MINISTRY FOR EDUCATION AND SCIENCE, RUSSIAN FEDERATION
Federal State Autonomous Organization of Higher Education
«Novosibirsk National Research State University»
(NSU)
Faculty of Economics
Chair of Management
Master Thesis
“Systemic Analysis: to enhance a more flexible labour market”
Written by:
Erik Saether
Supervisor:
Professor:
S. Kovalev
Supervisor:
Professor:
N. Suslov
The head of the chair:
Assoc. Professor: PHD in Technical Sciences
S.A. Kuznetsova
Novosibirsk
2016
Contents
Summary...................................................................................................................................................................3
Advantages of a More Flexible Labour Market....................................................................................................4
Aim of Research ...................................................................................................................................................5
Understanding the Labour Function .................................................................................................................6
1.
a.
General Labour Market Definition ...............................................................................................................6
b.
Understanding the Drivers of the Labour Function ......................................................................................6
c.
Types of Labour Transactions (Effort) .........................................................................................................7
d.
Labour: Understanding Motivation and Payoffs ........................................................................................10
e.
Labour and Decision Making Behaviour ....................................................................................................13
Understanding the Constraints of the Labour Function: .................................................................................17
2.
a.
Physical Exertion or Effort .........................................................................................................................17
b.
Mental Cycles .............................................................................................................................................17
c.
Non-routine or Uncertainty Aversion .........................................................................................................18
d.
Time Availability ........................................................................................................................................18
e.
Social Behaviours, Reputation & Deviancy ...............................................................................................19
f.
Work Environment & Culture ....................................................................................................................21
Information & Technological Trajectories .....................................................................................................23
3.
a.
Information and Learning in the Labour Market ........................................................................................23
b.
Employment Risks of Inflexible Employers...............................................................................................25
c.
Innovative Behaviour .................................................................................................................................26
d.
Collaboration Efforts, Synergies & Optimisation of Work Intensity .........................................................27
e.
Mentorship Dynamics.................................................................................................................................28
4.
The Production Function, Technology Trajectories & Learning Curves .......................................................29
5.
Methods for Optimisation ...............................................................................................................................33
Optimising Work Flow so as to Improve Labour Abilities ................................................................................33
Conclusion ..............................................................................................................................................................37
Applications ............................................................................................................................................................38
References ..............................................................................................................................................................40
Summary
Ever increasing technological advancement requires deeper and wider knowledge accumulation than ever
before. Labour latency effects of acquiring technical skills can be extensive, with people spending their
entire lives learning and adapting new skills while our technologies become ever more advanced. On the
other extreme, we have rich countries and poor countries for example, high density populations in large
countries such as Bangladesh, Pakistan or Uzbekistan where good opportunities can be more difficult to
find. It can be really concerning for these people to see the level of advancement of United States or
Germany and then their own predicament. Then for example, within the United States the most powerful
country in the world, it has been shown that there are rising income discrepancies (Picketty 2006). All
while the world population is steadily increasing (predicted to exceed 10 billion people by 2100 by the
United Nation medium projection).
So on the one hand, as technology develops, we are improving. First through the optimal accumulation of
information in what we now call the Information Age, and secondly through improved lifestyle design
and optimisation technologies. But are these technologies sustainable? How are we going to maintain our
learning and experience curve so as to support these technology trajectories? Are we choosing the correct
learning and experience curves to support these technology improvements? This is my argument for a
more flexible labour market and this vindicated by the worldwide information technology trends that
show SAAS (software as a service) investment expected to double by the end of 2016.
An improvement on the printing press, the internet, through is messy evolution is providing ever
increasing amounts of information in more relevant and useful ways than ever before. For example
massive online courses provide online education now, news providers from all over the world are now
accessible and anyone can voice their opinion or create content to support their position or cause. Then
there are analytical systems that are able to determine valuable information about client needs, online
CAD systems where people can work on projects together, online trading systems where products and
services can be traded instantly and websites which provide huge quantities of research information. All
this information management can be used for improved decision making and is increasingly moving
online in the business sphere where information can be more readily available for decision making (e.g.
online project management tools, time scheduling CRM and ERP cloud solutions). For example a recent
report by PriceWaterHouse Coopers indicated SAAS solutions revenues have already exceeding new
sales of legacy ERP solutions, where online solutions are not only driving cost savings but also enabling
better workforce manoeuvrability and customer driven solutions.
Secondly better design thinking can save space, time and energy. Through improved behavioural or
ergonomic design in almost all areas in our lives i.e. nutrition, health, transportation, energy or education
supplies. We live limited lifespans, and the planet we live on, Earth, has limited resources so as to be able
to satisfy our every whim, want or need. So one-click or time saving solutions are welcomed with global
companies providing well tested global solutions to the general consumer which circumvent
heterogeneity or language barriers. We are slowing moving to even more connected world which
integrate with our circumstances and senses at any point in time giving us a wider view of our own lives,
our friend’s lives and greater understanding of people lives more distant to our own.
Macroeconomics results have proved the efficiency of capitalism which adapts to the constraints set by
our environment. Now we are looking at ways where we can better measure and manage our social and
environmental components within our economic systems so to achieve more sustainable development
goals i.e. a more context based world. However, Thomas Pickety’s research on income and capital
discrepancies with his comparisons of the capital rates of return and growth rates of countries. Of interest
for example, are his findings that English speaking countries income discrepancies have increased over
the last 30 years (Picketty 2006). In another joint paper by (Yakovenko & Rosser – 2009), it has been
shown that the income distribution can be compared to thermal and super thermal distribution in terms of
a dynamic probabilistic system with some part of the populations achieving super wealth while other
remain at lower income levels. So then the question beckons, are we controlled by the flows of
probability? Or how can we better control the dynamics of creating even, flexible and dynamic labour
force where technological output or value-add per person is maximized.
Advantages of a More Flexible Labour Market
It is the conjecture of this paper that there are many advantages to a flexible labour market which assume
the following:

More fluidity between labourers who assist each other with tasks.

Better information of available labour abilities. E.g Technopark here in Academgorodok there are
many companies work in one innovative business park. How much do labourers know about each
other abilities and if there was more fluidity surely more productivity would result as a whole.

Increased competence building as a whole as gaps in work in one business are filled by excess
labour in another.

Better understanding of market weaknesses by businesses and looking for persons to help with
these.

Pro-active management teams or leaders.
Advantages include:

Improved productivity or value-add per labourer as a whole.

More choices or options for both employer and employee.

Less unproductive time (this is not the case where time searching for employment is excessive).

Less destructive behaviour as accountability is increased.

More inspired or highly motivated individuals or workers.
Improved flexibility or autonomy in the labour market is a function receiving correct information, being
able to make appropriate decisions and properly controlling one’s time or maximisation thereof so that the
value to benefits to society are maximised. It represents a form of freedom, but a responsible one where
actions are maximised to the advantage of mankind. In effect it is a requirement in achieving sustainable
development as individual’s behaviours are targeted more appropriately into causes and solutions that
greater benefit mankind. This can be for the organisation you working for, but could also change because
your services may also be required by a company similar to yours further up or down the supply chain.
Technology accumulation is more specialised and complex than before. We need high social capital
together with highly fluid market so that people’s skills are maximised. Also computers are more freely
available and this provides an opportunity for people to collaborate on important projects more freely.
Aim of Research
It is the intention of this paper to look at motivation, information flow, some mechanisms of its control
and optimisation, some methods of innovation and learning in the work space and how they possibly map
to technology trajectories and problem solving in creating a more flexible labour market.
The assumption or assertion of this paper is that if people are suitably supported at a basic or fundamental
level, they will find a productive sphere to contribute or can be motivated to do so.
This paper tries to focus and understand many of the causes of problems within our social system but
from a labour market point of view.
1. Understanding the Labour Function
a. General Labour Market Definition
The labour function can be defined as some form of exertion\effort\sacrifice using a combination of
physical or mental abilities performed by an agent over a time period in exchange for some form of
external or extrinsic reward in order to achieve some common purpose, good, goal or benefit in the final
form of a tangible product or project; and\or intangible service or process or in the accumulation
knowledge for these purposes.
In terms of this paper, general labour market has been defined as all human beings suitably capable to
perform labour and does not differentiate between investor, employee, manager or shareholder. Neither
have I differentiated between age, group, sex, religion or race (although some variation may be noticed in
the effort function). In terms of this paper, the general labour market is given a more general definition
because it is the understand of the author that all people or individual agents are required to work to
survive, be it mental or physical labour, be it in knowledge and understanding or physically applying
oneself in various forms of achievement, capability and activity so as to be recognised as a valuable
contributor by society.
Thus labour implies some form of behaviour that requires effort so as to achieve a reciprocal benefit.
Effort can be in the form of being simply available to do a task (no work performed), to assist a team in a
task, or to complete the task oneself. The extent or intensity of the task may vary depending on
circumstances.
In addition the task itself may involve varying levels of complexity, both in the physical and\or mental
sphere. Tasks themselves may require different levels of pre-learning to be completed. E.g. concert
pianist player may require years of practice as compared to a shop assistant may just need to know basic
skills like how to use the till. Increasing division of labour occurs when individuals are not able to
perform the tasks of others and so a situation arises where divisional of labour benefits society more
because the extent of time to learn time becomes prohibitive and the use of the expert is much more time
effective to both participants or agents.
b. Understanding the Drivers of the Labour Function
Nobel Prize winning ethologist: Niko Tinbergen argues that behaviour is affected by four factors:
function, causation, development and evolutionary history. Function (our goals) is what drives our
motivation or causation as he coins it. For example food consumption (which we use for energy) drives
our causation need or desire for food (also known as hunger). Development (change through willingness)
and evolution (changes forced on us by nature) are historic and cumulative systems and work with the
time system we find ourselves.
In terms of the labour function, one needs to consider the net forces of the perceived effort (work) and the
perceived benefit to be received (motivation) and can be classified as follows:
Perception of behaviour
Effort required
Benefit (Payoff)
Cruising
Low
High
Hard Worker
High
High
Co-operative
Low
Low
Dis-incentivised
High
Low
Work also has many forms but the components of which can be broken down into the following:




Intensity (Effort required\Ability) or (Time estimate\Time available),
Time period,
Skill or task type (a set of required actions),
Purpose or Application
This perceived effort vs benefit relationship seems to be a natural endowment of all animals on the planet
including us, Homo sapiens.
We are trying to minimise effort and maximise payoffs in the form of food, reproduction and where
applicable improving social status where some animals interact and compete aggressively. Also of
importance is our intensity level which shows that either our effort is very high in relation to our abilities
or that our time availability to complete a task is very low. This can cause stress in the organism and our
body as natural mechanisms so that we can successfully pursue stressful tasks in the short term. However
medically it has been shown that excessive stress in the long term chronic stress to set in, which can result
in reduction to the immune system, slower healing, slower development in growth in children, worsening
storage of new memories and visceral fats linked to obesity.
Also importantly the benefits may be intrinsic or extrinsic, and be short term or long term and may also
be layered i.e. personal motivation, group motivation (friends, company you work for, etc.) and at hypergroup motivation e.g. at country level.
c. Types of Labour Transactions (Effort)
There are many types of labour transactions but in terms of this paper because we concerned with
technological progress, we will group them according to the types of information learning or innovation
systems. The reason for this, we will go into later.
i. Production:
Innovation is in the form of constant improvement of products produced.
It is generally based in one location, although different components can be based in different regions.
Some form of repetitive work performed in the production of consumer products or capital goods – with
various useful lives e.g. farming lettuce will produce something that may last a week (consumables) or
producing a car will provide a something that can be used countless times (durables). Production is also a
function of size and complexity, with some products extremely small (e.g. nanoparticles based
microchips) and other extremely large in the form of capital goods which may have extensive useful lives
(e.g. train). Economies-of-scale are expected in the production of goods as leverage is gained through
volume increases over potential fixed or sunk costs. Learning in production assists with a decreasing cost
function which means businesses are able to provide more competitive pricing.
This may not have happen however where it is to the advantage of the monopoly or colluding oligopoly
to reduce supply as to maximise profits. These entities also have good reason to contain trade secrets and
this withholding of information may and may not have negative effects on society e.g. providing incorrect
information on oil reserves. Firstly because investors need to achieve a return on investments and
secondly trade secrets give the entity a competitive edge in the market.
ii. Support and Services:
Innovation in the form of improving utility at the location and time a person demands it.
Time, space and energy based. The service provision may be in a form of highly qualified professional
service (e.g. an advocate or doctor), or a simply have an availability requirement (e.g. a receptionist).
Some services may require people knowledge, others are more task focused or skilled (e.g. sale person vs
information technology engineer). Some rewards on services will be time based; others may be
incentivised on performance (e.g. estate agent or sales person).
Knowledge of time, location and tactics used assist the contextual problems of the customer along with
knowledge of the professional skill and tools used will all provide the service company a strategic edge
and so knowledge management is critical to services companies which also effectively are able to take
advantage of division of labour and the cross pollination of skills within the service function. Service
businesses also achieve economies of scale as per the production entities and businesses are able to take
advantage of this and combine and products and services into a singular business model or offering (this
requires more flexibility).
iii. Management:
Innovation in the form improved situational awareness
Management falls into the category of the individual requiring to have a high situational awareness so as
to help match or take custody of the systems or team’s they will be in control of. Generally managers take
custody of functional areas within organisations but also take up overall leadership positions where their
understanding of market requirements can assist the organisation. Rewards generally paid a fixed salary
plus possible incentives such as bonuses or share options. They focus on the context of their solution
offering while also improving the organisation areas through better optimisation, efficiency or
effectiveness of processes and procedures. Management can also be in the form of consultancy as the
need arises (part time).
Innovation arises in management from knowledge gained from works and what does not work.
Experience in managing people, technology and systems can become invaluable and deeper
understanding is gained of constraints.
iv. Research:
Innovation in the form of improved understanding nature or social needs and potential applications
Includes Licenses, Goodwill, Patents, Trademarks and Copyrights – time based work where work
performed in the past is rewarded by the future value generated of the use of the intangible right by
others. Payoffs may be in the form of once off payments or royalty agreements over the life of the asset.
Business goodwill is included as it requires the development of an understanding of technical and
customer contextual requirements that allow for a business to gain an edge over its competitors. This
capability may have been developed over a significant time period and so organisations and individuals
may make significant steps to protect this knowledge.
v. Design & Architecture:
Innovation in the form of understanding context and function of user, system or various forms of
application or functional complexity and formulating appropriate systems and infrastructure to
support this.
This may be some form of user system based research and formulation of best possible application to
improve the functional optimisation for the user of the system. Design and architecture is about
understanding components or modules of a system, how they interact and the interface with the users of
the solution in a contextual manner. Increased knowledge of the constraints of the components results in
increased abilities in this area as for example can be identified in the works of Buckminster Fuller, where
he is development of the geodesic dome was a result of Fuller's exploration of nature's constructing
principles to find design solutions.
Design is a multi-layered discipline where many different levels of skills become integrated. This form of
innovation is highly experimental, as it requires understanding the ergonomic potential of his or her usergroup. It also requires high levels of resourcefulness in finding optimal solutions together with people
skills to assist in this optimisation.
vi. Development & Projects:
Innovation in form of grouping sets of differing skills and tasks into one functional sets or subsets so
as to achieve a measurable goal
Integrated use of products and services into a complicated asset e.g. a space launch vehicle, a nuclear
power plant or may just be in the form of prototype e.g. the latest robot from Japan. It may be developed
over a few months or over several decades; and its application or use being from very short periods
(rocket launches) to extensive periods (road bridges) depending on requirements. Size and complexity
may vary greatly due to time and extent of tasks needed. Projects tend towards creating a tangible capital
good or support service (e.g. online software platform) which is singular or once off in nature; but the
technology or engineering capability may also be duplicated in future similar projects.
vii. Allocation of Funds:
Innovation in the form understanding worthwhile social or business problems, and determining viable
solutions
Investment, Grants, Government spending – labour is in the form of understanding risks and returns of
businesses and government and social projects and allocating funds appropriately. Largely this labour is
in the form of understanding investments or worthwhile causes and determining appropriate funds for
such causes or business cases. Knowledge is critical for allocation of funds but also trustworthiness
(which we will go into later). Worthwhile causes can be difficult to determine at the individual level but
when many people come together in support of a project, this process becomes easier.
Knowledge accumulation in this area also comes from knowing what will work and what will not work.
Tacit knowledge of risky investments can be invaluable where funds could be better spent on more
productive or high impact projects.
d. Labour: Understanding Motivation and Payoffs
Maslow hierarchy has a great representation of the motivators of our organism but is rather limited in its
details. For this I have decided to analyse gamification which provides some interesting insights. For
example at the Rochester Institute of Technology that using gamification at the university increased
retention rates and they were able to increase the interaction between the students and faculty. To
encourage this, they created collectable cards for the faculty and staff which students would receive in
exchange for playful or creative interaction with the faculty.
Motivation is a function of perceived benefit to be received. Motivation increases when benefits are
higher. External motivation however is also a function of expectation and to our due to our limited senses
and mental understanding, we may incorrectly assess expectations. The table below lists the different
motivators by model and a mapping to similar motivational drivers. Maslow and Octalysis both focus on
extrinsic and intrinsic motivators whereas Self Determination Theory focuses on intrinsic motivations.
Payoff Types
Maslow hierarchy
Mental Motivators:
- Autonomy & Work Self-Actualization,
Intensity are
balanced
- Spontaneity
Self Esteem
- Problem Solving,
Creativity
Self Determination
Theory (Intrinsic)
Gamification –
Octalysis
Framework
Representation
Autonomy,
Competence,
Relatedness
Autonomy,
Competence
Epic meaning or
calling.
- Development &
Accomplishment.
- Empowerment
Ownership (Earned
- Family
- Friends
- Intimacy
Belonging
Competence,
Relatedness
Physical Security,
Physiological
N\A
Capital)
Social influence
(Social capital)
Basic Response
Motivators:
- Scarcity
- Unpredictability &
curiosity
- Avoidance
The Octalysis is a frame work that organizes systematically a list of gamified elements of cognitive drives
model has the added advantage of splitting intrinsic and extrinsic motivations see below (Evaluation of
role-playing platforms 2015).
Positive Motivators (White hat motivators or perceived payoffs):





Epic Meaning or Calling – Slightly different to Autonomy (which is being able to shape your own
destiny). Feeling of being able to contribute to a cause greater than oneself. Work intensity and
autonomy are balanced.
Development & Accomplishment (extrinsic) – is about motivating people through the feeling that
they are improving. E.g. top score, levelling up, collectable cards.
Empowerment of creativity and feedback (intrinsic) – enablement of creativity through positive
feedback. E.g. playing with Lego or seeing results of effort or combinations and wanting to do it
again.
Ownership and possession (extrinsic) – Accumulation, improvement and protection of one’s
wealth or looking after plant or pet may provide this motivation. The feedback is external.
Social Influence (intrinsic) – motivated by influence of others.
Negative Motivators (perceived negative payoffs – black hat motivators):



Scarcity – result may be impatience, people are motivated by something they don’t have. This
could also lead to obsessive behaviours\habits to compensate for shortfall over longer term.
Unpredictability and curiosity – willingness to discover an unknown outcome. But could lead to
addictive behaviours. E.g. gambling, etc.
Loss avoidance - loss or loss aversion heuristics. E.g. Prisoners dilemma situations may result.
Ultimately human beings may be pursuing autonomy as determined by Self Determination Theory but are
still subject to various forms of feedback in motivation as proposed by Octalysis. Physical needs are
important and sometimes they combine into more mental motivators like self-esteem or belonging
motivations e.g. baking a cake could help one’s self esteem, or enjoying a good ice cream may give a
sense of belonging (I cannot explain that one).
There is also the concept called the Free Riding Principle: numerous game theory experiments have found
that free riding principle is prevalent when group dynamics are at play. However social forces tend to
change these dynamics and people are excluded when it felt they are not adding value. Also of particular
interest is a paper by Gurerk et al. (2006) where a group of people who were given the choice of
punishment, performed better than the group that chose against punishment if some of the participants did
not perform up to par. Actually in the end, 100% of the participants chose this option.
Free riding could be grouped as per the “Cruising” set of behaviour above due to the low perceived effort
or work level and could be caused either by apathy or purposeful omission by the participants (I say this
tongue in cheek of course). But punishment is also a form of intensity creation and can be a great
motivator of performance where behaviour change is required. But if morale is already low, additionally
negative feedback at the individual level can actually worsen performance (Punishing by Rewards –
Vaishnav et al.).
e. Labour and Decision Making Behaviour
Rationality can be defined as making the best or optimal decision given the information provided so as to
maximize well-being for the individual. Game theory has attempted to understand decision can predict
optimal choices on the player. Unfortunately rationality is not so simple to define as can be summarized
from the below literature:
- Rationality, Equilibrium and Expectations The efforts attempting to create a microfoundations for
macroeconomics have resulted in a more unified approach of doing economic theory. The approaches discussed so
far (also Keynesian oriented models) all postulate rational behavior on the part of economic agents and some
notion of equilibrium. If expectations are important, it is postulated that agents’ expectations concerning important
variables coincide with the model’s predicted values concerning these same variables. This assumption concerning
agents’ expectations have been termed “rational expectations” (cf., Muth, 1961). Parallel to the microfoundations
literature, a literature questioning the eductive justifications for the notions of equilibrium and rational
expectations emerged. This literature on the foundations of game theory basically argued that if we assume that
agents (players) are rational and that their rationality and the model (game) in which they operate is assumed to
be common knowledge, then it is not implied that these agents will play according to an equilibrium of the game.
Fundamental papers in this respect are Bernheim (1984) and Peirce (1984), among others. These and other papers
show that a much weaker notion, named (correlated) rationalizability, can be derived from assumptions regarding
common knowledge of the rationality of players. On the basis of this literature, Guesnerie (1992) argues that the
notion of rational expectations should be regarded as an equilibrium notion that is also not solely based on
postulates regarding the rational behavior of individual players. It is rational for individual players to have
“rational expectations” if other players have these very same “rational expectations”, but not necessarily
otherwise. As the notion of rational expectations is essentially an equilibrium or consistency notion, it suffers from
the same drawbacks that it is not implied by the individual rationality assumptions that players will form rational
expectations. Another literature (see, e.g., several essays in Frydman and Phelps (1983) and, for example, Bray
and Savin (1986)) studies the question whether in a decentralized economy economic agents may learn over time to
have expectations that are consistent with those that are assumed by the rational expectations hypothesis. The
general conclusion of this literature is that due to the feedback from expectations to economic behavior, the
outcomes of an economic model with learning agents do not converge to the rational expectations solution. It then
follows that the microfoundations literature mentioned so far has not really succeeded in deriving all
macroeconomic propositions from fundamental hypotheses on the behavior of individual agents. The requirements
of methodological individualism have thus not been satisfied by the microfoundations literature that has predominantly presumed that individuals behave rationally (cf., Janssen, 1993).” (Janssen 2006)
Unfortunately this is a simplified understanding of the brain function but scientists are beginning to
understand the different cognitive biases and heuristics that we use which assists with our decision
making (Hilbert 2012).
In addition, I would like to add an interesting thought. Biases can be defined as the deviation from
Bayesian statistical predictions where an individual should choose A but instead chooses B. Biases come
at the individual level, but can also have a serious effect on society as whole sets of people can
misinterpret information provided.
Heuristics on the other hand, involve mental shortcuts which provide swift estimates about the possibility
of uncertain occurrences (Baumeister & Bushman, 2010, p. 141).
Our biases, heuristics therefore combine with our short term to provide our cognitive load or mental
capability. Behaviour though is a learned activity or set of actions linked to motivation but bound to the
roots of our ability. Below is a model proposed by BJ Fogg on motivation and ability and how customers
behaviour is influenced (Fogg 2009). He has constructed this framework for the purposes of customer
website or interaction design but I will now infer this set of behaviours into a labour form as it follows the
same subset of required variables, my inference being that all these behaviours are in fact cost
consideration which a person is using when considering a labour transaction:





Physical effort – physical exertion required to complete task or activity. For example blue collar
work will require physical exertion than white collar work.
Brain cycles – if a task requires a lot of mental thinking, people may choose an alternative labour
option if it is perceived as easier to do.
Non-routineness – if something is out of the ordinary, people may choose the better understood
labour or task option. This aligns with many of the cognitive biases such as availability, and
adjustment and anchoring which helps us escape from the proverbial chasing tiger!
Time – perceived time to achieve a task versus opportunity cost of time spent pursuing other
endeavours. Some jobs may require too much time away from other duties.
Social co-operation – people are willing to work together so long as the moral (group motivation)
is positive between them and will prefer to not to social deviate so long as social capital is
positive. In extreme circumstances parties may not even be willing to employ or be associated
with an individual that is perceived as negative or not seen to be socially co-operative from a
morale or morality point of view. On the other hand, a person on the dark side of the economy
may not perceive an opportunity cost in transacting in a socially co-operative way and will
therefore continue to do (especially when the benefits may be high e.g. drugs dealing).
Money is listed in his model but will not be discussed here as it really an output or payoff function of
labour.
Triggers are also an important variable and come in the form of spark, facilitator or signal. In terms of the
labour function I would expect a trigger received (a task allocated say to a support engineer at an IT
company by the support desk) at a low motivation and low ability would not motivate the person to
complete the task timeously but this person may choose to delay or find a way to avoid the task. But if the
motivation is high and the person is capable then of course the task would be completed because the
obstacle to do so is small. Stress would result at high motivation levels, which was discussed before and
on the opposite extreme, a person may lazily perform a job that was easy (due to his or her high ability).
Importantly the above is different to the effort benefit discussed in section in 2(b) as effort and ability
together create the intensity function.
I = effort\ability. This can also be represented as a time function as noted in (Situational Management of
Innovative Projects in the Oil and Gas Sector – Darya Yuva).
Sparks, facilitation and signalling are extensive topics and will be discussed here. But remembering this
framework could be very useful in management practice as staff members can and will interpret actions
of their managers; and decide whether to give honest feedback or not based on their interpretations (this is
also an argument for maintaining integrity by leadership).
2. Understanding the Constraints of the Labour Function:
a. Physical Exertion or Effort
People tend to gravitate to work that suits their physical ability. Examples include footballers, models,
athletes, etc.
Our physical ability is asymptotically limited, and depends on fitness and inherited traits or abilities. It
may be assisted by medical solutions but is till limited to environmental constraints. Physical abilities can
be improved (e.g. top tennis players or 100m record sprints), but seems to be limited to our homo sapiens
like heritage – high endurance, rather mobile, able to grasp and control tools and vision limited to the
front. Our senses limited seeing, hearing, sense of smell, touch and taste.
In terms of flexibility of labour physical fitness in different areas can be a serious constraint. Medical
technologies may assist us with improving on this factor. But some areas of concern which if not properly
managed could in fact affect the health of other e.g. sleep deprivation, extreme work pressures and
addictive chemicals, which for example could seriously affect a pilot’s ability to make clear and concise
decisions when required to make an important manoeuvre.
Exertion implies that the labourer will get tired after some point and will need to rest if the exertion level
is higher than his or her state of equilibrium.
b. Mental Cycles
A problem may be quickly solved by an adequately trained individual. But training can be in many forms
such as through good parenting, good schooling and good social settings.
The human brain takes many years to develop and in many countries one is only deemed to be an adult
once when reaches 18. Other states deemed 21 more appropriate. For example in the United States, some
states provide child support up to the age of 18, others up to 21.
Then people tend to gravitate to work that suits their mental ability. Examples include mathematicians,
entrepreneurs, scientists, etc. Some subjects such as languages, mathematics, software programming
music and more complicated games such as chess requiring cumulative practice in the form of repetitively
practiced cumulative learning (Ericsson 1993). Other skills require more adaptation to situations such as
an entrepreneur, need far less practice. There is no doubt a benefit of people working in groups versus
alone benefit from saving on mental cycles. This will be discussed later.
Learning comes from our ability to take in information and make sense and understand it. Learning is
based on inherent abilities of the mind, the sensory organs interacting with the mind and stable factors in
the environment assisting in creating a fair and consistent message of the requirements (for example
excessive stress can cause slower learning effects and tunnel vision as evident in scuba diving where
stress can cause a scuba diver to panic and take action which is harmful to others). Having good cognitive
ability, memory function and adequate and accurate sensory are all factors which need to be considered
for better or improved learning or mental ability. Mental exertion does mean we are able to do complex
calculations using significant energy of our organism but not in an unlimited form as eventually every
task will bring on tiredness or fatigue.
Over the time function however it has been shown that learning curves can make a significant
contribution to increased efficiencies in production (Delionback NASA 1975).
Development and biological factors also need to be considered. For example aging affects the rate of
learning significantly. Learning mathematics or a new language at an older age can be found to be
significantly more difficult at an older age. Increased cognitive ability may actually allow an older person
to learn quicker in the very short term but younger age has a distinct advantage in the long term (Munoz
2006).
Mental ability is also a function of physical abilities and individuals need to find a balance between the
work, social and home requirements e.g. sleep deprivation, addictive behaviours and any other factors
that may influence physical ability i.e. health. Stronger physical abilities no doubt contribute to clearer
thinking and problem resolution although these abilities may distract the individual from mental
development.
c. Non-routine or Uncertainty Aversion
Non-routine – if something is out of the ordinary, people may choose the known or better understood
option. This aligns with many of the cognitive biases such as availability, and adjustment and anchoring.
This comes from the ability to predict the future based on information available. Ultimately if people
aspire to self-determination, risk aversion (loss avoidance bias) will still be a major consideration: it may
come in the form of the extent of the loss or the probability that is will occur (if it is high). This may also
be in the form of specific concerns of the individual or potentially outside factors that may affect the
candidate’s decision on a particular labour opportunity. Factors that may influence the behaviour of the
individual may be due to highly ingrained behaviours learnt over a lifetime and the person may not be
prepared to change behaviour unless provided a very good reason.
Risk aversion of course applies to the ability to perform the task or duty. Requirements may vary from
feeding a tiger in a cage to dealing with snakes. Some individuals may not have a tolerance for jobs with
greater risks e.g. commercial scuba diving.
However, most risks can be circumvented if the person is properly educated (as in the case of scuba diver
training). Similarly in creating a more flexible labour market, perceptions of others are critical in
understanding the challenges that are under and in helping them find appropriate solutions (such as is the
case with family and friends who assist each other).
d. Time Availability
This is the perceived time by individual to achieve a task. People would prefer to save time on a particular
task. In the labour context people prefer to delay work (procrastination) and live in the moment (Fischer
1999).
These may differ depending on health, age, sex, culture and religion. Availability for work performance is
constrained. Also our experience of time is not the same; some people may have faster metabolisms, other
slower.
It important to remember that restraints like distance to work and lack of access to adequate supporting
infrastructure (e.g. non-existence of canteen or child care support); can inhibit time and constrain the
individual’s performance or ability to be more flexible with their time.
Working for one employer, there are four forms of job flexibility that can be illustrated:




Compressed work week – the most popular form is to work 10 hours a day for 4 days instead of the
normal 8 for 5 days.
Flexitime – this practice normally consists of a common core and flexible hours. The common core
may be 6 hours where you need to be at work and the flexible hours, the individual gets to choose
whether they work in the morning or evening.
Job Sharing – allows two or more individuals to split a 40 hour work week where availability is a
requirement. For example one person may work in the morning, the other in the evening. Or
individuals may work on different days. This practice allows flexibility to young mothers and retirees
and also to those where a 40 hour work week is not practical.
Telecommuting – working from home.
Millions of people however, are working for more than one employer but employers which require high
mental or physical intensity will prefer exclusivity.
People are generally also need a minimum amount of time away from work to “reboot” their motivation.
See discussion around motivation. Time can also be represented in a form where problem solvers have
time to reflect as discussed by Adam Grant in his interesting TED talk on how to optimise
procrastination.
e. Social Behaviours, Reputation & Deviancy
Ethology groups animal’s social behaviours as follows:
Type of behaviour Effect on the donor Effect on the receiver
Egoistic
Cooperative
Altruistic
Revengeful
Increases fitness
Increases fitness
Decreases fitness
Decreases fitness
Decreases fitness
Increases fitness
Increases fitness
Decreases fitness
Humans of having more advanced forms of communication, tool making and our intelligence in solving
advanced problems (for the latter however extensive may be required – as can be seen by numerous yet
still unsolved mathematical problems). But it is our communication skills that have advanced us further
than ever before (The Talking Ape, Burling) and so this is a critical element in our social behaviour. But
this is limited by our tendency to seek dominancy in the animal kingdom which is not a new concept.
It should also be noted that there are cognitive biases that reinforce our behaviour in this area i.e. we have
mental short cuts that encourage loyalty. Suffice to say that the influence of others on a person’s decision
making is due to the strength of the relationship or cumulative influence (loyalty) on the individual. This
same effect can be noticed with individual’s attitude with society. As discussed above, social deviancy
also plays a role in decision alternatives. Also of interest is the attitude of an individual to relationships.
Some may be more apathetic. Others may be on the other extreme and unable to decline requests or
influence of others. Our behaviours therefore impact our relationships with others.
So social behaviour is a function of the limitations of relationships with others, i.e. the loyalties we
maintain between each other which will differ based on circumstance, opportunity costs and motivational
forces. Transactions of this nature maybe such things as favours, kindness, socialising and networking
and could affect us at a micro-level or at a macro-level e.g. affiliation to country, regional, company,
religious, education etc. Country or regional policy making provides the secular framework here.
•
People also need freedom to decide their own futures (alignment with self-determination theory).
•
Culture provides a good framework for people to create common ground within homogeneous and
heterogeneous groupings, although it is noted problems to arise between cultural sub-sets.
Signal theory is a form of understanding people’s intentions based on their behaviour. This is extensively
used in the labour market especially in the context of education where people performing well in
education are in larger demand than people with less education of performance levels. In his paper, Job
Market Signalling, Michael Spence considers labour acquisition as an investment under uncertainty
(Spence 1973). Employment therefore creates a situation of loyalty but under differing motivational
presumptions.


You are loyal to the cause of the organisation because you are really interested in the purpose of
the organisation and how it will assist others in solving a particular problem within the social
context (epic calling). This is where business slogans come to the fore with a simple message on
core purpose together with application vision, etc. This together with a double auction like
flexibility between employer and employer on methods to deliver solutions with optimize this
motivation to achieve this goal.
The other form of loyalty is based purely on monetary rewards, which provides the candidate the
benefit of benefits that come with higher monetary rewards (which of course can be extensive).
This form of loyalty can however have some negative effects if the employee becomes addicted to
these rewards.
In research conducted as Harvard (What is Social Capital? 1999) trust and trustworthiness were
formulated as they main constituent parts. Social capital was found to be higher in people with higher
social status with people acting in a more trustworthy manner to people with higher status and these
people therefore increasing earnings. Also of interest in this paper were the following:




“Individuals with greater social connection trusted each other more.
People from different races or nationalities behaved in a less trustworthy manner towards one
another.
Individuals from more successful families, individuals with more friends, individuals who
volunteer and individuals with sexual partners all elicit more trustworthy behaviour.
There are three major implications of this paper for future research. First, social capital is a
meaningful, individual-level variable that can be studied with the tools of price theory, once it is
understood that aggregation will be much more difficult than for other forms of capital. Our
evidence supports the idea that human capital includes cognitive and physical abilities and also
social capital, e.g. interpersonal skills, status and access to networks (as in Bowles and Gintis,
1976).”
In the labour market, of course there are many instances where reputation plays an important role e.g.
professional consultancies, business leadership and professional fields such as accountants, lawyers and
doctors.
One must also however consider that that this concept can have a negative side as with the example of
Germany during World War where Jews were stigmatised. This is an extreme case where trustworthiness
mechanics had broken down. But of interest in the above paper, people with greater social connection
trust each other more. This seems like an important factor that is not taught. To create a stable culture
and\or society this is critical to our survival as a species.
Loyalty in terms of employment is also an interesting topic for investigation and would be an interesting
study. Suffice today that loyalties may deviate based on different circumstances of the individuals (and
potential choices or temptations the individuals may be confronted with). Strong relationship building
appears to be a means to maintain this. Strong relationships however come from having an understanding
of what you have common with another person and therefore being better able to understand their
situational context. For example in South Africa, Black Economic Employment has seen to redress race
discrepancies in the market due to Apartheid. However in this redress this continual focus on differences
which has also created a negative feedback cycle where some participants feel victimised by this policy
and thus less likely to want to contribute to the greater good.
Adam Grant also has written an interesting book called: Give and Take we he suggests that in order to
take, one should give first. This he wrote in response to experience a work culture of takers and finding it
was blocking collaboration.
f.
Work Environment & Culture
Ergonomics is the science of understanding how to design for human comfort but also to understand and
design for conditions where we can work better. Humans are rather fickle and have rather stringent
requirements such as preferring to work in specific range of environmental factors e.g. temperature,
humidity, air pressure and within a limited chemical range (e.g. we cannot swim in hydrochloric acid).
This means we need a secure work environment, but not only from physical limitations of our organism
but also conditions which help to optimise our physical, mental, social limitations and in terms of design
i.e. minimising energy, time and space attributes so that we can perform our duties better. A good
example is Google where an office environment has been created where people are more likely to openly
interact, collaborate and foster innovation. There are numerous papers on what environments we best
work in and which environments our cognitive abilities and decision making works best and we will not
go into this.
3. Information & Technological Trajectories
a. Information and Learning in the Labour Market
Through adequate feedback loops people can properly understand various technologies. But I will attempt
to group lack of learning in the form of where innovation happens as discussed previously. It is critical to
remember that the labour function cannot function with some form of information. This is list is not
meant to be comprehensive:

Production:
Learning in these sectors may be in the form of apprenticeship and\or technical training.

Support and Services:
Learning in these sectors can be easier e.g. retail; but will become more highly qualified with level
of technological and industry customer understanding e.g. medical equipment sales person.

Management
Seeing system and process strengths and weaknesses requires deeper learning of the constraints of
information flow and human dynamics. For example article clerks in audit firms will gain
extensive general knowledge of business processes and systems. Similarly business analysts will
focus more specific areas of user interaction with systems (perhaps a mixed form of design).
Management skills of course also include knowledge of how to motivate and co-ordinate the work
of people.

Design & Architecture
Architecture is a good example of training for design. First qualifications focus on understanding
physical constraints of building technologies, focus on component strengths and weakness (e.g.
tensile strength, etc.) and create platforms for individuals to experiment with new combinations.
This innovative approach is highly interactive as the participant may be aware of most constraints
but may need to consult experts to solve complicated design problems (e.g. mechanical engineers,
etc.) to satisfy the simplicity factor of design. This can be applied in other technologies, for
example software development, etc. Learners need some freedom experiment.

Projects
Project management, at its essence is combination of tasks within a deadline of time, cost or
quality level or a combination of these qualities. Project managers need to understand the tools
and methods to work within these constraints. Understanding scope creep along with all the inner
workings of projects needs both training and experience to achieve the abilities of well-paid
qualified PM’s.

Research & development
Experimentation and research in new areas of science are generally very closely associated with
the universities and many opportunities arise with students who benefit from this association.

Fund Allocation
Learning to understanding risks and returns of businesses and allocating funds appropriately is a
very important labour function. Financial and corporate understanding in the business arena or
understanding of social needs comes to the fore. Allocation to funds requires mature, well
informed decision making and so learning in this area requires that interaction of theory and
practice. Trust is an important variable to manage in this arena.
These are all forms of opportunity and it must be remembered disallowing access to the opportunities
above could cause socially deviant behaviour and\or social conflict and is an important consideration
when aiming for a more flexible labour market. People on the outside need avenues to access these career
paths or to experiment with different career paths if their old career paths are no longer motivating.
Information is not only important for the application of the labour function, but critical. Information is not
always available though. In pre-historic times it was acquired through experience and experimentation but
as language developed, information was able to be transferred far more quickly. Language allowed the
human species to explode into the technological wonders we have now and the extent of which, we have
difficulty in keeping track of, this all as people learnt from each other’s successes and failures.
Not all information is provided when and accurately as needed though. There are some constraints to
correct information provision within the social context. Mainly information is not provided to people
within or outside an organisation due to potential loss of income that could result to the organisation. But
this could cause slower advancement in technology trajectories especially if the organisation is
cumbersome and has slow feedback loops. Also the organisation may not be working in optimal condition
with use of old technologies, aging management teams and no longer contact with the customer needs
which may have changed with technologies trajectories introduced by competitors. Market conditions
may also change e.g. commodity price decreases, increasing labour costs (as seen now seen even in China
where some factories are now moving to Vietnam), regional conflicts, closing markets (e.g. changing
conditions of trade agreements). Change of labour capabilities may need to take a more natural and
organic approach to the changing market conditions as companies suffer the force of natural and political
changes.
b. Employment Risks of Inflexible Employers
Organisations or individuals within organisations may seek to push ulterior motives on the organisation
which may not be good for it. Labourers may see these problems but not be in a position to resolve them
due to their temporary work nature.
They can be summarized as follows:


Adverse selection – the business may be pursuing fraudulent activity or individuals within the
organisation may be dishonest in their pursuits e.g. a management decides to use the business
money’s for his or her personal pursuit and discloses incorrect information about the state of the
problem to investors. More flexible workers may be brought in an attempt to solve this problem
but the may not be given of all the details and may be dismissed before the truth is allowed to
prevail.
Employer moral hazard – this is a slightly more complicated form of adverse selection in that the
person the agent is misleading is required to take more risk than the agent themselves. The agent
may also be in possession of information that would alter the decision of the labourer if that
person were fully knowledgeable at the time of the employment. A classical case is where a
company is controlled by management team that knows the business is about to falter and already
has an exit plan.
Organisation control of labour:

Labour monopsony – an employer may seek to use their size advantage or industry and then when
procure a flexible labourer at a discount of true value. This transaction may not be two way
though as the monopsony may control the market within this industry and so the labourer may not
have a choice to work elsewhere.
Luckily, as economies develop, people are able to choose career trajectories and potential employers.
Unfortunately this availability is not open to all as best performers are normally chosen for high
performance jobs. Flexibility however in the labour market is severally limited by perceived requirements
by the labour market of commitment. However my argument is that maximum add-value is the ultimate
goal of a flexible labourer and this is something person’s with an ulterior motive may and will take
advantage of.
c. Innovative Behaviour
Innovation is defined as new form of application of capability either in its capability or application. For
example the invention of dynamite to new ways to assemble furniture or information technology
infrastructure, all are new forms of tools which mankind uses to optimise his utility function. Research on
the diffusion of technology was initiated by Gabriele Tarde in his Book: The Laws of Imitation (Tarde
1903) and is broken into the following steps (excluding any cognitive biases in this determination):




Knowledge accumulation
Forming an attitude
A decision to adopt or reject or to withhold decision
Implementation and use
Innovation in its constitute factors require human beings in our social grouping framework, information
of some form of technological capability, and some form of collaborative effort where complexity of the
invention is more (e.g. a person may find a new use for a hammer that excludes hitting a nail into wood
but inventing a bike that rides on water may require some form of collaboration due to complexities of
components).
Importantly innovation works within any system because at its very core, it is a feedback loop. If
something is believed to work, scientifically or not. People may or will find a use for it. However,
scientifically and\or user based feedback is noted as being preferred by both Academic and Business
circles. But importantly, ultimately mankind and the constraints of our environment become the subjects
of our inventions and these are important factors when determining our technological trajectories. For
example, this can be evidenced by the current argument by scientists on whether pollution from carbon
dioxide pollution is causing global warming (Manabe & Wetherald, 1967). Our innovative use of oil and
gases resources for example is creating an environmental problem for our planet if one looks at all the
plastics created from this resource, which now pollutes the lands and oceans of our planet.
Innovation is at its core, a form of creativity where the discerner is able to determine a new function for a
particular tool. But the creation of the invention may be by accident or by intention and its application
discovered in a similar way.
Computer software development for example has developed this kind of thinking with the Agile
framework of Build first, Measure, then Learn and then build again. At its very essence this methodology
requires quicker feedback loops. More complicated forms are possible for example the waterfall
methodology, which implies more design or forethought and thus requires deeper understanding of the
constraints of nature\resources to be used and of the users of the product or service.
At the very essence of information technology accumulation is in the following steps:



Sensory input of some form
Processing of information so to determine output.
Output of an appropriate response
A simpler framework which works in all sorts of technologies from remote controls to vacuum cleaning
robots! But this also now includes greater access to a greater extent of inputs of information. E.g.
geographic information systems are is creating new opportunities with information outside of the bounds
of our eyesight (lower and higher bands of the electromagnetic spectrum) providing huge amounts of new
data which needs to be processed into a useable format and then applied in some way e.g. cattle control,
navigation, road planning and weather prediction systems.
d. Collaboration Efforts, Synergies & Optimisation of Work Intensity
At the very core of a collaborative effort is effect communication. Collaborative efforts are recognized as
some form of joint effort for a great good or goal. A suitable goal or benefits received for all participants
must exceed the effort required all participants may not be willing to participate (also see social
behaviours above). Individuals may also have other options and may perceive your project of less value
or benefit than other projects.
Motivation of all collaborators thus is a key consideration; with the net sum of all motivations a major
factor. For example motivation may be in the form of development of the individual’s ability, and a
person may be involved or contribute in a project free of any payment if development is a perceived
payoff.
Similarly, the person may not receive much recognition for his or her abilities and may volunteer for a
project if their social capital is perceived to increase from involvement in the project. Alternatively they
may not wish to be associated with your project if their perceived social capital could be damaged.
Also as indicated the collaborator may have different senses of urgencies. One individual may be
requiring payoffs day to day. Others may require payoffs at a later point in time and in different forms.
This creates differences in expectations but quite often is motivated by the constraints and motivations of
each person’s lives.
The key point here is that collaboration’s main purpose is to minimise time for completing tasks for the
entire team. Therefore this collusive ability cannot be underestimated as varying views from team
members can distort the project and its direction as a whole. Therefore it is important to have some form
periodic meetings for team members where the risk of deviancy of any common task or goal may
increase. Factors affecting team members:




Working in different contexts, processes or systems.
Whom have higher interaction with different outside parties or with customers who’s needs
change often.
Highly complex or risky projects whose technical parameter’s change often.
Any combination of the above.
It must also be kept in mind that any improvement or degradation of team member’s motivations or
abilities may affect the team’s behaviour as a whole.
e. Mentorship Dynamics
Gathering information makes for improved strategic advantage when making decisions as they can be
more informed. There are four extremes of mentorship, which can be graphed as follows. When a person
is taking advice on decision on career choice, the following are possibly being considered by the
candidate.
Good knowledge of person’s
ability.
Outside Industry
Adv. Solid sounding board.
Could also provide a good
consumer based opinion.
Dis-adv. False positive
feedback may be provided on
industry choices.
E.g. Friend, relative, spouse.
Little knowledge of person’s
capabilities, interests.
Knows Industry\Capability
Adv. Specific helpful advice.
Dis-adv. Advice may be
biased as information of both
may be from same source.
E.g. Old boss, work
colleague, fellow
entrepreneur.
Adv. Fully independent
feedback. Maximum bias
independence.
Dis-adv. Not aware of
complexities, best fit for
individual.
Adv. Honest independent
industry advice.
May be in form of a coach,
Distant-relative or stranger.
Friend from within industry,
lawyer, past client.
Dis-adv. May not be willing
to provide all information
needed.
The determination of choice of mentor may require the assessment of the mentor’s emotional intelligence,
which is important when interacting within an industry or the providing also may also require good social
skills in outstanding industry strengths and weaknesses (as typically would be established with a SWOT
analysis) as information in both areas is not always readily available.
Unfortunately information of capabilities and interests of the mentor may not always be available.
DISC (Mouton) is an HR tool that reflects learned behaviours and person’s potential impact work culture.
It measures the following characteristics of potential candidates:




Dominance
Influence
Conscientiousness
Steadiness
Competing behaviours may be problematic though and cause changes in social dynamics which an
experienced flexible labourer will more easily adapt to, especially under conditions where the
organisation is clear on its goals within helping the world achieve sustainable development goals, so that
there is no dispute around the task(s) of the flexible labourer. Therefore Human Resource tools such as
this should be used carefully.
4. The Production Function, Technology Trajectories & Learning Curves
Innovation and clear information provision can significant, if not fundamental contribution to an
organisation, be it a start-up struggling for finance or additional revenue, or a mature company where old
technologies and paradigms restrict the organisations competiveness and flexibility to change.
Managerial economics has studied the production function extensively and provides useful models on
how to calculate and optimise profit functions. Labour costs form an integral part of this literature and
hence do not need to be discussed here. The mathematical models for managerial economics also describe
how the production function which allows one to calculate the maximum output from a set of inputs and
so then allowing one to monitor and optimise different returns to scale. The labour function can also be
used in this method but it is limited in some aspects due to the fact that the labour function is not constant
and is changing day to day. So productivity may also be a function of the other parameters discussed in
Chapter 2.
Technology development trajectories were researched by Keith Pavitt in 1984.
Data was originally collected via Townsend et al. on the characteristics of about 2000 significant
innovations, and of innovating firms, in Britain from 1945 to 1979. Innovation was defined as a new or
better product or production process. Significant innovations were identified by experts knowledgeable
about, but independent from, the innovating firms; but the characteristics were collected directly from the
firms.
In terms of the research, sectoral representation was not 100%. There were 10 2 digit sectors, 26
categories in the 3 digit classifications. E.g. there was an over representation in textiles and instruments
and an under representation in Aerospace. Innovation was identified to sectors using UK’s Minimum
Listing Heading (MLH) or industrial classification system. Still this research was detailed in its analysis
and identified interesting patterns.
Sources of the main knowledge inputs into the innovations were identified by asking the sectoral experts
and the innovating firms to identify the type of institution that provided up to the three most important
knowledge inputs into each innovation i.e. themselves, other firms, institutions providing public
knowledge, such as universities and government laboratories. Information on the sectors of production of
innovations came from the sectoral experts; and on sectors of use from the innovating firms.
Process innovations were from the same sectors and product innovations as those from different sectors.
They were made up as follows:
•
The sectoral sources of technology used in a sector: in particular, the degree to which it is
generated within the sector.
•
The institutional sources and nature of the technology produced in a sector: in particular. The
relative importance of intramural and extramural knowledge sources.
•
The characteristics of innovating firms: in particular, their size and principal activity.
Main focus of the paper was: the classification of innovations in each sector according to whether or not
the sectors of production, of use, and the principal activity of the innovating firm, are the same.
Industrial firms cannot and do not identify and evaluate all innovation possibilities indifferently, but are
constrained in their search by their existing range of knowledge and skills to closely related zones.
However whilst firms in assembly and continuous process industries tend to concentrate relatively more
of their innovative resources on process innovations, those in chemicals, electronic and electrical
engineering, mechanical engineering, and instrument engineering devote most of these resources to
product innovation.
In their proposed taxonomy and theory, the basic unit of analysis is the innovating firm. Since patterns of
innovation are cumulative, its technological trajectories will be largely determined by what is has done in
the past in other words, by its principal activities. Different principal activities generate different
technological trajectories. These can usefully be grouped into the three categories that are call supplier
dominated, production intensive, and science-based. Later on, an additional paper was written which
additional category was added: knowledge based.
Strictly speak though; if one has perfect information available innovation can be summarized as follows:
Therefore innovation happens in either of the following ways:
a)
b)
c)
d)
A researcher or scientists builds a new technological invention
The inventions is found to have an application
A user needs is identified
Technology is developed to satisfy this need
Therefore all enterprises are creating value for human beings. But either in the form of:


Organisation directly to consumer (O2C).
Or Organisation to Organisation which later converts into a consumer solution (O2O).
(I have purposefully avoided the B2C and B2B terms as this does not include all organisations).
This all within the framework the context of risk, which can be broken into the following spheres:


Natural risk – risk which we find in nature, in the laws of physics, etc. etc.
Sociological & Commercial risk – risk creates by social forces and abilities (a subset of natural
risk but created by social dynamics).
Social issues are however much more easily solved where these risks are circumvented. But unfortunately
the prisoner’s dilemma plays an important part here and at least some countries are investigating
implementing a basic income grant.
Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a
nutshell:
Organizations are open systems that need careful management to satisfy and balance internal needs and
to adapt to environmental circumstances. There is no one best way of organizing. The appropriate form
depends on the kind of task or environment one is dealing with. Management must be concerned, above
all else, with achieving alignments and good fits. Different types or species of organizations are needed in
different types of environments.
So an organisation needs to work within the correct frameworks of social and natural risk. But if the
social risks are resolved, more fluidity will result in solving and focussing on natural risks (i.e. in
resolving commercial risks).
Social risks can also be split into different levels. For example: at team level, functional area or at an even
higher level e.g. company or group level (intrinsic social risks) for risks within the strategic objective of
the organisation. Then there are extrinsic social risks, which are those social risks that result because
other organisation rely on that organisation e.g. customers, suppliers, other alliances.
Also of interest is a discussion in the paper of Darya Yuva (see references Chapter 2) that risk needs to be
seen in an opposing point of view and that is of one of uncertainty. For example one cannot find solutions
by accident if one does not allow for uncertainty. Regularity which provides for necessity needs to
balance with a certain amount of freedom so that accidents can happen. For example the organisation may
not be interacting with the outside environment due to perceived risks but this very same lack of
interaction may cause the person not find the appropriate solution in that outside environment.
So therefore the challenge here is, to create a safe social framework or culture for innovation to occur
naturally.
5. Methods for Optimisation
Henry Mintzberg, The Design School: Reconsidering the Basic Premises of Strategic Management
“Behind the premise of the formulation-implementation dichotomy lies a set of very ambitious
assumptions: that environments can always be known, currently and for a period well into the future, in
one central place, at least by capable strategist there. To state this more formally, by distinguishing
formulation from implementation, the design school draws itself into two questionable assumptions in
particular: first, that the formulator can be fully, or at least sufficiently, informed to formulate viable
strategies, and second that the environment is sufficiently stable, or at least predictable, to ensure that the
strategies formulated will remain viable after implementation. Under some conditions at least, one or the
other of these assumptions proves false.”
Optimising Work Flow so as to Improve Labour Abilities
At any point in time an individual’s ability A is either improving or degrading in his or her ability. This
can be represented as a velocity function together with an acceleration factor:
Terminal Capability Velocity at the end of t periods: 𝐶𝑉𝑡 = 𝐶𝑉0 𝑎𝑡
Where a (capability velocity improvement per time period) represents an average improvement
coefficient (i = improvement and d = decline).
𝑎 = (1 + 𝑖 − 𝑑)
And where t could tend towards infinity, where perhaps a natural logarithm could be used, but this is
impractical as improvements will impossible to track. Instead below I have demonstrated a year and
broken it into 365 days. Please note the numbers used are points of a percentage and still show very
significant change.
Net Motivation can be represented as follows (representing the sum of motivational forces a person may
be subject to):
𝑛
𝑀𝑛𝑒𝑡 = ∑ (𝑀 + 𝑚)−𝑛
𝑖=1
Where motivation is the sum of all intrinsic motivators (m) and extrinsic motivators i.e. morale (M)
experienced by the individual:
𝑀𝑛𝑒𝑡 ≤ 1 Or 100%
It is dually noted that some motivational forces are short term and some are long term. The differing
potential effects of these are noted but ignored for this paper.
Challenge can be represented as follows if one follows Mihaly Csikszentmihalyi’s representation of
challenge versus ability, but we will include a time factor.
Therefore challenge can be represented as:
𝑛
𝐻 = ∑ 𝑑𝑖 .
𝑖=1
𝑀𝑛𝑒𝑡
𝑡𝑎𝑣𝑎𝑖𝑙
Where d = the acts or deeds required for that particular challenge.
But subject to = time available > time estimated to complete.
E.g. It is estimated it takes a maximum of 10 tasks per day to achieve with reward 1 = so challenge = 10.
The person may be limited to only have half a day available so creating a challenge level of 20. Double
what the person may be capable of! (This can also be converted into a pressure function where this
challenge is now double the pressure the person is capable of.)
So if we relate Mihaly’s optimal flow solution, we get:
𝐻
𝐹𝑙𝑜𝑤 = 𝐶𝑉
𝑜
Or
𝑛
= ∑ 𝑑𝑖 .
𝑖=1
𝑀𝑛𝑒𝑡 𝑉0
𝑡𝑎𝑣𝑎𝑖𝑙
In other words flow (intensity) is that same feeling when you ride on a roller coaster. That form of
acceleration of exhilaration is due to the fact that you are accelerating. This can also be represented in
relation to time, showing that one’s estimate of time to complete a task can flaw your required work
intensity estimate.
𝐼𝑒𝑠𝑡 =
𝑡𝑒𝑠𝑡
𝑡𝑎𝑣𝑎𝑖𝑙
Therefore:
𝑡𝑒𝑠𝑡
𝑀𝑛𝑒𝑡
=
𝑡𝑎𝑣𝑎𝑖𝑙
𝑉0
And:
𝑡𝑒𝑠𝑡 =
𝑡𝑎𝑣𝑎𝑖𝑙
𝑀
𝐶𝑉0 𝑛𝑒𝑡
There are obviously limitations to motivations as discussed in Chapter 2, so for example a person may
eventually ignore motivation beyond a certain limit because the required challenge level is beyond what
the person is able to accept or can accept, or they may break under the resultant pressure. On the opposite
end, sometimes one needs sufficient motivation to get out of bed in the morning.
Therefore the improvement coefficient discussed above is critical and management techniques to help
achieve individual improvements are of the outmost important especially in the beginning so that people
can adapt their behaviour so as to adapt to the requirements earlier. Also noted is that the declines
achieved in older people can be offset if they are highly motivated. This can be an interesting piece of
information when considering these constraints in your work force management.
Also of particular interest are the individual’s time estimates to complete a task or job. This can be
represented as follows (assuming the rate of change is the same):
𝑡𝑒𝑠𝑡 =
𝑉𝑡 − 𝑉𝑜
𝑎
I would also like to highlight that all of the above could be subject to the clear understanding function (U)
of the extent of tasks of the challenge function. Here are some parameters when delegating to an
individual (understanding maximum = 100%):



Accuracy – clear requirements and objective of task.
R is relevancy or context of task in relation to the overall goal or purpose of task in
space and time.
And T is on time or timeliness of information. This cannot be emphasised more
otherwise incorrect expectations may be set. We tasks are set over longer periods or
changes are more frequent, more feedback may be needed.
All this assuming the person speaks the same language as you, of course! Then one also needs to consider
the trust component.
To sum up a fighter pilot will need perfect information and extreme ability to overcome any possible
effect of cognitive biases on his or her decision making. This is subject to cognitive load requirements
and cumulative mental and physical capabilities. The capability function however is cumulative and can
sometimes be assessed by the individual’s confidence to complete the task. Although managers need also
be aware of the Dunning-Kruger effect or that individuals may be assuming others will assist in certain
tasks. Capability is cumulative though and so simplifies this process as one does not expect large changes
in performance (unless of course the person is being mentored from many sides). Also people that you
have worked with in the past will better be able to predict your ability or challenge level and so may
better be able to predict your work behaviour.
Conclusion
Much like wealth creates cumulative advantage, so to can cumulative learning create increased market
flexibility advantage.
Therefore I would like to motivate a social system which encourages optimisation of labour against the
constraints documented by this paper and emphasise a quote from the Hungarian Mathematician, George
Polya: “Teaching is not a science; it is an art. If teaching were a science there would be a best way of
teaching and everyone would have to teach like that. Since teaching is not a science, there is great
latitude and much possibility for personal differences. ... Perhaps the first point, which is widely
accepted, is that teaching must be active, or rather active learning. ”
This paper may not solve all of mankind’s conflicts but understanding our biases, constraints and
motivation where can better solve problems together.
A contextual focused world means we are better able to solve problems. This is not so easy when the
problem is looked at from individual or narrower point of views.
Utilising George Polya’s methodology:



First understand the problem
After understanding it, design a plan
Carry out the plan
Review and see if you could have done better The World Fair Trade Organization proposes a set of
principles for the fair trade of the world. So too should we consider the fair treatment of the constituent
factors of the labour function.
Then if we resolve the problems within labour and have appropriate mechanisms to circumvent
exploitation thereof, it only leaves economic rents on natural, capital or social assets that need appropriate
mechanisms to regulate potential speculative behaviours. This as people who can be in a position to
understand the problem are put in a position to lead and resolve the constituent issues as they see or
evidence them.
Applications
Time Tax:
Social or Group Information Bubbles and Cumulative Learning Curve Effects - People only understand
what they are exposed to. For example the Favela’s in Brazil or the slums in Mexico are accumulation of
economies of scale of people who need a place to live or survive. Other social bubbles might include
Beverley Hills, and large institutions all focussing on optimising their intuitional or system strategic
strengths which is normal in a competitive global economy. So my suggestion is for countries with large
Gini coefficients are high, to implement a non-race based time tax, where people must share there is time
if there income is significantly or extremely higher.
•
It would need to be located regionally and would need some form of trust system so as to ensure
time spent was useful to participants. Also it is suggested to use some form of matching algorithm
such as that used by the medical interns in the United States where preference of both parties are
considered (for matching economically advantaged and disadvantaged individual).
•
Careful reputation methods needs to be implemented though as research has indicated that
exposure to low performers in a school like context will result in team performance to degrade.
Appropriate tools need to be found so as to identify and treat individuals whom are struggling
with cognitive noise within the cognitive load or decision making.
•
Mark Zuckerberg’s quote comes to mind “we can’t jail our way to a just society”.
Building Skills which encourage market flexibility
Governments need to focus on building skills that allow individuals more flexibility. In today’s
technological era, business, science and art together can be a explosive combination. Students should be
allowed to experiment as much as possible. Be provided access with tools so they can do. In addition
skills that require a lot of practice to learn and most likely to be useful later in life should be taught as a
young an age as possible. This includes mathematics, languages, software and music although more
research can be done in this area. Sustainable development goals for example could be set up in the
educational sphere and skills that require more practice taught earlier. Especially those with
understanding the need for social balance and limitations of the environmental system, without which we
risk doom, as our planet strains under the constrains of our ever growing consumption.
Social Innovation
The sharing economy created by the information age has started to redefine the concept of ownership
(and perhaps even the roots of the concept of wealth creation) through websites like Airbnb and Uber.
Then there is another question in that: can a more flexible labour market overcome the hurdles within the
Capitalistic system, where the group collective systems or group agents of our labour: trade unions,
businesses, educational institutions, government institutions and religious and perhaps even non-profit
organizations, all influence behaviours so as to maximise their interests while the labour market
cumulative abilities are ignored. Do we allow sufficient chaotic cognitive thinking so as to challenge the
rules or confines of our society?
While conducting my research I found the following ideas particularly intriguing and thus are suggestions
for future focus:








The Variable of Luck as a control Mechanism - controlling luck around a person having access to
online information or via other participants is one way of preventing or discouraging destructive
or “trolling” behaviour, and can be varied using the input of others. A simple game could be
constructed where other players can change your luck base on how fair your behaviour is
perceived to be.
The Golden Ratio, the Gini Co-efficient and the Concept of Fairness – the ultimatum game (from
game theory), and the golden ratio in mathematics seem to align very closely. This is an area for
further research but importantly one must remember that in the business game, some people have
first advantage at access resources or information. This is very similar to the dynamics of the
ultimatum game where labourers must choose whether to accept an offer or not, most times
without full information (information asymmetry). Responsible custodians will need to be looked
after though in all fields of civilisation.
Human Resource Career Management – I am rather in favour of Holland model’s, which focusses
more on intention of an individual rather than his\her assumed nature which could be trained
habits or behaviours (I am not in favour of the Myers Briggs model). His model focuses on
personality types and their interaction with the environment and can be listed as follows: realistic,
investigative, artistic, social, enterprising and conventional. These ideas align quite closely with
innovation.
Designing for Trust – As discussed before this is an important tool in managing behaviour. There
are already many good papers in this area. Areas of interest are social games such as Run chicken
run concept where people co-operate or are banned or made to work harder by others. Also of
interest are games designed to improve your social skills e.g. compromise versus taking on more
responsibility. Not all situations are the same.
Using Option Theory in the Labour Function – This would require a highly evolved double
auction market but seems like an interesting idea for circumventing risks.
Lotka Volterra & Logistic Growth equations – Where society might be able to work together so as
to maximise our organisational tools to that total income or life force of mankind is maximised but
under the constraint of nature. The balance needs to be measured and sustained.
Economics rents received on Social Capital – the extent and boundaries of this. Wealth is clearly
creates more opportunity for achieving economic rent as gaps in the market can be taken
advantage of by the speculator with access to excess wealth. But does this also apply to Social
Capital?
Systemic innovation systems – where greater populations can influence direction of innovation
but with appropriate “balanced” or “balancing” indicators.
References
Introduction:
1.
2.
3.
4.
Income, Poverty, and Health Insurance Coverage in the United States: 2010 (see Table A-2)
World Population Prospects. (2015 Revision) - United Nations.
The Evolution of Incomes: A Historical and International Perspective (2006) - Thomas Picketty.
http://www.forbes.com/sites/louiscolumbus/2015/01/27/five-catalysts-accelerating-cloud-erpgrowth-in-2015/#64495c7d72c0
5. The Global Information Technology Report (2013) World Economic Forum & Insead Business
School.
6. Colloquium: Statistical mechanics of money, wealth and income. (2009) J Barkley Russer Jnr
(Department of Economics – James Madison University) & Victor M Yakovenko (Department of
Physics – Maryland University)
7. National Bureau of Economic Research (May 2016) Paper Reviews:
 For Better and Worse, Class environment Powerful Influence. Jay Fitzgerald
 Comparing Urbanization in Rich and Poor Nations. Linda Gorman
 University Innovation and the Professor’s Privilege
Understanding the labour function:
8. A Theory of Motivation. Abraham H. Maslow. (1943)
9. The Talking Ape: How Language Evolved (2005) - Robbin Burling.
10. Sustaining cooperation in laboratory public good experiments: a selective survey of the literature.
Ananish Chaudhuri (2009)
11. Gamification: Designing for Motivation. Deterding (2012) Hamberg University
12. Evaluation of a dynamic role-playing platform for simulations on Octalysis gamification
framework – Economou D, Doumanis I., Pedersen F., Katharani P., Mentzelopoulos M. & Bouke
V. (2015) Dept. of Computer Science, University of Westminster.
13. The Ludic Drive as Innovation Driver: Introduction to the Gamification of Innovation
14. Proposing a theory of Gamification Effectiveness
15. Punishing by Rewards: When the Performance Bell Curve Stops Working for You. C Vaishnav, A.
Ali Khakifirooz, M. Devos. MIT, Object Mentor Consulting.
16. Cognitive Behavior Modification. Donald Meichenbaum (2010)
17. A Behavior Model for Persuasive Design. BJ Fogg (2009)
18. The Behavior Grid: 35 ways behaviour can change. BJ Fogg (2009)
19. Situational Management of Innovative Projects in the Oil and Gas Sector. Darya Yuva. NSU.
20. Organizational Behavior. 9th Edition. Stephen P Robbins.
Factors or Constraints of the Labour Function:
21. The Role of Practice in the Acquisition in Expert Performance. FLF Ericsson (1993)
22. NASA Guideline for Application of learning/Cost improvement cost curves. Dr L. Delionback
(1975)
23. On how age affects foreign learning. Carmen Munoz. University of Barcelona (2006).
24. Micro-foundations. Janssen. (2006)
25. The Laws of Imitation - Tarde, Gabriel. (1903)
26. Job Market Signalling. M. Spence (1973)
27. What is Social Capital? The Determinants of Trust and Trustworthiness (1999) Cambridge
University.
28. Cognitive Behaviour Modification. Meichenbaum (2010)
29. Towards a synthesis of Cognitive biases: How Noisy Information Processing Can Bias Human
Decision Making. Martin Hilbert (2012)
30. Long-term Effects of Cognitive Training on Everyday Functional Outcomes in Older Adults
(2006)
31. How age affects foreign language learning. C Munoz (2010)
32. Read this paper later: Procrastination with Time Consistent Preferences. Carolyn Fischer (1999)
Information, technology trajectories and limitations to flow:
33. Sectoral Patterns of technical change: Towards a taxonomy and a theory. Pavitt (1984)
34. Factors affecting labour productivity in the Gaza strip. Journal of Civil Engineering and
Management. (2007)
35. A study of various factors effecting labour productivity and methods to improve it. Magdum
College of Engineering.
Methods for optimisation:
36. Henry Mintzberg, The Design School: Reconsidering the Basic Premises of Strategic
Management
37. How to solve it. George Polya. (1945)
38. Improving collaborative work and project management in a nuclear power plant team: Human
Centred Design Approach. Guy Boy, etc. (2016)
39. Managerial Economics .Mark Hirschey.
40. A Contribution to the Theory Of Growth. Robert Solow. The Quarterly Journal of Economics.
(1956)
41. Workforce Skills and Innovation: An overview of major themes in the Literature. OECD. Phillip
Toner (2011)
Conclusion
42. http://www.wfto.com/fair-trade/10-principles-fair-trade
43. A Lotka-Volterra model for multi-mode technological interaction: modelling competition,
symbiosis and predator- prey mode. University of Pretoria & MIT.(1996)