Complexity

It is always advisable to have one major source of revenue and then diversify by having multiple minor streams of revenue that de-risk you from that major source of revenue. For example, YouTube’s revenue split is 1:3 between subscriptions and advertisements.

Why it matters:

• It protects against risk of ruin.
• It protects against ups and downs. For example, revenue from advertisements is seasonal.

Bad decisions add cognitive load to the organization without providing value to the user. Examples include:

• Bad HR policies.
• A business leader within the organization wants the website or app of his business unit to look different. The user does not care.
• Building a confused organization structure/hierarchy. The user does not care. For example, the Twitter Fail Whale image had birds flying in different directions.
• Choosing a sub-optimal stack because developers in that stack are more cost-effective to hire.
• Building a low-trust work environment

“Low margin businesses (eg many media biz) often create an internal culture of ‘survival of the fittest’, where different divisions compete, viciously, to eke out another 0.5% profit. Makes digital transformation even harder…”

– Alex Watson, Ex Head of Product at BBC.

Complexity bogs us down. The more you have to keep in mind before doing something, the slower you’ll go.

Why it matters:

• This complexity and commission risk can cripple companies, leaving them open to disruption.
• It also slows down onboarding new staff and moving existing staff across projects or departments.
• Failing to remember everything can result in ‘Commission Risk’ – inadvertent omissions that lead to more work and unintended consequences.

If left unchecked, the amount of entropy in systems keeps rising.

As a company grows…

“… a scaling-up of a software entity is not merely a repetition of the same elements in the larger size; it is necessarily an increase in the number of different elements. In most cases, the elements interact with each other in in some nonlinear fashion, and the complexity of the whole increases much more than linearly.”

– Frederick P. Brooks from No Silver Bullet, 1986

Why it matters: Complexity slows down execution.

How: With company growth comes an increase in:

1. The count and diversity of sub-systems, teams, software, and their nuances.
2. Interactions across all these elements.

Remember this: On January 7, 1997, at Macworld Expo, then Apple CEO Gil Amelio discussed how MacOS has evolved on an outdated architecture.

The journey of any organization transitioning to fully-adopt AI is fraught with challenges:

• Need to build judgment: AI is costly and it is easy to get it wrong. You could spend months building a model and then realize that an underlying hypothesis was wrong and you have to start all over again.
• Need for change management: People within most critical functions of the organization will have to change, up skill, or retrain to adopt AI. AI will also mandate change in mandate/scope/power of various stakeholders. None of this is easy.
• Need to expand talent pool: There is limited AI/ML talent pool in the market and the number of companies competing for the same is high.

Anthropologist David Graeber talks classifies Bullshit Jobs into five categories:

• flunkies, who serve to make their superiors feel important, e.g., receptionists, door attendants, etc.
• goons, who act to harm or deceive others on behalf of their employer, or to prevent other goons from doing so, e.g., lobbyists, corporate lawyers, telemarketers, etc.
• duct tapers, who temporarily fix problems that could be fixed permanently, e.g., programmers repairing bloated code, airline desk staff who calm passengers whose bags do not arrive;
• box tickers, who create the appearance that something useful is being done when it is not, e.g., corporate compliance officers, quality service managers;
• taskmasters, who create extra work for those who do not need it, e.g., middle management;

Entropy.
A measure of randomness, a parameter of disorder.
Energy broken down in irretrievable heat.
What might appear to be chaos, even decay,
is really a system’s way of smoothing out differences — its search for equilibrium.
Uncorrelated parts interact,
find their connections in an evolving system
so, from one perspective, entropy is a clock
charting the irreversible.

NUMB3RS Episode 511: Arrow of Time–Wolfram Research Math Notes