Mind · Strategy
InformationDividend
The payoff from changing shape to exploit reliable short-term information, which exists even when the long-range forecast is entirely correct
Definition
Mechanism
A long-range prediction (80% sun over ten days, total rainfall for July, the resources a project needs) can be entirely correct and still leave value unrealised, because it does not say which days will be sunny. An agent that holds one shape for the whole period, such as one policy for the year, gets only the payoff of the average. An agent that changes shape day by day on reliable one-day forecasts, staying home on rain days and going to the park on sun days, collects an extra payoff from the variation inside the forecast. This dividend from InformationGrowth requires three things: transition costs low enough to make changing worthwhile, short-term information reliable enough not to be noise, and local conditions that differ from the average. It does not depend on uncertainty: it arises even when the world is predictable, so it is distinct from the case for agility based on bad planning. Holding ShapeControl over a long period forgoes it.
Preconditions
- Changing shape costs less than the value it unlocks
- Short-term information is reliable
Invariants
- The dividend can exist without any error in the long-range prediction
- It is bounded by the gap between the value of changing shape and the cost of changing it
- It disappears if short-term information is unreliable or local conditions match the average
Risks
Failure modes
Setting one blanket policy from summary statistics and forgoing the variation inside them
Changing shape on unreliable short-term signals, which lowers the payoff (add inertia instead)
Justifying flexibility only by uncertainty, so better forecasts are wrongly taken to remove the need for it
Relationships
Builds on
References
Adding new information that has value in its own right, even when exploiting it deforms or abandons the current shape
Keeping an organisation, model or trajectory close to a desired form or target, with information serving that form
Used by
References
Society
Let scope move in and out of a project in balance, so the resource forecast stays intact while the delivered value rises
Granular, local or short-term responsiveness only pays if the local optimum differs from the global average
Society
Predict resources over the long range, and leave the shape of the work free to follow short-range information
Occupy a position that lowers the cost of moving to many valuable states, rather than one that is best for any single state
Choose between holding shape (adding inertia) and moving with the information (removing inertia) by weighing switching cost, information reliability and local variation