OS Is A Fan Of Michael Schrage: Two Recent Essays To Consider

So much economic writing makes the readers' eyes glaze over, as so many writers labor to appear even-handed and fair. Rather like the hamsters on the Kia ad: 'You could give this, or you could give her that!.' Ennui soon sets in.

Michael Schrage, in his musings on the Harvard Biz Review site, does not fall for that stuff. He actually has a point of view, and seeks to make sense, instead of impressing the reader with his erudition and ability to fabricate charts. OS, simple mind that he is, appreciates that approach.

So, two recent posts to share, and hopefully this will encourage the vast and swelling hordes of OS's loyal posse to read more Michael Schrage.

First: Higher Education Is Overrated; Skills Aren't

Thanks, Mr. Schrage, for stating the obvious, pithily.

We have a huge branding issue. Pundits and policy-makers jabber about the need to educate people to compete in knowledge-intensive industries. But knowledge doesn't represent even half the intensity of this industrial challenge. What really matters are skills. The grievously undervalued human capital issue here isn't quality education in school but quality of skills in markets. Establishing correlations, let alone causality, between them is hard. (Michael Polanyi's classic "Personal Knowledge" brilliantly articulates this.) A computer science PhD doesn't make one a good programmer. There is a world of difference between getting an "A" in robotics class and winning a "bot" competition. MIT's motto isn't Mens et Manus (Latin for Mind and Hand) by accident. Great knowledge is not the same as great skill. Worse yet, decent knowledge doesn't guarantee even decent skills. Unfortunately, educrats and eduzealots behave as if college English degrees mean their recipients can write and that philosophy degrees mean their holders can rigorously think. That's not true.

Second: The Hireless Recovery

Pick any recovery-shaped letter you like. Economic policymakers would still be wondering: Where did the jobs go?

Alas, that's exactly the wrong question. The better question: Where did the employers go?

America doesn't have a jobless recovery; it has a hireless recovery. Don't confuse them. After all, you first have to get hired to have a job. Organizations may be desperate to grow, but they overwhelmingly lack the desire to hire. Fewer people are working longer, harder and (presumably) smarter hours. So many firms have proven so productive even after several rounds of layoffs, that serious economists wonder if, in fact, large slices of the workforce actually offer ZMP — Zero Marginal Productivity — to their enterprise. In other words, the Great Recession reveals many employees not just to be worth less but economically worthless. Ouch.

[he continues....]

For most organizations, people are a means and medium to an end. They're not hiring employees, they're hiring value creation. If they can get that value — or most of it — from contingency workers, outsourcing, automation, innovative processes or capital investment, why wouldn't they? If tweaking a process or program empowers three people to do the work of five, then tweakonomics is the way to go. The profound difference between today and 2005 is that good hires looked like better investments than great tweaks back then. In 2010, good tweaks look like better bets than even great hires.

He tells us stuff we don't gladly hear. But, it's stuff we need to hear.

HT Mr. Schrage.