Paul Romer on management

From the conversation with Tyler Cowen.

the typical situation of an IT team or a research unit in a place like the bank is that there’s this almost unlimited set of requests you get, of which you can process only a subset. So you need some transparency about how is it you’re selecting the things you actually work on, given the many things people want.

This really resonated with me. One of the differences between a sub-Dunbar and super-Dunbar organization is that you need a formal process to prioritize projects. When I started at Freddie Mac, they didn’t have this, and the result was a hodge-podge of systems developed on different platforms using different data models. It was only around 1989 or 1990 that a woman in the IT division put together a rational process for explicitly setting project priorities. I was one of the people on that project, and I learned a lot from it.

You’d think that it has to be obvious that top management has to determine the priorities of staff. But in fact without a formal process, it’s like the senior executives can push buttons but nothing happens. Top priorities go unaddressed while employees lower down work on putting out fires or doing things that they find personally satisfying.

And on a different topic, but also resonating with me, Romer says,

I think there’s a slightly different culture in the Midwest compared to the East Coast, and there’s enough of a difference so that when you go from one to the other, you have maybe a little bit of a sense of being an outsider. Maybe those things have filtered into my work.

I felt like an outsider from my first week at Swarthmore College. I remember running into another freshman, from Chicago, and immediately feeling that he and I had a lot in common. He and i talked for several hours. Also, I wrote a lot of long letters to friends from high school, trying to explain my sense of dislocation. After a few weeks, I adjusted to where I could function among the East Coasters. But in a sense I remained an outsider.

Back then, by the way, the cultural differences were not heavily political, as they are today. I think that we Midwesterners were tougher in some sense. We were better at relating to ordinary people than the students who had spent their whole lives isolated in wealthy suburbs and prep schools.

6 thoughts on “Paul Romer on management

  1. “a hodge-podge of systems developed on different platforms using different data models.” has less to do with whether or not formal priorities are established than it does about avoiding the hard work of requirements gathering. Even if a firm “wants” to do this well, it can run into some serious soup rather quickly.

  2. I grew up in Minnesota and didn’t move out of state until I was 25. I went on a couple of business trips to South Carolina and Georgia. In a lot ways it was more like being in a foreign country than when I visited Canada. I gathered from then on that the various regions of the US had a lot more cultural differences than I had previously assumed.

  3. “I felt like an outsider … ”

    Like language, culture includes social interaction protocols and conventions that require the actors to have absorbed and indeed been deeply psychologically molded by those to enable the effortless and effective use of those protocols. This naturally creates more uniformity and homogeneity.

    Human interaction cannot occur on superior levels requiring high levels of ease and trust without everyone involved being able to automatically and accurately anticipate everyone else’s baseline perspectives and likely reactions within a narrow range. But human personalities and potentialities are extremely diverse, so some minimal degree of an assimilation process that makes everyone more alike in the important respects, and at least some period of enhanced cultural flexibility and malleability allowing for this molding, is really indispensible. Like language, these are things that can be picked up with differing degrees of success and difficulty later, but childhood really is special, and old dogs usually can’t learn many new tricks, just like people usually can’t conceal accents or pick up new phonemes or pronounce shibboleths. Assimilation is also helped along by very strong social incentives such as otherwise being doomed to lower status or never fitting in as an ‘outsider’, and it helps if one is overwhelmingly outnumbered so that one cannot immediately lean on the crutch of self-segregating and flocking together with birds of a feather in a spontaneous social ghetto.

    Whenever psychological / cultural diversity increases beyond a certain level, it introduces serious frictions and that feeling of a lot of social uncertainty and awkwardness, alienation and atomization, and which leads to a lot of uncomfortable tension and miscommunication, especially as people have to walk on eggshells because being uncertain about boundaries and what might cause offense. Everything becomes harder, takes longer, needs more ‘outside arbitration’. This is such an obvious and common experience that it’s a major trope used over and over in literature and entertainment.

    This is the very opposite of a well-functioning team where everyone can read each other’s minds and knows what everyone else is thinking and feeling without having to say hardly anyway, where people can anticipate each other’s moves, establish Schelling points for any kind of guesses or social predictions, and “finish each other’s sentence”.

    This friction and difficulty and awkwardness is one of the many things that opponents of open, unlimited immigration are worried about, avoiding which is a perfectly legitimate interest and widespread preference, especially as the local ratio of foreign-born (or even from distant-regions) rises past a critical threshold. The feeling of being in Babel, of being a “stranger in one’s own homeland,” (or an ‘outsider’) and thus of suddenly being the one who has to assimilate to someone else’s cultural protocols. It threatens to turn an existing functional and pleasant shared-cultural environment into Teddy Roosevelt’s line about a mere “polyglot boarding house”, and the feeling was articulated quite well in Rudyard Kipling’s poem “The Stranger”.

    The Stranger within my gate,
    He may be true or kind,
    But he does not talk my talk–
    I cannot feel his mind.
    I see the face and the eyes and the mouth,
    But not the soul behind.

  4. “a hodge-podge of systems”

    Back when ordinary workers in federal agencies began to get desk-top PCs. Every section of every division of of every group came up with dBase applications for reporting everything under the sun from budget to work reports. It took decades for headquarters IT offices to win data fights with line units over whose systems would prevail with line units often maintaining separate parallel data bases. Lotus 1-2-3 didn’t have the same problem since it was a much more transparent system.

    “I wrote a lot of long letters to friends from high school, trying to explain my sense of dislocation.”

    Same here except from high school I enlisted. Same sense of dislocation when I would up in DC working for the feds after completing grad school with GI benefits. Didn’t know whether I related better to ordinary people better because of acclimating to life in the barracks or because of my midwest upbringing.

    At any rate, now being long since retired, I look back on my career and can see that where I most excelled was in handling case files and appeals. Somewhere along the line when I was very young I had read a poem about a man waiting on a bureaucrat in an office who sits down at her desk and casually places her cup and dessert on his case file “which was everything.” Don’t remember the name or the title, but that image has stayed with me ever since (regardless of the study linked to at Marginal Revolution the other day) and I never wanted to be that bureaucrat. Midwestern upbringing? Military service? Transformative power of poetry? Maybe all three.

    • @edgar: The database problems have not been solved at all. The Obamacare website fiasco was just one revealing instance of it. Indeed, even within a Department, it is a frequent tragicomic observation that sub-offices often play musical chairs in picking which non-interopearable system to switch to every few years, some choosing Salesforce, or Oracle, or Internet Quorum, SharePoint / CRM or yet another custom proprietary or in-house effort. A real mess.

      What ends up happening is that every office has its own system and tools, and when coordinating with another office with different systems and tools, it has to go through a human who goes through a duplicative, time-consuming, and expensive manual translation process. When one is dealing with some big, multi-entity project, this kind of thing can happen dozens of times with each and every project update.

  5. About 20 years ago I went from the midwest (Indiana) to upstate New York (Cornell). I got the sense that the northeast was more diverse by way of being more stratified. In the midwest the class divisions were newer and more permeable; you rarely met anyone at any level who couldn’t change a tire or do his own taxes. In the northeast those activities seemed to describe distinct types of people.

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