Apple integrates vertically

Apple has decided to produce its own chips instead of buying them from Intel (WSJ, June 2020 and WSJ, June 2020). I wonder if specialized investments or contracting costs increased?

An intelligent piece on the future of WFH

Big tech and universal telecommuting

by  Tyler Cowen June 20, 2020 at 2:12 am in 

• Economics
 
• Web/Tech

It has gone great so far, but I don’t think it is socially optimal to be doing this forever.  Here is my latest Bloomberg column on that topic, 2x the usual length, excerpt:

If Twitter, Facebook and other tech companies shift toward everyone working from home, it will mean less reliance on esprit de corps and morale to ensure performance, and more management using direct financial incentives and project- and output-based monitoring. Virtual tools can help organize teams, but they simply can’t replicate the intellectual frisson of “gathering the smart people” together, and this could damage performance and innovation.

And:

There is some evidence that when employees work at a distance, they don’t put in extra hours or extend themselves for the benefit of co-workers. That probably means a better work-life balance for many people, but perhaps also inferior performance from a lot of companies over the longer haul.

This move away from workplace morale as a motivator will help self-starter employees, but it may not be good for tech labor overall. In essence, without a local workplace ethos, it is easier to commoditize labor, view workers as interchangeable and fire people. The distinction between protected full-time employees and outsourced, freelance and contract workers weakens. A company can make the offer of, “If you hand in your project, we pay you,” to virtually any worker around the world, many of whom might accept lower wages for remote roles.

Bringing new workers on board is an especially difficult problem for this model.  In the short run, of course, that is a minor concern but over time it grows.

GE’s use of goodwill is puzzling

This piece discusses that GE’s puzzling use of goodwill. (WSJ, March 2019). The article reminds me of the case in the book where OVI inflated estimates of oil reserves. I think the decision was bad. “Increasing goodwill had the effect of enabling GE to avoid costs that would have reduced its earnings. Not writing it down delayed investors’ realization of how deep the conglomerate’s problems ran.” Three questions:

1. Who made the decision to inflate goodwill?
2. What information did they have?
3. What incentives did they face?

The process Boeing used to design 737 MAX

Here is a description of the The describes the process Boeing used to design 737 MAX (WSJ, March 2019).

1. What bad decisions did Boeing make?
2. Who make each decision?
3. What information did they have?
4. What incentives did they face?

Managers who apply the rational actor paradigm help their firms perform better

VoxDev reports that firms “that [set] sensible targets, [provide] proper incentives, and credibly [monitor]i performance”  and “boast rigorous performance monitoring, systems geared to optimize the flow of information across and within functions, motivational short- and long-run targets, and a performance system that rewards and promotes great employees while helping underperformers to turn around or move on” “are more productive, grow at a faster pace, and are less likely to die” (Vox, Jan. 2018).

How to ask for a raise or promotion

Here is a money quote: “Learning how to convince other people to give you what you want requires that you first figure out what scratches their itch. This means figuring out how to frame your raise as a win for your boss. The more closely your promotion is tied to fulfilling the boss’s needs, the more successful you will be” (WSJ, June 2020).

Olly has died

This obituary of Oliver Williamson describes the focus of his work and some of his main conclusions (WSJ, June 2020).

"All feasible forms of organization are flawed. We need to understand the trade-offs that are going on, the factors that are responsible for using one form of governance rather than another, the strengths and weaknesses that are associated with each of them.”