Author Archive

The Anthropomorphication of Siri

November 19, 2011 Leave a comment

For someone who doesn’t even exist, Siri is quite popular. At Steve Jobs’ memorial last month on the Apple campus, not one but two of the speakers- board members Al Gore and Bill Campbell- told anecdotes about the iPhone’s new digital assistant.  She has websites devoted to enshrining her utterances  for posterity. People pour their hearts out to her, and lonely men propose marriage. Others, I assume, have secret emotional affairs with her, to the chagrin of their significant others.

What in the world is behind this mass adulation of a cleverly-crafted string of bits and bytes? The secret of Apple’s genius, that’s what. And this is what Steve Jobs, who was never shy of pouring scorn on his rivals, meant when he decreed that Google and Microsoft ‘just don’t ‘get it’. But what is it exactly, that they don’t get? The answer is what Apple considers its secret sauce- what Jobs described as the unholy matrimony between technology and the humanities. In other words, computer science with a human face.

Or voice. Both Google’s Android and Microsoft’s Windows Phone 7 operating systems had voice-recognition functions before Siri came along. But nobody talked about them. Nobody wrote adoring paens to them. Nobody loved them. Why? Because they failed to touch us as humans. When Apple bought the program that became Siri, it developed the program to actually have a personality (thus the charmingly witty, coy and even sarcastic remarks attributed to her).  They gave her a dulcet voice (Microsoft’s version has a stereotypically bland ‘androidy’ voice, and Google’s doesn’t talk). Hell, they gave her a name.

And just as we project human qualities onto our pets and even our cars, we have begun to readily project human qualities onto a pocketable electronic device, just because it talks to us in a mellifluous voice. Are we silly to do so? No doubt the androids at Google and the Bill Gates clones at Microsoft would probably have thought it silly to anthropomorphize their software (especially after Microsoft’s embarrassing debacles with previous digital assistants like Clippy, Bob, and that dog everyone would like to drown). But Apple freely embraces the touchy-feely in its products and marketing.

Where will this lead? No doubt Google and Microsoft are now internally brainstorming what to christen their respective Siri clones. No doubt Artificial Intelligence has crossed the threshold from arcane science to popular cool, and a new wave of conversationally-aware devices is in the product pipelines of many a tech company. No doubt GM, Toyota and Ford realize that Knight Rider’s KITT can be- in fact, must be- brought into the world, to chat with us as we drive to and from our cubicle farms.  And that is all splendid. It is the inevitable flood of robot girlfriends that’s got me worried.

Categories: Technology

Why Succession Planning is bad for your health

October 14, 2010 Leave a comment

The Economist is facetiously comparing the disciplined succession-planning process in North Korea with the shambolic one found in many corporations. The cause, of course, is not a lack of focus by Boards as they claim: the real reason CEOs don’t like to designate successors is if you do so, you immediately create someone with a vested interest in seeing you fail.

Every time you vest a lucrative stock option, your successor shifts uncomfortably in his seat, thinking ‘that should have been me.’ Each time you make a strategic gaffe, his darkly plotting heart leaps in the hope that you drive the company over a cliff so he can step in and cover himself in glory by rescuing the mothership from your geriatric incompetence.

As a CEO, make no mistake: your designated successor spends his evening patiently sharpening the knife he shall someday plunge gleefully into your back. Don’t be fooled by the polite deference he displays in public: he would love nothing more than to lace your coffee with arsenic. He has nothing to lose and all to gain by your destruction.

So the next time your Board suggests you nominate a successor, point at North Korea and say to them: The Economist suggests that nominating my son is best practice. May I? That should put an end to that tiresome initiative.

The Winner’s Curse is Upon HP and Dell

August 30, 2010 Leave a comment

The world of finance likes to pretend that big deals are driven by rigorous analysis, spreadsheets and efficient negotiations. The truth however is, most deals aren’t any more sophisticated than the frenetic haggling in any Turkish Souk.

Take the ridiculous bidding war between HP and Dell for some obscure pipsqueak of a software company that hasn’t ever made a profit. The ludicrous valuations on offer clearly are not and will never be supported by any objective measurement of value like free cash flow. The prices are going so high simply because neither HP nor Dell wants to back down and lose the bidding war.

This is the primary reason most M&A deals end in failure: buyers pay too much. And when there is a rival bidder, the premium is even more preposterous. The long-suffering analysts who have to keep churning out increasingly implausible post-merger ‘synergy’ scenarios to justify the huge final price are simply the supporting cast in a testosterone-fueled game of ‘my budget is bigger than yours.’

The price paid in any M&A deal is the result of negotiation, and the balance of leverage and desperation between buyers and sellers. Rival bids put the seller in the position of choosy suitor. Like with all things in business, the social psychology of the deal trumps the numbers any day. This is why the winner of the bid has time aplenty to rue their rash enthusiasm.

How Do You Make Governments Behave?

May 19, 2010 1 comment

Business vs. Government

Just like there are diseases of the rich, there are economic malaises peculiar to wealthy countries. One of these is a high level of government involvement in the economy. In the UK for example, government spending is set to become half of GDP. Similar numbers characterize much of Europe and the OECD.

The implications of this are interesting. It means that our notion of how economies work- firms produce goods and services, consumers buy them, and efficiency is guaranteed by the forces of competition- is only 50% of how rich countries’ capital stock is being deployed.

The biggest player in the economy is a gigantic monolith with the power to tax. It has no incentive to be efficient, because it cannot go bankrupt. It has no competition. When it spends too much, it can simply raise taxes. When these built-in incentives to fiscal profligacy result in massive government debt and deficits, it simply waits for its neighbours to bail it out.

The frightening reality is, there is no-one to regulate the regulator, to watch the watcher and prevent him from dragging the whole economy down in a sea of red ink. This is why the IMF is now plaintively begging the world’s governments to behave.

Of course, we need more than begging. Rich countries have got used to gigantic governments and high taxes. This is unlikely to reverse. The next best thing is to devise rigid mechanisms for regulating the fiscal behavior of governments. Elections clearly don’t work. The answer to this mighty challenge will be the big economic question of our time.

Why You Shouldn’t Innovate Too Much

May 14, 2010 Leave a comment

No innovation, please.

Many businesses adopt the canard that process or product innovation is key to stealing a march on the competition. They therefore aspire to deliver stuff to customers in new and innovative ways. Fortunately for themselves, they usually don’t succeed.

That’s because people are a rather conservative breed of animal. They like things to be familiar and predictable, and often find change confusing and disconcerting. More subtly, the ‘normal’ way of doing things can be deemed to have resulted from millions of consumers voting for a particular business model until it became mainstream. Ignore the peoples’ vote at your peril.

Google learned this the hard way when it ventured into the mobile phone business with its ill-fated Nexus One phone. Being an Internet company, Google revealed a bias for the Internet way of buying stuff when devising its distribution strategy. It decided that the Nexus One would only be sold online via a web store.

Failure and low sales ensued. Google is now retreating from that ‘innovative’ way of selling mobile phones, and adopting the more traditional route of selling through mobile phone retailers. It turns out people like to see and touch phones before they buy them, and their considered set of potential purchases is the phones they see at retail.

Lesson? Don’t try to get customers to change their behavior. Your product is unlikely to be great enough for them to go to the trouble. Instead, find out how they like to buy stuff, and offer it to them through their preferred channels. It’s possible to be a little too innovative for your own good.

Bailout for Business Bloggers

April 20, 2010 1 comment


Why are there no atheists in foxholes? For the same reason there are no free-marketers in a recession: in desperate times, we lose nothing (but our consistency) by crying to a higher power for help, whether that higher power be the God we want to protect us from enemy bullets, or the government we want to save us from our own financial irresponsibility.

And that’s one of the many reasons government intervention in a correcting market is an insidious idea: it lets people get away with putting themselves in bad situations. Which means of course, that they’ll go ahead and do it again.

During the mass panic that was late 2008, all manner of business cried unto the government for salvation, like a people unto their God. Free marketers like us warned that giving money to failing industries was a slippery slope to the kind of massive fiscal deficits we’re seeing now. We were ignored.

It took Larry Flynt, radical purveyor of porn, to point out the silliness of using public money to bailout the auto and banking industries. He duly demanded a bailout for the porn industry. And why not?

Today, we see that such facetiousness was not entirely far-fetched, as airlines are now demanding a bailout in recompense for their losses due to the Icelandic smoke belch. If this continues, we might as well shut down all industry and just all collect our living wage directly from the government. But in the meantime, on behalf of business bloggers everywhere, I hereby demand a bailout. And why not?

Iceland and The Calculus of Risk

April 19, 2010 Leave a comment

Corporate risk management is supposed to be an exact science: a bespectacled number-cruncher generates risk scenarios, assigns probabilities and impact assessments to them, and then based on its risk appetite, the firm decides which risks to accept, which to reject and which to mitigate or transfer via say insurance or other contracts.

Or so we’d like to think. The current calculus of risk of flying over Europe after Iceland belched a cloud of noxious anger into the air to protest its treatment during the credit crunch, illustrates how we REALLY deal with risk. We never do it rationally. We start with our emotional or self-interested positions, then look for data to support our views. Basically, we do what we feel like, then justify it by rationalisation and tendentious data.

When the cloud of ashy anger first grounded flights, we were ok with it. We could live with not travelling for a couple of days as long as the reason was to keep us safe. Then the costs of not flying mounted up. Airlines were losing millions by the day, corporations couldn’t do business, travellers were stuck at airports. Suddenly, rather than being the prudent saviours of peoples’ lives, air traffic controllers became ‘over-reacting’ bureaucrats.

Emotionally, we were fed up, and just wanted to fly. So KLM, Air France and other airlines sent up ‘test flights’, which proved- surprise, surprise- that it was safe to fly. We’d found the data to support the risk we wanted to take. So the lobbying began– let us fly, the airlines pleaded. Now, it looks like the authorities will cave in to the pressure and let the airlines loose to profit.

We have no idea what the real risks are. Because we present data to support our a priori positions, which are always biased by our incentives, data is meaningless. For decision-makers in business, this is just a high-profile case study on why risk management- like most systematic decision-making- is really a farcical comedy of errors. Let’s just hope nobody dies.