What I am reading
Books, articles and blogs worth sharing and discussing
There is little doubt that the current capitalist system needs some adjustments, and The Future of Capitalism provides an interesting and balanced analysis. Paul Collier argues that “Capitalist societies must be ethical as well as prosperous” in that they must foster a sense of “reciprocal commitments”—something that we seem to have lost. In a social climate that constantly stresses rights and entitlements, Collier stands out by stressing the obligations that each one of us should feel if we are to function as a community.
For Collier, the golden age of the “ethical state” was the two decades after World War II, when reciprocal obligations were enshrined in the social insurance systems of social democracy in Europe and in the US (with Roosevelt’s New Deal). This golden age, in his view, was then torn apart by two different forces: the globalists, who exploited economic globalization for their own profit ignoring their national obligations, and the tribalists who “promoted the distinctive identity of victim groups”. There is a lot I agree with in his analysis, but it sidesteps the fact that the social democratic welfare system had some perverse economic incentives built in: it gave politicians an incentive to promise more generous benefits, and citizens an incentive to rely more on those benefits than their hard work—so that in the end pension and health care systems have become inefficient and financially unsustainable. Striking the right balance between solidarity and individual incentives is the hardest economic problem, and it cannot be solved just with the right narrative to build social cohesion. Incentives matter.
The tension between globalism and national identity is something I care about at a very personal level. Collier argues that highly skilled people developed a sense of superiority against their less skilled countrymen and started exploiting them as “suckers”, bonding with other highly skilled people in other countries. I disagree and find this view simplistic. As a social democracy becomes more progressive and redistributive, it creates stronger incentives to take advantage of the benefit system, and highly skilled people who play by the rules become the suckers. Their ability to move to a different country—and take on a new set of obligations there—helps create a healthy competition among nations. The reason rich regions in Spain and Italy have developed centrifugal temptations is not selfishness, but a sense of being taken advantage of. And to recreate an “ethical state” we need in my view a set of common values that citizens will subscribe to; this goes against the current emphasis on cultural differences and identity politics, but unless we square this circle, our societies will unravel.
Collier proposes that skilled workers who live in big cities should be taxed more, because big cities provide them with “gains from agglomeration” to the detriment of less skilled people, who are left simply facing a higher cost of living. I find the argument unconvincing, a simplistic answer to an important issue. First: Collier thinks a skilled worker in a big city is getting an un-earned rent, earning a higher income simply because she is in the same place as other skilled workers. But look at it a different way: the whole US economy benefits from having New York as a global financial powerhouse, or San Francisco as a global innovation hub; their leading position is made possible by the concentration of financial and tech talent. Therefore, each financier in New York and tech wizard in San Francisco also creates a positive externality. Second: big cities have advantages and disadvantages for all. Less skilled workers earn a lot more in a big city than in the ‘provinces’, simply by being in a place with higher purchasing power. And skilled workers—like everyone else—suffer significant “losses from agglomeration” in the form of traffic congestion and pollution, just to mention a few (as well as already higher local taxes). The higher earning power of a lawyer in Chicago is quite different from the rent that the Duke of Westminster enjoys by virtue of the fact that his family has owned most of central London for centuries.
Finally, a couple of quibbles. Collier argues that since the population of London was the same in 2011 as in 1950, while the number of immigrants rose 37% in the interim, this proves that (skilled) immigrants pushed out a large share of the native population. But London’s population dropped from 8 to 6 millions between 1950 and 1990, a whopping 25% decline. Then it bounced back, partly thanks to immigration, but it looks like many native Londoners left before anybody else moved in. Douglas Murray has made a strong case that a London where today nearly 40% of the population is foreign born has lost its original culture and character. I have a lot of sympathy for that argument. There is an awkward trade-off between diversity and tradition—the charm of unspoiled villages in Italy or France is inextricably linked to their lack of diversity. But numbers should always be handled with care. Similarly when Collier argues that a 30% youth unemployment in Italy explains the recent surge in populism—Italy’s youth unemployment averaged 33% when the country experienced its fastest recent period of growth, in 1994-2000. It doesn’t take long to check the numbers.
Stimulating and definitely worth reading—but keep your critical attitude switched on.
You’ll remember Adam Smith’s famous quote: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Luca Silipo would agree, but in On Proximity he notes there is something more: the identifiable connection of our bread with the local baker and of our coat with the tailor endowed these products with a value beyond their practical use—a “social value” made up of the human connections created by a product, and our awareness of what the product represents for everyone involved in producing it and using it. All this has largely gotten lost as the efficient specialization and division of labor (which also goes back to Adam Smith) led to increasingly articulated and complex global supply chains.As the Chief Economist of GEODIS, a leading global transport and logistics company, Luca know this well.
This loss of “product social value” has probably contributed to the atomization of our society—Luca observes—the increased income and wealth inequality, the weakened social cohesion, the heightened political polarization that we observe in many societies. The modern economic system has created unprecedented prosperity, but the social costs have been underestimated and have risen to the point where the economic system itself risks losing legitimacy. I think political developments in both the US and Europe confirm this.
Proximity puts forward a provocative and visionary proposal to use new technologies to resurrect the social value of products without undoing the efficient setup of the current economic system. Imagine using Virtual Reality (VR) and Augmented Reality (AR) to visualize the past and the potential future of a product you are thinking of buying. You could see where and how it was produced, with what impact on the environment and the living standards of the workers involved; and get a detailed view of the options for reuse or recycling that you will have once you no longer need it. Such a system would allow you to make much more informed choices, using data that to a large extent are already being collected. In the process, it would bring the product to life.
I love the technology angle of Luca’s proposed solution—and it aligns well with recent innovations in AR/VR. My main concern is whether humans will have the capacity or desire to absorb all this information and use it to make better decisions. We are surrounded by examples where most of us ignore or disregard already available information. The right user interface could certainly make a big difference to people’s willingness and ability to use information wisely—but I worry we’ll be pushing against some very basic human instincts/failings.
On Proximity is a unique and fascinating book and a very engaging read. Our current economic system will have to change, and if we can’t guide the change in a direction that safeguards its ability to boost living standards, we could end up making or repeating some very costly mistakes (as socialism becomes cool once again). I am also convinced that some of the technological solutions that Luca envisages will show a momentum of their own and gain traction—raising a host of additional data privacy and security issues. Great food for thought, and Luca is determined to bring the vision to life, so stay tuned.
Gary Pisano’s Creative Construction (The DNA of Sustained Innovation) is an invaluable guide for companies and an excellent read for anyone interested in how innovation works (or does not work) in the messy real world of business.
As GE’s Chief Economist and Head of Business Innovation Strategy, I have wrestled with many of the issues that Gary tackles in the book: can a large established company be as innovative as a startup? How do you build an innovation strategy? Create an innovation culture that permeates the company? Invest in new opportunities and business models while safeguarding the core revenue stream? I read Gary’s book with battle-scarred, cynical eyes—and I was impressed.
Creative Construction debunks many of the myths and buzzwords that surround innovation, slogans such as “eat your own lunch before someone else does.” It takes a pragmatic and systemic view of the assumptions that underpin these fashionable bits of wisdom. How confident are you that your existing technology will become obsolete, and how quickly? Is the disruption you discern on the horizon as profitable as your current strategy or other alternatives? The book gives great attention to details, specific conditions and interdependencies—which yields useful general rules rather than catchy generalizations. It backs this up with a more insightful and less stereotyped read of some of the classic cases of innovation failure and success (think Kodak, IBM).
One of the best features of Creative Construction is that it recognizes how devilishly difficult the innovation game is, how hard and sometimes impossible it is to predict trends in technology and tastes across a range of interdependent sectors. This is sobering but not paralyzing: it comes combined with clear and effective frameworks for thinking through the tradeoffs and choices implied by different types of innovation strategy.
Another virtue of the book is the clean logic that runs through it. There’s no room here for fuzzy thinking. You get a realistic assessment of where we face uncertainty and ambiguity, with a very logical way of thinking through the options and structuring your strategy.
Creative Construction provides pragmatic advice, informed by decades of case studies and consulting work with companies large and small. Gary knows what dynamics actually play out within companies, how discussions unfold, how different views and interest groups clash – essential knowledge to provide advice that can truly be implemented within a corporate environment.
Creative Construction will prove a valuable source of insights for executives, but also a great read for anyone interested in how innovation gets to shape the way we work and live—and it’s very well-written to boot, so you should put it at the top of your reading list.
Three reasons to love No Hard Feelings, the new book by Liz Fosslien and Mollie West Duffy on “the secret power of embracing emotions at work”. First: you will recognize yourself in the book. Liz and Mollie have a great ability to spot and highlight the many ways in which our emotions (and our colleagues’ and bosses’ emotions) shape our working life, with examples that make you snap your fingers and say ‘Yes, that’s exactly what I do/how I feel when…’
It reminded me of how Kahneman’s Thinking Fast And Slow opens our eyes to our cognitive biases. Second: their tips on how to channel, leverage or restrain our emotions are the kind of smart and sensible advice we can all use. My favorite tidbit: “Your feelings aren’t facts” (we should all apply it well beyond the workplace) Third: Liz’s drawings!
A great read that will make your working life more enjoyable (or at least a bit less painful). Even if you think that emotionless robots will soon take all our jobs...a lot of the insights will apply to the rest of your leisurely life.
The quest to develop true, "general" Artificial Intelligence is at the same time a quest to understand how human intelligence works and, ultimately, what it means to be human. The Future of the Mind (2014) documents the impressive progress we are making in understanding how the cogs and wheels in our brain turn as we make memories, solve problems, admire a sunset or have a burst of road rage. This leads to provocative reflections on telepathy, implanted memories, and even the idea of dematerializing our consciousness and beaming it across space, accelerating our search for extraterrestrial intelligence.
Except of course that our intelligence and consciousness are closely linked to all the external stimuli we get from our senses. Even an extended stay in a sensory deprivation chamber can test our sanity, so how well a disembodied intelligence would fare remains to be seen.
I love the fascinating, exasperating contradiction that emerges in the book, however. We understand enough about our mind to get the depressing feeling that we are just another machine--but not enough to reproduce it in a man-made machine.
Full disclosure: I worked closely with Beth Comstock for seven lucky years and consider her one of the most inspiring leaders around. With Imagine it Forward, coming out on September 18, Beth brings us a most courageous and insightful book on leadership; an invaluable resource for anyone trying to succeed in the new economy, and for those who want to understand how innovation is reshaping the business world.
In Imagine it Forward, Beth holds nothing back: the excitement of pushing forward major changes, the adrenaline of challenging consensus, the frustrations and setbacks, the moments of self-doubt. The book is immediate, genuine and deeply personal—as I read it I could hear her voice in countless meetings and conversations.
Technological innovation has shifted up a gear, disrupting industries and business models at an accelerating pace. For businesses large and small, coping is hard. You have to think faster and move faster, facing greater uncertainty than ever before. You have to scout a growing list of revolutionary technologies, from Artificial Intelligence to Robotics to 3D printing and more, and try to understand which ones can help you and how. You have to try and anticipate new competition coming from left field, and rethink your relations with customers, suppliers and competitors.
To succeed, you need to think differently, experiment, learn to do things differently. Beth did it in one of the largest and most established industrial conglomerates in the world—a setting that offered the greatest potential and posed the greatest obstacles.
Beth brings to life how hard it is to thrive in this faster-changing world, and how you can do it. It’s scary, but it’s inevitable, and it can be done. She shows the difficulties you will encounter and how you can anticipate them and surmount them. The book is packed with insights, from personal anecdotes to business examples, from simple heuristics to more articulated methodologies like Fastworks.
If it were a novel, Imagine it Forward would be a classic hero’s journey, where the protagonist surmounts increasingly hard challenges and in the process discovers herself, gaining full confidence in her powers. The fact that this time the hero is a heroine—the first woman to become a GE Vice Chair—is another element that should push both male and female leaders to think differently. Beth’s journey continues. The insights she shares from her experience are invaluable.
After a long prejudiced hesitation, I have finally come around to reading Nassim Taleb’s Antifragile. I confess I have enjoyed it tremendously. Taleb at times sounds exquisitely pretentious—even more than the academics and intellectuals he pillories throughout the book. And yet even that pretentiousness has an insidious charm. The same goes for his writing style, at times so over the top, often so witty and effective.
I enjoyed the most Taleb’s emphasis on common sense and pragmatism, his denunciation of many instances of pseudo-science and excessive interventionism, in medicine as in economic policy. I disagree with his visceral despise for economics and economists, but I have to recognize it is not entirely unwarranted—the man has a point. His direct attacks against a few high-profile experts are as brutal as they are well-argued and, in my view, on the mark. And while at times undeniably pretentious, Taleb’s erudition greatly enriches the book. If you have not read it yet, try it; chances are you will both love it and hate it, which means it’s worth reading.
By now you’ll have realized I’m a sucker for science fiction. This is a modern classic, just over 20 years old. I love this book for four reasons. First: it is even more relevant today than it was 20 years ago, because it centers on key technologies that are now just beginning to show their potential. At the heart of the book is an interactive virtual reality learning device—and the little girl who grows up with it. It’s set in a future where 3D printing has finally come of age, and every house has a Matter Compiler; nanotechnology has become pervasive.
But…what hasn’t evolved much in this world of the future is human nature. This is no paradise. And no, there is no Universal Basic Income… Second reason why I love it: this is a great fairy tale, and a gritty one. Third: its global vision – which to me is crucial to understand what impact technologies will have on our world. Fourth: the way that Neal Stephenson enjoys playing with the language, sometimes over the top. Highly recommended.
Recent advances in Artificial Intelligence (AI) have reawakened our fear of robots: if we are lucky, they will only take over all the jobs, leaving most of us impoverished; more likely, they will enslave us. Thus goes the prevailing narrative. I find it amusing. As i wrote in a recent blog, the reality is that "employment is higher than ever — we all slave away with pitifully low productivity while the AI overlords play chess and Go". But robots and AI raise deep fascinating questions about human nature and our relation with technology.
I love going back to Asimov's first robot stories--which i first read as a little kid. Some of these stories are now 70 years old (!) and yet they still provide the most fresh, authentic and often surprising insights. How would we interact with intelligent robots? How would the robots think, and perhaps feel? Could they be more similar to us than we expect? Would they find a way around the three laws of robotics? If you are at all interested in these issues, this collection is a must.
I had the chance to hear General McChrystal speak at a GE management offsite, and he was truly impressive. But there were two more reasons why I wanted to read his book. First, because I have a long-standing admiration for our Armed Forces. Second, because the book tackles an issue I have experienced first hand: how can a large organization handle a world where innovation favors speed, agility and decentralization? When lives depend on it, you have a strong incentive to figure it out.
I find this to be still the best book on networks vs hierarchies; it illustrates how to foster decentralization and entrepreneurship while maintaining a strong unifying culture; how to improve transparency and communications by prizing results and insights over hierarchy. One of the best leadership books you can lay your hands on.
By all accounts a sobering read. Marty Makary is a renowned surgeon, and provides a disturbing insider view on how dysfunctional the US health care system is, and why. Some of my takeaways: don't assume you can trust your doctor; do your own research on ailments and get a second opinion--and a third. And yes, the system does push us to more exams, pills and procedures than we really need.
Understanding how the incentives are mis-aligned is a great starting point to think how we can reform the system. Dr Makary emphasizes the need to improve transparency and information--I could not agree more. Other industries are learning how to extract greater value from "big data". Health care needs to get serious about collecting more data, improving data interoperability so the data can be shared and analyzed--and enable both medical professionals and patients to take better-informed choices.
This book is such a treat. I have been a big Feynman fan since i was in graduate school. Feynman championed two lessons that we should always keep in mind. First: if you can't explain something in very simple terms to a non-expert, you don't understand it. Second: we know and understand very little. This book embodies both lessons. Feynman runs through essential elements of physics in very understandable terms; and every new understanding shows you how much we do not understand yet -- and conveys the passion to learn more.
His lessons apply beyond physics: more simplicity and humility could accelerate progress in many areas.
Over the last several decades a growing share of US prime working age (25-54 years old) men have dropped out of the labor force. Some are in prison, but many--according to some economists--are just staying home playing videogames. And I guess even more will, as augmented realty and virtual reality technologies become better and cheaper. This is terrible. Or is it?
Ernest Cline's Armada gives a different perspective. It's great fun to read. And--like al great novels--it is essentially a Western movie...