Category Archives: Business as unusual

Human-computer interaction, indeed

This event was great fun – fun as a show, but also impressive in what both the student teams (well, MIT didn’t do that well…) and the computer could do. Jeopardy is a very complicated game, relies on wordplay (In the category “presidential rhymes”, the answer is “George W.’s bottoms”, the question “What is Bush’es tushes), obscure knowledge and word combinations (such as combining two movie titles into a new one, as in “Millon Dollar Baby Boom”).

If only the HBS team hadn’t played it safe towards the end – they bet just enough money so that they would not lose to MIT if they missed the last question – we would have had the first instance where the computer had lost to a human team. Oh well…

Addendum: A perspective from Stacey Higginbotham: Why Watson can’t talk to Siri. (I wonder if they used the same questions at that event, since Chile was an answer in the HBS one, too. Doesn’t mean they are cheating, though – it is quite easy to make a computer forget…

Notes from Eric Schmidt at MIT

After the jump, my notes from Eric Schmidt’s talk at MIT today. I am sure this will be available as a video at some point. I found the the whole exercise a bit pat – he didn’t really say anything new, but there were a few nuggets of interest here and there (and my notes are not complete.)

Update 17. nov: MIT writeup.

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Computers taking over: Examples

I am currently thinking about how computers are taking over more and more of what we humans can do, in ways we did not think about just a few years ago. The impetus for this, of course, is Brynjolfsson og McAfee’s recent e-book Race Against The Machine, where the main examples given are Google’s driverless cars, instant translation software, and automated paralegal research. I’ll use this blog post as a repository for examples of this, so here goes:

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The Digital Economist Index

The Economist has long had the Big Mac index, a surprisingly useful index for all kinds of things (though the magazine use it primarily to track over/undervaluation of a local currency. The Big Mac is a useful indicator because it is locally produced with local labor, but subject to stringent standards in terms of production and provisioning.

The digital version of the Economist, on the other hand, should be the diametrical opposite of the Big Mac – it is the same all over the world (the Economist does relatively little tailoring of its product, seeing its customers are globalists) and the price for delivering it is, of course, the same in all countries (with some provision for sales taxes.) Consequently, you would expect the product to have one price, all over the world.

Alas, that is not the case.

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Norwegian Air Shuttle: Using IT to lower costs, increase revenue, and start new businesses

(This case was written for an BSG Concours/nGenera report in March 2008, but never used. I found it while writing a report on the Norwegian IT industry, and publish it here because, well, I need a place to put it. And it is interesting – it succinctly exemplifies a company that uses IT for lowering cost (increasing the bottom line), for expanding in its current market (expanding the top line), and for creating new businesses.)

Norwegian Air Shuttle is the fastest growing low-cost airline in Europe. Its growth is built on smart market moves – supported by even smarter IT applications and use.

A Norwegian plane - white paint is cheap

Norwegian Air Shuttle was originally a small airline company leasing planes and crew – called a "wet lease" in the business – to Braathen’s, Norway’s second largest airline. When Braathen’s was acquired by industry leader SAS in 2001, it looked like the game was over for Norwegian – it had funding for less than three months’ operations.

clip_image005Bjrn Kjos, lawyer and former fighter pilot, had agreed to help the company through what everyone thought was going to be a managed bankruptcy. Instead, Kjos sought out new investors – Norwegian fishing fleet owners, accustomed to high risk and equally high rewards. With his background as a pilot and sanguine, jovial personality, Kjos personified opposition to the somewhat bureaucratic and monopolistic SAS and became popular both with his employees, the public and the regulating politicians.

The new company’s strategy was simple: To offer direct flights between city-pairs not served by SAS, and keep costs low through efficient processes and a flexible organization. Kjos was not a proponent of information technology, but knew he needed a CIO, and in 2002 hired Hans Petter Aanby, an experienced IT manager from SAS.

Hans Petter AanbyAanby needed to establish IT as a contributor to the business, and so set out to first harvest the low-hanging fruit. First of all, the company’s distribution costs were too high: Most sales came over the telephone or through travel agents, with average transaction cost of more than $35 per ticket. Aanby moved the whole process online in April 2003, removing anything confusing from the web site. The company was one of the first in the business to have customers print out their own (bar-coded) boarding passes, which simplified check-in and saved boarding time. Eventually, 85% of orders would come over the web, and only 1% through the call center. This was achieved with a small IT department and smart use of small consulting companies.

image Having demonstrated an ability to lower costs, Aanby now, with the title of CIO and EVP of Business Development, set out to increase sales. A new architecture that would allow growth in complexity without growth in costs was proposed to the board in late 2003. Airline prices vary, but it can be very hard for customers to see when it is cheap to fly. Many airlines make it hard for customers to find the cheap flights, but Aanby went the other way, giving the customers a calendar-based view of flights with prices shown. Since flight reservation systems are not set up for this kind of information extraction – each query is treated as a potential booking, thus influencing demand figures – Norwegian had to build their own database of flights and prices extracted from the transaction-oriented Amadeus reservation system. The customers responded enthusiastically, since it made it easy to change travel plans to take advantage of lower prices. The application was sold to Amadeus, and the competition eventually had to follow Norwegian’s lead and provide their own low-price calendars.

As Norwegian expanded (eventually flying more passengers outside Norway than inside,) the next step was to establish a new business out of their customer base and transaction platform: Bank Norwegian, an Internet bank that went into operation in the Fall of 2007. Drawing on a satisfied customer set, an experienced IT capability and a sophisticated, yet lean architecture, Norwegian figures it can take the transaction growth and reliability demands a banking application requires.

Kjos, now a converted IT buff, constantly talks about how Norwegian’s IT infrastructure allows the company to expand without growing costs. In August 2007, with a fleet of 22 airplanes, the company placed an order for 42 new Boeing 737 airplanes, for delivery over a five year period.

Norwegian continues to look for areas where IT can make a difference. The airline industry is extremely competitive, and the game is all about being low-cost, yet effective in how talent is employed. Norwegian consciously trains its employees to be capable of performing many tasks – any flight attendant can also do check-in or reservations, for instance, thus enabling the company to use the labor outside the 600-700 hours in the air regular flight personnel can work.

For Norwegian, the trick has to flood the company with IT support before anyone has had time to hire people. And as Aanby has put it: In Norwegian, there are really only two employee categories that are paid above market average: Pilots – and IT people.

In 2007, Hans-Petter Aanby was rewarded for his efforts by being awarded the title CIO of the Year by the Norwegian IT Magazine – and Norwegian has continued to grow since, now profitably expanding its business while most of its competitors, particularly the traditional airlines, are struggling.

Record companies lose, artists gain

In early September, two of my M.Sc. students handed in their thesis, which has created quite a stir in the Norwegian music industry. I think this has applicability outside Norway, so here is a translation (and light edit) of the Norwegian-language press release and a link to the full report (PDF, 3,4Mb):

After 10 years of digitalization of music, the average (Norwegian) musician’s income has increased by 66%. As a group, the only losers in digital music seems to be the record companies. This is the conclusion of a M.Sc. study done by students Richard Bjerkøe and Anders Sørbo at the Norwegian School of Management BI in Oslo.

The thesis “The Norwegian Music Industry in the Age of Digitalization” shows that the musicians’ income increase is due to increased income from concerts, various collection agencies and stipends from the government in the period from 1999 to 2009. During the same period, record sales have decreased by about 50%. The fall in income from record sales is less important for the musicians, however, since, on average, they only receive 15% of record sales, whereas they receive on average 50% from concerts and 80% from collection agencies (who collects provisions from radio play and other uses of the artists’ productions.)

– In the interviews we have done with a number of musicians and music producers, the musicians say they are losing money on digitalization, but the numers show that it is the record companies, not the artists, who are losing, says Bjerkøe og Sørbo.

– The fall in record sales also means that record companies are becoming less important as launchpads for new artists, and that records to a larger degree become “business cards” – i.e., a marketing tool – to attract audiences to concerts.

Espen Andersen, associate professor at the Norwegian School of Management, has been the faculty advisor for the thesis. He thinks the results show that artists in the future will have more of their income from concerts and by being played on the radio, TV or Internet streaming services. Musicians will also, to a larger extent, have to take responsibility for their own marketing. The future of the record companies is uncertain and they will need to redefine their role in the music industry.


  • Income from concerts has increased, on average, 136% from 1999 to 2009
  • Income from collection organizations such as TONO, Gramo and others has increased 108% from 1999 to 2009
  • stipends and other supports from the government has increased 154% from 1999 to 2009
  • The number of registered active musicians has increased by about 28% during this period
  • All figures have been adjusted for inflation.

For questions, please contact

  • Richard Bjerkøe, +47 9181 8686,
  • Anders Sørbo, +47 9284 0098,
  • Espen Andersen, +47 4641 0452,

Newton as master detective

I am currently working from home, laid somewhat lower than usual by a persistent cold. One way to pass the time in between attempting to do actual work is padding through some of the bookmarks of "things I will read when I have time." Here is one gem I marked four months back – Thomas Levenson‘s brilliant talk on his book about Isaac Newton‘s tenure as Master of the Royal Mint, where he had to deal with counterfeiters (particularly William Chaloner) by setting up his own detective force:

Levenson draws lines to modern economy and shows how Newton had a quite sophisticated understanding of modern economy, was a smart investor, particularly in the South Sea bubble in 1720, and then fell victim to his own greed. Highly recommended!

7 hour train journey via Bittorrent

The Norwegian broadcaster NRK recently made a 7 hour program about the very scenic train journey from Bergen to Oslo. The program was hugely successful despite the rather slow subject, offering long views from the front of the train interspersed with interviews and various other happenings along the ride). Here is a selection:

The raw film from the front camera is now being offered as a free Bittorrent download under a CC license. There is even a competition (in Norwegian only) for best reuse of the footage.

Kudos to the people behind NRK Beta, the experimental part of NRK, who again come up with interesting ways of making their material available!

Update 20.12: Boingboinged!

Reflections on Accenture’s Technology Lab

I am writing this from Accenture’s Sophia Antipolis location, where I am visiting with a group of executive students taking a course called Strategic Business Development and Innovation (the second time, incidentally, last year’s notes are here). Much of this course is around how to use technology (in a very wide sense of the word) to do innovation in organizations. To turn this into practice, my colleague Ragnvald Sannes and I run the course as an innovation process in itself – the students declare an innovation project early in the course, and we take them through the whole process from idea to implementation plan. To further make this concrete, we collaborate with Accenture (chiefly with Kirsti Kierulf, Director of Innovation in Norway) to show the students some of the technologies that are available.

Accenture Technology Labs is a world-wide, relatively small part of Accenture’s systems integration and technology practice, charged with developing showcases and prototypes in the early stage where Accenture’s clients are not yet willing to fund development. While most consulting companies have this kind of activity, I like Accenture’s approach because they are very focused on putting technology into context – they don’t develop Powerpoints (well, they do that, too) but prototypes, which they can show customers. I see the effect on my students: I can explain technology to them (such as mobility, biometrics, collaboration platforms) but they don’t see the importance until it is packaged into, say, the Next Generation Bank Branch or an automated passport control gate.

Making things concrete – telling a story through hands-on examples – is more important than what most companies think. When it comes to technology, this is relatively simple: You take either your own technology, if you are a technology provider, and build example applications of it. If you are vendor-agnostic, like Accenture, you take technology from many vendors and showcase the integration. If your technology is software-based, or consists of process innovations, then you showcase your own uses of it. Here in Sophia we have seen how Accenture uses collaboration platforms internally in the organization, for instance. (Otherwise known as eating your own dog food.)

Having a physical location is also very important. At the Norwegian School of Management, we have a library that we like to showcase – a "library of the future" where the students have flexible work areas, wireless access to all kinds of information, in an attractive setting. This looks nice on brochures, but also allows us to highlight that the school is about learning and research, and allows us to tell that story in a coherent manner. I see Accenture as doing the same thing with their labs – they develop technology, but also showcase the activity and its results to the rest of the world. The showcasing has perceived utility, generating the funds and managerial attention (or, perhaps, inattention) necessary to sustain the prototype-producing capability.

Quite a difference from slides and lunch meetings, I say. And rather refreshing. An example that more companies should follow.

GRA6821 Eleventh lecture: Search technology and innovation

(Friday 13th November – 0830-about 1200, room A2-075)

FAST is a Norwegian software company that was acquired by Microsoft about a year and a half ago. In this class (held with an EMBA class, we will hear presentations from people in FAST, from Accenture, and from BI. The idea is to showcase a research initiative, to learn something about search technology, and to see how a software company accesses the market in cooperation with partners.

To prepare for this meeting, it is a good idea to read up on search technology, both from a technical and business perspective. Do this by looking for literature on your own – but here are a few pointers, both to individual articles, blogs, and other resources:


  • How search engines work: Start with Wikipedia on web search engines, go from there.
  • Brin, S. and L. Page (1998). The Anatomy of a Large-Scale Hypertextual Web Search Engine. Seventh International WWW Conference, Brisbane, Australia. (PDF). The paper that started Google.
  • Rangaswamy, A., C. L. Giles, et al. (2009). "A Strategic Perspective on Search Engines: Thought Candies for Practitioners and Researchers." Journal of Interactive Marketing 23: 49-60. (in Blackboard). Excellent overview of some strategic issues around search technology.
  • Ghemawat, S., H. Gobioff, et al. (2003). The Google File System. ACM Symposium on Operating Systems Principles, ACM. (this is medium-to-heavy-duty computer science – I don’t expect you to understand this in detail, but not the difference of this system to a normal database system: The search system is optimized towards an enormous number of queries (reads) but relatively few insertions of data (writes), as opposed to a database, which is optimized towards handling data insertion fast and well.)
  • These articles on Google and others.



Longer stuff, such as books:

  • Barroso, L. A. and U. Hölzle (2009). The Datacenter as a Computer: An Introduction to the Design of Warehouse-Scale Machines. Synthesis Lectures on Computer Architecture. M. D. Hill, Morgan & Claypool. (Excellent piece on how to design a warehouse-scale data center – i.e., how do these Google-monsters really work?)
  • Weinberger, D. (2007). Everything is Miscellaneous: The Power of the New Digital Disorder. New York, Henry Holt and Company. Brilliant on how the availability of search changes our relationship to information.
  • Morville, P. (2005). Ambient Findability, O’Reilly. See this blog post.
  • Batelle, J. (2005). The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture. London, UK, Penguin Portfolio. See this blog post.

Say what you will about the Gubernator…

Some years ago I talked with a Berkeley professor who first was shocked when Arnold Schwarzenegger was elected guvenor of California – then, a year later, had to grudgingly concede that he wasn’t all that bad – especially in that he took on the State Assembly, which is incredibly conservative in its vested-interest radicalism. The following message recently sent to the State Assembly shows that he (or someone on his staff) has a sense of humor, too:


How I wish the underlying messages of other political emissions where equally clear…

(Via boingboing, which, true to form, spends most of the comments on calculating whether this was a coincidence or not…)

Messy works magically

Craigslist is a mess that is currently taking the mickey out of eBay and irritating Google, according to a fun article in Wired. I am not surprised. The value of a meeting place is not what happens there, but who is there – and by minimizing controls and keeping most transactions face-to-face, Cragslist is eeking out the value from the network with minimal investment and a business model that really isn’t a business model.

As for the messy design, well, it is quick, and you learn very fast where to click to get what you want.

The funny thing is that in Norway, the most popular website by far is, the online version of the biggest tabloid paper – or, rather, an online paper that shares the name, but not must else, with VG, the paper paper. The online version has its own editorial office and their design is evolved, evolving, and the perennial joke with web designers for its busy organization and ratty typeface. They would love to replace it with something akin to Aftenposten or New York Times, where order, quality and completeness reigns. VGnett would beg to offer – they know the use patterns of their audience and serve it, messy or not.

Network externalities in plain view, in other words.

Fixing and fixability as attribute and philosophy

Matthew Crawford’s The Case for Working With Your Hands has made the top of the NY Times website, and well deservedly so. His argument is that physical work, especially diagnostic worked involved in solving technical problems, are as fulfilling and intellectually stimulating as any desk job, though the hours may be longer and your fingers dirtier. For instance, you have think about your angle of attack not just in terms of the likelihood of being right, but the cost of finding out:

The attractiveness of any hypothesis is determined in part by physical circumstances that have no logical connection to the diagnostic problem at hand. The mechanic’s proper response to the situation cannot be anticipated by a set of rules or algorithms.

There probably aren’t many jobs that can be reduced to rule-following and still be done well. But in many jobs there is an attempt to do just this, and the perversity of it may go unnoticed by those who design the work process. Mechanics face something like this problem in the factory service manuals that we use. These manuals tell you to be systematic in eliminating variables, presenting an idealized image of diagnostic work. But they never take into account the risks of working on old machines. So you put the manual away and consider the facts before you. You do this because ultimately you are responsible to the motorcycle and its owner, not to some procedure.

Sounds like a good consultant to me. And the right kind of academic.

Buying an old Mercedes has certainly taught me something about expertise. I first tried taking it to the largest Mercedes dealer in Boston, whose reps took in the car wearing white coats and were utterly useless: The customer service rep had never heard of this particular model (it was the flagship at the time,) the computer system could not deal with cars before 1982, and come to think of it, the rep didn’t know much about cars in general. The mechanics seemed to be looking for a place to stick the computer diagnostic tool, nearly destroyed the suspension and tried to solve problems by "Easter Egging" – i.e., replacing parts until the problem disappears. Eventually I found a company that had both the knowledge of the car and the diagnostic philosophy required – to listen to the problem and determine what it is based on the few symptoms a car really has to give. What a relief – and what a fulfilling job it must be to work like that.

A colleague of mine remarked, a few weeks ago, that "nobody repairs anything anymore." A few years ago I bought my wife a nice everyday watch, a Seiko with a stainless steel chain. The chain broke, she took it in, and was told that the cost of fixing the chain would be so high that it would be better to just replace the watch. The watch was not designed to be repaired.

What little work I have been able to do on my old Mercedes has been joyful, since the car is designed to be fixed – the screws are solid (no plastic clips that rot over time) and accessible, everything is laid out with some logic, and if you sit down and think about it, you can figure the technology out (with, for me, the exception of the automatic gear boxes, which I don’t understand and wouldn’t have the tools and space to do anything with anyway.)

Crawford continues:

Some diagnostic situations contain a lot of variables. Any given symptom may have several possible causes, and further, these causes may interact with one another and therefore be difficult to isolate. In deciding how to proceed, there often comes a point where you have to step back and get a larger gestalt. Have a cigarette and walk around the lift. The gap between theory and practice stretches out in front of you, and this is where it gets interesting. What you need now is the kind of judgment that arises only from experience; hunches rather than rules. For me, at least, there is more real thinking going on in the bike shop than there was in the think tank.

Put differently, mechanical work has required me to cultivate different intellectual habits. Further, habits of mind have an ethical dimension that we don’t often think about. Good diagnosis requires attentiveness to the machine, almost a conversation with it, rather than assertiveness, as in the position papers produced on K Street. Cognitive psychologists speak of “metacognition,” which is the activity of stepping back and thinking about your own thinking. It is what you do when you stop for a moment in your pursuit of a solution, and wonder whether your understanding of the problem is adequate.

This is one reason I sometimes envy people who do "mere" programming for a living – the ability to have problems that have solutions, tell you when they are solved, and reward the laser-like focus both on the detail and the broader reflection (and abstraction) necessary to see the bigger picture. The problem-solving I am involved with on a daily basis is less a question of understanding what to do than it is a question of finding a way to express the solution in a way that convinces those who hold the key to it to actually do it. Assertiveness certainly helps, but, boy, would I love to just tinker for a while.

Anyway, I have but scratched the beginning of Crawford’s argument, but hey, I think I have gotten the gist of it. The rest I leave you to read on your own.

The datacenter is the new mainframe

From Greg Linden comes a link and a reference to a very interesting book by two Google engineers: The Datacenter as a Computer: An Introduction to the Design of Warehouse-Scale Machines (PDF, 2.8Mb) by Luiz André Barroso and Urs Hölzle. This is a fascinating introduction to data center design, with useful discussions of architecture, how to do cooling and reduce power use (it turns out, for instance, that getting computers that use power proportionally to their level of use is extremely important).

I suspect that even highly experienced data center designers will find something useful here. The book is written for someone with some degree of technical expertise, but you do not need a deep background in computer science to find much here that is interesting and useful.

One of my recurring ideas (and I am by no means alone in thinking this) is that the Norwegian west coast, with its cool climate, relatively abundant hydroelectric energy and underused industrial infrastructure (we used to have lots of electrochemical and electrometallurgical plants) could be a great place to do most of Europe’s computing. Currently we sell our electric energy to Europe through power lines, which incurs a large energy loss. Moving data centers to Norway and distributing their functionality through fiberoptic cables seems a much more effective way of doing things to me, especially since that region of the country has a reasonable supply both of energy engineers and industrial workers with the skill set and discipline to run that kind of operation.

Now, if I could only find some investors…

Abercrombie & Fitch & truly moronic store policies

image While I am in the States, my family sends me orders for various items they would like me to bring back. Since I have three daughters and a rather dishy wife, that means shopping in places such as Abercrombie & Fitch, which are mall rat havens with pounding music, posters of meticulously depilated underage models artfully grabbing their crotches, and clusters of of sweet young things standing around staring into space, occasionally shouting “What?”. My standard approach is to bring a netbook or some printouts and convince one of these creatures to go get the stuff for me.

Usually this works out to everyone’s satisfaction, but not today. I found myself in the Abercrombie & Fitch store next to Faneuil Hall in Boston, looking for a specific top (pictured) in a specific size. The store had only one left, which they refused to sell to me. When I asked why, the salesperson (and, eventually, the store manager) explained to me that it was the last one in the store and belonged to the “Visual Team”, apparently an organizational entity with immense powers. They did offer to check whether it would be available in another store. The idea that they sell me their piece and get a new one from another store apparently did not occur to them.

A few years ago this would have occasioned some rather sarcastic attempts by yours truly to explain the lack of basic business instinct in this policy, but with advancing years I have come to understand that discussing anything with “managers” (who manage without authority, an interesting concept) is like hunting dairy cows with a scoped rifle, to steal a phrase from P. J. O’Rourke. So I shook my head and left.

As for the store policy, I just can’t get it: There is a recession, and retail is suffering along with everyone else. Abercrombie’s revenues are stagnating and their stock is down there with the rest of the market. And here I am, a customer wanting to buy a product they have, and rather than sell it to me they instead saddle me down with their own bureaucracy.

Someone once said that in all companies, we start out working for the customer and end up working for the CFO. In Abercrombie they work for the Visual Team – it clearly is more important how the store looks than whether any sales take place there. I don’t get it. But then again, I am just a lowly business school professor who thought selling stuff was what stores did.

I must be getting old. And sadly lacking in the depilation department.

Interesting Wolfram Alpha statistics

Here is the answer you get from entering "budget surplus" into Wolfram Alpha:


Two things I did not know: The fifth largest government surplus in the world is held by Serbia, which surprises me, given that the country has 14% unemployment and a recovering economy, according to Wikipedia. And that Japan’s deficit is very close to the US’, indicating that things are not as bad in the US as you might think. Or perhaps that the numbers are a bit dated, but according to the source information, most of the numbers are from 2009.

Since May 17th is Norway’s national day, I think it behooves me to point out that of the five surplus states listed above, Norway is the nicest place to live, by most measures (weather, culture, politics, human rights, health care, etc. etc.). On the other hand, many of the countries with large deficits are nice places to live, so I wouldn’t read too much into the economics at all…

(Hat tip to Karthik, who retweeted one of my tweets, which I misunderstood and started researching….)

Gladwell on Goliath vs. the ever striving, socially unacceptable David

The New Yorker has a great article by Malcolm Gladwell on how David beats Goliath, largely by working harder and exploiting unanticipated weaknesses in the opponents defense. Examples include basketball, Lawrence of Arabia, Doug Lenat using an expert system, and, of course D vs. G.

The interesting point here, of course, is how Goliath reacts when David substitutes effort for talent and rule-bending (or, rather, rule exploitation) for tradition: By declaring that this is an unacceptable way of playing. During the 1990s, under the truly eccentric coach Egil "Drillo" Olsen" (pictured), the Norwegian national soccer team employed a strategy of putting the whole team in defense, and scoring all their goals on the occasional breakaway, when a long pass would find a single player (usually Jostein Flo) plugging a goal against a surprised defense. This strategy was highly effective (at one point, Norway beat Brazil and was ranked as number 2 in the world by FIFA) but raised the ire of commentators and players everywhere, because they were seen as destroying soccer as a spectator sport. Just like the protagonists in Gladwell’s article, Olsen was an analyzer and a highly controversial character.

Incidentally, after many failures on the field, the Norwegian national team has employed him as a coach again. And they have started winning. Just wait for the accusations to start…

(Come to think of it, the great Swedish Alpine skier Ingemar Stenmark was subject to the same mechanism: He never did downhill races (thinking them crude and dangerous), but won every slalom and grand slalom event on the tour, and thus the overall World Cup title (as well as a total of 7 Olympic medals). This led the powers that be to institute a rule that to be eligible for the overall title, you had to participate in at least one downhill race. Which Stenmark did, in an upright position like a Sunday skier. He finished dead last, and, of course, took the overall title. Again.)

Think about your own industry – what are the equivalent to Olsen strategy there? I am sure it involves something socially unacceptable which will allow the weakest player to win. May you find it before someone else does…

Health care is about driving science forward, too

Virginia Postrel makes an excellent point in this article in the Atlantic: The US health care system, for all its flaws, drives research forward in a way that no other country can do:

Looking at the crazy-quilt American system, you might imagine that someone somewhere has figured out how to deliver the best possible health care to everyone, at no charge to patients and minimal cost to the insurer or the public treasury. But nobody has. In a public system, trade-offs don’t go away; if anything, they get harder.

The good thing about a decentralized, largely private system like ours is that health care constantly gets weighed against everything else in the economy. No single authority has to decide whether 15 percent or 20 percent or 25 percent is the “right” amount of GDP to spend on health care, just as no single authority has to decide how much to spend on food or clothing or entertainment. Different individuals and organizations can make different trade-offs. Centralized systems, by contrast, have one health budget. This treatment gets funded, and that one doesn’t.

In other words, markets drive innovation – sometimes in directions not deemed to be in the (whole) public’s interest, such as plastic surgery – in a way centralized coordination cannot. It is wasteful, but effective. And somewhere in the world there needs to be some slack for new things to come up, which can then be cost-effectively (or, rather, cost-efficiently) be implemented other places.

Which reminds me of Peter Drucker’s statement: "There is nothing so useless as doing efficiently that which should not be done at all." Not unknown in public health care systems…

(Via John Tierney)