented. Check it out.

Made in Japan by Akio Morita

This book “Made in Japan” has been on my to do list for a long time. Got hold of a copy and finished reading it recently. Akio Morita, the man who put Sony on the world map, has written (has 2 co-authors as well) this book in a candid style. This book was first published in 1986, much before the Japanese economy hit the skids. Akio had no way of predicting that, of course, in an age when anything the Japanese did was an instant fad and replicated widely. You can sense his pride throughout the book. Not really knowing the man aside from this book, some of his comments could be construed as arrogance. Some highlights: 1. Akio covers the War, Pearl Harbor and the A-bombs and his own tenure in the military extremely well giving the Japanese perspective and how these events were viewed in Japan at that time.  2. How Sony (originally called Tokyo Tsushin Kogyo) was founded on Masuru Inbuka’s vision of making a tape recorder, when they didn’t even know how to make the tape or other imortant components. Shows how passion and vison can make great things happen. Akio also covers how marketing and sales are crucially important when the tape recorder they built didn’t sell well initially untill they figured out target customer segments. .3. The thing that really put Sony on the pedestal –  the Walkman, was made when Ibuka demanded a music system that only he could listen to and could carry everywhere. Akio also narrates the funny incident of how some junior folks in the marketing department picked the name Walkman when he was on vacation. He really didn’t like the name. But all the marketing materials were ready to go, so he couldn’t change the name! 4. Akio then covers the portable transistor radio which Sony built adapting the transistor invented in the USA. He also narrates how he rejected the large Bulova OEM deal because he wanted the Sony brand to be built independently. This story is very popular as a negotiation case study.  5. Sony’s legendary Trinitron technology gets a few pages.  6. The chapter on management gives you a good feel for how Sony pursued a more egalitarian open style of  management, in comparison to the other Japanese companies. Akio gives a lot of comparison with American management styles. p188 has a mention of an young researcher who “came up with a system of plasma display that might one day be adaptable for computers and even flat TV monitors. But the idea seemed very far in the future to us, too far to invest a lot of time and money in at the momemnt”. Maybe this is why Sony missed the boat on flat panel TVs and is still playing catch up to Samsung and Sharp. 6. Later, Akio gives some coverage to the famous Betamax Vs. VHS story. And also covers the quasi-statesman like role he plays in helping US businesses setup shop in Japan, representing Japanese business interests in the US etc. 7.  This para on p245 reminds me of the Indian education system:
“Having said so much about how competition has worked to make our industry great, I must admit there is another side of the picture, which is that excessive competition is at work in our society today. It exists in education and in social life, and it has actually destroyed many young lives. The competition for a place in school is intense. And because entrance to the “best” schools is based completely on merit, the only way to get in is through competitive examination. This has led to the making of Japan’s famous “education mothers” who force their children into a very difficult and cheerless life of drill and study. Some years ago, when we moved into a new house in the Aoyama district of Tokyo, I discovered there was a prep school for kindergarten in the neighborhood”. Isn’t it scarily similar to India? Now that I am here I can say that the “education mother” disease is totally ingrained.    8. In the penultimate chapter “Japan and the world” this passage on p288 caught my attention:
“I mentioned earlier that no American companies at all were interested in our compact disc player technology, not a single one, and yet this is the technology of the future, with standards agreed upon by all the major Japanese and European makers. While we are moving into the next generation, American companies are clinging to the old twelve-inch black analog record, which will soon be as outmoded as the standard play 78-rpm record is today.
When others cannot see the opportunities and refuse to get into a business, this gives us a great advantage. But I dislike it when there are complaints then because somebody else had the foresight to go into the business and capture the market. American companies should not turn their backs on this technology and give it up, because it will lead to many other applications, not just the reproduction of music. Ironically, some of the technology that made this new recording breakthrough possible was pioneered in the United States, but American companies nowadays seem more interested in service industries than in turning new technologies into attractive products that will be enjoyed by a vast number of consumers”. How much the world has changed since then? Apple’s iPod gave the death blow to the Sony Walkman using components made in Japan (Toshiba hard drive, Sony battery..).  Sony is still to figure how to compete in the digital music world dominated by Apple. Overall, this is a book everyone interested in Technology and Management must read.

Fine tastings of this week

Decided to publish a compilation of the  things that capture my attention every week. Here are the ones this
week:

1. Creativity Issue from the Rotman’s School  (PDF)
Has some great articles. Margaret Borden’s  ideas on p-creativity and h-creativity is insightful.
(Via Raman Krishnamoorthy)

2. James Surowiecki of “The Wisdom of the Crowds Fame”  profiles Joshua Schachter of Deli.cio.us
It is a great article. How delicious  leverages one’s selfish purpose of tagging the web pages visited to create a system of categorizing the web is amazing. We knew this before but when you hear it directly from Joshua along with how he came with the idea is great.  Interestingly, Schachter calls a tag, crystallized attention – powerful imagery. The only other system that i could think of that similarly used ones’s selfish purpose to title the CD tracks when ripping them – CDDB (Gracenote). Flickr is there but it uses the same tagging idea – in fact, Caterina Fake is said to have taken Schachter’s advice.  I wish more systems that fulfill selfish needs to create utility for the rest of the world could be created.
(Via Sadagopan  http://123suds.blogspot.com)

3. Sun Jar – a cool solar power capturing device.  The type of creativity that makes you go – why did n’t i think of that. . (Via treehugger)

4. Three Days to See – an amazing artcicle by Helen Keller.  Reading this will make you appreciate your ability to
see in a new light.  (Via Ebenezer Grace)

5. Cicada fly that surfaces only once in 17 years – an evolutionary strategy  that ensures that there are no predators
at all. Predators don’t even recognize them because who is going to wait 17 years for a meal.  (Via Time Machine
program on the Animal Planet  channel)

6. On the fun side – check out this compilation of Captain Haddock’s swear words. For the uninitiated, Captain Haddock is Tintin’s sidekick in Herge’s immortal comic series. The explanation behind why Herge started using these swear words is interesting. Read on.

You can keep track of some of my tastings through my linkblog on the right hand side column of the blog. If you are wondering why i call it tastings – check out the about page of the blog!