Market-Based Management®

More on Human Action

As I was thinking about my Monday post, I found some interesting things on YouTube referring to Human Action. I've found that  Human Action either gets people excited or (more often) gets groans. There are a decent number of lectures and other more technical videos out there (And for the really brave souls out there, here is a play list that reads Human Action to you). However, if I can find ways to make Human Action a little easier to swallow, it's a big win in my book. 

So, without further ado, here are some fun videos that attempt to break down portions of Human Action. This video is from Human Action Comics. It's cheesy, but I still enjoy the premise: 

The video below that jams out to some ideas from Human Action: 

Do you think these videos would help people get into Human Action? Do they well-represent portions of Human Action? What resources have you found that help you teach the human action model? What are some neat things that makes Human Action a little easier to swallow? 

Bastiat and The Broken Window Fallacy

Have you ever thought, or heard someone else say something like, "ya, [Katrina, Haiti, Chile, ...] was a tragedy - but ultimately good will come of it - there will be jobs created, new infrastructure... in the end we'll be better off"?   That is referred to as the Broken Window Fallacy, originally articulated by Frederic Bastiat -- hailed by Joseph Schumpeter as "the most brilliant economic journalist who ever lived."

Tom Palmer and Atlas have recently released this video viscerally explaining the fallacy.  I'll warn you that the introduction contains scenes of 9/11 -- if such things upset you, you may want to skip this one. 

I highly recommend Bastiat's short, and easy-to-read essay titled "The Law" -- you might also enjoy his essays in "Economic Sophisms."

Sci-Fi and the Human Action Model

Okay, I admit it, I love Science Fiction. I'm more of a Star Wars fan than a Star Trek fan, but we Sci-Fi geeks tend to find one another. So, I knew a fellow who strongly believed that Science Fiction (and Star Trek in particular) helped push technology forward by inspiring scientists to greater and greater things. For instance, he argued that flip phones first appeared on Star Trek (below is a clip if you're not sure what I'm referring to).

However, my friend only pointed out one of three requirements for human action (click here to see the original text). For a human to be moved to action there must be (in no particular order): 

• Uneasiness;
• A vision of a better state; and
• The belief that one's behavior can lead to a better state.

I know I've personally been inspired by Sci-Fi, but have seriously lacked the capability to believe that my behavior could lead to a better state. Yet, I wonder what role Sci-Fi, and dreaming of bigger and better things, plays in advancing technology. What do you think? Does Sci-Fi and storying telling help drive human action? If so, can managers harness this power to inspire employees? 

At about the 55 second mark, Kirk pulls out his flip communicator: 

In Response to "It Depends"

I received a great email response from a colleague to my earlier post entitled "It Depends." Here is the response from Pat McCann:

"It is true; just like there are no cook book answers in life, there are no cook book MBM answers in   business. "It depends" because, different situations warrant different solutions AND there is usually more than one way to address a situation.

But here is the good news, we are not "a ship without a rudder."

MBM does provide us with the insight and guidance that can lead to successful answers if/when we     do the necessary critical thinking.

Remember, MBM is based on fundamental, PRINCIPLES (economics, human sciences, etc.) that     help us understand why the market works the way it does and why people do what they do. These principles, this understanding, can "ground" us in reality regarding various situation at hand, (how did we get here and how should we proceed to create and capture max., long term value).

So how do we apply MBM to lead us to these successful answers? Well, at risk of over simplification... analyze the situation considering applicable MBM philosophy, concepts, models and frameworks AND base you decisions on the same things."

Thanks to Pat for his response. Do you have a response to "It Depends" or Pat's follow up? 

Science

This article over at PBS shows cute letters from children to museum curators about the classification of Pluto changing from a planet to a dwarf planet. (I actually went to Wikipedia's Pluto article because I wasn't sure what Pluto is considered these day.) Many of the letters ask questions like, "Why do you think it's not a planet any more?" or flat out disagree with the scientists. 

These letters got me thinking, how did Pluto get changed from a planet to a dwarf planet? So, I did what any normal person would do and searched for images and  youtube clips!This video gives one explanation about the change in Pluto's status. 

What do you think about the idea of scientists coming together and voting on definitions? Is this just a modern day example of Polanyi's Republic of Science or Kuhn's scientific revolutions? Or, did something completely different happen? 

Thanks to Jayme for the link that inspired this post! 

It Depends...

After studying (and struggling) with MBM for a little over a year, I've started to get a little more comfortable teaching the concepts in front of large groups... for the most part. There is one answer that makes me squirm, but it comes up often: "it depends." 

Recently, an Associate changed my mind on "it depends."  After I pretty much apologized for saying "it depends," Maggie raised her hand. When I called on her, she told me that she likes the answer. Maggie went on to explain that for her the "it depends" answer points to the fact that individuals should be thinking and answering these questions, not just taking things for granted. 

Throughout that week I asked three other people how they felt about the "it depends" answer. Here are a few other thoughts boiled down from longer conversations: 

• "It depends" is a legitimate answer because it's flat out true. Most of the time instructors (or managers for that matter) don't have enough local information to give a more specific answer.
• From an instructor's perspective, "It depends" gives participants a chance to think through the mental models for themselves. 
• (This thought comes from a conversation someone who isn't familiar with MBM.) The world is a complicated place. "It depends" isn't just a common answer in management, but it's a common answer for life. 

What do you think about getting "it depends" as an answer? 

Thanks to Maggie for changing my perspective on "it depends"! 

Friday Links

I have stumbled across some interesting links lately, but most of them require some explanation. So this link dump is a little text heavy. 

Recently, I have re-read chapters in Hernado de Soto's book, The Mystery of Capital. One thought in the book that fascinates me is the trade off between formalizing property through records and anonymity. It go me thinking, what would it take to go "off grid" and disappear in the modern world. A writer for Wired Magazine tried to do this. You can read his account here. 

Speaking of anonymity, I received a letter from the Census Bureau (telling me they were going to send another letter), and then stumbled across some neat maps from the 1870 Census. 

A cool little video (from Consumer Reports via Consumerist) about waste in every day products. I like the cut away that shows package innovation that eliminates waste.

I've been reading some psychology literature lately and several articles have talked about the color test. I tried it and literally felt my brain working. If you want to try it, click here (via Carpe Diem). Also, if you're looking for a great psychology book, I recommend Self-Insight. 

Arlington, VA has gotten a lot of snow, and the roads falling to pieces from the salt and trucks. There have been stories about how the cities/counties are going to pay for repairs. Well, some creative folks have suggested that you can sponsor a pothole. 

This is totally random, but every now and again an assumption of mine gets totally blown out of the water. From Lifehacker, "It turns out store lighting triggers photosynthesis in leafy greens, boosting its nutritional content even after harvesting." 

Have you read anything lately that has changed one of your assumptions? Leave us a link in the comments! 

Economics Everywhere

I decided to study economics in undergrad (and graduate school) because I enjoy neat explanations about the world.  

For instance, the Consumerist brings you "How Bags of Oranges Cost More than Coke." The article and comments connect this phenomena to the increasing American waistlines. I don't need a high powered regression to buy into this idea. The Wendy's right outside the office has started a program where you get a free frosty with every purchase (once you buy a little card for $1). Every time I decide where to go for lunch that free frosty enters my calculation and has changed my behavior! 

If you enjoy these types of thought exercises, I highly recommend the book MoneyBall by Michael Lewis. While many people prefer the "pizazz" of Freakonomics, I find Moneyball more satisfying. It ties the power of correlations to results. The real life story shows people combining economic thinking, statistics and risk-taking to win games. 

What other books or articles have you enjoyed that show some interesting economic thinking? 

Thanks to Steve Church for the Consumerist tip. 

Can we go back to the future?

In the Science of Success, Charles Koch writes,

 "As an engineer, I understood the natural world operated according to fixed laws.  Through my studies, I came to realize that there were, likewise, laws that govern human well-being.  I learned that prosperity is only possible in a system where property rights are clearly defined and protected, people are free to speak, exchange and contract, and prices are free to guide beneficial action.  Allowing people the freedom to pursue their own interests, within beneficial rules of just conduct, is the best and only sustainable way to promote societal progress."

The Future Once Happened Here, by Fred Siegel, is a well-documented and articulate account of what happened to the cities of NYC, Washington D.C., and Los Angeles, when they chose to ignore the principles of economic freedom and instead took the road to serfdom.  This sobering account deftly puts the pieces together to show the consequences of public policies that favor "takers" over "makers."  It is a compelling read with all the features of a train wreck developing in slow motion. (A short paper with the 30,000 foot fly-by of the issues in the book is here.)

The title refers to the unfortunate fact that many other cities look to NYC, DC, and LA as examples to pattern off of - and they are experiencing the same frustrating, avoidable results.  So is there hope?  Can we go back to the future and do things differently this time?  Check this series out:

Tacit Knowledge

I've been reading a lot about Michael Polanyi's concept of tacit knowledge. So, I did the perfectly rational thing... I typed "tacit knowledge" into Youtube. This interesting video came up. 

It's amusing for the cheese factor, but quite frankly, it misses the mark. To me, tacit knowledge is knowledge that cannot be articulated. I think this clip is more about institutionalizing knowledge. What do you think? Does this clip explain tacit knowledge?