How Meeting in Person Remains a Need

This excellent Atlantic article addresses the question we all ponder: ‘Do We Really Need to Meet In Person?‘. Employers generally consider that some face-to-face meeting is needed in particular for creative endeavors (see our post ‘How Face-to-Face Work is Needed for Innovation‘; employees would rather stay at home and avoid commuting.

The Atlantic article takes a clear position in favor of remote work, and provides as well interesting data. In particular “The amount of meetings doubled during the pandemic“! It is true that our days have been packed with much more interactions and the need to switch from one topic to the other.

On the other hand, I observe since we have been able to meet again with people in person, how rich those encounters are compared to remote meetings. From informal exchanges around coffee to the enhanced environment of discussion, reading body language cues and understanding the working environment of people you meet.

In particular for all commercial and business development aspects, face-to-face meetings still remain much more powerful than remote meetings in conveying messages and conviction.

I have also observed that for audits and reviews, there is much more to be captured when working in the office being reviewed than remotely, and it remains essential to travel on site to provide a good quality analysis and feedback.

I am convinced that while remote work will certainly increase compared to pre-Covid time, face-to-face work is also here to stay and develop. We will have to learn what method works best for which purpose.


How Infrastructure Projects Cost Has Increased Dramatically in Developed Countries

This VOX article poses a great question ‘Why does it cost so much to build things in America?‘ in the context of infrastructure and mass transit construction. This can be generalized probably to all developed countries, with some differences: why has it become (relatively) so expensive to build infrastructure in those countries?

Research by New York Federal Reserve Bank and Brown University researchers reveals that the cost to construct a “lane mile of interstate increased five-fold” between 1990 and 2008. New construction — widening and building interchanges and building new sections of road altogether — is where the bulk of the problem lies

Reasons mentioned beyond the density of those locations where infrastructure are being built include institutional reasons (in particular, more power given to opposing groups leading to complaints and lawsuits). The article also mentions the lack of experience of government agencies and construction companies due to the lack of construction in the last decades. I personally suspect also financing mechanisms – long projects like infrastructure will get heavily burdened by financial costs if the government does not step in for part of the financing.

In any case, it is certainly the accumulation of layers of requirements in developed countries that lead to substantial delays and even more substantial increase in cost for transportation and other infrastructure building. This is a concern for our societies that need to be overcome if we want to remain competitive.


How AI Can Only Produce Mediocre Content

In this excellent post ‘Why AI Will Not Create Great Content Any Time Soon‘, Christopher Penn makes the point that AI can’t really be trained to make better than mediocre content. Still it can certainly create heaps of it!

The point is that AI needs to be trained, therefore it will be trained on existing content. And existing content is scrapped from the web. The post goes into detail on the origin of those training databases used to train content-generating AI. It is not a huge database, and while the people that have created them have tried to filter the worst, it mainly contains average content.

Which means that natural language models will inherently be biased towards creating mediocre content, content that’s readable and coherent, but not compelling or unique, because that’s what the vast majority of the language is that they are trained on.”

The post continues with actual real life experiments on actual content, asking for an AI algorithm to fill-up the remainder of the text. It appears quickly that it can’t imitate unique writing styles or unique ideas.

Of course the problem is that AI generated content can be produced much more easily and may flood media, drowning the best content. On the other hand, people have learned where to find unique content so for the foreseeable future, as long as your content is unique in terms of style and content, AI will not be able to imitate you!


How Robot Chefs Start Selling Food To Go

In this excellent post ‘The New Top Chef‘ Alex Tabarrok explains how “During the pandemic a pasta restaurant launched on UberEats in Paris. Cala quickly attracted a top 1% rating for it’s high quality to price ratio. Only now has it been revealed that the chef is a robot“.

This was actually a startup hidden behind the storefront, conducting a real blind experiment to prove its concept. This saves a bit on labour and also mainly on real estate as mentioned in this article: ““With three metres squared, we can serve 1.2k meals an hour,” says Richard. “A traditional McDonald’s restaurant is 125m2, and usually they can serve 550 meals an hour.”

This gives a glimpse of a future where the preparation of common food will increasingly be automated to support delivery or on-the-spot consumption, while competition between restaurants will be increasingly on fancy food and great atmosphere. The price gap between various options can be expected increase, while labour will move from burger-flipping to service and delivery.

The advent of robot-chefs is just a visible change that automatization will bring to our daily lives. Are you ready for it?


How To Overcome the Moral Link Between Value and Effort

Seth Godin in this post ‘Labor and value‘ reminds us of the various historical theories about value. In particular, the Marxist ‘labor theory of value‘ stating that value is proportional to the amount of labor (cost) gone into it. This theory however still provides a kind of moral limit to the value (price) we propose.

Having an estimate of value independent of cost is difficult to understand in business: I still have a tendency when I sell a product or service to believe that its value (price) should be somewhat correlated to the effort (cost) that has gone into it. This consideration is almost a moral statement: it is based on the consideration that it would not be fair to charge for significantly more than the direct effort gone into the item or service.

However, this thinking is quite wrong, for three reasons:

  • Value lies in the eye of the beholder, or the client (informed by the market / competition and its own needs). What I propose may have much more or quite less value for it than the effort that has gone into it. Selling for a large value (price) something that has taken not so much effort to build will pay for other services or products that I can’t sell for such a high price (such as new innovative product that are looking for their proper form to produce value for clients)
  • In addition to the direct cost or effort, we must consider that our product or service is also the result of years of practice and learning, and that a large part of the value is actually indirect value of this significant investment, and not just direct effort (this is particularly visible with new clients where we can often deliver huge value for very little effort just by bringing to bear our knowledge)
  • If we don’t sell at the right market price reflecting actual value, we will be in a weaker financial situation compared to competitors, thus impeding our capability to develop innovative products or services (still, it is good to sell slightly less that competitors to increase market share!)

In the end we should overcome the moral imperative of linking value with effort. Everyone values things differently, and this diversity is promoting innovation.


How Insurance Companies Can Leverage Technology to Control Behaviors

Insurance companies have always influenced behaviors through basic rules underlying their contracts, for exemple historically in terms of fire prevention. There can be a fine line between imposing some rules and actually controlling behavior. In this article ‘Draining the Risk Pool: Insurance companies are using new surveillance tech to discipline customers‘, modern practices of insurance companies are described that border on spying individual behaviors.

The trend is particularly acute in the US where health insurance is provided by private companies. It starts with some shocking statements about examples of companies prohibiting smoking or other possibly health-impacting behaviors because of insurance fees; and other companies promoting health-welness programs which appear to be quite mandatory. “Wellness programs are about exercising that leverage, reducing the risk profile of employees and thus cutting the employer’s costs for health insurance plans.”

However in the modern world, this means using apps and other devices to monitor progress and connect with colleagues, and those could ultimately be used for control purpose. Examples are give, from insurers that require wearing of personal health monitoring devices, or fitting cars with black boxes to determine driving patterns. All leaving to possible insurance access and price discrimination, leading to a much more personalized behavior influence. Boundaries to this approach and rules around fairness will have to be imposed by law.

With the development of personal devices and technology, insurance companies will certainly find a field of improved insight into client behaviors. Lawmakers will have to follow those trends closely to put the right boundaries.


How Face-to-Face Work is Needed for Innovation

This article ‘New Microsoft Study of 60,000 Employees: Remote Work Threatens Long-Term Innovation‘ provides much food for thought on the limitations of remote work in creative endeavors.

While productivity seems to remain stable or even benefit from remote work in certain areas, creative areas lag behind. “a massive new peer-reviewed study from Microsoft […] found that, while remote work is fine for plowing through day-to-day work, it has the potential to put a serious damper on collaboration and innovation long-term.

Thus if one’s work is pure production without distraction, remote work is great. If it requires a lot of informal communication and exchange, nothing replaces face-to-face. While this is quite intuitive and not a discovery, the fact that it is described in a peer-reviewed paper enhances the validity of the findings.

Microsoft CEO Satya Nadella calls this ability of remote work to simultaneously improve heads-down productivity and harm creativity the hybrid work paradox.” 

In a world where most value lies in innovation and creativity, a return to the office is inevitable at least for part of the time, and that’s exactly what most organizations are doing now.


How We Overvalue Fast-Growth Companies

This article by Tim O’Reilly ‘Two economies. Two sets of rules‘ bounces back on the question about why Elon Muks is so rich to conclude that there are really two different economies: the real economy and the gambling – stock market economy. And betting on the stock market leads to unrealistically high valuations.

In effet, stock valuation today is generally very high, and for some companies like Tesla it is unrealistic by any measure. I also observe this trend in (unlisted) start-up valuation, which are sometimes quite unrealistic – it is very difficult to expect a real economic payback in the foreseeable future.

We also know that the valuation of a company being listed is always significantly higher than when it is privately held – some of it the value of floating shares that can be sold at any moment, and some of it simply the effect of the market and a large number of possible buyers.

This is quite strange because at the same time we always underestimate exponential growth, which is what we could expect in this case ; but we tend to overestimate future company economic return in a situation where demand far exceeds supply of scarce stock or shares. I would tend to agree with Tim O’Reilly that there is an element of irrational gambling behavior in those cases (possibly compounded by the fear of missing out one of life’s greatest opportunities).

Stock market and high-growth start-up valuations being thus generally exaggerated, either one keeps away from it, or one sales before reality catches up again. Those are the only possible strategies!


How Network Effects Create Negative Marginal Costs

In this post ‘Negative marginal cost‘, Seth Godin highlights that non only digital allows to produce at zero marginal costs, but that when network effects are added, marginal cost can actually be negative.

Negative marginal cost means that it costs more to produce less, or that it costs more to have less people connected and contributing. The network effect being exponential creates situations where the value generated by one additional user actually benefits the community by its presence.

As Seth Godin writes, “Moving from expensive to cheap to free to “it’s a bonus to add one more person” changes our economy and our culture forever.” Zero marginal cost was already the internet revolution; negative marginal cost is the social network revolution.

While this explains the exponential development and success of social networks, it is still useful to remember that internet uses a lot of resources and energy, and I am still not sure whether the marginal cost would remain effectively negative when we add those in – that’s actually quite an interesting research topic.

We always underestimate network effects like we underestimate exponential growth, and they indeed create an advantage to add users. We are just at the beginning of the network revolution!


How Amazon is Becoming a Very Significant Private Employer

Amazon is expanding and hiring worldwide – and is now employing a sizeable share of the workforce, as underlined in this post ‘Amazon now employs almost 1 million people in the U.S. — or 1 in every 169 workers‘. And actually, global hiring at Amazon continues in an exponential curve.

Distribution businesses have always been very significant employers (such as for example, supermarket chains) because of the labor-intensive nature of their trade. Amazon in the US (1.3 million employees or direct contractors) is on the way to overtake Walmart the first employer (1.6 million).

Those numbers mean that we can expect in the next few years some unionization of the relationships between employees and Amazon (and potentially some struggles too), and also that any decision taken by Amazon HR regarding general policies will have far-ranging effects on local economies. Amazon also certainly is developing its political influence where unemployment is a major local issue.

Amazon will probably soon become the first employer in many countries. This will necessarily change the nature of its social relationships both inside and outside the company.


How Content on Any Social Platform Needs to be Curated and Administered

Seth Godin in this post ‘The inevitable decline of fully open platforms‘ shows how fully open platforms (i.e. without any content curation and filtering) fall pray to spammers and inappropriate content. Still, there is also a need to maintain some balance in the administration of the network so as to benefit from its full capability.

The tension is simple: If a platform is carefully vetted and well-curated, it meets expectations and creates trust. If it’s too locked down and calcifies, it slows progress and fades away. […] Too much curation stifles creativity, opposing viewpoints and useful conversation. But no curation inevitably turns a platform over to quacks, denialists, scammers and trolls.”

Even on private social networks, such as the ones that can be implemented by large organisations, curation and administration is required. This is something that is often forgotten, and it is clear that it can sometimes be seen as purely censorship. The balance needs to be clearly set between removing offensive content and removing content just because it would not please the owners of the network. One does not want to end up like an autocratic regime where any content contrary to the currently acceptable political opinion is removed.

Debate rages whether the Facebooks, twitters and other social networks do curate sufficiently or too much; whether they use enough resources for that. The balance is not easy, but as any social network founder, curation is probably one of the most strategic activities when operating social networks.


How Engineering Processes Need to Be Upgraded with Digitalization

In engineering circles, an interview of Elon Musk a few months ago has created quite a few ripples. Elon Musk expressed himself about his engineering philosophy, mainly in the context of SpaceX. This article for example summarizes his views: ‘Elon Musk’s Design Process Starts With Making Things ‘Less Dumb’

The 5 principles defended by Elon Musk are the following:

  • Make the requirement less dumb
  • Try to delete part of the process and of the design
  • Simplify or optimize (and don’t optimize something that should not exist in the first place!)
  • Accelerate cycle time (but not before you have sorted out the 3 first principles)
  • Automate the design process to move more quickly through the design cycles.

Those principles seem founded quite in common sense, although of course they are very hard to implement as experience shows. In my world of large industrial projects it is a constant battle to try to simplify requirements developed over decades and comprising of layers of knowledge and experience. No surprise that a newcomer like SpaceX can do better without the institutional history.

What I find particularly interesting is the fact that Elon Musk recognizes that automation as a way to accelerate iteration today needs to be an intrinsic part of engineering approaches.

Digitalization provides new possibilities and we definitely need to re-interrogate the traditional engineering processes to take advantage of the new capabilities made available, simplify and produce more straightforward designs.