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Comment author: Lumifer 08 March 2017 05:13:01PM 1 point [-]

Your chapter 5 is about disaster recovery. It is staying power because your goal is to return to the status quo ex ante. Adaptation is needed when you find yourself in new circumstances which will not go away.

For an example of a company which failed to adapt, see Kodak.

Comment author: Davidmanheim 14 March 2017 10:31:11AM 0 points [-]

True - I wasn't referring exclusively to chapter 5 when I said that's the argument the linked piece makes. And again, it's not just about staying power.

Comment author: Lumifer 07 March 2017 10:00:45PM 0 points [-]

But if a company evolved repeatedly, and transformed itself

The issue is still the identity: is it the same company?

massive shocks are easier for large companies to absorb, due to their greater institutional capacity

I think that depends on the kind of shock. Shocks which call mostly for staying power to wait out the storm, yes. But shocks which require rapid adaptation, I have doubts about.

Comment author: Davidmanheim 08 March 2017 04:56:39PM 0 points [-]

I think the linked piece makes a convincing argument that it's not just about staying power.

Comment author: Lumifer 06 March 2017 04:03:29PM *  0 points [-]

We were originally talking about a "meteoric event that could extinct Google, Facebook, etc. and leave only small, adaptable companies".

At issue here is the identity of a (large) company. When a company dies, its assets do not disappear, its brand names are usually bought by someone, its managers move on to other positions, even its corporate culture may survive in smaller chunks of the company that continue to exist under new ownership. Eventually that all disperses and the former company's ghosts dissipate, but it can take a long time.

So I can say that Continental Tobacco Company is dead because it doesn't exist any more and you can say that it still lives on through Lorillard and other companies. Both statements are true enough and the real question is what do we mean by a company "going extinct".

Comment author: Davidmanheim 07 March 2017 06:29:35PM 0 points [-]

But if a company evolved repeatedly, and transformed itself, it's hard to say that the change was due to inflexibility. And in many ways, massive shocks are easier for large companies to absorb, due to their greater institutional capacity. I'm arguing that a "meteoric event that could extinct Google, Facebook, etc. and leave only small, adaptable companies" is actually the opposite of what would occur. Instead, any large-scale change allows the organizations that have the deepest pockets and largest capacity to thrive, destroying smaller companies.

For some examples of how large companies are better are building resilience, see Chapter 5 of "How Civil Institutions Build Resilience" (a report I co-authored) http://www.rand.org/pubs/research_reports/RR1246.html

Of course, in the wake of a disaster, new crops of innovative companies show up. This happens most clearly in my experience in reinsurance after a major disaster and resulting bankruptcy of some old firms. But it's a different dynamic than the one discussed.

Comment author: Lumifer 24 February 2017 04:21:32PM 1 point [-]

As you point out, (very) large companies are not know for being nimble and adaptable. A radical change in the political and economic environment is a much more massive shock to them then to small players. Generally speaking, such a radical change would be caused either by a revolution (but not by e.g. a palace coup) or by losing a war. But even without revolutions, look at the composition of the Dow Jones index which is supposed to represent the biggest industrial companies in the US. In 1899 these companies were:

  • The American Cotton Oil Company
  • Federal Steel Company
  • The Peoples Gas Light and Coke Company
  • American Steel & Wire Co.
  • General Electric Company
  • Tennessee Coal, Iron and Railroad Company
  • The American Sugar Refining Company
  • National Lead Company
  • The United States Leather Company (Preferred)
  • Continental Tobacco Company
  • Pacific Mail Steamship Company
  • United States Rubber Company

How many are still around?

Comment author: Davidmanheim 06 March 2017 03:53:33PM 0 points [-]

This is a bit confusing, but almost all of them, actually, modulus name changes, acquisitions, and antitrust actions.

GE is still GE.

Continental Tobacco Company is split, and the biggest part is now Lorillard, which makes Newports and other cigarette brands. But parts were split off and turned into parts of basically all the major cigarette manufacturers now. This was due to antitrust.

US Steel is still huge, and Federal Steel, Tennessee Coal, Iron and Railroad Company, and American Steel & Wire Co. are part of it now. National Lead Company is now (basically) CompX, The American Sugar Refining Company, after antitrust action is now part of C&H Sugar, which makes Domino Sugar. Pacific Mail Steamship Company was bought, and turned into American President Lines, which is a huge shipper today.

Changes in value are mostly not due to lack of adaptability, but change in the types of businesses that make money.

Comment author: DataPacRat 24 February 2017 06:23:45AM 0 points [-]

If I may ask, do you have a preferred email address through which I can ask you some questions which wouldn't quite work out as comments to the blog-post?

Comment author: Davidmanheim 06 March 2017 03:21:50PM 0 points [-]

Google's email service, with my lesswrong username.

Comment author: Mass_Driver 11 April 2010 07:00:39AM *  20 points [-]

Goodhart's Law starts some other way. It's not quite right to say:

Superiors want an undefined goal G.

Mathematically speaking, the problem can't be that G is undefined. If G were really undefined in any absolute sense, then superiors would be indifferent to all possible outcomes, or would choose their utility function literally at random. That rarely happens.

Instead, the problem could be that G is difficult to articulate. It is "undefined" only in the sense that people have had trouble coming up with an explicit verbal definition for it. i know what I want and how to get it, but I don't know how to communicate that want to you ex ante. For example, maybe I want you (the night shift manager) to page me (the owner) whenever there's a decision to make that could affect whether our business keeps a client, but I've never taken any business classes and don't quite have the vocab to say that, so instead I say to only page me if it's "important." "Important" is vague, but "important' is just a map, and the map is not the territory.

Alternatively, the problem could be that G is difficult to commit to. I can define my goal in words just fine today, but I know (or you suspect) that later I will be tempted to evaluate you by some other criterion. For example, I would like to give a raise to whichever police officer does the most to keep his beat safe, and, as a thoughtful and experienced police chief, I know exactly what the difference is between a safe neighborhood and an unsafe neighborhood, and I'm happy to explain it to anyone who's interested. As one of my employees, though, you can't verify that I'm actually rewarding people for making neighborhoods safe, and not, say, giving raises to people who bring in the most money for drug busts, or who artificially lower their crime statistics, or who give me a kickback. It might make more sense for me to just announce that I'll pay people based on hours worked and complaints lodged, because that announcement is more verifiable, and thus more credible, so at least I'll be viewed as evenhanded.

Finally, as you've already pointed out, the problem could be that G is difficult or expensive to measure. Alternative measures of GDP that take into account factors like health, leisure, and environmental quality have gotten pretty good about specifying what health is, and it's easy enough to pass laws that commit agencies to valuing health in a particular way, but it's expensive to measure health, especially in any broad sense. A physical is $60; an exercise fitness exam is another $45; an STD test runs about $20; a battery of prophylactic tests for cancer and heart disease and so on is another $100 or so; a mental health exam is another $80, and then you multiply all that by the size of a valid random sample and we're talking real money. In my opinion, it would be money very, very well spent, but one can understand why GDP - which can be measured just by asking the IRS for a copy of its tax receipts - is such a popular metric. It's cheap to use.

Comment author: Davidmanheim 03 March 2017 03:54:13PM 0 points [-]

I partly disagree. Simple metrics are used in place of complex goals, for good reason; https://www.ribbonfarm.com/2016/06/09/goodharts-law-and-why-measurement-is-hard/

Then the fact that the goal is too simply defined allows flexibility to be abused; https://www.ribbonfarm.com/2016/09/29/soft-bias-of-underspecified-goals/

Comment author: gjm 23 February 2017 02:12:28PM 2 points [-]

The choice of image was probably partly inspired by the example of dinosaurs and mammals, which I think reduces how struck we should be by any match-up.

Comment author: Davidmanheim 23 February 2017 07:03:56PM 0 points [-]

Very true - see the more explicit parallels to ecosystems in my earlier piece on scaling companies; www.ribbonfarm.com/2016/03/17/go-corporate-or-go-home/

It explains why companies need to end up bureaucratic when they scale, and on the way it talks about the analogy to living systems in various ways.

Comment author: morganism 23 February 2017 05:32:48AM 1 point [-]


That is the most insightful exposition on the failings of management theory i have ever seen, and all without the need to spread it out through novel length.


Comment author: Davidmanheim 23 February 2017 07:01:18PM 0 points [-]

Glad you thought it was useful - but that's the first time I've ever seen a ribbonfarm post praised for brevity!

[Link] Prescientific Organizational Theory (Ribbonfarm)

3 Davidmanheim 22 February 2017 11:00PM
Comment author: Viliam 10 February 2017 11:10:21AM 1 point [-]

any area where other people have well-informed opinions

It could be tricky to find out which areas are like this.

I mean, if I disagree with most people, I am probably going to suspect that their opinions are not well-informed, so I guess the core problem is assessing the "well-informedness" of people I disagree with.

For example, if I believe that someone is highly intelligent and has a lot of experience in X, and their explanation makes sense to me, or they are willing to listen to my arguments and then tell me where specifically did I make a mistake... I would be quite willing to move my opinion towards theirs. No controversy here.

But there are also situations where people have strong opinions for wrong reasons, and they consider themselves well-informed because they talked to each other and read each other's blogs or books.

Comment author: Davidmanheim 13 February 2017 07:15:46PM 0 points [-]

It's strange for me to consider that you'd take the inside view when evaluating the informed-ness of others.

The usually correct solution is to realize that both your opinion and theirs is likely based on making some incorrect assumptions. You just don't know which - and so this is a useful quick heuristic

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