Prestige of Engineers

sakky
Tue, 22 Jan 2008 12:33:07 +0000

Now you are coming nearer the mark when you say that much of what passes for high end consulting at premium prices is smoke and mirrors and marketing. That model works for a while, makes a few people rich and drags down the rest of the system. Eventually someone points out that the Emporer is naked and then they hire a different set of charlatans. You may dislike communism, but this is an example of capitalism at its worst.



Yeah, but at the end of the day, whether we like it or not, engineers work mostly for capitalistic firms. Only a minority of engineers work for the government or in academia or in other noncapitalistic institutions. Most of them work for profit-oriented firms and hence the goal is to make money. Therefore I ask - if management consulting firms successfully package their offerings through slick marketing, why can’t/don’t engineering firms do that?

Again, I don’t think it’s a matter of ethics or principles. We had previously agreed that engineering firms are just as greedy as consulting firms. Microsoft, for example, has arguably broken, or at least bent, numerous ethical rules along the way to success. You said it yourself - firms like Apple may be enabling music stealing. Intel, GM, Boeing, these firms have all had their scandals, with Boeing a few years ago being caught in a procurement tampering scandal with the Department of Defense, culminating in the CFO of Boeing even being sent to prison and the CEO of Boeing resigning, and last year, Siemens executives were convicted in a bribery/kickback scandal. Hence, I see no evidence that engineering firms are any more ethical than are consulting firms.



In terms of products, I do not begrudge paying a premium for a product that delivers premium performance when I actually need premium performance. Personally, I do not think a product like the iPod qualifies as such, but I will admit that a lot of people own the things.



A lot of things, frankly, don’t qualify as such. Microsoft Windows, for example, is in my opinion not a particularly high quality software product. But it is by far the most successful software project in the world. Until recently, Intel’s microprocessors were not as good as AMD’s. But it didn’t really matter as Intel could still vastly outsell AMD not only in terms of units sold, but also in terms of price per unit. Cisco’s routers and switches are really not that good. They’re not bad, but they’re not as good as their price might imply, and you can arguably get a better set of routers and switches for cheaper from other vendors. But it doesn’t seem to matter as Cisco enjoys dominant market share in the datacom sector.

The truth is that quality does not always win out when you’re talking about technology products and technology markets. Many technology markets are characterized by network effects where the highest quality product does not always ‘win’, rather, the product that just so happens to win quick market adoption is the one that wins regardless of whether the product is the highest quality or not. MS Windows didn’t win because it truly was the best operating system at the time of launch (for the Apple Mac was and arguably still is better). Windows won because MS was able to establish it as a de-facto industry PC operating system standard upon which all other market players would converge. Hence, you as a customer had to buy Windows even if you didn’t really want to just because most of the software and the peripherals that you wanted to use are compatible with Windows but not necessarily with some of the other OS’s. Similarly, if I want to sell something online via an auction, I have little choice but to use Ebay and pay their fees. Even if I can find a better and cheaper auction site, it doesn’t matter because Ebay has the millions of potential buyers who I need to access. Ebay isn’t necessarily ‘better’ as a technology, it just happens to be the standard locus of connection between buyers and sellers, just like MS Windows happens to be the standard locus of connection between users and applications/peripherals.



What makes them popular is that they look really nice, have a slick user interface, provide convenience by being small and carrying many hours of music and video. What really makes them popular is that they allow users to steal >90% of the material they used to have to buy with very little chance of ever being caught. As a musician as well as an engineer, I have some issues with that business model.



Well, frankly, I don’t know that you should blame just Apple for this. Let’s face it. Music stealing was highly popular for years before the Ipod became popular. Napster was launched in 1999. The Ipod wasn’t launched until 2001 and didn’t really get big until 2004 (people seem not to remember that Ipod sales were fairly mediocre for the first few years after launch).

If nothing else, at least Apple has created a market for legal digital music downloads through its Itunes store and Apple is now the largest vendor of legal downloads. The P2P sites don’t do even that.



I have certainly seen the phenomenon where one engineer seems to be more productive than his or her colleagues, but I think you are oversimplifying the situation. If a company could simply hire another productive worker and fire a half dozen losers, they would do just that. In fact many have tried it at some point. What they generally find is that they have not really been measuring productivity and that at least four of the people that they thought were losers were actually pretty important to the company in some way. They wind up with a couple of prima donnas who do not get along very well and are producing exactly what is being measured and nothing else, then they have to go out and rehire people who see and do what is really needed rather than whatever it is that is being measured this month.



So then what you can do is produce better measurement schemes. Or, even better, simply create work roles that are autonomous. That’s what firms do with sales roles. If you consistently fail to hit your sales quotas, you will be fired. But if you consistently crush your quotas, you will be richly rewarded. That’s as it should be.



You got yourself a chicken and egg conundrum when you ask why engineering firms get established in high cost of living areas. As you point out, even average engineers have it better than most Americans. If they can afford to live and work in a nice place, why shouldn’t they? If companies want upscale workers, they have to locate in places that will attract them. Those places tend to be higher cost of living areas. As more companies enter those areas and start paying salaries that allow even more workers to afford to live there, you take another spin around the inflationary spiral. .



But that’s exactly what I am talking about. These engineering firms “decide” that they need upscale workers. Ask yourself - why do they decide that? Why couldn’t they just “decide” that they don’t need upscale workers and can just take lower quality workers instead (and pay them less)?

But regardless of the answer to that, the bottom line is that these firms have decided, for whatever reason, that they do need upscale workers. That’s why high tech firms like Cisco stay in Silicon Valley. So if you’ve already decided that you need upscale workers, then what’s stopping you from deciding that you need “really upscale” workers - i.e. the very very best engineers coming out from MIT and Stanford, and will pay them the very very best wages, i.e. over $150k a year to start? Lest you think that’s outrageous, I would point out that the private equity and venture capital firms are paying the very best grads out of schools like Stanford and MIT over $150k to start, sometimes over $200k to start. If they can do it, why can’t you?

Again to be clear, I am not talking about paying every Stanford/MIT engineering student that kind of money. I am talking about paying that to the very best ones. In short, you would be forging a small, highly elite team of engineers, that would be highly highly productive.

If you still think this is ridiculous, then I would point out that many startup firms are already effectively doing this. But they’re not paying high salaries, instead they’re paying “high stock options” such that if the firm does produce a successful product in a short period of time, all the engineers become instant millionaires. Google, for example, effectively paid millions of dollars a year to each of its original core team of engineers. For example, I heard of one engineering student who joined Google in 1999 right after graduating from Stanford, and ended up being worth around $50 million on the day of the Google IPO in 2004. Hence, Google effectively “paid” him $10 million a year. Hence, if that can happen, I don’t find it ridiculous that firms can pay $200k a year of starting salary to the very best engineering students.

Now, one might say that the guy took a big risk by joining Google because nobody knew that Google was going to become successful. That’s true. But it’s not like that guy was working there for free. He was getting a regular salary from Google in addition to his stock options, so even if Google had become unsuccessful, he would have still made his regular salary anyway. He was having his cake and eating it too.

The bottom line is that if you’re not paying people well, or at least not even providing people with the chance of getting paid well, then the best people are going to look elsewhere for employment.



When you say that an engineer cares about nothing more nor less than his or her own career, I find that offensive. Indeed there are some individuals who are that greedy and short sighted, but to tar the entire profession with that brush goes too far. If you really believe that statement, I think that you are far more pessimistic than I am. Personally, I have to believe that what I am doing has some greater good. I think that the vast majority of the engineers with whom I have worked would agree with that concept.



Uh, I see nothing at all wrong with the concept, and in fact, I think that’s exactly the way it ought to be. Exactly. For the truth is, you can’t trust anybody else but you to look out for your career. You certainly can’t trust your employer. Employers are not your friends and they’re not really out to help you. Countless times have companies provided an implicit job guarantee for life, only to later lay thousands of people off. That’s what happened at IBM. Never fall in love with your employer, because you never know if the employer will fall out of love with you. We know how employers are: they operate on the principle of ‘What have you done for me lately?’ People can and should adopt the same attitude. Like it or not, that’s how business works.



I have no argument that startups can be a very attractive way to either start a career or to continue a successful one. Again, we are necessarily talking about a small portion of the entire industry. I have also said right along that engineers who want any sort of job security must be prepared to move on when the conditions demand it. From my viewpoint, the process of corporate evolution appears to be speeding up. It takes much less time than it used to to run a successful industry leader into the ground and there are entirely too many people around who would happily contribute to that process for personal gain. Heaven help us if all the engineers want to join in the feeding frenzy rather than doing something more useful.



I would actually argue that this sort of job mobility (which you call the feeding frenzy) is highly productive for the economy. It shifts labor from less productive and mature areas to more productive areas. For example, right now, I see that a lot of Americans want to shift from manufacturing industries to, say, the energy industry (i.e. petroleum exploration or alternative energy) which offers better pay. I don’t think that’s bad. On the contrary, I think that’s good. The country needs more energy innovation right now, and the way to get that is to attract talented people into the energy industry.

For example, I know a couple of MIT engineering students who turned down jobs at big firms in order to join a solar energy startup that was offering them not only above-average salaries ut more importantly, huge stock option packages. If that startup succeeds, they’ll be millionaires. Even if it doesn’t succeed, they’ll still have made an above-average salary.

So think about that. They get to join a high-tech startup where they’ll wield great power very quickly and where they’ll get to work on cool projects with little bureaucracy. They get a relatively high salary. And they have a chance to get filthy rich. Sounds like a jackpot to me. Now, is that a ‘feeding frenzy’? I don’t know. All I know is that the country needs the best engineering minds to work on better solar technology, and that the price signal is a mechanism for the economy to shift resources accordingly.