100 Widgets Quotes

If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? 100 minutes OR 5 minutes

One of the many signs of verbal virtuosity among intellectuals is the repackaging of words to mean things that are not only different from, but sometimes the direct opposite of, their original meanings. 'Freedom' and 'power' are among the most common of these repackaged words. The basic concept of freedom as not being subjected to other people's restrictions, and of power as the ability to restrict other people's options have both been stood on their heads in some of the repackaging of these words by intellectuals discussing economic issues. Thus business enterprises who expand the public's options, either quantitatively (through lower prices) or qualitatively (through better products) are often spoken of as 'controlling' the market, whenever this results in a high percentage of consumers choosing to purchase their particular products rather than the competing products of other enterprises. In other words, when consumers decide that particular brands of products are either cheaper or better than competing brands of those products, third parties take it upon themselves to depict those who produced these particular brands as having exercised 'power' or 'control.' If, at a given time, three-quarters of the consumers prefer to buy the Acme brand of widgets to any other brand, then Acme Inc. will be said to 'control' three-quarters of the market, even though consumers control 100 percent of the market, since they can switch to another brand of widgets tomorrow if someone else comes up with a better widget, or stop buying widgets altogether if a new product comes along that makes widgets obsolete. ....by saying that businesses have 'power' because they have 'control' of their markets, this verbal virtuosity opens the way to saying that government needs to exercise its 'countervailing power' (John Kenneth Galbraith's phrase) in order to protect the public. Despite the verbal parallels, government power is in fact power, since individuals do not have a free choice as to whether or not to obey government laws and regulations, while consumers are free to ignore the products marketed by even the biggest and supposedly most 'powerful' corporations in the world.

A total of 105 patrol officers died on the job in 2012. Less half of those (51) died as the result of violence, and another 48 died in traffic accidents. Between 1961 and 2012, 3,847 cops were murdered and 2,946 died in accidents—averaging about 75 murders and 58 fatal accidents in a typical year. Naturally it is not to be lost sight of that these numbers represent human lives, not widgets or sacks of potatoes. But let’s also remember that there were 4,383 fatal work injuries in 2012. As dangerous professions go, according to the Bureau of Labor Statistics, policing is not even in the top ten. In terms of total fatalities, more truck drivers are killed than any other kind of worker (741 in 2012). A better measure of occupational risk, however, is the rate of work-related deaths per 100,000 workers. In 2012, for example, it was 17.4 for truck drivers. At 15.0 deaths per 100,000, policing is slightly less dangerous than being a maintenance worker (15.7) and slightly more dangerous than supervising the gardener (14.7). The highest rate of fatalities is among loggers at 127.8 per 100,000, just ahead of fishers at 117.0. The rate for all occupations, taken together, is 3.2 per 100,000 workers. Where are the headlines, the memorials, the honor guards, and the sorrowful renderings of Taps for these workers? Where are the mayoral speeches, the newspaper editorials, the sober reflections that these brave men and women died, and that others risk their lives daily, so that we might continue to enjoy the benefits of modern society?

For fifteen years, John and Barbara Varian were furniture builders, living on a ranch in Parkfield, California, a tiny town where the welcome sign reads “Population 18.” The idea for a side business came about by accident after a group of horseback riding enthusiasts asked if they could pay a fee to ride on the ranch. They would need to eat, too—could John and Barbara do something about that? Yes, they could. In the fall of 2006, a devastating fire burned down most of their inventory, causing them to reevaluate the whole operation. Instead of rebuilding the furniture business (no pun intended), they decided to change course. “We had always loved horses,” Barbara said, “so we decided to see about having more groups pay to come to the ranch.” They built a bunkhouse and upgraded other buildings, putting together specific packages for riding groups that included all meals and activities. John and Barbara reopened as the V6 Ranch, situated on 20,000 acres exactly halfway between Los Angeles and San Francisco. Barbara’s story stood out to me because of something she said. I always ask business owners what they sell and why their customers buy from them, and the answers are often insightful in more ways than one. Many people answer the question directly—“We sell widgets, and people buy them because they need a widget”—but once in a while, I hear a more astute response. “We’re not selling horse rides,” Barbara said emphatically. “We’re offering freedom. Our work helps our guests escape, even if just for a moment in time, and be someone they may have never even considered before.” The difference is crucial. Most people who visit the V6 Ranch have day jobs and a limited number of vacation days. Why do they choose to visit a working ranch in a tiny town instead of jetting off to lie on a beach in Hawaii? The answer lies in the story and messaging behind John and Barbara’s offer. Helping their clients “escape and be someone else” is far more valuable than offering horse rides. Above all else, the V6 Ranch is selling happiness.

Consider, for example, the following puzzle. 1. A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? What’s your instinctive response? I’m guessing that it is that the ball must cost 10 cents. That can’t be right, though, can it? The bat is supposed to cost $1.00 more than the ball. So if the ball costs 10 cents, the bat must cost $1.10, and we’ve exceeded our total. The right answer must be that the ball costs 5 cents. Here’s another question: 2. If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? The setup of the question tempts you to answer 100. But it’s a trick. One hundred machines take exactly the same amount of time to make 100 widgets as 5 machines take to make 5 widgets. The right answer is 5 minutes. These puzzles are two of the three questions that make up the world’s shortest intelligence test.1 It’s called the Cognitive Reflection Test (CRT). It was invented by the Yale professor Shane Frederick, and it measures your ability to understand when something is more complex than it appears—to move past impulsive answers to deeper, analytic judgments.

If the widget company consistently earned a superior return on capital throughout the period, or if capital employed only doubled during the CEO’s reign, the praise for him may be well deserved. But if return on capital was lackluster and capital employed increased in pace with earnings, applause should be withheld. A savings account in which interest was reinvested would achieve the same year-by-year increase in earnings—and, at only 8% interest, would quadruple its annual earnings in 18 years. The power of this simple math is often ignored by companies to the detriment of their shareholders. Many corporate compensation plans reward managers handsomely for earnings increases produced solely, or in large part, by retained earnings—i.e., earnings withheld from owners. For example, ten-year, fixed-price stock options are granted routinely, often by companies whose dividends are only a small percentage of earnings. An example will illustrate the inequities possible under such circumstances. Let’s suppose that you had a $100,000 savings account earning 8% interest and “managed” by a trustee who could decide each year what portion of the interest you were to be paid in cash. Interest not paid out would be “retained earnings” added to the savings account to compound. And let’s suppose that your trustee, in his superior wisdom, set the “pay-out ratio” at one-quarter of the annual earnings.

A bat and ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? _______ cents If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? _______ minutes In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? _______ days

There are two basic things you can do with technologies that make work faster: reduce work-time or intensify work. If a widget maker makes 100 widgets a day full-time, and a new machine allows the worker to make them twice as fast, they can either make 200 widgets a day or knock off at noon. It’s not hard to see which way it has gone in America.