My latest essay concludes,
In many industries nowadays, small teams of talented individuals can out-compete larger collections of mass workers. Elite skills, reputations, and connections can create barriers to entry that produce high returns. In some important fields, the stars get the best jobs, which in turn enables them to enhance their know-how and their reputations. And the most talented people in one field are likely to work in firms with the most talented people in other fields, creating synergies that increase their rewards even further.
I think one thing that gets overlooked is that certain legal, social, and proprietary risks have made it impossible for large bureaucracy to function well beyond a certain scale and scope, where efficient ‘virtualized’ coordination requires less guarded communication styles. High-trust enables low security, and high security is inimical to efficiency and overall capability. A lot of coordination technology turns out to be too susceptible to these risks, with no legal mechanism for mitigation or remedy, and so can’t help solve the problem. So leadership teams are more insular, secretive, and playing it increasingly close to the vest, and subordinates struggle to infer what needs to be done with vague or nonexistent guidance.
As a result, one cannot adequately operate outside a rather small and narrow circle of trusted insiders, cannot rely on delegations proceding down the entire chain of command with fidelity to intentions. These is less consistency and congruence between the ‘legible’ records of the the official process and chronicle or organization activity, and the reality of leader decision making – and this makes corporate governance or oversight much more challenging and ineffective. Coordination via human language is really, really hard as it is, and any additional burden on it are like adding straws that will eventually break the camel’s back.
My own hunch is that some of the “special talent” that is needed is some special skill or insight into how to handle these relatively new issues, the best practices for which have not yet been disseminated to whole sectors or across sectors. It may be that the meta-problem is that you cannot teach how to solve (or circumvent) these problems for the same reason they are problems in the first place, because they are too sensitive to articulate to the public or in some unsecured manner. The only way they will spread is that the individuals who have been exposed to those best practices and figure out what’s really going on get circulated around different firms and paid a premium to do exercise whatever mysterious executive magic they can accomplish.
I think one thing that gets overlooked is that certain legal, social, and proprietary risks have made it impossible for large bureaucracy to function well beyond a certain scale and scope, where efficient ‘virtualized’ coordination requires less guarded communication styles. High-trust enables low security, and high security is inimical to efficiency and overall capability. A lot of coordination technology turns out to be too susceptible to these risks, with no legal mechanism for mitigation or remedy, and so can’t help solve the problem. So leadership teams are more insular, secretive, and playing it increasingly close to the vest, and subordinates struggle to infer what needs to be done with vague or nonexistent guidance.
As a result, one cannot adequately operate outside a rather small and narrow circle of trusted insiders, cannot rely on delegations proceding down the entire chain of command with fidelity to intentions. These is less consistency and congruence between the ‘legible’ records of the the official process and chronicle or organization activity, and the reality of leader decision making – and this makes corporate governance or oversight much more challenging and ineffective. Coordination via human language is really, really hard as it is, and any additional burden on it are like adding straws that will eventually break the camel’s back.
My own hunch is that some of the “special talent” that is needed is some special skill or insight into how to handle these relatively new issues, the best practices for which have not yet been disseminated to whole sectors or across sectors. It may be that the meta-problem is that you cannot teach how to solve (or circumvent) these problems for the same reason they are problems in the first place, because they are too sensitive to articulate to the public or in some unsecured manner. The only way they will spread is that the individuals who have been exposed to those best practices and figure out what’s really going on get circulated around different firms and paid a premium to do exercise whatever mysterious executive magic they are able to accomplish.
Good essay. I would say “Intangibles Dominate” is becoming a good slogan for the economy in the 21st century.
What is your opinion on this essay?
https://danwang.co/how-technology-grows/