Tim Kastelle

Category: book riffs

  • David Lazer on the State of Complex Network Analysis

    Here is David Lazer’s keynote talk at the Political Networks 2009 Conference that took place recently (James Fowler’s talk is also worth watching):

    David Lazer at Political Networks 2009 from David Lazer on Vimeo.

    Lazer shows examples from a lot of state-of-the-art network research, mostly centred around politics. It gives you a pretty good idea of what sorts of things are possible. There are examples of analysis of interaction networks with geography added in, people interacting through institutions, and network evolution over time – and most of them are working with mind-boggling big datasets.

    These leads to some questions about using network analysis to study innovation:

    • What can we learn about innovation from some of these colossal data sets?
    • Are there new questions that we can ask about the innovation process using these tools?
    • How do network dynamics contribute to the evolution of innovation processes?
    • What can network analysis tell us about causality when we study innovation?

    John and I and our research group are looking at these questions right now – it’s definitely an exciting area to be in right now. Network Analysis I think is still the best way to track communication patterns – the challenge is to link these to actions and outcomes. What do you think?

  • focus on process, not tools

    I’m reading Kill All Your Darlings by Luc Sante at the moment, which is very good. It includes a number of pieces on culture, many originally from Village Voice or the New York Review of Books. Sante is a fantastic writer and there are a number of great lines throughout the book, but one just jumped out at me in his piece on the photographer Walker Evans.

    He had never been a camera snob, or even, although he was a superb printer, much concerned with the mechanics of his art (once when a student asked him what camera he had employed to take a particular shot, he became irate, declaring the question tantamount to asking a writer what sort of typewriter he’d used).

    I love this little story for a number of reasons. The simplest is because I’ve never been a big fan of camera snobs, or anyone that gets too hung up on equipment. Equipment can make some things easier, but it can’t replace knowledge and experience accumulated over time.

    The second reason that I like the quote though is that it illustrates a problem that we often run into in firms that are trying to implement a new innovation program. Often these initiatives come about because someone at the top has said something like “innovation has been one of our ‘core values’ for values, so we better start doing something about it.” The first thing that always happens in these cases is that the organisation goes out and gets some software. It might be something that supports message forums for Communities of Practice, or a tool for capturing ideas. The flaw in this approach is that the minute you approach Knowledge or Innovation Management as an IT problem, the initiative is dead.

    Managing innovation is a people and process problem, not a technical one. Yes, it helps to have some tools to use, but if you want your organisation to be more innovative, you have to be good at generating ideas, choosing the best ones, and getting those ideas to spread (variety, selection and replication – an evolutionary process). These are people problems, and they are often network problems. Get your processes right first, then you can get some tools to help facilitate them.

    If you focus on improving the innovation process, not the tool, you will be much more likely to be successful.

    (photo by Walker Evans)

  • Trust Agents Change the Game

    I just finished reading Trust Agents by Chris Brogan and Julien Smith. It’s a terrific book, and for many people it will end up being essential. While the book looks at how to use the web to build business, it is not a tech book – it is actually one of the best business books I’ve read in a long time. Before I get into why, we should start with Brogan and Smith’s definition of a trust agent:

    (Trust Agents) are digital natives using the Web to be genuine and to humanize their business. They’re interested in people (prospective customers, employees, colleagues and more), and they have realized that these tools that enable more unique, robust communication also allow more business opportunities for everyone.

    The book is filled with lots of practical advice about how to effectively use the web to build your own profile, and, by extension that of your firm. In many ways it reminds me of Kevin Kelly’s New Rules for the New Economy in that Brogan and Smith get at general principles that people will be using for many years to come. They go out of their way to try to ensure that the book won’t age by referring to ‘LinkedIn, Twitter and even newer platforms’ a number of times. This is a bit jarring right now just after the book has come out and the things that they are talking about haven’t been replaced yet, but I guess in a few years that will read a bit better. In any case, this illustrates one of the strengths of their book – they are not telling us how to use twitter, they are telling us how to use the tools of the web generically. That’s what makes this a business book, and not a tech book.

    One of the things that I like is that they address a number of issues that I’ve been thinking about a lot recently, and they do it very effectively. For example, their first substantive chapter talks about changing the game. They view interacting online as a game (a great suggestion!), and they say that the way to win is to invent your own game. Instead of trying to be the next Seth Godin, you should invent an entirely new category. This is business model innovation! The general idea is that we need to find an area that no one is playing in yet – and figure out how to dominate that. Here’s the way Godin puts it:

    So, you don’t get someone to switch because you’re cheaper than Walmart. You don’t get someone to switch because you serve bigger portions than the big-portion steakhouse down the street. You don’t get someone to switch because your hospital is more famous than the Mayo Clinic.

    The chances that you can top a trusted provider on the very thing the provider is trusted for are slim indeed.

    Instead, you gain converts by winning at something the existing provider didn’t think was so important.

    Like I said, I’ve been thinking about this a fair bit recently myself, and I’ve been trying to do some things like this already (for example do a google search for ‘aggregate filter connect’ and see what comes up first…). This shouldn’t be taken to mean that there isn’t anything new in Trust Agents. There definitely is. One great thing about the book is that it has a series of actions that you can (MUST!) take right now, so that you can start implementing the ideas immediately. This is where Trust Agents is actually even a bit better than New Rules – Kelly’s book might have a bit more depth to it, but you have to figure out what it means in action terms yourself. This isn’t bad, but it makes it easier to not act. However, Brogan and Smith tell you what you should be doing right now – and it’s hard not to.

    The second half of the book is not quite as clearly thought out as the first, but it ends with an absolutely smashing final chapter that sums everything up. One of the ideas they put forward here is the value of using the ‘Yes, and…’ improv approach to new ideas. The key to that is to take any new idea that comes in front of you, and instead of figuring out the reasons why it won’t work, you say ‘yes, and .’ That’s how improv theatre works, and I think it’s a terrific idea for business too.

    In Brogan’s post that introduces the phrase Trust Agents, he lists a bunch of people in big organisations that fill this role. However, I think that a lot of the ideas here actually will be more challenging to implement within larger firms. But if you’re starting your business, working in a startup, or building your personal brand for some reason (and we all should be!), then this book is indispensable. It also illustrates why I’ve been talking recently about how to filter when you’re small. I don’t read every business book that’s popular on amazon (in fact, in many cases popularity is a negative sign for me). But when people that I trust like Roland Harwood of NESTA and Seth Godin recommend a book highly, that is pretty compelling. They are trust agents. We should be too.

  • small pieces loosely joined

    More quotes that I like – this time from Small Pieces Loosely Joined by David Weinberger:

    Distance on the Web is measured by links, so the way to make your site ‘close’ to where your customers are is to get lots of places to point to it. How? By being interesting or worthwhile. That’s not how space works where ‘location location location’ ouweighs almost everything – precisely because navigating real space is such a pain. while big companies have an advantage when it comes to location because their fatter wallets can buy better positioning, big sites don’t have a leg up on being interesting. In fact, often it’s quite the contrary.

    I think this goes a fair way towards explaining why a lot of big companies have had trouble taking advantage of the benefits that the internet offers. It doesn’t play to their strengths. A big part of innovating is getting your ideas to spread. How? The same way you do it on the Web – by making the ideas more interesting. And by embedding them within a network – which is what the second quote gets at:

    Yes, we’re individuals, but we’re at our best when we acknowledge our dep attachment to the others of our world. Yes, the world is independent of us, but we’re at our best when we work the stuff of the world to enrich our common potential… These beliefs put together and shorn of their negative valuations say something quite commonsensical and quite true: We are creatures in a shared world not of our making, and we’re in it not simply as bodies but as people who care about ourselves and others; we understand our world based on the hard work and poetry of those who went before us.

    I know it’s a bit utopian, but I like it! Which is probably a fair summary of the entire book…

  • the price of free leads to innovation

    I just finished reading Free: The Future of a Radical Price by Chris Anderson. As usual, Anderson takes ideas that have been out there a while and packages them in an insightful and valuable way. I’m a bit late to the party, so there has already been plenty of reaction to the book. Much of the discussion has been spurred by Malcolm Gladwell’s piece about the book in the New Yorker, which is strongly critical of Anderson’s ideas. This brought a reply from Seth Godin, and Mitch Joel has summarised a lot of the main points (with links to everything) on his blog Six Pixels of Separation.

    The book builds on the ideas that Stewart Brand articulated at the first Hackers’ Conference in 1984:

    On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

    This quote often gets shortened to “Information wants to be free” – this is the bit that Gladwell quotes – and I think that the shortening is the source of a lot of the misdirected arguments against Anderson’s book. If you only say “Information wants to be free”, then the big question around free becomes how do content creators get paid? If you take this angle, then even talking about free as a concept is tantamount to advocating piracy – so a lot of the people upset with Free are, like Gladwell, professional content creators, wondering how they’ll get paid once information becomes free. Actually, even more than content creators, a lot of the kicking against free as a concept comes from content filterers (newspaper publishers and record companies, for example).

    I think that the way around this problem is to think about the full quote from Brand, as Anderson actually does in the book. The tendency towards cheap/free content is inexorably driven by technological advances – it doesn’t really matter if we like it, or if we want it to happen – it’s just the way it is. The question then becomes ‘how do we structure a business model that includes some free content?’ While this can be a challenging question for incumbent businesses with business models that are difficult to change, it also provides significant opportunities for business model innovation.

    And in fact, we have many, many examples of business models that include some part of the intellectual content being offered for free. Just think of the longest running, most successful open innovation project in history – science. Watson & Crick published the structure of DNA in Nature in 1953 – for free. Subsequently, the entire industry of biotechnology has been built on the foundation they provided, along with many other businesses. And even though Watson & Crick didn’t get paid by Nature for creating that short piece of content, they still ended up doing ok financially…

    FirstSketchOfDNADoubleHelix

    The key to making free work is to consider both parts of Brand’s idea about information – especially the first part. Information wants to be expensive, because it is extremely valuable when it is adapted and applied to specific contexts. If you are creating worthwhile content, the key is to figure out how to find the people that control those contexts, and build your business model around making money off of them. There are plenty of ways to do this – Anderson’s original article about Free in Wired links to a how-to wiki that lists 53 different business models that include free as part of the model, but which also include revenue-generating mechanisms. Making money off of free is a pure business model problem, and the people and firms that are innovative in constructing their business models are the ones that will profit from creating content in the information age. To do this, don’t just think about how information wants to be free, you must also consider how it wants to be expensive.

    Follow up post here.

    Other free resources:

    Steve Outing has a great article discussing how this might work for newspapers

    As usual, the definitive bit of writing on the issue comes from Kevin Kelly

    Chris Anderson discusses the book in the Authors@Google program

    Mike Masnick has a good take on the issues

  • rules for positive deviance

    bell curve

    Atul Gawande ends his latest book Better with a set of rules for positive deviance. This is building on the idea that performance in most fields follows a bell curve, and that if you want to end up in the good tail, you need to take steps to deviate from the norm in that direction. Since the book is about medicine, most of his examples are from that field, however, it is a pretty good roadmap for being a good innovator as well. His steps are:

    1. Ask an unscripted question – don’t just go through the script when you’re talking with people – ask them something (anything!) personal. “It’s not that making this connection necessarily helps anyone. But you start to remember the people you see, instead of letting them blur together. And sometimes you discover the unexpected.”
    2. Don’t complain – “The natural pull of conversational gravity is towards the litany of woes all around us. But resist it. It’s boring, it doesn’t solve anything, and it will get you down. You don’t have to be sunny about everything, just be prepared with something else to discuss: an idea you read about, an interesting problem you came across…”
    3. Count something – “One should be a scientist in this world. In the simplest terms, this means one should count something… It doesn’t really matter what you count. You don’t need a research grant. the only requirement is that what you count should be interesting to you… If you count something you find interesting, you will learn something interesting.”
    4. Write something – “It makes no difference whether you write five paragraphs for a blog, a paper for a professional journal, or a poem for a reading group. Just write. What you write need not achieve perfection. It need only add some small observation about your world… by offering your reflections to an audience, even a small one, you make yourself part of a larger world… The published word is a declaration of membership in that community and also of a willingness to contribute something meaningful to it. So choose your audience. Write something.
    5. Change – “Look for the opportunity to change. I am not saying you should embrace every new trend that comes along. But be willing to recognize the inadequacies in what you do and seek out solutions. As successful as medicine is, it remains replete with uncertainties and failure. This is what makes human, at times painful, and also worthwhile… So find something new to try, something to change. Count how often you succeed and how often you fail. Write about it. Ask people what they think. See if you can keep the conversation going.”

    Gawande is a fabulous writer, and I think that these suggestions have general utility. Following these suggestions will make you better at whatever you do. Innovating is all about change, so the last poitn is obviously useful for innovators. But I’m also a big believer in the value of counting and writing – they feed a propensity towards action – which is another central part of innovation.

    I’m going to give them a try. How about you?

  • the role of failure

    Atul Gawande from his most recent book, Better:

    The third requirement for success is ingenuity – thinking anew. Ingenuity is often misunderstood. It is not a matter of superior intelligence but of character. It demands more than anything a willingness to recognize failure, to not paper over the cracks, and to change. It arises from deliberate, even obsessive, reflection on failure and a constant searching for new solutions.

    Exactly.

    Even though Gawande writes about medical issues, he does so in a way that imparts a lot of wisdom that can be applied to many endeavours, including innovating.

    fail owned pwned pictures
    see more Fail Blog

  • econophysics to the rescue

    I read Why Stock Markets Crash by Didier Sornette last year, and I thought it was a pretty good book. Sornette builds on the quantitative work of Benoit Mandelbrot to make models of market bubbles using non-linear dynamics. The basic idea is that bubbles are created when the expectations of people in a market become spontaneously synchronised. It has some heavy-duty math to back up this idea, which makes it a less readable book than one might like, but to me Sornette’s models ring true.

    One of the features of Sornette’s models is that he believes they include information that can predict the time when a market reaches an inflection point, which may in turn cause a crash. When I first read this, I was fairly skeptical. However, he is doing something that very few orthodox economist are willing to try – he is making public predictions of market crashes – including dates! In collaboration with several other authors, Sornette predicted date of the US housing market crash (roughly), and the date the 2008 oil bubble would burst. Most recently, they predicted a stock market crash in the Shanghai stock market, with the most likely dates being sometime between 17 and 27 August 2009. It didn’t. The market waited to crash until August 4th.

    shanghai stock prices 2009

    This is actually pretty remarkable. I’ve read several different blog posts discussing this issue, a lot of people are arguing whether or not a 20% drop in value in 2 weeks is a crash or not, and lots of other things. Many others talk about whether or not these are self-fulfilling prophecies. As much as I like econophysics, I’m pretty certain that it’s pretty close to impossible to credibly argue that articles in Physica A are moving the US housing market. Personally, I’m still not convinced that I buy Sornette’s underlying model, but I still think that the general approach has merit. The lesson that I take away from it all is that there is enormous potential value in modeling complex economic systems using non-linear methods. We need to do more of it since when we’re innovating, we are trying to introduce ideas into a complex, non-linear system.

    Here’s the article with the heavy-duty math behind the prediction…

    Image from an article reporting the story on the arXivBlog, hat tip to Alex Tabarrok)

  • if you want some crocs, better buy them soon

    Another book that I read on my trip is Voodoo Histories: The Role of the Conspiracy Theory in Shaping Modern History by David Aaronovitch. It looks at a number of conspiracy theories from around the start of the 20th Century up to the present time. Some of them have had deadly consequences (e.g. the myths surrounding the protocols of Zion which led pretty much directly to the holocaust), while others have been a bit more benign. In all cases, Aaronovitch makes a fairly convincing case for the premise that conspiracy theories are often the result of people who are not achieving the political or social outcomes that they want, and who use the idea of a conspiracy as an explanation for their failure.

    Since an important part of innovating is getting your new ideas to spread, looking at how bad ideas spread can be useful. In this case, the bad ideas are spreading because they provide some level of comfort to people (even though they are usually expressed hysterically). In the case of the economy, bad ideas that spread are probably best characterised as fads. There’s no good reason for them to spread, and often they replicate for reasons that are unrelated to their features or benefits. A lot of firms try to find the next fad, but in the long run, it seems to me that it is better to try to build success by providing a solid product or service, rather than simply through letting people feel like they belong. Now that the fad part of their lifespan has passed, it looks like if you really like Crocs because of their features, you better buy more pairs soon, just to use a recent example of a bad idea that spread widely!

  • the role of chance

    I had a chance to catch up with my friend Rick while I was in Seattle. Since we go back a long time, we had plenty of things to talk about. One of the things that we touched on was his time with Microsoft – he worked there on software development starting in the mid-80s. He said that he thought that one of the primary drivers of Microsoft’s success was the HR department during that period – Rick felt that the quality of people there had been extremely high. My observation at the time was that in hiring people, they were skilled at identifying quality rather than just looking for conformance to criteria as a proxy for quality. So even though I don’t often look at the HR department as a driver of innovation, I think that in this case it probably was.

    Right after our talk, I was on the plane back to Brisbane where I finished reading The Drunkard’s Walk: How Randomness Rules our Lives by Leonard Mlodinow. Towards the end of that book (which is very good and well worth checking out), Mlodinow talks about the role of chance in the success of Microsoft in the middle of a discussion of whether or not CEOs really deserve all of the credit and blame that they get the outcomes their firms experience. One of the points that Mlodinow makes in the book is that the vast majority of variation in profits that firms experience fall well within the normally expected range of random change, and that consequently, our tendency to credit CEOs with the relative success or failure of their firms is not very well-grounded in evidence.

    I mostly agree with this angle, and it’s one that I try to get across in my classes. It is one of the logical consequences of viewing the economy as an evolving complex system. Which ties in to another issue that Rick & I discussed – power law distributions. Power law distributions are commonplace in the economy – two key examples are the distributions of wealth and returns to innovation. When I’m teaching this idea, the ‘so what’ question is fairly important. One natural conclusion is that people should be a bit more humble in the face of success, and a bit more persistent after experiencing failure. I also gained an insight into this when I was talking to Rick. Mlodinow makes the point that a lot of business processes generate random returns, but that one strategy that you can use is to increase your likelihood of success by increasing your skill level, or the quality of your product or service. One way that you can do this is implementing the mid-80s Microsoft strategy – make sure that you’re hiring better people than everyone else. This doesn’t guarantee success, but it improves your chances. And in a complex economy, improving your chances is probably the number one management task. You’ll still face mostly random outcomes, but investing in quality definitely tilts the odds a bit more in your favour.

  • increasingly wired

    One of the books that I read on the way home last week was Create Your Own Economy by Tyler Cowen. He’s got a quick summary available on the Fast Company site, which includes this quote:

    In a typical day, I might write two tweets, peruse 15 blogs (Jason Kottke and Penelope Trunk are two must-reads), and watch James Brown dance on YouTube. If it’s a really fun day, I’ll read more blogs, scour the Web for movie reviews, browse eBay, Google myself, and spend more time on Twitter. None of this costs me a penny, and yet I am producing plenty — namely, my own interest and amusement.

    More and more, “production” — that word my fellow economists have worked over for generations — has become interior to the human mind rather than set on a factory floor.

    I’m not twittering much, but my day ends up looking a bit like that as well. This also reminded me of a recent post by danah boyd – who talks about being wired at conferences:

    For the last few years, I’ve been spoiled. I’ve been surrounded by people who, when asked a question, immediately bring out a digital device and look it up. The conferences that I’ve attended have backchannels as a given. Tweeting, blogging, Wikipedia-ing… these are all just what we do. It’s not all there – it’s still broken. My cohort is still always in search of a power plug and there’s a lag between the time a question is asked and the point at which the iPhone’s slow browser is loaded, the query is entered, and the answer is given. Still, we’re getting there.

    She then goes on to discuss a conference where she was criticised by some older academics for doing precisely that, and finishes with “How I long for being connected to be an acceptable part of engagement.”

    Before Cowen’s book, I read Halting State by Charles Stross, which is set in 2018, and looks at how the world might be once we are all fully wired, all the time. It’s certainly an interesting question. The three authors all have slightly different takes on the topic as well – which makes we wonder if it is a bit of a Rorschach test, where we end up projecting our own hopes and fears onto whatever scenario we’re considering. Cowen views things pretty optimistically – basically saying that having the ability to generate our own leisure is empowering and will ultimately lead to a more diverse and interesting world. Stross is a bit more pessimistic – in his view the increased levels of connectivity lead to decreased freedoms for normal people, while corporate and police power has substantially increased. You can see the generational differences though when you read boyd, because to her, being wired is just the way things work, and she feels cut-off from the world when she’s not hooked up to data.

    I don’t really have any profound point to make here (or even a trivial one), I just thought that the contrast between the three views of the present and future was interesting. And all three people are thought-provoking, terrific writers, who are worth checking out.

  • people building networks

    I just finished reading Why the Garden Club Couldn’t Save Youngstown: The Transformation of the Rust Belt by Sean Safford. It’s a very good book. Safford compares the histories of Youngstown, Ohio and Allentown, Pennsylvania in an effort to discover why Allentown has been able to recover economically from the collapse of its primary industry (steel), while Youngstown hasn’t. He starts by tracking and comparing the social and economic histories of the two cities – which shows that differences in their social structures at the time of founding (200 years ago!) led to differences in social structures now, and that these differences explain a fair bit of their current situations. The main story is that the business elites in Youngstown formed a fairly closed circle, which was recreated across a number of social settings, while in Allentown there is much more of a history of cooperation across classes leading to effective collective action.

    The story concludes with a very nice piece of network analysis, which supports this story. Safford looks at the interlocking board membership networks in both cities in 1950 and 1977 (both sample times precede instances of substantial economic change). He includes information about civic groups that are oriented around both business and community. What he finds is that in Youngstown the membership of business and community boards overlaps almost completely, while in Allentown these form two quite different networks. He concludes that this supports his earlier story – that in Youngstown the business elites faced a time of crisis and responded by mostly just talking to themselves, while in Allentown the business leaders encountered a broader range of opinion, which led to a better response to the economic changes.

    This short summary obviously doesn’t do the book justice, and it’s definitely worth checking out yourself. It is a beautifully written book (even though it includes academic data, it reads like the sort of thing you could find in The New Yorker). It is also a very good example of how to put together a coherent research project, which PhD students can use as a model. The reviews of the book have been very positive. One thing that has struck me is that many people are pointing to the novelty of Safford’s use of network analysis.

    powerlaw

    While I think his combination of network analysis and more traditional sociological techniques is very well conceived and executed, I also think this is a bit of a strawman argument. There are obviously some prominent streams of network research that treat network structure as the only driver of action within the network (mostly coming from the physics-based literature). But I think that most people that are using network analysis in the social sciences (even some econophysicists!) acknowledge that agency is important, and try to take into account the impact that people and their relationships have on the formation and maintenance of networks. The fantastic work of Pip Pattison, Garry Robins and their research group is a good example of researchers that take these issues very seriously. Even in work that is more structurally based, agent-level action is taken pretty seriously – I was struck recently by parallel findings concerning the interplay between network structure and individual attributes in research by Andrew Stephen and Oliver Toubia (see their paper Explaining the Power-Law Degree Distribution in a Social Commerce Network) and some of my findings concerning the international trade network (while that particular piece of research doesn’t have much room for agency, the point is that the interplay between structure and actor is there, which is something I’m taking very seriously in my current work). And in our research group, Sam MacAulay, John Chen and Marco Fahmi are all doing studies that take the human side of networks very much into account.

    While that angle isn’t unique, this doesn’t take away from the value of Safford’s book. It is a very well thought out piece of research, and he tells the story really nicely. It’s definitely worth a read.