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Sunday, September 29, 2019

Diseases of organizations

Over the last hundred thousand years, humans have been successful in the diagnosis, management, treatment and even the cure of physical diseases emanating from external sources and entities. However, they seem to have largely failed to understand diseases of an endemic origin or those affecting the Central Nervous System (CNS). The latter, underdiagnosed and overtreated, is likely responsible for significant loss of life and mind. As an example, humans lose 1 out of 10,000 to suicide every year. The problem is increasingly better understood in the medical profession but with few identifiable solutions. Life sciences companies, in a rush toward economics, have not put enough focus on broad solutions.

More importantly, we have to also recognize that organizations - countries, companies, religions, and institutions - also suffer from both physical and mental diseases. Physical diseases of organizations, largely understood by executives, consultants, and bankers, are well treated. But diseases of the mind and psyche of organizations are not something that is diagnosed or treated. This is likely more detrimental to the success of the firm for strategies and tactics focused on shareholder value, albeit necessary, are not sufficient. The meager attempt at defining such heuristics as culture has not had any measurable effects.

Early diagnosis of mental diseases is critical for the success of organizations (1). Lack of diversity is an early symptom in this regard. This is driven by a simple internal heuristic that maximizes replication. Driven to the extreme, an organization could seek a sterilized structure, devoid of new ideas. Recent developments in the executive branch of the US are symptomatic of a loss of perspective in a closed system. This can only lead to bad decision-making or worse. An organization without a moral and ethical construct is something that may have entered an advanced mental disease state.  Unlike humans, who could be intervened with chemicals, organizations cannot be pulled back, once there.

Leaders of large and complex systems may have to spend more time on the mental health of their organizations. History tells us that mental health is likely more important than the strategies and tactics leaders mostly focus on.


(1) https://www.amazon.com/Flexibility-Flexible-Companies-Uncertain-World-ebook/dp/B008KZ6T6Q/ref=sr_1_1?keywords=gill+eapen&qid=1569810218&sr=8-1

Tuesday, September 24, 2019

Policy and politics

As 8 billion identical human specimens churn across the blue planet, separated by idiotic leaders, religions, science, countries, wealth and ignorance, it is clear that we are heading to predesigned exits. As the speculation of a holographic universe and multiverse mount, it is sad that humans will likely exit before finding the truth. There is no policy questions for the elected, just politics. The system their forefathers handed down in good faith, failed them. Autocrats with no respect for the failing system, democracy, shall rule again. Some of them deriving power from the color of their skin and others by the lack of it, some asserting superiority by belief and others by the lack of it, some by perceived knowledge and others by the lack of it, some in the East and others on the opposite side, some by predicting catastrophe and others by simply drawing bubbles, some by attracting attention and others by mocking it.

It is clear that the human is an inferior life form and she was never expected to survive. It is a miracle that she persisted for hundred thousand years. With crude and simple objective functions borrowed from single cell organisms, this complex life form has been attempting to differentiate without luck. As the scientists ponder the Fermi paradox, they are missing a simpler idea - no extraterrestrial intelligence will ever be interested in making  "contact," with the crudest construct that simply maximizes entropy.

Policy is far fetched - politics is more attaiable. As the cycle continues in predictable 4 and 6 year frequencies, electing those with no concern for humanity, we have to accept what we deserve.



Saturday, September 21, 2019

Infinity and Zero

Humans have had difficulties with two most important concepts in knowledge forever - infinity and zero. But most of their contemporary theories end up in either of these extremes. The best they could do so far is to rename them - singularity and all. Physics, apparently the foundation of it all, dies in the "singularity," not to mention the unknown 94%. Assigning undefined terms to an observation is not knowledge, it is fundamentally the definition of ignorance.

For over two thousand years, humans could not internalize the concept of zero. As they pile up PhD theses and Nobel prizes in ivy covered jails, they could not accept that they are ignorant. Spending billions on heavy steel to smash "particles," to prove the unprovable exist is not engineering, just ignorance. Cobbling strings together as if 10 dimensions are better than less is not knowledge, just pure ignorance. As they claim back holes apparently "radiate away," based on unprovable math, it is not knowledge, just speculation. As dark matter, energy and flow tickle the fancy of theorists and experimentalists alike, they have to understand that ignorance cannot be easily sugar coated.

Just as the contemporary politicians do not understand the emerging generation, those who seek tenures and publications do not understand that simple assertions driven by inexplicable math is not knowledge, it is just silly. If one needs an ever expanding particle zoo to "explain," the universe, or skills in naming the unknown and the unknowable, it is time to look back. There is no understanding Math without a coherent view of infinity and zero.

Humans, appear to progress backward in knowledge, ably aided by their "scientists" and "politicians."


Friday, September 6, 2019

The emerging Principal-Agent-Machine problem in the enterprise

Ever since the owners of organizations put agents in charge of operations, because of growing scale and perceived need for management specialization, shareholder value maximization has not been Pareto optimal for decision-makers. Much has been written and studied in this area with little effect on organizational structure, systems, and strategies (1). From the advent of computers, agents have been effective in claiming superiority over machines because of a lack of transparency for the owners. Although it is difficult to prove that machines possess superior decision-making capabilities in real companies and markets because of the lack of data from long and repeated experiments, it is clearly the case in financial markets.

With clear and consistent data in the financial markets, it has long been clear that financial intermediaries and traders have been destroying alpha, forever. With misguided and a confusing focus on "absolute returns," these agents have been successful in siphoning out wealth from owners in fees and expenses. An illustrious investment bank seems to have recently recognized that "trading," done by humans creates no value for its clients. Machines are infinitely better as they can act based on complete information without bias. Decision-making, thus, is better delegated to machines.

In real markets, this is equally applicable. Because of high diversity in types of decisions and long durations to outcomes, agents have long claimed superior capabilities compared to machines. This is true at all levels of organizations (1) and in every function. Since distributed owners are unable to understand the inner workings of complex organizations, agents simply claimed they are better without any contention. This has significant negative effects on the economy and its potential to grow. A structural change that culminates in the reassignment of human responsibilities in the enterprise may be afoot.

The emerging principal-agent-machine problem is real for modern organizations. Institutionalization of agents since the industrial revolution has run its course. Owners may finally have an opportunity to break this stalemate.