Q&A 030

Published on:
April 14, 2021

Hi All,

Reaching another anniversary, we end this newsletter with some reflection on the role of projects, big and small, in our lives. We continue our investigation of inflation, look at technical incarnations of intuition and the pitfalls of culturally diverse combinations. Enjoy!

👵 Expert

Looking at the development of information technology over the last few decades, I am struck by how much it has analogies in human professional development. Thinking back to when I landed my first job and was taught the ropes, I still vividly remember the rules that made the game. A few years in, I saw more senior operators break these rules while performing vastly better. They navigated more on intuition than rules, and the classic explanation was always "First, you must learn the rules, then know when to break them". The secret sauce was for later.

The first big wave of automation tackled a lot of rules-based if-then-else work. When handling a situation asked for simple rules, automation was the way to go. A lot of menial tasks have been automated in the past decades. Now AI is gaining more and more traction in the workplace, the intuition-based part is up for automation next. Albert Einstein once said that:

"Intuition is nothing but the outcome of earlier intellectual experience"

This makes the case for intuition being a complicated model, much like the Machine Learning we see more and more. This insight also brings us the best litmus test for AI opportunities in your company. If the difference in 'decision quality' between experts and novices is significant, that means complex algorithms (a.k.a. "Life experience") are in place and AI might be a way to go.

📐 Definition Matters

Is Consumer Price Index (CPI) or its reduced version 'Core CPI' still the best index to look at when making decisions about the interest rate, pricing bonds, or setting wage increases?

As often with complex questions: it depends. As long as your average annual spending matches the composition of the CPI index, it is probably the right index. This is where the trouble starts. It's an average and depending on where you live, what expenditures you face and which income you generate, you may very well look at (and realise) very different inflation rates.

Take for instance the housing market. Changes in real estate prices are not part of CPI. Still, many people buy their homes and face a housing market that has seen average annual price increases of 5-10% over the past decade.

There have been various efforts to try to capture 'real' inflation. Shadowstats is the most famous but also carries the smell of being anti-everything that originates from a government-controlled body. However, given the reasoning that it all depends on perspective (analogous to the observer-observed theorem in physics), any concoction of an all-comprising figure will likely have its flaws.

With average spending per capita not keeping pace with the amount of money being created by central banks, logic has it that a correction is waiting to happen. It's doubtful this will be (evenly) spread amongst everyone and therefore create inflation noticeable in everyone's wallet.

Many people do not wait for that moment and try to take matters into their own hand. It's one of the driving forces of so-called Defi (decentralized finance) initiatives. Bitcoin is an example of such an initiative. Its value has increased 600x in 8 years.

🗽🇨🇳 Culture clash

If you want to see a good demonstration of how culture is not just an explicit expression of norms and beliefs, reserve a block of about 2 hours for the Netflix documentary American Factory. It shows how culture also drives your intrinsic behaviour and assumptions.

The documentary follows Chinese company Fuyao that bought part of a closed General Motors assembly plant in Ohio in 2014. It subsequently creates thousands of jobs and gives an important impulse to the local industry. It is however not an easy ride and the documentary carefully examines how complex it is when two different economic and social systems converge at one location and each strive for their own success. Kudos to the documentary makers for displaying different angles and avoiding any judgment.

Even though each 'side' tries very hard and key incentives become aligned, the formula does not prove to be a success. It is clear there are deeper issues at play and one might even wonder whether this is a challenge that mankind can master at all. Perhaps a different angle is required by minimizing (or even better: removing) any upfront expectations from such cultural combinatory endeavours. Having the combined teams determining their own targets and way of working together may yield results no one expects.

🏗 Project

Being in a reflective mood while discussing the 30th edition of this newsletter, I came to see this as being another example of what makes me tick. If there's anything that I enjoy doing, it's creating something with other people. Looking back, all of the episodes that I really enjoyed were just fun projects with nice people. Making movies in high school, crazy moonshot projects like playing Tetris on a building or travelling the world, that overly ambitious work project with a small but great team.

Starting this newsletter has also been one of them. I love the writing, followed by the constructive feedback we share, the rewriting, the composing, leading up to the moment we have a draft sitting in our bulk e-mail editor. While on a video conference, one of us aks 'Are we happy?' before we press send. Something is created. It's small, but it's a creation anyway.

Apple's former design guru Jonny Ive told people:

“I’ve always thought there are a number of things that you have achieved at the end of a project. There’s the object, the actual product itself, and then there’s all that you learned. What you learned is as tangible as the product itself, but much more valuable because that’s your future."

I'd like to add the people part to this. The result of any project is how the people involved have grown their relationship. And those are the results I remember most.

That's it for this week! If you got forwarded this newsletter and like what you read, click here to sign up. You can browse earlier editions in our revamped, searchable archive.

As always, we would love to hear your thoughts and tips. Just reply to this e-mail to get in touch with us.

Have a great week!

Quinten & Alphons