My Successful Team Story- ISAC

This week, I am going to blog about my experience with a successful team. It seems a very interesting topic to me because the team I am involved with is actually facing with a transaction in management.

Last semester, a couple of international students within Econ Department figured out that the resources from the general Department of Economics are no longer enough to serve for the international students group. Then, with the assistance of some advisors in the Department of Economics, a couple of students co-founded the group of International Student Advisory Committee (ISAC) and sponsored by the Department of Economics. What ISAC does is assisting econ department to run and organize some events, especially with the growth of population of international students. This becomes a platform to give international students, who show some leadership skills to grow as a leader, and also provide more resources such as workshops, training, events and network to all econ students.

I joined the team this summer and I am very proud to oversee the transaction of the structure of our group. ISAC used to be a “Circle Network,” where everyone in the committee serves as a Chair in an area, or even multiple areas, and they share resources, and when it comes to organizing events, they become co-workers and in the events, they act more like a leader in the campus wide. This semester, after the first committee meeting, we decided to restructure our committee group. Problems are caught that from last semester that when it is closer to events, it seems like everyone’s schedule suddenly become get a little bit crazy, and all the committee members do things at the very last minute. I would say, for the result of the events, it might not be as perfect as what it was planned, and everyone seems to blame the “unexpected time and situation” for what has happened. So, in the first meeting of this semester, we made a deal that we want to change our group into “dual authority.” Instead of everyone is working at their same pace without any supervision except the econ department, we finally have a boss, which is our president, to supervise, or even “monitor” our work, as well as four different branches to support the team.

I learned a lesson from this restructuring of the company that sometimes we need a transaction in labor division of the management team, and the main reason for that is because it creates efficiency. There are some transaction costs in this transaction, when everyone in the management level is a little bit confused about their responsibility, and they have concern about the new system of the “dual authority.” However, it is already showing that this makes everything more efficiency. The communication is facilitated because a lot of dual communication is avoided, and everyone seems to be clearer about his or her responsibility, and put them into action. On the other hand, if the group does not make this transaction, talented might become confused, ineffective, apathetic or hostile. For example, if you are routinely asking a designer to take phone calls and take notes for the meeting, it is very hard to say that you allocate correctly and utilize people’s strengths to improve efficiency.

Another thing I find out from my experience is that structure does influence what might happen in the workplace. It is very important to make sure everyone is on the same page within your group or team. The beauty of division of labor is to make full use of everyone’s specialization, which enables the organization to benefit most from the labor allocation.

Followed with the change of the organization, network has somehow changes too. People are usually attracted by similarity. In an organization where everyone is specialized in their strong area, it attracts more people to join, and would like to be in the team. That is one reason why recruitment of new committee members can get benefit from the new distribution of the management team.

Last thing I would point it out is that there are a lot of “traffics” inside the transaction of the organization. Luckily, we have a “broker” people, which is me. I made my attempt to get in touch with people and make sure their voices are heard. It is time consuming but it definitely pay off in the weekly committee meeting, and it seems to improve the efficiency too and make the transaction of the organization more smoothly.

In conclusion, it is not easy to make a successful team, and sometimes we should make some arrangements or changes to improve the efficiency, to lower the transaction costs, and thinking in a blue point and in a bigger picture.

Opportunism

          It was really interesting that this week’s topic is opportunism. Unlike other weekends, I spend this weekend in Rockford, away from Champaign, not because I love traveling, but as a guest with my friend Paul, for an 8-hour driving traffic school. I mean, I am a big fan for traveling, but the reason that leads me to Rockford is to accompany my friend Paul, who has to pay off his “opportunism.” Let me start by sharing the story with you.

          It all starts from last Thanksgiving Break, when Paul and I got on a journey to Wisconsin for a skiing trip. It was a long day and a long drive that we stopped at Saint Louis, to pick up two other friends, and then tried to make our way to Wisconsin. After an exhausting 6-hour drive, the wind began to blow very fast, and it was already around midnight, but we were still on the highway, 3 hours away from our hotel. It was tiring for everyone in the car, especially for the driver, my friend Paul. He decided to speed up to 100mph on a road with a speed restriction of 70. Finally, at about midnight, a police officer showed the light and issued a ticket to Paul, in the blowing wind, which leads him to Rockford, for a driving traffic lesson of EIGHT HOUR this week, with my accompany.

          Related back to the topic, what is the opportunism? And why people take advantages of opportunism? In my friend’s case, he is trying to take advantage of the speed limit, so that we can get to the hotel as soon as possible. The punishment is pretty straightforward, a ticket! With a room of about 30 students sitting for a driving traffic school, I am thinking about why they would like to take the advantage of opportunism? Almost everyone knows that the punishment of going beyond the speed limit on the road will be a ticket, which may leads to a traffic school, monetary punishment, or even going to the court or going to the jail. However, some people still do it, to take the advantage of opportunism, with the knowledge of what the punishment will be. Why? Because there is a great chance that they won’t get caught, and they do not have to pay for opportunism, but at the same time can get benefits from taking the opportunism.

          We talked in the class that opportunism could even hurt people. With the case I talk about, it could cause consequences to innocent people. Every year, a lot of people get hurt or die in a car crash, or a car accident. In the case, the police officer reacts as a person who monitors plagiarism, which may change people’s behavior of taking opportunism, because the cost is too high for them to pay. For some people, who think the punishment is too low, there is no way they will change their behavior the next time they get on the road.

          I know it is a very common case I am sharing here, but when we put it on a context of the nation, it is a big problem. I look into the Forbs News, and there are two pieces of news doing a little bit estimation. One piece mentions by car insurance industry estimates that you will file a claim for a collision about once every 17.9 years. On the other piece of news, the bond title with bigger font catches my eyes, “Car Crashes Kill 40,000 in U.S. every year.” That is a lot of life involved in!

          In general, opportunism happens more frequently when people believe the benefit is better than the cost of taking advantages in that situation. The benefit is usually very obvious but the cost is usually hidden sometimes. It is the uncertainty of possibility that gives people a chance to create “snake oil” and sometimes they don’t even regret of doing it. Economists consider this problem through studying people’s behavior, figuring out their utility functions, and strategies of opportunism to help govern the whole society, or persuade people to stay away from opportunism. But sometimes people don’t look at the situation the same way economists look at, and they focus on the benefits, while omitting the costs, since a lot of time, costs are implicit and benefits are very attracting. But all these studies, statistics and policy will definitely help people to better understand the punishment, and to hopefully to prevent people from doing it again.

Efficiency and Transaction Costs

                                 Efficiency VS Transaction Costs

                                                              

    In our generation, world rapidly changes every day because of the application of technology. I still remember when I was a child; I played with cards and small games that I begged my parents to buy for me whenever we went to the grocery store. Two years ago, I was babysitting my cousin's son, Justin. He laughed at me for not having games on my IPhone and he would treat of well-behaving in home for a day, just to play games on my IPhone. 

    I am not planning to write my whole blog talking about my miserable childhood. But to be honest, I love my childhood. I enjoyed the joy from reading books, playing with cards and doing some outside activities. From the experience I am sharing here, I try to make a point that every transaction to get access for better efficiency has to pay, and sometimes it is really hard to define if efficiency is a good thing or not. 

    From class, professor helps me to understand organization better by asking a series of questions: Why do we need organization if market could acquire equilibrium itself?  Is market can get to the point where all parts of market can attain equilibrium? If we need organization, does it always work? If not, why it does not work or how to make it work?

    The answer to the series of questions, I believe, is yes. we need organization because sometimes market will fail, market does not know how to redistribute resources to make sure it is better off for the whole society. The small example will be, let's just say the salary of a football coach in University of Illinois is $1 million and guess what is the grant or income of a phd student in the Department of Economics? The answer to it will be mostly less than $1 million. How do you think of this situation? I would say, admittedly, the football coach did a great job of training the football teams and school will earn reputation by the football team. Every member of school will be proud of our football team, and would like to shout at "Go Illini" at any football game. But is it going to the best for the school to distribute the resources like that? Probably I would say no. If I make a transaction to give the phd students more money and take some money from the football coach, what will be the effect of this action? There might be some transaction costs that the football coach was not satisfied about his salary, and he wouldn't put as much as effort into his teaching experience, or even lead to the decision of changing his job in a different university. Is it a good transaction cost to pay, in terms of to be more efficiency? Personally, I think it will be a good idea to do it, because we are a research institution and all the students, faculty and support team will be better off if the decision like this is made. 

    This is a good example showing that the transaction cost is positive but to get to efficiency, it is a good leverage. Sometimes, on the other hand, we pay more than we thought about to make a transaction, and maybe to be more efficient; however, if regarding of if it is a good thing or not, I will hesitate for a while. 

    Back to the small example I use for my childhood, I think sometimes technology brings efficiency but the transaction cost is much more than we thought about. It is not just about the training that we give it to the customers, the research of pros and cons scientists make effort of from time to time, it might change our prospective for how to be happy, and even bigger like how to live a life? I don't want to get deeper into if technology has more advantages or more disadvantages, but I am simply just saying that sometimes we put a lot of time to investigate the obvious pros and cons of a transaction, but we omit something "hidden," like value of to make a transaction. In education, technology did a good thing like applying I-Clicker, E-book, videos to help demonstrate more topics and give students and professors more time to focus what they might be interested in. Instead of writing all the nots on the blackboard, the instructor can put more time into preparing the lecture, considering new way of thinking, and elaborating more materials as well as giving students time to self-learning. From students’ perspective, they don't need to carry heavy textbooks from class to class, they don't need to prepare a lot of things for class, so they have more time to think, and to dig into more materials from Internet. Then, let's take a step back to think about what are some transition costs in this process? Professors might spend hours and hours to prepare for the instructions of I-Clicker, contact the service of these goods to make sure students won't have to spend too much time on figuring out how to use new technology, answer e-mails from students about questions for these little things. Students might have to redo the homework just because of the poor connection of Internet, and etc. All these things are the transaction costs, and in a broad view, some people might never read a paper-version book in their whole book. Thinking of taking notes in the book, hanging around in the bookstores, and siting under the tree with reading, I just feel like I missed it so much. 

   In conclusion, I enjoy the new way of thinking of efficiency and transaction costs, and I also believe that we need people who take care of organization for us, in every part of our life. Lastly, I would really like to challenge you to think about transaction costs, even when you are enjoying the efficiency of life.

Famous Economist- Carl Shapiro

Biography

Carl Shapiro is the Transamerica Professor of Business Strategy in the Haas School of Business at the University of California at Berkeley.

Shapiro had the honor of serving as a Member of the President’s Council of Economic Advisers during 2011-12. For the two years immediately prior to that, he was the Deputy Assistant Attorney General for Economics at the Antitrust Division of the U.S. Department of Justice; he also held that position during 1995-96. From 1998 to 2008, Shapiro served as Director of the Institute of Business and Economic Research at UC Berkeley.  He has been Editor and Co-Editor of the Journal of Economic Perspectives and a Fellow at the Center for Advanced Study in the Behavioral Sciences, among other honors. Shapiro earned his Ph.D. in Economics at M.I.T. in 1981, taught at Princeton University during the 1980s, and has been on the Berkeley faculty since 1990.

Shapiro has published extensively in the areas of industrial organization, competition policy, patents, the economics of innovation, and competitive strategy. His current research interests include competition policy, the economics of innovation, the design and use of patents, housing finance, and energy and environmental economics.

Shapiro is the co-author, with Hal R. Varian, of Information Rules: A Strategic Guide to the Network Economy, published by the Harvard Business School Press. Information Rules has received critical acclaim for its application of economic principles to the Information Economy and has been widely read by managers and adopted for classroom use. 

More information can be found here.