Learning curves sloping up and down

One of the great inefficiencies of humanity as a species is the need to re-educate every successive generation. I think of this when playing with my nieces and nephews and my friends' children. Adults have to spend so much time teaching infants and children things we've already learned, and the process of knowledge transfer is so lossy. The entire education system can be seen as a giant institution for transferring knowledge from one generation to the next, like some crude disk drive, and these days it's rising in price despite not measurably improving.

Artificial intelligences need not go through this because they don't die abruptly like humans, they can evolve continuously without hard resets. This is one of its chief advantages over human intelligence. To take a modern example, self-driving cars should only improve from here on out, and each new one we build can be as smart as the smartest self-driving car as soon as it's assembled. Every node on the network has access to the intelligence of the network.

All this human intelligence cut short by mortality is a curse, but given human nature, it is also critical to forward progress. People's views calcify, so death is a way of wiping the slate clean to make way for ideological progress. Part of why racism and sexism, to take two social ills, decline over time is simply that the racists and sexists die out.

This plays out at a corporate level, too. Companies can have both too long and too short a memory. New employees have to be taught the culture and catch up to what others before them learned so they can be as productive as possible. On the other hand, institutions can become set in their ways, less adaptive as their environments evolve. New blood can bring fresh eyes.

One form of this is institutional trauma. A company tries to enter a space, fails, and doesn't venture into that space ever again, even if the timing for entry shifts to a more favorable one. I look at a product like Google Wave and think that if Google had stuck with it, they might have built something like Slack.

Why do companies slow down as they grow larger? One reason is that in a hierarchical organizational structure, the more people and more levels you pile in, the more chances someone somewhere will say no to any idea. Bureaucracy is just institutionalized veto power growing linearly with organizational size.

One theory for why evolution gives us just enough of a lifespan to bear offspring but not stay around too long is that it reduces competition for resources for our offspring. Old timers who rise in an organization can compete for resources with new employees, but without the disadvantage of old age. Most who survive at a company have risen to the level where they have disproportionate institutional power. It's often deserved, but it's also dangerous. True disruption of a company is difficult to counter because it attacks the strongest part of your business, and that division or unit tends to be the one that has the most power in the organization.

Companies try to counter this by dividing themselves into smaller units even as they grow in the aggregate. Jeff Bezos tried localizing decision-making power at Amazon in what he called two-pizza teams (the size of the team being one that could be fed by two pizzas). Facebook acquires companies like Instagram and WhatsApp but lets them run largely independently. Google's new Alphabet org structure breaks itself into a looser coalition of entities where each division has more degrees of freedom strategically. All are attempt to keep the weight of bureaucratic middle management off of the creatives, to preserve greater dimensionality and optionality throughout the organization.

Amazon is one company which often wins just by being more patient than its competitors, playing games on a much longer time scale than most. It tends to be less susceptible to institutional trauma than most. Of course, part of this is the result of the unique ownership structure that companies like Amazon, Facebook, and Google have managed to pull off: ultimate decision-making power rests in the hands of the founders even as they leverage the benefits of the public market.

However, it's more than that. When Bezos was asked at Recode last year how he decided when to give up on a project, he said something striking: we give up on something when the last high judgment person in the room gives up on it.

What a brilliant heuristic. Simple and memorable. Of course, deciding who is high judgment is its own challenge, but this concept reverses the usual problem of bureaucracy, which is it takes only one person saying no to kill something. Jeff reverses that; he wants the company to be as smart on any topic as its single smartest person. 

At some point in life, it probably is rational to be that old dog who eschews new tricks. If you're going to die soon anyhow, you're more likely to just suffer the discomfort of having to adjust and then die before you can reap any awards. The corporate version of this is the concept that most executives should just squeeze the maximum profit out of their existing thinking and not bother trying to stave off disruption. It might be more energy and resource efficient to just have some of the stalwarts die off rather than shift the thinking of tens of thousands of employees, or change a culture which has evolved over decades.