20/11/2013 § Leave a comment
Q: What statistics software do pirates use?
A: ‘We use R, me hearties!’
Turn away now, it doesn’t get any better….
I’ve spent the last two days in a workshop on R, run by the lovely people at the New Zealand Social Statistics Network. It was billed as ‘Intro to R’, and ended up being partly intro, partly intermediate, and also an intro to statistical packages generally, a refresher in statistics and lecture on good data visualisation. Something for everyone.
I went along because I’ve taught myself R from various online sources, and cobbled together analysis from bits of code pillaged from the Web and other people’s projects (’cause I’m down with OPP). I needed to see what I’d missed through my autodidacticism and pick up new tips and tricks. Keep the tools sharp, as it were. The course absolutely delivered — there are a few things I should do differently and lots I can do better.
The open-source approach — giving it away for free — creates different incentives. Several people asked me why I use R. It’s simple — R is free, and it gets the job done. But it isn’t the price itself that’s the issue. The issue is that I’ve moved around from job to job over the last 20 years, and everybody uses something different. I’ve used SPSS, SAS, Limdep, GAMS, Eviews, and probably others. I got quite good at SPSS, for example, and then went somewhere that didn’t have a licence. When I started my current job, I had the choice of retraining in Stata or improving my Eviews, or venturing out into the wilds of R. I chose R, because I figure that jobs will keep coming and going, and there’s no guarantee that the next place will use Stata or whatever.
In a world where data is largely accessible and files are in the cloud and people change jobs regularly, there is a lot less call for investing in site-specific resources. That includes training in software that ties you to a particular employer. Portable tools make sense, and open source is portable. It does raise the question of who should pay for training, the employer or the employee. Training will increase the employee’s potential contribution to the current workplace, but also raises her value on the job market. That suggests that open-source software might have more value in economies with greater agglomeration, where a number of employers essentially train a pooled workforce from which they all draw. It also may have more value where there is greater job entry and exit — if people don’t tend to change jobs, then having portable skills isn’t as valuable.
Now I’ll leave you with my earworm. On the first day of the course, in the first presentation, the presenter said about our data files, ‘They should be comma-separated.’ Since then, I’ve had that line going around my head, but sung by The Offspring:
22/10/2013 § Leave a comment
Yes, yes, I know. I have been absent. Mea culpa, truly. I am trying, as a friend of mine used to say, to fit 10 pounds of ‘stuff’ into a 5-pound bag. Feel free to convert to metric.
Anyone out there need a job?
I interrupt this unscheduled silence to point to Slate article by Laura Helmuth via Scott Lemieux at Lawyers, Guns & Money (an eclectic blog and excellent Zevon song). The title of the article — words to live by, actually — is ‘Don’t Be A Creep’.
The point, as Lemieux summarises, is that professional people should be professional. Helmuth:
If you are established in your career and in a position to help others, congratulations. Be as generous as you can be, and while you’re at it, remember to thank the people who helped you. But recognize that you have a tremendous responsibility to take your mentees seriously. It’s easy to forget how insecure and uninformed someone can be starting out, and it’s hard to remember that you have a lot of power in comparison, even if you have just a few years more experience or feel like a cog yourself. Be respectful, be appropriate, be professional. Above all else, do not be a creep.
This piece is a good reminder of something important. I am filing it under ’7 skills of consulting’, because it ties in with the whole idea of those posts. My recipe for being a consultant includes cultivating a sense of restraint, sobriety, balance — professionalism. It’s also a good way to treat other people. Just because you’re
Mayor of Auckland Commodore in the Navy principal investigator on a few projects doesn’t make you irresistible, regardless of what Kissinger said.
Even a little power comes with responsibility.
14/08/2013 § Leave a comment
Another business book review. This time, it’s Tribal Leadership, by Logan, King, and Fischer-Wright. The book is, helpfully, available as a free audio book from the website.
Overall rating: good. useful. pretty smart.
Yes, there are the annoying traits of pop-culture business books. There are beautiful anecdotes about teams that overcome adversity to realise the potential hidden within. There is the university research used as a totem, such as the cameo appearance by Daniel Kahneman. There are the impossible generalisations, the air-brushing of complex people (such as Frank Jordan, former San Francisco mayor — ask Food Not Bombs how cuddly he is), and the simple tools to make things better.
But there is also good stuff.
What hooked me into the book was that it starts off saying that ‘life sucks’ for some people. The First Stage of Tribes describes bad environments. It was really refreshing to have a book recognise that it isn’t all good and not everything can be fixed.
The Second Stage of Tribes is when ‘life sucks for me’. This is apparently an advance on the First Stage, because it recognises that life is good for some people, which opens up the possibility that it could actually one day be good for me. Wisely, the book acknowledges that professional workplaces can suck. They can be awful places, horribly dysfunctional and unpleasant to work in. The authors recognise their readers may be in such a situation. Recognising ‘where we are’ is important if we are trying to change.
So what if we want to fix it? The authors say that slogans and techniques don’t work, especially not in a dysfunctional environment. When you have people in a beaten-down state, you can’t change them with one-minute management or good thoughts for the week. These devices only add to the insult. The authors admit that it takes work to sort out problems.
Of course, this is also a self-help book, so they do offer techniques to make things better, and they do give examples of slogans that motivate workplaces. But this is the central irony of the genre, no?
Something else that they get right is that it’s all about people. It is always about people and their relationships. The book focuses on how people feel about where they work and how they relate to each other. From a consultant’s perspective, there is nothing more important. People decide whether to send work your way; people decide whether your work meets their needs. There can be all sorts of objective measures to judge that a proposal or a report is really bad or really good, but in the end a consultant needs to convince people.
And so the book goes, taking us through the Third, Fourth, and Fifth Stages of Tribes and Tribal Leadership. At each stage, life gets better, people feel more fulfilled, and workplaces are more productive. Stages Four and Five are the Future of Business, according to the authors. Their message, in a sense, isn’t too far off books on Flow or Bliss or Being in the Zone. The less time we spend bickering amongst ourselves, the more energy we have for working towards a common purpose. Simple thermodynamics.
Subtly, though, the book undermines its central premise (which is the central premise of all self-help books), that everyone can be great. To get to Stages Four and Five, you have to go through Three, whose catchcry is ‘I’m great!’ The authors tell us that we should become great — world-class, even! — at something. Then, we can really live Stage Three and be recognised as a valuable member for a Stage Four organisation. The problem is that we can’t all be world-class. Does that mean we should embrace Stage Two? Should we join in saying, ‘Bonjour paresse‘?
But you wouldn’t be reading Tribal Leadership to be a slacker, would you? So my verdict is that it’s worth reading and thinking about, and wondering about the interpersonal dynamics in your workplace. Then wonder if maybe there isn’t a way to improve them and of being the change you wish to see.
09/05/2013 § Leave a comment
I have been pondering how effort and reward vary by the size of the project. There’s no data to this, just jaded experience from many years of consulting. There just seem to be some project sizes that generally work well, and some that are difficult for the money involved.
- Under ten grand — quite variable projects; some are easy and some are impossible
- $35,000 — a really horrible number. The client wants a $50k project but doesn’t have the budget
- $40,000 — oddly, usually much better than $35k. If the client had wanted a $50k project, they would have found the extra money. They really just want $40k of work
- $80,000 — sweet. This is a great project size. Enough budget to do something interesting, small enough that admin effort is low, reasonable client expectations
- $90,000 — client wants $100,000 project but that’s a scary number
- Over $100 grand — it all depends, so manage carefully.
For those of you who are visual, I came up with the following chart to show average effort:reward ratio by project size (solid line) and the spread around the average (dotted line). Values over 1.00 mean the effort is greater than the reward; values under mean the opposite.
22/04/2013 § 2 Comments
I posted flippantly last week about the Reinhart and Rogoff (R&R) re-assessment by Herndon, Ash, and Pollin. There’s been more bytes spilled since then. The Economist says it’s not such a big deal, because ’Ms Reinhart and Mr Rogoff acknowledge in their academic work that this conundrum “has not been fully resolved”, but have sometimes been less careful in media articles.’ Paul Krugman counters that, yes, it is a big deal and provides some links. Matt Nolan at TVHE provides more links and more perspective:
it has been used as an inconsistent marketing tool by people for selling their own unrelated ideological policies….
I’m going to be careful here. Media interviews are not the same as academic writing. Keeping my thoughts straight while listening to someone else’s questions, and then controlling the random thoughts that spring to mind whenever (ask my poor students — I don’t censor digressions quite the same way in lectures) while not babbling — hey, it’s fun and energising but only approximately accurate. So, I’m not going to pile on.
I’m fascinated that it was a spreadsheet error, at least in part. Most economists I know proudly and loudly avoid Excel for anything analytical. Grunty programmes like Stata, sure, and nerdy open-source stuff like R (thanks, Auckland!), absolutely. I mean, these are guys (yes, guys) who sneer at SPSS. To find out that R&R were relying on Excel is like, I don’t know, seeing a celebrity chef eating at Burger King.
There’s a lesson for consultants here. Excel is the sort of programme that gave rise to this:
To err is human, but to really foul things up requires a computer.
Nevertheless, I like Excel a lot. Despite all the stupid and paranoid security controls that Microsoft has added, it is still a portable way to give clients the analytical details of what I’ve done. It also allows me to build dynamic tools to help clients tweak the analysis for their own questions. And, I can show them exactly which number is multiplied by which other number, and then transform it all into pretty pictures clearly and transparently. Throw in some macros and buttons, and it’s really powerful.
The best advice I’ve heard about building those sorts of files is to treat them like programming tasks. You are essentially programming a new bit of software. There are established protocols for tracking versions and checking code — that’s a place to get some tips on good design processes.
It’s the best advice, but I’ve generally ignored it (like a lot of good advice). It’s just too hard. So, let me offer my own advice:
- do it differently — there are always multiple ways to make calculations. I like to make calculations two different ways, and then check whether they have the same values (‘=A3=B3′ will give a TRUE or FALSE; or, use an IF statement)
- back-of-the-envelope — just the other day, we were looking at a spreadsheet model (again, portability is important), and we did some back-of-the-envelope calculations to check whether they were sensible. It’s similar to the idea of an elevator pitch — can I explain in simple language and logic why we get these results?
- have someone check — give it to someone else. Let them see everything, get them to check everything. Make sure they have the chops, too, to do it right. Now, that can be expensive, several hours of work. So ask yourself,
do I feel lucky todayis it worth it for the job or the client? I mean, if I’m going to recommend unemployment for a few million people, I want to make sure my cell references are right. But not all clients warrant that level of scrutiny.
After all that, though, mistakes will happen. The best thing to do is be a mensch — I’m not sure what the New Zild translation is. Own up, walk the client through the impacts, and do as much work as you need to do with the client to restore some credibility.
And then, add it to your bag of tricks. You’ve just learned an expensive lesson.
10/04/2013 § Leave a comment
In my last post, I pointed out that charge-out rates and productivity percentages are closely related. You can’t decide on a charge-out rate (or rates) without thinking about how you spend your time. So, how should you allocate your time as a consultant?
There are several broad categories of activities:
- consulting — the stuff people actually pay for. Whether it’s research or reviewing or advising, this is the billable time
- marketing — how you bring the work in. It might be schmoozing or networking or writing proposals or going to sales events or whatever works for you and your business. It’s a balance: too much fun networking, and you’re out of time for paid hours; too much reading interesting papers, and there’s no work in the pipeline
- investment — the ‘working on the business’ part. It might be improving your own skills, or focusing the business on growth areas, or re-organising processes to make them more efficient
- administrative — keeping the day-to-day ticking over. Invoices need sending out, bills need paying, papers need filing, etc. Too much, and you’re just moving paper around the office to no good effect. Not enough, and things fall apart; the centre cannot hold.
You want to aim for 70% to 80% of your time on billable work, assuming you’re a lone consultant or in a small group. A large group can take advantage of division of labour, so seniors might do more marketing and juniors do more billable work. Marketing, well, the rule of thumb is about a quarter of your time, so figure 20% to 25%. Investment, let’s give that 10% to 15%. Administrative work is probably going to take 10% (an hour a day or a day a fortnight).
Wait, what? Even doing the minimum, that’s 110% of your time. Do more and you could be looking at 130% of your time or more. Yeah, well, that’s the problem — no one said it was easy. If you do each activity to the point that it feels like you’ve ‘done enough’ or ‘sorted it out’, you could be there all night. There’s too much to do and not enough time, or, as a friend of mine used to say, it’s like putting 10 pounds of stuff in a 5-pound bag.
How do you make it work? First, avoid the easy temptations. Short-change the investment activities, and your skills get rusty or you miss opportunities. Get behind on administration, and suddenly people owe you for three months of work. Cash-flow problems kill more small businesses than anything else. Marketing is a funny one. In my area, economic research, we are mostly introverted, so anything to do with other people is a chore. It’s easy, then, to skimp on marketing until you absolutely have to do it. Then the work dries up and you have to scratch around for the next project.
The second way to make it work is synergies, which is just a fancy way of saying ‘kill two birds with one stone’. Each project (billable work) is an opportunity for marketing. Don’t just email a report — meet with the client, meet with their bosses and stakeholders. Administration should be part of the everyday work — file papers when you’re done; take five minutes to run an invoice when you send off a deliverable. Investment and marketing can be combined — a conference or workshop is a chance to learn new things and meet new people. Introduce yourself, tell them what you do, take business cards or brochures.
The third trick is the hardest: figure out how much is enough. Gold-plating every output — a old boss used to call it ‘gilding the lily’ — is a waste of time and money. Most clients don’t want it so they won’t pay for it. If that’s the case, then you’re just doing it for yourself. Is this really how you want to spend your leisure time?
Back to the question, how does a consultant allocate time? ‘With difficulty’ is the honest answer. There’s a bit of Zen involved, actually. Be mindful of what you are doing, of how you spend your time. Then, decide whether it’s helping you make progress. If it isn’t, do something that will.
08/04/2013 § Leave a comment
What should you charge? That’s a hard question, and it comes up all the time. Every project is different, every consultant has strengths and weaknesses.
I’ve been thinking about the question because it’s time for my year-end accounting. Looking back over the year, I’m seeing where I’ve made money and lost money on projects. It reminds me of a woman I knew who had a printing and framing shop. One year, she lost her biggest customer — a big chunk of her revenue disappeared. She had to re-organise the shop and let someone go. The result? She actually made more profit. The ‘big client’ was costing her money.
Importantly, you can’t separate the charge-out rate from how you use your time. The total amount you get paid for a job is hours times your rate. How you divvy up between the two figures is somewhat notional. So, using time efficiently is key.
The first thing is to keep track of what you’re doing. It’s tempting to put in an hour or two at night or on the weekend, just to get something done, and not account for it. You may not be able to charge the client for the work, but make sure you aren’t lying to yourself about the time you’re putting in.
The second thing — once you actually track your time — is to examine your over-runs honestly. If you billed 100 hours but it took 150 hours to do the work, was it worth the extra time? There are always reasons to over-do work — it’s interesting, the client is important, it will lead to something else — but at least be clear why you are doing it.
Finally, see if there’s something you can change. Did you have to read every article on the topic from the last ten years? Did all the meetings have to be in person? There are probably ways you can work more efficiently and still produce a product that satisfies the client.
There are three tensions to consider with your charge-out rate:
- cost-plus versus value pricing — it is common business advice, but true: find out what your product is worth and charge it. Cost-plus just looks at your costs and adds a margin. There are two issues with cost-plus: you probably don’t realise what your true costs are (see above) and you are leaving money on the table
- charge-out rate versus productivity percentage — You could state a higher charge-out rate to your clients, and then bill for only a portion of the hours you work. Or you could lower your rate and bill more time. A high rate can be used as a signal of experience or quality, but you also don’t want to price yourself out of the market. The other consideration is how to vary your prices by client. I’m in favour of having different rates for different work. I’m not really selling my time, I’m selling my effort — some things simply require premium effort. Your ‘low-rent’ work might sell for only 70% of your premium work. Varying your rates also gives you a chance to show your best clients you are giving them a special deal.
- project versus overhead work — when thinking about productivity percentages and over-runs, separate the truly project work from the development and marketing work. Development and marketing, alas, really are overheads for a consultant. You might be able to charge it to a client. If you can’t, though, don’t think of it as a loss but rather as necessary investment. So, have a sense of whether what you are doing is advancing the project or building your own capability, and then track it accordingly. However, you can’t make money just building your capability. At some point, you need to be doing chargeable work. How much? That really depends: 50% is probably a minimum, 75% is great, and 100% means you are kidding yourself or working long hours.
It’s a balance, and only you can figure out what the balance is for you — once you are honest about how you spend your time.
How much should you charge? The simple answer is: charge enough.
02/04/2013 § Leave a comment
Dear Mr _____ :
Thank you for your kind invitation to speak at your upcoming event. As you are aware, I have been doing some work on that topic and have some insights to share.
As I am sure you also know, I recently approached your organisation with an application for funded work. That application was rejected.
Given that both notices — the rejection and the invitation — arrived in the same week, I believe you might be unaware of my situation. I would therefore like to explain it.
I am a researcher-for-hire. I work on externally funded projects, and I am responsible for obtaining funding as well as conducting the research. My current employer, as well as my former employer, have made it clear that my employment is contingent on my maintaining a stream of funding. My job is only as secure as the next research contract.
As a result, I need to be mindful of paid work versus unpaid work. A certain amount of unpaid work is unavoidable. In addition to writing proposals, I contribute to the profession, promote the use of economics tools to the wider public, meet people and discuss their research needs, and more. These activities are unfunded. I am not paid for them. There is no underpinning funding, no contribution-to-the-research-environment account, no payments just because.
I am paid by the piece. It is all milestones and deliverables. When I deliver, I can bill; when I bill, I keep my job. It is simple and brutal, but it is the life of a researcher-for-hire. I would say my position is unusual, but as I look around at my peers and the next generation of workers — the freelancers, adjuncts, temps, and consultants — I see that it is rather common.
You might not see it from your perspective as a secure, permanent, salaried employee, but your invitation is a request to work for free. I am afraid, therefore, that I must decline.
16/11/2012 § 4 Comments
One of the curious stories out of the US presidential election is about the consultants on the Romney campaign. Apparently, they made a lot of money:
Much of Romney’s operation, for example, appears to revolve around a close-knit
group of insiders at American Rambler Productions, which took in more than $160
million through mid-October, records show.
That’s some gravy.
And what did the campaign get for this money? Here’s one thing they got:
If you spend your time watching politics and haven’t been hiding in a deep depression since Tuesday, you’ve probably been hearing a lot about “ORCA.” According to the Washington Post, ORCA “was designed as a first-of-its-kind tool to employ smartphones to mobilize voters, allowing them to microtarget which of their supporters had gone to the polls.”
There is now widespread condemnation of the program as being sloppy and poorly deployed.
They say that the truth is the consultants essentially used the Romney campaign as a money making scheme, forcing employees to spin false data as truth in order to paint a rosy picture of a successful campaign as a form of job security.
The last paragraph spreads the blame around — consultants and employees. Clearly, though, there is some consternation about having paid for all these consulting services and not getting a working product.
Hey, consulting isn’t all rainbows and unicorns. Most projects work but some don’t. It isn’t unusual for clients to be a bit unsure about what they want. They may not figure it out until you deliver to them the wrong report. Then you have the clients who do know what they want, but it doesn’t accord with, um, reality.
What’s a consultant to do? I figure there are three strategies.
- One strategy is to give the people what they want. You figure out what the client really wants, and then deliver it. People know what they are getting when they hire you. This approach keeps people happy — short term. There are two weaknesses to this approach. First, you aren’t really helping the clients. The answer they want may not be the right answer, so they end up with the wrong information and eventually that will have consequences. Secondly, third parties also know what you deliver. Whatever your advice, right or wrong, it’ll be suspect.
- The second way is even more cynical. You promise what you know the client wants, and deliver the cheapest result you can get away with. An election is an interesting consulting problem. From the consultant’s point of view, the client is transient — it disappears the day of the election — so you have to get payment beforehand. From the client’s point of view, the consultant is only as good as the results, which are apparent only on election day. It’s easy to see how the ORCA debacle can happen, how a client could pay for a shoddy project.
- The third strategy is to play it straight. You work on understanding what clients want. You tailor your research to their needs. But you also do the work as best you can, honestly, with (in the case of economic research) one eye on theory and the other on the data. Some projects won’t work out; some clients will have a different view of the world and won’t like yours. Those projects you have to take on the chin. Most projects, though, should go well, and most clients will be happy, and you’ll get a reputation for quality and consistency.
I prefer the third approach. It suits my personality and it seems to work for me. The first two sound like far too much hassle, trying to keep people happy and stay one step ahead of expectations.
But let’s not be naive. Some consultants will work the first two strategies. With $160 million up for grabs and accountability disappearing on election day, it shouldn’t be a surprise that the Romney campaign ended up landing an ORCA.