Some of the most interesting topics covered in this week's iteration are related to 'quitters in the new work economy', 'how coffee is changing due to a disease', and 'the problems with the intangibility of tech investments'.
At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, including investment analysis, psychology, science, technology, philosophy, etc. We have been sharing our favorite reads with clients under our weekly ‘Ten Interesting Things’ product. Some of the most interesting topics covered in this week’s iteration are related to ‘quitters in the new work economy’, ‘how coffee is changing due to a disease’, and ‘the problems with the intangibility of tech investments’.
Here are the ten most interesting pieces that we read this week, ended December 8, 2017.
1) How work changed to make us all passionate quitters [Source: Aeon]
Friedrich Hayek was an influential Austrian economist who operated from the core conviction that markets provided the best means to order the world. For Hayek, the centralized economic planning that characterized both communism and fascism was a recipe for disaster. This approach to markets and governments, commonly called neoliberalism by its critics, has grown increasingly dominant. However, with its increasing adoption, problems arose. Hayek did understand that his model of making the market so foundational would require a specific kind of person, a new kind of person. But he never developed an effective model for making complicated decisions such as deciding whom to hire for a job opening, or how to fashion a career over a lifetime. Others, the Nobel Prize-winner Gary Becker for example, who coined the idea of human capital, had to come up with concrete models for how people should, in market terms, understand everyday interactions. Inspired by Becker in adopting the market idiom, business writers began to talk about how people need to think about investing in themselves, and viewing themselves as an asset whose value only the market could effectively determine.
This change coincided with the change in the way that the value of a company was assessed also. Not so long ago, business people thought that companies provided a wide variety of benefits to a large number of constituents – to upper management, to employees, to the local community, as well as to shareholders. Many of these benefits were long-term. But as market value overtook other measures of a company’s value, maximizing the short-term interests of shareholders began to override other concerns, other relationships. Quarterly earnings reports and stock prices became even more important, the sole measures of success. How companies treated employees changed, and has not changed back. In general, to keep stock prices high, companies not only have to pay their employees as little as possible, they must also have as temporary a workforce as their particular business can allow. The more expendable the workforce, the easier it is to expand and contract in response to short-term demands. These are market and shareholder metrics. Their dominance diminished commitment to employees, and all other commitments but to shareholders, as much as the particular industry requirements of production allow. With companies so organized, the idea of loyalty receded.
For companies, employees who work long, and in many cases, intense hours to finish short-term projects, became more valuable. While companies rarely say so explicitly, in practice they often want employees who can be let go easily and with little fuss, employees who do not expect long-term commitments from their employer. But, like employment, loyalty is a two-way street – making jobs short-term, commitment-free enterprises leads to workers who view temporary work contracts as also desirable. You start hiring job-quitters. The current employee is a job-quitter for a good reason – the business world has come to agree with Hayek that market value is the best measure of value. As a consequence, a career means a string of jobs at different companies. So then how does work change when everyone is trying to become a quitter? First of all, in the society of perpetual job searches, different criteria make a job good or not. Good jobs used to be ones with a good salary, benefits, location, hours, boss, co-workers, and a clear path towards promotion. Now, a good job is one that prepares you for your next job, almost always with another company.
The calculus of quitting changes three things: a) Workplace dynamics: Being a good manager now means helping those whom you manage acquire the skills that will help them to leave for a better job at another company. b) Division of labour: If your goal is to get a job somewhere else, not all work projects are equally valuable. Workers must jockey for the tasks and projects that might lead to a job elsewhere. They must try to avoid tasks that, either due to intellectual property issues or for other reasons, are too company-specific. C) Nature of being co-workers: Workers who used to get ahead by impressing their managers by being steady, self-effacing and conscientious no longer have the time to establish the appreciative audience they used to within a company. As a result, these types of workers might no longer be steadily promoted. If their co-workers appreciate them, however, then they might, when it comes time for them to look for their next job, have supporters at other companies.
When you start imagining yourself as always on the verge of quitting, the emotions you feel for your work change. When companies decided to do away with company loyalty, businesses had to find a new way to help workers foster an emotional connection to work. In the US especially, there is a strong cultural consensus that people should feel passion for their work, and work hard. Hiring mangers there always choose people who seemed passionate about their work over someone who seemed to have the most experience. They teach them any necessary skills but the need for them to work very long hours meant that people needed to be passionate. Since company loyalty is no longer around to guarantee committed workers, passion is now supposed to be the driving force. Intriguingly, this passion that workers are supposed to feel is restricted to the tasks at work or to learning certain skills. As a result, the market-specific problems for which workers feel a passion for solving are usually the problems that a range of companies might face. They aren’t specific to that particular company. In the quitting economy, you have to work for passion, and working for passion means focusing on the task, not the company.
2) The disease that could change how we drink coffee [Source: BBC ]
Coffee rust is a disease with the power to cripple, or even wipe out Colombia's national product - Coffee, the base of one of its biggest industries, and one of its most important sources of foreign currency. Colombia is the third largest producer of coffee in the world, which means if rust takes hold there and global supply dwindles, it will affect the price of the coffee we drink everywhere. That’s why for the past few decades, Colombia’s scientists have been engaged in a little-known battle with the disease, staged from a small laboratory deep inside the mountains of Colombia’s coffee axis. The question is, can Colombian coffee’s distinct flavors survive intact?
Coffee rust has plagued farmers for more than a century. When a tree gets infected by it, its leaves produce a brown, thin powder when scratched, pretty much like iron rust. The tree eventually loses all its leaves, as well as its ability to produce beans. If left unattended, the disease can have dramatic consequences. In the late 19th Century, Sri Lanka, the Philippines, and other countries in Southeast Asia were the major exporters of coffee in the world. In a matter of decades, the disease meant they practically stopped growing it. What makes coffee rust a particular worry for Colombia is that it attacks the type of coffee that the country relies on – and that coffee lovers have got used to drinking. Coffee comes in two varieties. We could call them ‘the beauty’ and ‘the beast’. The ‘beauty’ is Coffea arabica. Its seed gives a delicious and delicate brew that sells at good prices in international markets. This is the variety that made Colombian coffee so famous. ‘The beast’ is Coffea canephora, also known as robusta. It is a tougher tree, with more resistant leaves, that is cheaper to grow and crop. It has a more rough and bitter taste; not very appealing for coffee connoisseurs. As a result, it accounts only for a 37% of the world coffee production. Unfortunately, coffee rust attacks the ‘beauty’, but not the ‘beast’. Colombia only exports ‘beauties’, so switching has never been an option.
In the 1960s, a team of scientists at a research laboratory called Cenicafe set out to find a solution that drew on the best features of the two varieties. It was set up by the Colombia’s National Federation of Coffee Growers (also known as Fedecafe), the coffee industry association in the country, and is considered a global flagship centre for the science of coffee. The solution came from the other side of the world - in Timor. In Timor, a naturally occurring hybrid of arabica and robusta was found in 1927. It is not really a great tasting berry, but it had a crucial feature: unlike normal robusta, it can be bred again with arabica varieties, which means that it can transmit its rust resistance to them. However, because the taste wasn’t very good, it meant that it was going to fail. If cultivators were not going to be paid at least as much money for the new varieties, they simply were not going to change their bushes. In 1980, the centre released its first hybrid of Caturra – the dominant variety grown in the country – and the Timor hybrid. It was called Colombia, and it was good enough for it to be well accepted by growers and buyers.
However, the disease has since evolved, and found a way to infest some of the formerly immune coffee bushes. While it maintains partial resistance, the fungus will inevitably break it. There’s also the menace of climate change. Temperatures in the coldest part of the year are rising, which some scientists believe reduces the time the rust fungus takes to attack the leaves once it gets to the tree. As a result, future epidemics might be longer and more destructive. With that in mind, Cenicafe has developed other varieties. The main idea is to make it more difficult for the fungus to fully break the tree’s resistance. This is achieved by including many different genes that offer invulnerability against the pathogen. If one of them is defeated by a new mutation of the fungus there are many others left.
Getting growers to change to resistant varieties can be difficult though. A single coffee bush can bear fruit at peak productivity for up to eight years, which means that most new seeds are not immediately adopted by cultivators once they are released. Also, many growers have an emotional attachment to the varieties they already grow. They know the quirks of their trees, their ebbs and flows, and the precise ways they behave in the particular environments of their farms. The change also has a monetary cost. Variety replacement requires a large initial investment, and returns “no or very low yields for at least the first two years, and thus a greatly reduced income”. Colombia has put forward a strategy for overcoming these hurdles. Fedecafe offers subsidies and loans to farmers for helping them buy resistant seeds, and technical advice on growing. Still, the disease can wreak havoc on the industry. A 2008 outbreak still managed to wipe out up to a quarter of the year’s crop in Colombia. Since then, the country has accelerated its efforts to make farmers grow the hybrid. Today, per Fedecafe’s figures, 76% of all coffee trees in Colombia are at least partially resistant to coffee rust, an increase achieved mostly by pushing hybrids among growers. And while other countries have seen their crops halved in recent outbreaks, Colombia maintains a single-digit prevalence of the disease.