The Decision Strategist

I have spent the last couple of months incredibly addicted to this little game called nethack. It’s free and completely old school, and just terribly awesome. I have yet to beat it. Someday I’ll post a story of my exploits.

I was gearing up the other day to start working on new projects again, and went over my primary goals for 2007. It turns out I did ok. I was officially out of debt in November (not counting the dreaded student loans), made a lot of progress on projects, have been running, and maintained a pretty healthy diet. I could have done better, especially without the devil game referenced above, but I’m not as disappointed as I thought I would be.

Which brings me to two different but related thoughts. First, I feel like my life is composed of a number of cycles. It’s vary noticeable with respect to my work on individual projects. I tend to have a few months of hard work and extreme motivation, followed by a few months of a lack of enthusiasm. But there are other areas: exercise, games, jobs, etc… In fact, I’m starting to think that I only enjoy a particular job for about 2 years before I start to get bored. I spent two years at REMI, have spent two years at BBER, and am now looking at spending two years in the Peace Corps (by the way, I received my medical clearance the other day).

The second thought is about my expectations as I pulled up my list of personal goals for 2007. Why did I feel like I had failed? Are we predisposed to feel unsatisfied with our efforts? To some extent it seems like this is common-place, even in areas where other people think our work is spectacular. At work people and clients have been pretty happy with what I’ve done, but I tend to focus on the aspects of any given project that I didn’t explore fully, or had to make uncomfortable assumptions.

So is it just a difference of information? Clients have only the end results of my work to evaluate, and don’t see all the missteps or excluded possibilities. They don’t have access to full information. Is it yet another case of the signal to noise ratio?

Unequal information and the signal to noise ratio have something to do with it, but then why was I convinced of my own failure to achieve my goals? My perfect information of my own thoughts and actions should have kept me online with how I was actually doing. Of course part of feeling like I didn’t do well has to do with the non-trivial impacts of environment and my state of being, which could be related to any number of factors.

But a bigger force was at work. The major source of my disappointment came from my work on launching decyder. I had hoped that by the end of 2007 I would have a working framework for group decision-making, not to mention well-developed web application development skills. In reality I have only a basic framework, and though I know much more than I did at the beginning of 2007, I still have a long way to go.

This means that one goal, ‘launching a decision-based startup’, overrode my other goals and became a proxy for my success in 2007. Why is this? If you asked, I wouldn’t put it above my other goals, especially ‘developing stronger connections with the important people in my life’. But I think there are several reasons why it naturally rose to the forefront:

• It is measurable. My success or failure can be easily discerned by the health of the project, especially in metrics like number of users (0) and income generated (0).
• It has glamor. The idea fits into a society-wide story in which a lone person creates a business with spectacular success.
• It is perhaps most closely related to my future career (in my mind at least). If ultimately I’d like to be more involved in creative idea implementation, this is a good building block for my development.

The other possibility is that we, or at least I, are inherently optimistic about what we can achieve, and pessimistic about what we have achieved. Most people, programmers especially, have a terribly difficult time estimating how much they can accomplish in a given amount of time, often largely overestimating their abilities.

The key for me was that I realized that even if I didn’t accomplish all of my goals, I had made some fairly significant strides in all of them. Perhaps then the point of goals isn’t so much to accomplish them, but to give you something to work towards if you are floundering.

Baby steps

-zot

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A significant amount of my profession involves working with small towns to examine economic issues. These are issues that are probably familiar to all of you because they are the same for every small resort town:

• Youth leave because there are few economic opportunities and the big cities are more exciting, or to attend college in the big city.
• Real estate is priced far beyond anything that is affordable to local residents. Only wealthy immigrants can buy houses.
• Costs are extremely high.
• Arts and tourism are a significant, if not the main, source of income for residents.

The result of these issues can generally be described in terms of two major trends. First is the demographic shift brought on by the emigration of youth and the immigration of aged populations.

With the median age getting older, the towns focus naturally shifts to fulfilling the desires of older population and away from providing a better and more enticing environment for the younger up and coming generations.

The second major trend is the gentrification of the community. As the median income increases, low wage earners become more and more marginal, and end up relegated to the role of providing services for wealthier tourists and residents. These are jobs almost exclusively located in food services, accommodations and retail. The problem of residents not being able to buy real estate only intensifies.

The parallels with so-called “third world” countries are alarming.

Pursuit of Economic Growth

The strategies for economic growth are not qualitatively different except in minor aspects: pursue tourist-funded and export-led growth.

Depending on tourist spending as an economic engine has worked out fantastically for some countries and towns, but never without the problems mentioned above and what amounts to the institutionalization of a very poor working class that serves very rich tourists. I’ll leave it for others to argue whether this is an improvement over their earlier lifestyle.

A tourist-based economy is undesirable for at least two reasons: tourism is extremely fickle and dependent on economic fluctuations, and it locks the town’s economy into a single track that cannot be left without significant consequences.

As the world approaches a recession, small resort towns are clamoring to find out why their real estate sales are slowing and their tourist numbers are down. They think that it is a problem they can fix if they just market themselves more, or make the town prettier and more friendly, or (insert random improvement here).

What they don’t realize is that the last 8 years of tourism have been funded by first a tech bubble and second a housing bubble caused by extremely low interest rates financed by our tax dollars.

In essence, much of tourists’ perceived wealth was imaginary, and now it is leaving (I’m talking about house and stock-based wealth here, not true wealth).

Few small US towns export anything of significance except their youth. Export led growth usually makes people think of China. In some areas crops are a major export, and in others arts and crafts may be somewhat important.

The real truth being, of course, that America itself isn’t a net exporter of anything but marketing and design. It hasn’t been more than this for years, though the severely weakening dollar will likely change that somewhat.

But the real problem with tourism or export-led growth is that they are based on the same thing: inequality.

A Simple Sustainable Strategy for Growth

There is really only one way to sustainably increase the economic well-being of a community, and that is to increase the productive capability of the area.

I don’t mean this in the industrial sense of destroying the surrounding environment to build manufacturing ability, but rather to take steps to develop both the infrastructure and the productive ability of the workforce.

This is a slow process in which a community must consume less than it produces and invest the excess in greater capacity. In the US this is a completely foreign concept. Instead we focus on getting people to spend as much as they can.

In other words, we have unequivocally adopted a strategy of short term growth at the expense of long term sustainable gains.

This is the tragedy of democracies in general, but especially strongly pro-corporate democracies. Politicians are under pressure to produce immediate gains, and so sacrifice future gains to do so. Bush has pursued this strategy to perfection by both cutting taxes and spending an outrageous amount of money, ensuring that the economy stays afloat for a while, but the consequences when the party is over will be that much more painful.

Those of you who work in sustainable community development in small towns, I’d be interested in hearing your thoughts about how communities can pursue a general strategy of sustainable development. I’ll post your responses next week.

-zot

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SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis is sort of all the rage in strategic planning these days, and is typically applied in a business setting to strategize about a certain objective. It is also this week’s new decision making technique, though it isn’t explicitly used in decision making as much as strategy. In this case I’m going to apply it on a personal level to analyze my own strengths, weakness, opportunities and threats.

Part of the popularity of the SWOT analysis may come from it’s simplicity. Once an objective is defined, a list of each aspect is created. This list is used to create a strategy for achieving the objective.

Yet that simplicity is also the source of it’s criticism. SWOT analysis has been criticized because it leads people to think they have done an adequate job of planning when all they’ve done is list four categories of aspects. SWOT analysis allows you to consider the factors that are affecting a situation or objective, but doesn’t provide the strategy itself.

One key for a useful SWOT analysis is to make sure you have an explicitly defined objective. SWOT analysis in the abstract tends to contribute to the error of thinking SWOT is adequate and the analysis ultimately has little relevance. Since I’m doing this exercise on a personal basis, here’s my objective:

To move into more creative work based on idea generation and execution in programming and design.

Corollary: Given the tendency for businesses to reward status quo success over creative innovation, it is likely, though not necessary, that this means a startup or freelance work.

With this objective in mind, the first step of a SWOT analysis is to consider the internal factors: strengths and weaknesses. These should be things that are inherent to the person (or company usually) and not things that involve external factors.

Strengths and Weaknesses

The next step is to consider the external factors: opportunities and threats. These are things like political and economic factors, market trends, situational and environmental changes, etc…

Opportunities and Threats

That’s the complete SWOT analysis process, but I hardly have a strategy at this point. I’ll have to work on developing one and post it later. There are some key things to point out here though.

First is that I listed more positive than negative factors when talking about myself and less positive factors when thinking about the external situation. Is this a result of selective consideration of evidence as a confirmation bias, or is it just the truth of the situation? Something tells me that if I was someone else doing this analysis on me I’d find more negative personal aspects.

Second, there are some things I listed that need qualification or explanation. I should start by saying that I need to go back and revise my objective to explicitly say creative problem solving instead of just creative work. When I think of creative work I’m generally thinking of new approaches to problems, not things like art or poetry (not to dis on all you cool artists out there).

Another thing that strikes me is looking at the lists of strengths and weaknesses, I am much more capable of succeeding that I usually think. One of my perennial weaknesses is that I underestimate my ability to program, but as I work with code more and more, I am finding myself naturally learning and able to do stuff I would have recently balked at.

None of my weaknesses seem particularly strong or debilitating. Further, taking advice that I heard from somewhere (maybe The 4-Hour work Week), I’m going to focus on increasing my strengths rather than eliminating my weaknesses. Why? Because the return on investment for increasing my strengths is exponential, while the return to eliminating my weaknesses is (at least in the beginning) linear at best, not to mention demoralizing.

One the other hand, my biggest concern for any advertising-based revenue source (such as this blog) is that a consumer spending led recession, especially with the astronomically high levels of debt, will result in a significant decline in sales of all kind, including ad-based internet sales.

So that’s a SWOT analysis, and it gives me a basis for examining the variety of factors that will affect my failure or success in obtaining my goal. If you’re like me, you’re thinking that it’s rather similar to other decision making techniques like the Pros-Cons-Fixes method used in What am I doing with my life? and Plus-Minus-Interesting used in Buy vesus Rent Part II.

The only real difference is that instead of considering the pros and cons of each option in a decision, we’re considering the pros and cons of ourself or our organization with respect to an objective, and we’re explicitly separating internal and external factors.

If you’d like more information on SWOT analysis, Wikipedia has a nice SWOT Analysis page and businessballs has some good (though garish and terribly designed) information here.

On an entirely different note, why do so many decision making and strategic planning web sites seem like the digital version of a car salesman? There are only two real possibilities here. Either all these decision making techniques are snake oil, or the techniques are ok but the consultant is about as valuable as a car salesman.

Decision making techniques in general seem useful, but don’t do much to account for decision making errors. In a way they are merely the formalization of methods we do implicitly. Though I think there are real benefits to plotting things out explicitly, I’m not convinced of the usefulness of hiring consultants to do so. My suspicion is that there are a few really good ones and a whole lot of ineffectual ones, just like most other fields. More on this later.

-zot

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Hofstadter’s Law states that a project will always take more time that you allow for it, even when you take into account Hofstadter’s Law.

The problem isn’t Hofstadter’s Law. The problem is the Law of Expansion: A project expands to take up the time allotted to it.

Where I work this is a constant problem. People just do not work until they are under the pressure of a deadline. This causes some projects to be past due when unexpected problems surface, which results in longer time and higher cost estimates for future projects.

Hofstadter’s Law is true only because most people don’t work unless there is pressure to do so. Projects are overdue because everyone messed around for the first two months, not because the initial estimate of effort was wrong. Hofstadter’s Law is an error of attribution, and it’s worse because it focuses our attention on the overdue status of the project instead of figuring out why people weren’t working on it earlier.

For those of you with projects that are consistently past deadline, the real question should be, “how many hours of solitaire did I play before I actually got started on this project?”

Do it now.

-zot

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