Conversation

I have pretty good instincts around how organizations are managed and how they do/should do their actual work (like airports running airline ops), but I have a big blindspot when it comes to understanding the financial engineering structure of the world
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every org/institution in the world has a financial shape/size based on its funding sources, capital reserves, debt on the books, stock or bond instruments modeling ownership, etc. The landscape of these shapes and sizes has been simply blown up catastrophically
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when I was younger and more naive, I'd ask dumb questions like why, when there is no material damage, and when the financial stuff is essentially arbitrary fiat fictions, you couldn't just "fix" the shape/size of an org in financial terms after a blindside catastrophe
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it feels weird to see perfectly fine undamaged capital assets like buildings and equipment undergoing the financial equivalent of being rained on with bombs
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But this is a dumb way to look at it. A better way to think of it is like this: the financial architecture of an organization is very much like the software architecture on a hardware device. Most of the value is in that intangible architecture in either case.
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Without s/w that can run on it, a hardware device like an iPhone is worth no more than its weight in physical raw materials -- some aluminum and sand and copper basically. It's worth like maybe $10 in raw materials. This is why open/unlocked/non-proprietary is such a big deal.
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Financial architecture is like that for institutions. It may seem like an impressive building full of nice standing desks and multi-monitor workstations and aeron chairs etc is "undamaged" by a financial crisis, but if you added up all the value, I bet it would be minimal.
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Like, even the fanciest business that is primarily information/culture based, I suspect the material value of the atoms would not exceed say 10-15% of the value of the institution, and the bulk of it would probably be real estate/lease value, not furniture etc.
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Replying to
Right, I’m confused because I thought the point of saying “even the..” was going to challenge the reader’s notions by providing an example that one would expect a higher % for. But knowledge work is unsurprisingly low in tangibles.
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