Is diversifying our learning the only way to survive?

Last week had an interesting conversation with an old friend on the current ‘hot skills’ that rule the job market. We both have young kids. We also debated what could be the ‘best’ disciplines for them when they grow up. As we talked, what was evident to both of us was that this list of sought-after skills changes every decade. The conversation led me to think something adjacent. Let me bring up the topic here and invite your ideas.

In the world of financial investments, we have a bunch of asset classes (gold, equity, bonds, real estate, etc) to choose from. There is no way any investor can - leaving aside the ‘lucky’ ones - consistently strike gold, i.e., get spectacular returns in every period. It would mean perfectly timing the jump from one asset class to another – gold to equity, equity to real estate and so on. This is nearly impossible. What is the practical solution? We know it. DIVERSIFICATION. Reduce risks and trace a middle path.

You must be already seeing the parallels with investing in self? We cannot predict which set of skills can consistently produce returns (i.e., high wages) in the labor market. Specially in the current digital age, this has become ever more volatile. Today’s hot skills are obsolete or automated away in 10 years. Can we afford to deeply invest in acquiring one or two skills? This is like investing all your money in the current hot stock and hoping for the best. But then how to intelligently ‘diversify’ when investing in human capital?

The problem is compounded as today we have an unprecedented choice in learning new subjects from the fields of science, art, languages, medicine, management and so on and so forth. Like the fluke investor, you have to be ‘lucky’ to learn the right subjects that keep you employed at the top of the curve for 30 to 40 years. To properly diversify in this tricky marketplace, I think one has to “discover” one’s core underlying skills. These can be as basic as ‘I am good with numbers’, ‘I learn abstract concepts well’, ‘I handle people well’, ‘I can produce original work’, ‘I have an elephant’s memory’, 'I cook well' and so on. And then, invest in mastering new subject areas throughout your life which fully exploit your core faculties. This will ensure you diversify, but not randomly. It is based on your strong foundational skills.

How would you recommend - in the race with machines - we stay relevant for the next hundred years? If you read this, drop a comment. Would love to read them.

Should the captain always go down with the ship?

Like most, for the last few weeks I have also been following the news flow from the Sewol tragedy. As more details keep coming out, it is impossible to miss the rage in the media against the Master and the crew of that ferry. I think it is important to raise a few questions based on the events that unfolded on that fateful day and put things in context.

Let's take a step back and carefully dissect the facts from the different news items. For a moment let’s not judge anything as we read on.

1. Master Lee Joon-seok – the captain of the fateful Sewol - was a genuinely nice human being as described by his colleague with a wealth of experience in his profession – over 40 years at sea.  He has travelled this route before. 10 out of 10 times, if you were told before you boarded, you would not panic if a person of his stature leads the ship. Read a generous profile of the Master here.

2. In what must have been “routine operations” for him, on that day he hands the ship to the 26 year old third mate. He himself takes a break in his quarters.

3. The inexperienced third mate has never been at the helm on this route before. On that fateful day, she unfortunately makes an error at her duty (measuring by consequences it ultimately proved to be extremely costly). She takes a sudden turn which tilts the ship dangerously.

4. As the leader, the Master rushes from his quarter to take hold of the situation but fails to re-balance the ship. The vessel continues to tilt.

5. As the vessel was listing, the captain had to take a set of complex decisions in a crisis situation weighing the costs and benefits with whatever information he had. The one that turned out to be the most calamitous was his judgement to have passengers stay in the vessel since (as he himself later told news persons) “the tidal current was strong and water temperature was cold, and there was no rescue boat”. He must have factored how much time the ship will hold up till rescue boats are arranged.

6. The captain finally ordered evacuation after confirming that nearby vessels are coming for rescue operations (it is not sure the orders reached everyone)

7. Soon after ordering evacuation, the captain himself left the ship not waiting to ensure every passenger is evacuated safely. This action is now being condemned world-wide and the captain and crew are also arrested..

8. The stories of the passengers are the most heart-wrenching. They trusted their captain all along. They knew the ship was sinking but still faithfully obeyed the captain’s orders to stay put and waited for help. The videos that have come out make your heart sink.

What happened here? A seasoned leader in charge of people who depended on him to navigate them through the ocean hits an unexpected crisis and takes a set of decisions to the best of his ability to save everyone. When he thought he has found safety for them, he leaves the ship with his crew without waiting for the last person to be evacuated. And all along the crisis, most of the people placed full faith in their leader in spite of anticipating the worst.

The questions to ask are is this set of behaviours so unique that the leader must be vilified as Master Lee Joon-seok is? What would happen if such high moral standards of leadership (“captain must always go down with his ship”) are expected everywhere, specially in corporations? Under what circumstances is it acceptable for a leader to jump a sinking ship while others are still fending for themselves and when is it absolutely not? I certainly do not have the answers...

Will higher education market ultimately price itself to oblivion?

I have had so many debates in my circle whether MOOCs will ultimately replace college education. So far I never believed this is possible. The college environment provides so much more than just the instructor led classroom courses - one cannot discount the learning environment and the real networking with students and teachers that you can only get from physically attending colleges. The job market handsomely rewards the produce from top ranked institutes all over the world. My view on online learning has always been of what pornography is to the real thing - a distant substitute.

I consider the MOOC ecosystem more broadly than just the online courses offered by the reputed universities. I include in this category all the self-styled instructors who put out quality content out there. Today we have an unprecedented opportunity for "self-learning". The breadth of online learning opportunities is huge. And with millions of netizens voting and providing feedback, there is a vibrant mechanism to separate the wheat from the chaff. The rich discussions/debates among 'virtual students' in the forums are not too far off from what one would get in colleges.

In my mind the main complaint against MOOCs (or any online learning) has so far been its inability to provide the signalling effect and verifiability. They do not offer college credits. If one cannot put it in the resume and the market does not value it then how will it ever fly. It is only a tool for enriching oneself and for the universities to attract more international students to their campuses. Even then, I am a serial MOOC-er myself who wastes time in collecting these worthless papers.

Of late, my views are changing. I suspect that there is a tipping point approaching. The price of college education is going through the roof. Universities are run more like corporates today. Overall labor market has become too dynamic and unpredictable that it cannot guarantee the kind of jobs which can recoup the costs. Bloomberg is reporting a 'death spiral' of small colleges already. Future society is surely going to carefully measure returns on investment if this trend continues.

I have started to believe this is just the beginning. In another decade or so it would not be uncommon to have self-taught individuals trained by self-styled teachers. The teachers would be the ones who give up navigating the corporate style universities and choose to offer their knowledge free or dirt cheap over digital platforms (accepting Bitcoins!). In the job market there would be wide acceptance of 'real' skills however acquired without looking at institutional pedigree. The whole ecosystem will change. Our next generation will think us as fools why we went to such expensive colleges when there were so much free stuff out there. We will tell them how great a time we had in college campuses.

Today's generation has not seen so many things - would not be surprised if after a couple of decades the next generation blinks when they hear about college, higher education and all of that.....

Can we handle the inverted pyramid in the future

A discussion I often have with my circle – that is fathers of toddlers - is how kids are picking up digital technology faster than ever. It's mind boggling to see a 4 year old able to tap on the Youtube app on an iPad and start his favorite cartoon or start playing games! And in contrast, the prior generation - specially over 55 - struggles to come to terms with the newer digital technologies.

I was impressed when I got this TED talk by 12 year old Thomas Suarez forwarded to me. For those who do not know, he shot into fame when at the age of nine (yes nine!) he taught himself Python, Java, C and created a mobile app called Earth Fortune. He subsequently created a few more apps which garnered decent hits in the AppStore. I remember how I were when I was 12. And here he is standing on a podium and talking to an audience of several hundreds without flinching!

To me, society is surely turning upside down with time. For so long, we have been used to believing that knowledge and wisdom (and the associated fame, wealth, position in society and organization and all of that) correlates with age, experience and formal education. It was highly unlikely that a fresh graduate can know and contribute much more than a seasoned 40 year old in a company – but no more.

The digital economy is playing its role as usual. The coming together of voluntary experts sharing their knowledge “free” on the internet and the ability of search engines to rank them nicely has significantly lowered the cost of gaining knowledge on anything. But everyone is not able to take the advantage - it is only the smart guys who are able to leverage the digital platforms to the fullest.

I believe that, over time, as the economy becomes more digital, the balance of knowledge will significantly tilt towards smart younger workers who will be much more connected to the digital world. With more curiosity and less fear in trying out new things – they will exploit digital platforms far better than their older counterparts who can often be conservative. It’s impossible to envision how societies and workplaces will evolve be in a decade from now. Today our mental models are hard-wired to pyramidal structures where the top is ‘assumed’ to have more knowledge and hence can direct those at the bottom of the pyramid. I have never seen an org structure which is not a pyramid. But how long?

It will be interesting to see how society adapts to this situation what I like to call as an "inverted pyramid". Would be very interested to know others’ thoughts or even if you believe this is going to happen.

In the Internet of Things when will humans volunteer to become the 'things'

The Internet of Things (IoT) and the advancements in M2M (machine to machine) never ceases to fascinate me. One of the prime use cases of M2M among many which has added a ton of value in several industries is real-time asset tracking and their management. I am confident the days of tediously transcribing data into data capture systems will finally be over by this decade. Almost all goods flowing through an organization (at least the valuable ones worth tracking) would have embedded sensors. They would provide real-time status and provide alerts for any imminent fault through use of intelligent predictive models.

The challenge worth thinking about is how industries where the main assets are ‘people’ and main outputs are knowledge artefacts will take advantage of this huge value-prop of M2M and IoT, that is, real time asset management. Needless to say, in the foreseeable future, knowledge based industries will be the only ones that will still employ humans, rest will probably be taking advantage of automation and employing only robots.

And such industries - like everyone else - would need to better manage their core assets which are people and their knowledge. Firms with huge number of people spread across 30-40 countries already have a difficult time matching emerging opportunities with available internal skills – a topic which I discussed in my last post how it can possibly lead to employing ‘fit-for-purpose’ mercenaries. 

In my opinion, the current situation is waiting to be disrupted. Here is a possibility which I think can happen over the next ten years. There will be emergence of digital platforms positioned for the knowledge industry that will help manage their human assets just like manufacturing does. The heart of it will be simple non-invasive software that will track down their employees' every move. The software will record the websites they visit, the forums they contribute, the groups they are affiliated to, the books they read, the internal business applications they access and so on and so forth along with time spent in each activity. And it will provide analytics on top of all this data to help categorize people into distinct expertise areas.

I know this is getting hairy. Specially after the recent Ed Snowden appearance in SXSW. The only difference I see is this. In this new scenario, it will be voluntary. People will sign up for being tracked. They will have the option of “switching off” tracking when they want to. Question is why would they do it? The main motivation would be to signal one's coordinates continuously in the huge knowledge map in a non-interventional real time manner. Services will emerge to crunch such data to come up with a single index for each individual like today's credit score! People would be eager to increase their "score" in the heavily crowded knowledge market to get recognized and improve their prospects.

I think people will be motivated to trade their privacy (selectively and optionally) when they see tangible benefits. All this will be a huge win for the industry as well as they can hire and manage their human resources far better than they can do today.

Will mercenary workforce be the future standard of employing human resources

One of my old friends visited me last month. We talked about numerous things. One topic that we spent a lot of time discussing was how our previous generation (our fathers that is) spent a substantial part of their work life in one company, one profession, one city and so on and why the current economic forces do not allow this ‘sameness’ any more.

I have been part of strategy discussions where we tried to prepare ourselves for the major changes anticipated in the coming decade. There is no right or wrong in such futurology discussions. The best you can do as a company or as an individual is whole-heartedly bet on certain perspectives and closely monitor whether the scenarios you laid out are playing out as expected.

One thing I strongly believe is traditional employment – that is how companies employ individuals and how individuals work for companies - will fundamentally change in the new world. Especially in the Internet economy, digital economy, knowledge economy whatever you call it.

I believe this is inevitable because of the lack of platforms in companies where skills and opportunities/projects can be matched without friction. Large companies by design have to break their end to end operations into silos to achieve efficiency. And such divisions lead to unavoidable waste. At a macro level, within the four walls of a company, skills go unused due to lack of opportunities and opportunities go unexploited due to lack of skills.

It is in this backdrop I feel certain that there will be a rise in mercenary workforces in the coming years. Mercenaries are constructs of extremely talented and deeply skilled set of individuals (maybe with their small teams) in specific areas who offer their services for a specific project in a company at a premium. They are not generalists but specialists in their chosen areas – be it programming, media strategy, data mining, big data architecture, hardware design and so on and so forth.

There are already some industries which exhibit this trend. In such industries superstars or A-listers are independent and are able to create their ‘brands’. They charge a premium for specific projects and also take a cut from the gross earnings in the backend (films and sports are prime examples). They sell their talent for competing entities thus bringing down competitive barriers. What works for these industries where superstars can pull apart from the rest is the presence of a platform (television, internet, films, etc) where their skills are watched by millions and their performance is measured and evaluated objectively.

In the coming years I feel the digital economy will provide the right set of tools and platforms for individuals to showcase their professional talent. Performance measures of individuals / teams will be publicly available for their different projects. Already a few platforms like Linkedin try to do that but there will be more such that will come up. 'Matching' platforms will grow. Companies undertaking complex initiatives will look for such teams who will be employed only for the duration of the project and then disbanded. And such teams will also work for competitor companies thus constantly levelling the playing field. Current legal hurdles will be taken down.

We are living through an era of profound advancements to humanity and a decade ahead looks too far away. One can hardly draw a reasonable picture of the world only a few years into the future, the best we can do is stay prepared and keep our peripheral vision on....

Will Bell curves eat orgs or orgs eat bell curves

We go through this exercise year after year, especially in large organizations. That is placing all the employees in a bell curve or a normal curve during yearly ratings. Different orgs follow different procedures but more or less the final outcome remains the same.

I am convinced that in the knowledge industry powered by the digital revolution, something is got to give in a few years. Either the bell curve will bring down large organizations OR organizations will learn from what’s happening in the broader economy and take out bell curve driven rating systems. A few companies have already taken the lead.

This is an entrenched system. Organizations have been following this method for decades. If we look at the current digital economy riding high on technology advancements, it provides an unbridled platform for individuals to fully express themselves. The result is that we have incomes (if we take that as a substitute for how much value an individual can add) exhibiting a power law distribution with fat tails. A small percent - the superstars - are able to pull apart from the rest. 

Now conceptually think that the four walls of an organization hold a random sample of individuals from this very society. The core attributes of these individuals (creativity, learning capability, risk taking behaviour, etc, etc) - if given the perfect platform - will doubtless exhibit a power law. But then organizations end up “force-fitting” this set of individuals to a normal curve.

What is the fundamental difference between a normal curve and a power law curve? If you can actually do a small simulation of repeatedly drawing 500 random observations from a normal distribution and a power law distribution, you will understand. The big difference is normal distribution blocks out large outliers (remember stats 101? Less than 1% lie 3 sigma away from the mean). With power law distributions, you will see it is quite common to see wild outliers - several thousand times the mean. And because of outliers the mean also is several orders above the median. The concept of a ‘typical’ or ‘average’ employee is not there in a power law distribution.

My hypothesis is simple. Since normal curves are unable to accommodate these large outliers and force everyone to group around the ‘average’, the ‘superstars’ - who we actually want to retain - get crowded out. But good for the overall economy as more Jan Koums get out there and do their stuff to move us forward. I do not know which one will happen first – will the economics of large organizations crumble over time on the face of the disruptive digital economy OR they would learn to replicate the real economics unfolding outside their four walls. Have to wait and watch and be ready....