Fundamental papers in this respect are Bernheim (1984) and Peirce (1984), ...... Gareth Morgan in his book Images of Organization describes the main ideas ...
MINISTRY FOR EDUCATION AND SCIENCE, RUSSIAN FEDERATION Federal State Autonomous Organization of Higher Education «Novosibirsk National Research State University» (NSU) Faculty of Economics Chair of Management
Master Thesis
“Systemic Analysis: to enhance a more flexible labour market” Written by:
Erik Saether
Supervisor: Professor: S. Kovalev
Supervisor: Professor: Doctor of Sciences N. Suslov
The head of the chair: Assoc. Professor: PHD in Technical Sciences S.A. Kuznetsova
Novosibirsk 2016
Contents Summary...................................................................................................................................................................3 Advantages of a More Flexible Labour Market....................................................................................................4 Aim of Research ...................................................................................................................................................5 Understanding the Labour Function .................................................................................................................6
1. a.
General Labour Market Definition ...............................................................................................................6
b.
Understanding the Drivers of the Labour Function ......................................................................................6
c.
Types of Labour Transactions (Effort) .........................................................................................................7
d.
Labour: Understanding Motivation and Payoffs ........................................................................................10
e.
Labour and Decision Making Behaviour ....................................................................................................13 Understanding the Constraints of the Labour Function: .................................................................................17
2. a.
Physical Exertion or Effort .........................................................................................................................17
b.
Mental Cycles .............................................................................................................................................17
c.
Non-routine or Uncertainty Aversion .........................................................................................................18
d.
Time Availability ........................................................................................................................................18
e.
Social Behaviours, Reputation & Deviancy ...............................................................................................19
f.
Work Environment & Culture ....................................................................................................................21 Information & Technological Trajectories .....................................................................................................23
3. a.
Information and Learning in the Labour Market ........................................................................................23
b.
Employment Risks of Inflexible Employers...............................................................................................25
c.
Innovative Behaviour .................................................................................................................................26
d.
Collaboration Efforts, Synergies & Optimisation of Work Intensity .........................................................27
e.
Mentorship Dynamics.................................................................................................................................28
4.
The Production Function, Technology Trajectories & Learning Curves .......................................................29
5.
Methods for Optimisation ...............................................................................................................................33 Optimising Work Flow so as to Improve Labour Abilities ................................................................................33
Conclusion ..............................................................................................................................................................37 Applications ............................................................................................................................................................38 References ..............................................................................................................................................................40
Summary Ever increasing technological advancement requires deeper and wider knowledge accumulation than ever before. Labour latency effects of acquiring technical skills can be extensive, with people spending their entire lives learning and adapting new skills while our technologies become ever more advanced. On the other extreme, we have rich countries and poor countries for example, high density populations in large countries such as Bangladesh, Pakistan or Uzbekistan where good opportunities can be more difficult to find. It can be really concerning for these people to see the level of advancement of United States or Germany and then their own predicament. Then for example, within the United States the most powerful country in the world, it has been shown that there are rising income discrepancies (Picketty 2006). All while the world population is steadily increasing (predicted to exceed 10 billion people by 2100 by the United Nation medium projection). So on the one hand, as technology develops, we are improving. First through the optimal accumulation of information in what we now call the Information Age, and secondly through improved lifestyle design and optimisation technologies. But are these technologies sustainable? How are we going to maintain our learning and experience curve so as to support these technology trajectories? Are we choosing the correct learning and experience curves to support these technology improvements? This is my argument for a more flexible labour market and this vindicated by the worldwide information technology trends that show SAAS (software as a service) investment expected to double by the end of 2016. An improvement on the printing press, the internet, through is messy evolution is providing ever increasing amounts of information in more relevant and useful ways than ever before. For example massive online courses provide online education now, news providers from all over the world are now accessible and anyone can voice their opinion or create content to support their position or cause. Then there are analytical systems that are able to determine valuable information about client needs, online CAD systems where people can work on projects together, online trading systems where products and services can be traded instantly and websites which provide huge quantities of research information. All this information management can be used for improved decision making and is increasingly moving online in the business sphere where information can be more readily available for decision making (e.g. online project management tools, time scheduling CRM and ERP cloud solutions). For example a recent report by PriceWaterHouse Coopers indicated SAAS solutions revenues have already exceeding new sales of legacy ERP solutions, where online solutions are not only driving cost savings but also enabling better workforce manoeuvrability and customer driven solutions. Secondly better design thinking can save space, time and energy. Through improved behavioural or ergonomic design in almost all areas in our lives i.e. nutrition, health, transportation, energy or education supplies. We live limited lifespans, and the planet we live on, Earth, has limited resources so as to be able
to satisfy our every whim, want or need. So one-click or time saving solutions are welcomed with global companies providing well tested global solutions to the general consumer which circumvent heterogeneity or language barriers. We are slowing moving to even more connected world which integrate with our circumstances and senses at any point in time giving us a wider view of our own lives, our friend’s lives and greater understanding of people lives more distant to our own. Macroeconomics results have proved the efficiency of capitalism which adapts to the constraints set by our environment. Now we are looking at ways where we can better measure and manage our social and environmental components within our economic systems so to achieve more sustainable development goals i.e. a more context based world. However, Thomas Pickety’s research on income and capital discrepancies with his comparisons of the capital rates of return and growth rates of countries. Of interest for example, are his findings that English speaking countries income discrepancies have increased over the last 30 years (Picketty 2006). In another joint paper by (Yakovenko & Rosser – 2009), it has been shown that the income distribution can be compared to thermal and super thermal distribution in terms of a dynamic probabilistic system with some part of the populations achieving super wealth while other remain at lower income levels. So then the question beckons, are we controlled by the flows of probability? Or how can we better control the dynamics of creating even, flexible and dynamic labour force where technological output or value-add per person is maximized.
Advantages of a More Flexible Labour Market
It is the conjecture of this paper that there are many advantages to a flexible labour market which assume the following:
More fluidity between labourers who assist each other with tasks.
Better information of available labour abilities. E.g Technopark here in Academgorodok there are many companies work in one innovative business park. How much do labourers know about each other abilities and if there was more fluidity surely more productivity would result as a whole.
Increased competence building as a whole as gaps in work in one business are filled by excess labour in another.
Better understanding of market weaknesses by businesses and looking for persons to help with these.
Pro-active management teams or leaders.
Advantages include:
Improved productivity or value-add per labourer as a whole.
More choices or options for both employer and employee.
Less unproductive time (this is not the case where time searching for employment is excessive).
Less destructive behaviour as accountability is increased.
More inspired or highly motivated individuals or workers.
Improved flexibility or autonomy in the labour market is a function receiving correct information, being able to make appropriate decisions and properly controlling one’s time or maximisation thereof so that the value to benefits to society are maximised. It represents a form of freedom, but a responsible one where actions are maximised to the advantage of mankind. In effect it is a requirement in achieving sustainable development as individual’s behaviours are targeted more appropriately into causes and solutions that greater benefit mankind. This can be for the organisation you working for, but could also change because your services may also be required by a company similar to yours further up or down the supply chain. Technology accumulation is more specialised and complex than before. We need high social capital together with highly fluid market so that people’s skills are maximised. Also computers are more freely available and this provides an opportunity for people to collaborate on important projects more freely. Aim of Research It is the intention of this paper to look at motivation, information flow, some mechanisms of its control and optimisation, some methods of innovation and learning in the work space and how they possibly map to technology trajectories and problem solving in creating a more flexible labour market. The assumption or assertion of this paper is that if people are suitably supported at a basic or fundamental level, they will find a productive sphere to contribute or can be motivated to do so. This paper tries to focus and understand many of the causes of problems within our social system but from a labour market point of view.
1. Understanding the Labour Function a. General Labour Market Definition The labour function can be defined as some form of exertion\effort\sacrifice using a combination of physical or mental abilities performed by an agent over a time period in exchange for some form of external or extrinsic reward in order to achieve some common purpose, good, goal or benefit in the final form of a tangible product or project; and\or intangible service or process or in the accumulation knowledge for these purposes. In terms of this paper, general labour market has been defined as all human beings suitably capable to perform labour and does not differentiate between investor, employee, manager or shareholder. Neither have I differentiated between age, group, sex, religion or race (although some variation may be noticed in the effort function). In terms of this paper, the general labour market is given a more general definition because it is the understand of the author that all people or individual agents are required to work to survive, be it mental or physical labour, be it in knowledge and understanding or physically applying oneself in various forms of achievement, capability and activity so as to be recognised as a valuable contributor by society. Thus labour implies some form of behaviour that requires effort so as to achieve a reciprocal benefit. Effort can be in the form of being simply available to do a task (no work performed), to assist a team in a task, or to complete the task oneself. The extent or intensity of the task may vary depending on circumstances. In addition the task itself may involve varying levels of complexity, both in the physical and\or mental sphere. Tasks themselves may require different levels of pre-learning to be completed. E.g. concert pianist player may require years of practice as compared to a shop assistant may just need to know basic skills like how to use the till. Increasing division of labour occurs when individuals are not able to perform the tasks of others and so a situation arises where divisional of labour benefits society more because the extent of time to learn time becomes prohibitive and the use of the expert is much more time effective to both participants or agents.
b. Understanding the Drivers of the Labour Function Nobel Prize winning ethologist: Niko Tinbergen argues that behaviour is affected by four factors: function, causation, development and evolutionary history. Function (our goals) is what drives our motivation or causation as he coins it. For example food consumption (which we use for energy) drives our causation need or desire for food (also known as hunger). Development (change through willingness) and evolution (changes forced on us by nature) are historic and cumulative systems and work with the time system we find ourselves.
In terms of the labour function, one needs to consider the net forces of the perceived effort (work) and the perceived benefit to be received (motivation) and can be classified as follows: Perception of behaviour
Effort required
Benefit (Payoff)
Cruising
Low
High
Hard Worker
High
High
Co-operative
Low
Low
Dis-incentivised
High
Low
Work also has many forms but the components of which can be broken down into the following:
Intensity (Effort required\Ability) or (Time estimate\Time available), Time period, Skill or task type (a set of required actions), Purpose or Application
This perceived effort vs benefit relationship seems to be a natural endowment of all animals on the planet including us, Homo sapiens. We are trying to minimise effort and maximise payoffs in the form of food, reproduction and where applicable improving social status where some animals interact and compete aggressively. Also of importance is our intensity level which shows that either our effort is very high in relation to our abilities or that our time availability to complete a task is very low. This can cause stress in the organism and our body as natural mechanisms so that we can successfully pursue stressful tasks in the short term. However medically it has been shown that excessive stress in the long term chronic stress to set in, which can result in reduction to the immune system, slower healing, slower development in growth in children, worsening storage of new memories and visceral fats linked to obesity. Also importantly the benefits may be intrinsic or extrinsic, and be short term or long term and may also be layered i.e. personal motivation, group motivation (friends, company you work for, etc.) and at hypergroup motivation e.g. at country level.
c. Types of Labour Transactions (Effort) There are many types of labour transactions but in terms of this paper because we concerned with technological progress, we will group them according to the types of information learning or innovation systems. The reason for this, we will go into later.
i. Production: Innovation is in the form of constant improvement of products produced. It is generally based in one location, although different components can be based in different regions. Some form of repetitive work performed in the production of consumer products or capital goods – with various useful lives e.g. farming lettuce will produce something that may last a week (consumables) or producing a car will provide a something that can be used countless times (durables). Production is also a function of size and complexity, with some products extremely small (e.g. nanoparticles based microchips) and other extremely large in the form of capital goods which may have extensive useful lives (e.g. train). Economies-of-scale are expected in the production of goods as leverage is gained through volume increases over potential fixed or sunk costs. Learning in production assists with a decreasing cost function which means businesses are able to provide more competitive pricing. This may not have happen however where it is to the advantage of the monopoly or colluding oligopoly to reduce supply as to maximise profits. These entities also have good reason to contain trade secrets and this withholding of information may and may not have negative effects on society e.g. providing incorrect information on oil reserves. Firstly because investors need to achieve a return on investments and secondly trade secrets give the entity a competitive edge in the market. ii. Support and Services: Innovation in the form of improving utility at the location and time a person demands it. Time, space and energy based. The service provision may be in a form of highly qualified professional service (e.g. an advocate or doctor), or a simply have an availability requirement (e.g. a receptionist). Some services may require people knowledge, others are more task focused or skilled (e.g. sale person vs information technology engineer). Some rewards on services will be time based; others may be incentivised on performance (e.g. estate agent or sales person). Knowledge of time, location and tactics used assist the contextual problems of the customer along with knowledge of the professional skill and tools used will all provide the service company a strategic edge and so knowledge management is critical to services companies which also effectively are able to take advantage of division of labour and the cross pollination of skills within the service function. Service businesses also achieve economies of scale as per the production entities and businesses are able to take advantage of this and combine and products and services into a singular business model or offering (this requires more flexibility). iii. Management: Innovation in the form improved situational awareness Management falls into the category of the individual requiring to have a high situational awareness so as to help match or take custody of the systems or team’s they will be in control of. Generally managers take custody of functional areas within organisations but also take up overall leadership positions where their understanding of market requirements can assist the organisation. Rewards generally paid a fixed salary plus possible incentives such as bonuses or share options. They focus on the context of their solution offering while also improving the organisation areas through better optimisation, efficiency or
effectiveness of processes and procedures. Management can also be in the form of consultancy as the need arises (part time). Innovation arises in management from knowledge gained from works and what does not work. Experience in managing people, technology and systems can become invaluable and deeper understanding is gained of constraints. iv. Research: Innovation in the form of improved understanding nature or social needs and potential applications Includes Licenses, Goodwill, Patents, Trademarks and Copyrights – time based work where work performed in the past is rewarded by the future value generated of the use of the intangible right by others. Payoffs may be in the form of once off payments or royalty agreements over the life of the asset. Business goodwill is included as it requires the development of an understanding of technical and customer contextual requirements that allow for a business to gain an edge over its competitors. This capability may have been developed over a significant time period and so organisations and individuals may make significant steps to protect this knowledge. v. Design & Architecture: Innovation in the form of understanding context and function of user, system or various forms of application or functional complexity and formulating appropriate systems and infrastructure to support this. This may be some form of user system based research and formulation of best possible application to improve the functional optimisation for the user of the system. Design and architecture is about understanding components or modules of a system, how they interact and the interface with the users of the solution in a contextual manner. Increased knowledge of the constraints of the components results in increased abilities in this area as for example can be identified in the works of Buckminster Fuller, where he is development of the geodesic dome was a result of Fuller's exploration of nature's constructing principles to find design solutions. Design is a multi-layered discipline where many different levels of skills become integrated. This form of innovation is highly experimental, as it requires understanding the ergonomic potential of his or her usergroup. It also requires high levels of resourcefulness in finding optimal solutions together with people skills to assist in this optimisation. vi. Development & Projects: Innovation in form of grouping sets of differing skills and tasks into one functional sets or subsets so as to achieve a measurable goal Integrated use of products and services into a complicated asset e.g. a space launch vehicle, a nuclear power plant or may just be in the form of prototype e.g. the latest robot from Japan. It may be developed over a few months or over several decades; and its application or use being from very short periods (rocket launches) to extensive periods (road bridges) depending on requirements. Size and complexity may vary greatly due to time and extent of tasks needed. Projects tend towards creating a tangible capital good or support service (e.g. online software platform) which is singular or once off in nature; but the technology or engineering capability may also be duplicated in future similar projects.
vii. Allocation of Funds: Innovation in the form understanding worthwhile social or business problems, and determining viable solutions Investment, Grants, Government spending – labour is in the form of understanding risks and returns of businesses and government and social projects and allocating funds appropriately. Largely this labour is in the form of understanding investments or worthwhile causes and determining appropriate funds for such causes or business cases. Knowledge is critical for allocation of funds but also trustworthiness (which we will go into later). Worthwhile causes can be difficult to determine at the individual level but when many people come together in support of a project, this process becomes easier. Knowledge accumulation in this area also comes from knowing what will work and what will not work. Tacit knowledge of risky investments can be invaluable where funds could be better spent on more productive or high impact projects.
d. Labour: Understanding Motivation and Payoffs Maslow hierarchy has a great representation of the motivators of our organism but is rather limited in its details. For this I have decided to analyse gamification which provides some interesting insights. For example at the Rochester Institute of Technology that using gamification at the university increased retention rates and they were able to increase the interaction between the students and faculty. To encourage this, they created collectable cards for the faculty and staff which students would receive in exchange for playful or creative interaction with the faculty.
Motivation is a function of perceived benefit to be received. Motivation increases when benefits are higher. External motivation however is also a function of expectation and to our due to our limited senses and mental understanding, we may incorrectly assess expectations. The table below lists the different motivators by model and a mapping to similar motivational drivers. Maslow and Octalysis both focus on extrinsic and intrinsic motivators whereas Self Determination Theory focuses on intrinsic motivations.
Payoff Types
Maslow hierarchy
Mental Motivators: - Autonomy & Work Self-Actualization, Intensity are balanced - Spontaneity Self Esteem - Problem Solving, Creativity
Self Determination Theory (Intrinsic)
Gamification – Octalysis Framework Representation
Autonomy, Competence, Relatedness Autonomy, Competence
Epic meaning or calling. - Development & Accomplishment. - Empowerment Ownership (Earned
- Family - Friends - Intimacy
Belonging
Competence, Relatedness
Physical Security, Physiological
N\A
Capital) Social influence (Social capital)
Basic Response Motivators: - Scarcity - Unpredictability & curiosity - Avoidance
The Octalysis is a frame work that organizes systematically a list of gamified elements of cognitive drives model has the added advantage of splitting intrinsic and extrinsic motivations see below (Evaluation of role-playing platforms 2015). Positive Motivators (White hat motivators or perceived payoffs):
Epic Meaning or Calling – Slightly different to Autonomy (which is being able to shape your own destiny). Feeling of being able to contribute to a cause greater than oneself. Work intensity and autonomy are balanced. Development & Accomplishment (extrinsic) – is about motivating people through the feeling that they are improving. E.g. top score, levelling up, collectable cards. Empowerment of creativity and feedback (intrinsic) – enablement of creativity through positive feedback. E.g. playing with Lego or seeing results of effort or combinations and wanting to do it again. Ownership and possession (extrinsic) – Accumulation, improvement and protection of one’s wealth or looking after plant or pet may provide this motivation. The feedback is external. Social Influence (intrinsic) – motivated by influence of others.
Negative Motivators (perceived negative payoffs – black hat motivators):
Scarcity – result may be impatience, people are motivated by something they don’t have. This could also lead to obsessive behaviours\habits to compensate for shortfall over longer term. Unpredictability and curiosity – willingness to discover an unknown outcome. But could lead to addictive behaviours. E.g. gambling, etc. Loss avoidance - loss or loss aversion heuristics. E.g. Prisoners dilemma situations may result.
Ultimately human beings may be pursuing autonomy as determined by Self Determination Theory but are still subject to various forms of feedback in motivation as proposed by Octalysis. Physical needs are important and sometimes they combine into more mental motivators like self-esteem or belonging motivations e.g. baking a cake could help one’s self esteem, or enjoying a good ice cream may give a sense of belonging (I cannot explain that one..). There is also the concept called the Free Riding Principle: numerous game theory experiments have found that free riding principle is prevalent when group dynamics are at play. However social forces tend to change these dynamics and people are excluded when it felt they are not adding value. Also of particular interest is a paper by Gurerk et al. (2006) where a group of people who were given the choice of punishment, performed better than the group that chose against punishment if some of the participants did not perform up to par. Actually in the end, 100% of the participants chose this option. Free riding could be grouped as per the “Cruising” set of behaviour above due to the low perceived effort or work level and could be caused either by apathy or purposeful omission by the participants (I say this tongue in cheek of course). But punishment is also a form of intensity creation and can be a great motivator of performance where behaviour change is required. But if morale is already low, additionally negative feedback at the individual level can actually worsen performance (Punishing by Rewards – Vaishnav et al.). e. Labour and Decision Making Behaviour Rationality can be defined as making the best or optimal decision given the information provided so as to maximize well-being for the individual. Game theory has attempted to understand decision can predict
optimal choices on the player. Unfortunately rationality is not so simple to define as can be summarized from the below literature: - Rationality, Equilibrium and Expectations The efforts attempting to create a microfoundations for macroeconomics have resulted in a more unified approach of doing economic theory. The approaches discussed so far (also Keynesian oriented models) all postulate rational behavior on the part of economic agents and some notion of equilibrium. If expectations are important, it is postulated that agents’ expectations concerning important variables coincide with the model’s predicted values concerning these same variables. This assumption concerning agents’ expectations have been termed “rational expectations” (cf., Muth, 1961). Parallel to the microfoundations literature, a literature questioning the eductive justifications for the notions of equilibrium and rational expectations emerged. This literature on the foundations of game theory basically argued that if we assume that agents (players) are rational and that their rationality and the model (game) in which they operate is assumed to be common knowledge, then it is not implied that these agents will play according to an equilibrium of the game. Fundamental papers in this respect are Bernheim (1984) and Peirce (1984), among others. These and other papers show that a much weaker notion, named (correlated) rationalizability, can be derived from assumptions regarding common knowledge of the rationality of players. On the basis of this literature, Guesnerie (1992) argues that the notion of rational expectations should be regarded as an equilibrium notion that is also not solely based on postulates regarding the rational behavior of individual players. It is rational for individual players to have “rational expectations” if other players have these very same “rational expectations”, but not necessarily otherwise. As the notion of rational expectations is essentially an equilibrium or consistency notion, it suffers from the same drawbacks that it is not implied by the individual rationality assumptions that players will form rational expectations. Another literature (see, e.g., several essays in Frydman and Phelps (1983) and, for example, Bray and Savin (1986)) studies the question whether in a decentralized economy economic agents may learn over time to have expectations that are consistent with those that are assumed by the rational expectations hypothesis. The general conclusion of this literature is that due to the feedback from expectations to economic behavior, the outcomes of an economic model with learning agents do not converge to the rational expectations solution. It then follows that the microfoundations literature mentioned so far has not really succeeded in deriving all macroeconomic propositions from fundamental hypotheses on the behavior of individual agents. The requirements of methodological individualism have thus not been satisfied by the microfoundations literature that has predominantly presumed that individuals behave rationally (cf., Janssen, 1993).” (Janssen 2006)
Unfortunately this is a simplified understanding of the brain function but scientists are beginning to understand the different cognitive biases and heuristics that we use which assists with our decision making (Hilbert 2012). In addition, I would like to add an interesting thought. Biases can be defined as the deviation from Bayesian statistical predictions where an individual should choose A but instead chooses B. Biases come at the individual level, but can also have a serious effect on society as whole sets of people can misinterpret information provided. Heuristics on the other hand, involve mental shortcuts which provide swift estimates about the possibility of uncertain occurrences (Baumeister & Bushman, 2010, p. 141). Our biases, heuristics therefore combine with our short term to provide our cognitive load or mental capability. Behaviour though is a learned activity or set of actions linked to motivation but bound to the roots of our ability. Below is a model proposed by BJ Fogg on motivation and ability and how customers behaviour is influenced (Fogg 2009). He has constructed this framework for the purposes of customer website or interaction design but I will now infer this set of behaviours into a labour form as it follows the
same subset of required variables, my inference being that all these behaviours are in fact cost considerations which a person is using when considering a labour transaction:
Physical effort – physical exertion required to complete task or activity. For example blue collar work will require physical exertion than white collar work. Brain cycles – if a task requires a lot of mental thinking, people may choose an alternative labour option if it is perceived as easier to do. Non-routineness – if something is out of the ordinary, people may choose the better understood labour or task option. This aligns with many of the cognitive biases such as availability, and adjustment and anchoring which helps us escape from the proverbial chasing tiger! Time – perceived time to achieve a task versus opportunity cost of time spent pursuing other endeavours. Some jobs may require too much time away from other duties. Social co-operation – people are willing to work together so long as the moral (group motivation) is positive between them and will prefer to not to social deviate so long as social capital is positive. In extreme circumstances parties may not even be willing to employ or be associated with an individual that is perceived as negative or not seen to be socially co-operative from a morale or morality point of view. On the other hand, a person on the dark side of the economy may not perceive an opportunity cost in transacting in a socially co-operative way and will therefore continue to do (especially when the benefits may be high e.g. drugs dealing).
Money is listed in his model but will not be discussed here as it really an output or payoff function of labour.
Triggers are also an important variable and come in the form of spark, facilitator or signal. In terms of the labour function I would expect a trigger received (a task allocated say to a support engineer at an IT company by the support desk) at a low motivation and low ability would not motivate the person to complete the task timeously but this person may choose to delay or find a way to avoid the task. But if the
motivation is high and the person is capable then of course the task would be completed because the obstacle to do so is small. Stress would result at high motivation levels, which was discussed before and on the opposite extreme, a person may lazily perform a job that was easy (due to his or her high ability). Importantly the above is different to the effort benefit discussed in section in 2(b) as effort and ability together create the intensity function. I = effort\ability. This can also be represented as a time function as noted in (Situational Management of Innovative Projects in the Oil and Gas Sector – Darya Yuva). Sparks, facilitation and signalling are extensive topics and will be discussed here. But remembering this framework could be very useful in management practice as staff members can and will interpret actions of their managers; and decide whether to give honest feedback or not based on their interpretations (this is also an argument for maintaining integrity by leadership).
2. Understanding the Constraints of the Labour Function:
a. Physical Exertion or Effort People tend to gravitate to work that suits their physical ability. Examples include footballers, models, athletes, etc. Our physical ability is asymptotically limited, and depends on fitness and inherited traits or abilities. It may be assisted by medical solutions but is till limited to environmental constraints. Physical abilities can be improved (e.g. top tennis players or 100m record sprints), but seems to be limited to our homo sapiens like heritage – high endurance, rather mobile, able to grasp and control tools and vision limited to the front. Our senses limited seeing, hearing, sense of smell, touch and taste. In terms of flexibility of labour physical fitness in different areas can be a serious constraint. Medical technologies may assist us with improving on this factor. But some areas of concern which if not properly managed could in fact affect the health of other e.g. sleep deprivation, extreme work pressures and addictive chemicals, which for example could seriously affect a pilot’s ability to make clear and concise decisions when required to make an important manoeuvre. Exertion implies that the labourer will get tired after some point and will need to rest if the exertion level is higher than his or her state of equilibrium. b. Mental Cycles A problem may be quickly solved by an adequately trained individual. But training can be in many forms such as through good parenting, good schooling and good social settings. The human brain takes many years to develop and in many countries one is only deemed to be an adult once when reaches 18. Other states deemed 21 more appropriate. For example in the United States, some states provide child support up to the age of 18, others up to 21. Then people tend to gravitate to work that suits their mental ability. Examples include mathematicians, entrepreneurs, scientists, etc. Some subjects such as languages, mathematics, software programming music and more complicated games such as chess requiring cumulative practice in the form of repetitively practiced cumulative learning (Ericsson 1993). Other skills require more adaptation to situations such as an entrepreneur, need far less practice. There is no doubt a benefit of people working in groups versus alone benefit from saving on mental cycles. This will be discussed later. Learning comes from our ability to take in information and make sense and understand it. Learning is based on inherent abilities of the mind, the sensory organs interacting with the mind and stable factors in the environment assisting in creating a fair and consistent message of the requirements (for example excessive stress can cause slower learning effects and tunnel vision as evident in scuba diving where
stress can cause a scuba diver to panic and take action which is harmful to others). Having good cognitive ability, memory function and adequate and accurate sensory are all factors which need to be considered for better or improved learning or mental ability. Mental exertion does mean we are able to do complex calculations using significant energy of our organism but not in an unlimited form as eventually every task will bring on tiredness or fatigue. Over the time function however it has been shown that learning curves can make a significant contribution to increased efficiencies in production (Delionback NASA 1975). Development and biological factors also need to be considered. For example aging affects the rate of learning significantly. Learning mathematics or a new language at an older age can be found to be significantly more difficult at an older age. Increased cognitive ability may actually allow an older person to learn quicker in the very short term but younger age has a distinct advantage in the long term (Munoz 2006). Mental ability is also a function of physical abilities and individuals need to find a balance between the work, social and home requirements e.g. sleep deprivation, addictive behaviours and any other factors that may influence physical ability i.e. health. Stronger physical abilities no doubt contribute to clearer thinking and problem resolution although these abilities may distract the individual from mental development. c. Non-routine or Uncertainty Aversion Non-routine – if something is out of the ordinary, people may choose the known or better understood option. This aligns with many of the cognitive biases such as availability, and adjustment and anchoring. This comes from the ability to predict the future based on information available. Ultimately if people aspire to self-determination, risk aversion (loss avoidance bias) will still be a major consideration: it may come in the form of the extent of the loss or the probability that is will occur (if it is high). This may also be in the form of specific concerns of the individual or potentially outside factors that may affect the candidate’s decision on a particular labour opportunity. Factors that may influence the behaviour of the individual may be due to highly ingrained behaviours learnt over a lifetime and the person may not be prepared to change behaviour unless provided a very good reason. Risk aversion of course applies to the ability to perform the task or duty. Requirements may vary from feeding a tiger in a cage to dealing with snakes. Some individuals may not have a tolerance for jobs with greater risks e.g. commercial scuba diving. However, most risks can be circumvented if the person is properly educated (as in the case of scuba diver training). Similarly in creating a more flexible labour market, perceptions of others are critical in understanding the challenges that are under and in helping them find appropriate solutions (such as is the case with family and friends who assist each other). d. Time Availability
This is the perceived time by individual to achieve a task. People would prefer to save time on a particular task. In the labour context people prefer to delay work (procrastination) and live in the moment (Fischer 1999). These may differ depending on health, age, sex, culture and religion. Availability for work performance is constrained. Also our experience of time is not the same; some people may have faster metabolisms, other slower. It important to remember that restraints like distance to work and lack of access to adequate supporting infrastructure (e.g. non-existence of canteen or child care support); can inhibit time and constrain the individual’s performance or ability to be more flexible with their time. Working for one employer, there are four forms of job flexibility that can be illustrated:
Compressed work week – the most popular form is to work 10 hours a day for 4 days instead of the normal 8 for 5 days. Flexitime – this practice normally consists of a common core and flexible hours. The common core may be 6 hours where you need to be at work and the flexible hours, the individual gets to choose whether they work in the morning or evening. Job Sharing – allows two or more individuals to split a 40 hour work week where availability is a requirement. For example one person may work in the morning, the other in the evening. Or individuals may work on different days. This practice allows flexibility to young mothers and retirees and also to those where a 40 hour work week is not practical. Telecommuting – working from home.
Millions of people however, are working for more than one employer but employers which require high mental or physical intensity will prefer exclusivity. People are generally also need a minimum amount of time away from work to “reboot” their motivation. See discussion around motivation. Time can also be represented in a form where problem solvers have time to reflect as discussed by Adam Grant in his interesting TED talk on how to optimise procrastination.
e. Social Behaviours, Reputation & Deviancy Ethology groups animal’s social behaviours as follows: Type of behaviour Effect on the donor Effect on the receiver Egoistic Cooperative Altruistic Revengeful
Increases fitness Increases fitness Decreases fitness Decreases fitness
Decreases fitness Increases fitness Increases fitness Decreases fitness
Humans of having more advanced forms of communication, tool making and our intelligence in solving advanced problems (for the latter however extensive may be required – as can be seen by numerous yet still unsolved mathematical problems). But it is our communication skills that have advanced us further than ever before (The Talking Ape, Burling) and so this is a critical element in our social behaviour. But this is limited by our tendency to seek dominancy in the animal kingdom which is not a new concept. It should also be noted that there are cognitive biases that reinforce our behaviour in this area i.e. we have mental short cuts that encourage loyalty. Suffice to say that the influence of others on a person’s decision making is due to the strength of the relationship or cumulative influence (loyalty) on the individual. This same effect can be noticed with individual’s attitude with society. As discussed above, social deviancy also plays a role in decision alternatives. Also of interest is the attitude of an individual to relationships. Some may be more apathetic. Others may be on the other extreme and unable to decline requests or influence of others. Our behaviours therefore impact our relationships with others. So social behaviour is a function of the limitations of relationships with others, i.e. the loyalties we maintain between each other which will differ based on circumstance, opportunity costs and motivational forces. Transactions of this nature maybe such things as favours, kindness, socialising and networking and could affect us at a micro-level or at a macro-level e.g. affiliation to country, regional, company, religious, education etc. Country or regional policy making provides the secular framework here. •
People also need freedom to decide their own futures (alignment with self-determination theory).
•
Culture provides a good framework for people to create common ground within homogeneous and heterogeneous groupings, although it is noted problems to arise between cultural sub-sets.
Signal theory is a form of understanding people’s intentions based on their behaviour. This is extensively used in the labour market especially in the context of education where people performing well in education are in larger demand than people with less education of performance levels. In his paper, Job Market Signalling, Michael Spence considers labour acquisition as an investment under uncertainty (Spence 1973). Employment therefore creates a situation of loyalty but under differing motivational presumptions.
You are loyal to the cause of the organisation because you are really interested in the purpose of the organisation and how it will assist others in solving a particular problem within the social context (epic calling). This is where business slogans come to the fore with a simple message on core purpose together with application vision, etc. This together with a double auction like flexibility between employer and employer on methods to deliver solutions with optimize this motivation to achieve this goal. The other form of loyalty is based purely on monetary rewards, which provides the candidate the benefit of benefits that come with higher monetary rewards (which of course can be extensive). This form of loyalty can however have some negative effects if the employee becomes addicted to these rewards.
In research conducted as Harvard (What is Social Capital? 1999) trust and trustworthiness were formulated as they main constituent parts. Social capital was found to be higher in people with higher
social status with people acting in a more trustworthy manner to people with higher status and these people therefore increasing earnings. Also of interest in this paper were the following:
“Individuals with greater social connection trusted each other more. People from different races or nationalities behaved in a less trustworthy manner towards one another. Individuals from more successful families, individuals with more friends, individuals who volunteer and individuals with sexual partners all elicit more trustworthy behaviour. There are three major implications of this paper for future research. First, social capital is a meaningful, individual-level variable that can be studied with the tools of price theory, once it is understood that aggregation will be much more difficult than for other forms of capital. Our evidence supports the idea that human capital includes cognitive and physical abilities and also social capital, e.g. interpersonal skills, status and access to networks (as in Bowles and Gintis, 1976).”
In the labour market, of course there are many instances where reputation plays an important role e.g. professional consultancies, business leadership and professional fields such as accountants, lawyers and doctors. One must also however consider that that this concept can have a negative side as with the example of Germany during World War where Jews were stigmatised. This is an extreme case where trustworthiness mechanics had broken down. But of interest in the above paper, people with greater social connection trust each other more. This seems like an important factor that is not taught. To create a stable culture and\or society this is critical to our survival as a species. Loyalty in terms of employment is also an interesting topic for investigation and would be an interesting study. Suffice today that loyalties may deviate based on different circumstances of the individuals (and potential choices or temptations the individuals may be confronted with). Strong relationship building appears to be a means to maintain this. Strong relationships however come from having an understanding of what you have common with another person and therefore being better able to understand their situational context. For example in South Africa, Black Economic Employment has seen to redress race discrepancies in the market due to Apartheid. However in this redress this continual focus on differences which has also created a negative feedback cycle where some participants feel victimised by this policy and thus less likely to want to contribute to the greater good. Adam Grant also has written an interesting book called: Give and Take we he suggests that in order to take, one should give first. This he wrote in response to experience a work culture of takers and finding it was blocking collaboration.
f.
Work Environment & Culture
Ergonomics is the science of understanding how to design for human comfort but also to understand and design for conditions where we can work better. Humans are rather fickle and have rather stringent requirements such as preferring to work in specific range of environmental factors e.g. temperature, humidity, air pressure and within a limited chemical range (e.g. we cannot swim in hydrochloric acid). This means we need a secure work environment, but not only from physical limitations of our organism
but also conditions which help to optimise our physical, mental, social limitations and in terms of design i.e. minimising energy, time and space attributes so that we can perform our duties better. A good example is Google where an office environment has been created where people are more likely to openly interact, collaborate and foster innovation. There are numerous papers on what environments we best work in and which environments our cognitive abilities and decision making works best and we will not go into this.
3. Information & Technological Trajectories
a. Information and Learning in the Labour Market
Through adequate feedback loops people can properly understand various technologies. But I will attempt to group lack of learning in the form of where innovation happens as discussed previously. It is critical to remember that the labour function cannot function with some form of information. This list is not meant to be comprehensive:
Production:
Learning in these sectors may be in the form of apprenticeship and\or technical training.
Support and Services:
Learning in these sectors can be easier e.g. retail; but will become more highly qualified with level of technological and industry customer understanding e.g. medical equipment sales person.
Management
Seeing system and process strengths and weaknesses requires deeper learning of the constraints of information flow and human dynamics. For example article clerks in audit firms will gain extensive general knowledge of business processes and systems. Similarly business analysts will focus more specific areas of user interaction with systems (perhaps a mixed form of design). Management skills of course also include knowledge of how to motivate and co-ordinate the work of people.
Design & Architecture
Architecture is a good example of training for design. First qualifications focus on understanding physical constraints of building technologies, focus on component strengths and weakness (e.g. tensile strength, etc.) and create platforms for individuals to experiment with new combinations. This innovative approach is highly interactive as the participant may be aware of most constraints but may need to consult experts to solve complicated design problems (e.g. mechanical engineers, etc.) to satisfy the simplicity factor of design. This can be applied in other technologies, for example software development, etc. Learners need some freedom experiment.
Projects
Project management, at its essence is combination of tasks within a deadline of time, cost or quality level or a combination of these qualities. Project managers need to understand the tools and methods to work within these constraints. Understanding scope creep along with all the inner workings of projects needs both training and experience to achieve the abilities of well-paid qualified PM’s.
Research & development
Experimentation and research in new areas of science are generally very closely associated with the universities and many opportunities arise with students who benefit from this association.
Fund Allocation
Learning to understanding risks and returns of businesses and allocating funds appropriately is a very important labour function. Financial and corporate understanding in the business arena or understanding of social needs comes to the fore. Allocation to funds requires mature, well informed decision making and so learning in this area requires that interaction of theory and practice. Trust is an important variable to manage in this arena. These are all forms of opportunity and it must be remembered disallowing access to the opportunities above could cause socially deviant behaviour and\or social conflict and is an important consideration when aiming for a more flexible labour market. People on the outside need avenues to access these career paths or to experiment with different career paths if their old career paths are no longer motivating.
Information is not only important for the application of the labour function, but critical. Information is not always available though. In pre-historic times it was acquired through experience and experimentation but as language developed, information was able to be transferred far more quickly. Language allowed the human species to explode into the technological wonders we have now and the extent of which, we have difficulty in keeping track of, this all as people learnt from each other’s successes and failures. Not all information is provided when and accurately as needed though. There are some constraints to correct information provision within the social context. Mainly information is not provided to people within or outside an organisation due to potential loss of income that could result to the organisation. But this could cause slower advancement in technology trajectories especially if the organisation is cumbersome and has slow feedback loops. Also the organisation may not be working in optimal condition with use of old technologies, aging management teams and no longer contact with the customer needs
which may have changed with technologies trajectories introduced by competitors. Market conditions may also change e.g. commodity price decreases, increasing labour costs (as seen now seen even in China where some factories are now moving to Vietnam), regional conflicts, closing markets (e.g. changing conditions of trade agreements). Change of labour capabilities may need to take a more natural and organic approach to the changing market conditions as companies suffer the force of natural and political changes. b. Employment Risks of Inflexible Employers Organisations or individuals within organisations may seek to push ulterior motives on the organisation which may not be good for it. Labourers may see these problems but not be in a position to resolve them due to their temporary work nature. They can be summarized as follows:
Adverse selection – the business may be pursuing fraudulent activity or individuals within the organisation may be dishonest in their pursuits e.g. a management decides to use the business money’s for his or her personal pursuit and discloses incorrect information about the state of the problem to investors. More flexible workers may be brought in an attempt to solve this problem but the may not be given of all the details and may be dismissed before the truth is allowed to prevail. Employer moral hazard – this is a slightly more complicated form of adverse selection in that the person the agent is misleading is required to take more risk than the agent themselves. The agent may also be in possession of information that would alter the decision of the labourer if that person were fully knowledgeable at the time of the employment. A classical case is where a company is controlled by management team that knows the business is about to falter and already has an exit plan.
Organisation control of labour:
Labour monopsony – an employer may seek to use their size advantage or industry and then when procure a flexible labourer at a discount of true value. This transaction may not be two way though as the monopsony may control the market within this industry and so the labourer may not have a choice to work elsewhere.
Luckily, as economies develop, people are able to choose career trajectories and potential employers. Unfortunately this availability is not open to all as best performers are normally chosen for high performance jobs. Flexibility however in the labour market is severally limited by perceived requirements by the labour market of commitment. However my argument is that maximum add-value is the ultimate goal of a flexible labourer and this is something person’s with an ulterior motive may and will take advantage of.
c. Innovative Behaviour
Innovation is defined as new form of application of capability either in its capability or application. For example the invention of dynamite to new ways to assemble furniture or information technology infrastructure, all are new forms of tools which mankind uses to optimise his utility function. Research on the diffusion of technology was initiated by Gabriele Tarde in his Book: The Laws of Imitation (Tarde 1903) and is broken into the following steps (excluding any cognitive biases in this determination):
Knowledge accumulation Forming an attitude A decision to adopt or reject or to withhold decision Implementation and use
Innovation in its constitute factors require human beings in our social grouping framework, information of some form of technological capability, and some form of collaborative effort where complexity of the invention is more (e.g. a person may find a new use for a hammer that excludes hitting a nail into wood but inventing a bike that rides on water may require some form of collaboration due to complexities of components). Importantly innovation works within any system because at its very core, it is a feedback loop. If something is believed to work, scientifically or not. People may or will find a use for it. However, scientifically and\or user based feedback is noted as being preferred by both Academic and Business circles. But importantly, ultimately mankind and the constraints of our environment become the subjects of our inventions and these are important factors when determining our technological trajectories. For example, this can be evidenced by the current argument by scientists on whether pollution from carbon dioxide pollution is causing global warming (Manabe & Wetherald, 1967). Our innovative use of oil and gases resources for example is creating an environmental problem for our planet if one looks at all the plastics created from this resource, which now pollutes the lands and oceans of our planet. Innovation is at its core, a form of creativity where the discerner is able to determine a new function for a particular tool. But the creation of the invention may be by accident or by intention and its application discovered in a similar way. Computer software development for example has developed this kind of thinking with the Agile framework of Build first, Measure, then Learn and then build again. At its very essence this methodology requires quicker feedback loops. More complicated forms are possible for example the waterfall methodology, which implies more design or forethought and thus requires deeper understanding of the constraints of nature\resources to be used and of the users of the product or service. At the very essence of information technology accumulation is in the following steps:
Sensory input of some form Processing of information so to determine output. Output of an appropriate response
A simpler framework which works in all sorts of technologies from remote controls to vacuum cleaning robots! But this also now includes greater access to a greater extent of inputs of information. E.g. geographic information systems are is creating new opportunities with information outside of the bounds of our eyesight (lower and higher bands of the electromagnetic spectrum) providing huge amounts of new data which needs to be processed into a useable format and then applied in some way e.g. cattle control, navigation, road planning and weather prediction systems.
d. Collaboration Efforts, Synergies & Optimisation of Work Intensity At the very core of a collaborative effort is effect communication. Collaborative efforts are recognized as some form of joint effort for a great good or goal. A suitable goal or benefits received for all participants must exceed the effort required all participants may not be willing to participate (also see social behaviours above). Individuals may also have other options and may perceive your project of less value or benefit than other projects. Motivation of all collaborators thus is a key consideration; with the net sum of all motivations a major factor. For example motivation may be in the form of development of the individual’s ability, and a person may be involved or contribute in a project free of any payment if development is a perceived payoff. Similarly, the person may not receive much recognition for his or her abilities and may volunteer for a project if their social capital is perceived to increase from involvement in the project. Alternatively they may not wish to be associated with your project if their perceived social capital could be damaged. Also as indicated the collaborator may have different senses of urgencies. One individual may be requiring payoffs day to day. Others may require payoffs at a later point in time and in different forms. This creates differences in expectations but quite often is motivated by the constraints and motivations of each person’s lives. The key point here is that collaboration’s main purpose is to minimise time for completing tasks for the entire team. Therefore this collusive ability cannot be underestimated as varying views from team members can distort the project and its direction as a whole. Therefore it is important to have some form periodic meetings for team members where the risk of deviancy of any common task or goal may increase. Factors affecting team members:
Working in different contexts, processes or systems. Whom have higher interaction with different outside parties or with customers who’s needs change often. Highly complex or risky projects whose technical parameter’s change often. Any combination of the above.
It must also be kept in mind that any improvement or degradation of team member’s motivations or abilities may affect the team’s behaviour as a whole.
e. Mentorship Dynamics Gathering information makes for improved strategic advantage when making decisions as they can be more informed. There are four extremes of mentorship, which can be graphed as follows. When a person is taking advice on decision on career choice, the following are possibly being considered by the candidate. Good knowledge of person’s ability.
Outside Industry Adv. Solid sounding board. Could also provide a good consumer based opinion. Dis-adv. False positive feedback may be provided on industry choices. E.g. Friend, relative, spouse.
Little knowledge of person’s capabilities, interests.
Knows Industry\Capability Adv. Specific helpful advice. Dis-adv. Advice may be biased as information of both may be from same source.
E.g. Old boss, work colleague, fellow entrepreneur.
Adv. Fully independent feedback. Maximum bias independence. Dis-adv. Not aware of complexities, best fit for individual.
Adv. Honest independent industry advice.
May be in form of a coach, Distant-relative or stranger.
Friend from within industry, lawyer, past client.
Dis-adv. May not be willing to provide all information needed.
The determination of choice of mentor may require the assessment of the mentor’s emotional intelligence, which is important when interacting within an industry or the providing also may also require good social skills in outstanding industry strengths and weaknesses (as typically would be established with a SWOT analysis) as information in both areas is not always readily available. Unfortunately information of capabilities and interests of the mentor may not always be available. DISC (Mouton) is an HR tool that reflects learned behaviours and person’s potential impact work culture. It measures the following characteristics of potential candidates:
Dominance Influence Conscientiousness Steadiness
Competing behaviours may be problematic though and cause changes in social dynamics which an experienced flexible labourer will more easily adapt to, especially under conditions where the organisation is clear on its goals within helping the world achieve sustainable development goals, so that there is no dispute around the task(s) of the flexible labourer. Therefore Human Resource tools such as this should be used carefully.
4. The Production Function, Technology Trajectories & Learning Curves Innovation and clear information provision can significant, if not fundamental contribution to an organisation, be it a start-up struggling for finance or additional revenue, or a mature company where old technologies and paradigms restrict the organisations competiveness and flexibility to change. Managerial economics has studied the production function extensively and provides useful models on how to calculate and optimise profit functions. Labour costs form an integral part of this literature and hence do not need to be discussed here. The mathematical models for managerial economics also describe how the production function which allows one to calculate the maximum output from a set of inputs and so then allowing one to monitor and optimise different returns to scale. The labour function can also be used in this method but it is limited in some aspects due to the fact that the labour function is not constant and is changing day to day. So productivity may also be a function of the other parameters discussed in Chapter 2. Technology development trajectories were researched by Keith Pavitt in 1984.
Data was originally collected via Townsend et al. on the characteristics of about 2000 significant innovations, and of innovating firms, in Britain from 1945 to 1979. Innovation was defined as a new or better product or production process. Significant innovations were identified by experts knowledgeable
about, but independent from, the innovating firms; but the characteristics were collected directly from the firms. In terms of the research, sectoral representation was not 100%. There were 10 2 digit sectors, 26 categories in the 3 digit classifications. E.g. there was an over representation in textiles and instruments and an under representation in Aerospace. Innovation was identified to sectors using UK’s Minimum Listing Heading (MLH) or industrial classification system. Still this research was detailed in its analysis and identified interesting patterns. Sources of the main knowledge inputs into the innovations were identified by asking the sectoral experts and the innovating firms to identify the type of institution that provided up to the three most important knowledge inputs into each innovation i.e. themselves, other firms, institutions providing public knowledge, such as universities and government laboratories. Information on the sectors of production of innovations came from the sectoral experts; and on sectors of use from the innovating firms. Process innovations were from the same sectors and product innovations as those from different sectors. They were made up as follows: •
The sectoral sources of technology used in a sector: in particular, the degree to which it is generated within the sector.
•
The institutional sources and nature of the technology produced in a sector: in particular. The relative importance of intramural and extramural knowledge sources.
•
The characteristics of innovating firms: in particular, their size and principal activity.
Main focus of Pavitt’s paper was: the classification of innovations in each sector according to whether or not the sectors of production, of use, and the principal activity of the innovating firm, are the same. Industrial firms cannot and do not identify and evaluate all innovation possibilities indifferently, but are constrained in their search by their existing range of knowledge and skills to closely related zones. However whilst firms in assembly and continuous process industries tend to concentrate relatively more of their innovative resources on process innovations, those in chemicals, electronic and electrical engineering, mechanical engineering, and instrument engineering devote most of these resources to product innovation. In their proposed taxonomy and theory, the basic unit of analysis is the innovating firm. Since patterns of innovation are cumulative, its technological trajectories will be largely determined by what is has done in the past in other words, by its principal activities. Different principal activities generate different technological trajectories. These can usefully be grouped into the three categories that are call supplier dominated, production intensive, and science-based. Later on, an additional paper was written which additional category was added: knowledge based. Strictly speak though; if one has perfect information available innovation can be summarized as follows:
Therefore innovation happens in either of the following ways: a) b) c) d)
A researcher or scientists builds a new technological invention The inventions is found to have an application A user needs is identified Technology is developed to satisfy this need
Therefore all enterprises are creating value for human beings. But either in the form of:
Organisation directly to consumer (O2C). Or Organisation to Organisation which later converts into a consumer solution (O2O).
(I have purposefully avoided the B2C and B2B terms as this does not include all organisations). This all within the framework the context of risk, which can be broken into the following spheres:
Natural risk – risk which we find in nature, in the laws of physics, etc. etc. Sociological & Commercial risk – risk creates by social forces and abilities (a subset of natural risk but created by social dynamics).
Social issues are however much more easily solved where these risks are circumvented. But unfortunately the prisoner’s dilemma plays an important part here and at least some countries are investigating implementing a basic income grant.
Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a nutshell: Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances. There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with. Management must be concerned, above all else, with achieving alignments and good fits. Different types or species of organizations are needed in different types of environments. So an organisation needs to work within the correct frameworks of social and natural risk. But if the social risks are resolved, more fluidity will result in solving and focussing on natural risks (i.e. in resolving commercial risks). Social risks can also be split into different levels. For example: at team level, functional area or at an even higher level e.g. company or group level (intrinsic social risks) for risks within the strategic objective of the organisation. Then there are extrinsic social risks, which are those social risks that result because other organisation rely on that organisation e.g. customers, suppliers, other alliances. Also of interest is a discussion in the paper of Darya Yuva (see references Chapter 2) that risk needs to be seen in an opposing point of view and that is of one of uncertainty. For example one cannot find solutions by accident if one does not allow for uncertainty. Regularity which provides for necessity needs to balance with a certain amount of freedom so that accidents can happen. For example the organisation may not be interacting with the outside environment due to perceived risks but this very same lack of interaction may cause the person not find the appropriate solution in that outside environment. So therefore the challenge here is, to create a safe social framework or culture for innovation to occur naturally.
5. Methods for Optimisation Henry Mintzberg, The Design School: Reconsidering the Basic Premises of Strategic Management “Behind the premise of the formulation-implementation dichotomy lies a set of very ambitious assumptions: that environments can always be known, currently and for a period well into the future, in one central place, at least by capable strategist there. To state this more formally, by distinguishing formulation from implementation, the design school draws itself into two questionable assumptions in particular: first, that the formulator can be fully, or at least sufficiently, informed to formulate viable strategies, and second that the environment is sufficiently stable, or at least predictable, to ensure that the strategies formulated will remain viable after implementation. Under some conditions at least, one or the other of these assumptions proves false.”
Optimising Work Flow so as to Improve Labour Abilities At any point in time an individual’s ability A is either improving or degrading in his or her ability. This can be represented as a velocity function together with an acceleration factor (assuming it is constant): Terminal Capability Velocity at the end of t periods: 𝐶𝑉(𝑡) = 𝐶𝑉0 𝑎𝑡 Where a (capability velocity improvement per time period) represents an average improvement coefficient (i = improvement and d = decline). 𝑎 = (1 + 𝑖 − 𝑑) And where t could tend towards infinity, where perhaps a natural logarithm could be used, but this is impractical as improvements will impossible to track. Instead below I have demonstrated a year and broken it into 365 days. Please note the numbers used are points of a percentage and still show very significant change.
Net Motivation can be represented as follows (representing the sum of motivational forces a person may be subject to): 𝑛
𝑀𝑛𝑒𝑡 = ∑ (𝑀 + 𝑚)−𝑛 𝑖=1
Where motivation is the sum of all intrinsic motivators (m) and extrinsic motivators i.e. morale (M) experienced by the individual for n different type motivators: 𝑀𝑛𝑒𝑡 ≤ 1 Or 100% It is dually noted that some motivational forces are short term and some are long term. The differing potential effects of these are noted but ignored for this paper. Challenge can be represented as follows if one follows Mihaly Csikszentmihalyi’s representation of challenge versus ability, but we will include a time factor. Therefore challenge can be represented as:
𝐻=
𝑑 𝑡𝑎𝑣𝑎𝑖𝑙 𝑀𝑛𝑒𝑡
Where challenge is a function of reward = the acts, tasks or deeds required for that particular challenge. This can simply be represented as a number or as the integral of the capability velocity function per time a time period: 𝑡
∆
𝑑 = ∫ 𝐶𝑉(𝑡) → 𝑡 0
But subject to = time available > time estimated to complete. E.g. It is estimated it takes a maximum of 10 tasks per day to achieve with reward say $10, with a motivation of 100%, so challenge level = 10 (the reward is ignored). The person may be limited to only have half a day available (for some or other reason) so creating a challenge level of 20. That’s a flow double what the person may be capable of! (This can also be seen as a pressure function). Also if motivation is halved, that means the challenge level doubles! Thus resulting in a similar predicament. So if we relate Mihaly’s optimal flow solution, we get (where challenge and capability are equated):
𝐹𝑙𝑜𝑤 =
𝐻 𝐶𝑉0
= 1 . So that needed motivation to maintain flow of 1 = 𝑀𝑛𝑒𝑡 =
𝑑 𝐶𝑉0 . 𝑡𝑎𝑣𝑎𝑖𝑙.
Recalculating for expected time to be taken if motivation is known or given: 𝑡=
𝑑 𝐶𝑉0 . 𝑀𝑛𝑒𝑡
In other words flow (it can also be equated with intensity) is that same feeling when you ride on a roller coaster. That form of acceleration of exhilaration is due to the fact that you see change faster than you expect. This can also be represented in relation to time, showing that one’s estimate of time to complete a task can flaw your required work intensity estimate. 𝐼𝑒𝑠𝑡 =
𝑡𝑒𝑠𝑡 𝑡𝑎𝑣𝑎𝑖𝑙
So: 𝐼𝑒𝑠𝑡 =
𝑑 𝐶𝑉0 .𝑀𝑛𝑒𝑡 .𝑡𝑎𝑣𝑎𝑖𝑙
There are obviously limitations to motivations as discussed in Chapter 2, so for example a person may eventually ignore motivation beyond a certain limit because the required challenge level is beyond what
the person is able to accept or can accept, or they may break under the resultant pressure. On the opposite end, sometimes one needs sufficient motivation to get out of bed in the morning. Therefore the improvement coefficient discussed above is critical and management techniques to help achieve individual improvements are of the outmost important especially in the beginning so that people can adapt their behaviour so as to adapt to the requirements earlier. Also noted is that the declines achieved in older people can be offset if they are highly motivated. This can be an interesting piece of information when considering these constraints in your work force management. Also of particular interest are the individual’s time estimates to complete a task or job. This can be represented as follows (assuming the rate of change is the same):
I would also like to highlight that all of the above could be subject to the clear understanding function (U) of the extent of tasks of the challenge function. Here are some parameters when delegating to an individual (understanding maximum = 100%):
Accuracy – clear requirements and objective of task. R is relevancy or context of task in relation to the overall goal or purpose of task in space and time. And T is on time or timeliness of information. This cannot be emphasised more otherwise incorrect expectations may be set. We tasks are set over longer periods or changes are more frequent, more feedback may be needed.
All this assuming the person speaks the same language as you, of course! Then one also needs to consider the trust component. To sum up a fighter pilot will need perfect information and extreme ability to overcome any possible effect of cognitive biases on his or her decision making. This is subject to cognitive load requirements and cumulative mental and physical capabilities. The capability function however is cumulative and can sometimes be assessed by the individual’s confidence to complete the task. Although managers need also be aware of the Dunning-Kruger effect or that individuals may be assuming others will assist in certain tasks. Capability is cumulative though and so simplifies this process as one does not expect large changes in performance (unless of course the person is being mentored from many sides). Also people that you have worked with in the past will better be able to predict your ability or challenge level and so may better be able to predict your work behaviour.
Conclusion Much like wealth creates cumulative advantage, so to can cumulative learning create increased market flexibility advantage. Therefore I would like to motivate a social system which encourages optimisation of labour against the constraints documented by this paper and emphasise a quote from the Hungarian Mathematician, George Polya: “Teaching is not a science; it is an art. If teaching were a science there would be a best way of teaching and everyone would have to teach like that. Since teaching is not a science, there is great latitude and much possibility for personal differences. ... Perhaps the first point, which is widely accepted, is that teaching must be active, or rather active learning. ” This paper may not solve all of mankind’s conflicts but understanding our biases, constraints and motivation where can better solve problems together. A contextual focused world means we are better able to solve problems. This is not so easy when the problem is looked at from individual or narrower point of views. Utilising George Polya’s methodology:
First understand the problem After understanding it, design a plan Carry out the plan
Review and see if you could have done better The World Fair Trade Organization proposes a set of principles for the fair trade of the world. So too should we consider the fair treatment of the constituent factors of the labour function. Then if we resolve the problems within labour and have appropriate mechanisms to circumvent exploitation thereof, it only leaves economic rents on natural, capital or social assets that need appropriate mechanisms to regulate potential speculative behaviours. This as people who can be in a position to understand the problem are put in a position to lead and resolve the constituent issues as they see or evidence them.
Applications Time Tax: Social or Group Information Bubbles and Cumulative Learning Curve Effects - People only understand what they are exposed to. For example the Favela’s in Brazil or the slums in Mexico are accumulation of economies of scale of people who need a place to live or survive. Other social bubbles might include Beverley Hills, and large institutions all focussing on optimising their intuitional or system strategic strengths which is normal in a competitive global economy. So my suggestion is for countries with large Gini coefficients are high, to implement a non-race based time tax, where people must share there is time if there income is significantly or extremely higher. •
It would need to be located regionally and would need some form of trust system so as to ensure time spent was useful to participants. Also it is suggested to use some form of matching algorithm such as that used by the medical interns in the United States where preference of both parties are considered (for matching economically advantaged and disadvantaged individual).
•
Careful reputation methods needs to be implemented though as research has indicated that exposure to low performers in a school like context will result in team performance to degrade. Appropriate tools need to be found so as to identify and treat individuals whom are struggling with cognitive noise within the cognitive load or decision making.
•
Mark Zuckerberg’s quote comes to mind “we can’t jail our way to a just society”.
Building Skills which encourage market flexibility Governments need to focus on building skills that allow individuals more flexibility. In today’s technological era, business, science and art together can be a explosive combination. Students should be allowed to experiment as much as possible. Be provided access with tools so they can do. In addition skills that require a lot of practice to learn and most likely to be useful later in life should be taught as a young an age as possible. This includes mathematics, languages, software and music although more research can be done in this area. Sustainable development goals for example could be set up in the educational sphere and skills that require more practice taught earlier. Especially those with understanding the need for social balance and limitations of the environmental system, without which we risk doom, as our planet strains under the constrains of our ever growing consumption.
Social Innovation The sharing economy created by the information age has started to redefine the concept of ownership (and perhaps even the roots of the concept of wealth creation) through websites like Airbnb and Uber.
Then there is another question in that: can a more flexible labour market overcome the hurdles within the Capitalistic system, where the group collective systems or group agents of our labour: trade unions, businesses, educational institutions, government institutions and religious and perhaps even non-profit organizations, all influence behaviours so as to maximise their interests while the labour market cumulative abilities are ignored. Do we allow sufficient chaotic cognitive thinking so as to challenge the rules or confines of our society? While conducting my research I found the following ideas particularly intriguing and thus are suggestions for future focus:
The Variable of Luck as a control Mechanism - controlling luck around a person having access to online information or via other participants is one way of preventing or discouraging destructive or “trolling” behaviour, and can be varied using the input of others. A simple game could be constructed where other players can change your luck base on how fair your behaviour is perceived to be. The Golden Ratio, the Gini Co-efficient and the Concept of Fairness – the ultimatum game (from game theory), and the golden ratio in mathematics seem to align very closely. This is an area for further research but importantly one must remember that in the business game, some people have first advantage at access resources or information. This is very similar to the dynamics of the ultimatum game where labourers must choose whether to accept an offer or not, most times without full information (information asymmetry). Responsible custodians will need to be looked after though in all fields of civilisation. Human Resource Career Management – I am rather in favour of Holland model’s, which focusses more on intention of an individual rather than his\her assumed nature which could be trained habits or behaviours (I am not in favour of the Myers Briggs model). His model focuses on personality types and their interaction with the environment and can be listed as follows: realistic, investigative, artistic, social, enterprising and conventional. These ideas align quite closely with innovation. Designing for Trust – As discussed before this is an important tool in managing behaviour. There are already many good papers in this area. Areas of interest are social games such as Run chicken run concept where people co-operate or are banned or made to work harder by others. Also of interest are games designed to improve your social skills e.g. compromise versus taking on more responsibility. Not all situations are the same. Using Option Theory in the Labour Function – This would require a highly evolved double auction market but seems like an interesting idea for circumventing risks. Lotka Volterra & Logistic Growth equations – Where society might be able to work together so as to maximise our organisational tools to that total income or life force of mankind is maximised but under the constraint of nature. The balance needs to be measured and sustained. Economics rents received on Social Capital – the extent and boundaries of this. Wealth is clearly creates more opportunity for achieving economic rent as gaps in the market can be taken advantage of by the speculator with access to excess wealth. But does this also apply to Social Capital? Systemic innovation systems – where greater populations can influence direction of innovation but with appropriate “balanced” or “balancing” indicators.
References Introduction: 1. 2. 3. 4.
Income, Poverty, and Health Insurance Coverage in the United States: 2010 (see Table A-2) World Population Prospects. (2015 Revision) - United Nations. The Evolution of Incomes: A Historical and International Perspective (2006) - Thomas Picketty. http://www.forbes.com/sites/louiscolumbus/2015/01/27/five-catalysts-accelerating-cloud-erpgrowth-in-2015/#64495c7d72c0 5. The Global Information Technology Report (2013) World Economic Forum & Insead Business School. 6. Colloquium: Statistical mechanics of money, wealth and income. (2009) J Barkley Russer Jnr (Department of Economics – James Madison University) & Victor M Yakovenko (Department of Physics – Maryland University) 7. National Bureau of Economic Research (May 2016) Paper Reviews: For Better and Worse, Class environment Powerful Influence. Jay Fitzgerald Comparing Urbanization in Rich and Poor Nations. Linda Gorman University Innovation and the Professor’s Privilege Understanding the labour function: 8. A Theory of Motivation. Abraham H. Maslow. (1943) 9. The Talking Ape: How Language Evolved (2005) - Robbin Burling. 10. Sustaining cooperation in laboratory public good experiments: a selective survey of the literature. Ananish Chaudhuri (2009) 11. Gamification: Designing for Motivation. Deterding (2012) Hamberg University 12. Evaluation of a dynamic role-playing platform for simulations on Octalysis gamification framework – Economou D, Doumanis I., Pedersen F., Katharani P., Mentzelopoulos M. & Bouke V. (2015) Dept. of Computer Science, University of Westminster. 13. The Ludic Drive as Innovation Driver: Introduction to the Gamification of Innovation 14. Proposing a theory of Gamification Effectiveness 15. Punishing by Rewards: When the Performance Bell Curve Stops Working for You. C Vaishnav, A. Ali Khakifirooz, M. Devos. MIT, Object Mentor Consulting. 16. Cognitive Behavior Modification. Donald Meichenbaum (2010) 17. A Behavior Model for Persuasive Design. BJ Fogg (2009) 18. The Behavior Grid: 35 ways behaviour can change. BJ Fogg (2009) 19. Situational Management of Innovative Projects in the Oil and Gas Sector. Darya Yuva. NSU. 20. Organizational Behavior. 9th Edition. Stephen P Robbins. Factors or Constraints of the Labour Function: 21. The Role of Practice in the Acquisition in Expert Performance. FLF Ericsson (1993) 22. NASA Guideline for Application of learning/Cost improvement cost curves. Dr L. Delionback (1975)
23. On how age affects foreign learning. Carmen Munoz. University of Barcelona (2006). 24. Micro-foundations. Janssen. (2006) 25. The Laws of Imitation - Tarde, Gabriel. (1903) 26. Job Market Signalling. M. Spence (1973) 27. What is Social Capital? The Determinants of Trust and Trustworthiness (1999) Cambridge University. 28. Cognitive Behaviour Modification. Meichenbaum (2010) 29. Towards a synthesis of Cognitive biases: How Noisy Information Processing Can Bias Human Decision Making. Martin Hilbert (2012) 30. Long-term Effects of Cognitive Training on Everyday Functional Outcomes in Older Adults (2006) 31. How age affects foreign language learning. C Munoz (2010) 32. Read this paper later: Procrastination with Time Consistent Preferences. Carolyn Fischer (1999) Information, technology trajectories and limitations to flow: 33. Sectoral Patterns of technical change: Towards a taxonomy and a theory. Pavitt (1984) 34. Factors affecting labour productivity in the Gaza strip. Journal of Civil Engineering and Management. (2007) 35. A study of various factors effecting labour productivity and methods to improve it. Magdum College of Engineering. Methods for optimisation: 36. Henry Mintzberg, The Design School: Reconsidering the Basic Premises of Strategic Management 37. How to solve it. George Polya. (1945) 38. Improving collaborative work and project management in a nuclear power plant team: Human Centred Design Approach. Guy Boy, etc. (2016) 39. Managerial Economics .Mark Hirschey. 40. A Contribution to the Theory Of Growth. Robert Solow. The Quarterly Journal of Economics. (1956) 41. Workforce Skills and Innovation: An overview of major themes in the Literature. OECD. Phillip Toner (2011) Conclusion 42. http://www.wfto.com/fair-trade/10-principles-fair-trade 43. A Lotka-Volterra model for multi-mode technological interaction: modelling competition, symbiosis and predator- prey mode. University of Pretoria & MIT.(1996)
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