This is the second part of the series reviewing Karen Ho’s book, Liquidated: An Ethnography of Wall Street. Click here for part 1 on the “Culture of Smartness”. In this summary, I will describe each concept as it originated on Wall Street and then show how it has been translated to industry. The industry I am using is Big Pharma because I think pharma has been one of the industries most adversely affected by Wall Street culture and whose demise is indicative of what will happen to the rest of the country if this culture is not reformed. Of course, Wall Street culture has permeated politics too. I’ll get to that at the end.
Let’s start with some current news that on the surface doesn’t appear to have anything to do with employer “flexibility”. Yesterday, the NYTimes featured an article about the sharp increase in retracted articles from scientific journals. In some cases, the work is just shoddy, in some others, it looks like it was deliberately manufactured. What’s going on?:
In October 2011, for example, the journal Nature reported that published retractions had increased tenfold over the past decade, while the number of published papers had increased by just 44 percent. In 2010 The Journal of Medical Ethics published a studyfinding the new raft of recent retractions was a mix of misconduct and honest scientific mistakes.
Several factors are at play here, scientists say. One may be that because journals are now online, bad papers are simply reaching a wider audience, making it more likely that errors will be spotted. “You can sit at your laptop and pull a lot of different papers together,” Dr. Fang said.
But other forces are more pernicious. To survive professionally, scientists feel the need to publish as many papers as possible, and to get them into high-profile journals. And sometimes they cut corners or even commit misconduct to get there.
Yet labs continue to have an incentive to take on lots of graduate students to produce more research. “I refer to it as a pyramid scheme,” said Paula Stephan, a Georgia State University economist and author of “How Economics Shapes Science,” published in January by Harvard University Press.
In such an environment, a high-profile paper can mean the difference between a career in science or leaving the field. “It’s becoming the price of admission,” Dr. Fang said.
The scramble isn’t over once young scientists get a job. “Everyone feels nervous even when they’re successful,” he continued. “They ask, ‘Will this be the beginning of the decline?’ ”
University laboratories count on a steady stream of grants from the government and other sources. The National Institutes of Health accepts a much lower percentage of grant applications today than in earlier decades. At the same time, many universities expect scientists to draw an increasing part of their salaries from grants, and these pressures have influenced how scientists are promoted.
“What people do is they count papers, and they look at the prestige of the journal in which the research is published, and they see how may grant dollars scientists have, and if they don’t have funding, they don’t get promoted,” Dr. Fang said. “It’s not about the quality of the research.”
Dr. Ness likens scientists today to small-business owners, rather than people trying to satisfy their curiosity about how the world works. “You’re marketing and selling to other scientists,” she said. “To the degree you can market and sell your products better, you’re creating the revenue stream to fund your enterprise.
Been there. By the way, that part in bold is not by choice. We didn’t go to school to learn marketing and business. This is a role we’re being forced into to the detriment of our other work.
In the research industry, your chances of getting or retaining a job depends on your publication count. And let me tell you, it’s not easy to have your work published. Those of us in corporate labs have to run our submissions past a team of lawyers who may keep work on hold indefinitely. There are many reasons for this. Sometimes it’s to protect proprietary information or patents. But while you’re waiting, you could be laid off- for having insufficient publications. When I was laid off, I was involved in 2 active projects, one of which I had been working on since 2006. We are just now getting around to publishing.
The scramble for publications is fierce. People get really cut throat about them. Your future may depend on being first author. And when people can’t publish on their active projects, sometimes they end up writing crap on some trivial method development just so they can put something down on their performance goals worksheet.
So, what does scientific misconduct have to do with flexibility?
Karen Ho describes the working conditions of Wall Street as being constantly changeable. Employees do not expect to be in a job for very long. As an analyst, it’s expected that you will quit after 2 years and go get your MBA. So, long term employment is really not expected in the lower levels. But even 2 year commitments are rare. Ho was laid off after being at her first job for only about 6 months. Bankers Trust gave laid off workers grace time to find other jobs and Ho was able to transfer to another department within the company. But the first lay off came as a shock to her, while other more experienced Wall Street workers just roll with it.
Layoffs are common on Wall Street and workers there pride themselves on their ability to adapt and change as if their “smartness” is some genetic asset that confers some phenotypic advantage that allows them to adjust to their new environments. Survival of the smartest. When they get laid off from one job, they usually land another one pretty quickly somewhere else. They just move their desk organizers across the street.
In economic downturns, layoffs are to be expected and they can look like a bloodbath. But layoffs are routine in good times on Wall Street as well. Wall Street uses good times to do “rank and yanks”, getting rid of their bottom 20% of performers and then going on a hiring spree at Princeton or Harvard. Sometimes Wall Street firms overdo it and layoff too many people in the very area of expertise they find out later that they should have retained. That can cost them in institutional knowledge. But they have the flexibility to hire new people to fill those spots or poach them from other companies. It’s light, it’s quick, it’s flexible.
When Ho talked to her informants about the changeability, expansion and contraction of Wall Street, they tended to attribute it to a nebulous entity called “The Market”. The market is not simply the Dow or geopgraphical activity. The market is a combination of economics, financial industry trends and the people who work for the market. In other words, Wall Street firms tend to follow trends. If Merrill Lynch is ditching 20% of its workforce, all of the other institutions follow suit. If one institution gets into collateralized debt obligations, all of the other ones do too. So, when a particular market collapses, so does the need to keep people in particular jobs. No biggie for the Wall Street worker. All they need is a cube and a workstation. They shift with the market. Since they were hired for their prestigious pedigrees and connections and not their undergraduate specializations, they just learn a new area of finance and take it from there.
All that matters in the end is getting that bonus and making a high number of deals. The pressure is always on to make the highest number of deals, to sell the highest number of securities, to arrange a giant merger. Everything is quantified and correlated with the bonus. To stay in the game, you need to keep up, make your numbers and be flexible.
So, when a Wall Street financial unit starts analyzing companies, it begins to wonder why it is that other industries can’t be as adaptable. Why are workers clinging to their jobs like their lives depend on them? If they were more flexible, they would be more innovative. If scientists are as smart as they say they are, they’d be more productive or just get jobs somewhere else.
In the 90’s, those of us in the research industry started to notice an increase in the number of new trends in big pharma. When one company decided that combichem was the next big thing, all companies jumped on the bandwagon. When that changed to proteomics a few years later, everyone started chasing that. Then genomics after that. Then siRNA. etc, etc. The introduction of next big things was beginning to get ridiculous. Usually, they were something discovered in academia that wasn’t quite ready for prime time, a get rich quick scheme talked up by some desperate manager who saw a presentation at a meeting, that was sold to the executives as the thing that would result in research churning out half a dozen blockbusters a year. While we tried to figure out how to use these new tools and incorporate the data, we found that just as we were figuring things out, the fad was abandoned and a new one took its place. Couple that with the rapidity of new biological discoveries and it made your head spin.
Then came the “rank and yank” performance evaluations where everyone’s work was reduced to a metric that could be measured. How many compounds did you synthesize? How many NMRs did you run? How many crystals did you solve? How many papers did you write and where were they published? That last one became very important at one of the companies I worked for. There was a hard number of papers that had to be written each year just to rank in the middle of the pack. To get a decent raise or promotion, you had to publish in a prestigious journal and you had to be first author. This resulted in a lot of writing and not as much science. Your career and house and kid’s college fund were directly tied to how many papers were written. Resources were hoarded because if you needed to run certain experiments for a method paper, you had to prioritize. Should you spend a lot of time collaborating and helping your project team or run a bunch of LC Mass Specs to make sure you have the right number of data points for your paper? Some people will manage to suck a good portion of limited department resources, like disk space on a server, for themselves, leaving the rest of the department scrambling for enough space to run their jobs or deleting their data at a moment’s notice. These selfish people usually end up keeping their jobs, because they can get their work done without interruption and publish, so there’s incentive to be selfish and hobble your competition.Big blank spaces in the publications section of a CV due to active project limitations are stress inducers if you need to find a new job.
Eventually, the mergers and acquisitions, trend chasing, competition vs collaboration, and the increasing pressures from the FDA to find the perfect drug with zero side effects or risk a recall, started to have an effect on the bottom line of many pharmas. And then there were all those cheaper scientists overseas who surely must be more productive.
The layoffs have always been a feature at pharma since my first days on the job back in the late 80s. But they started to pick up in the 90s. For research, we always operated with a hiring freeze. Since 2007, the number of layoffs has been devastating with hundreds of thousands of scientists thrown out of work. Many of us have been encouraged to find jobs at the small biotechs that have popped up lately. The problem is that small biotechs have very high overhead. Sometimes, they have to layoff early stage research staff when they move to a new stage of development. It’s not unusual for scientists to jump from company to company and get laid off multiple times. The problem is, unlike the Wall Street worker who sees this as normal, a scientist can’t simply pick up his equipment and move across the street. There are costs associated with that. As I have written before, journal articles for small companies and independent scientists are prohibitively expensive. And modeling software? The stuff I used to use on a daily basis when I was in a corporate lab cost millions of dollars a year for licenses. That leaves me working with open source applications, some of which are decent, like bioinformatics tools that most governments make publicly available, and some, like computational chemistry tools, are not. I always feel like my hands are tied when I have to do a docking run that used to take me minutes to setup and run and now takes me much, much longer to cobble together from cheap, available and generally inadequate parts. Innovation has just taken a step backwards because a lot of us are forced to use stone age tools that we can afford when we used to use high tech stuff in a corporate lab. Wall Street workers need only a cube and a computer. We need a complete working infrastructure.
But the worst aspect of the flexibility model is that you can’t have a life as a scientist. I mean, you can’t have a scientific life and you can’t have a life outside the lab. When you’re forced to keep moving, your connection to the actual work is tenuous. You can’t follow a project long enough to really understand what’s going on. And some CROs don’t even want you to do that. They just want you to do your one special thing and not think about what it means in the whole scheme of things. That’s going to have a great impact on innovation because you can’t learn anything in a holistic sense or apply new understandings to new projects. In a similar sense, the Wall Street worker also doesn’t have time to analyze their work, resulting in a different set of consequences.
Outside the lab, you can’t really have a family. There’s no security in it. You can never be sure that you’re going to be in one place long enough to settle into it. Many of us have been told to relocate to Massachusetts if we want to find a job and many of us have said, “No, thank you”. That means disrupting your domestic life and moving to another state where you might only have a job for a few months. Then you’re hitting the pavement, marketing your “product”, which is yourself. I’ve met a lot of scientists lately who have decided to not go to Cambridge and are leaving science altogether. And if you’re always in danger of a layoff, there’s no point to buying a house or any big purchases. Any money you can save needs to be stashed away in preparation for the next big down turn. In science, bonuses are not half or more of our compensation package so there’s considerably more insecurity than there is on Wall Street. Sure, maybe if you have enough publications and graduate from the right university, you can find another job but it’s not like Wall Street where employees can afford to wait it out and jump into a new job when the market shifts.
This is the new workplace. It is dynamic and you’re expendable. Some corporations are headed towards a “weightless” model where they hire and fire contractors when they need to and to whom they have no long term financial obligations. Nevermind that it doesn’t work for your industry. Nevermind that Wall Street analysts start working at age 23 while the average PhD chemist is over 30 before he or she gets his first paying job. The average Wall Street worker has had 10 years to sock away a nest egg before he imposes his flexible workplan on your lab.
In the meantime, publications are everything. And when the money is hard to come by and the equipment is available for a limited time only, mistakes will be made, corners will be cut and papers will be retracted. That’s going to affect innovation and “shareholder value”, the next part of this series.