Tools and Operators

· January 6, 2019

A great conversation over the new year got me thinking about the types of consumption that we have, as individuals. There is a kind of spending and investment of time that is really about improving our productivity and career outcomes: training, reading in certain areas, buying tools, and spending on enabling technologies like cars or personal task trackers. 

Most products that boost productivity are sold to companies, not individuals, and the benefits primarily accrue to companies. It is possible to have a product which, at scale, provides benefits to the individual? Or: given a technology which increases productive output, how does that benefit get split between employers and employees?

There are two classes of technologies that seem to apply, one being tools that employees invest in and make direct use of, and one in skills that employees invest in to use tools that employers have purchased. In the construction world its the difference between a worker who brings a tool belt with their preferred hammer, and one who drives a large JCB. 

My impression is that tools that succeed become a cost of doing business: chef’s are expected to bring their own knives, MBAs to subscribe to the Wall Street Journal, and practically everyone in the US to have a car. 

Equally though, sufficiently motivated individuals can succeed without these things - someone with persistence and a bus pass can get the same job as someone with a car. Tools provide benefits to workers outside of direct, remunerated productivity.  A better hammer doesn’t help a construction worker work faster, but it may make it easier for them, leave them less tired or less injured over time. A subscription to The Economist doesn’t make someone better informed than another person who is motivated and has an internet connection, but it might save them time. Individuals invest in things that help them professionally to get the same financial results with fewer or better side effects. 

Skill investments that allow workers to operate tools do come with some financial returns though: the JCB driver is more valuable to a firm than their untrained friend, and Excel wizardry can help an accountant land a better job. They equally tie an employee to the the skills associated with the larger outlay by the employer - maintaining relevance as the world changes is hard for the same reasons avoiding disruption is hard for companies. 

Making the cost-benefit analysis of whether to invest in training or a tool is tricky. The costs are generally concrete and immediate but the benefits are spread over time and uncertain, particularly when the benefit is not financial. As well as this, individuals generally have less of a tool kit for performing that analysis than companies (with a gradiation of capability as the company gets bigger). Interventions by companies and by government can nudge people in a direction of beneficial choices by reducing the cost or clarifying the benefits, but that suffers from it’s own set of problems or mismatched incentives, which can be particularly bad in fields like healthcare.