Search News

### Company Matches

On Beyond Newton An apple fell on my head. I'm a lot better now, really, and I've got these equations that explain everything. Like why short people get more stock options.
By Bing!/While You Were Out...Stanley Bing

(FORTUNE Magazine) – Readers of this column will recognize my ongoing effort to cultivate empirical standards for understanding the business world, which, although wrapped in duty, costume, and numbers, is in its nature irrational, ego-driven, and arbitrary. I have occasionally utilized idiot charts and graphs, the kind often used to illustrate economic and strategic concepts, for more philosophical purposes--mapping, for instance, the arc of anger that attends an executive's temper tantrum, or the decline of the drinking lunch. In so doing, I have tried to grasp the ineffable. But it has not been enough. Business remains a hard nut of chaos practically impervious to rational cracking.

And yet...the mind continues to yearn for order. Questions remain that beg for quantifiable solutions. Questions like: What is power? How big should my office be? Am I fat, or merely successful? What are the relationships between these factors?

It occurred to me that the business universe is just a subset of the bigger cosmos and might be governed by the same general laws. A brief investigation of Newton has borne some fruit, and I'd like to share it with you. Don't be nervous. This stuff is lots easier than Stephen Hawking, and you all bought his book.

Newton began with a central equation that defined Force as a function of Mass and Acceleration. It's pretty much the key to everything, and we're going to start with it, too. Here's how it looks:

F = MA

Force, however, is uninteresting to us, so we're going to replace it with a more germane concept: Power. Thus:

P = MA

Power equals Mass multiplied by Acceleration.

What do the concepts of Mass and Acceleration mean in business terms? Let's start with Mass. My entire super-executive structure is filled with guys who have almost incalculable mass. My peers, on the other hand, have less. How can we measure this common attribute? I believe it may be done using the following quantifiable factors:

1. Cost of suit (C) 2. Size of office in square feet (O) 3. Number of people this person could fire (F) 4. Height in inches (H)

Since it is an undebatable (if inexplicable) truth that short people have more mass (and hence more power), Mass must be inversely proportional to height. This gives us the following relatively simple way to calculate a person's mass:

M = Cost of Suit x Office Size x Potential Firees [divided by] Height = COF [divided by] H

Let's look at my Mass. The suit I'm wearing I got on sale for about \$400. You'd never know it. It looks like a real Armani. My office is 225 square feet in size. I could potentially fire about 125 people, although I could make life miserable for somewhat more. (The ability to inflict misery is also calculable, I am sure, but I don't think we have time for that.) Multiplying all these together gives us a numerator of 11,250,000. Divide that by my Height in inches, for all intents and purposes 6 feet (71 inches), and we arrive at the not inconsiderable mass of 158,450.70423, which we may permissibly round to 160,000. My boss, Ed, who is not as tall but is better dressed, with a much bigger office and an ability more than ten times mine to extinguish life, has a Mass of 307 million. That seems about right.

Now for A, Acceleration. This may be understood, I believe, as Income (I, in thousands) times Executable stock options (E) over Time (T). Or:

A = IE [divided by] T

Let's look at me and Ed in terms of Acceleration. I've been at this for about 18 years. Divided into my income (in thousands) and stock options, that gives me a career acceleration rate (in millions) of approximately 2.8. Ed's comes out to 653, although I could be guessing wrong about his options (on the low side).

Now we're ready to calculate our relative power. If P = MA (in thousands):

Bing: P = 160 x 2.8 = 448--Not bad! Ed: P = 307,000 x 653 = 200,471,000

No wonder I'm nervous in meetings with him.

This new science is not about the arithmetic--that's just the means by which we test it, and I think it's doing very well so far. The exercise is concerned with finding empirical methods to relate the central entities that make up a business life: Power. Loyalty. Growth. How much the cost of one's clothing contributes to success. The physics, in short, of the work we do.

Take Loyalty. How are we to understand its meaning, its relation to the other conditions under which we labor? Isn't it involved, in some way, with the growth of power over Time, the amount of compensation granted, the value of the cars, club memberships, expense accounts, and other Perks (K), divided, finally, by the pain and suffering inflicted on the loyal individual, calculated as the number of hours per night per year spent sleepless (NZ)? Could the equation be as simple, then, as:

Loyalty = [(Power [divided by] Time) x Acceleration x Perks][dividided by] Sleepless Hours/Year

= (P [divided by] T)AK [divided by] NZ?

More work remains to be done on difficult-to-grasp phenomena. Take, for instance, the amount of money being made by stupid people on the Internet. Somehow we must figure out the dynamic ratio between Substance (B), credulous column inches in The New York Times Circuits section (BS), and nonmarketing-related investment (\$).

Beyond the Newtonian is the entire subject of modern physics, with Quantum Theory and the seminal equation E = mc[squared]. Einstein, who formulated it, died without having completed the Grand Unified Theory that was to supersede Relativity. That did not mean his quest was not worth the effort. In the search for truth, there are no pointless journeys. And they did get the Bomb out of it, after all.

I invite further speculation. This field is new, and it's as big as our ability to push on to new discoveries. Get out your slide rules and go to work. I look forward to hearing from you.

By day, STANLEY BING is a real executive at a real FORTUNE 500 company he'd rather not name.

 Top Stories