I recently read the article "At Sears, Eddie Lampert's Warring Divisions Model Adds to the Troubles". My friend sent it to me with the subject line "is Ayn Rand destroying Sears?!"

Obviously this sort of article is biased towards taking a crack at a huge success like ESL that's meeting with a tough spot. But is raises some interesting points. Doctrinaire belief systems always fall apart when taken to extremes. I guess it is Soros' 'competition vs. cooperation' debate.

The time frame of hedge funds is trickling through the whole of society. Given life contains an inevitable sequence of errors and that the current measurement system allows for zero error, it is perhaps inevitable that within a corporation you will be cut and cauterized at some point. Buffett, Ackman, ESL, etc. would presumably all have fired themselves at various points of setback. And when you get cut from somewhere like Sears, you lose all the "clients" that you've spent a career building and have no entrepreneurial base from which to direct yourself mid-career.

Is this "time frame" a strong argument for encouraging your children to pursue the diversified/entrepreneurial approach going forward? The zero-error expectation and threat of career termination is a key factor in pressuring staff at certain financial firms to do unsavory things.

Gary Rogan writes: 

The first thought that I had after reading the article was that typically there is no "algorithm" that one can come up with that works long enough, consistently enough, and is platform-independent enough to be declared an algorithmic success story when dealing with complicated problems involving a lot of people. Any kind of attempt to manage lots of people by a relatively rigid and relatively simple algorithm will fail, and it will be even worse if the algorithm is rigid and complicated. You have to have some system, but the system always requires human intervention by some very smart humans. If the human is highly eccentric (and these are over-represented among those who start things) the results are usually highly unpredictable and uneven although always entertaining, yet people like Howard Hughes and the rest of eccentric billionaires prove that they are not always unsuccessful.

It is absolutely true that in the modern age two-way loyalty between the corporation and the individual has gone out of style, so anyone who is not independently wealthy should be prepared to have skills to sell at any moment. What ESL evidently did at Sears seems almost cruel though, like experimenting on live humans after offering them a big enough incentive, but it's certainly not unethical as they were all big boys and girls and should have known who they were dealing with.





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