Incentives – Page 15 – artdiamondblog.com

What Motivated Paterno to Win 400 Games—“Gettin’ Paid”

Source of image: screen capture from YouTube clip referenced below.

What motivates employees? Economists have emphasized pay as the primary incentive, while recognizing that there may be “compensating differentials” for aspects of the work that are pleasant or unpleasant.
In recent years many non-economists, such as Daniel Pink in Drive, have emphasized non-pecuniary incentives.
Joe Paterno entered the debate at age 83, after he became the first major college coach to win 400 games on November 6, 2010.
Right after the victory, he was interviewed on the field by “Heather” of ESPN. Starting at 1:33 seconds into the clip referenced below, here is the key dialogue:

Heather: “Coach Paterno, what has motivated you to get to this point?”

Paterno: “Oh geez, I don’t know—gettin’ paid.”

Source: YouTube clip at http://www.youtube.com/watch?v=jQzdVeYtm5w
(Note: the clip was posted on 11/6/10 by shellymic and has the title “Joe Pa FIRST to 400 Wins!”)

Taking Away Patents Would Be “Cutting Off the Hopes of Ingenious Men”

(p. 208) For Watt, the theft (as he saw it) of his work was a deeply personal violation. In (p. 209) 1790, just before realizing the extent of what he perceived as Hornblower’s theft of his own work he wrote,

if patentees are to be regarded by the public, as . . . monopolists, and their patents considered as nuisances & encroachments on the natural liberties of his Majesty’s other subjects, wou’d it not be just to make a law at once, taking away the power of granting patents for new inventions & by cutting off’ the hopes of ingenious men oblige them either to go on in the way of their fathers & not spend their time which would be devoted to the encrease [sic] of their own fortunes in making improvements for an ungrateful public, or else to emigrate to some other Country that will afford to their inventions the protections they may merit?

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: italics and ellipsis in original.)

Financial Gain an Important Motive for Invention

(p. 121) In 1930, Joseph Rossman, who had served for decades as an examiner in the U.S. Patent Office, polled more than seven hundred patentees. producing a remarkable picture of the mind of the inventor. Some of the results were predictable; the three biggest motivators were “love of inventing,” “desire to improve.” and “financial gain,” the ranking for each of which was statistically identical. and each at least twice as important as those appearing (p. 122) down the list, such as “desire to achieve,” “prestige,” or “altruism” (and certainly not the old saw, “laziness,” which was named roughly one-thirtieth as frequently as “financial gain”). A century after Rocket, the world of technology had changed immensely: electric power, automobiles, telephones. But the motivations of individual inventors were indistinguishable from those inaugurated by the Industrial Revolution.
. . .
In the same vein, Rossman’s survey revealed that the greatest obstacle perceived by his patentee universe was not lack of knowledge, legal difficulties, lack of time, or even prejudice against the innovation under consideration. Overwhelmingly, the largest obstacle faced by early twentieth-century inventors (and, almost certainly, their ancestors in the eighteenth century) was “lack of capital.” Inventors need investors.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: ellipsis added.)

Inventors Should Work Alone, Even If They Have to Moonlight

(p. 291) If you’re that rare engineer who’s an inventor and also an artist, I’m going to give you some advice that might be hard to take. That advice is: Work alone.

When you’re working for a large, structured company, there’s much less leeway to turn clever ideas into revolutionary new products or product features by yourself. Money is, unfortunately, a god in our society, and those who finance your efforts are businesspeople with lots of experience at organizing contracts that define who owns what and what you can do on your own.
But you probably have little business experience, know-how, or acumen, and it’ll be hard to protect your work or deal with all that corporate nonsense. I mean, those who provide the funding and tools and environment are often perceived as taking the credit for inventions. If you’re a young inventor who wants to change the world, a corporate environment is the wrong place for you.
(p. 292) You’re going to be best able to design revolutionary products and features if you’re working on your own. Not on a committee. Not on a team. That means you’re probably going to have to do what I did. Do your projects as moonlighting, with limited money and limited resources. But man, it’ll be worth it in the end. It’ll be worth it if this is really, truly what you want to do–invent things. If you want to invent things that can change the world, and not just work at a corporation working on other people’s inventions, you’re going to have to work on your own projects.
When you’re working as your own boss, making decisions about what you’re going to build and how you’re going to go about it, making trade-offs as to features and qualities, it becomes a part of you. Like a child you love and want to support. You have huge motivation to create the best possible inventions–and you care about them with a passion you could never feel about an invention someone else ordered you to come up with.
And if you don’t enjoy working on stuff for yourself–with your own money and your own resources, after work if you have to– then you definitely shouldn’t be doing it!

. . .

It’s so easy to doubt yourself, and it’s especially easy to doubt yourself when what you’re working on is at odds with everyone else in the world who thinks they know the right way to do things. Sometimes you can’t prove whether you’re right or wrong. Only time can tell that. But if you believe in your own power to objectively reason, that’s a key to happiness. And a key to confidence. Another key I found to happiness was to realize that I didn’t have to disagree with someone and let it get all intense. If you believe in your own power to reason, you can just relax. You don’t have to feel the pressure to set out and convince anyone. So don’t sweat it! You have to trust your own designs, your own intuition, and your own understanding of what your invention needs to be.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.
(Note: Italics and centered ellipsis in original.)

Defenders of Climategate Benefit from Global Warming Fears

(p. A15) Last November there was a world-wide outcry when a trove of emails were released suggesting some of the world’s leading climate scientists engaged in professional misconduct, data manipulation and jiggering of both the scientific literature and climatic data to paint what scientist Keith Briffa called “a nice, tidy story” of climate history. The scandal became known as Climategate.

Now a supposedly independent review of the evidence says, in effect, “nothing to see here.”
. . .
One of the panel’s four members, Prof. Geoffrey Boulton, was on the faculty of East Anglia’s School of Environmental Sciences for 18 years. At the beginning of his tenure, the Climatic Research Unit (CRU)–the source of the Climategate emails–was established in Mr. Boulton’s school at East Anglia. Last December, Mr. Boulton signed a petition declaring that the scientists who established the global climate records at East Anglia “adhere to the highest levels of professional integrity.”
This purportedly independent review comes on the heels of two others–one by the University of East Anglia itself and the other by Penn State University, both completed in the spring, concerning its own employee, Prof. Michael Mann. Mr. Mann was one of the Climategate principals who proposed a plan, which was clearly laid out in emails whose veracity Mr. Mann has not challenged, to destroy a scientific journal that dared to publish three papers with which he and his East Anglia friends disagreed. These two reviews also saw no evil. For example, Penn State “determined that Dr. Michael E. Mann did not engage in, nor did he participate in, directly or indirectly, any actions that seriously deviated from accepted practices within the academic community.”
Readers of both earlier reports need to know that both institutions receive tens of millions in federal global warming research funding (which can be confirmed by perusing the grant histories of Messrs. Jones or Mann, compiled from public sources, that are available online at freerepublic.com). Any admission of substantial scientific misbehavior would likely result in a significant loss of funding.
It’s impossible to find anything wrong if you really aren’t looking.

For the full commentary, see
PATRICK J. MICHAELS. “The Climategate Whitewash Continues; Global warming alarmists claim vindication after last year’s data manipulation scandal. Don’t believe the ‘independent’ reviews..” The Wall Street Journal (Mon., JULY 12, 2010): A15.
(Note: the online version of the article is dated JULY 10, 2010.)
(Note: ellipsis added.)

“Fun” and “Profits” as Motives for Entrepreneurship

(p. 184) After we started selling the boards to Paul Terrell–working day and night to get them to him on time–we had profits like I never imagined. Suddenly our little business was making more than I was making at HP. That wasn’t very much, admittedly. But still, it was a lot. We were building the boxes for $220 and selling them wholesale to Paul Terrell for $500.

And, of course, we didn’t need a ton of money to operate. I had a day job, so I looked at it as, Hey, cool. Extra money for pizza! As for Steve, he was living at home. I was twenty-five and he was only twenty-one at the time, so what expenses could we have, really? Apple didn’t have to make that much to sustain itself and be ongoing. We weren’t paying ourselves salaries or paying rent, after all. We didn’t have any patents to pay for. Or lawyers. It was a small-time business, and we weren’t worried that much about anything.
My dad, watching this, pointed out that we weren’t actually making money because we weren’t paying ourselves anything. But we didn’t care, we were having too much fun.

But note, only several pages later:

(p. 194) Like I said before, we needed money. Steve knew it and I knew it.

So by that summer of 1976, we started talking to potential money people about Apple, showing them the Apple II working in color in Steve’s garage.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Wozniak on the Motives and Rewards of Inventor and Innovator

(p. 147) The whole thing used forty-five chips, and Steve paid me half the seven hundred bucks he said they paid him for it. (They were paying us based on how few chips I could do it. in.) Later I found out he got paid a bit (p. 148) more for it–like a few thousand dollars–than he said at the time, but we were kids, you know. He got paid one amount, and told me he got paid another. He wasn’t honest with me, and I was hurt. But I didn’t make a big deal about it or anything.

Ethics always mattered to me, and I still don’t really understand why he would’ve gotten paid one thing and told me he’d gotten paid another. But, you know, people are different. And in no way do I regret the experience at Atari with Steve Jobs. He was my best friend and I still feel extremely linked with him. I wish him well. And it was a great project that was so fun. Anyway, in the long run of money–Steve and I ended up getting very comfortable money-wise from our work founding Apple just a few years later–it certainly didn’t add up to much.
Steve and I were the best of friends for a very, very long time. We had the same goals for a while. They jelled perfectly at forming Apple. But we were always different people, different people right from the start.
You know, it’s strange, hut right around the time I started working on what later became the Apple I board, this idea popped into my mind about two guys who die on the same day. One guy is really successful, and he’s spending all his time running companies, managing them, making sure they are profitable, and making sales goals all the time. And the other guy, all he does is lounge around, doesn’t have much money, really likes to tell jokes and follow gadgets and technology and other things he finds interesting in the world, and he just spends his life laughing.
In my head, the guy who’d rather laugh than control things is going to be the one who has the happier life. That’s just my opinion. I figure happiness is the most important thing in life, just how much you laugh. The guy whose head kind of floats, he’s so happy. That’s who I am, who I want to be and have always wanted to be.
(p. 149) And that’s why I never let stuff like what happened with Breakout bother me. Though you can disagree–you can even split from a relationship–you don’t have to hold it against the other. You’re just different. That’s the best way to live life and be happy
And I figured this all out even before Steve and I started Apple.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Electronics Projects Were Wozniak’s “Passion” and “Pastime” and “Reward”

(p. 127) I think most people with day jobs like to do something totally different when they get home. Some people like to come home and watch TV. But my thing was electronics projects. It was my passion and it was my pastime.

Working on projects was something I did on my own time to reward myself, even though I wasn’t getting rewarded on the outside, with money or other visible signs of success.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Underwater Power Cables Maximize Profits and Improve Environment

“Laying line in San Francisco for the Trans Bay Cable project, which submerged 33 miles of cable.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) Generating 20 percent of America’s electricity with wind, as recent studies proposed, would require building up to 22,000 miles of new high-voltage transmission lines. But the huge towers and unsightly tree-cutting that these projects require have provoked intense public opposition.

Recently, though, some companies are finding a remarkably simple answer to that political problem. They are putting power lines under water, in a string of projects that has so far provoked only token opposition from environmentalists and virtually no reaction from the larger public.
. . .
(p. B7) . . . , the underwater approach solves some intractable problems. In San Francisco, for example, old power plants that burn natural gas are about to be retired because a new transmission company has succeeded in running a line 33 miles across the San Francisco Bay.
Mr. Stern said his company’s Neptune Cable, which runs from Sayreville, N.J., to Levittown, N.Y., on Long Island, now carries 22 percent of Long Island’s electricity. His company is trying to complete a deal for a cable that would run from Ridgefield, N.J., to a Consolidated Edison substation on West 49th Street in Manhattan.
Those two cables were not motivated primarily by environmental goals — they are meant to connect cheap generation to areas where power prices are high. Mr. Stern’s company, PowerBridge, is now considering two renewable energy projects, however. One cable would connect proposed wind farms on the Hawaiian islands of Molokai and Lanai to the urban center on Oahu, and another would bring wind power from Maine along the Atlantic coast to Boston.

For the full story, see:
MATTHEW L. WALD. “A Power Line Runs Through It; Underwater Cable an Alternative to Electrical Towers.” The New York Times (Weds., March 17, 2010): B1 & B7.
(Note: ellipses added.)
(Note: the online version is dated March 16, 2010 and has the shorter title “Underwater Cable an Alternative to Electrical Towers.”)

Myhrvold Innovates in Financing Innovation

“Nathan Myhrvold, chief of Intellectual Ventures, says patent holders are being treated unfairly.” Source of caption and photo: online version of the NYT article quoted and cited below.

When Nathan Myhrvold was at Microsoft, he helped Bill Gates write The Road Ahead, a well-written book full of realistically optimistic speculation, forecast and analysis.
Besides his main initiative, discussed below, he has recently been in the news due to his bold and controversial suggestion for how to cheaply solve global warming.

(p. B1) BELLEVUE, Wash. — Nathan Myhrvold wants to shake up the marketplace for ideas. His mission and the activities of the company he heads, Intellectual Ventures, a secretive $5 billion investment firm that has scooped up 30,000 patents, inspire admiration and angst.

Admirers of Mr. Myhrvold, the scientist who led Microsoft’s technology development in the 1990s, see an innovator seeking to elevate the economic role and financial rewards for inventors whose patented ideas are often used without compensation by big technology companies. His detractors see a cynical operator deploying his bulging patent trove as a powerful bargaining chip, along with the implied threat of costly litigation, to prod high-tech companies to pay him lucrative fees. They call his company “Intellectual Vultures.”
White hat or black hat, Intellectual Ventures is growing rapidly and becoming a major force in the marketplace for intellectual capital. Its rise comes as Congress is considering legislation, championed by large technology companies, that would make it more difficult for patent holders to win large damage awards in court — changes that Mr. Myhrvold has opposed in Congressional testimony and that his company has lobbied against.
. . .
(p. B10) The issues surrounding Intellectual Ventures, viewed broadly, are the ground rules and incentives for innovation. “How this plays out will be crucial to the American economy,” said Josh Lerner, an economist and patent expert at the Harvard Business School.
Mr. Myhrvold certainly thinks so. He says he is trying to build a robust, efficient market for “invention capital,” much as private equity and venture capital developed in recent decades. “They started from nothing, were deeply misunderstood and were trashed by people threatened by new business models,” he said in his offices here.
Mr. Myhrvold presents his case at length in a 7,000-word article published on Thursday in the Harvard Business Review. “If we and firms like us succeed,” he writes, “the invention capital system will turbocharge technological progress, create many more new businesses, and change the world for the better.”
In the article and in conversation, Mr. Myhrvold describes the patent world as a vastly underdeveloped market, starved for private capital and too dependent on federal financing for universities and government agencies, which is mainly aimed at scientific discovery anyway. Eventually, he foresees patents being valued as a separate asset class, like real estate or securities.
His antagonists, he says, are the “cozy oligarchy” of big technology companies like I.B.M., Hewlett-Packard and others that typically reach cross-licensing agreements with each other, and then refuse to deal with or acknowledge the work of inventors or smaller companies.
. . .
Mr. Myhrvold personifies the term polymath. He is a prolific patent producer himself, with more than 100 held or applied for. He earned his Ph.D. in physics from Princeton and did postdoctorate research on quantum field theory under Stephen Hawking, before founding a start-up that Microsoft acquired.
He is an accomplished French chef, who has also won a national barbecue contest in Tennessee. He is an avid wildlife photographer, and he has dabbled in paleontology, working on research projects digging for dinosaur remains in the Rockies.

For the full story, see:
STEVE LOHR. “Turning Patents Into ‘Invention Capital’.” The New York Times (Thur., February 18, 2010): B1 & B10.
(Note: ellipses added.)
(Note: the online version of the article is dated February 17, 2010.)

The Bill Gates book is:
Gates, Bill. The Road Ahead. New York: Viking Penguin, 1995.

Myhrvold’s Harvard Business Review essay is:
Myhrvold, Nathan. “The Big Idea: Funding Eureka!” Harvard Business Review 88, no. 2 (March 2010): 40-50.

“Nathan Myhrvold with a machine that freeze-dries food. Intellectual Ventures so far has paid $315 million to individual inventors.” Source of caption and photo: online version of the NYT article quoted and cited above.

Heretics to the Religion of Global Warming

Source of book image: online version of the WSJ review quoted and cited below.

(p. A19) Suppose for a minute–. . . –that global warming poses an imminent threat to the survival of our species. Suppose, too, that the best solution involves a helium balloon, several miles of garden hose and a harmless stream of sulfur dioxide being pumped into the upper atmosphere, all at a cost of a single F-22 fighter jet.

. . .

The hose-in-the-sky approach to global warming is the brainchild of Intellectual Ventures, a Bellevue, Wash.-based firm founded by former Microsoft Chief Technology Officer Nathan Myhrvold. The basic idea is to engineer effects similar to those of the 1991 mega-eruption of Mt. Pinatubo in the Philippines, which spewed so much sulfuric ash into the stratosphere that it cooled the earth by about one degree Fahrenheit for a couple of years.
Could it work? Mr. Myhrvold and his associates think it might, and they’re a smart bunch. Also smart are University of Chicago economist Steven Levitt and writer Stephen Dubner, whose delightful “SuperFreakonomics”–the sequel to their runaway 2005 bestseller “Freakonomics”–gives Myhrvold and Co. pride of place in their lengthy chapter on global warming. Not surprisingly, global warming fanatics are experiencing a Pinatubo-like eruption of their own.
. . .

. . . , Messrs. Levitt and Dubner show every sign of being careful researchers, going so far as to send chapter drafts to their interviewees for comment prior to publication. Nor are they global warming “deniers,” insofar as they acknowledge that temperatures have risen by 1.3 degrees Fahrenheit over the past century.
But when it comes to the religion of global warming–the First Commandment of which is Thou Shalt Not Call It A Religion–Messrs. Levitt and Dubner are grievous sinners. They point out that belching, flatulent cows are adding more greenhouse gases to the atmosphere than all SUVs combined. They note that sea levels will probably not rise much more than 18 inches by 2100, “less than the twice-daily tidal variation in most coastal locations.” They observe that “not only is carbon plainly not poisonous, but changes in carbon-dioxide levels don’t necessarily mirror human activity.” They quote Mr. Myhrvold as saying that Mr. Gore’s doomsday scenarios “don’t have any basis in physical reality in any reasonable time frame.”
More subversively, they suggest that climatologists, like everyone else, respond to incentives in a way that shapes their conclusions. “The economic reality of research funding, rather than a disinterested and uncoordinated scientific consensus, leads the [climate] models to approximately match one another.” In other words, the herd-of-independent-minds phenomenon happens to scientists too and isn’t the sole province of painters, politicians and news anchors

For the full commentary, see:
BRET STEPHENS. “Freaked Out Over SuperFreakonomics; Global warming might be solved with a helium balloon and a few miles of garden hose.” The Wall Street Journal (Tues., OCTOBER 27, 2009): A19.
(Note: ellipsis added.)