When Rewards Become Sarcasm

Very often, doing the right thing in the wrong way can completely undermine its value.  Case in point, the present fascination with "gamification" by those who do not have a firm understanding of the concept is leading to some very awkward and even offensive practices in online experiences.   I'm most concerned of late with the notion of "badges" and "social rewards" with which retailers wish to encourage shoppers to give them more business - I have a sense there is some potential, but its present misuse may be damaging the potential of the practice.

In the context of a game, a badge is an icon or emblem granted to a player for completing a significant or unusual accomplishment.   "Significant or unusual" is critical, because a reward loses its value if the act it represents is common or of little significance.

To be granted a badge for completing the first and easiest level of the game on the lowest difficulty setting is not of value to a player because it's something anyone can do with very little effort.   It's tantamount to getting a diploma for completing kindergarten - which, ironically, is something that is actually done at some schools nowadays.  A trivial reward such as this is a nice gesture for the kids because they are not particularly intelligent or sophisticated at that age - but I've never heard a parent brag about their child "graduating" from kindergarten.

And therein lies the problem with granting rewards to adults, who are usually intelligent and sophisticated, for trivial accomplishments.  An adult studying a foreign language places little value in a photocopied certificate awarded to them for completing the first week of lessons.   If anything, such trivial gestures become a form of insult.   "Good for you, you've learned to tie your shoes" is not a compliment, but sarcasm to anyone beyond the age of five.

The same is true of retail rewards and badges for creating an account on a merchant's website, or purchasing an item, or successfully entering a delivery address.    Obtaining the product is the only reward that is necessary for the completion of such a trivial action, and any "extra" reward is unnecessary and a bit perplexing.

The retailer's self-serving agenda is further revealed when it is suggested that the customer should announce a trivial reward to others they know in social media - it is clear that the retailer does not mean to reward the customer, but merely to connive a way to get them to promote the store to their social network.   This fails miserably because a reward that takes the tone of a sarcastic insult is not something most individuals would care to announce to their friends and colleagues.

Moreover, this practice is damaging not only to the retailer whose reward system is poorly conceived, but to all retailers that might wish to leverage a social media reward system - much in the way that some advertisers' indiscreet use of email marketing has caused all commercial email to be disregarded as spam, even those that are the product of carefully targeted and thoughtfully planned advertising campaigns.

Thus considered, it may already be too late for retailers to leverage social media rewards programs because poor use by some has poisoned the well for all: the prevalence of trivial emblems is so great that every emblem is regarded as trivial, even those that represent a unusual or significant action.

Organizational Disorganization

In "Anarchy in the Office" I considered the rather bizarre concept of a project execution environment in which there were no formal leaders, merely ad-hoc coordinators that leveraged voluntary resources to complete tasks.   It seemed an interesting but likely impractical arrangement, and I've since read a book that proposes to do the same not only for a specific environment, but entire companies.

Peer Leadership proposes a networked (rather than hierarchical) organization structure, in which individual employees are like nodes of a computer network that are engaged as needed to accomplish organizational tasks - or which can, on occasion take on coordination of the efforts of others when they recognize the need for something to be done.

It remains an interesting concept, though it strikes me as being even more improbable on that level, given a number of potential issues - chiefly, that most of the day-to-day operations of a business are rather routine and non-dynamic and require the ongoing involvement of the same resources with few situations in which deviation from standard operating procedure is necessary.

Granted, the problems many companies face in a competitive environment is that standard operating procedure becomes bureaucratic and inflexible, as the author rightly suggests:  a front-line employee perceives a need for a change to be made, must communicate it up the chain of command to a high enough level for someone who is not familiar with the problem to authorize a change or deviation from established process, and then the change must be socialized within the organization before communicating back down to the front lines for implementation - a procedure which can take days or months.

But as in many things, I expect swinging the pendulum to the opposite extreme could do more harm than good ... or perhaps it's just that I've become institutionalized to the traditional approach of command-and-control hierarchies that I can't fully concretize the concept.  I don't really think that's the case, but I'll allow for the possibility.

My sense is that the determination of the amount of authority given to those on the front lines of an organization largely depend on the task in question.  For some tasks (day-to-day operations that are repeated) the procedure/control structure is likely the best approach whereas for others (which focus on changing the procedures that guide routine actions) a great deal more latitude is necessary to make progress.   To impose the organizational structure of one upon the other would be counterproductive.

Sustainability and Monopoly

The notion of "sustainability" seems to be popping up more often of late in conversations about enterprise management.   It's nothing particularly new, as it comes back under various names every so often and then goes away again.   My sense is that it's not at all a bad idea, just that the present culture is unready to embrace it in spite of its benefits.

The core concept is that focusing on serving a fixed number of customers, rather than seeking to constantly increase the number of customers served, is a more plausible long-term strategy because it facilitates planning and operational efficiency.

Much of the waste in business operations is pinned to the hope that the firm will sell more product next year than last year - managers ramp up production and staffing to provide products (goods or services) for 20% more customers in the next year.   When those new customers fail to materialize, the cost of the extra capacity is waste, which causes the firm to lose money on unnecessary expense and, in some cases, collapse from the financial burden of having spent an unnecessary amount of money to provide capacity that cannot be sold.

It is also a problem if more customers than anticipated are gathered by the various efforts to grow the firm, in that the company finds its staff and facilities insufficient to serve the massive influx of customers and its inability to provide service as promised is a disappointment to new customers (who are turned away) and old ones (whose quality of service diminishes as the company struggles under the strain) as well, and damages the reputation of the brand.

Both of these problems can be avoided by assuming a fixed customer base, which renders a fixed level of demand, which requires a predictable amount of production.   That is to say that a business is capable of profitably serving a certain number of customers, beyond which point growth becomes unprofitable and the firm becomes unsustainable.   Hence, a firm should be managed for long-term stability rather than constant growth.

All of this makes perfect sense, but for one thing: avarice.   I would not go so far as to claim all businesses are greedy and want to suck up as many consumer dollars as they can get - but I can say that I have never heard of a firm that doesn't covet growth and is willing to focus on providing quality of service to a limited market - and whose long-term strategy is to serve only as many customers as necessary to cover costs and generate a fair profit, and to the rest say "No thanks, we have as much business as we can competently and profitably serve right now."

To my knowledge, there is only one kind of company that seeks sustainable operations as a long-term strategy, and that is a monopoly.

Monopoly Efficiency

A monopoly exists when one firm serves 100% of the market and there is no competition.   This is generally considered by panic-mongers to be a bad situation because the monopoly "controls" the market and can use this power to charge exorbitant prices - though reason tells us this could not happen in a free market because entrepreneurs would quickly recognize the opportunity to underprice a monopoly and would enter the industry, thus ending the monopoly.  The only way for a monopoly to occur in a free market is if one firm provided service of acceptable quality at a fair price (what's wrong with that?) or for government to favor one firm and prevent competition (which, ironically, is called a "natural monopoly").

For the latter reason, monopolies exist in otherwise free markets, generally in the form of "public" utilities.  In most markets, there is no competition for electricity, water, waste disposal, and other services of that nature because local governments support one provider and prevent competition.   And what can be noticed is that these businesses run their operations with exceeding efficiency because of the predictability of demand.

Granted, there can be some objection to the suggestion that utility companies are efficient - though it is based largely on ignorance.  Most people complain about their monthly bill but haven't run the numbers.  Had they done so, they would quickly recognize that compared to the cost of purchasing an electric generator and paying for maintenance and a constant supply of fuel, the local electric monopoly's prices are in most cases very low.

The reason a monopoly is able to be efficient and reduce waste is that demand is highly predictable.   Except in rare instances, people do not move into or out of a service area in large numbers.  And in aggregate, there is very little fluctuation in the amount of power or water consumed by a population.   The monopoly can therefore make accurate plans for serving a fixed number of customers and eliminate the waste of overproduction.

Adopting Monopoly Thinking

In non-monopoly markets, there is a great deal of delusion.   Companies assume they have the ability to grow their business infinitely, and every firm in an industry assumes a 5% or 10% growth rate in the following year - even when there is not any reason to expect the same level of growth in aggregate market demand.

For example, take firms that produce diapers for babies under one year old.   In the United States, about four million children are born each year - a figure that has not fluctuated much in twenty to thirty years.  These firms should be well aware that this means there are four million customers per year (given that last year's customers "age out" of their product) and this figure is unlikely to fluctuate by much.   There is no significant increase or decrease in need, hence none in demand.   The only way these firms can grow is by stealing customers from one another - such that one firm's gain is another firm's loss.  In that situation, it is completely irrational for any firm to expect a 10% increase in business each year for the next decade (unless it can offer a significantly and sustainably better value proposition to consumers).

It would be far more rational, and efficient, for one of those firms to recognize that it has a 20% market share, and will not likely increase it, and so should set its production budget to manufacture and distribute enough diapers for 800,000 families and its marketing budget to merely replace any customers who may defect - then price its product to provide a reasonable and consistent return to long-term investors.

But this is not done: the combination of avarice and delusion lead firms to the belief that they can somehow manage to grab more of the market from competitors - often without making any improvement in product quality - and that its competitors will not be siphoning off their existing customer base.   The net result is an exorbitant expense of marketing and waste in the manufacturing operations - which causes firms to become inefficient, unprofitable, and unsustainable.

The reason firms do not collapse on a regular basis can be attributed to consumer surplus.  The customers pay not only the cost to manufacture and distribute the products they need at a reasonable profit to the providers, but they also pay for the waste of their providers' inefficient business operations.

It would also stand to reason that the firm that plans for a sustainable level of business could minimize this waste and more competitively price its product, resulting in a slow but sustainable growth in its market until it has reached the point of saturation in terms of the value proposition that is acceptable to its market segment.

Segmentation and Monopolization

While it is likely not possible for a firm to establish a monopoly in a regulated economy (regulators would prevent this, even if the market favored a single company's value proposition), many firms do seek to monopolize market segments - and doing so should likely give them the ability to apply sustainable monopolistic thinking to their operational strategy.

Consider the previous example, in which demand for diapers could be predicted according to birth rates in a given market.  A firm that proposed to sell all diapers to all ages would likely be recognized as a monopoly and shut down by regulators.   A firm that proposed to sell diapers for first-year infants would draw less attention.   And a firm that proposed to sell diapers for first-year infants of middle-income families in twelve states would draw even less attention.

To win a monopoly over such a well-defined market segment should be more feasible, as the firm could readily identify the needs and price sensitivities of a specific target with a relative degree of accuracy - and so long as it could find a way to manufacture a product that served their needs well at a price that customers found to be attractive, it should have little difficulty creating for itself a sustainable market.

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I'm aware, at this point, that I've taken off into a realm of speculation based on a plausible theory and have perhaps gone a bridge too far.   But I expect the core theory is plausible: that a firm can define a specific market segment, plan for a specific market share, and thereby eliminate waste and gain operational efficiency at a level that is both profitable and sustainable.

The primary obstacles to doing so are likely cultural challenges: the present culture of "more and more each year" in defiance of all logic is likely difficult to impossible  - and attempting to use reason to dispel irrational beliefs is a difficult proposition indeed.

A Contradiction in Trends

An article about the new "virtual collaborative" office called attention to a contradiction in terms that even its author didn't seem to recognize, in spite of how obvious it was in his various descriptions of the topic: it is possible for an office to be virtual and it is possible for an office to be collaborative - but I remain steadfastly unconvinced that it is possible to be both at once, as they represent separate extremes of separation and colocation.

Separation (Location and Time Independence)

The "virtual office" is a concept that leverages technology to eliminate the need for a physical space in which employees would be present in the same location at the same time.   In this sense, employees can work from their homes, or from coffee shops, or from any location so long as they have connection to a network to access shared resources.   Physical files are replaced by digital ones, memos by email, and meetings by threaded discussions.

The benefit of this arrangement, aside of saving real estate expenses for the employer who provides a physical space, is that employees are untethered.   They do not need to be in the same place to share resources or converse, nor do they need to work at the same time of day, given that a person can read and respond to a message (email, text, or discussion thread) at their leisure.

The drawback to this arrangement is that collaboration is not efficient without violating the principles on which it is based: workers must be brought into the same space and time, or at least the same time, to exchange information in a dynamic and rapid enough manner to effectively contribute to the same effort.   It is not impossible, as an email conversation can still take place, but there is a great deal of lag between sending a message and receiving a response - such that conversation that would have taken five minutes in person can take several hours or several days to complete in a separated situation.

Colocation (Location and Time Dependence)

The "collaborative office" is a contradictory trend that not only requires a physical space, but requires that physical space to be more accessible than before.   The core concept requires (literally) tearing down walls to get people to be constantly accessible to one another - ideally within line of site and a distance at which they can observe one another and converse at any time, without having to make arrangements to meet because they are always meeting.

The benefit of this arrangement is increased exposure.  It is not possible for an individual to work on something secretly and unveil it at a meeting because others are always observe his actions, hear his conversations, and see what is on his desk and computer screen so that they may interrupt at any moment when they see an opportunity to contribute to his efforts.   In such an environment, information travels fluidly and conversations are constant.

The drawback to this arrangement is the very same thing: when an individual is constantly interrupted by others who wish to contribute, he is capable of getting very little done.   This can frequently be seen in meetings where a person is typing into a computer while others watch on a projection screen: he can scarce finish a sentence without someone else telling him what he ought to be typing (or multiple people telling him to type different things), nor is it possible finish a sentence and then go back and correct a typographical error because others will spot it and insist it be corrected right away.   It would be much more efficient for the individual to prepare work in isolation and bring it to others for review afterward, but this is not possible in a collaborative environment.

Blended Arrangements

The ideal situation would seem to be a blended arrangement in which individuals could spend part of their time working individually and another part of their time sharing information in a collaborative discussion.   Ironically, that is exactly the arrangement most offices have at the present time: people can withdraw to a cubicle or an office to work in private and schedule a meeting when a discussion is necessary.

That considered, it is likely that the physical office (or the degree to which a physical office is used) is not quite as bad, counterproductive, or outdated as it would seem.   While there are some tasks that can be done in a virtual office and others that require communication, chances are that many individuals hold positions that are a blend of the two - and what is needed is not a change in office arrangements, but better work management to ensure that work that is best done in isolation can be done in isolation and that which is best done collaboratively can be done collaboratively.

Perception and Reality

Sentiment arises from observation and reasoning, as these powers enable us to perceive or imagine the link between actions and consequences and evaluate whether the outcomes of an action were positive/praiseworthy or negative/deplorable.   It is from the aggregation of these judgments, in various circumstances, that form our impression that the object of perception - person, thing, location, or action - is to be regarded as good or bad.

The notion that there is a "moral sense" that exceeds our observation and reasoning has often been suggested, and is entirely absurd.   This is merely a shortcut or pretense for a person whose perception or thinking are flawed and superficial, who has not been attentive or diligent and is embarrassed to admit as much.  It suits their ego much better to claim supernatural powers than to admit to a lack of discipline and rationale.

Human perception, however, is often limited: what we perceive is merely color and shape, and this is always within the context of time and perspective.  That we recognize some subset of colors and shapes to be known objects is a mental process that imposes reasoning, memory, and experience upon this raw sensory data.   A certain combination of colors and shapes is a horse, another combination of colors and shapes is a carriage - so the fact that we speak of seeing a horse and carriage or even recognize the two are different things in spite of their tangency is a matter of interpretation of the colors and shapes that have been directly perceived, comparison to patterns in memory, and the assignment of identity.   That si to say we do not perceive objects, but define objects in what we see.

Our mental processes further interpret our perceptions, as we consider the horse to be a three-dimensional object - though we see only one side of the animal, our imagination suggests there is another side we cannot see - and thus when we consider a horse, we combine the half of the beast that our vision indicates with the other half we imagine to exist.  

This is not merely extrapolation on the assumption of symmetry, as no matter the angle at which the horse is perceived, we conceive its missing components based on the mental framework by which perceptions are translated to conception.   It is also the reason that our minds are so easily subjected to creating an illusion of completeness based on a representation that may in fact be incomplete.

Thus what we accept to be truth and reality is always some blend of the testimony of our senses and the fancy of our imagination: we may see the expression on a man's face and imagine him to be pained, only to learn that he was merely lost in thought.   But if we imagined him to be pained, we felt sympathy for his emotion and had already begun to imagine further to consider the cause of his pain.   This all occurs very quickly in many instances, without careful deliberation.   It can be somewhat difficult to overcome.

This lends itself neatly to a somewhat minimalistic approach to communication, in which the presentation of certain perceptible elements can suffice to communicate a broader and deeper sense of a reality in which the mental models of the observer can be leveraged to complete the concept that is described only in a few superficial details.   But also consider that we may do so unintentionally.