Party in the CIA

VR: Redux

Ok, this is getting somewhat embarrassing already. Turns out I need to go to Kuopio in early November, so naturally I start figuring out what the best way to get there would be. And just to be fair, let's look at VR as an option. I punch in the trip details and I get the offers below. VR's ticket system does indeed seem to be very interesting as I understood that they have tried to imitate the airlines. One tip: if you imitate the airlines, at least do it properly so you'd maximize the profits. Screenshot below.

So, what we can see here is that VR has implemented three types of tickets. The "Perus" ticket, unlike the name might imply, is not only for the Perus Suomalaiset folk, but is the old 2nd class ticket, i.e. the regular train ticket. The "Joustava" ticket is the former business class ticket with added flexibility. And the new arrival is the "Ennakko" ticket for the early booker who can buy what is essentially a "Perus" ticket but with more limited options when it comes to making changes to the ticket. Now, why is the flexible economy ticket the most expensive? What's going on?

Additionally an interesting bit is in the trains themselves. I can leave Helsinki at 16:30 and arrive to Kuopio at 21:38 with the Pendolino and no need to switch trains. Or I can leave Helsinki at 17:12, make two train switches and arrive at Kuopio at the same 21:38 with the same Pendolino. The first two legs, however, are travelled with an InterCity 2 train and a regular, old train. So someone please tell me what the point of the Pendolino exercise was when the train that was supposed to improve travel times is actually operated at slower speeds than the older equipment.

Seriously, someone please put an end to this non-sense. Privatize the whole company as it appears that the government is impotent when it comes to making what is fundamentally a for-profit company work.

Edit: As a funny additional thing to notice is that the prices above are student prices. Blue1, a Finnish airline, is offering to fly me to Kuopio and back again for roughly the same amount of money that it would cost to get the Joustava student tickets. Oh, and the Blue1 tickets aren't student discounted...

Something wrong in the land of VR

Anyone who's been a customer of VR (Valtion Rautatiet, the Finnish nationalized railway monopoly) in the past few years can fairly easily attest to the fact that the company has gone to hell. The most recent episode has been their failure in implementing a new IT system that has reached epic proportions as of late. But let's start at the beginning...

Operating a railway company isn't really rocket science. There are multiple facets to it, but let's stick to the transportation of people from point A to point B as that is the service that I mainly use. From my perspective I pay the company a certain amount of money so that it gets me from one geographic location to another in a specific temporal window. I don't care what the method is exactly, but I imagine that teleportation would revolutionize this business thanks to the radical reduction of time of travel. But anyway, my train trips consist of essentially two fundamental components: ticket procurement and the actual transport. On both dimensions VR has been fumbling with the ball.

Starting with the actual transport, to my recollection VR was decently good at operating its trains within the schedules that they had a decade or so ago. But over the past few winters, the quality has deteriorated. I mainly use the Helsinki-Turku track and more often then not jump off at the Salo station roughly three fourths from Helsinki to Turku. The travel time is typically around an hour and 25 minutes. It is not uncommon for the train to be 50 minutes behind schedule on a trip like that, which already brings it closer to 60% behind schedule. And that is when the train actually materializes and gets on its way. It's not also entirely uncommon for trains to not even show up, which leads us to another problem directly related to the business of transporting me from A to B...

Communication is in essence very much irrelevant as long as you provide me exactly the service that you promised and I can trust you to perform. If I can look at the schedule and platform information and trust that it is true, I don't really need other forms of communication with the operator. But when a train fails to materialize, there is a problem. VR has been getting the stick as of late for its inability to transparently communicate situations to the customers. It's normal that every once in a while something happens and causes problems. But then you should openly communicate what the situation is, what is being done about it and most importantly what is the impact that I have to endure. If you tell me that the train broke down and it will take 45 minutes to arrange another train, that is fine. I can then use the time to go do something else; purchase a magazine or get a beer at the station. But when you don't tell me what is going on, I have to work with the assumption that a train might materialize at any moment of time and hence I can't do anything else asides from waiting next to the track. More annoyingly there have been some occasions in which they have communicated a delay of e.g. 20 minutes. In one case I decided to pop by a store at the station and get a soft drink, only to return less than 10 minutes later to barely catch the train which had indeed showed up and was about to leave only 10 minutes into the 20 minutes given. I understand that these two demands of communication, if interpreted at face value, lead to a situation where the company will tell you every three minutes that the train will be three more minutes late ad infinitum. But if you actually think about it, VR should be an expert on operating a train network and hence one would assume that they would have the ability to give educated estimates on how long it will take to fix something. I've lived in Helsinki now for eight or so years and I'm able to give fairly good estimates on how long it will take to get from A to B with public transport at a certain time of day, assuming that A and B are within the areas I often go to. So VR shouldn't have a problem assessing how long it will realistically take to rectify the situation.

Related to the operation of the train network, VR has also fumbled with the procurement of new vehicles. They purchased a number of Pendolino trains, but those have been nothing but a source of grief ever since they started operating them. On the Helsinki-Salo route the Pendolino is only 5 minutes faster than the regular trains, and even that is only due to the fact that the Pendolino skips one stop on the way. Which raises the question of why even operate the Pendolino on that segment, since the Helsinki-Turku journey is not any faster with it. It has its uses on the longer trips to up north which actually do receive a fair amount of time savings due to the increased speeds... That is when the Pendolino is working. It appears that the train is unable to function properly when it sees snow. Also, it appears that VR is having its fair share of trouble in general from the weather phenomenon known as winter. Winters in Finland aren't anything new, so it is somewhat amazing that a "wrong" type of snow can severe the operations of a company that was founded in 1862 and most likely does know that winters occasionally happen.

Then onto the procurement of tickets. I absolutely hate to interface with humans in simple transactions such as purchasing tickets. Airlines have done a brilliant job of ensuring that these days I can even check in via a kiosk or even online with my phone at best and not have to endure the impotence of humans behind the counter. VR has, amazingly enough, had a fairly functional online ticket system from which I could send tickets to my phone or print them out and not have to endure additional pain. Unfortunately as of late I've been put into a situation where I receive free (as in beer) train tickets. Unfortunately I can only get the tickets by queueing at the station and talking to the lady behind the plexiglass. Standing in the queue today got me somewhat annoyed and I started measuring times. The five people on front of me in line took over 35 minutes to be served. That is 7 minutes per person, on average. There is no reason why it should take this long. If you use the kiosks (which aren't, by the way, working as of now due to VR botching up its IT system) buying a ticket typically takes you 30-60 seconds. It shouldn't take much more to tell a person behind a plexiglass to do the same. So that leads me to think that a) the system that the lady behind the plexiglass uses is too complicated or slow or b) the lady behind the plexiglass is too incompetent and slow. That normally wouldn't really bother me as I would never interact with her, but due to these "free" tickets I now must interact with her. Ultimately the problem should sort itself out as companies tend to make things more efficient over time to save money and increase revenue and it appears that the lady behind the plexiglass is a severe bottleneck. So you either automate her or lay her off and replace her with a more productive individual, who might be able to reduce the transaction time from 7 minutes to something a bit more decent. But, in the case of VR this won't happen because...

... VR is in fact a state-owned monopoly. Because of this status, VR will of course be a responsible employer and instead of having to be accountable to its private shareholders and make as much profit as possible, it will attempt to serve the "public interest" (see previous blog entry) better and offer safe employment and whatnot. And because of the monopoly, there is not competitive pressure to keep VR improving itself. In fact, the only pressure comes from VR's incompetence and the fact that at some point people will just decide that it's a better idea to use a car rather than a train to go from A to B. In fact, factoring in the delays and incompetent people, airplanes may actually start being significantly faster on domestic trips... And at best they are also cheaper already when going to e.g. Lapland.

Recently VR has decided that it wants to be an airline. Or at least use similar pricing systems. That should be a relatively positive note for anyone who has a degree in applied mathematics as you've just received another potential employer who will now employ you to tweak the algorithms ad infinitum. The rationale for this is of course quite clear: certain trains are especially popular. Like the 5 PM train out of Helsinki to Turku. This is always very full and unless you've reserved a ticket in advance, chances are that you'll get to stand or sit in the corridors. At the same time there are routes which are operated with half-empty trains, possibly due to the fact that VR needs to perform a function that is in the public interest and hence operate routes at times which may at best be uneconomical. So naturally VR wants a system to encourage people who can travel at off-peak times to use those trains and then charge significantly more from people who want to travel at peak times. Nothing wrong with that per se. The issue I have with this is that because it is a state-owned company and technically looks to do the whole "public good" thing, then I have an issue with the pricing scheme. People who are willing to pay more do not get preferential treatment in Finnish public healthcare and neither should that be the case with VR, if we strictly interpret it. If you want to act like a profit-seeking entity and leverage these types of approaches, then I feel that we should inflict some competitive pressure on VR as well by opening the railway system up for other companies as well. You shouldn't be able to cherry-pick in this way.

However, this brilliant plan to switch over to dynamic pricing models and new IT systems in fact failed very visibly. The system VR bought turned out to not scale, meaning that the whole ticket system has been in a state of havoc as of late with the primary companion, our old friend Accenture, coming out into the public media and giving statements along the lines of "We have no idea what is going on." So, again the plague of the public sector, i.e. the incompetence of playing the role of customer in IT projects, has hit again. To be fair, many private sector companies also fail in these types of large operations, but fortunately then they feel the whole impact themselves. With the case of government-owned monopolies, it's the tax-payer who ultimately foots the bill for this type of ass-hattery. I wouldn't say it's so much a problem with Accenture as it is with VR. Accenture is a profit-seeking company which of course lies and cheats in the offers it makes and ultimately churns out endless amounts of billable hours. That is precisely why you want to be very much on top of things and keep your consultants on a very tight leash if you're the customer. Otherwise they will bend you over the table and let you have it. Additionally, what kind of moron doesn't stress-test a system thoroughly, and more importantly what kind of moron does a complete roll-out of a new system all at the same time? If there's one thing I've learned about IT systems, it's that you want to do rolling launches where you start with updates to certain parts and see how it goes from there. At any point of time if things go wrong, you immediately revert to the old system to contain and mitigate the impact of your incompetence. But how does the super-team of VR and Accenture go about it? Yes, in the same way as our other old friend, Danske Bank... Hilarity ensues.

I guess I could continue onwards with this, but as one final note, I truly enjoy the pain that the lady behind the plexiglass inflicts on me. After waiting for over 35 minutes, she tells me that the ticket voucher I have from the Ministry of Labor is not valid. It has been made invalid overnight with no type of grace period. Then when I decide to pay with actual money, she is unable to comprehend a simple statement such as "1 student ticket to the 7 AM train on next Monday from Salo to Helsinki". Then when she finally is able to produce the ticket and I tell her to just give it to me, she insists on printing receipts and then placing everything in a paper sleeve before giving the pile of paper to me. Which is rather interesting as VR brands itself as a green company. I merely want the ticket and nothing else: why do you insist on throwing so much paper at me which I anyway will throw away...

The Corporation and The Public Good

Just a quick note. I put the documentary film named The Corporation on and have been watching it out of the corner of my eye. I've seen it before, so essentially I'm just passing time and know that it is very much anti-corporation in its agenda. But one thing that jumped up was in the first part of the film how they clearly articulate that the primary purpose and responsibility of a company is to create profit for its shareholders. The continue by contrasting this to the public good by stating that profits surpass even public good in the priorities of a corporation.

But, what is public good? Can it be quantified or measured? What generates more public good and what less? If Finland supports the bailout of Greece, does that create public good for the Greek and does it reduce the public good for the Finns? Is it a net positive or net negative change? With a brief amount of thinking, I tend to feel that defining public good is very problematic. If public good as a concept was clear and everyone could subscribe to it, very many problems would be solved. So in this context I think contrasting the profit-driven nature of companies with something as hazy as the "public good" is somewhat problematic. Especially when you consider at the core what companies do.

Companies are profit-driven by nature and by legal requirements and obligations to its shareholders. Of course companies can engage in many nasty red ocean strategy tricks and be very cutthroat. But at the end of the day the company must provide a good or a service to a person or group who is willing to pay money for it. If a company is unable to perform this, it will soon go out of business. So, if a company produces a good or a service for an individual who buys it and which results in the decrease of "public good", is it the company's fault or the customer's? I don't think it's the TV network's fault that TV is full of reality shows: I think it's us as the consumers who are to blame since we (or at least some of you) seem to want to watch them. But maybe the customer is tricked and doesn't know better. Maybe the state should look out for the "public good" and tell the individual that reality TV in fact decreases "public good"? But I'm not sure that it does. The concept of "public good" is most likely very much tied to the context, the values of the perceiver, and whatnot. So more often than not an elite, typically a political one, is imposing their concept of "public good" upon me. Fortunately, at least in Finland, it is often enough the case that the results aren't significantly net negative and occasionally they might be net positive so that I don't have to storm to the streets.

The environment is often considered important. It is argued that it is in the interest of everyone to reduce pollution and save the environment. I guess at the end of the day the planet itself doesn't really care what happens to it as it will always survive in one form or another. Humans, however, may not if we pollute the planet we inhabit to an extent where life becomes impossible. So from the perspective of humanity, preserving the environment in a state that allows us to survive is very much net positive. I think nobody contests that. But how to get there? Recently nuclear power has been decided to be opposed to the "public good". The people who want to further "public good" have instead seemed to decide that fossil fuel based energy production methods are a better way to go, or at least less net negative than nuclear power. But strangely enough there is also a healthy amount of literature suggesting that nuclear is in fact much better than coal, oil, or gas. In this case, again, putting some metrics down and trying to assess via those which route produces more "public good" might offer some more support on decisions. Perhaps a structured way of defining "public good" in this context would be warranted. Unfortunately I haven't seen this being done (then again, I haven't looked that much, so please send me links to articles if you know of anything interesting). So far my limited understanding is based on following the research of a friend of mine who seems to take a relative engineering view of the problem and writes pieces which appear quite transparent and coherent. And based on that I think that while nuclear may not be the ideal way to produce power, it creates more "public good" than the alternative of fossil fuels (based on direct deaths, CO2 emissions, cost, ...).

Linking back to the original point, as it's very much unclear in the power discourse what is in the interest of the public, declaring that companies are bad for putting profits ahead of the "public good" seems somewhat childish, especially when it seems that very often these two in fact appear to correlate. Especially when you consider the alternative proposed, i.e. public ownership. For some strange reason a strong government tends to historically lead to increased centralization of power and hey, let's face it, nothing bad has ever come out of that. No government has ever oppressed its citizens. Sounds like a brilliant idea. Let's look at the shades of gray a bit more, shall we?

Stockholm Half Marathon 2011

Well, the first and most likely last half marathon of this season is over and what can I say... The Swedes definitely know how to arrange an event. The half marathon in Stockholm was in just about every way better than its Finnish counterparts, and not least because I've managed to run my best times there. Everything just seems to work there and the overall atmosphere was amazing.

Related to my last entry about measurements, I guess it's only good to present some measurements from this exercise as well. My target time was 2h00m00s (my previous time from Stockholm was 2h00m21s, or something thereabout). This means 7200 seconds or 341.26 seconds per kilometer (or 5m41.26s) for 21.098 kilometers. And the result? 1h57m36s according to my measurements (the official time was 2s better, but as I took measurements with my own watch and the kilometer times are based on those, I'll just use the 36s one for the review of the run).

The chart below is probably the most relevant one, considering that I wasn't able to get my heart rates due to some technical glitches. The diagram shows the per kilometer deviations from the target time and the red line shows the average deviation from the target per kilometer over the entire run. The biggest thing to note is the profile of the diagram, which I think has slightly improved when compared to previous events. My main sin, as shared with so many other runners as well, is starting too fast and then  tiring out when the going gets real. The positive bit is that I was able to keep the initial pace fairly well intact and at no point did I entirely collapse.

This time I was able to find the two hour pace runner and tagged along for the first eight kilometers. This resulted in the fairly accurate times for the first four kilometers after which the pace runners in fact sped up a bit. The seven kilometer blip is due to a drinking station hassle. The pace keepers started slowing down a bit at around eight kilometers to apparently adjust the pace back to the two hour target, but considering the relatively good feeling I continued going at my own pace and decided that as long as the pace runners don't catch me, I'll be very well off in respect to my target.

One thing that separates Stockholm from Helsinki is that the amount of entertainment along the course is significantly higher. I didn't keep exact count, but I think there were five or so DJs spread along the course and two or three live orchestras playing music. This was in fact very helpful in keeping up the pace and positive mood during the mid part of the event. During the 18th kilometer my run started dragging a bit as can be seen from the diagram. It turns out, however, that Prodigy's latest album is a very decent approach to keeping the pace at least somewhat reasonable after switching to defensive running and changing the focus from running as quickly as possible to ensuring that the original target is at least met. And of course the fact that the last kilometer or two of the track were surrounded by people cheering you on helped as well. Overall the run was surprisingly enjoyable, especially when compared to the HCR'10 and Espoo Rantamaraton fiascos of last year.

Finally, here are some of the official statistics from the organizers for my run:

Split	time	diff	min/km	km/h	place
5K	0.28.17	28.17	05.40	10.61	5869
10K	0.55.18	27.01	05.25	11.10	5280
15K	1.21.42	26.24	05.17	11.37	4843
20K	1.51.06	29.24	05.53	10.20	4937
Finish	1.57.34	06.28	05.54	10.18	5086

Overall there were about 10500 or so runners, so in that respect I'm also relatively satisfied that I finished in good mid-range territory ranking-wise. The next steps from here will be to try to solidify my running and try to be able to consistently run sub-2 hour times. I don't hold any serious expectations of being able to improve my time too drastically and don't really even hold that as a priority. For the rest of the winter I think my focus will be on learning how to swim. Additionally a classmate of mine also suggested taking up Savate, which I at least tentatively agreed to. So, essentially the goals for next year will most likely be to run at least one half-marathon with a target time of less than two hours (ideally matching 1h57m34s or faster) and to complete a sprint triathlon with no specific other target (if I'm not able to find a suitable triathlon from Finland to try, then I'll just test out the triathlon by myself to see how that feels). It may be also reasonable to revisit these targets early next year to see what the feeling then is and possibly revise them as needed, depending on e.g. how the swimming goes.

But for now I'm just going to kick back for a moment and try to get my legs back into shape again.

Measurements

One thing I've learned over the years is that I can't trust myself. We humans tend to be absolutely terrible at many things. Our yearning for causality and stories leads us to make conclusions which actually don't hold true under closer inspection. We are influenced by feelings of fear and greed and often succumb to hubris. So it's no wonder why it seems that the life of a typical person is very much a tragicomedy.

To tackle the above, I've been trying to impose some structure in my life via quick and easy exercises. In a separate blog I'm documenting the year of my life from a daily financial perspective: how do I spend money, are there any easily observable trends, and so on. In HeiaHeia I try to track my exercises. And recently Google Docs Spreadsheets combined with forms and linked to the home screen of my iPhone provides me with an easy, quick, and flexible framework to start tracking anything with relative ease. The point here is that gathering data is critical to be able to do any type of educated decisions. Having a hypothesis about what to change to improve a bit in your life is fine, but if you don't have any way to judge whether or not the results materialize and are what you wanted, it's relatively pointless to invest any effort into change.

On the other hand, gathering raw data and analyzing it also motivates you by giving very concrete and quick feedback with which to evaluate how you're moving along. Measuring the times of standardized jogging routes enables you to see how much faster you're able to run. Add a subjective measurement of how the exercise felt and you can start analyzing on a rough level what your strong points are and what are the potential shortcomings when running training for a half-marathon. Or tracking your spending enables you to find things such as how much money you spend on pointless things or in bars and how rigorous financial discipline is useless if you go splurge on an individual day every once in a while.

I guess ultimately this entry is merely a personal note to remind myself again that everything can be measured and just about everything should be measured. And once you start measuring things, you can start improving them. And that's good since at least for me happiness correlates relatively strongly with change achieved in a certain timeframe.

Patent citations

Interesting bit of the day: if you look at granted patents and calculate the age of the patents that the given patent cites and calculate averages, it appears that the selection of companies affects the value quite a bit. In my case the aggregate patents of about 120 companies involved in either high-tech/electronics and/or automobiles shows that on average newer patents are cited than in the case of all the patents. The timeframe has been the patents from 1976 to 2010. Diagram below, blue bars are the first group and green is the group with all patents.

More on education: incentives and linearity

I think I've written about education on multiple occasions, but let's revisit the topic again. So to briefly recap, the western education system is out of control. On one hand the fees universities are charging are growing rapidly, excluding the possibility of higher education for the masses. At the same time, the level of education when adjusted for the cost is questionable as MIT and Stanford are giving away lectures and materials online for free. This means that ultimately the student is merely paying for the stamp of approval that the prestigious university with its reputation is able to provide. Less reputable universities thus cannot charge as high prices as the elite universities. And in Finland all of this is moot as the government subsidises studies and the main problem here is how to get students to graduate as quickly as possible so they can start making money to pay taxes (i.e. become productive cogs in the system) and minimize the economic impact of their studies via costs.

Ultimately there is a crisis afoot here, namely because more people strive for higher education based on the assumption that higher education will give you higher salaries. Along with cost of education, unemployment is also on the rise meaning that for the benefits from potentially increased salary take longer to materialize. And at the same time we are straying very far away from the questions regarding what the purpose of education is, to the society, to the academia and to the students.

Reflecting on those points, I keep getting this feeling that the linearity of my studies is counterproductive. I'm selected at the age of 18 to start studying towards a MSc (Tech) without really any concept of what this stuff is about, what sort of skills I might need and the only way I can keep track of where we are going in e.g. mathematics is trying to tie the concepts down to concepts I already know. And then eventually further down the road I might notice that some of the things are in fact useful (e.g. it is nice to know the basics of matrices, eigenvalues and eigenvectors if you want to figure out which trends are central in generating and sustaining violent conflicts in the Middle East) and then you need to revisit the issues. But alas due to the linear fashion of studies, you already went through the "basic" courses years ago and revisiting the courses and asking more intelligent questions (as you now have a better understanding of applications, etc.) is looked down upon as you are merely wasting more resources.

So, to tease out what the problem is, we can cite Warren Buffet's partner Charlie Munger, who told us that to understand why things are the way they are and to predict where they are going, you need merely look at the incentives. And none of the larger institutions at the current stage really have incentives to actually teach the students anything real. It's only if the students pursue an academic career that they might with a certain degree of probability need the basic skills taught in Masters programs. And even then it's still most likely cheaper to teach the skills at the later stage again than to spend enormous amounts of effort in the earlier stages to make sure that the entire class understands the ideas and concepts in class.

Another point is the cyclicality: something should be done about that. The reason why Finnish engineers have traditionally been fairly good is mainly due to the fact that at a very early stage of their studies, the students often already go to the industry to work on real issues. Their work naturally gives them problems to think about, which they can then bring back to school and try to work out, creating a tighter linkage to their studies by giving more motivation that the things being studied are actually useful. It also benefits the industry because they get relatively cheap labor which also is very rapid in adapting and learning things due to the close link to the university and the framework behind the students which supports learning. So while bearing this in mind, it seems very counterproductive for the state to demand quicker graduation times from students, as that would wreck this dynamic. But on the other hand if education costs were shed upon the shoulders of students in the form of tuition fees of say 10 000 euros per year, this is also quite a high opportunity cost for having a support network you can potentially tap, especially when considering that a person who goes to say 20 courses a year actually generates more costs for the university than a student who merely takes, say, three courses a year. So this should also ideally be addressed when redesigning the education systems.

Sorry again for not having any real tangible solutions at this stage, but I thought it worth ranting about these subjects just for the record and for future reference when I go through these entries at later stages.

The reason for the unrests in London?

It's the same as the reason for many problems: people don't think things through. Even people who think they have nothing to lose have many things to lose. They just haven't thought it through...

Swimming briefs or not?

I am increasingly convinced that doing a triathlon next summer is a good idea. The exact variant is yet to be determined, but I'm starting to think that maybe a sprint distance at 750m swimming, 40km cycling and 10km running is a good way to get acquainted with the sport. So, why triathlons? The rationalized answer is because practicing the three different sports may in fact be more healthy in the long run when compared to only running, which itself puts a fair bit of pressure on joints and whatnot when running around the pavements in the Helsinki area. But that's not the real reason. The real reason of course is because I seriously want a new roadbike and what better way to rationalize the acquisition than to state that I absolutely need one for a triathlon.

Anyway, cycling and running should not be too difficult. The thing I'm slightly worried about is swimming and the fact that it's about a decade or so since I've last done any swimming. I'm just not that into the whole water business and I've never really liked spending time on beaches and such. You just get sand everywhere and you can't even dress like a human since it's too bloody hot and typically there aren't even shades around. But yeah, swimming is quite relevant from the perspective of a triathlon and fortunately enough it's also the first part of the shebang, meaning that if I happen to drown, at least I didn't waste effort in cycling and running. Fail fast, if you will.

So, swimming then needs to be tackled and naturally you need the appropriate attire to swim, namely the swimming suit. And oh joy, here we stumble on the age old argument about whether or not men can wear swimming briefs ("Speedos") or not, and of course I can't let a fight like this slide by without taking a stance. And of course the answer is that the only appropriate way to dress is with swimming briefs, or "Speedos". Period. End of story. It's as simple as that.

If you think about it, it's in fact quite obvious and I don't understand why there even is such a big fuss about the topic. First of all, swimming is exercising and when exercising, your attire is based on functionality. When training, it doesn't matter if you look stupid or not, the point is that you must dress in a functional fashion. I'm always baffled when you see women in polo shirts and sporting nail polish show up in gyms and pretend to work out. I go to gyms to work out and get sweaty, ergo I dress appropriately and don't really care whether it fits my sartorial image or not. And in terms of swimming, the appropriate and functional way to dress in in swimming briefs: they offer better movement ability and the fact that they are not a tent (unlike the things the Americans wear) you can actually swim more efficiently. And when you're done and leaving the swimming pool, they also dry fast and don't take as much space.

Now, someone will of course start bitching and moaning about the fact that they look ugly when you're on the beach and women will never like you if you wear "Speedos". Those just demonstrate prejudice and small mindedness. And besides, the point is moot since there is absolutely no reason why a civilized person would go on the sand to grill themselves in the first place. So that point is purely hypothetical anyway. Instead of being chavs, civilized men instead will spend their summers doing something productive, like sailing or playing sports, and dress appropriately. And when just lounging around, they shall anyway wear long trousers (preferrably linen or some other lightweight fabric) and polo shirts to look reasonable.

So there you go, the whole argument about briefs or not briefs when going swimming is hereby solved once and for all.

Decoupling and deconstruction

One of my pet theories is that the increasing level of infrastructure (security, transport, capital, ...) will decrease the size of companies. This summer it appears that the oil and gas industry is experiencing a trend of spin-offs and splitting of companies, without even regulator involvement. First Marathon Oil spun off Marathon Petroleum and in today's Financial Times ConocoPhillips announced its intention of splitting itself into two. Interestingly enough after yesterday's announcement the markets rewarded ConocoPhillips with and increase of 7.5% in valuation. So whereas nuclear scientifically fusion energy seems to often fail to materialize in the corporate world, fission certainly seems to have worked in this case.

But of course some caution should be applied before we dive into the theory of infrastructures and company sizes. Without being an expert on oil and gas, my guess is that the industry in itself is in the midst of a turmoil and from an investor perspective I would be careful as my common sense says that peak oil will have most likely already happened and that the industry, at least in terms of oil, will is already declining and buy-and-hold strategy will at this point would only result in tears in a matter of years. But another driver may be increased competition in declining markets and the inability for a large organism to adapt rapidly enough, further held back by the immense amount of effort wasted in internal communication and other functions which spin out of control as a function of company size.

It will, however, be interesting to keep an eye on what is happening and whether or not the benefits of these fission exercises will be sustainable, or whether the markets merely rewarded the companies for making any type of effort.

Don Quijote and EU's fight against credit raters

Amusingly enough EU seems to have been caugh with its trousers down by the credit raters, who have in the past weeks downgraded a couple of more EU members into the junk bond category. And as appears to already be typical for the eurocrats, the approach now is to focus on the annoying smoke by attacking the credit raters instead of addressing the real problem, namely that of the horrible state of competitiveness and finances of its member states.

As part of the latest news today, a couple of EU commissars have been making interesting statements. Firstly there is supposedly a cartel of the top three credit raters, according to Viviane Redding. Well, judging by the past few years, the level of competence demonstrated by the raters in regards to e.g. evaluating the credit worthiness of subprime mortgage CDOs and the whole shebang, one would assume that entry barriers for a new rater wouldn't be very high. That is assuming that a new entrant could provide more credible ratings. I'm not an expert, but I fail to see how a cartel would actually work here. Perhaps I'm mistaken, but in any event I do agree that maybe more competition would be better, but rushing out and calling cartel without credible proof seems somewhat weird.

Secondly the fact that raters will change ratings has apparently caught another commissar by surprise. Well, you know, assessing the situation and changing ratings accordingly is precisely what raters do, as surprising as it might be. And even more surprising undoubtedly is that if raters don't see improvements in the actions and the expected outcomes of the actions, ratings will drop. Perhaps raters could talk with the parties that are being rated about different things, but ultimately I understood that the whole point of having third parties perform ratings was that investors who want more information on which to act could get a somewhat reliable, unbiased and objective assessment of the situation. Interestingly enough, however, it appears that historically the raters, e.g. in the subprime case, may have had conflicting interests and biases towards rating subprime mortgage CDOs higher than they should have, which I think then comes back to the whole situation where I personally would like to see raters remaining somewhat detached and distant from the parties who are likely to gain or lose basing on the ratings.

But all of this is ultimately very much moot as the fundamental issue still remains: the EU has made a total hash of things and it should now focus on fixing the core causes of the whole trouble, i.e. increasing the competitiveness and entrepreneurial activities while decreasing the corruption and inertia in the troubled member states. If this isn't done, then ultimately arranging bail outs and negotiating loan terms is pointless as the loans will never be repaid unless the countries actually get their financial growth back on track. And while this is going on, maybe EU shold resist the temptation of lashing out at windmills...

Mobility and performance

Traditional view holds that from the perspective of an individual the best approach to career development is to move positions every three to five years. Less than three years and you will come across as an organization climber who will most likely have not had enough time to actually pick up the experience or the skills of the previous position. Or worse yet, fast moving individuals may move fast because they get canned as soon as it becomes apparent that they are little more than hot air.

But stick around in a position for much more than five years and very often development on a personal level grinds to a halt. I had the pleasure of serving two steps underneath a brilliant boss for a while and he held the view that you should do a single thing three times; on the third time your performance will peak. The rationale is simple. On the first round you have no clue what you're doing. The second time around you have some clue and can formulate a more educated plan. But it is on the third time around that you are able to truly refine the process and will have become increasingly adept in what you are doing. But on the fourth time people tend to get lazy, if we put it in a simplistic fashion. Efficiency and output quality may begin to deteriorate.

So extrapolating from those viewpoints, it is thus fairly logical that it is both in the individual's as well as the organizations' best interest to have individuals move around. But I recently read some interesting bits about why taking this approach too far is also very counterproductive. In a recent article the Economist talked about Barca, the football team, and how it has achieved success while emphasizing on local values and growing its own players, as opposed to using big money to attract high-fliers. The article continues and cites studies which show that successful individuals on Wall Street will very often suffer deteriorating performance when they switch to other organizations. This would then suggest that it may in fact be in the organizations' interest not to necessarily go along with the rapid ascent of individuals.

So, where then is the balance between acquiring fresh blood and new ideas versus cultivating a strong internal culture and values? The counterargument to the culture and value argument is that very often when organizations grow old and large, they tend to begin to detach themselves from the "real" world; they gather inertia, organization builds on top of organization and performance deteriorates. Amusingly enough literature is full of these cases. Just look at any piece of cutting edge management literature from a decade back and skim over the examples of successful firms. My hunch is that most of them will have succumbed and are either in trouble or have already folded. Of course if a company is able to keep its well functioning culture and cultivate it appropriately, superior performance should ensue. But take for instance Google. The question is that has Google already peaked? It may still continue and churn out very hefty profits, but has the rapid recruitment drive already hampered what originally was the coveted Google culture? Have large numbers of employees already lowered the average performance of individuals; has mediocrity taken over the company yet? If not, chances are good that it will in a while. Because examples of this type of dynamic are plentifully around.

Riddle me this...

If every company only hires (according to HR, anyway...) the top-of-the-class, top 1% of the population types, why isn't the unemployment rate at 99% yet?

Eras

Change is strange. It's sort of like an untrue, even dreamlike feeling booking meeting rooms and meetings with agendas such as "Debriefing/handover of responsibilities" and "Exit practicalities".

More random thoughts

• Capitalism and free markets aren't the problem. Big corporations and the fact that there are no free markets is the problem. Confusing capitalism with corporatism is a mistake that leads to many problems and incorrect conclusions.
• If we're optimistic, the drivers of individualism, education, and technology, amongst others, will drive the decline of large corporations and return the system to a functioning competition-based free market. This will be because the friction and missing infrastructure bits that big corporations were able to get past when small companies couldn't will be reduced.
• To enable the above, one must decide what type of a mechanism should be used to revitalize the system. Competition law and regulators are an obvious choice, but this requires the regulators to act more decisively and more intelligently in the future.

Random thoughts

• Most disruptions can be taken apart into smaller pieces, which in turn often are merely small linear, evolutionary steps. Just like the metaphorical boiling frog if you look at only the small delta, you miss the big change that can make things really hot for you.
• Flexibility and adaptability is crucial for survival. Interestingly enough people seem to cling onto ideologies even in situations where the pragmatic option would be to change your stance. Like in martial arts, fixing yourself into one stance will again land you in a tight situation when the circumstance changes.
• An offshoot of the previous and originally from some smarter person: communism for 20-somethings stems out of passion, but communism for 40-somethings stems out of idiocy.
• "I'd rather be a shareholder than a customer of [insert any bank here]." Because of incentives, banks tend to take better care of shareholders than customers.

Told'cha, ya shoulda killed me last year!

Why PS-accounts aren't selling?

Hmm... Could it have something to do with the unpredictable tax regime of Finland and the fact that the current climate seems to suggest that not only will taxes be going up but every succeeding government seems to aggressively change pension legislation. So excuse me while I don't see any point in locking my assets up for over 40 years with a product that very efficiently ties me to a Finnish banks, tax authorities, and government. If someone, however, offered good productized solutions for small investors to spin their savings into a offshore fund so that the government couldn't constantly kick your teeth. That I could be interested int.

Money

Many small, and large, companies have been ruined with too much money. --Jorma Ollila