Moneyball and flash boys: social enterprise?

29 Jan

dataFirst post of the year, and the fact that it is almost the end of January probably reflects what a busy start to the year it has been – at SEUK, as everywhere, there’s a lot on: new people joining, working on strategy / business planning, policy work ahead of the election, next state of social enterprise research in full swing, plenty of delivery before year end, and events, dear boy, events. Yesterday, I was up in Salford with about 30 participants of our Health + Social Value programme, and then on February 3rd we have our Social Value Summit – a big conference in London to try and move the whole field forward. More to come throughout February + March, and more local events with members too.

All of which unrelenting pace means it was nice over Christmas to take time out to do a bit of reading, and get a bit of external inspiration and thinking in. Given my new role which started in January, I read Consiglieri by Richard Hytner which was OK, if a bit badly structured – there were some nuggets (highlighted ready to be Evernote-d), but nothing that earth shattering or insightful. Interesting to think about the interplay between senior people in an organisation, and what makes that work, and how different pairings and groups can work best together. But not sure the book added much to existing management and leadership literature.

More thought-provokingly if behind-the-times-ingly, I read both Moneyball and also Flash Boys by Michael Lewis (find more on both here). The former is all about ‘sabermetrics’, the data revolution in baseball and how it changed the sport for good. The latter is all about how technology (and the people in charge of it) changed, corrupted and made a mockery of the stock exchanges in the US and elsewhere. I’d recommend both – Moneyball the book is better than the film, with more of the tracing of the history (some data nerd back in the 70s stapling his own publication together), more depth in the surrounding characters, and more detail on how it actually works. Of course, all of that would have made a more boring film, but it makes for a great book. My takeaways are: don’t assume what you’ve always done (+ taken to be right) is the right way, or always will be; don’t underestimate what data can do for you (but also use it in combination with gut, feel, instinct + heart); and don’t think you can’t win with fewer resources.

Flash Boys is genuinely terrifying – I don’t feel capable of explaining it here, but basically clever programmers + traders exploit microseconds of difference in the speed it takes for trades to travel along broadband / cable lines to manufacture profits for themselves in between buyers and sellers of stocks. And financial institutions create their own ‘dark pools’ (basically closed exchanges) in which the customer has no transparency, but is promised said financial institution will get them the best price – strangely, they tend to rip the customer off…who would have thought? I thought having read a couple of books about sub-prime and collateralised debt obligations that I had read about the lowest to which financial services could stoop + over-complicate; but this stuff is quite extraordinary. Blatant screwing of the individual, of the smaller company, and even of large main customers – and basically buying up the exchanges + regulators to the extent that no-one can change it.

What’s interesting about it is that it takes all skill out of the process – there is simply technological exploitation (admittedly very cleverly designed technological exploitation), no understanding of markets, analysis of companies, building of relationships, gathering intelligence, or applying of experience; just quicker fibre optics + algorithms. I’m not sure what I took from this book, apart from raised blood pressure – a reminder, maybe, that while we look at methods of investment + financial products in the social sector, we should be careful what we import and what we seek to emulate.

It’s got me thinking a lot about the unintended outcomes of new technology too – I wonder whether, as Stephen Miller has written recently, we need to be thinking about the ramifications + potential of ‘tech for ungood’ as well as ‘tech for good’. But at the same time, I’m hugely encouraged by the potential of data (again through advanced technology) to better inform and influence our knowledge and our decisions. Given we do (some of) the leading research on social enterprise in the UK, we need to up our game on data, follow the money + help share it better so that the whole movement can use it: no small feat for the year ahead.

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