business Archives - Page 14 of 17

Imperfect Information (Processing)

The Economist ran a special report on Managing Data, which is really about how to Data have become really abundant in our world today and how it might help us at all.

It is interesting how I have got a friend who once commented that all forms of market failure is a result of imperfect information. He says that people are consuming too much or too little of a product because they don’t have perfect information about the impact of the products, and so basically all the inability to analyse cost and benefit is a result of imperfect information. Likewise, to this friend of mine, technological advancement is basically slowly discovering information, truths that we previously know nothing of. Of course, that’s a little extreme and basically demanding perfect knowledge as well. For him, perfect knowledge would naturally be attained from having sufficient information.

The digital age ushered in lots of information; so much that we don’t have enough time to process them. In fact, even cataloguing them might be troublesome enough and the process generates meta-data, which in fact is information about information. They would prove useful though they actually add to the information heap. Say for example I give you a quote:

The setting sun, and music at the close,
As the last taste of sweets, is sweetest last,
Writ in remembrance more than things long past:

If I don’t provide the source, it’s not particularly helpful unless you’re able to identify it from just the content. It’s from Shakespeare’s The Tragedy of King Richard the Second. But then that’s just a little bit of metadata; there’s more: it comes from Act II Scene I. And even more: it’s from Line 14-16. The ability to manipulate all these data themselves would create more information too. And they all might just prove to be way too much.

Economics have definitely become more complex thanks to the flood of information. Technology has allowed suppliers to maintain tighter inventory and reduce idle capacity but reality seem to drift further away from classical economics even as the economic agent are becoming more equipped with the information necessary to create a more perfect market. It appears, the next big assumption of Economics about the real world that needs toppling is in fact the idea of independence.

Printing Stuff

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Imagine you need a square meter of light, perhaps for a single ’tile’ on the ceiling that emits lights at your building. You’d probably get contractors to make a box with circuits inside that connects to a couple of fluorescent tubes (or if you’re quite rich, a couple of LEDs) and then cover the thing with a translucent white piece of acrylic. The entire structure is bulky and probably quite energy consuming. Now, scientists have found a way to make a ‘sheet’ of LED that would allow you to make that ‘lighted tile’ much more easily and is also much more compact. Essentially, the technology allows you to print a circuit that is wired in a way that acts as a diode, and one that emits light.

And since we’re at the issue of printing stuff; we mentioned previously about industrial prototyping machines that churns out 3D structures/models. I was quite intrigued by the idea of being able to print out a peg for your clothes or even design a shoe that fits you perfectly. But perhaps even more amazing would be the ability to print out cells, tissues and even organs as reported by The Economist.

The article mentioned about growing organs from scratch and raised the example of bladders being grown from original cells of patients. Essentially the patients are donating organs to themselves; the same applies for the printing of organs. The idea is appealing because there’s nothing artificial about them beside the involvement of doctors in the process of growing the cells and putting them together – ultimately the organ is still organic and from the patients. Perhaps then, Iran’s model for kidney donation won’t be so appealing anymore.

Biz Connect

Just recently, The Economist was tabulating the impacts of social networks and featured significant discussion on their impact on the business. The Big Money has a list of top 50 brand names (they call them ‘companies’) that has been doing well on Facebook as a social media vehicle for their brands. It appears that Facebook have become some sort of brand management tool that is carefully balanced with fans/consumer followings and interactions. As applications proliferate on these social networking platforms, there is a risk that all these commercial stuff are crowding out the actual social messages that are being sent over it. While

Google recently produced Buzz as I’ve highlighted previously, and The Economist thinks that it’ll hardly do much to dent the influence of Facebook and Twitter.

Diversity & Sophistication

Economics have been a subject troubled with the idea of scarcity and thinking about means of distributing resources to produce what we call ‘wealth’. Scarcity is a clear-cut notion and ‘abundance’ represents the other end of the spectrum. The problem is that we are so familiar with scarcity we cannot be quite sure what really represents abundance (infinite, in short run or long run?) and thus, we actually have a problem quantifying wealth. What constitutes richness? Money? Gold? Having the most expensive resources? Having in abundance the most useful resource? Having the most diverse resources? Having human capital?

We’ve seen that most of the rich, developed world appears to be the same, with the similar institutions, rule of law and informal market rules; most of them produce certain complex niche products while importing a variety of inputs as well as many other consumer products. On the other hand, developing economies appears more diverse. This shows that the end state of riches can probably be attained through different pathways. The Economists’ latest Economic Focus discuss how recent research shows that sophistication in the economy signals at the potential of an economy.

The Product Space map that the researchers came up with shows that an economy producing at a more centrally located product zone where it is easy to diversify into many other products would fare better than one in an isolated region. However, the isolated products often yield greater profits because they are probably rarer and so competition amongst economies leads to evolutionary forces pushing certain economies into these corners of product space possibly at the expense of potential. In any case, versatility is treasured and flexibility in production will aid economic growth.

Life as a Proletariat

Paradise for the Proles

Slightly less than three-quarter of a person’s lifespan nowadays is spent on work and so it is really important to love your work. And while internal motivation is important at sustaining you, the environment that you work in, the boss that you work for and the people you work with are all going to affect the way you see your work.

Of all these factors, your employers can mould quite a substantial portion of your experience. They might not control working culture but they have a great influence over it; they might not be able to dictate your life but they can create circumstances to urge you to do as they see fit. That makes choosing your employers important and the recent ranking published by Fortune Magazine is particularly valuable for that purpose.

SAS top that list of ‘2010 Best Companies To Work For’. You can see from the perks how the employer really ‘cares’ in the real sense (no sarcasm intended). Although the title of this entry is somewhat demeaning, I do believe that treating your worker well makes great business sense. In fact sometimes I think that there should be Human Resource Consultancies that help check companies’ books and then find out how to improve performance through treating workers better – the military around the world are in need of that. Maybe there’s already such firms and they probably borrow tricks from SAS as well.

So if you’re intrigued by Google and want to work for them, maybe you should consider SAS if you treasure job security above remuneration.

Con-nect-working

Social networks have been rising for some time now. And while they initially started out as mere toys for youngsters, there have been talks of higher degrees of commercialization, how these networks will change the lifestyle of people, and so on. Now that the change has taken place somewhat, it makes sense for The Economist to tabulate some of the impacts these networks have brought in.

To begin, these networks have definitely became an important way people communicate; however mundane or skimpy each little piece of content may be, they are viewed by many people within your network and it broadcasts bits of information about you that couldn’t have been captured in the yesteryears. This is true for the comments you cast, the status messages you post, the photos and videos you uploaded and all the social games that you play. Although online social networks remain essentially much like a bulletin board (except viewership ability of contents are more strictly controlled and with richer content) and thus does little to enrich people’s ability to do real networking, it does a wonderful job at augmenting our real relationships.

This strong link with the real world is a great strength for online social networks. Websites are viewed as corporate facades that give little information about the reality of the companies. On the other hand, the pages for these firms on social networking sites are viewed as better avenues for firms to communicates with their customers. Likewise, a corporate site announcement of a promotion the company is offering does less to boost sales compared to a tweet which might have much more followers.

That is the free advertising service that sites like Twitter and Facebook might offer, which brings us to the question of how money is being made on such networks. A peach of an opportunity, an article in The Economist special report on social networks gives us an idea what are the businesses that taps into the plumbing of social network connections and thriving. For all the talk about connecting with friends, being entertained by your online pets, or having a good laugh from the video your friend has shared, businesses might be the greatest benefactor of this trend.

Jobs’ Book

My sister asked me if The Economist would publish an article on Apple whenever they introduce a new product. I told her that they would if they anticipate that the product Apple produces is sufficiently influential or even revolutionizing. And perhaps that should be the case for iPad, where The Economist thinks is an attempt at transforming 3 industries at one time.

Their full article on the iPad propels their point further, discussing how the product would have a profound impact on the way digital content and media is consumed in the market and how this would alter the economics of digitizing newspapers. While there are many limitations to this product, Apple have traditionally been quick to modify their products to suit the way users use them while incorporating more powerful functions. A quick review of the historical revisions of the iPod before it eventually become the current iPod Touch shows how Apple pulls off their innovation along with changes in consumer preferences while upgrading their product.

We know that something big will be happening when the iPad is available on the market but it’s still too early to decide what it is. For now, we wait.

Bundles of Cables

James Surowiecki from New Yorker talks about the effects of the recent Fox vs Time-Warner Cable affair on public perception. His focus was that the event reminds viewers that much of the money they pay are for stuff they don’t use or don’t want – the idea of bundling, allowing consumer surpluses in one product/good spill over to others which are bundled together with it. This allows less mainstream stuff to be sold to the mass market or introduced to consumers since without bundling their proceeds wouldn’t pay for the cost.

The complexity of the modern economy supports bundling; it helps people make some of their choices. Imagine if you’ve to assemble exactly which channels you want each month based on what is going to be screened on them; or to decide every single module running in your computer during installation (the Linux style); or to decide which brand of sugar, type of coffee beans, water and cup to use for takeaway coffee at breakfast. And James show how customers like them:

The appeal of bundling is partly that it reduces transaction costs: instead of having to figure out how much each part of a package is worth to you, you can make a blanket judgment. Bundling eliminates the problem of fretting about small expenditures, which may be one reason that flat-rate pricing is very common in the vacation industry (cruise ships, all-inclusive travel packages, and so on). It also offers what economists call option value: you may never watch those sixty other channels, but the fact that you could if you wanted to is worth something. Many consumers also perceive bundles as bargains; getting a bunch of things for one price feels like a deal, even when it’s not.

Of course, like what James mentioned at the end of the article, when components of the bundle start fighting over the cost of each of them or the proportion of their share over the entire bundle’s proceeds, it will raise the appeal of à la carte. Imagine when the addition of a Sashimi palette into the buffet table results in the waiter going around to collect extra money from the patrons still in the restaurant and able to enjoy the Sashimi. Those who don’t want the Sashimi and just entered the restaurant would opt for à la carte while those leaving would protest.

The Bigger Brother

A search query on Wikipedia for ‘Big Brother‘ offers a disambiguation page that offers a link to their ‘Authoritarian personality‘ article. Today, we sometimes allude to the concept of ‘Big Brother’ when we talk about our governments but we hardly picture the government being authoritarian, perhaps just more of nannying. Today’s problem for the world, however, is that our Big Brothers are getting too big, as Leader of The Economist this week pointed out.

The cover of The Economist features a big fat monstrous lump attempting to devour a corporate executive reflecting their perception of how appallingly huge and scary governments have become. As a matter of fact, developed world governments might have taken up to much of economic breathing space because of the recent events and will need to scale down their footprint more. It’s always easy to get involved in many activities in the economy but difficult to pull out. The Briefing talks about state spending ballooning and makes a fierce assault on the weaknesses of government.

One of the case mentioned was their failure to make good use of management consultants, who ends up being portrayed as conman treating “the public sector as dumping grounds for airy-fairy ideas”. Oh well, in a crisis everyone suffers, even the management consultants themselves are not doing well.