The hour between dog and wolf

There is an old French aphorism that calls sundown ‘the hour between dog and wolf’.  At dusk,  the familiar domestic pet turns into a rabid hunter.  Dusk is the hour of metamorphosis. This is how Jean Genet puts it in his 1986 memoir “The Prisoner of Love” (Un Captif  Amoureux):

[The hour] between dog and wolf, that is, dusk, when the two cannot be distinguished from each other, suggests a lot of other things besides the time of day … the hour in which … every being becomes his own shadow, and thus something other than himself. The hour of metamorphoses, when the people half hope, half fear that a dog will become a wolf. The hour that comes to us from at least as far back as the Middle Ages, when country people believed that the transformation might happen at any moment.

I spent last weekend at the Hop Farm festival, a three day mini-Glastonbury in Kent. Since it is British Sumer Time, the sun does not go down until 9.30pm so the headline acts are hitting the stage at dusk. We had two grand old men of rock: Peter Gabriel on Friday and Bob Dylan on Saturday. Both of them underwent a metamorphosis at dusk, since neither were presenting their seminal rock tunes in their original form. In both cases, their back catalogue had been radically transformed to such an extent that it was almost unrecognisable.

Dylan first. Listening to his incomprehensible growling and barking interspersed with the occasional yelp,  it was definitely a lupine transformation but I could not tell if it was a dog or a wolf. It was more like a metamorphosis frozen between the two, like a ghastly science experiment gone wrong or the dog monster from John Carpenters The Thing. The creature was clearly in excruciating pain judging from its piteous yowling, as was the audience that had to listen to it. More puzzling was the fact that the big video screens to the side of the stage were stuck on a single long shot showing a tiny figure in a white hat – exactly like the view from where I was standing – which made the whole thing utterly pointless. Technology negated by a man so vain that he had banned all close ups of his 71 year old face.

When he came on he was greeted with a huge cheer befitting his iconic status, but by the fourth song half the audience had drifted away to the other stages (Primal Scream, Gary Numan, New Order). This left a hard core knot of Dylan Fans in the gathering gloom exchanging quizzical glances as they tried to work out what song His Bobness was actually singing – sometimes it took until the second chorus to work it out.

Was I disappointed ? No. I last saw Dylan live 25 years ago when things were pretty much the same but just with a faster tempo. He has been on a never ending tour ever since. There is a PE ratio for live shows. Not the Price/Earnings ration beloved of financial analysts, but a Performance to Expectations ratio. Seasoned concert goers know that that Dylan is always the lowest ranked on this basis (followed by Van Morrison in a close second). The greatness of his artistic halo is repeatedly shattered by the awfulness of his live show.  The concert promoters had crowed in the advance publicity that this was to be Dylan’s “only UK Show in 2012”. Now we know why…

Peter Gabriel, in contrast, was terrific. His metamorphosis was triggered by setting himself an artistic constraint: no drums or guitars. So his rock oeuvre had to be completely reinterpreted for an orchestra to play…with spectacular results. The audience was still playing a game of  “guess the song” but in a good way.  The orchestral versions of his songs brought new resonance and meaning to his work. It is good example of how an artist can take a risk and and reach new heights.

The interesting point is how self-imposed restraint promotes artistic excellence.  Rhyming poetry has more artistic merit than blank verse, and blank verse more so than prose.  Art house movies often use black and white rather than colour. Peter Gabriel’s ‘no drums or guitars’ restriction was in a similar vein. But the best example of “high art through restraint” is calligraphy. Picture the master calligrapher standing in front of a blank sheet of paper with his inked up brush in his hand. The ink is black – no colour is allowed. The character he must paint is pre-defined. Even the very order in which he makes the strokes is set by centuries of historical convention. Yet despite, or maybe because, of all these constraints he produces something of such transcendent beauty that it is seen as the ultimate art form by more than half the world: the true mark of a civilised man.  Artistic endeavour must be honest; a truthful expression of inner conviction. This is pithily summed up in this maxim:  Lies cripple the artist. To this we can add another: a strait jacket sets him free.

Excellence through restraint was also very much on show in the movie I saw as I was recovering from the festival weekend. This was X Men – First Class. The restraint in this case being that there are pre-formed familiar characters – a lot of them – all of which have to be woven into the story.  This summer’s blockbuster Avengers Assemble, which I also enjoyed, carries a similar burden with four strong hero characters (Hulk, Captain America, Thor and Iron Man) all having to be fitted into a single movie. With X-Men – First Class we also know where we have to end up because this is a prequel. So unlike a typical story, we already know the ending and the character ‘development’ is similarly constrained. The fun and skill comes in delivering us (the audience) to that pre-agreed destination through the most enjoyable route. This is the storytelling equivalent to a third option on your satnav that lets you chose not the fastest, nor the shortest route but the most scenic.

The dilemma at the heart of the X Men movies is this: is being a mutant a disease from which you should be cured ? Or is it a beauteous and natural thing that should be celebrated. Should Wolverine be transmuted back into a domestic pet? In the movie the answer is no. So the series can be read as a thinly veiled critique of right wingers who believe that being ‘gay’ or ‘different’ is something that can be cured.

This month also sees the publication of a new book entitled “The Hour Between Dog and Wolf: Risk-taking, Gut Feelings and the Biology of Boom and Bust” by John Coates, a successful Wall Street Trader turned Cambridge neuroscientist. Coates took saliva swabs from 250 traders on the dealing room floor over a two week period. He then plotted testosterone levels against risk taking and trading performance. Those with higher testosterone levels took bigger bets, greater risks and subsequently made the most money.

In the book,  John Coates seeks to explain “irrational exuberance” of the markets through blood biochemistry – testosterone and other hormones coursing through the veins of amped up traders in the dealing room causes them to be overconfident, take unnecessary, irrational risks and so cause financial bubbles. Having found a ‘reductionist’ explanation for financial excess, maybe it can now be ‘cured’ ?

In my view, the error underlying this blood chemistry approach is the idea that financial bubbles are a mistake – something that needs to be eliminated or cured. The X men movies make the same point. Bubbles are not a mistake, they are a naturally occurring phenomenon, part of the fabric of nature. Their existence is not a sign that something has “gone wrong” but that everything is working fine. They may be inconvenient and cause financial damage but this is to misapply a human concern to an entity on a higher level. It’s the same type of error as calling the law of gravity “immoral”

King Canute ordered his throne to be carried in to the shallows of a rising tide. The reason normally ascribed is that he believed he could command the waves. In fact, his intention was to mock his courtiers and to demonstrate he was not all powerful: he could not control the waves. The tides follow their own cycles, dictated by celestial bodies in a higher dimension beyond the control of man. Likewise financial cycles, belong at a higher level.

Set up three levels: blood chemistry, trader, market. We can join the dots with two causal arrows pointing upwards crossing the catataxic boundaries like this: blood chemistry controls the trader, the trader controls the market. Our we could reverse them and have the causal arrows pointing downwards. If we want to control the market (eliminate financial bubbles and crashes) we must control the trader and to control the trader we must control the hormones. This leads to some rather farcical conclusions. This reductionist argument is really a reductio ad absurdum. Maybe the FSA should prescribe testosterone suppressant drugs in order to eliminate boom and bust? Or maybe firms should only employ women on the dealing floor?

Just as it is wrong to view the trader as purely a product of raging hormones  (drunk driving excuse- the booze made me do it). So it is wrong to see the market as purely an amalgam of traders. To do so is to make a catataxic error. Each entity belongs on its own level with its own rules. The point is that you can not control the market. King Canute knew that a thousand years ago. Some of us are still struggling to understand that now.

Microsoft’s management kills innovation

Vanity Fair this month has a great article titled “Microsoft’s lost decade”. It describes how the corporate giant lost its way and changed from being an indomitable technology Titan to a has-been. Just as IBM did a decade earlier. The reason? A management technique known as “stack ranking”. Every business unit had to rank a certain percentage of its employees as “top performers”, “average” or “poor” and this effectively crippled the company’s ability to innovate. In contrast, Apple (for decades underdog to Microsoft) generates more revenue with a single product  – the iPhone – than the whole of Microsoft Corp.

“Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees,” Kurt Eichenwald writes in Vanity Fair. “If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible review,” says a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”

This internal competition vs external competition is a catataxic debate and it lies at the heart of the resurgent interest in group selection theories of evolution. The question is whether the natural selection that drives evolution acts at the level of the group or at a genetic level. If evolution is the “survival of the fittest”, then the question becomes the fittest what? Is it the fittest group? The fittest species ? The fittest individual? The fittest set of genes ? This question about “which level rules” is the essence of catataxis.

In social animals such as ants and termites you can clearly see a form of individual altruism: insects that sacrifice themselves for the good of the colony as a whole. This seems to imply that natural selection is operating at the level of the group. However, Richard Dawkins in his book “The Selfish Gene” pins natural selection definitively to the genetic level. He explains the “self sacrificing ants” in a bottom-up genetic way. The ants in the colony are all related to each other; they share the same genetic material. So in sacrificing yourself for the sake of the group you are still indirectly propagating your genes. This genetic cause of altruism is summed up in Hamilton’s Rule which states that the degree of altruism depends on the degree of genetic relatedness. It can be summed up in this grim biologists joke :

I will lay down my life for two brothers, four nephews or eight cousins

Other biologists such as David Sloane Wilson see a group selection argument for altrusim which goes like this: If you mix a group of selfish people and altruistic people together, then the selfish people will always win. They act in their own self interest and exploit the generous altruists. But if you move up a level and observe the competition between groups then you see a different effect. Groups that are full of altruists working cooperatively together outcompete groups full of selfish people fighting each other. So at a group level teams of altruists win, but at an individual level selfish people win. So, turning this around, you can say that wherever you see altrusitic behaviour then it is a sign that competition between groups is a stronger force than competition inside groups. Or, as Microsoft has found out, when management emphasises internal competition the group as a whole will fail.

This “level of selection” controversy is still a hot topic of debate amongst biologists. In this June’s issue of Prospect Magazine,  Richard Dawkins wrote an excoriating review of a book by fellow biologist Edward Wilson titled “The Social Conquest of Earth”. Wilson was arguing for the theory of group selection outlined above. Dawkins violently disagreed. His review concludes “…this is not a book to be tossed lightly aside. It should be thrown with great force…”. This vigorous denunciation provoked a huge backlash. The Dawkins article received more responses than any other in Prospect Magazine’s history. In effect, it was the atheist equivalent of watching the Pope beat up the Archbishop of Canterbury on the steps of St Paul’s Cathedral.

The debate also provides a controversial conclusion for management consultants. If you want your company (group) to win then you should embrace the cult of mediocrity. Suppress internal competition and focus on external competition.

In fox hunting circles, when the Master of the Hounds is training a new pack, he takes the dogs for their first outing in spring to see how they perform. He then shoots both the first few pack leaders and the last few stragglers, keeping the mediocre middle performers because he knows they will form the most effective team.

Could this translate across to corporate management. Is the secret to commercial success to sack not just your worst salesmen but also your best? Let me know what you think….

Stimulation or austerity: the catataxic debate

Gold CoinMost Western countries are having the same economic debate at the moment: austerity or stimulus? Britain’s coalition government, Germany and the Tea Party in the USA want more austerity. The logic is simple. If you have too much debt then you should stop spending. But the counter argument goes like this: government cutbacks depress the economy, recessions mean less tax revenues which mean more cutbacks. The result is an ever decreasing spiral like the one in Greece where the economy is shrinking 5% a year. So governments should be spending to stimulate the economy and worry about balancing the books later when the private sector is booming again. Rubbish, say the fans of austerity, you can’t spend your way out of a debt crisis…

This “stimulus versus austerity” debate can be recast as an example of catataxis. It hinges around the fundamental concept of money which has three main functions: a medium of exchange, a unit of account and a store of value. These three functions form three different “levels” and the stimulus vs. austerity debate is a conflict between these levels. Let’s look at each of the three in turn.

The first function of money is as a medium of exchange. It acts as a physical token that is exchanged when a transaction takes place. In this sense, money can be cowrie shells, gold bullion, coins or notes. In a prison, cigarettes are often a medium of exchange. It also does not need to be that ‘physical’. If you transfer money between two bank accounts through a BACS transfer, then some digital tokens are being exchanged between two computer systems. Likewise, air miles are a form of money which can be exchanged for seats on an airplane.

The second function of money is as a unit of account. It acts as a common yardstick for measuring the value of different things. In a barter economy, you can exchange two sheep for three goats. In a monetized economy, you might say that both were worth six shillings. Money as a unit of account tells you what things are worth. In our example, a sheep is worth three shillings and a goat worth two.

The third function of money is as a store of value. This arises because you don’t spend money the instant you get it (unless you are my daughter, Flora). There is a timing difference between transactions. Having sold your sheep for six shillings, you may not spend the money for a couple of weeks. While it is in your pocket (or under your mattress) it is a store of value. The money is worth something while you hang on to it.

These three different functions give us the three different levels. The first is physical, the second is conceptual at a mathematical or accounting level. The third is at conceptual level one higher than that. The store of value is not about numerical equations but about the crystallization of confidence; the distillation of belief. Catataxis is level confusion: the conflict between these different interpretations of money.

If you view money at level one as a physical medium of exchange, then you want your economy to have as much of it as possible. That means that more physical exchanges can take place. In other words, more trade and more growth in the economy.

If you view money at level three as a store of value, then you want your economy to have as little of it as possible. The less there is, the more valuable it is. By restricting the supply of money you keep its value.

A good illustration of the difference between these two views is the “shopping in Vietnam” example. You can pay for your goods in a shop in Vietnam in US dollars, but you will get your change in Vietnamese dong. The shopkeepers would prefer to hoard the dollars as they see them as a better store of value but the medium of exchange is dong – that’s how you get the change.

Some would argue that the US dollar is not a very good store of value. When Nixon broke the link between the dollar and gold in 1971, gold was worth $35 an ounce. Once the link was broken, the US government was free to create as much money as it liked. This “freeing up” of the physical medium of exchange led to a period of spectacular global economic growth. More money, more exchanges (more trade). But now, 40 years later, gold is worth $1,900 per ounce. In other words, the dollar has declined in value by 98% (many currencies have fared worse) so its role as a store of value has been damaged.

The stimulus vs. austerity argument, in effect a debate about whether the money supply should be expanded or contracted, is a catataxic debate. A conflict between the level one and level three views of money. It is also a debate between creditors and debtors. Creditors (people who are owed money) favour level three. They are concerned with the store of value and want their money to be worth something when they are paid back. Debtors (people who have borrowed money) favour level one. They want a lot of economic activity so they can earn the money to pay back their debts. If the value of money falls in the process so much the better – that means less to pay back in real terms.

Normally, the debtors are many and the creditors few. So the populist position is to be on the side of the debtors and let the money lenders take the punishment. This was true when the economy first began to be monetized in 1190 with the terrible massacre of the Jews at York (see the novel Holy Warrior for a graphic description of this appalling event). It is still true today. Maybe the current trend for “banker bashing” is a reflection of this.

Phillip Coggan in his excellent book Paper Promises points out an interesting irony in US politics this time around. The Tea Party is a populist, grass roots movement that is pro-austerity. They favour level three and are concerned about the store of value. Wall street bankers, who would normally be level three advocates, are the ones calling for stimulus at level one. So the traditional positions of the banker and the populace have recently become inverted in the USA.

Costa Concordia: catataxic catastrophe

How sad that on the centenary of the Titanic disaster of 1912 another huge cruse ship should sink. It may be insensitive to be grandstanding and pontificating at a time of tragedy, but one of the causes of the Costa Concordia disaster is catataxis. As cruse liners have ballooned in size, the safety systems have not scaled up appropriately. In this case, more of the same is not just different but also deadly.

Cruise ships have been a boom industry and as a result the ships have got bigger and bigger in order to achieve economies of scale. Today’s ships are twice the size of a decade ago and can carry 6,000 passengers and 1,800 crew. That’s the size of a small town and four times bigger than the Titanic. Since most passengers want a nice view from their cabin, there are more and more decks stacked above the waterline. At the same time, the ships need to be able to get into traditional old ports (where tourists like to go) rather than to anchor offshore and be ferried in on small boats. That means they need a shallow draught. Both factors mean that ships are becoming increasingly top heavy: there is a lot more above the waterline and too little underneath.

A second factor is the lifeboat problem. This technology has not really changed since the time of the Titanic. When the top heavy Costa Concordia heeled over, that put half the life boats out of action because they could no longer be lowered into the water. Every passenger is (in theory) allocated a berth in a lifeboat matching their cabin allocation. It is a logistical nightmare to try and shepherd 7,800 people to their allocated lifeboat seat. Just picture this. A typical movie theatre has say 250 seats. Now imagine 30 cinemas stacked on top of each other in a sky scraper with every seat full. You randomly distribute tickets with seat numbers in a different cinema to all the members of all the audiences. Then you blow a whistle and tell them to find their new seats in the new auditoriums. Result: utter chaos. Now imagine doing it in the dark, at sea with the rooms gradually tilting over to one side…..

This lifeboat issue is such a logistical problem that the International Maritime Organisation advises Captains to try and use the ship itself as a “big lifeboat” and return as fast as possible to port for evacuation. In other words, the best advice available about lifeboats is to try to avoid using them at all.

Both the ship design and the lifeboat problem are problems of scale. Andrew Linington of Nautilus International, a maritime union, says “The alarm bells have been ringing with many of us for well over a decade now. These ships are floating hotels – skyscrapers, really. The design has been extrapolated from that of smaller ships. We believe a lot of basic safety principles are being compromised to maximise the revenue”

A big ship is different from a scaled up small ship. That is catataxis. If you just inflate the ship design like a balloon it becomes top heavy. Logistical problems with large numbers of passengers grow exponentially. More of the same is different.

Europe: the Federated States of Catataxia

Catataxis means level confusion and the Eurozone crisis is a catataxic one. I will explain the problem with the state(s) of Europe in a moment, but first a little bit more background about the state of catataxia.

When things start to get bigger, sooner or later a certain point arises when there is a discontinuity. Getting past that requires a transformation in structure or organization. To get to the next level, something more than just size must change. Think of the biggest insect in the world. It will not be more than a foot long. Those giant ants towering over houses in 50’s sci fi movies are a physical impossibility. A creature with an exoskeleton reaches a physical limit to growth. There comes a time when the muscles required to move the external carapace get so big they can not be contained inside that carapace. Think of an enormously fat knight; his armour is so heavy he can no longer lift it. So in order for an ant to grow to be the size of an elephant, he has to cease to be an ant. His body form must be reorganized. His exoskeleton needs to be replaced by an exoskeleton. Mammals have endoskeletons: internal bones not external shells. Mammals range in size from a tiny shrew to a gigantic blue whale. That “exo to endoskeleton ” transformation marks a catataxic boundary: a discontinuity in a smooth linear expansion. A necessary reorganisation before further growth can continue.

Hence, the catataxic maxim “more of the same is different”. Let’s look at a corporate example instead of a biological one. A common cause of failure amongst small companies is not that that they fail to adapt when things are going badly but when things are going well. Sudden rapid growth can be just as dangerous as a declining market. As they expand quickly to become a big company they face a number of complicated hurdles, mostly to do with internal organisation. They must develop more robust systems in HR, admin, compliance and legal. They must navigate through a deadly miasma of corporate structure and org charts. This is the equivalent of the “exo to endo” transformation: the ant becoming the elephant. To most employees, this pointless bureaucracy and red tape is a big dead weight; sapping energy, crippling natural agility and dragging down performance. It is true that an ant can perform prodigious feats. Insects can carry many times their own weight or jump many times their own height. An elephant can’t jump at all, but it is BIG and that brings many different benefits.

Let’s look at a social example. When two or three people go out to dinner in a restaurant it is quite easy to settle the bill: just split it down the middle. But with 12 people there, suddenly the argument is all about who had the lobster to start with and how much wine did Jimmy drink. More of the same is different. It’s hard for a big group of people to pay the bill. Often its best to appeal to a higher authority: someone picks up the tab and takes a chance by sticking it on his corporate credit card. That way some higher level corporate entity can sort it out.

And so back to Europe. Everyone agrees that there should be a bailout for the Eurozone but no one wants to pay the bill. There is no leadership and no one to take charge because they can’t. There is no institution big or powerful enough to deal with it… yet. In Europe, we are privileged enough to be watching the ant turn into an elephant before our very eyes. Yes, this will require upheavals, reorganisations and much red tape. In the end, the Federated States of Europe will emerge. This lumbering, dull witted mastodon, much mocked and stung by the agile insects around it but big enough to crush them without even noticing.

The press has delighted in pointing out that the Groupe de Francfort, the eight public figures including Merkel and Sarkozy that are attempting to lead the response to the Eurozone crisis, are largely unelected and therefore have no democratic legitimacy. But then again, no one lauds a catataxic transformation. Have you ever heard a front office employee praise a corporate decision to double the number admin staff and increase red tape. This transformation is happening because it is an inevitable consequence of scale. Globalisation has made the existing structures redundant or unfit for purpose, and new institutions must replace them. It is a naturally emergent phenomenon driven by the environment, like a high tide or a wildebeest migration.

The ant must turn into an elephant. The Groupe de Francfort is its emergent head. A catataxic boundary must be crossed. It is a necessary transformation before growth can continue.

BYOT and the jobs revolution

Do you know the latest trend in the office IT world? It’s called BYOT, short for Bring Your Own Technology. New young recruits into large multinationals are shocked by how awful the corporate IT systems are. This is a generation brought up on facebook, twitter, tablets  and smart phones; personal devices on which you can do a lot of cool stuff. Their first encounter with a corporate IT system makes them recoil in horror. It’s so slow, so clunky and so user unfriendly.

In most other industries, there is professional grade equipment for serious business use and then a cut down, ‘less good’ version for the home hobbyist. But in the IT world this has been inverted. All the cool stuff is at the consumer end of the market. This is catataxis. The level 1 ‘home’ gear runs faster and is more powerful than the level 2 ‘corporate’ gear.  Hence BYOT. You bring in your own laptop or iPad to use at work. You are responsible for maintaining it. You are happy because you get to use the cool gadgets that you like. The company is happy because the cost of equipment and maintenance goes down. Productivity is up and costs are down (by 22% in some pilot schemes). Everybody wins.

Well, not quite everybody. No-one in the IT department likes this trend at all, because having so many different devices gives them a big headache. BYOT is cynically known by IT staff as “the CEO bought an iPad” syndrome. Nirvana for IT staff is an organisation that uses exactly the same equipment everywhere, all under the centralised control of the IT Dept. Under their watchful eye, individualism is stamped out “for security and efficiency purposes”.

This drama is not new. Take a look at the Apple Mac advert from the dawn of the PC era. A female athlete runs through the hall of a political rally and hurls a hammer at a huge screen with the face of Big Brother on it. The final tagline says:

On January 24th, Apple Computer will introduce the Macintosh. And you’ll see why 1984 will not be like “1984”. 

Shot by Ridley Scott, this advert is almost 30 years old but it is still as powerful as ever and encapsulates the whole spirit of BYOT: the catataxic challenge of the individual against the corporate system one level higher. Steve Jobs’ revolution really is a revolution in jobs. And how satisfying that he finally got to see it happen before he died.