Nicholas Bloom: evaluation

Transcript context

…Then you must think people are remarkably productive and effective because self-help books are very cheap. The advice Dallas sent you — that was for free. If you think of it in terms of marginal value, given the low price, the marginal gains to being more productive personally — well, you must be very close to the frontier. But that strikes me as counterintuitive. I see people screwing up all the time, not realizing their potential. I think the market for talent is remarkably inefficient and that people don’t do their very best. Well, there’s two issues, I think. One is, you’ve got to consider what it would be like without it. Humanity is dramatically more productive than it was, and some of it could be self-help. The other issue is, there’s unknown unknowns. The problem is you don’t know what you don’t know. Again, as a personal anecdote, I was recently given an energy efficiency. My brother came around a couple of years ago and pointed out, I should be using LED bulbs throughout the entire house rather than the old halogen or CFL fluorescent ones. My brother’s an engineer, and I sat down and went through the numbers, and it paid off within two to three years. That’s clearly a fantastic rate of return. That’s pretty rapid. I switched every single bulb in my house to LED. But I didn’t know it until someone had pointed it out. Ex post, it seems kind of obvious. I could have easily gone to Amazon and worked out the cost of it, worked the electricity uses and done the calculation. I just never thought of it. A lot of this is like Dallas’s recommendations. She said, using this microphone, turn the gain thing down to zero. I didn’t realize that. There was a knob at the back of the microphone I’d never even looked at. I then looked at it. And, “Oh yeah, there is that.” Turned it down to zero and, hopefully, it sounds okay. Honestly, you see this in firms all the time, and when we were out in India or when I was in McKinsey, you’d often give pieces of advice, and ex post, it was really useful. For example, as another concrete piece of analysis, when I was out in India, a big issue in a lot of modern management is quality defects. These companies were large companies making, say, fabric, that goes into making shirts and trousers and upholstery coverings. A lot of the learnings coming out originally from Japan is, you should zero in on quality defects and fix them instantly. Essentially, I said, “Look, your factory of a hundred looms — we’re going to take six looms at the back row and have a quality defect index and have a quality control process, a Kaizen process.” After two to four weeks, it was so effective in spotting repeated issues that the factory owner said, “This is great. It’s worth the effort setting up this QDI index and this committee. We’re just going to roll it out to the whole factory.” But in advance, they were skeptical. I think that — as with so many things in life, unfortunately — we just don’t know what we don’t know, and so we’re skeptical on advice. How bullish are you on Chinese management?…

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