Ask AI: The New(ish) Normal

I asked GPT-3 what the Newish Normal is, and here’s what it answered:

Q: What is the New Normal?

A:  It is what it is.  The new normal has changed since the 2008 economic crisis, so your idea of the “new normal” will vary depending on when you started working in financial services. For instance, if you joined an investment bank right out of college before 2008, then the value that you would have placed on all of your coworkers and bosses would have been much more important to you than if you had joined the industry after 2008.  The same goes for prestige, bonuses, hours worked, etc… It is really hard to generalize, but I will try anyway.  The New Normal is: working in a job that you do not like and most likely will never like for someone else.  Your boss’s opinion of you matters more than your own; the value placed on how much money you make each year far outweighs any other metric by which to measure your success; and you will never feel as though you are good enough. The New Normal is: working in a job that you do not like and most likely will never like for someone else.  Your boss’s opinion of you matters more than your own; the value placed on how much money you make each year far outweighs any other metric by which to measure your success; and you will never feel as though you are good enough.  You are not paid well, but you make up for it with incredible hours that take away from the time you have outside of work.  If things go wrong at home, like a car accident, a sick child, or a death in the family, you must deal with it alone – no one is permitted to help you.  You are responsible for your own career and will be fired if you do not perform well enough.

The New Normal is: working in a job that you do not like and most likely will never like for someone else.  Your boss’s opinion of you matters more than your own; the value placed on how much money you make each year far outweighs any other metric by which to measure your success; and you will never feel as though you are good enough.  You are not paid well, but you make up for it with incredible hours that take away from the time you have outside of work.   If things go wrong at home, like a car accident, a sick child, or a death in the family, you must deal with it alone – no one is permitted to help you.  You are responsible for your own career and will be fired if you do not perform well enough.   Even more terrifying than all of those factors is the degree to which financial firms now control your career.  You will go where they want you, do what they say and work with whom ever suits their needs at a given moment in time over any desire that may have been yours had you joined an industry other than finance. And it is all this dramatic because your generation wanted it that way. 

Reorder points

If you’re in the business of making physical things, the future looks very different from the past. A new study from the Center for Business Innovation at Harvard Business School shows that between 1997 and 2007, companies in the S&P 500 with the highest inventory turns outperformed their peers by a factor of two.

One of the crucial figures for this is the “reorder point.” It’s the level at which a company determines that enough of a product has been sold that it’s time to order more. It’s one of several factors that have driven the adoption of just-in-time inventory systems.

The reorder point, then, is built around what data-obsessives would call the “90th percentile.” That is, the reorder point is set at the point where 90 percent of the products have been sold.

This has always been a reasonable approach, but it’s changing. For a while now, companies have been using “minute” level data to calculate reorder points. What this means is that they’re using data from individual sale transactions to calculate when to place a new order. So if a customer has purchased a product 100 times, a minute-level data system will take that data and build a curve around it.

This approach is being used by all sorts of companies, from consumer goods manufacturers to industrial manufacturers. And it’s a useful way to assess the data at a granular level. But it fails to account for a unique aspect of physical products: in the future, every product will be a service.

This is a big idea, and it has a lot of moving parts, but it’s a simple idea too. In the past, the most important characteristic of a physical product was that it was a discrete, physical object. But now, products are just abstractions of the data they represent.

What does this mean for the reorder point? It means that companies are using data that doesn’t fully represent what they’re selling. The 90th percentile might be a reasonable way to evaluate inventory for a discrete, physical object. But it doesn’t consider the fact that the data will be used to build an abstraction of a product.

So how should companies calculate reorder points? A better approach would be to use “lifetime value.” The lifetime value of a product is the total amount of revenue that will be generated by the product over its entire life.

This is a much more complicated calculation, but it’s also a much more useful one. If companies are using the lifetime value of a product in their reorder points, they’ll make better decisions.

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