How many actuaries does it take to make an iPod?

The Speaking of Actuaries blog recently featured a post by Emily Kessler on the role of universities in actuarial education and qualification.  Emily makes it clear that the actuarial discipline, like others, should draw on a variety of other disciplines to thrive and innovate:

Any profession needs to have a constant stream of intellectual capital. Medicine, law, finance, psychology, actuarial science – no profession can move forward without a constant stream of new thinking, from the broad possibilities to the detailed mathematics. I may not understand quantum mechanics, but I know that its theories are the root of modern electronics. I applaud the Nobel-prize winning physicists whose theories (which I don’t understand) paved the way for my iPod.

Emily makes an excellent point. You don’t need to know everything about everything to help create something great like the iPod—one of the most successful and game-changing innovations of our time. The iPod was more than a new way to listen to music. It paved the way for the iPhone and a slew of other handheld devices that have revolutionized the way we access information and communicate with one another.

How did Apple, a computer company that languished for much of the 1990s, deliver such an incredible product in the audio market, one dominated by larger, more successful companies like Sony? Specifically, why didn’t Sony give us the iPod?

In a recent episode of the Harvard Business IdeaCast, Morten Hansen, professor at the UC Berkeley School of Information, offered one explanation for why Apple succeeded with the iPod and iTunes, while Sony failed with “Sony Connect” (Sony what?).  Hansen points to stark differences in the social culture within Apple and Sony. Essentially, Apple was able to harness the collective creativity among its employees, while Sony failed to do the same across independent platforms.

Hansen expands further in his book Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results:

Sony, not Apple, should have given us the iPod.  Sony failed miserably because it couldn’t collaborate across its many decentralized divisions. It could deliver only one kind of performance—wonderful products coming out of independent business units that had a great deal of freedom. But it couldn’t add another level of performance—great products resulting from collaboration across its divisions. It failed to move its performance to a higher plateau—to gain the best of both worlds—by keeping the benefits of having independent business units and reaping big results from collaboration. It lacked disciplined collaboration.

Actuaries, like other professionals, store and produce a great deal of valuable information at an individual level. Individual thinking is vitally important because it leads to the pursuit of self-interest in a capitalist economy and also ensures a varied mix of ideas and solutions to problems.

But we can do much more at the company, industry, and social level by combining what we know with other actuaries as well as members of other disciplines. To date, we’ve been encumbered by geographic and social barriers. This is by no means unique to the actuarial profession; knowledge workers across the globe stare at the same walls and ceilings.

Fortunately, this is changing thanks to Web 2.0 and social technologies that allow individuals to collaborate regardless of conventional barriers. I’m confident that we will see new iPods delivered at an even faster pace as we move into the 21st century—one that will take interdisciplinary collaboration to levels we cannot fathom today.

In future posts, I’d like to explore various collaboration technologies that actuaries and other knowledge workers can use to increase their productivity, market value, and contribute to their industries. Current examples of these technologies include wikis, message boards, YouTube-style videos, social media sites like LinkedIn, Google Wave, and others.  If you already use these or other technologies, please let me know in the comments. Additionally, if you have suggestions for future topics, please let me know about those too.

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  1. #1 by meep on March 11, 2010 - 8:52 pm

    Thing is, I think we’ve got plenty of tech that allows us to collaborate in ways where geography is no constraint… and yet….

    Here’s the thing. The tools are helpful for people like us who want to collaborate, but what would be =really= helpful is having some tools that let us route around the people who are deliberate bottlenecks.

    And then there are the people who just don’t want to collaborate, but if they don’t want to, that’s their problem. It’s the people who are deliberate barriers [and the IT policies enabling them] that annoy me.

    • #2 by Eddie on March 11, 2010 - 9:20 pm

      meep, you raise some good practical points. First of all, you are correct that some people just don’t want to collaborate. This is simply a fact of life. Even in companies that have fully implemented an “Enterprise 2.0” structure for collaboration, a percentage of the workforce doesn’t participate. That’s okay. Some people just aren’t meant to. But I think overall, at an aggregate level, productivity does increase with effective collaboration because fewer ideas get shelved. . . which leads me to comment on your point about information bottlenecks.

      The bottleneck problem is one that will be solved in the long run. It’s really just a question of how soon. The conventional structure of a company requires that ideas pass through narrower and narrower pipes as they travel from the masses at the bottom to the few at the top. Social technologies change (potentially even reverse) this flow.

      Just having a simple message board within a company that allows employee 512315 to connect with employ 5479913 on the other side of the building is a step in the right direction. Given time, I think the bottleneckers will give way because the benefits will become more apparent.

      As for IT, I think they are primarily motivated by information security concerns. I’m going to address these issues in later posts.

      Thanks very much for your comment.

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