Book List 2014 – Summer

Prelude

Recently my career took a small, unplanned, yet forgiven detour.  My current role is that of a Data Analyst.

I feel I am going down a slide.  Started out as a Software Developer developing in serious languages (C [Industrial Strength]), then came Power-builder, Delphi, and Visual Basic ( Business Applications).  Later came Operations Database Administrator [DBA] and a soon after I became an Engineering DBA.

And, now a forgetaboutit “9 to 5 Data Analyst”.

In so many ways and words, Management is telling me that they trust me less and less with contributing tangibly.

As the saying goes, those who can’t, teach or write about it.

While I am thinking about writing for a living, the gods send words my way.

Here is one from Jay-Z’s “Moment of Clarity”:

I dumbed down for my audience to double my dollars
They criticized me for it, yet they all yell “holla”
If skills sold, truth be told, I’d probably be
Lyrically Talib Kweli
Truthfully I wanna rhyme like Common Sense
But I did 5 mill’ – I ain’t been rhyming like Common since

It is not that writing and teaching doesn’t come with benefits:

  • Many parents have directly or indirectly shared with me that being a parent has forced balance, moderation, thoughtfulness, awareness, and orderliness into their lives.
  • Writing also allows greater insight, open channels for contribution, raises the cover off silent evidences and anti-patterns.

There is so much I can say about the above, but since we have a title let us go back and talk about books.

This year I got rid of more books.  I think I had little choice; sneezing all night and it is like let us vacuum the carpet a bit and rid of books and their dust.

Most of the books I rid of were computer books.  Not exactly a huge tax write-off, if I were to “write them” down.

But, later I received some good books, business & economics books no less.

Here are some of them:

But, please do not feel overly sorry for me, as I have listened in to a couple of Audio CDs, as well.

Here are three of them:

Kevin Kelly – New Rules for the New Economy

Here are some good concepts illustrated in Kevin Kelly’s book:

0. Introduction

No one can escape the transforming fire of machines. Technology, which once progressed at the periphery of culture, now engulfs our minds as well as our lives. Is it any wonder that technology triggers such intense fascination, fear, and rage?

One by one, each of the things that we care about in life is touched by science and then altered. Human expression, thought, communication, and even human life have been infiltrated by high technology. As each realm is overtaken by complex techniques, the usual order is inverted, and new rules established. The mighty tumble, the once confident are left desperate for guidance, and the nimble are given a chance to prevail.

But while the fast-forward technological revolution gets all the headlines these days, something much larger is slowly turning beneath it. Steadily driving the gyrating cycles of cool technogadgets and gotta-haves is an emerging new economic order. The geography of wealth is being reshaped by our tools. We now live in a new economy created by shrinking computers and expanding communications.

This new economy represents a tectonic upheaval in our commonwealth, a far more turbulent reordering than mere digital hardware has produced. The new economic order has its own distinct opportunities and pitfalls. If past economic transformations are any guide, those who play by the new rules will prosper, while those who ignore them will not. We have seen only the beginnings of the anxiety, loss, excitement, and gains that many people will experience as our world shifts to a new highly technical planetary economy.
This new economy has three distinguishing characteristics: It is global. It favors intangible things—ideas, information, and relationships. And it is intensely interlinked. These three attributes produce a new type of marketplace and society, one that is rooted in ubiquitous electronic networks.

Networks have existed in every economy. What’s different now is that networks, enhanced and multiplied by technology, penetrate our lives so deeply that “network” has become the central metaphor around which our thinking and our economy are organized. Unless we can understand the distinctive logic of networks, we can’t profit from the economic transformation now under way.

1. Self-Reinforcing Success

Networks have their own logic. When you connect all to all, curious things happen.

Mathematics says the sum value of a network increases as the square of the number of members. In other words, as the number of nodes in a network increases arithmetically, the value of the network increases exponentially.* Adding a few more members can dramatically increase the value for all members.

This amazing boom is not hard to visualize. Take 4 acquaintances; there are 12 distinct one-to-one friendships among them. If we add a fifth friend to the group, the friendship network increases to 20 different relations; 6 friends makes 30 connections; 7 makes 42. As the number of members goes beyond 10, the total number of relationships among the friends escalates rapidly. When the number of people (n) involved is large, the total number of connections can be approximated as simply n 3 n, or n2. Thus a thousand members can have a million friendships.

The magic of n2 is that when you annex one more new member, you add many more connections; you get more value than you add. That’s not true in the industrial world. Say you owned a milk factory, and you had 10 customers who bought milk once a day. If you increased your customer base by 10% by adding one new customer, you could expect an increase in milk sales of 10%. That’s linear. But say, instead, you owned a telephone network with 10 customers who talked to each other once a day. Your customers would make about n2 (102), or 100 calls a day. If you added one more new customer, you increased your customer base by 10%, but you increased your calling revenue by a whopping 20% (since 112 is 20% larger than 102). In a network economy, small efforts can lead to large results.

A network’s tendency to explode in value mathematically was first noticed by Bob Metcalfe, the inventor of a localized networking technology called Ethernet. During the late 1970s Metcalfe was selling a combination of Ethernet, Unix, and TCP/IP (the internet protocol), as a way to make large networks out of many small ones. Metcalfe says, “The idea that the value of a network equals n squared came to me after I failed to get networks to work on a small scale, despite many repeated experiments.” He noticed that networks needed to achieve critical mass to make them worthwhile. But he also noticed that as he linked together small local networks here and there, the value of the combined large network would multiply abruptly. In 1980 he began formulating his law: value 5 n 3 n.

In fact, n2 underestimates the total value of network growth. As economic journalist John Browning notes, the power of a network multiplies even faster than this. Metcalfe’s observation was based on the idea of a phone network. Each telephone call had one person at each end; therefore the total number of potential calls was the grand sum of all possible pairings of people with phones. But online networks, like personal networks in real life, provide opportunities for complicated three-way, four-way, or many-way connections. You can not only interact with your friend Charlie, but with Alice and Bob and Charlie at the same time. The experience of communicating simultaneously with Charlie’s group in an online world is a distinct experience, separate in its essential qualities, from communicating with Charlie alone. Therefore, when we tally up the number of possible connections in a network we have to add up not only all the combinations in which members can be paired, but also all the possible groups as well. These additional combos send the total value of the network skyrocketing. The precise arithmetic is not important. It is enough to know that the worth of a network races ahead of its input.

This tendency of networks to drastically amplify small inputs leads to the second key axiom of network logic: the law of increasing returns. In one way or another this law undergirds much of the strange behavior in the network economy. The simplest version goes like this: The value of a network explodes as its membership increases, and then the value explosion sucks in yet more members, compounding the result.

2. The Law of Plentitude – More gives more

So strong is this network value that anyone purchasing a fax machine becomes an evangelist for the fax network. “Do you have a fax?” fax owners ask you. “You should get one.” Why? Your purchase increases the worth of their machine. And once you join the network, you’ll begin to ask others, “Do you have a fax (or email, or Acrobat software, etc)?” Each additional account you can persuade onto the network substantially increases the value of your account.

When you go to Office Depot to buy a fax machine, you are not just buying a US$200 box. You are purchasing for $200 the entire network of all other fax machines and the connections between them – a value far greater than the cost of all the separate machines.

The fax effect suggests that the more plentiful things become, the more valuable they become. But this notion directly contradicts two of the most fundamental axioms we attribute to the industrial age.
First hoary axiom: Value came from scarcity; diamonds, gold, oil, and college degrees were precious because they were scarce.

Second hoary axiom: When things were made plentiful, they became devalued; carpets no longer indicated status when they could be woven by the thousands on machines.

The logic of the network flips these industrial lessons upside down. In a Network Economy, value is derived from plentitude, just as a fax machine’s value increases in ubiquity. Power comes from abundance. Copies (even physical copies) are cheap. Therefore, let them proliferate.

Instead, what is valuable is the scattered relationships – sparked by the copies – that become tangled up in the network itself. And the relationships rocket upward in value as the parts increase in number even slightly. Windows NT, fax machines, TCP/IP, GIF images, RealAudio – all born deep in the Network Economy – adhere to this logic. But so do metric wrenches, triple-A batteries, and other devices that rely on universal standards; the more common they are, the more it pays you to stick to that standard.

3. The Law of Exponential Value – Success is nonlinear

The chart of Microsoft’s cornucopia of profits is a revealing graph because it mirrors several other plots of rising stars in the Network Economy. During its first 10 years, Microsoft’s profits were negligible. Its profits rose above the background noise only around 1985. But once they began to rise, they exploded.

The archetypical illustration of a success explosion in a Network Economy is the Internet itself. As any old-time nethead will be quick to lecture you, the Internet was a lonely (but thrilling!) cultural backwater for two decades before it hit the media radar. A graph of the number of Internet hosts worldwide, starting in the 1960s, hardly creeps above the bottom line. Then, around 1991, the global tally of hosts suddenly mushrooms, exponentially arcing up to take over the world.

Now that we’ve entered the realm where virtuous circles can unfurl overnight successes in a biological way, a cautionary tale is in order. One day, along the beach, tiny red algae blooms into a vast red tide. Then, a few weeks later, just when the red mat seems indelible, it vanishes. Lemmings boom and disappear. The same biological forces that amplify populations can mute them. The same forces that feed on each other to amplify network presences into powerful overnight standards can also work in reverse to unravel them in a blink. Small beginnings can lead to large results, while large disturbances have only small effects.

4. The Law of Tipping Points – Significance precedes momentum

In epidemiology, the point at which a disease has infected enough hosts that the infection moves from local illness to raging epidemic can be thought of as the tipping point. The contagion’s momentum has tipped from pushing uphill against all odds to rolling downhill with all odds behind it. In biology, the tipping points of fatal diseases are fairly high, but in technology, they seem to trigger at much lower percentages of victims or members.

There has always been a tipping point in any business, industrial or network, after which success feeds upon itself. However, the low fixed costs, insignificant marginal costs, and rapid distribution that we find in the Network Economy depress tipping points below the levels of industrial times; it is as if the new bugs are more contagious – and more potent. Smaller initial pools can lead to runaway dominance.

Lower tipping points, in turn, mean that the threshold of significance – the period before the tipping point during which a movement, growth, or innovation must be taken seriously – is also dramatically lower than it was during the industrial age. Detecting events while they are beneath this threshold is essential.

In the past, an innovation’s momentum indicated significance. Now, in the network environment, significance precedes momentum.

Biologists tell a parable of the lily leaf, which doubles in size every day. The day before it completely covers the pond, the water is only half covered, and the day before that, only a quarter covered, and the day before that, only a measly eighth. So, while the lily grows imperceptibly all summer long, only in the last week of the cycle would most bystanders notice its “sudden” appearance. But by then, it is far past the tipping point.

5. The Law of Increasing Returns – Make virtuous circles

Likewise, the increasing returns we see in Silicon Valley are not dependent on any particular company’s success. As AnnaLee Saxenian, author of Regional Advantage, notes, Silicon Valley has in effect become one large, distributed company. “People joke that you can change jobs without changing car pools,” Saxenian told Washington Post reporter Elizabeth Corcoran.

“Some say they wake up thinking they work for Silicon Valley. Their loyalty is more to advancing technology or to the region than it is to any individual firm.”

One can take this trend further. We are headed into an era when both workers and consumers will feel more loyalty to a network than to any ordinary firm. The great innovation of Silicon Valley is not the wowie-zowie hardware and software it has invented, but the social organization of its companies and, most important, the networked architecture of the region itself – the tangled web of former jobs, intimate colleagues, information leakage from one firm to the next, rapid company life cycles, and agile email culture. This social web, suffused into the warm hardware of jelly bean chips and copper neurons, creates a true Network Economy.

The nature of the law of increasing returns favors the early. The initial parameters and conventions that give a network its very power quickly freeze into unalterable standards. The solidifying standards of a network are both its blessing and its curse – a blessing because from the de facto collective agreement flows the unleashed power of increasing returns, and a curse because those who own or control the standard are disproportionately rewarded.

6. The Law of Inverse Pricing – Anticipate the cheap

One curious aspect of the Network Economy would astound a citizen living in 1897: The very best gets cheaper each year. This rule of thumb is so ingrained in our contemporary lifestyle that we bank on it without marveling at it. But marvel we should, because this paradox is a major engine of the new economy.

Through most of the industrial age, consumers experienced slight improvements in quality for slight increases in price. But the arrival of the microprocessor flipped the price equation. In the information age, consumers quickly came to count on drastically superior quality for less price over time. The price and quality curves diverge so dramatically that it sometimes seems as if the better something is, the cheaper it will cost.

Computer chips launched this inversion, as Ted Lewis, author of The Friction Free Economy, points out. Engineers used the supreme virtues of computers to directly and indirectly create the next improved version of computers. By compounding our learning in this fashion, we got more out of less material. So potent is compounding chip power that everything it touches – cars, clothes, food – falls under its spell. Indirectly amplified learning by shrinking chips enabled just-in-time production systems and the outsourcing of very high tech manufacturing to low-wage labor – both of which lowered the prices of goods still further.

Today, shrinking chip meets exploding net. Just as we leveraged compounded learning in creating the microprocessor, we are leveraging the same multiplying loops in creating the global communications web. We use the supreme virtues of networked communications to directly and indirectly create better versions of networked communications.

Almost from their birth in 1971, microprocessors have lived in the realm of inverted pricing. Now, telecommunications is about to experience the same kind of plunges that microprocessor chips take – halving in price, or doubling in power, every 18 months – but even more drastically. The chip’s pricing flip was called Moore’s Law. The net’s flip is called Gilder’s Law, for George Gilder, a radical technotheorist who forecasts that for the foreseeable future (the next 25 years), the total bandwidth of communication systems will triple every 12 months.

7. The Law of Generosity – Follow the free

If services become more valuable the more plentiful they are (Law #2), and if they cost less the better and the more valuable they become (Law #6), then the extension of this logic says that the most valuable things of all should be those that are given away.

First, think of “free” as a design goal for pricing. There is a drive toward the free – the asymptotic free – that, even if not reached, makes the system behave as if it does. A very small flat rate may have the same effects as flat-out free

Third, and most important, following the free is a way to rehearse a service’s or a good’s eventual fall to free. You structure your business as if the thing that you are creating is free in anticipation of where its price is going.

Another way to view this effect is in terms of attention. The only factor becoming scarce in a world of abundance is human attention. Each human has an absolute limit of only 24 hours per day to provide attention to the millions of innovations and opportunities thrown up by the economy. Giving stuff away garners human attention, or mind share, which then leads to market share.

Following the free also works in the other direction. If one way to increase product value is to make products free, then many things now without cost hide great value. We can anticipate wealth by following the free.

8. The Law of the Allegiance – Feed the web first

The distinguishing characteristic of networks is that they have no clear center and no clear outer boundaries. The vital distinction between the self (us) and the nonself (them) – once exemplified by the allegiance of the industrial-era organization man – becomes less meaningful in a Network Economy. The only “inside” now is whether you are on the network or off. Individual allegiance moves away from organizations and toward networks and network platforms. (Are you Windows or Mac?)

Thus, we see fierce enthusiasm from consumers for open architectures. Users are voting for maximizing the value of the network itself. Companies have to play this way, too. As consultant John Hagel argues, a company’s primary focus in a networked world shifts from maximizing the firm’s value to maximizing the value of the infrastructure whole. For instance, game companies will devote as much energy promoting the platform – the tangle of users, developers, hardware manufactures, etc. – as they do to their product. Unless their web thrives, they die.

9. The Law of Devolution – Let go at the top

All organizations (profit and nonprofit alike) face two problems as they attempt to find their peak of optimal fit. Both are amplified by a Network Economy in which turbulence is the norm.

First, unlike the industrial arc’s relatively simple environment, where it was fairly clear what an optimal product looked like and where on the slow-moving horizon a company should place itself, it is increasingly difficult in the Network Economy to discern what hills are highest and what summits are false.

Big and small companies alike can relate to this problem. It’s unclear whether one should strive to be the world’s best hard disc manufacturer when the mountain beneath that particular peak may not be there in a few years. An organization can cheer itself silly on its way to becoming the world’s expert on a dead-end technology. In biology’s phrasing, it gets stuck on a local peak.

The harsh news is that getting stuck is a certainty in the new economy. Sooner, rather than later, a product will be eclipsed at its prime. While one product is at its peak, another will move the mountain by changing the rules.

There is only one way out. The organism must devolve. In order to go from one high peak to another, it must go downhill first and cross a valley before climbing uphill again. It must reverse itself and become less adapted, less fit, less optimal.

This brings us to the second problem. Organizations, like living beings, are hardwired to optimize what they know and to not throw success away. Companies find devolving a) unthinkable and b) impossible. There is simply no room in the enterprise for the concept of letting go – let alone the skill to let go – of something that is working, and trudge downhill toward chaos.

And it will be chaotic and dangerous down below. The definition of lower adaptivity is that you are closer to extinction. Finding the next peak is suddenly the next life-or-death assignment. But there is no alternative (that we know of) to leaving behind perfectly good products, expensively developed technology, and wonderful brands and heading down to trouble in order to ascend again in hope. In the future, this forced march will become routine.

The biological nature of this era means that the sudden disintegration of established domains will be as certain as the sudden appearance of the new. Therefore, there can be no expertise in innovation unless there is also expertise in demolishing the ensconced.

In the Network Economy, the ability to relinquish a product or occupation or industry at its peak will be priceless. Let go at the top

 

More on Nassim Nicholas Taleb’s book later.

Wish

I wish you a good, grand, and generous life. Generosity in terms of the worthiness of your life, and the choices you make as that forwards or limits your ability to share its building blocks.

And, also in the books that you read as that sometimes hinders the teachings you take, when you take them, how you accept them, and the extent you incorporate them.

Listening To

I absolutely love YouTube as it gives me context.  One of the most endearingly books I ever read is Andrew Solomon’s Noon-Day Demon.

Please read Andrew’s Book way before you ever need it.  It pays many times and years forward.

Here is a little video of a speech he gave at TED:

Andrew Solomon: How the worst moments in our lives make us who we are.

References

References – Kevin Kelly

References – Nassim Nicholas Taleb

References – Bill Gates

References – Andrew Solomon

References – Thandie Newton

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