Embrace Complexity; Tighten Your Feedback Loops
ferd.ca
ferd.ca
But my cynical worker viewpoint is that the problem is really that upper management doesn't do the actual work and that is by design. It's a class separation. They are there to crack the whip and collect the spoils.
The only way for upper management to really understand what's going on and give useful input would be for them to be directly involved on a day-to-day basis.
In other words, they would have to do actual work.
That's not going to happen. So the best they can do is to stay out of the way of people who are actually working, avoid making decrees, and maybe try to keep the other managers from interfering with the work also.
Maybe another approach would be for the workers to share more equally in the spoils so that they would be naturally inclined to integrate business improvements and goals. But that's never going to happen.
The structure is much more directly related to a caste system than people may acknowledge.
You get to a point where it's impossible to do the work anymore. There's too much of it. You have to develop teams, processes, structure, etc. that delivers the outcomes you're accountable for with full knowledge that you cannot do them yourself. It's very different than doing the work and experience shows that fewer people are capable of doing it, especially with any repeatability. The working world yearns for effective managers.
I encourage you to compare the productivity of the modern multinational corporation to any commune in history. The people working in collectives are not stupid or lazy. It's not an effective structure.
It’s a hard comparison to make when the goals of those two systems are vastly different.
I worked for a multinational software company and the amount of waste I saw was just staggering. If outside shareholders knew how little we actually produced on a day to day basis, they would probably be appalled. But because the company knew how to engage with market analysts, we looked good on paper. So much of the money made today involves just being the biggest player in a given market, regardless of how effective the product is (i.e. “nobody ever got fired for choosing Microsoft”)
Also, effectiveness of software relates to the attributes that align to the dimensions of "goodness" as defined by each user not the developer. The software does not have to be the best (among its peers) to be the most effective for me. The same software may be completely ineffective for you, if what you want out of it is different to what I want.
This is historically correct
Here's a recent unambiguous proof from Tesla's own words:
"Tesla argued that stock options were used to ensure Director's incentives were aligned with investor goals." [1]
Said another way, "we massively over-paid directors in order to give them an incentive to prioritize investor goals over all other goals"
In the parlance of finance this is the only goal and the ultimate decision that cannot be questioned.
I have seen this made explicit in multiple organizations as a Director or Senior Manager. As a manager, if you are explicit in supporting employee benefits over increase in stock price or C-Suite direction (when given the choice) then you should expect no further growth or promotions (unless you can manipulate the org or have some damaging information on the company).
>Maybe another approach would be for the workers to share more equally in the spoils so that they would be naturally inclined to integrate business improvements and goals
The strong form of this is a worker-owned-cooperative but second to that are labor unions. So if you want to change it, then start/join a union and stop creating corporations with separate ownership rules for investors.
[1]https://www.engadget.com/tesla-directors-agree-to-return-735...
The whole system seems to exist for short term profits.
It is absolutely zero sum for any measure that matters over periods that are impactful to individual and familial human flourishing
This capitalist rationalization of greed-based markets, loves to pick whatever timeline for measurement which fits their criteria.
It is unambiguous that wealth and power accumulation will persistently concentrate into the smallest number of hands in absence of collective structural countermeasures.
So the default state of large scale capatalist systems follows power law in both wealth and power distribution. It’s a mathematical reality that is shown over and over and over to repeat itself
Give me example of any non-zero sum game, and I can prove that under the hood it is actually a zero-sum game.
The trivial proof is that profit/revenue pool available for Corporation is limited, and the main question is how that profit pool is to be divided among Labor (employees) and Capital (investors/shareholders).
The fundamental laws of mass/energy preservation equally apply to money - you can't create money out of thin air, it has to be taken from someone else (customer) and then redistributed (among suppliers/labor/investors/shareholders/tax man)
Question is how to slice a pie between Labor and Capital?
Now we know that IT is a growing market, and next year pie will be bigger, much bigger. That's why Capital needs Labor to cooperate along and work as efficiently as possible to capture maximum slice of pie for the Corporation next year and the year after.
That's why they give variable compensation and give sense of ownership. Just by giving out 0.1% of shares, Capital is able to extract max value form Labor and make their pie grow at 30-40% per year.
Absolutely killer deal for Capital.
That's how zuckerberg et al become billionaires, while employees who created the money making machine are mere (multi)millionaires.
you join stage B startup and get 0.01% of company as ISO options, but you do the 100% of the work required to make product and grow company from $10M valuation to $10B valuation. Three orders of magnitude growth for Capital, while Labor get 1/1000 of that growth
That's literally a non zero sum game. You can phrase it as cynically as you like, but that's still the definition of a non zero sum game.
Counter example to your claim: if giving out RSUs is not zero-sum, then why don't Companies give me as many RSUs as possible, since they are not losing anything and it is not zero-sum game, by your definition?
Sure the RSUs available today are zero sum. The company has a finite value today, and thus your share of the compensation available today is a zero sum game across every participant in the corporation.
But your compensation _over time_ is not zero sum, as the value of the company can grow, both within the current market and as the current market grows _by your own definition._
If you look at the whole picture, you will see that “to align employees with company goals” is simply “to incentivize employees to make shareholders richer”.
Shareholders usually own 90+% of the stock, while employees ownership is in single percentages at best. That includes early employees.
The deal for Capital is very simple: give away few percents of stock and make Labor grind tirelessly to increase value of Capital by orders of magnitude.
Percentage wise everybody wins, both Labor and Capital (so called not zero sum game), in absolute terms however the distribution tells a different story.
Another counter-example: Imagine startup fails or is acquired at decreased valuation: will be it zero sum or not?
Well, employees options are wiped out first, VC capital gets first claims to money pool, Founders have second claims after VCs (or would have made liquid in separate deals), while regular employees are the ones who screwed.
> Imagine startup fails or is acquired at decreased valuation: will be it zero sum or not?
It's not zero sum, the total sum changed over time as the company lost value. Non zero sum doesn't mean "value only goes up"
> Percentage wise everybody wins, both Labor and Capital (so called not zero sum game), in absolute terms however the distribution tells a different story.
Thank you for conceding my point. It is a non zero sum game. There's an argument to be made about that employees are not given their fair share of RSUs or options, but that is a wholly separate argument/debate and you weaken your point by trying to say it's a zero sum game.
But, the problem can be reformulated as zero-sum in terms of time: Time is the ultimate scarce and zero-sum resource, you cannot create time, only redistribute.
The more time we spend with the loved ones, less time we have for other things like hobbies and work. Company wants people to spend maximum time on work and worker efficiency (so called "career growth"), and less time on personal life etc. For corporation - worker's attention is absolutely zero-sum game and they want maximum of worker's attention, on top of 9-5.
That's why they create more employee love by throwing benefits, free food and snacks, corporate parties so that they spend less time on personal matters and work more toward the company's goals.
On the flip-size, only immaterial things can be freely modeled as non zero-sum without conflicts
and this makes the zero sum, since the money plumber pays accountant, is the money he cannot spend on other things like groceries and vise versa.
And bringing currency into the equation doesn’t change the fact that the plumber is better off for engaging in the trade.
Not all ways of spending money create the same value. He could also spend the money by burning it, which would be negative sum.
Accountant values his labor as 100/hr and plumber values his services as 100/hr and they simply exchanche services.
How is it positive sum?
You mention competitive markets, where surplus is reduced or almost eliminated. But most markets do not reach such a late stage level of optimization.
This is how we have a CEO making $100b from a single company stock which would be impossible if it were a zero sum game.
Hype which is even more rarefied air, can create so much money without taking anything from the customers. Silicon Valley VC's create valuations for companies out of thin air and then triple it even without anyone ever seeing that money.
Attention which is unlimited in a way is a new form currency, which is why you see platforms being built up to get more eyeballs.
The rule you mentioned comes into play when taking into account players in the game i.e any game where you can add more players is guaranteed to become zero sum.
In real world situations where cooperation is needed, we mostly have a non zero sum game.For ex - https://cs.stanford.edu/people/eroberts/courses/soco/project...
I’d agree if there was any semblance of a power balance or history of successful outcomes for the vast majority over the long term.
All people point to are the infinitely rare (over represented here by multiples) first few employees of a huge start up - and even that is getting rarer for anything but the first 100 employees at most.
When was the last big employee millionaire event like Microsoft or Google or Amazon - over 20 years ago for all but Google (19)? That’s an entire career.
I don’t recall a wave of new millionaires from Snap, AirBnB or Uber IPO in the same way. Maybe I’m totally wrong here and just missing these groups - seems all the spoils went to the VCs.
How this works: new SaaS startup shows up and shows $10M EBITDA to investors. This does not reflect $5M in SBC.
According to industry averages, bankers apply average (lets say 10x) EBITDA multiple and derive valuation of $100M and invest funds based on that calculation.
Had company paid cash salary instead of RSUs, firms' EBITDA would have been $5M and valuation of $50M - a half of original pitched value
Obviously this is just a naiive textbook example, and actual valuations are more complex and involve several ways of deriving value and multiples, but in general RSU is viewed favorably mainly because it improves Cash Flow from Operations and EBITDA numbers - in addition to creating incentives to employees
So it’s the same story and is effectively a lottery ticket.
For example, literally the day before I started at my last company, their stock went from $120 to $40
So yes it’s a lotto ticket
You could sign job offer with $1M in RSUs at $100/sh for 10k shares, but you would have vested only $500k worth of shares if price decreases to $50/sh a year after, when you reach cliff vest
So selling at vest does not decrease your risk between RSU grant date and vest date
The worst system was a DOS-based point-of-sale system in a restaurant---kept around way beyond the 'age of DOS'. The main gimmick is that it had a wired light touch pen (I think it worked like a classic Nintendo gun) for selection. It gave the illusion of innovation/ease of use, but was extremely cumbersome and required a good amount of experience to avoid mistakes.
I also think trying to pin down things as strictly class warfare every time can muddy problem areas. Institutions realistically do gain some functional productivity by having people specialize and having defined roles, but having them too separated and specialized can also create problems. You can also have a lazy human problem, where people don't want to do the work that isn't directly associated with their role, and so on. There is also a lot in the bschool lit about how different business structures contribute to these problems too.
Sure there are managers that crack the whip, but most the places I’ve worked for, my manager was a former IC and cared deeply about the health of the product, while protecting the IC team I was on from the business side.
Learning more about the business portion and product manager viewpoints, gives me a more sympathetic tone to the whole situation.
We shouldn’t expect someone whose career they’ve focused on the business side to understand the software in depth. Sure there’s space to learn anything, but people have lives outside of career. Instead, a healthy company delegates these tasks out. It’s the responsibility of my manager to have one foot in the software, and one in the business, to help best translate and champion towards a common goal.
It’s the responsibility of her managers to respect the decisions she makes, and when hard lines are drawn for the sake of the health of the product to adhere to them. Within reason, of course.
This to me makes me feel excited to go to work (not every day, I’m not a psycho :) ), and makes me want to climb the ladder. I get paid well, produce value for the company, and get opportunities to work on challenges and with data/systems that I otherwise would not be able to.
With that knowledge, I can then take that to my side business and more effectively grow it. Don’t think there’s any “they’re taking the spoils” going on…
I think that's what good managers are supposed to do. As in, that's their entire job.
Managers are not necessarily good at doing the actual work, but hopefully, the people they manage are. The thing is: running a business involves a lot more than doing the "actual work", coordination, dealing with customers, etc... Managers are supposed to shield workers from all that, so that they can concentrate on the "actual work".
For example, a somewhat idealized but not so far from the truth exchange with my manager could look like:
- The customers is unhappy with the latest release, he says that X doesn't work as expected, can you tell me why?
- Uhm... X wasn't in the specs so it wasn't tested, but sure, it is a bug
- Ok, how long you think it will it take to fix it?
- Probably around two days
- Ok, let's make it 4 to account for risk and management. It shouldn't cause major delays but I may need to find some extra budget, I will negotiate with the customer since it wasn't originally planned. In the meantime, work on fixing that bug and tell me how it goes.
I've been thinking about my role as a technical writer (TW) recently. I think TWs have a lot of opportunity to operate in a similar way. The real name of the game for my line of work is organizational knowledge management. For example, I've had some [1] success getting Eng teams to dump common Q&A into Stack Overflow so that the next time the issue comes up they can just link customers to that answer. It often feels a bit more lightweight and less intimidating than updating the official docs. Also the Q and A nature of Stack Overflow keeps the docs request tightly scoped. And of course the end result is that the knowledge is much more accessible.
On the other hand, maybe there's nothing special about SREs or TWs here and "organizational knowledge management" is the name of the game for every role in the org. We all just tackle the problem from a different angle.
[1] Emphasis on "some" here. Sometimes it works very well, other times it doesn't go anywhere.
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"Uuuh nothing, only that they are an impending thing in software :sweat-smile:"