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Leonard Mlodinow writes in a recent article in Forbes about the paradox of Meritocracy.

..one can imagine a more realistic utopia, where people are treated fairly and are compensated according to their skills. A true meritocracy. But there is a lingering problem–How can we tell what a person is really worth?

In today’s economy where knowledge work has overtaken traditional physical work, there is no easy way to count the number of widgets being cranked out to measure worth. For a truly fair world, compensation should be directly tied to value-added. This concept compounds the problem even further because value of an enterprise is not the assets and ‘goodwill’ anymore, but a complex series of judgments made by investors regarding competitive ability, industry positioning, branding, etc. Unfair in some sense but very much real, especially in large businesses where direct contribution to ‘value’ is buried way deep under all the financial consolidations and investor hysteria that makes up the stock market ticker symbol.

So, how does one draw a relationship between an individual’s contribution to the enterprise and the corresponding value-added? One does not even try it! Mlodinov continues to point out that

In business, merit supposedly determines pay. But in fact, it’s often the other way around, with pay determining merit. In controlled studies in which people were assigned random tasks with random pay, psychologists discovered people behave as if the higher-paid individuals have superior ability. And they do so even if they know that the pay scale was arbitrary.

Although Mlodinov does not reach the obvious conclusion in his article, the inescapable message to knowledge workers is that they will be recognized for their pay-scale first and merit second. The incentive for advancement is tied to boosting their pay-scales and not necessarily on adding value to the business. And if the climb through pay scale ladders is slow at the current company, move to another for a ‘fresh start’. Or if the risk is worthwhile, participate in the open market yourself by turning into an independent consultant. We are conditioned to value the recommendation from a $500/hr consultant even though the same recommendation from a $50/hr employee has bounced around without gaining any traction.

The message for businesses is equally clear. To add the greatest value to the business we need a robust and fair mechanism to recognize and reward merit through a visible tie to company performance. The alternate is to try and add value with a mix of (a) pay-scale focussed, unmotivated employees, (b) new employees who have joined to get that pay-scale jump they could not in their old companies, and (c) high-priced, short-term consultants brought in to try and add value using the unmotivated employees mentioned above….or by bringing in even more high-priced, short-term consultants.

Businesses need a core of meritocracy in its Utopian sense, and that core can drive value-addition in the most efficient and sustained fashion.

The Transportation Security Administration (TSA) holds back a passenger carrying the new MacBook Air laptop….not able to believe that it has ‘no hard-drive’.

A Freshman trying to use Facebook for homework study group is facing expulsion.

All these students are scared ….about using Facebook to talk about schoolwork, when actually it’s no different than any study group working together on homework in a library….students argue Facebook groups are simply the new study hall for the wired generation.

But you can interact with a system using touch and gestures on a tabletop rather than keyboard and clicks. Microsoft’s new Surface Technology is coming to Harrah’s Rio Casino in Las Vegas this Spring.

You can also control your iPod with your eyelids now.

Bat an eyelid to replay your favorite iPod tune with a new Japanese remote control that works in the blink of an eye. When a user winks, movement in their skin is detected by sensors clipped to their glasses or headphones…

You can get high-tech from vending machines now. Doug Amath stuck at Dallas Airport ended up taking pictures of vending machines for iPods, Sony, Proactiv and Rent-a-Laptop that dot the airport terminal. We have come a long way from the soda and the chips….

The Economist has a story on why Japan lost the mobile-phone wars to Scandinavia, Korea and others despite having been a pioneer in technology and usage of mobile devices. Japanese players are doing alright within Japan and still provide high-value components like the hard drives and screens from Toshiba - but the mobile world has moved on with other global players in hardware, software and usage.

The analysis on why the Japanese failed has an uncanny correspondence to trends and challenges in Enterprise Business Systems today.

“First, too many Japanese companies make phones. All major electronics firms sell them, mainly as a matter of corporate pride: not to do so would be a sign of weakness. As a result, 11 different domestic makers compete, most of them at a loss.”

Well, too many businesses try to write their own systems from scratch instead of reusing the globs of code written already all over the world. Standards and technology have existed for quite some time now that help put an ‘envelope’ around the code you want to reuse. This allows a black-box approach to ‘composing’ new arrangements of business-models. The value is in how the components are put together - and not always on the individual component.

“Second, Japanese manufacturers concentrated on the domestic market at the expense of global growth. Yet the national business model is unique: mobile operators design the features of the phone, and the manufacturers must comply. So the makers do not have a good understanding of what users want…” 

“Third, the manufacturers designed products around home-grown technical standards and special features that are not used elsewhere. “

This reminds me of IT shops in companies faithfully implementing every single enhancement request from business users without asking the additional questions, “Is this the standard way the industry operates? If not, then does this enhancement give you a unique competitive advantage?” The discussion should focus on reducing total cost of operations of industry-standard ‘utility’ processes and on investing resources in processes that create a competitive edge.

“Fourth, high-end customers who want sophisticated phones drive the Japanese market, but the main growth in the wireless industry overall is in emerging markets, which need cheap phones. The world’s top three makers—Nokia, Samsung and Motorola—focus on this segment.”

This is where the IT groups spend their annual budgets on high-end enterprise systems - ERP’s, CRM’s, SCM’s and similar ‘will fix everything and the kitchen sink’-initiatives. No money left over to analyze and improve the typical users’ workday  -better and more flexible productivity, collaboration and organization tools. No wonder the IT groups within business organizations are facing challenges from ‘mass-market’ technologies like Google Apps, WordPress blogs, Linked-In Contacts and a variety of desktop and mobile gadgets that help with balancing work and home lives. The tech-savvy, gadget-laden, knowledge-worker - with an equivalent of an IT shop at home - is the new ‘emerging market’.

IT groups supporting business enterprises can add this chapter to their ‘Learning Book’…yet another set of rationale justifying the need to reinvent.