Wednesday, July 9, 2008

Do You Know too Much to Increase Your Profitability?

In 1267, Roger Bacon published his Opus Maius, an 845 page work, said to contain all the knowledge in the world. Imagine that. All the knowledge in the world in a single person, and in a single volume. You'd have to be a teenager to make such a claim today.

In 1961, before the dawn of Moore's Law, and before the proliferation of the silicone chip, Dr. Kenneth McFarland wrote that there was already a veritable information overload, such that a seeker could often find entire sets of developed knowledge in direct contradiction of other entire groups.

The only way that a person could hope to avoid inaction and indecision caused by confusion due to such disparity of truth would be to limit the intake of information, and the type of source for information.

Dr. McFarland said that such a defense strategy would necessarily produce individuals who would be "often wrong, but never unconvinced."

In January, 1999, UNESCO reported that there were some 869,000 books in print. By December, that number had jumped to 1,963,000. The pronouncement that, for the first time in verifiable history, human knowledge had more than doubled in less than a year.

With Moore's Law in full swing, there have been at least 30 doublings since Dr. McFarland's pronouncement in 1961, and 6-8 doublings since 1999, when UNESCO reported its findings.

To whatever degree Dr. McFarland's observation could have been observed to be true in 1961, there can be no doubt that it is certainly true today, true of more people, and true more often.

More than in 1961, today there are multiples of bodies of information in direct contradiction to other bodies of information.

How else could NASA Scientist, James Hansen assert that oil company CEOs should be tried for crimes against humanity for their contribution to "Global Warming" now called, simply, "Climate Change." At the very same time, meteorologist and founder of The Weather Channel, John Coleman, wants to sue AL Gore for financial fraud in order to "expose [his] fraud of "global warming." You can't get any more diverse with these "bodies of information."

There are thousands of other examples.

As to the tendency to limit the types of sources from which we learn: Well, some listen to Rush Limbaugh, others to Al Franken. But nobody listens to both. What about the blogosphere? Some read, others, but nobody reads them both.

How else could we find our political system so polarized?

Now I'm not advocating that people need to become open-minded. And I'd be the last one to say that every position is valuable, or even worth consideration. What I am saying is that if Dr. McFarland could report way back in 1961 that people are "often wrong but never unconvinced," that the situation is multiplied many times over today, particularly in the entrepreneurial world.

The average entrepreneur, small business owner, is dangerously susceptible to this condition. With ever increasing distractions and decisions, the opportunity for error is increasing by the day. The occurrence of error is increasing every day. But the error is invisible. (The decider is convinced that he is right!) As a result, the inefficiency created, will also be invisible.

I've started calling this condition "Business HIV." It's the "Hidden Inefficiency Virus." It's the situation in which a business builds inefficiency into the very business model. It's what a 2008 Reuters report says about a software business that spends 10x more "fixing" than "producing."

You might have Business HIV if:

  • You feel relieved when an employee quits, knowing that your payroll expense will be reduced while the position remained unfilled.
  • You reported to your board that you had cut your health insurance plan increase in half; You didn't report or realize that the cost of the use of corporate resources exceeded the value of the reduction.
  • You handle harassment training by making your employees watch the inexpensive generic videos. It was "affordable" training, too, so long as you don't recognize that you wasted an hour of time, energy and focus boring them to death, and accomplishing nothing important. Well, you did check a box on some compliance checklist.
  • You try to take every offer from a vendor/associate to the simplest form so that you can "shop it" and minimize your expense. You believe that all those "value adds" are just excuses to get you to pay more than you have to.
  • You assume that, if Peter Drucker said it, it doesn't apply to you.
  • You believe that the less you pay, the better the deal.
  • You believe that if anyone could take two weeks off from the job, you really didn't need them anyway.
  • You measure and monitor your sales cycle, but not your attrition.
  • You believe turnover is a "soft cost."
  • You don't believe that your company can afford to hire great people.
  • You believe outsourcing is a way to get another company to do the same things you used to do yourself, for less.
  • You believe that outsourcing is a stopgap, a temporary way to handle things that, when you get big enough, you can bring them back in house.
  • You believe that sometimes it costs too much to do it right.

The pressures of today's business world don't tolerate the same level of inefficiency acceptable in days gone by. "Often wrong" then, happened far less often, and had far less impact than "often wrong" today. And "never unconvinced" just looks stupid.

Half of being smart is knowing what you're dumb at. Then, find somebody smart, and let them handle what they're smart at. It is a lot more efficient.

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