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Expertise leads to overreach. Some who have it think it qualifies them to hold opinions about other fields in which they have none.

There was Dr. Robert Shockley, co-inventor of the transistor, who thought his opinion about the relationship between IQ and race was worth listening to, entertainers who think their celebrity makes their opinions about foreign policy worthy of our time and attention, and, (this week’s topic) economists, too many of whom consider their thoughts about business management to be worth sharing.

The problem in four steps:

  1. Economists study the behavior of markets.
  2. To understand markets, economists make a simplifying assumption — that humans act to “maximize utility” — to optimize transactions for personal gain.
  3. Most economists, most of the time, use money as a proxy for utility (the economists’ term for “what people value”).
  4. They then force-fit a marketplace perspective onto every phenomenon in human interactions in order to prescribe how we all ought to go about our lives.

Step four is where the trouble starts. Here’s a non-business example: Most of us value friendship. And yet, creating a “friendship marketplace” doesn’t work — renting another person’s time and attention doesn’t make them your friend. (For more on this and related topics, read Michael Sandel’s “How Markets Crowd Out Morals,” Boston Review, May/June edition, and thanks to long-time correspondent Leo Heska for bringing it to our attention.)

When it comes to business …

Economic theory started to encroach on what we laughingly call “management science” during the Japanese invasion of the mid-1970s. That’s when Toyotas and Datsuns turned out to cost less and hold up better than anything GM,  Ford and Chrysler were selling, and buying televisions from Sony and Panasonic provided better value than RCA or Zenith.

Prior to that, business leaders understood that paychecks were what they exchanged for an employee’s effort — “An honest day’s work for an honest day’s pay” — but that they received an employee’s loyalty in exchange for a different coinage.

And so, employers redefined the employer/employee relationship as nothing more than a marketplace, and employee loyalty became a quaint hold-over of a simpler time. It wasn’t that employers didn’t want employee loyalty after that. It’s that they became blind to the coinage needed to get it, namely, their own loyalty toward their employees.

Who but an economist … someone who considers a giving a gift to be a less-efficient alternative to handing over an appropriately calculated wad of cash … could make a mistake like that?

It was at about the same time that boards of directors decided they had to bribe their CEOs to do their jobs, at an ever-increasing level of bribery (you’ll find charts and graphs in “Historical Trends in Executive Compensation, 1936-2005,” Carola Frydman and Raven E. Saks, January 18, 2007).

Is it actually bribery? That depends on your perspective.

Mine is that there really is an employment marketplace, which means that to fill any position, a company has to be willing to pay what the market will bear … or, must offer enough intangible benefits to compensate for the money they aren’t able to offer, remembering that money isn’t utility, it’s a proxy for utility.

Compensation is what companies provide in order to get the right people to work there instead of somewhere else. Using it to change someone’s behavior? That’s a bribe (“Something, such as money or a favor, offered or given to a person in a position of trust to influence that person’s views or conduct,” from The Free Dictionary).

Unless you’re an economist, in which case money is the sole driver of human behavior.

Then there’s the asset view of the enterprise. Prior to the takeover of management by economists, business managers figured they were responsible for running a successful business — one that out-competed other companies that sold similar goods and services.

But no longer. For the most part, business management now tries to maximize “shareholder value,” for which market capitalization is an appropriate metric. Business management became responsible for what a company can be sold for, not for what it does.

This would be just fine were it not for a nice little irony: The path to maximizing a company’s asset value is to ignore it.

The companies that are worth the most aren’t the ones that try to move the price of a share of stock in the right direction. They’re the ones where everyone focuses on selling great products and taking care of customers. That’s everyone. Including the IT staff.

Which means that as an IT leader, part of your job is helping everyone in IT connect the dots that separate their jobs from the company’s products and customers.

Not “internal customers.” The company’s customers.

Imitation, I’m told, is the sincerest form of flattery. Given the occasional criticism of Gartner in this space over the years, I was especially flattered by Gartner Senior Analyst Nikos Drakos. At the Gartner Europe Spring Symposium/ITxpo 2001, Drakos made use of the technology life cycle — Hype, Disillusionment, Application — first described in this column back in May, 1996. Referring to peer-to-peer computing, Drakos reportedly said that it’s just approaching the top of the hype cycle, but after passing through the inevitable subsequent phase of disillusionment (which will take until 2004), peer-to-peer has great potential in the business environment.

Attribution would have been nice, but you can’t have everything. In any event, while the unattributed flattery was nice, Drakos’ prediction is both shaky and funny.

The funny part requires historical perspective. Remember the early days of client/server computing? Part of its attraction was its ability to move processing to the desktop. That way, as the number of end-users increased, so did the available computing power.

Our understanding was pretty fuzzy back then, of course. Distributed processing relates to the platform layer of technical architecture. Client/server is an application-layer issue, and may or may not relocate processing tasks. But that’s okay — a lot of people in IT are still pretty fuzzy about this distinction. Which explains at least some of the confusion connected to advocacy of what’s usually called “thin-client” (really, fat-network) computing architectures.

The logic behind fat network computing is the allegedly high cost of distributing applications to the desktop and managing them there. It “just makes sense” to centralize everything on bigger servers that are professionally managed in the data center, according to this line of thinking, although why it “just makes more sense” than taking advantage of desktop computing cycles to run the distributable parts of an application is rarely articulated.

Which is okay, because some thin-client architectures do run the distributable parts of an application on the desktop — they’re downloaded on-demand from a server in the form of Java applets. Or, the applets can load from a cache on the local hard drive, and are only downloaded when a new version is available on the server.

Which apparently is very different from Windows automatically downloading updated versions of DLLs when new versions are available on a server — that’s a fat-client technique. I guess the client is fat when software is installed instead of cached. It’s kind of hard to tell.

And it just got harder, because the very same pundits who explained why fat-network computing “just made sense” while client/server does not are now explaining that peer-to-peer computing is in your future. Why? Because it makes use of all that wasted computing power available on the desktop, of course! It just makes sense. Maybe it does — but it sure is amazing how the very same pundits who were sneering at “fat clients” just a year ago — and probably still do — now extol the virtues of just another version of fat client computing.

Napster made peer-to-peer computing fashionable again. Never mind that most Napster downloads came from a small number of big honkin’ machines on the Napster network. Those big honkin’ machines weren’t labeled “server” on the network diagram, after all, and there are a lot of pundits in this industry who are on constant alert for the Next Big Thing.

I say, don’t wait until 2004. If peer-to-peer has such great business potential, take advantage of it right now. Make your end-users’ hard drives shareable.

Okay, maybe that isn’t peer-to-peer’s potential. Maybe it’s making use of all those “wasted” computing cycles on the desktop. That has nothing to do with what Napster was about, of course, but it does have something to do with a screen saver the folks at SETI are using to distribute some of its processing to volunteers around the Internet.

Sound attractive? Maybe, but the major bottlenecks of most business applications are I/O and running the user interface, not calculations. So let’s use peer-to-peer for those. For starters we can, with sophisticated DBMS software, distribute our terabyte databases across the hard drives of all of our desktop PCs.

Or maybe not. Because what happens when employees turn off their desktops before leaving for the night?

That leaves the user interface. Great idea! It’s so great, in fact, that we’re done. We moved that to the desktop in the earliest days of client/server computing.

My LDLs, I recently learned, are high enough to experience the Oort cloud up close and personal. Which is why I looked at the nutritional information printed on a bag of fudge-covered Oreos. The news was wonderful — only 0.5 grams of saturated fat per serving. Wow! Then I looked at the serving size. One cookie. Who are they trying to kid? Everyone knows the standard serving size for Oreos is a bag.

Which demonstrates an important marketing principle: With a little ingenuity you can lie by telling the truth. And so long as you can defend your statements in court you’re in the clear. In marketing, this kind of deception is considered ethical. You have to tell the truth, but after that, caveat emptor.

Managers face different ethical conundrums, and CTOs sometimes have a hard time accepting the contextual nature of executive ethics. Take, for example, the widely accepted principle that “lying is bad.”

Imagine this scenario: Your company decides on a round of layoffs. You disagree. Your options:

1. Resign in protest. But that results in someone less qualified, and likely with fewer scruples in charge of the organization you were too principled to continue leading.

2. Implement the decision but tell everyone you disagree with it. In addition to being unprofessional, that behavior is divisive to the company and damages morale and motivation.

3. Implement the decision and tell everyone you support it, even though you don’t. But then, of course, you aren’t being truthful.

4. Implement the decision and refuse to say whether you agree with it. That’ll keep ’em guessing.

5. Or, implement the decision and tell everyone you aren’t qualified to critique it because the people who made the decision have access to more information than you. Except that as a member of the inner circle, you were part of the decision process. It simply didn’t go your way. You’re lying again, and being a weasel besides.

What’s the right answer? There is no right answer that fits every circumstance, and no answer will leave your sensibilities untrammeled. Worse, every time you have to make a decision like this, the line separating acceptable and unacceptable behavior becomes more blurred and gray. But that isn’t the problem — the line, after all, really is gray and blurry.

No, the problem is inversion of purpose. When you can stomach anything, it’s easy to lose sight of why you wanted to be in the executive suite in the first place.

It’s when your goal becomes just being there that you’re in trouble.