Wednesday, March 31, 2010
Sunday, March 28, 2010
On human capital
Being in a happy position of still retaining the title of student I've been able to talk to a fair amount of different companies and their representatives. On top of the network of people who you've sat with and solved differential equations in Mat-1.1120 also talk a bit about where they've ended up and what they're doing. The insights about how the market and employers work is a rather illuminating experience and it seems that the age old rules of thumb still apply...
Some say that if you truly want to learn, go to a small company or start your own. You get your hands dirty and learn by doing. The salaries aren't that great, but you get a sense of accomplishment when you ship something to the customers or finish a project and see how you've made a tangible difference somewhere. It's also a world where bullshit doesn't fly; the small companies don't have the luxury of employing the standard mid-level management. If it doesn't contribute to the bottom line in one way or another, it won't fly.
On the other end of the scale we have the multinationals. Compared to the startups the difference is drastic: you actually get paid every month regardless of the financial success of your company, which is sort of cool. The nature of the game also changes: you start doing more abstract things and at times it may not even be clear who exactly is paying your salary and why they are doing so. But it enables you to spend a lot more time just thinking about things instead of having to run around trying to ensure that the company will survive next month as well, which is often the top priority in smaller companies.
Salary-wise it's actually interesting. I guess with large companies the salaries follow a bell curve with the average being some decent middle-class figure. The start-up world in turn may also follow a bell curve, but the average is way lower and the variance is very much higher: you get shitty salary but if things go will, your equity stake will be worth a nice and tidy sum... Something that doesn't typically happen in the Fortune 500 companies. Or that's anyway the feeling I had. Recently I've started to think that maybe even the large companies are not that uniform: some get a totally shitty salary, more people get a decent salary, then there's a gap, and finally the few get paid enormous amounts in various types of compensations.
But the practical implication, then, is the age old notion that if you want to do cool stuff, go start companies or join small companies. You won't necessarily get great financial rewards, but it'll be pretty goddamn fun. If, on the other hand, you want to be sure that you'll never make a difference in anything but aren't hanging by a thin thread either, go to a big company.
The question is thus the following: having experienced both worlds, which one do I actually want to belong to? The sense of accomplishment is far greater in the startup world, but the big companies are places where you can grow old and fat without having to really worry about anything...
Some say that if you truly want to learn, go to a small company or start your own. You get your hands dirty and learn by doing. The salaries aren't that great, but you get a sense of accomplishment when you ship something to the customers or finish a project and see how you've made a tangible difference somewhere. It's also a world where bullshit doesn't fly; the small companies don't have the luxury of employing the standard mid-level management. If it doesn't contribute to the bottom line in one way or another, it won't fly.
On the other end of the scale we have the multinationals. Compared to the startups the difference is drastic: you actually get paid every month regardless of the financial success of your company, which is sort of cool. The nature of the game also changes: you start doing more abstract things and at times it may not even be clear who exactly is paying your salary and why they are doing so. But it enables you to spend a lot more time just thinking about things instead of having to run around trying to ensure that the company will survive next month as well, which is often the top priority in smaller companies.
Salary-wise it's actually interesting. I guess with large companies the salaries follow a bell curve with the average being some decent middle-class figure. The start-up world in turn may also follow a bell curve, but the average is way lower and the variance is very much higher: you get shitty salary but if things go will, your equity stake will be worth a nice and tidy sum... Something that doesn't typically happen in the Fortune 500 companies. Or that's anyway the feeling I had. Recently I've started to think that maybe even the large companies are not that uniform: some get a totally shitty salary, more people get a decent salary, then there's a gap, and finally the few get paid enormous amounts in various types of compensations.
But the practical implication, then, is the age old notion that if you want to do cool stuff, go start companies or join small companies. You won't necessarily get great financial rewards, but it'll be pretty goddamn fun. If, on the other hand, you want to be sure that you'll never make a difference in anything but aren't hanging by a thin thread either, go to a big company.
The question is thus the following: having experienced both worlds, which one do I actually want to belong to? The sense of accomplishment is far greater in the startup world, but the big companies are places where you can grow old and fat without having to really worry about anything...
Thursday, March 11, 2010
Speed of technology cycles and process/product innovation
The speed that new technology emerges has been speeding up over the course of our history with the reasons being plentiful. The idea in essence is that for instance writing took pretty darn long to emerge in its current form and be widely adopted throughout the world, but for instance computers went through the same cycle in a fraction of that time. I don't have the references off the cuff now, but I recall running across some papers on this issue a year or few back.
Recently I've also had to go back to basics and read a bit of Utterback and Abernathy, and other such guys, on industry evolution, ecology, and the whole shebang. Well, ok, Utterback and Abernathy looked at the swings between process and product innovation, and the simple thought from that is well summarized in Nelson's paper from 2001: product innovation is driven by the amount of firms in an industry, process innovation by the size of firms. In practice this means that when an industry or technology is emerging, small entrants are plentiful and thus product innovation is abound. Then when dominant designs begin emerging some companies fare better than others and thus we get big companies. Or alternatively existing big companies enter the industry. The end result anyway is that the competitive advantage shifts to process innovations as the big companies tend to be good at throwing resources at things and developing processes. Scale benefits and such then ensure that small companies either exit or gravitate toward non-mainstream niches.
But what if you lump these two things together? Technology cycles become shorter, thus meaning that the time window for big companies to reap benefits based on process innovations is shortened (I guess that product innovation cycles will also shorten, but I think the point is that to have relevant process innovation, you first need a product and the business, otherwise it's pointless). Will this, then, imply that big companies will be at an increasing disadvantage because of their inertia and inability to perform product innovations, at least on the level that start-ups can? And will this, then, imply that from an evolutionary perspective the days of the big companies are outnumbered?
Recently I've also had to go back to basics and read a bit of Utterback and Abernathy, and other such guys, on industry evolution, ecology, and the whole shebang. Well, ok, Utterback and Abernathy looked at the swings between process and product innovation, and the simple thought from that is well summarized in Nelson's paper from 2001: product innovation is driven by the amount of firms in an industry, process innovation by the size of firms. In practice this means that when an industry or technology is emerging, small entrants are plentiful and thus product innovation is abound. Then when dominant designs begin emerging some companies fare better than others and thus we get big companies. Or alternatively existing big companies enter the industry. The end result anyway is that the competitive advantage shifts to process innovations as the big companies tend to be good at throwing resources at things and developing processes. Scale benefits and such then ensure that small companies either exit or gravitate toward non-mainstream niches.
But what if you lump these two things together? Technology cycles become shorter, thus meaning that the time window for big companies to reap benefits based on process innovations is shortened (I guess that product innovation cycles will also shorten, but I think the point is that to have relevant process innovation, you first need a product and the business, otherwise it's pointless). Will this, then, imply that big companies will be at an increasing disadvantage because of their inertia and inability to perform product innovations, at least on the level that start-ups can? And will this, then, imply that from an evolutionary perspective the days of the big companies are outnumbered?
Sunday, March 07, 2010
Books and covers
I ran across Fantastic Plastic Machine quite some years ago, mainly by stumbling on the first track of FPM's third album, Luxury. The track was quite aptly named Theme of Luxury, which I fell in love with right from get-go. Trying to describe it would only discredit it. Yes, it's that good. Unfortunately (or fortunately?) the rest of the album was, well, very different. As a matter of fact the album itself is as eclectic and diverse as they come. So I was somewhat disappointed with the album and it has been lying around ever since. Well, up until recently, anyway, when I finally picked it up again and started to listen to it, and lo-and-behold, it is in fact very good.
I guess the underlying dynamic here is that based on the first track, I was expecting something. The album didn't deliver that, and that was the letdown. But what it does deliver is something else, which is equally good, just different. It's like picking up the swimsuit edition of Sports Illustrated and finding out it reads like The Economist. Well, not really, but you get the idea.
I guess the underlying dynamic here is that based on the first track, I was expecting something. The album didn't deliver that, and that was the letdown. But what it does deliver is something else, which is equally good, just different. It's like picking up the swimsuit edition of Sports Illustrated and finding out it reads like The Economist. Well, not really, but you get the idea.
Friday, March 05, 2010
Tuition fees
We've traditionally had free university in Finland, meaning that in practice students do not pay for their education. This system has essentially afforded equal opportunities for people regardless of socio-economic background to educate themselves in universities. Now, recently there's been talk of introducing tuition fees in Finland. This presentation made by a group doing a report for the government would suggest a yearly fee of 1000 euros per student, translating to an extra 250 million euros of income per year for the education system (calculations done by Helsingin Sanomat). The rationale behind this move would be to get students to graduate faster as well has help in hiring new faculty, and so on.
Technically the goals of this initiative sound good: who wouldn't want to graduate faster and have more faculty per student than before. However, this somewhat undermines the free education principle. Some people stand very firmly behind the principle, but I don't consider myself as much of a hardliner on this issue. From a practical standpoint, however, I'm am somewhat worried about this turn of events: if the system was working and someone could guarantee that the extra 250 million would be spent wisely and would in practice improve the quality of education, I wouldn't necessarily be that much against it. But I fear that the extra money wouldn't matter; it would be squandered on pointless exercises and real tangible value would fail to materialize for the students.
Aalto University, the merger between Helsinki University of Technology, Helsinki School of Economics, and the University of Art and Design Helsinki, promised lots of new and unique opportunities for students. The jury is still out on this one, but as far as I'm concerned this seemed precisely like an exercise that could bring synergies via increased economies of scale: reducing overlapping functions and bureaucracy and refocusing the left over resources on improving quality. Instead my current feeling is that this isn't happening. I don't have any hard evidence, but I have a feeling that the bureaucracy has in fact increased and thus I'm not so sure throwing extra money helps. There's a saying that states that only when money runs out does the thinking start. So in practice as long as there is an abundance of resources nothing will really change as it doesn't really have to.
So based on this I would argue that the system shouldn't be rewarded with more resources before it can clearly demonstrate that it will not spend the resources on completely pointless work groups consisting of bureaucrats who just like to spend their time in glorified workshops in remote locations.
As for the tuition fees themselves, that's also somewhat of a difficult issue. On one hand I somewhat understand the logic of putting some pressure on students: if you want to study, you have to be confident enough in what your doing to put some money where your mouth is. But many students are already doing this as traditionally the state support for students hasn't been that great in Finland and students are often forced to take jobs on the side (as a curious side note, I argue that this habit of taking up extra work is especially good for engineering students who clearly benefit from the overlapping of school and work and are thus, in my opinion, better prepared to face future challenges when compared to being merely school educated and lacking all practical experience coming out of school).
From the point of view of an individual student the net effect isn't too different if you consider two options: 1) institute tuition fees or 2) reduce state support for students. The result is less money for the student, meaning more work or more loans. I am a proponent for the work-while-studying approach, but that's mainly in the cases where the work actually supports studies. In cases where the work is routine manual labor and doesn't really overlap with your studies, the benefits are not as many. And ultimately I'm not sure either approach is necessarily that good, despite the fact that provocatively enough I often do argue that students need to indeed be ready put up a bit more of a stake than merely saying that "Yeah, I'll graduate, maybe..."
So what should be done, then? I actually think that tuition fees shouldn't be instituted. I also don't think that student support from a financial standpoint should be increased either. I do, however, think that one thing where students could use support is with affordable housing. To an extent this mechanism is already in use as student housing is given to students for a certain period of time with the assumption that students will eventually graduate or then get kicked out of their apartments after some years. It's the cheap housing which then enables students to have slightly more cash with which to improve their lives, and more money can then be obtained via working or lending money from the bank.
But yeah, by no means is this a simple issue and the problems are very much real. However, I think that both the students and the government are coming at the problem in a way too hardliner way which to an extent frightens me. Schools don't deserve any more money as far as they're as fat as they currently are and tuition fees are a bad idea, but also giving students too much financial aid (as opposed to loans) is also somewhat questionable. The fact that students take quite long (~6-7 years, I would guess) to graduate may not necessarily be a bad thing, and the government should try to understand that point as well. As for the students whose studies drag on and on, I would argue that there's hardly any extra cost (after the already sunk costs) for the state as these people often don't attend lectures and classes and are merely trying to finish their thesis or do the last couple of exams and are thus hardly more than a few bits in a data system.
These were just my two cents on the subject from the top of my head, so again I reserve the right to change my view in the morning after I sleep a bit...
Technically the goals of this initiative sound good: who wouldn't want to graduate faster and have more faculty per student than before. However, this somewhat undermines the free education principle. Some people stand very firmly behind the principle, but I don't consider myself as much of a hardliner on this issue. From a practical standpoint, however, I'm am somewhat worried about this turn of events: if the system was working and someone could guarantee that the extra 250 million would be spent wisely and would in practice improve the quality of education, I wouldn't necessarily be that much against it. But I fear that the extra money wouldn't matter; it would be squandered on pointless exercises and real tangible value would fail to materialize for the students.
Aalto University, the merger between Helsinki University of Technology, Helsinki School of Economics, and the University of Art and Design Helsinki, promised lots of new and unique opportunities for students. The jury is still out on this one, but as far as I'm concerned this seemed precisely like an exercise that could bring synergies via increased economies of scale: reducing overlapping functions and bureaucracy and refocusing the left over resources on improving quality. Instead my current feeling is that this isn't happening. I don't have any hard evidence, but I have a feeling that the bureaucracy has in fact increased and thus I'm not so sure throwing extra money helps. There's a saying that states that only when money runs out does the thinking start. So in practice as long as there is an abundance of resources nothing will really change as it doesn't really have to.
So based on this I would argue that the system shouldn't be rewarded with more resources before it can clearly demonstrate that it will not spend the resources on completely pointless work groups consisting of bureaucrats who just like to spend their time in glorified workshops in remote locations.
As for the tuition fees themselves, that's also somewhat of a difficult issue. On one hand I somewhat understand the logic of putting some pressure on students: if you want to study, you have to be confident enough in what your doing to put some money where your mouth is. But many students are already doing this as traditionally the state support for students hasn't been that great in Finland and students are often forced to take jobs on the side (as a curious side note, I argue that this habit of taking up extra work is especially good for engineering students who clearly benefit from the overlapping of school and work and are thus, in my opinion, better prepared to face future challenges when compared to being merely school educated and lacking all practical experience coming out of school).
From the point of view of an individual student the net effect isn't too different if you consider two options: 1) institute tuition fees or 2) reduce state support for students. The result is less money for the student, meaning more work or more loans. I am a proponent for the work-while-studying approach, but that's mainly in the cases where the work actually supports studies. In cases where the work is routine manual labor and doesn't really overlap with your studies, the benefits are not as many. And ultimately I'm not sure either approach is necessarily that good, despite the fact that provocatively enough I often do argue that students need to indeed be ready put up a bit more of a stake than merely saying that "Yeah, I'll graduate, maybe..."
So what should be done, then? I actually think that tuition fees shouldn't be instituted. I also don't think that student support from a financial standpoint should be increased either. I do, however, think that one thing where students could use support is with affordable housing. To an extent this mechanism is already in use as student housing is given to students for a certain period of time with the assumption that students will eventually graduate or then get kicked out of their apartments after some years. It's the cheap housing which then enables students to have slightly more cash with which to improve their lives, and more money can then be obtained via working or lending money from the bank.
But yeah, by no means is this a simple issue and the problems are very much real. However, I think that both the students and the government are coming at the problem in a way too hardliner way which to an extent frightens me. Schools don't deserve any more money as far as they're as fat as they currently are and tuition fees are a bad idea, but also giving students too much financial aid (as opposed to loans) is also somewhat questionable. The fact that students take quite long (~6-7 years, I would guess) to graduate may not necessarily be a bad thing, and the government should try to understand that point as well. As for the students whose studies drag on and on, I would argue that there's hardly any extra cost (after the already sunk costs) for the state as these people often don't attend lectures and classes and are merely trying to finish their thesis or do the last couple of exams and are thus hardly more than a few bits in a data system.
These were just my two cents on the subject from the top of my head, so again I reserve the right to change my view in the morning after I sleep a bit...
Wednesday, March 03, 2010
Strike!
AKT, the Finnish transport workers' union, went on strike yesterday. Today the strike ended with both the employer and employee sides still unsatisfied. The strike itself brought Finland, to an extent, to a halt as all forms of automotive transport from public transport to cargo traffic came to a halt. Without going into the employee side's demands, this illustrates an interesting dynamic: in effect a single union can hold more or less an entire nation hostage. This situation seems completely absurd as in a sense the union seems to have a type of a monopoly on the human capital that its members essentially sell to companies.
Building off this analogy, it's interesting that this type of behavior is allowed from a legislative perspective. If we would have a company with a monopoly position behaving in a similar way, using it's monopoly to hold its customers hostage and forcing its own will on others in this respect, I'm quite certain that many regulatory entities would have a field day beating the company around with antitrust legislation.
Building off this analogy, it's interesting that this type of behavior is allowed from a legislative perspective. If we would have a company with a monopoly position behaving in a similar way, using it's monopoly to hold its customers hostage and forcing its own will on others in this respect, I'm quite certain that many regulatory entities would have a field day beating the company around with antitrust legislation.
Tuesday, March 02, 2010
Collars
I recently gathered quite a strong opposition by arguing for contrast collars and cuffs. It seems that very many people don't like the look, which begs a question regarding why. As we know from history, the wealthier individuals have traditionally clustered towards white shirts, namely to demonstrate wealth by being able to keep the shirts white when the lesser people would soil them quickly. The story goes that white shirts eventually became boring and thus some individuals took to wearing also colored shirts, but opted for white collars and cuffs as these were the parts which would soil most frequently, thus still being able to differentiate from the pure blue collared group. Since then it seems that most people associate contrast collars with bankers and other suspicious types.
So thus it seems that ultimately there would be three potential reasons for why people might object to contrast collars: 1) because they are, to an extent, a sign of wealth, 2) because they are, to an extent, associated with questionable people who aren't too well liked these days, or 3) because of aesthetic reasons. The first point is easy to discard as it would imply that the same people would also need to object to white shirts, something which isn't as widely spread as a viewpoint as the hatred towards contrast collars. So then it must have something to do with the links to certain shady occupations or pure aesthetics.
We can't do much about the second point, but the third point warrants some more discussing. My girl friend is very open about her distaste towards these types of shirts and bases her argument on the fact that they just look horrible. There are some theories as to why contrast collars might appear horrible. Some say that if the tie is too pale it will get lost in the color of the shirt and thus allow the collar to stand out too much. This point is increasingly relevant as the contrast between the shirt and tie increases, namely by making the shirt out of stronger colors than the traditional light blue or light pink. Others suggest that the white collars draw the attention upwards and into the face of the person, and that this wouldn't be a good thing. I can't for the love of life recall the reasoning behind this argument, but I guess a tongue-in-cheek interpretation might include the face in question in the equation: if you have an ugly face, you won't want to draw attention to it... Discarding the second point we still find two things to bear in mind: make sure that your tie dominates the shirt, not the other way around, and that the contrast between the shirt and the collar doesn't become too drastic.
Moving on, to provoke people even more, I decided to go ahead and order yet another MTM shirt from France, this time with a nice 120s poplin with blue and white stripes combined with contrast collars and cuffs. And to ensure that there are enough stares, I also ordered a pair of braces from the UK to conclude the slimy banker look, which should be perfect for the upcoming premiere of Wall Street, the sequel.
So thus it seems that ultimately there would be three potential reasons for why people might object to contrast collars: 1) because they are, to an extent, a sign of wealth, 2) because they are, to an extent, associated with questionable people who aren't too well liked these days, or 3) because of aesthetic reasons. The first point is easy to discard as it would imply that the same people would also need to object to white shirts, something which isn't as widely spread as a viewpoint as the hatred towards contrast collars. So then it must have something to do with the links to certain shady occupations or pure aesthetics.
We can't do much about the second point, but the third point warrants some more discussing. My girl friend is very open about her distaste towards these types of shirts and bases her argument on the fact that they just look horrible. There are some theories as to why contrast collars might appear horrible. Some say that if the tie is too pale it will get lost in the color of the shirt and thus allow the collar to stand out too much. This point is increasingly relevant as the contrast between the shirt and tie increases, namely by making the shirt out of stronger colors than the traditional light blue or light pink. Others suggest that the white collars draw the attention upwards and into the face of the person, and that this wouldn't be a good thing. I can't for the love of life recall the reasoning behind this argument, but I guess a tongue-in-cheek interpretation might include the face in question in the equation: if you have an ugly face, you won't want to draw attention to it... Discarding the second point we still find two things to bear in mind: make sure that your tie dominates the shirt, not the other way around, and that the contrast between the shirt and the collar doesn't become too drastic.
Moving on, to provoke people even more, I decided to go ahead and order yet another MTM shirt from France, this time with a nice 120s poplin with blue and white stripes combined with contrast collars and cuffs. And to ensure that there are enough stares, I also ordered a pair of braces from the UK to conclude the slimy banker look, which should be perfect for the upcoming premiere of Wall Street, the sequel.
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