Humble Pie for Chavez, Victory for Czar Putin

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There was an outbreak of sensibility in Venezuela this weekend as that swaggering gasbag, Hugo Chavez, was set back in his bid to rewrite the constitution.  Chavez, who was recently and openly told to “shut up” by King Juan Carlos of Spain, has been on a nationalization binge in the last few years. To validate his further consolidation of power, his party attempted to alter the constitution to favor his continued tenure and further his grasp on the resources of the state.  The people of Venezuela told him to go powder his nose.

Things weren’t so democratic in Russia last weekend as a highly managed political campaign delivered the goods. That is, victory for the Party of Vlad Putin, the new Czar of Russia. With key opposition leaders temporarily in jail (Kasparov), and a state controlled media, a comfortable margin of victory was delivered as expected to Putin by his aparachiki. 

Russia’s long, sad history of Big Boss rule continues.

MS Cyborg. Resistance is Futile.

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Much has changed in the consumer computer world in the 3 years since I last bought a computer. We recently purchased an HP Pavillion laptop computer. It comes with MS Vista and a bunch of other applications already installed. No program discs or manuals at all. And, like an infant, it pops out gasping for life sustaining air. Only in this case, it gasps for connection to the internet. 

What moves me to write this post is my naive refresher on the extent to which we are becoming enveloped and intertwined by the internet. Increasingly, the internet is becoming the central nervous system of our civilization.

While standing in front of a display at Circuit City I called the HP customer service number to inquire about the warranty on their Pavillion. I eventually spoke with a fast talking character who flat out said that I should not buy from Circuit City, one of their own distributors (!), and that I should have a custom laptop assembled by HP.  After 10 minutes of irritating hard sell, we eventually hung up on him.

This isn’t just about commerce. This is about anthropology. A commercial tool is absolutely altering how we do nearly everything and how we expend scarce resources.  It is a tool that uses features you cannot own- you can only agree to the terms of a license. This tool is held together by the sinew of invisible electronic code. This tool is both pleasurable and fearsome. It can be swung by governments, accountants, and 9 year old Hindu children.

To even inquire about these computer tools, we are forced to use computerized telecommunications and speak to computerized devices that filter and channel us into packing house chutes like pigs to slaughter. This sorting process can identify willing consumers, plump with credit, and prepare them for flensing.

We have become giddy and willing participants in a change that is almost biological in its transformation of our social structure. The very first thing that a MS program wants to do is to connect with the Mother Ship at Microsoft. Increasingly, our DSL connected computers are becoming assimilated into the control of the collective being.  It would be an exaggeration to say that it resembles the Borg of Star Trek. But the idea of assimilation of information flow into a master network is beginning to take shape. A master network suggests master control.

Consumers have control of the situation, you might say. At some level, yes. But there are disturbing trends that need to be recognized.  The playing field of global commerce is neither egalitarian, democratic, or laissez faire. While there may be harmonized regulations that cut across national borders to slow down the more obvious scams, the nature of the players is changing.  Increasingly,  nationalized organizations are participating in the market place in a big way.  In the petroleum market for instance, NOC’s control approximately 75 % of the worlds petroleum reserves. That means that soverign nations can modulate scarcity directly.

Autocratic and paranoid governments do what they have always have done. They restrict access and reduce transparency. When such governments have control of commodity production (i.e., Gazprom), their resilience in the market is magnified by the fact that overhead can be subsidized and scarcity can be driven by politics.  Nationalized commodity suppliers do not suffer the full forces of the market place because they can be floated by the government.  The cleansing effect of the market place on inefficient operation is ineffective.

The openness of the internet can only go one direction. It will increasingly be subject to contrivance and control by organizations that seek facile extraction of dollars from you. Today, buying a computer means giving increasing consent to automated integration into the net.  We willingly comply because we are first and foremost primates who are dazzled by flashing lights, pretty colors, and a new axe to swing around.

Uncle Merck and Aunt Lilly

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According to the November 26, 2007 C&EN, Merck has for a second time engaged the Indian firm NPIL to develop cancer drugs for two targets that they have disclosed. Merck will have the option to buy rights to the compounds, providing they successfully get through Phase IIa of clinical trials. The article discloses that Eli Lilly has made a similar agreement.

It is disappointing to see companys like Merck and Lilly outsourcing their R&D. I do not intend to besmirch NPIL. They have obviously crossed a threshold in their own R&D activity that meets the standard of major league pharma. But I do believe that Merck and Lilly deserve some scolding for outsourcing R&D.

R&D is one of the remaining activities for which the US maintains a bit of an edge. It is our magic.  To accelerate the development of R&D expertise in India is to act against our self interest as a country. India will eventually develop this capability on their own- why help? Drug discovery is an art that should be jealously guarded by a company. To farm it out to a hard working developing country with lower overhead rates is ultimately foolhardy. Even though some particular art is protected, this activity is always stimulates a company.

Lucky India. They get to exploit advanced technology without having to have paid for 100 years of R&D. Instead of having to pay to develop synthetic chemistry, they can plug and chug with a newly educated populace and access to the literature.

And who paid for the universities and the NIH post-doctoral fellowships and the research assistantships for grad students who developed and published the technology and who became the scientists whom Merck hired? Take a guess.

Investors may reap near term gains and Merck may get a better market foothold in India. Some executives will look like bloody geniuses. The presidents and CEO will prattle on over brunch about bringing home shareholder value. But when R&D goes the way of garment manufacture and automobiles, these “heroes” will be retired to their gated community in Palm Springs. In the end, they have eroded the competitiveness of the USA in an aggressive and contentious market.

Thumbs down to Merck and Lilly.

Person of Gender

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Some years ago, my first real job out of my post-doc was a one year teaching stint at a Catholic womens college.  The post-doc was rather less than a great experience. But that is a post for another time. I did get a couple of JACS papers, a Mendeleev Communications paper, a divorce, and one Org Synth publication out of it. And, I got to work with some smart folks I still consider to be among my closest friends.

The post-doc years were a time of deep personal turmoil. The divorce was traumatic. It affects one in ways that are hard to appreciate in advance. Mostly, it presents an indelible stamp of failure to the bearer.  If it weren’t for friends that I made while in Texas, frankly I don’t know where I’d be today.  The adage “What doesn’t kill you makes you stronger” does have some truth in it.

The Catholic school I taught in was associated with a major football presence in the midwest. The womens college was run by the same group of nuns who were connected with the coed university across the street so venerated by football enthsiasts. It had its own exit from the toll road, two lakes, two golf courses, and a mosaic of the Saviour declaring a touchdown. 

I bought furniture from Father Clarence and slept on a priest bed (without the priest, blessedly) for my academic year under the employ of nuns. Such furniture was typically donated back for eventual resale. Father Clarence offered to sell me the two 35 mm projectors used to entertain the revered Four Horsemen. Like an idiot, I declined his offer and regret it to this day.

The nuns who ran this single gender institution were an aging population. Initiates were hard to find- apparently most came from South America. The Blessed Sisters eventually handed off the university so they could concentrate on their hospitals.

Even though I received paychecks from the Sisters, I rarely saw them. We did have a nun from a different order in our department.  She was a pistol. And a biochemist. Her interest was infecting caterpillars with deadly caterpillar viruses. Strange game, this. Our Dean was a hoot- she looked and sounded just like Ethel Merman.

I taught a class of 95 students, all women. I recall looking out into a crowd of 19-22 year old women, most with poney tails protruding out from the back of baseball caps and peering at me under bills that were severely curled.   It was a general chemistry for non-majors section populated by students who couldn’t get into biology or the popular “physics for poets” class. These hapless students ended up with me as a prof.  What rotten luck.

One morning driving into work I was in a serious auto accident where I nearly rolled over my pickup. The patrolman graciously dropped me off at the college where I ran to the classroom 10 minutes late. Not a single one of the vicious little trolls waited for me to arrive. (After all, it says somewhere in the new testament that a student only has to wait 5 minutes for the prof.)

I took over a class previously taught by a fellow who had just died. His office was closed and untouched by a disinterested family. It was an odd experience- he was fresh in everyones mind except for mine. 

The main recollection I have from the experience is that perhaps 1/3 of the students I knew were genuinely dismayed that men taught at the University. They would point out that it made no sense for a women’s institution to have male faculty. As a “person of gender”, it was hard for me to disagree. But I would also point out that of the remaining 2/3 that I spoke with, half were uncertain about the wisdom of attending an all womens institution. So, for me it is hard to draw conclusions about the merit of single gender institutions. From a marketing view, there is/was demand for this kind of school. But whether demand is from parents or students is less clear to me.

Fools and Randomness

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There is an interesting book out by Nassim Nicholas Taleb called Fooled by Randomness, 2005, Random House (!!?), 2005, ISBN 0-8129-7521-9.  To get right to the point, Taleb has combined cognitive science and statistics with finance. 

There is nothing new about cognitive scientists using statistics.  But there is  something distinctly recent, at least, about finance people thinking about how cognitive science and statistics might be applied to how we approach investment thinking. I don’t mean the cookbook use of cognitive science in investments, rather, I mean how we think about investment risk.  The theme of Taleb’s book is concerned with how we think about randomness.

The reader can form her/his own opinion about Taleb’s ideas.  Speaking for myself, I am intrigued with his thesis that many “experts” in economics and investments are largely deluded when it comes to perceiving risk. Taleb suggests that validation of forecasting methods and the use of error estimation is generally lacking in investment trading. The cognitive connection applies to how investment traders think. Taleb suggests that there is a general lack of probabilisitic thinking.

Coming to grips with infrequent and unexpected outcomes (black swans) is one of the most befuddling and confusing challenges we all face. Our primate brains form elementary strategies for dealing with certain risks.  We catch a glimse of a big carnivore in the brush and we run. 

But what to do if we have a bundle of money in the market and some social or economic perturbation comes along?  What will the market do if the Molybdenum prices skyrocket or if China invades Taiwan? Individuals and industries are concerned with the value of their investments over the course of positive and negative events. Stock traders need to act on clues so as to protect the value of their accounts.

Taleb laments the lack of probabilistic thinking in the investment community. He suggests that individuals and firms who are deemed as highly successful in investments are in reality just very lucky more frequently than we realize.

Even for hacks such as myself who gasped and sputtered through a few semesters of exposure to probabilistic concepts, i.e., quantum mechanics, radiation science, etc., sweeping the mind free of deterministic biases requires constant attention.  How is some MBA derivatives specialist going to temper her/his enthusiasm to buy or sell when phantom patterns appear in the market?  Good question.

Colonels of the Chemical Business

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The strengths and weaknesses of a business are to a large extent a reflection of the strengths and weaknesses of the people running them. It is possible to standardize and depersonalize many aspects of a business.  Accounting systems come to mind. There are benefits to be derived from rigid protocols for financial transactions, for instance.  Purchasing and sales transactions are managed by accounting software straight from the old testament. Records of all actions involving the transfer of funds are visible from a hike down the audit trail. Wreckless use of funds or a whole range of malfeasances can in principle be found by independent auditors.

In contrast to the rigidity of business accounting systems is the fuzzy world of business development.  Business development is a type of activity that combines purchasing, sales, and marketing.  It has elements of project management down to some level of detail within the organization.  Generally, business development managers are fairly high level managers who are chosen for certain attributes.  Not least among the virtues are unflappable self-confidence, a nimble sense of decorum, and educated but nonthreatening countenance.

Business development people are charged with attracting new business.  Where this differs with sales managers is that new business may be custom or cutting edge in some fashion. It is not likely to be plug-n-chug.  Process development resources will have to be committed.  

In the chemical business, a business development manager is likely to be very technically oriented. Where this differs from a “straight” sales person is that a business development person will be able to engage the potential customer in highly detailed technical discussions with the customers project management staff as well as strategic discussions with upper level management.  The ability and authority to seamlesly represent the company from technical issues to business agreements is the range of the business development manager.  Very often they are corporate officers at the VP level or above. This means that they can commit the organization.

Getting the business is only part of the job.  In the fabulous world of chemicals, a new product often means that new supply chains for raw materials must be secured. Some new raw materials will be existing items of commerce. Others may require custom synthesis.  Business development people may be involved on the buy side if for no other reason than to assure continuity and timeliness. 

In order to engage a custom supplier of a raw material, disclosure of confidential material may have to be done.  Furthermore, meetings between senior managers may be necessary to initiate the process of taking the supplier to the first step by supplying a proprietary procedure to obtain samples and commitment from the supplier. The business development manager is an obvious choice to take the lead in the procurement of key raw materials, at least initially.

Business development people are on the road a good share of the time. They attend trade shows, conferences, customer visits, and other public speaking venues.  They are often seen as the face of the company.  

What is perhaps not widely appreciated is the negative side of the business development job.  The high profile of the job means that you’ll report to inscrutible executives with all of the second guessing and intrigue that goes along with life at that level. You’ll have a big target on your back and people will be gunning for your job.  The job carries many heavy responsibilities, including the possibility that you’ll bring a dangerous piece of business to the facility. Even if you don’t blow up the plant or injure someone, problematic products or those with lower than anticipated margins can garner unfavorable attention. Presidents and CEO’s tend to forget the 10 great products against the glare of the one dog you brought in to the plant.

Getting product out the door

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Manufacturing is all about getting product onto a truck and watching it leave the gates of the plant. Because after the shipping documents are given to the driver, the invoicing begins.  This is a very time sensitive action.  The customer can’t pay until the invoice is received and the 30-days-net countdown begins.

It is deeply satisfying to package a chemical product that you have prepared with your hands and your wits.  I find the act of packaging product after it has passed QA appproval to be my favorite part of the process. It also means that I can start something new.  Rarely does one hear anything from the customer if the product is satisfactory.  The only time you hear from the customer is when something has gone wrong.

The bean counters will render the process into some bland abstraction that has inputs and outputs. They’ll yammer on about ROI and earnings before taxes, interest, and … whatever.  I’m glad to see that the MBA’s learn something in business school besides how to manage their IRA’s. But there is more to business than the electronic transfer of funds.

What really matters to me is that I did something useful this day. It matters that my hand-made product is useful to someone else and performs as required. Making things and stuff contributes to the ongoing process of civilization.  I feel sorry for the pure finance people.  They don’t know the satisfaction of isolating a water-white product in 99 % purity and slapping a label on the bottle and giving it to the shipping folks. I still get a  kick out of it.