Monday, October 18, 2010

How We Interact

Alan Page Fiske is a U.C.L.A. educated anthropologist who thinks that people utilize one of four different models when they interact with one another. The four are:
  1. Communal Sharing - - An example would be a group of roommates in a house who are free to read another's books and wear one another's clothes.
  2. Equality Matching - - If I drive your child to school today, you drive my child to school tomorrow.
  3. Market Pricing - - The terms of an exchange are open to negotiation, or subject to the laws of supply and demand.
  4. Authority Ranking - - Paternalism in which superiors appropriate or pre-empt what they wish.

One is not better than another - - but, and this is very important but, the model chosen in any situation have a profound effect on the nature of the interaction.

Why do investment bankers get pay checks with six zeros? Because they were able to change the nature of the model and thus the interaction. They were able to move from a Authority Ranking model to a Market Pricing model (engineering has never been able to make this switch, yet)- - they were able to change a vast social history of being just an agent and were able to become a principal. The worldly interaction of investment banking is superstar based where the perceived forces of Talent are greater than the forces of Capital. Histoically, engineers have worked in Capital industries (e.g., Ford or GM) versus Talent industries (e.g., Apple). The superstar attitude of Market Pricing of the "talented professional class" has become one of "how much can I get versus how much is enough." Market Pricing for superstars fundamentally ignores the idea of vertical pricing (i.e., where do I rank performance and salary wise in the context of my peers in the company) and solely concentrates on horizontal pricing - - what is the market like outside the boundaries of the organization.

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