Links

WSJ: The Genius of the Tinkerer

WSJ: The Genius of the Tinkerer

I remember reading once that an entrepreneur is simply someone that takes existing assets (or perhaps ideas) and reconfigures them into an arrangement that produces more value than in their present setup. It seemed such a dry description and lacked the sexy and exciting “invention out of thin air” that we have been trained to think is what happens in business.

As I’ve progressed in my career, I’ve come to realize this definition is pretty accurate–“bricolage” as Steven Johnson points out this fantastic WSJ piece:

But ideas are works of bricolage. They are, almost inevitably, networks of other ideas. We take the ideas we’ve inherited or stumbled across, and we jigger them together into some new shape. We like to think of our ideas as a $40,000 incubator, shipped direct from the factory, but in reality they’ve been cobbled together with spare parts that happened to be sitting in the garage.

He then goes on to discuss Stuart Kauffman’s concept of “the adjacent possible” to describe those first order combinations that appear in nature.

The adjacent possible is a kind of shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself.

Finally, Johnson ties things back to modern “closed-door” corporate R&D:

The premise that innovation prospers when ideas can serendipitously connect and recombine with other ideas may seem logical enough, but the strange fact is that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas. Ironically, those walls have been erected with the explicit aim of encouraging innovation. They go by many names: intellectual property, trade secrets, proprietary technology, top-secret R&D labs. But they share a founding assumption: that in the long run, innovation will increase if you put restrictions on the spread of new ideas, because those restrictions will allow the creators to collect large financial rewards from their inventions. And those rewards will then attract other innovators to follow in their path.

He ends with one of my favorite scenes from Apollo 13 where the engineers have to design a carbon dioxide filter from miscellaneous items aboard the damaged spacecraft dumped on to the table (“We gotta find a way to make this fit into a hole for this,” he says, and then points to the spare parts on the table, “using nothing but that”). 

The trick to having good ideas is not to sit around in glorious isolation and try to think big thoughts. The trick is to get more parts on the table.

WSJ: The Genius of the Tinkerer

I remember reading once that an entrepreneur is simply someone that takes existing assets (or perhaps ideas) and reconfigures them into an arrangement that produces more value than in their present setup. It seemed such a dry description and lacked the sexy and exciting “invention out of thin air” that we have been trained to think is what happens in business.

As I’ve progressed in my career, I’ve come to realize this definition is pretty accurate—“bricolage” as Steven Johnson points out this fantastic WSJ piece:

But ideas are works of bricolage. They are, almost inevitably, networks of other ideas. We take the ideas we’ve inherited or stumbled across, and we jigger them together into some new shape. We like to think of our ideas as a $40,000 incubator, shipped direct from the factory, but in reality they’ve been cobbled together with spare parts that happened to be sitting in the garage.

He then goes on to discuss Stuart Kauffman’s concept of “the adjacent possible” to describe those first order combinations that appear in nature.

The adjacent possible is a kind of shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself.

Finally, Johnson ties things back to modern “closed-door” corporate R&D:

The premise that innovation prospers when ideas can serendipitously connect and recombine with other ideas may seem logical enough, but the strange fact is that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas. Ironically, those walls have been erected with the explicit aim of encouraging innovation. They go by many names: intellectual property, trade secrets, proprietary technology, top-secret R&D labs. But they share a founding assumption: that in the long run, innovation will increase if you put restrictions on the spread of new ideas, because those restrictions will allow the creators to collect large financial rewards from their inventions. And those rewards will then attract other innovators to follow in their path.

He ends with one of my favorite scenes from Apollo 13 where the engineers have to design a carbon dioxide filter from miscellaneous items aboard the damaged spacecraft dumped on to the table (“We gotta find a way to make this fit into a hole for this,” he says, and then points to the spare parts on the table, “using nothing but that”). (Source)

The trick to having good ideas is not to sit around in glorious isolation and try to think big thoughts. The trick is to get more parts on the table.

Motley Fool: The Buffet Test, Return on Invested Capital (ROIC)

Motley Fool: The Buffet Test, Return on Invested Capital (ROIC)

ROIC = Net operating profit after taxes / Invested capital

This one-size-fits-all calculation cuts out many of the legal accounting tricks (such as excessive debt) that managers use to boost earnings numbers, and provides you with an apples-to-apples way to evaluate businesses, even across industries. The higher the ROIC, the more efficiently the company uses capital.

Ultimately, we’re looking for companies that can invest their money at rates that are higher than the cost of capital, which for most businesses are from 8% to 12%. Ideally, we want to see ROIC greater than 12%, at minimum. We’re also seeking a history of increasing returns, or at least steady returns, which indicate that the company’s moat can withstand competitors’ assaults.

HBR: Worry Isn’t Work

HBR: Worry Isn’t Work

Great article about judging yourself on your output rather than on your stress level.

Worry isn’t work. Being stressed out isn’t work. Anxiety isn’t work. Entertaining a sense of impending doom isn’t work. Incessant internal verbal punishment isn’t work. Indulging the great unknown fear in your own mind isn’t work. Hating yourself isn’t work.

Work is the manifestation of value, and anyone who tells you that a person whose mind is 50% occupied with anxiety is more likely to manifest value is a person who isn’t manifesting much.

It’s OK to take care of yourself. To take time to exercise. By all accounts, exercise improves brain function. It’s OK to eat well, and to slow down enough to eat consciously and appreciate the food. Proper nutrition improves brain function as well. Go on vacation. Meditate. Take a break each week for an hour to see a therapist, or a movie, or stop in a church, if that’s your practice. Sit quietly on your porch in the evening and reflect. Chaining yourself to your desk is no more correlated to productivity than mental self-annihilation.

HBR: Worry Isn’t Work

Great Harvard Business Review article about judging yourself on your output rather than on your stress level. (Source)

Worry isn’t work. Being stressed out isn’t work. Anxiety isn’t work. Entertaining a sense of impending doom isn’t work. Incessant internal verbal punishment isn’t work. Indulging the great unknown fear in your own mind isn’t work. Hating yourself isn’t work.Work is the manifestation of value, and anyone who tells you that a person whose mind is 50% occupied with anxiety is more likely to manifest value is a person who isn’t manifesting much.It’s OK to take care of yourself. To take time to exercise. By all accounts, exercise improves brain function. It’s OK to eat well, and to slow down enough to eat consciously and appreciate the food. Proper nutrition improves brain function as well. Go on vacation. Meditate. Take a break each week for an hour to see a therapist, or a movie, or stop in a church, if that’s your practice. Sit quietly on your porch in the evening and reflect. Chaining yourself to your desk is no more correlated to productivity than mental self-annihilation.

Manifesto for Passionate Creatives

Manifesto for Passionate Creatives

from John Hagel III, John Seely Brown and Lang Davison. Hagel further defines passion in this other blog post as:

…strong emotions that motivate us to move beyond our comfort zone and to achieve the potential that resides within us.  Passion comes from within each of us; it cannot be imposed or mandated from outside. At the same time, it compels us to move outside, to engage with the world around us.

Manifesto for Passionate Creatives

In PDF form, from John Hagel III, John Seely Brown and Lang Davison. Hagel further defines passion in this other blog post as… (Source)

…strong emotions that motivate us to move beyond our comfort zone and to achieve the potential that resides within us. Passion comes from within each of us; it cannot be imposed or mandated from outside. At the same time, it compels us to move outside, to engage with the world around us.

Cass Sunstein and the University of Chicago Mind

Cass Sunstein and the University of Chicago Mind

This New York Times Magazine article has some interesting insight into the mindset of this administration:

The professors in Hyde Park believe in something called the University of Chicago mind. It runs cold and analytical when the rest of the culture runs hot. Chicago scholars tend to be social scientists at heart, contrarian but empirical, following evidence to logical extremes. They are centrally interested not in what it is like to be an individual within society but in how society washes over individuals, making and remaking them. During the campaign, when his former Chicago colleagues were asked to detail Barack Obama’s intellectual evolution, many of them described him in these terms. But they knew Obama, at best, only partly exhibited this tradition. His friend Cass Sunstein, who is certainly the most productive and probably the most influential liberal legal scholar of his generation, inherited it in full. “Cass has,” says Saul Levmore, a former dean of the law school, “the quintessential University of Chicago habit of mind.”

The value of a human life:

The office’s administrators require that federal agencies express the costs and benefits of their proposed rules (lives saved, swampland preserved) in dollars. Moral principles, filtered through this cost-benefit analysis, find their way into confounding little boxes. A human life, the E.P.A. figured in a 2001 rule about arsenic and drinking water, was worth $6.1 million. (If an environmental regulation would save one life but cost $4 million, it ought to be put into effect; if it cost $8 million to save that life, the regulation would be scuttled.) Each I.Q. point a child lost because of exposure to lead was worth $8,346 over the course of a lifetime. A lost workday was worth $83. Many of these estimates used data from surveys — taken at malls, among other places — that asked passers-by how much more they would need to be paid to take on a job that carried, for instance, a 1-in-10,000 risk of death. Richard Posner, who has the most magnificent and chilly mind in this realm, used similar projections to price the benefit of preventing the extinction of the human race at $600 trillion.

The power, and danger, of putting an academic in an applied setting:

“There’s a big difference between the role of an academic and the role of someone in government,” Sunstein told me when we spoke at the Au Bon Pain near the White House. “That’s a cliché, but in academic life if you say things that are common sense and people nod their heads, it’s not very useful. You’re not adding anything.” One of the changes in Washington, he said, was the pace: he could no longer take off the afternoons to play tennis. It was past dinnertime, and Sunstein was headed back to the office, to his memos. “When I was an academic, I’d sometimes get a little feeling of excitement when I had an idea that was, I hoped, fresh,” he said. “And whether anyone should act on that idea is a very different question.”

Indeed.