Urgency & Agency

I have encountered a range of situations – in industry, government, and academia – where the financial well being of the organization is severely threatened and leadership refuses to recognize the situation and accept agency for dealing with it. 

I recall one situation in academia where I asked the Provost how he would deal with decreased foreign enrollments due to Trumps’ constraints on immigration and the emerging coronavirus pandemic.  He provided his financial projections and indicated “Every institution will suffer similar consequences.”

I responded, “That does not seem like plan B.” It turned out the response was to cut costs everywhere possible, particularly for contingent faculty who are employed semester by semester.  All discretionary and rainy day funds were hoovered up.  Reengineering of educational process, which had been long avoided, remained avoided.

Recognizing and accepting the idea that people no longer wanted photographic film, or that people wanted digital devices not just phones, was very slowly accepted.  Billions of dollars of economic value were lost.  Creative destruction was rampant and markets fundamentally changed.

Why?  First, there was a lack of a sense or urgency.  The economic threat may have been recognized, but when might it happen?  This year?  Next year?  Certainly not tomorrow.  But iPhones quickly replaced Nokia’s low-cost phones, and the era of digital devices was off and running.

Beyond urgency, there is agency.  Given a recognized threat, whose responsibility is it to respond?  My experience is that most people want to just keep on doing what they have been doing, even when they begin to accept that this is completely inadequate,  For example, the market is not buying our product, but it is what we know how to do.

This is not the responsibility of “production workers,” although they may bear the brunt of the consequences of this situation.  The people who manufacture, deliver, and service an organization’s offerings to its markets or constituencies — ranging from shop floor workers to teachers to clinicians – likely have a wealth of ideas for improving operations, but they seldom have the authority to redesign their work processes.

This responsibility belongs to organizational leaders at several levels, ranging from supervisors to executives to investors.  There is a very strong tendency for these people to be stewards of the status quo.  They often find it difficult to recognize and articulate the fact that the status quo is no longer viable.  This requires that they lead rather than just manage.  

We Only See What We Can See

Consider two recent pieces in the New York Times: “How Animals See Themselves” by Ed Young, and “In a Parallel Universe, Another You” by Michio Kaku, both published on June 20th.

Young reports that animals sense light, sounds, smells, etc. much differently than humans do.  It helps them to identify food, mates, and other means to achieving objectives using signals unsensed by us.  They are arguable in the same world as us humans, but see the world quite differently.  Consequently, we can disrupt their worlds without our seeing any difference.

Kaku argues for there being different worlds.  The differences are not just light, sounds, smells, etc.  There are possibly completely different universes that function in ways that we are unlikely to understand.  Values, norms, and success paths may be completely different.  A fundamental challenges involves proving this in any meaningful way.

So what?  We each need to eat and mate in the world we inhabit, not all the other worlds.  This pragmatic perspective makes sense.  However, it suggests that absolutist perspectives are capricious and arbitrary.  Our convictions that we are “right” are ridiculous.  We need to understand the contextual nature of perspectives.  We only see what we can see.

Emerging Crises

I recently read Serhii Plokhy’s Atoms & Ashes (Norton, 2022), a chronicle of six nuclear disasters over several decades in America, England, Japan, and Russia, three in the military and three in electric utilities.  In all six cases, the consequences of the disaster were much worse than expected and governments did their best to cover up the situation until it became really bad and the media spilled the beans.

One of our latest disasters, beyond daily school massacres and horrible environmental events, involves misinformation and disinformation.  Social and broadcast media, including advertisers, deliberately deceive consumers to act against their own best interests, for example, pursuing health interventions that will likely kill them or voting for candidates that seemingly agree with their priorities, but actually have no such intentions.

Why do these kinds of things happen?  First of all, the purveyors of misinformation and disinformation are earning huge profits by deceiving consumers.  Second, when things go wrong, industry and government players think they can get things under control before the consequences get out of hand.  They are often quite wrong.  Third, the players involved do not want to be held culpable for these consequences. 

All of these behaviors undermine trust in government, industry, and expertise in general.  People feel that they are being sold a bill of goods – and that often is the case.  As the Supreme Court has ruled, lying is completely legal.  They have indicated that marketing and sales are typically inherently lying.  Let the buyer beware is their recommendation.  The overarching message is to not believe anything that anybody tells you.

Where does that leave us as a society?  We need a major initiative to restore trust.  This requires open communication, discussions, and debates across tribes.  This could start in the community of pubs, the topic of my last post.  This could be paired with a serious collaborative effort across the mainstream media – CNBC, CNN, FOX, et al.  President Biden should invite them to the White House for a serious planning session.  This has to be a top priority.

The Community of Pubs

Pubs are “public places” where we convene for drinks, meals, and often sporting events.  I always sit at the bar.  At a table, I am left to conversations with my colleagues with whom I entered the establishment or, if by myself, catching up with email with far-flung colleagues.

At the bar, it is likely that I and the person next to me have nothing in common, except perhaps interest in lunch or a cold drink.  The televisions are likely showing some sporting event, or the news is showing “breaking news,” often of questionable recency.  I ask the person next to me what they think, and a bit of an autobiography may emerge.

When I lived in Hoboken, which purports to have the most pubs per capita, the person next to me was usually a Wall Street type, as the city drains each morning via subways and ferries to lower Manhattan.  Talking to hedge fund managers can get very repetitive as the only currency is – well – currency.

Living in Washington, DC is quite different.  I have encountered the play-by-play broadcaster for DC United, a woman who manages wine and cheese imports for the French Embassy, and an older retired fellow who used to manage all the US railroads.  There was also the chief economist for Fannie Mae and a man who staffed the NATO Desk at the British Embassy.

It is most interesting to talk with people whose experience base differs from mine.  I have found that people’s political views vary as widely as their allegiance to sports teams.  Asking them why they are fans of particular teams often leads to stories of childhood.  Occasionally, the person will volunteer that they once played for a team.  Very rarely, they indicate that they still play for a team.

Beyond being a naturally curious person, I like encountering a variety of perspectives.  People’s reasons or rationale are usually quite interesting.  I often find myself saying, “I can see why you say that.” If asked, I will offer my opinion.  However, if I disagree with them, I have never found it productive to argue with them.

I think society benefits when people interact with those beyond their tribe.  Within your tribe, issues and perspectives are usually reinforced.  You typically hear an echo of your own thinking.  For example, my tribe of university faculty members have a standard set of complaints and ideas for how things should really be.  I don’t learn much of anything in such discussions.

The community of pubs provides a bit of a “window on the world,” especially in a diverse city like Washington DC.  People’s interests, motivations and life paths tend to vary enormously.  A toast and a good game can lead to fascinating exchanges and insights into other people’s views of life.

Democracy at Risk

Where are we headed as a country?  We were once – at least we thought – the shiny exemplar of liberal democracy.  Life, liberty, and the pursuit of happiness were our themes.  We understood that there would be conflicts in these pursuits, but we would work it out.  Reasonable adversaries would discuss and debates paths forward, but eventually settle on Social Security, Medicare and Medicaid as key elements of the social safety net.

We had some serious hiccups along the way, notably the Civil War, civil rights conflicts, and our ongoing cultural conflicts.  We are far from skilled at addressing and resolving such conflicts.  We have evolved to a tribal society where each tribe hates the other tribes (left, right, LGBTQ, Jewish, etc.) and advocates violence to thwart the other tribes.  The idea of voters discussing, debating, and deciding has been replaced by the sense that armed conflict is the best strategy.

This trend has been enormously exacerbated by social media.  Our first amendment rights protect anyone’s freedom to say anything.  Opposing politicians can be portrayed as pedophiles.  Their political platforms can be characterized as advocating sodomy and eliminating Social Security, Medicare and Medicaid.  Lying is legal and there are minimal consequences, if any, after many years of legal wrangles, perhaps but seldom resolved by the Supreme Court.

What is behind all this?  People have vested interests.  They own slaves and need them to sustain cotton production and their profits.  States have a large defense contractor that provides thousands of jobs, whether or not the system being produced in still relevant to defense.  A state’s economy is highly dependent on Federal revenues despite a majority of the state’s voters being decidedly opposed to any activities by the Federal government.

People tend to understand their vested interests, but not how those interests are served.  They want the revenue, profits, and paychecks sustained, but they do not understand – or care – what it takes to sustain this.  They vote their pocketbooks, not any particular philosophies or policies.  Their only question is, “What’s in it for me?”  It is really that simple?

Social media enables and motivates people to be totally focused on their personal interests.  Companies such as Cambridge Analytica make sure that you never see any content that is not in complete agreement with your perspective.  Everyone completely agrees that all Federal resources should be invested in Groton, Connecticut.  You knew that was the best decision.  Who am I supposed to vote for to make sure this happens?

Democracy is premised on entertaining and making compromises.  Give a little, get a little.  Sometimes you win, sometimes you lose. I experienced this when a child and young adult in a small town in New England.  When everybody insists on totally winning, everybody totally loses.  All that results is frustration and outrage, and increasingly violence.  Democracy is at risk.

Appealing to Voters

Quite simplistically, assume that there are two populations of voters:

  • X: A population that can easily be manipulated in terms of values, concerns, perceptions and decisions about consumption, health, education, and votes.
  • Y: A population that reflects on what is knowable, explainable, and predictive, consciously deciding what is believable and the consequences for decision making.

How can one appeal to these two populations?

With effective messaging, one can convince X to buy marginally effective drugs, scam insurance, and timeshare condos, as well as avoid vaccines, embrace censoring of education, and perhaps even vote for white supremacists. This messaging need not result in particular outcomes. It just needs to be compelling.

Y requires believable evidence, which of course requires understanding what affects believability. Data, logic, analysis and records of past successes are key elements of convincing Y to support initiatives. The intellectual credibility of those advocating initiatives is also important.

How might strategies for X and Y interact? This question is particularly important since one cannot know whether particular individuals are in one group or the other. Thus, one would prefer that any strategies do not antagonize either group.

It would seem that a centrist strategy might attract enough Xs and Ys to prevail. Yet, this might lead to minimal support as everybody is disappointed. Of course, a multi-faceted strategy might offer everybody something they want.  This possibility depends on the distance between the centroids of the positions of X and Y. The distance may be so great to stymie any chance of compromise.

Another possibility is to employ completely different channels to reach X and Y. With access to individuals’ social media activities and preferences, ads and other promotions can be tailored to each individual. Thus, the ad segments of each program can be tailored to each viewer. For example, environmentalists will see pro-climate ads while conservatives will see pro-fossil fuel ads.

Political ads will promise exactly what the individual viewer wants. Across all viewers, candidates will be pro and con on everything. The candidates will have no real intentions. They do not intend to deliver anything.  They are just getting each individual voter to buy into the story tailored to them.  Their goal, quite simply, is power.

So, everybody votes for candidates seemingly promising exactly what they want, but those elected renege on all promises. Next, there are two years of mischief, trading votes and patronage for campaign contributions and various boondoggles. Two years later we repeat the same charade.

This is not a recipe for progress.  Nothing happens except selected folks get to feed at the government trough.  Instead, we need to creatively address the realities of populations X and Y.  We need mechanisms that foster imaginative compromises.  That is an agenda for a later post.

Winning Ways

What do these three practices have in common?

  • Selling exorbitantly-priced drugs that provide no relative health benefits, but one cannot buy particular patented drugs and devices from other suppliers
  • Producing very expensive weapon systems that may no longer be needed, but one cannot buy these weapon systems and spare parts from other suppliers
  • One cannot access public services (education, health, energy, security) from other federal, state or local governments

All three provide economic returns to the providers of products and services, but not to the consumers of these offerings.  The value propositions are one sided.  How, then, are they sustained?  Armies of lobbyists assure these cash flows are not disrupted.

Market-based competition does not work when providers hold monopolies, either literally or effectively. When performance information is lacking, or at least hidden, consumers have no way of assessing value. They also may or may not have any insights into or influence on pricing.

These three ecosystems are laced with rice bowls in terms of revenues, profits, executive salaries and bonuses, jobs and paychecks. Any attempts to change the status quo will meet fierce resistance, facilitated by lobbying, gifts, and campaign contributions.

This is not an indictment of all industry. Auto manufacturers, for example, compete with each other to sell cars and trucks. Appliance manufacturers do as well. Competition among digital devices providers gives consumers choices, as does competition among entertainment providers. Almost everything in grocery stores involves competing offerings.

Competition leads to more choices, with better benefits and lower prices — at least relative to the benefits received. Monopolies, legal or effective, lead to less choice, poorer performance, and higher prices.  Yet, an overarching goal of many businesses to achieve monopoly positions.

Why would consumers put up with such situations? Why would consumers seek Adulheim, an Alzheimer’s drug with no proven benefits and an annual cost of $56,000? First of all, Medicare is paying, not consumers. Yet, everyone’s Medicare premium will substantially increase to cover these costs for a relatively small population of patients.

More significant, families of those suffering from Alzheimer’s are desperate for anything that might help. They believe pharma’s claims because they want these claims to be true. So, perceived positive impacts at zero cost trump any other logic.

It can easily be argued that health can be dramatically improved by lifestyle changes in terms of diet, exercise, etc. This is a lot of work compared to taking very expensive drugs for which you pay nearly zero. The fact that these drugs provide minimal, if any, health benefits is not apparent until it is too late.

Of course, buying healthcare and education, and perhaps even weapon systems, are seldom prone to calm, rational analyses.  Behavioral and social values, concerns, and perceptions dominate.  Worries and fears play central roles.  Hidden persuaders, vis-a-vis Vance Packard, take advantage of these forces.

Service Hall of Shame — Consumer Cellular

Consumer Cellular focuses on mobile phone services for older adults who do not use their phones for streaming services. The advertised monthly fees are much lower since the bandwidth utilized is much less.

Consumer Cellular is collocated with Target in their electronics department. According to the Consumer Cellular website, the only store in DC providing iPhones is in Columbia Heights — 90 minutes away for me via bus and subway.

Upon arriving, I found that the Consumer Cellular outlet at Target has not been staffed for 3 months, despite their website telling me that I could get the phone that day. The website is obviously very much out of date.

What did I learn? Quite simply, I cannot trust Consumer Cellular. How will they handle any other problems that I encounter? I cannot and should not count on them. I will stick with the more expensive, but much more reliable service.

I will certainly let my friends and colleagues know about this, as many were wondering what I would find with Consumer Cellular. This is a terrible outcome for a business specializing in providing service to older adults.

Good deals are only “good” when high quality products and services are provided at acceptable prices. High prices and poor service are the worst combination, but they persist, especially in industries where players have effective monopolies, e.g., airlines, pharma, and utilities.

Manipulation

I find it very interesting how easily people are convinced to behave in ways in conflict with their own self interests.  Advertisements for low-quality junk foods and vehicles that really will not increase your sex appeal are good examples.

Advertisements for prescription drugs that may benefit a few, but are not beneficial for most people are a compelling instance.  You are supposed to run to your physician and request a prescription, for which he or she will get a commission.  That’s how oxycontin became pervasive.

Political advertisements are equally misleading and harming.  Some blurbs argue that government is against you.  Yet, 50% of the federal budget is spent on Social Security, Medicare, and Medicaid.  What percentage of Americans would vote to eliminate these programs, as well as funds spent on medical research and education?

Firms such as Cambridge Analytica upped the ante.  They used personal information from Facebook to create political ads targeted to individual people.  These people would learn that specific political candidates agreed with them – on everything!  How could you not vote for them? 

The fact that these ads were totally lies is fully protected by the 1st Amendment of the US Constitution.  These ads did not force you to vote in one way or another, just as the ads for questionable prescription drugs do not force you to take these drugs.  Let the buyer beware.  It is up to you to avoid being manipulated.

How does this work for older adults, or perhaps disabled adults, all of whom are dependent on mobility and other services to travel to and from work or to age at home rather than in institutional residences.  Apparently, the marketplace is free to manipulate and motivate them to act not in their best interests.  Vested interests and their profits are fully protected. 

We have a free market economy totally focused on maximizing investors’ returns.  Consumers need to be aware of and avoid manipulation.  This includes doing research using other sources of information to assure claims by pharma, politicians, etc. are valid.  Elderly folks, for instance, should be researching the efficacy of Alzheimer’s drugs.  Sounds ridiculous, I know, but that is what beware buyers are supposed to do.

You might think that some combination of patients’ physicians, the FDA, et al. could handle this.  Abramson in Sickening: How Big Pharma Broke American Health Care and How We Can Repair It. (Mariner, 2022) explains why these professionals are unprepared and prohibited from doing this.  I’ll return to this next week.

Hopeless Causes

I have been wondering about change initiatives that are hopeless in the sense that change is virtually impossible.  What do I mean by “impossible”?  Theoretical impossibility is quite rare.  Planes that fly faster than the speed of light and the elimination of death and all taxes are good examples.  Most would agree on the impossibility of such outcomes.

My perspective is much more pragmatic.  What types on initiatives simply will not succeed in the next decade or two?  What kinds of outcomes am I unlikely to be alive to experience?  I am very skeptical of the possibility of all vehicles becoming driverless unless we reconceptualize the notion of “driving.”  I am similarly skeptical of all energy coming from renewable sources unless nuclear energy remains viable.

Yet, these are mostly technology challenges interwoven with economic and societal phenomena.  What about phenomena that are predominantly organizational?  I have long argued that the overarching goal of society should be creating and sustaining a healthy, educated, and productive population that is competitive in the global market place.  Is this possible?

This would require a major reallocation of resources away from unproductive, vested interests.  These interests would bring enormous human and financial resources to bear to thwart such changes.  Such change initiatives occasionally succeed, e.g., Social Security, Medicare, and Medicaid, but it requires alignment of political, economic, and social forces – and very strong leadership.

How might we convince people to ignore misinformation and disinformation sources that are prevalent on social media?  These information sources result, for example, in people accepting and following ill-founded medical advice and, in many cases, killing themselves.  The Supreme Court has ruled that people and organizations cannot be prevented from such deception and outright lying.  The first amendment of the Constitution protects them.

The solution would seem to be a mixture of authoritative sources and education to access and utilize these sources.  Yet, these possibilities can be thwarted by people’s strong inclinations to believe misinformation and disinformation, indeed their inclinations to spread untruths much faster and more broadly then truths.  Education to overcome these inclinations would seem, at best, to be a decades-long initiative.

I engage in seemingly endless meetings where the agendas are dominated by discussions of initiatives to “fix” the types of problems outlined here.  My sense is that success, if at all possible, will require many decades of concerted commitments and investments, careful definitions and measurements of success, and a strongly shared societal sense of who we want to become.  

Standards

I recently read Dennis Duncan’s Index, A History of the: A Bookish Adventure from Medieval Manuscripts to the Digital Age (Norton, 2022).  He provides a wonderful chronicle of the emergence of various common elements of books, and a glimpse into the notion of standards.

Manuscripts were originally written in scrolls, so just one very long page.  Titles of scrolls did not emerge for quite some time.  The idea of chapters or sections came later, followed by the notion of a table of contents.  With one very long page, the construct of page numbers was not meaningful.

Concordances — an alphabetical list of the principal words used in a manuscript – emerged several centuries ago, after the reluctance to employ alphabetical orders subsided.  This was followed by indexes, alphabetical lists of the form: subject, page numbers.  The idea of a card catalog in libraries came much later.

It struck me that the idea and form of an index, and all its forerunners, is an example of a standard that eases access to the knowledge in books.  Of course, it would not be very useful if the notion of page numbers had not earlier been conceived.  So, the evolution of “book technologies” included many inventions.

This got me thinking about other “standards” that we now take for granted.  Interchangeable parts are key to manufacturing and maintaining engineered systems.  This standard started when Eli Whitney built a firearms factory near New Haven in 1798. The muskets his workmen made by methods comparable to those of modern mass industrial production were the first to have standardized, interchangeable parts.

Railway gauges — the distance between rails — are 4 feet 8.5 inches, originated with George Stephenson’s pioneer Liverpool & Manchester line in 1829.  By June 1886, all major railroads in North America, an estimated 11,500 miles, were using the same standard gauge. Consequently, train engines and cars could move from one railroad to another.  This gauge, by the way, was derived from the distance between horse-drawn carriage wheels in England.

There are two standards for electricity.  Canada, Mexico and the United States all use a 110 volt, 60 hertz electrical system, which shares the same physical connectors. Most of Africa, Asia and Europe use a 220 volt, 50 hertz electrical system, with a variety of differing physical connectors.  Consequently, the portable electrical devices you buy in the US, for example, do not work in Europe without a transformer. 

The American Society of Mechanical Engineers Boiler & Pressure Vessel Code is a standard that regulates the design and construction of boilers and pressure vessels.  The Institute of Electrical and Electronics Engineers maintains the IEEE 802.11 standard, popularly known as WiFi, that specifies the architecture and specifications of wireless LANs.

There are also government-mandated standards.  The Occupational Safety & Health Administrations provides a set of safety standards.  The Federal Aviation Administration promotes safe air transportation by setting the standards for certification and oversight of airmen, air operators, air agencies, and designees.

Standards make things work better, e.g., indexes for accessing published information.  Standards make things work together, e.g., mechanical parts and electricity.  Standards make sure things do not hurt us, e.g., safety and flight standards.  Overall, standards play a key role in translating technological inventions into market innovations.

Leaders of Change

Do the times make leaders or do leaders make the times?  I have long thought that great leaders understand the times and determine how to take advantage of them.  More specifically, I think many great leaders have had a naturalistic orientation to understanding their worlds in terms of what is achievable, in what time frames, and with what nudges.  They lead change at a particular period of time because they understand that period of time and how change can be facilitated.

The ascent of Theodore Roosevelt to the presidency after McKinley’s assassination marked the definitive arrival of the Progressive Era.  The Progressives advocated democratic reforms and greater governmental regulation of the economy to temper the capitalistic excesses of the Gilded Age. Roosevelt championed his “Square Deal” domestic policies, promising the average citizen fairness, breaking of trusts, regulation of railroads, and pure food and drugs (Morris, 2001).

Roosevelt in WWII (Kershaw, 2007) carefully sensed the limited appetite of the American public for joining the Allies fighting the Axis.  For example, The Lend-Lease Act enabled the U.S. government to lend or lease (rather than sell) war supplies to any nation deemed “vital to the defense of the United States.” Under this policy, the United States was able to supply military aid to its foreign allies during World War II while still remaining officially neutral in the conflict. Most importantly, passage of the Lend-Lease Act enabled a struggling Great Britain to continue fighting against Germany virtually on its own until the United States entered World War II late in 1941.  The slower democratic process enabled many voices to be heard and better informed judgments to be made by Churchill and Roosevelt. 

Lincoln in the Civil War (Goodwin, 2006) informed his chief advisors and cabinet (July 22, 1862) that he intended to issue a proclamation to free enslaved people, but adds that he will wait until the Union Army has achieved a substantial military victory to make the announcement — September 22, 1862, five days after thwarting Lee at Antietam.  Emancipation would redefine the Civil War, turning it from a struggle to preserve the Union to one focused on ending slavery.  This set a decisive course for how the nation would be reshaped after that historic conflict.

Ghandi pursued independence of India over decades.  Gandhi’s leadership role was extremely complex. Convinced that violence only begets violence, he began practicing passive resistance. Mahatma Gandhi was a leader that brought one of the world’s most powerful nations to its knees by using peace, love and integrity as his method for change.  Martin Luther King, Jr. pursued a similar strategy, which required at least as much patience and is ongoing.

Of course, not all leaders similarly exploit their understanding of the times.  Leaders such as Franco, Hitler, Mussolini, Putin, and Stalin read the “tea leaves” and played to frustration, anger, etc., also including repression and violence.  Trump tried to emulate them with notable, but thus far limited success.  So, successfully leading change does not always imply that changes are positive.  Hitler’s holocaust, Stalin’s purges, and Putin’s atrocities can be the outcomes.

This begs the question of how to understand the drivers of change and possible outcomes.  Are shared aspirations and visions, as well as trust and commitment driving change?  Or, are anger, resentments, and tribal identities the drivers?  The issues involve not only understanding these distinctions, but understanding processes to support the former and mitigate the latter.

References

Goodwin, D.K. (2006). Team of Rivals: The Political Genius of Abraham Lincoln. New York: Simon & Schuster.

Kershaw, I. (2007). Fateful Choices: Ten Decisions That Changed the World, 1940-1941. New York: Penguin.

Morris, E. (2001). The Rise of Theodore Roosevelt. New York: Random House.

Strategies That Make a Difference

I have worked with over 100 enterprises, many large technology-based companies, quite a few government agencies, and many smaller entrepreneurial endeavors.  The large enterprises pose particular challenges.  This is due to the simple fact that they became large because of successful visions, strategies, and plans, and particularly determined execution.

My encounters with executives in these enterprises was typically driven by their concerns with experienced or anticipated value deficiencies.  They could see, or possibly had experienced, challenges from existing or new competitors, perhaps with new technologies and different value propositions.  They wanted my help to devise strategies and plans for countering these threats.

A central challenge was determining how these executives perceived their situations and alternative courses of action.  I wrote a couple of books, one an award winner, about how enterprises can deceive themselves and suffer from strategic delusions about who they are – now – and what options they realistically have.  A more recent book addressed how several well-known corporations presided over their own demise.

My experiences with government agencies presented several other challenges.  Money was seldom a particular challenge, nor was executive talent.  The overwhelming barrier to change was the status quo, with many political, economic, and social forces determined to not upset existing “rice bowls.”  There were typically strong forces articulating the importance of change, while systematically thwarting it.

The result is very talented people with substantial resources entertaining many inventive and possibly innovative ideas, but being stymied by the dreadnaught of the status quo.  Consequently, we published many research articles and well-received books, but actually informed and stimulated very little fundamental change in government.  In fact, most of our inventions became market innovations in non-governmental segments of the economy.

Pursuing the other side of the strategy coin, when does strategy advice tend to not make a difference?

  • When there are no “market forces” that make the status quo untenable.
  • When key stakeholders simply do not believe that change is needed.
  • When organizational policies and procedures limit the extent of changes.
  • When key stakeholders thwart initiatives that threaten their rice bowls.

I have worked with several companies where these hurdles prevented progress.  In contrast, all the government agencies with whom I have worked have strongly exhibited these phenomena.  Why is this the case and are there ways to mitigate these hurdles?  Let’s explore the possibilities.

What are the equivalent of market forces for a government agency?  Governments surely have competitors — economically, politically, and militarily.  It is often difficult, however, to think clearly about the nature of the competition.  If an adversary is investing in a new technological capability, for example, how will this affect our competition with this adversary?  Will their capabilities be faster, cheaper and perform better than ours?  Perhaps the answer depends on the competitive context.  How real and predictable is that context?

Does the government agency, e.g., defense, energy, homeland security, need to change to address these new capabilities?  Are the obsolete older capabilities mothballed or eliminated?  Does this free up resources – human and financial – to invest in the new capabilities?  If not, what is the source of new resources?  Or, does the resource pool have to continually increase to support ever-increasing layers of capabilities?

Do the policies and procedures of the government agency support sustaining existing entitlements rather than encouraging invention and innovation.  There are typically numerous government organizations, facilities, employees and a wealth of support contractors.  Unlike industry where capacities can be scaled up or down depending on market situations, government commitments tend to be sustained independent of projected needs for these capacities.

In the rare circumstances where significant redeployment of resources is widely acceptable, key stakeholders will do their best to thwart initiatives that threaten their rice bowls.  Investments in lobbying efforts to influence Congress can lead to trades of votes for sustainment of  threatened ice bowls.  Industry is not immune to such efforts, but they seldom dominate strategies, plans, and allocations of resources.

So, is strategic thinking and acting impossible for government agencies?  Strategic thinking is common and often quite insightful.  Strategic acting is quite rare due to the phenomena outlined above.  However, it is not impossible.  It requires very strong, determined leadership that can build coalitions across constituencies, protect needed resources, and sustain broad commitments to success.  These ingredients are also important in industry, but they are not as essential as in government.

Societal Allocation of Resources

With the proposed FY 2023 federal budget, government expenditures will grow to roughly 23% of the $26 trillion US Gross Domestic Product. Even with the proposed substantial annual tax increases on high-earners’ incomes, the offsetting tax revenues are insufficient to avoid a perpetual trillion dollar deficit each year, amounting to 5% of US GDP. This will drive the current $26 trillion of US National Debt to $40 trillion by 2030 or so, amounting to well over 100% of US GDP. 

The higher a country’s debt-to-GDP ratio climbs, the higher its risk of default becomes.  The US ratio is among the highest of OECD countries, exceeded by only Japan, Greece, and Italy.  A ratio over 100% indicates that a country may have difficulty paying its debts.  This may lead to reluctance among investors and their abandoning dependence on the dollar.

How is the government budget spent.  Considering the $7 trillion budget, with $4 trillion revenues, in FY 2021, the allocation was as follows.

  • Income supplements 24%
  • Healthcare 12%
  • Social Security 17%
  • Defense 11%
  • Medicare 10%
  • Interest 5%
  • Commerce & housing 4%
  • Education, training, & social services 4%
  • General government 4%
  • Veterans benefits & services 3%

Note that income supplements include stimulus payments in response to the coronavirus and child tax credits

Is this an appropriate allocation of societal resources?  Roughly half goes to people who are not prepared to fend for themselves.  The issue is not their preparation, or lack there of, but the fact that expenses have completely outstripped peoples’ abilities to pay.  It seems to me that too many people are making too much money for providing services that are prohibitively costly.

About one third goes to services provided by federal agencies.  Are those services worth the price?  There is much variation here, but non-defense is overshadowed by defense.  It is difficult to argue that leading-edge defense capabilities are not critical.  However, continuing to acquire yesterday’s capabilities supported by Congressionally mandated expenditures are very much of questionable value.

Is society seeing good returns on its investments?  I think the answer is a resounding, “No,” unless we view a primary purpose of government to be redistribution of incomes to the less fortunate and those at the head of the line for government contracts.  We are spending enormous amounts to sustain “rice bowls,” many of which are no longer warranted.  We need to pay much more attention to where societal investments make sense.  We all need to be much more savvy investors in the future of our society.

Consider how we got into this situation.  I saw in a recent commentary that the projected NIH budget includes a 0.6% increase. The commentators said that this was “grossly insufficient funding.”  In contrast, the President’s budget proposes strong increases to the budgets of CDC (27%), FDA (11 %), and NSF (19%).  What is the “right” amount for the NIH budget?  Would 50%, 100%, or 200% increases be sufficient?  Might that warrant substantial decreases of the budgets for Social Security, Medicare and Medicaid?  The evidence base for such advocacy is often slight at best.  It is all just pontifications.

At an extreme, I have encountered arguments that the portion of the Federal budget focused on disabilities should be focused on improving wheelchairs, nothing else.  No prosthetics, training, job aids, etc.  I confronted those advocating this position saying, “This is a ridiculous position.  No one will ever agree to this.”  Their response was, “We know it is ridiculous, but we always get a bit more when we take an extreme position.”  The difficulty, of course, is that most advocacy groups do this. 

Advocacy determines the federal budget, driven by lobbyists, campaign contributions, and ultimately voters.  One might think that tradeoffs are determined by, for example, the marginal returns of an additional dollar spent on health, education, or defense.  One might expect attractive returns on investments from long-term savings due to near-term expenditures.  However, the budget process is more like horse trading – really vote trading — than careful, broadly based analysis.

Everyone wins a little and loses a little in this process, but the winnings are sufficient for Members of Congress to be reelected in their district or state.  Completely reasonable and economically attractive proposals disappear either because they threaten rice bowls or the opposition does not want the proponents to gain political credit for proposing and orchestrating the idea to fruition.

How might this dilemma be addressed?   Singapore provides a compelling example of a professionally managed economy and country.  Top leadership has impressive credentials and experience – and is very well compensated.  Our federalist traditions would not support this.  Every state, indeed every city council and school board, can independently make its own rules.  Any citizen, regardless of expertise, can be elected to serve. 

Change will have to be more subtle and incremental.  The ethic has to evolve from everyone scrambling to get their piece of the pie, to a public consciousness focused on performance, quality, and equity.  The ingredients for this sentiment are occasionally apparent, but far from pervasive.  My guess is that forces such as the pandemic, war in Ukraine, and the impending climate crisis will prompt important dialogues about performance, quality, and equity, and slowly enable embracing this sentiment.

The Election Follies

Now that Members of Congress no longer have legislative responsibilities, they have become very creative in how they pursue reelection.  Some play it straight in the sense that they pretend to be serious about eliminating immigration, deporting anyone in the US whose family has been here less than three generations, and gutting K-12 curricula to guarantee the targeted 100% high school graduation rates.

Other Members act like standup comedians, rock stars, and retired sports legends.  Their goal is to be highly entertaining, attract loyal fans, and convince sponsors to invest in their promotional productions.  Few people believe what they advocate, but many people enjoy the farce.  It quickly has become a pastime, like watching Roadrunner or Scooby-Doo cartoons.

To the extent that they report on this at all, the media refer to it as the Election Follies.  Everyone pokes fun at Members’ charades and pretense.  The American public perceives Members to be charlatans and, more simply, jerks.  The population aspiring to be politicians and Members has rapidly diminished.  Not many people want to be seen as village idiots.

In contrast, interest in the real work of government has soared.  Professional schools, for example in public policy, are seeing numbers of applicants rapidly grow.  Young people do not want to play the game of politics.  They want to gain the requisite knowledge and skills to really contribute to society.  They have no interest in the Election Follies as it seems to be a vestige of old-time corruption and chicanery.

It has become increasingly difficult to get qualified candidates to run for Congress.  The incumbents hold onto their seats in the House and Senate.  The average age of Members is increasing by one year per year.  The average age now exceeds 80 and is headed to 90.  Wheelchairs are coming to predominate the House and Senate chambers.  Great attention is devoted to nonsense, for example, the ability of the former Senate Majority Leader to whistle God Bless America. 

In parallel the professional ranks of Federal and State government are becoming increasingly well-educated and motivated to make a difference.  Congress has readily agreed to be a sideshow of incompetents and imposters.  The executive and judicial branches of government have completely displaced the legislative branch due to their complete unwillingness to pursue anything legislative. 

This dilemma has led to a new Continental Congress to reset the balance among the three branches of government.  The Congress convened in Philadelphia in Carpenters’ Hall, the site of the 1774 First Continental Congress.  The delegates quickly agreed on the roots of the problem. 

Elections have been increasingly determined by money, which must be raised privately.  If private campaign contributions were banned, Members’ time would not be dominated by fund raising.  Lobbyists would lose the leverage they gain via campaign contributions.  Legislation would be driven by considerations of the public good, not corporate coffers.

Public financing of elections has quickly become a popular cause on both sides of the aisle.  The eventual Public Financing Act immediately has another effect.  All candidates have the same campaign budgets.  Consequently, media blitzes disappear.  All candidates get their allotted media times.  More attention is paid to articulating political positions rather than spewing misinformation and disinformation.  Over time, candidates are coming to once again being judged on legislative abilities.  Normalcy seems to be slowly returning.

Running for Election

Members of Congress have only one objective – getting reelected.  Their every utterance is focused on appealing to the voters that can get them through the primaries, if necessary, and winning in the general elections.  Many also have aspirations for higher offices.  Most have absolutely no interest in policy discussions and debates.  They have concluded that voters have little, if any, interest in this.

In an earlier post, quite some time ago, I proposed an obvious solution to reluctant legislators.  Members of Congress should devote all their energies to reelection and all other responsibilities should be eliminated.  They would be prohibited from engaging in legislation, which would be handled by well-educated, highly motivated, and well compensated professionals, whose accomplishments would determine continued employment.

Protected by the 1st Amendment, Members of Congress can articulate and support virtually anything.  They can be the political equivalent of standup comedians.  Their “base,” of whatever persuasion, could attend their rallies, buy their paraphernalia, and feel supported by their media presence.  Members of Congress would have absolutely no impact on the country other than to make their supporters feel heard.

Beyond being American citizens, there would be no requirements in terms of education and competencies to serve as a Member of Congress.  Other than being capable of bluster and bombast, as recently demonstrated by Members representing Colorado, Georgia, Missouri and Texas, fundraising and campaigning for reelection would be core competencies. 

The mainstream media would likely abandon following Members’ rants.  New Internet outlets, perhaps similar to YouTube, would emerge to provide access to their tirades.  User-defined profiles would enable their only seeing pieces that support their existing beliefs, leading many users to perceive that every Member agrees with them.  They would get the promises they seek, perhaps forgetting the impotence of Members.

It is reasonable to project that this change will eventually dramatically increase people’s confidence in government.  Professionally managed government would invest in health, education, energy, etc.  The trains would run on time.  Potholes would be fixed and garbage collected.  In the background, Members would rant, raise money, and run for reelection, continually refining the three Rs of politics.

Service Hall of Shame – Uber

Roughly a year ago, I profiled five companies that provide great service, for example, Kaiser Permanente and USAA.  This post addresses the flip side – the Service Hall of Shame.  Today’s inductee is Uber.  I have compiled ten reasons for their selection, all experienced in just two days.

Let’s start with driver deficiencies.  Here are two days of experiences:

  • Driver not knowing local geography and relying on Uber’s very misleading app
  • Driver ignoring passenger location messages – “I never look at them.”
  • Driver refusing to travel one block from pickup point – in the rain
  • Driver claiming passenger not wearing mask – despite never seeing passenger
  • Driver requesting a 30 minute delay to get gas and arriving 2 hours later

These deficiencies dovetail with Uber’s poor service delivery over the same two days:

  • Uber app not knowing my location, despite traveling frequently from same address.
  • Uber app not allowing cancellation of trip when driver searched for gas
  • Uber penalizing passenger when driver never arrived
  • Uber penalizing passenger for not wearing mask when driver never arrived
  • Uber app and website not providing a mechanism for customer feedback

It is very clear that Uber has no interest in customers’ experiences.  Better service would warrant greater customer loyalty, even with somewhat higher prices, but Uber apparently does not think this way.  They only increase prices, sometimes by factors of 2 to 5, when they have customers trapped by traffic jams or bad weather.  Revenue maximization is their only goal.  This may work until a truly customer-oriented provider emerges.  Then all Uber will have is their Hall of Shame plaque.

Four Books I Highly Recommend

The time that I can devote to reading has soared over the past two years.  I spend much less time getting to and from meetings – typically zero.  Here are my four favorite books of the past two months.  I highly recommend them.

Top of the list is Andy Norman’s Mental Immunity: Infectious Ideas, Mind-Parasites, and the Search for a Better Way to Think (Harper, 2021).  How can we cope with misinformation and disinformation about politics, health, etc.?  Building on the thoughts of Socrates, Plato, Aristotle, Descartes, Hume and, more recently, William James and C.S. Peirce, he crafts a philosophical and pragmatic prescription for cognitive inoculation.  Reading his book feels like taking a graduate course from a compelling instructor.  I hope I passed.

Next is Philipp Dettmer’s Immune: A Journey into the Mysterious System That Keeps You Alive (Hodder & Stoughton, 2021).  This is an intriguing precursor to Norman’s treatise.  Why not understand the human’s physical immune system before wrestling with mental immunity?  He provides a fascinating tour.  This very thorough book provides another graduate course from a compelling instructor.

Arthur Brooks provides another wonderful piece to the mini curriculum with From Strength to Strength: Finding Success, Happiness and Deep Purpose in the Second Half of Life (Penguin, 2022).  As our fluid intelligence wanes with age, our crystallized intelligence continues to grow.  Our former strengths are replaced by new strengths that can enable compelling new approaches to contributing to society, with significant less emphasis on resumes and bank accounts.

Rounding out the curriculum is Ro Khanna’s Dignity in a Digital Age: Making Tech Work for All of Us (Simon & Schuster, 2022).  Khanna, a Member of Congress from Silicon Valley, addresses ways in which digital technologies can economically and socially benefit everyone, ranging from the skilled technical workforce to technology wizards and entrepreneurs.  I found that I was particularly interested in how a Member of Congress thinks these ideas could be successfully pursued and achieved.

Reading these four books can, in effect, provide you a graduate certificate in understanding and appreciating several of the profound challenges we all face today, and how new ways of thinking can enable tractable solutions to these problems.  I truly appreciate the fact that remote working provided me the time to immerse myself in these wonderful works and, albeit at a distance, get to know these insightful authors.

The Many Cultures of Academia

Recent experiences have caused me to think about contrasts among science, technology, business and policy programs in academia.  I have intensely interacted with these programs at over 50 universities in North and South America, Africa, Asia, Australia, and Europe.  My sense is that academia is an amalgam of many intellectual cultures, which do not dovetail nicely into one culture.  Academic disciplines share cafeterias and parking lots, but not values.

My career has been in science and technology.  I have served on the faculties of several top engineering programs, and been on advisory boards of many top programs.  My forays into science have primarily been in computer science and medicine, all at top programs.  The values of engineering and science differ a bit, but not compared to the difference with other professional domains.

I have interacted, sometimes in depth, with several top business schools.  MBA programs have in recent years dominated.  To this end, an easily digestible curriculum that is combined with great placement services, along with excellent lecturers, enabled by substantial tuitions, seem to be the elements of success.  Of late, data analytics has roared to center stage, requiring serious attention to analytical competencies.

I have been involved in public policy programs at several top programs.  These programs tend to offer a blend of government, economics, education, psychology, and sociology.  Masters of Public Policy degrees are pursued by those seeking to develop their talents for employment in public-private ecosystems.  I think policy is representative of behavioral and social sciences, broadly defined in include, for example, economics and public sector finances.

I hasten to note that I have ignored another prominent culture – law.  It is the fifth pillar of the typical cohort of professional degrees – medicine, law, business, policy and engineering.  However, I have not had sufficient exposure to law programs to be able to opine on them. 

Table 1 summarizes key contrasts among the academic disciplines thus far discussed.  These contrasts lead to further distinctions.  Teaching can be seen as a process of imparting knowledge versus mentoring competencies.  For the former, a faculty member serves as a Sage on Stage, while the latter leads to a faculty member being a Guide on the Side.

Sages need to pursue research that fosters their personal credentials.  Guides see research as being central to mentoring students towards professional success.  Professional Masters degree programs charge student premium tuitions.  Research-oriented graduate programs provide student stipends and tuition to join research teams.  For the former, investments and operational costs are funded by tuition revenues.  For the latter, resources are secured entrepreneurially.

These contrasts and distinctions are reinforced by several behavioral and social phenomena:

  • Faculty members tend to embrace the cultural values they experienced as graduate students, particularly if their graduate studies were successful
  • Faculty members tend to strongly extoll the values that earned them promotions, tenure, and coveted external rewards
  • Faculty members tend to question, and perhaps dismiss, people who do not embrace and advance the values they have embraced and extolled
  • These proclivities of faculty members are similar to those of religious clergy, athletic coaches, military veterans, and serious hobbyists

Thus, one cannot characterize the academic culture.  The differences among disciplines are enormous, ranging from how education is designed and delivered, how research is pursued and rewarded, and how resources are secured and managed.  Forays into any particular academic discipline is best conducted after gaining an understanding of the underlying cultural values of that discipline.  In a recent discussion during a planning meeting of another discipline, I commented to a colleague, “I feel like Margaret Mead in Samoa.”

 Science (Med. & Comp Sci)Technology (Engineering)Business (MBA Programs)Policy  (MPP Programs)
Sources of FundsGrants, Which Cover Stipends & TuitionsGrants & Contracts, Which Cover Stipends & TuitionsPremium Tuitions, Minimal Grants & ContractsPremium Tuitions, Minimal Grants & Contracts
Focus of  Graduate EducationResearch, Requisite Methods & ToolsResearch & Design, Requisite Methods & ToolsClassroom Lectures, Case Studies & ProjectsClassroom Lectures, Case Studies & Projects
Disciplinary RelationshipsImportant, But Not DominantImportant, But Not DominantVery Important & DominantVery Important & Dominant
Domain RelationshipsVery Important for Practice ImpactVery Important for Domain ImpactSomewhat ImportantSomewhat Important
Promotion & Tenure CriteriaArticles, Citations, PhD Graduates, Practice ImpactArticles, Citations, PhD Graduates, Domain ImpactArticles, Citations, Student RatingsBooks, Reviews, Media Quotes
Role of Students in Research OutcomesAbsolutely Central Contributors, Coauthors on Key PublicationsAbsolutely Central Contributors, Coauthors on Key PublicationsLimited Role of Students in Faculty Pursuit of PublicationsLimited Role of Students in Faculty Pursuit of Publications

Table 1. Key Contrasts Among Academic Disciplines

Society’s Perfect Storm

Three weather fronts collided off the New England coast in 1991 – and the subsequent movie in 2000.  The Gloucester fishing boat Andrea Gail tried to endure but could not survive the onslaught.  Everyone was lost.

We have as a society encountered a collision of “fronts” that have left us reeling.  The US mortgage crisis of 2007-08 and its aftermath has been characterized as a perfect storm.  The opioid epidemic started in the 1990s, accelerated in 2010, and continues unabated.  The coronavirus pandemic emerged in 2020 and continues as an endemic. 

In parallel, climate change, global warming, and its impacts are rolling along.  There will be no vaccine for climate change.  Storms, fires, and sea level rise will take their tolls, repeatedly if we do not mitigate the risks and the outcomes. 

In the background is the “infodemic” – social media has fueled a blitz of misinformation and disinformation, catering to “tribal” interests and providing a base for white supremacist and racist activists.  All of this has been playing out in the midst of increasing economic inequality, for everyone.  Such inequality is exacerbated by all of the above.

How should we think about this?  What should we do?  If we were “all in the same boat,” we might be able to work together to find a way forward.  But, we are in multiple boats headed in different directions, and some boats want to destroy others.  Perhaps we can work out a truce, but who is “we” and why would “they” listen?  Perhaps we could look to the United Nations as a model and call ourselves the United States.  But we have already done that, have we not?

Perhaps Congress could move beyond carving up the Federal pie and pay attention to society’s perfect storm.  How do get everyone healthy, educated, employed, and involved?  How can we best deal collectively with the many challenges outlined earlier?  How can we think collectively, not just individually.

This is a major challenge in itself.  Alexis de Tocqueville argued individualism, if interpreted as a sort of selfish focus on oneself and one’s own interests (as opposed to a recognition of individual rights and responsibilities) can easily descend into a type of egoism that could destroy civil society — and therefore the fundamental ability of a democracy to function.

How can we bridge the gap?  We might convene the equivalent of a Continental Congress to devise agreed upon principles to move forward.  This approach fits      amidst a spectrum ranging from Wild West to authoritarian rule.  In the Wild West, concealed carry weapons and stand your ground laws are the norm.  Disputes and disagreements are resolved by armed violence.  Traditional law is marginalized.

The authoritarian end of the spectrum involves state control of everything.  You obey authority or you disappear. Misinformation and disinformation are controlled by the state.  What you can know and do are totally prescribed.  If a vaccine is deemed to be warranted, everyone will be vaccinated or incarcerated.  If messaging conflicts with this policy, the messengers will be incarcerated.

Ideally, there is a middle ground on this spectrum — democracy — that balances individual rights and responsibilities.  In the US, the 1st Amendment guarantees free speech, and the 2nd Amendment guarantees the right to bear arms.  Can one bear arms to defend one’s rights to free speech?  Yes, legal experts say that there is no 1st Amendment right to attend a gun-free protest.  Further, in several states, if you feel threatened, you can stand your ground and shoot people whose stated positions threaten your comfort.

This situation obviously needs remediation.  The solution, it seems to many people, is an explicit balance of rights and responsibilities that everyone understands, explicitly agrees with and practices.  This requires that everyone understands civics.  However, according to the Brookings Institution, “Despite the fact that the core of our education system was built upon the belief that schooling institutions have  a central role to play in preparing American youth to be civically engaged, this goal has been pushed to the margins over time as other educational objectives have moved to the forefront.”  Reading, math, and science are important, but they are not the only important objectives.

Innovation in Technology & Art

My intellectual path for well over five decades has been dominated by science and technology, influenced along the way by behavioral and social sciences, and more recently economics, politics and history.  Thus, I have become increasingly interdisciplinary.  However, the epistemological threads have all been dominated by the idea of evidence-based reasoning.

What about the musical and visual arts, and other forms of artistic expression?  As a baseline for comparison, consider innovation in technology.  Trends in technology change shape as the technology matures to enables market innovations.  Gartner’s hype cycle model exhibits an interesting shape change in terms of expectations rather than adoptions. Clearly, there is not always a linear path from idea to R&D to innovation.  Of course, hype cycles are recent formulations.  Looking back to the mid 1800s, I could find no published hype cycles for electricity or indoor plumbing.

Let’s move from technology to art.  Are there hype cycles for visual arts (painting, photography, sculpture), literature (fiction, non-fiction), performing arts (dance, improv, opera, symphony, theatre), and culinary arts?  It is difficult to imagine anticipating the conceptual innovations of Picasso, Matisse or Warhol, or the experimental innovations of Mondrian, Kandinsky, or Pollack (Galenson, 2006).  It is extremely unlikely that the usually prescient projections of The Economist would have heralded these innovations, or that Gartner would publish hype cycles for art.

Innovation in art differs from innovation in technology (Borstlap, 2016).  Only occasionally do these innovations involve technology adoption, e.g., materials or techniques. Further, adoption does not mean that eventually everybody embraces it. For instance, after Cubism emerged in 1907-11, all the other artists did not become Cubists.

Orchestras that focused on Baroque music, e.g., Bach, in the 17th century did not anticipate subsequent Classical music, e.g., Mozart, and later yet Romantic music, e.g., Chopin.  There were no European fan magazines heralding the possibilities of these innovations. Yet, all three musical forms have endured as has indoor plumbing and air conditioning.

Innovation metrics for art might be adoption by art museums and orchestras. Once almost all orchestras included saxophones, invented by Adolphe Sax in 1841, one could argue this instrument was a genuine innovation. Similarly, once almost all major museums included exhibitions of Cubist art, you could say it had arrived.

I hasten to note that this is not how art historians view innovation. Instead, they would assess how the invention affected the artistic community. If other artists extolled the invention, despite not necessarily adopting it themselves, it would over time be seen as an innovation.

There are several significant differences between innovation in art and technology.  Aesthetic innovation can involve creative adoption and extensions of old paradigms, sometimes abetted by technological innovations. Some artistic innovations involve leveraging technological innovations, e.g., robots, to the purposes and intentions of these domains. However, technology is inherently different because of constant progress – few people want an innovative new outhouse.

A fascinating crossing of borders between technology and art involves the impact of Poincare’s famous book on geometry, Science and Hypothesis, which led to Einstein’s relativity theory and Picassos’ cubism (Miller, 2008).  Science and art drew on the same intellectual roots to invent new conceptualizations of space and time.  It would be quite difficult to imagine anyone having predicted these outcomes – unlikely that there would have been a hype cycle for geometry.

Creativity can be important to inventing something new, and also be central to facilitating its adoption to become an innovation.  In a review of studies of creativity, I found that people judged to be creative had three common tendencies.  They were broad information seekers across a wide range of sources.  They mixed multiple approaches to processing information.  Finally, they perceived connections and distinctions that others did not.  Einstein, Picasso and their colleagues reading Poincare’s geometry treatise seems like a good example.

References

Borstlap, J. (2016). Is innovation in the arts a good thing? The Imaginative Conservative, March 15.

Galenson, D.W. (2006). Analyzing Artistic Innovation: The Greatest Breakthroughs of the Twentieth Century. Cambridge, MA: National Bureau of Economic Research.

Miller, A.J.  (2008). Einstein, Picasso: Space, Time and the Beauty that Causes Havoc. New York: Basic Books.

Time Horizons

We seem to think of the future, and perhaps the past, in terms of decades.  We likely recall our grandparents and, of course, our parents.  We consider our own lives and those of our children in terms of employment, education and eventually retirement.  Our overall time horizon for planning is likely 20-40 years.

Our plans inevitably are premised on explicit and implicit assumptions.  We expect that our society and economy will be pretty much as we have experienced them over the past decades.  That seems like a reasonable assumption, but it is not, as explained by famous fund manager Ray Dalio in Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail. (Simon & Schuster, 2021).

He looks back 500 years and characterizes the successive dominance of the Dutch, English, Americans and Chinese economies.  He argues there are 200 year cycles, plus or minus 150 years.  The phases of each cycle are new order, the rise, the top, the decline, and another new order.  The rise is characterized by strong leadership, inventiveness, education, strong culture, and economic growth.

The decline begins with decreased productivity, becoming over-extended, losing competitiveness, increasing wealth gaps, and large public debts.  This sounds pretty familiar to me.  Coming out of the Great Recession and the Coronavirus Pandemic, the US in exhibiting these symptoms.  China, in contrast, is on the rise.  So, our assumptions about the future US economy may not be warranted.  We may be the next United Kingdom.

What if your perspective is not centuries like Dalio, but millennia as considered by David Graeber and Davis Wengrow in The Dawn of Everything: A New History of Humanity (Farrar, Straus and Giroux, 2021).  They take a 30,000-year perspective, far beyond our usual time horizon, but nevertheless very interesting, Mostly because they show that history was not just a junior version of today.

They argue that “The prevalent ‘big picture’ of history – shared by modern-day followers of Hobbes and Rousseau alike – has almost nothing to do with the facts.”  ‘When it came to violence in pre-state peoples,’ writes the psychologist Steven Pinker, ‘Hobbes and Rousseau were talking through their hats: neither knew a thing about life before civilization.’

I had never really thought that these famous writers were articulating their perspectives, not reporting evidence-based truths.  Their frameworks were reasonable but unsupported by meaningful evidence.  Rationalization of colonial behaviors was pervasive.  “Colonial appropriation of indigenous lands often began with some blanket assertion that foraging peoples really were living in a State of Nature – which meant that they were deemed to be part of the land but had no legal claims to own it.”

We tend to consider civilization to be driven by the agricultural era.  However, “Farming often started out as an economy of deprivation: you only invented it when there was nothing else to be done, which is why it tended to happen first in areas where wild resources were thinnest on the ground.”  The key point is that agriculture was not the central force in the development of social systems.

Graeber and Wengrow ask, “Why do we assume that people who have figured out a way for a large population to govern and support itself without temples, palaces and military fortifications – that is, without overt displays of arrogance, self-abasement and cruelty – are somehow less complex than those who have not?”

“Such ‘simple’ economies are rarely all that simple. They often involve logistical challenges of striking complexity, resolved on a basis of intricate systems of mutual aid, all without any need of centralized control or administration.”  “What they offer us is significant: proof that highly egalitarian organization has been possible on an urban scale.”

I find it interesting how settlements emerged, prospered, and then disappeared.  Teotihuacan in Mexico was founded in 100 BC and abandoned in 600 AD.  All the evidence suggests that Teotihuacan had, at its height of its power, found a way to govern itself without overlords.  As another example, construction of the city of Great Zimbabwe began in the 9th century and continued until it was abandoned in the 15th century.  Why?

Graeber and Wengrow argue that “Three principles – call them control of violence, control of information, and individual charisma – are also the three possible bases of social power.”  They observe that, “Social science has been largely a study of the ways in which human beings are not free: the way that our actions and understandings might be said to be determined by forces outside our control. Any account which appears to show human beings collectively shaping their own destiny, or even expressing freedom for its own sake, will likely be written off as illusory, awaiting ‘real’ scientific explanation; or if none is forthcoming, as outside the scope of social theory entirely.”

They conclude that “Complex systems don’t have to be organized top-down, either in the natural or in the social world. That we tend to assume otherwise probably tells us more about ourselves than the people or phenomena that we’re studying.” Clearly, looking back further than our own origin stories can provide insights into givens that were never really given.

Peter Godfrey-Smith in Other Minds: The Octopus, the Sea, and the Deep Origins of Consciousness. (Farrar, Straus and Giroux, 2016) provides a much longer term view.  Looking back millions of years, he consider the origins and evolution of life.  The protagonist in this historical story is an octopus.  Godfrey-Smith addresses the wonderful question, “What does it feel like to be an octopus?”

As we learn about the proclivities of this amazing animal, one naturally reflects on these phenomena from a personal perspective – what it feels like to be a human.  One also comes to appreciate the millions of years it took to become the particular human we turned out to be.

This brief review of three time horizons suggests a few fundamental questions:

  • What does it mean to be alive, conscious? What does success mean?  Millions of years are relevant to answering these questions.
  • How do social systems evolve and change? Are there common patterns?  What leads to one pattern or another?  Thousands of years are relevant.
  • How does economic prosperity emerge and inevitably fade?  Why do some economic systems dominate, at least for a while?  Hundreds of years are relevant.

It strikes me – and these authors articulate this – that much of my knowledge is premised on assumptions that are heavily biased by times that have been contemporary with my life.  I can somewhat manage a 100 year perspective, perhaps longer if I limit myself to western society.  Thousands and millions of years are mostly abstractions.

Common Ground

Thirteen months ago, the Trump wing of the Republican party attempted a coup of the US government.  They failed despite injuring hundreds and killing several.  Many hundreds of these people have been indicted for their acts of insurrection.  Prison terms have started to result with hundreds more in the offing.  The Republican party has characterized these people as political prisoners only culpable for peaceful demonstrations.

Despite torn emotions of disbelief and anger, the primary players have simple ambitions – power and money.  Both Democrats and Republicans want to retain the power of the federal purse strings, making sure, for example, that Kentucky gains far more federal funds that it contributes to federal coffers.  In general, the blue states heavily subsidize the red states, earning no gratitude in the process.  In fact, red states tend to distain the federal government, not understanding that Social Security, Medicare, and Medicaid are federal programs.

There has of late been discussion of succession to form blue and red countries.  California and Texas could be credible independent states.  What about Alabama and Mississippi, or North and South Dakota, perhaps joining Montana and Wyoming.  Turning off the Social Security, Medicare, and Medicaid spigots to these states would devastate their economies.  Yet, it may be that these states would thrive on poverty and starvation.  Everyone would be responsible for taking care of themselves.  Many people would die but the strong would prosper.

People would inevitably migrate to the blue states for jobs and economic sustenance.  These people would send remittances to their families in the red states, which will have become the equivalents of developing countries.  Poor education and health would plague these red states.  However, those few people who dominate these economies would control resources and provide meagre incomes to these people.  The red states would, in effect, become colonies of the blue states.

There would be strong upward mobility for the most talented people in the red colonies.  The best and brightest would prosper in blue universities.  The red universities would come to completely focus on sports.  All red university academic programs would be suspended.  Blue universities would outsource their athletic programs to the top red universities.  Agreements with professional sports organizations would provide enormous cash flows to these universities. 

These resources would enable the blue universities eventually to acquire the red universities.  Alumni would push back, but at some point billions of dollars would prevail.  The red states would increasingly feel like vassals of blue states.  This would lead to merger initiatives.  Virginia acquires West Virginia.  Colorado acquires Wyoming, soon followed by Montana and North and South Dakota.  The national map soon resembles a map of the major athletic conferences.

The National Country Alliance Association (NCAA) soon emerges.  Everybody is playing by the same agreed-upon rules.  People come to ask, “Why couldn’t we all just federate into one republic?”  This idea gains momentum and a Continental Congress is scheduled.  Inevitably, someone asks, Didn’t we do this before?” Yes, of course.  Why did we do this before? To gain our independence from England!

Well, why are we doing it now? We need to get beyond ourselves and all our petty grievances. So, should we focus on where we agree?  Yes, and work on our disagreements in the context of this baseline. That’s right. Start from common ground and work from there.

Perhaps this notion could be applied more broadly.  Succession to form blue and red countries is likely a terrible, extremely expensive way to eventually discover the leverage of creating and exploiting common ground.  We will undoubtedly find that we share many aspirations, far beyond the format of the Bowl Championship Series and the NCAA March Madness.

The Allure of Classic Cars

The Life of the Automobile by Steven Parissenien (2014, Thomas Dunne Books) presents a panorama of automotive invention and innovation over the past 150 years.  There have been many hits, for example, Ford’s Model T, Mustang and Taurus; GM’s ’55 Chevy, GTO, and Escalade; VW’s Beetle and Golf, and Citroen’s 2CV and DS.  The number of failures far exceed the successes, for instance, GM’s Aztec, Corvair, and Vega, and Ford’s Edsel, Festiva, and Pinto.

Why do cars fail to meet a company’s market objective’s that they were intended to meet?  First, many cars, once they emerge, do not meet the market’s needs and wants.  Second, the system development process employed does not yield a high quality vehicle.  How does this happen?  Mismanagement is the central cause.  Executives, who are almost always men, consider themselves “car guys” and use gut feelings to make terrible decisions.

Parissenien reports many examples of this happening leading to enormous financial losses for companies, and often loss of the company itself.  He argues that 1959 was the zenith of the US auto industry, featuring the Cadillac Eldorado, Chevrolet Impala, and Ford Galaxie.  It has been downhill since then, driven increasingly by competition from Germany, Japan, and Korea.  American car companies rely on large SUVs and pickup trucks for their profits.

A few years ago, we conducted a study of 12 cars that had been withdrawn from the market, four each in the 1930s, 1960s, and 2000s.  Only one was withdrawn because of the nature of the car – people were unwilling to pay Packard prices for Studebaker quality, the companies having merged in 1954.  The other 11 vehicles were victims of financial and general mismanagement, as well broader market forces.

Parissenien provides a wealth of examples of lack of visionary leadership, failed processes, and not infrequent forces of greed.  Investors acquiring poorly run auto companies and then making matters worse seems to be a common trait of auto executives.  Unfortunately, a trait lacking for many car guys is discipline in terms of corporate finance, vehicle design and manufacturing, and supply chain management.

As I read this book on my Kindle, I used Google to access images of each of the cars mentioned.  Many of the non-US cars were unknown to me.  This combination of Kindle and Google made for a quite enjoyable experience.  It also provided a panorama of rather unattractive cars, with occasional gems of classic artistry and elegance.  Of course, if everything was a classic, the concept would not be meaningful.

It is quite natural to primarily remember the classic cars, even though they have been the exceptions.  Not surprisingly, we forget about Corvairs and Pintos.  Yet, failed offerings, particularly mediocre offerings, have been the rule rather than exceptions.  Nevertheless, I visit car museums whenever I encounter them when traveling — which has not happened lately.  There is definitely an allure to the classics.  While this tends to true for all the arts, the automobile has played a special role in many of our lives.

Ideas and Institutions

I have been thinking about the extent to which ideas are fleeting but institutions are sustaining.  Certainly ideas can be cumulative in the sense that electricity led to communications then computing and eventually networking via digital devices and social media.  This took roughly 150 years, but that is just a blip in the 6,000 years of human civilization.  It is extremely unlikely that people will be using the iPhone 6000 millennia into the future.  It is very difficult to imagine what people will be using in 2070.

Will there be educational institutions?  How about religious institutions?  Will there be governments?  We cannot be very sure of what form they will take, but education, religion, and government will likely be sustained.  Well, maybe.  What if human civilization does not survive?  What if the technological singularity leaves machines in charge?  Will machines need education and religion?  Perhaps institutions are sustaining until they are no longer relevant.

This raises the fundamental question of what we can assume about the future. In light of the Great Recession (2007-08) and current coronavirus pandemic (2020-22), “normal” seems like a vanishing benchmark.  Our quest for predictability may have run amuck.  Now, we need to hedge alternative futures.  Will vaccines preempt massive deaths? Will renewable energy sources prevail?  Our institutions need to help us understand and make associated investment decisions.

The notions of fleeting versus sustaining are very time and era dependent.  We all make tacit assumptions about what is a passing fancy versus a sustaining value.  We are all wrong as were the Babylonians, Egyptians, Greeks, Romans, Byzantines, and Ottomans.  What is common is people striving to make sense, survive, and hopefully prosper in the world where they find themselves.

This suggests than humanity “simply” aspiring to replicate itself is the sole overarching goal.  However, my guess is that, upon reflection, most of us would like the future civilization to be better than the current civilization in terms of health, education, and happiness.  But, what does that mean and how do we pursue it?

I recently read David Colander and Roland Kupers’ Complexity and the Art of Public Policy: Solving Society’s Problems from the Bottom Up (Princeton University Press, 2014).  They consider the relative roles of government and the marketplace in sustaining society.  Traditionally, these two perspectives have represented competing intellectual frameworks in economics.

Adopting a complex systems perspective, they outline how government and markets should work together.  Succinctly, government provides the top-down contexts and markets foster bottom-up innovations within these contexts.  Policy is the art of understanding and balancing these two perspectives.

More broadly, institutions design top-down frameworks with which people, bottom-up, create and nurture innovative ideas. This process is never finished.  Society and civilization continue to evolve, hopefully leading to growth and prosperity for all.  However, such progress is by no means guaranteed.  Civilizations have floundered as I outlined in my September post on Failures of Complex Societies.  Thus, we need to be flexible and adaptive in our balancing of top-down and bottom-up.

A Significant Milestone

Today, I am 75 years old.  My first engineering job was 55 years ago.  I earned my PhD from MIT five decades ago.  I was a tenured full professor at the University of Illinois over four decades ago. I was elected to the National Academy over three decades ago.    I have been on the faculties of six universities and founded, built, and sold several companies.

These accomplishments are very satisfying, but they are not central to becoming 75.  I am still fully involved in my professional life, but priorities have substantially changed.  I am not focused on building my resume.  Instead, the resumes of less senior and junior colleagues and students, including high school students have become priorities.

I continue to publish books and occasionally research articles. I am much more into impact, how investments of my time can make a difference in terms of societal benefits, both broadly and narrowly.  This leads me to be impatient with endless meetings and plans that are not subsequently executed.

Of course, physical health involves a few challenges; mental health seems good so far.  Diet and exercise receive increased attention.  After several serious falls, I am a highly vigilant walker.  The coronavirus has presented exercise challenges, but brisk – not fast — walks outside are wonderful.

Another impact of the coronavirus has been much more time to read — 60 books in 2021.  Combined with online business meetings, I spend over 8 hours each day looking at my laptop screen.  This seems like too much to me.  I am not sure of the consequences of so much screen time, but there must be some downside.

On the other hand, all this reading has led me to encounter previously unseen connections and distinctions among phenomena.  History, politics, economics, psychology, sociology, and technology richly interact at multiple levels of people, processes, organizations, and society.  Complex problems abound.

Atul Gawande’s book Being Mortal (Wellcome, 2014) provides pithy advice for successful aging.  These simple rules make sense to me, as well as to all my older colleagues with whom I have discussed them:

  • Retain a sense of purpose
  • Maintain social connections
  • Stay mobile

My purpose is to understand complex systems and communicate this understanding.  My social connections include family and friends, as well as a rich network of professional colleagues.  I frequently discuss complex problems with colleagues in this network, often by email and Zoom, but better yet in pubs and other social venues.  I stay mobile by walking everywhere, a necessity without a car.

All this is rather upbeat.  However, there are lessons learned over decades.  There are endless squirrels that, at first, seem worth chasing.  This consumes much energy and hardly ever succeeds.  Opportunities have to make sense within the priorities associated with your vision of where you are headed.  Potential funding is not at all near the top of my list.

Meetings that do not lead to an action agenda are interesting but seldom useful.  Sharing perspectives and insights is useful to a point.  At some point, however, the question is, “What are we going to try to do?”  As you get older, this question comes sooner rather than later.  How long are we going to talk about this?

Do I think this team can solve this problem or at least make significant progress?  Answering this question requires perspective and a sense of everyone’s batting average.  Are people committed?  Do they have a track record of delivering?  At age 75, interesting people are great.  Actual outcomes make everything much better.

The World’s Toughest Problems

A recent issue of Technology Review (October 2021) features an article, “The problem to end all problems,” by Siobhan Roberts.   This article addresses the treasured problem of “P versus NP,” the holy grail of theoretical computer science and mathematics.  Can particular problems by solved in polynomial time (nx) or non-polynomial time (en), where n is the number of nodes in a network representation of the problem?

Typical problems of interest include the knapsack problem (seeking the optimal way to pack a constrained space with the most valuable items), the traveling salesman problem (finding the shortest possible route that visits each city once and returns to the city of origin), and the Steiner tree problem (seeking to optimally connect a set of points with line segments of minimum total length).  These problems are particularly difficult when the traveling salesman wants to visit one million cities.

Of course, these three classic problems are just placeholders for a wide range of other important optimization problems.  I do not doubt the importance of these problems, but are they really the world’s toughest problems?  They assume a fixed, albeit very large, network structure with known, and non-varying, links among nodes in this structure.  These classic problems are completely deterministic.  The central difficulty is the large numbers of nodes.

What if the number of nodes is not known, the relationships among nodes is uncertain, and may vary in time, and the behaviors of nodes may change in reaction to social situations, economic policies, political conflicts, and climate challenges?  What types of problems can be characterized in these ways?  How might they be more difficult than the complexity theorists’ world’s toughest problems?

Consider the nature of the US economy in health, education, energy, and security sectors.  In healthcare delivery, there are 295,000 primary care professionals, including 209,000 physicians, 552,000 specialty physicians, 6,100 hospitals and 1,200 clinics, and 330 million patients.  Higher education in the US includes 14,000 public school districts, 131,000 schools, 3.6 million teachers, and 51 million students.

The electric energy industry in the US includes 3,300 electric utilities, generating electricity via 1.5 million solar panels, 57,000 wind turbines, 1,500 hydro power plants, 7 million workers across the energy industry, and 330 million consumers.  National security in the US employs almost 3 million people, deployed in roughly 500 military installations in US in every state, and roughly 100 installations internationally, with millions of weapon systems deployed.

Each of these four ecosystems would easily be considered complex networks by researchers in computer science and mathematics – indeed, everyone would see these ecosystems as complex.  With significant difficulty, we could define each node in these networks of millions of nodes and, with even more difficulty, we might be able to define relationships among nodes, not just in specifications of connections, but in terms what information, resources, and services flow among nodes.

What would we like to compute and what value could be associated with the results of these computations?  It seems to me that the optimal, e.g., shortest, route among all these nodes would not be very interesting.  The most effective ways to communicate with and convince the network to adopt some particular behaviors, e.g., getting vaccinated or adopting green energy practices, would likely be valuable.  Unfortunately, knowledge that two nodes are connected is not sufficient to enable these behaviors.

We need much deeper understanding of the behavioral and social sciences phenomena underlying nodes and relationships among nodes.  Understanding the physics of what is connected to what is necessary but far from sufficient.  Similarly, knowing the street map for a city provides a minimal starting point for predicting how the city will innovate in the arts, science, and business. 

My sense is that Roberts’ “world’s toughest problems” characterize solutions to large, static, deterministic problems where the network of interest is fixed and unchanging.  This is not a good characterization of much of the panoply of problems the world faces.  Perhaps rephrasing as “mathematics toughest problems” might be a better characterization, but my guess is that there are tougher mathematical problems in game theory and stochastic processes.

Of course, claiming that something is toughest, easiest, best or worst is always readily open to criticism.  This is exacerbated when the problem definition is a substantial abstraction of real problems of interest.  Solutions of abstractions can be very useful, but translations to reality can be immensely difficult and highly worthy of their own accolades and approbations.

When Leadership Makes a Difference

Exemplary leaders face difficult circumstances, work with others to devise plans for addressing these circumstances, cultivate support for these plans, and execute plans with a degree of success. Such success in difficult circumstances is possible.  However, as the following vignettes illustrate, leadership is crucial.  If top leaders remain stewards of the status quo, fundamental change will not happen.  Leadership is the most important competency augmented by vision, strategy, communications, and collaboration.

National leaders are among the most obvious exemplars.  Abraham Lincoln and the Civil War (1861-1865), as chronicled in Team of Rivals (Goodwin, 2006), showcased his abilities as a shrewd navigator of people and positions to achieve enormous, albeit painful, success.  Teddy Roosevelt and the Progressive Era (1901-1909), chronicled in The Bully Pulpit (Goodwin, 2013), illustrated commitments to basic principles rather than the power brokers.

Franklin Roosevelt and the New Deal (1933-1945), combined with Winston Churchill and World War II (1940-1945), are wonderfully portrayed in Fateful Choices (Kershaw, 2007).  They needed to negotiate feasible and viable decisions to address and counter decisions by Hitler, Mussolini, Stalin, and Tojo.  These two leaders needed to understand their respective constituencies and how they could engender support for a cataclysmic confrontation.  They succeeded.

Corporate leaders might include Carnegie, Morgan, Rockefeller, and Vanderbilt, but amassing monopolistic power does not seem to me to epitomize leadership as much as accumulation of raw market power.  Instead, consider Louis Gerstner and IBM (1993-2002), Bill Gates and Microsoft (1975-2000), and Steve Jobs and Apple (1976-2011).  These leaders transformed their enterprises.

IBM had its highest share price in 1990, but was on the path to losing billions in 1993.  Louis Gerstner, as new IBM CEO, is widely credited with transforming IBM.  Gerstner joined IBM in April 1993. During his tenure, the company’s share price increased more than 800 percent, and its market value grew by $180 billion. The company also gained market share in key strategic areas, including servers, software, storage and microelectronics.

Microsoft at first dismissed the Internet and Netscape’s web browser, introduced in 1994.  By May of 1995, however, Microsoft CEO Bill Gates had thrown his company wholeheartedly into joining the “Internet tidal wave.”  They released Internet Explorer as an add-on for Windows 95.  More recently, Microsoft introduced Azure cloud computing services in 2010 and now is second in market share behind Amazon Web Services. 

Apple was on the brink of fizzling out, struggling to find a consistently profitable source of revenue.  Instead of continuing to aimlessly pursue marginal product ideas, Apple, with Steve Jobs again leading, began to focus once more on creating beautiful consumer electronics, starting with the iMac in 1998. The iPod was an even bigger success, selling over 100 million units within six years of its 2001 launch. The iPhone, another smash hit, was released in 2007 and resulted in enormous year-over-year increases in sales. The iPad followed in 2010.  Apple changed its name in 2007 from Apple Computer to just Apple.

Academia has been led by many transformational leaders.  Charles Eliot, President of Harvard (1869-1909) transformed this provincial college into a pre-eminent American research university. Karl Compton, President of MIT (1930-1948) and highly involved in supporting World War II efforts, transformed MIT to become a national research asset.  The federal funds that subsequently flowed to MIT have been immense.  More recently, Charles Vest, President at MIT (1990-2004) and the National Academy of Engineering (2007-2013), spearheaded expansions into the fields of brain and cognitive sciences, nanotechnology, genomic medicine, biological engineering, and engineering systems.

Wayne Clough, President at Georgia Tech (1994-2008), oversaw $1 billion in new construction, increased retention and graduation rates, achieved a higher nationwide ranking and pursued a much larger student body, including programs which encouraged undergraduate research, offered international experiences, and made college more affordable for low-income students. Clough went on to become Secretary of the Smithsonian Institution (2008-2014).  His Provost, Jean-Lou Chameau became President of Cal Tech (2006-2013).

The above listing only includes men, mainly because political, industrial, and academic organizations were almost always led by white men.  Women found other paths to leadership.  Clara Barton founded the American Red Cross in 1881.  Margaret Sanger opened the first birth control clinic in the United States in 1916, which evolved into the Planned Parenthood Federation.

The early 20th century was an innovative period for cosmetics. Elizabeth Arden founded her cosmetics empire Elizabeth Arden, Inc. in 1910.  Helena Rubinstein founded Helena Rubinstein Inc. cosmetics company in 1915.  Both women became among the richest women in the world.

Madam C.J. Walker made her fortune by developing and marketing a line of cosmetics and hair care products for black women through the Madam C. J. Walker Manufacturing Company, founded in 1910. She is recognized as the first female self-made millionaire in America.

Women comprised almost 60% of US college students in 2020.  Almost 51% of students in medical schools and more than 52% of the students in law schools were women.  Women comprise 27% of the Members of Congress.  Roughly 70% are Democrats.  Much of the growth in female Members has come since the 1990s.  There is a steadily growing number, now over 40, of female CEOs among the Fortune 500. These trends portend increasing numbers of women in leadership positions.

Leadership is not just a matter of being in charge, which can be characterized as management or perhaps administration. Exemplary leaders face difficult circumstances, work with others to devise plans for addressing these circumstances, cultivate support for these plans, and execute plans with a degree of success.  Management or administration are seldom adequate in such situations.  Leadership is the most important competency augmented by vision, strategy, communications, and collaboration.

When Personalities Trump Competence

Donald Trump is, of course, the ultimate example of this phenomenon.  He is a narcissistic psychopath exhibiting extreme forms of grandiosity, exploitive behavior and a lack of empathy.  Fortunately, this severe personality disorder is not common.  There are much lessor disorders with which we must deal.

One is fervent optimism.  We have all had colleagues who are always upbeat and sure that everything will work out.  They are sure that the best outcomes will happen.  The archetype of this personality is Sonny, manager of the Best Exotic Marigold Hotel. One of his favorite sayings is, “Everything will be all right in the end and if it is not, then it’s not yet the end.”

There is also fervent pessimism.  My mother, imbued with a “depression mentality” – learned from the Great Depression, 1938 Hurricane, and World War II – often concluded, “If anything can go wrong, it will.”  I have colleagues who believe and anxiously await all the terrible things that will happen.  One colleague pays particular attention to all the things that can go wrong.  His insights are often quite useful.

Another category is arrogance involving people who know everything.  Their way is always the right way.  They are the only ones who understand the central issues.  Any potentially good ideas encounter retorts that we already did that.  The worst case are people who knows absolutely how everything in life is going wrong.  Such folks are not interested in your perspectives.

A special category of arrogance includes people who are combative.  They know that you are wrong.  They know the right way to do things.  Further, they are sure that you don’t know what you are doing.  They are dismissive of you and everybody else.  They are not really sure of why you or anybody else ventures to offer opinions or suggestions.

Then there is the category of the oppressed. Their lives are laced with woe.  The organization, indeed the world, provides them no support.  They have to struggle to accomplish everything by themselves.  An extreme of this category are those whose lives are a mess.  Relationships, children, and even their homes conspire against them.  They feel compelled to relate these woes to everyone.

How can one best cope with the above types of personalities.  A strategy of listening but not reacting might work unless you are the leader of the team.  Then, you have to facilitate the interactions between the troublesome team members and everybody else.  You cannot let these unfortunate behaviors undermine the team and possibly the whole organization.

This can be rather problematic when the people exhibiting these behaviors are among the highest performers on the team.  You do not want to get rid of them because they are really good at what they do.  You might try to convert those in the troublesome categories to become optimists.  This will likely require some one-on-one mentoring.  This special attention can provide opportunities to acknowledge these team members’ skills and contributions, while asking them to change their approaches to others.

Leading a team involves much more than simply getting everyone to do their job well.  Excellent taskwork is necessary for success, but not sufficient.  You also need excellent teamwork.  Sometimes this requires mentoring excellent task workers to become better team workers.  This may involve mentoring some types of personalities to overcome their natural tendencies.  Everyone on the team will appreciate this.

When No One Owns the Problem

There are many problems in our societies, our organizations, and our relationships that no one wants to own.  Owning a problem implies a responsibility for solving it.  If one recognizes a problem but does not own it, one can often comfortably wait for others to solve it.  After all, the problem is not yours.

The most common example of this is the fading market value of your current products and services.  Examples include film-based cameras being replaced by digital,  photography, inexpensive flip phones by smart phones, and lackluster domestic cars – Mercury, Plymouth, Pontiac and Oldsmobile – by Asian and European imports.  These problems were well recognized, but everybody stuck to the knitting of the status quo.

Another common example is burdensome internal policies and procedures that provide little value and consume significant resources.  The worst situations are cultures of compliance laced with administrative incompetence.  An interview study we conducted with Department of Defense science and technology executives found that success could be primarily attributed to insanely committed champions who only succeeded by circumventing policies intended to support them.

Another pervasive example is processes intended to enhance a shared value but actually systematically undermine this value.  Many of the companies with whom I have worked have well-articulated processes for fostering and managing invention and innovation.  However, the prescribed decision making processes are often circumvented, particularly by senior executives who want their pet ideas supported.  Not surprisingly, cynicism quickly emerges and undermines invention and innovation.

All of these examples represent situations where the value of the status quo has significantly eroded.  Almost everyone recognizes this, but nobody owns it.  Everyone mutually pretends that everything is fine, but also internally acknowledges that things are amuck.  What is needed is a leader, at some level, to articulate the problem and advocate a solution.

It is much easier to get everyone to own a well-conceived and broadly recognized solution.  This solution represents what we are going to do rather than what we are going to stop doing.  It represents the pursuit of success rather than the avoidance of failure.  Few people want to accept responsibility for failure.  Everyone one wants to be recognized for contributions to success.

The idea of owning a problem suggests some level of blame for the existence of the problem.  People try to avoid blame.  In contrast, the notion of owning a solution suggests some prospects for success and perhaps recognition for having contributed to this success.  People usually aspire to such outcomes.

When Secondary Issues Dominate

Most organizations have missions and visions for how best to pursue missions, regardless of whether these value statements are formalized or not.  Organizational performance metrics indicate how well the organization is performing in terms of revenues, profits, lives saved or students educated.  Successful organizations excel in terms of organizational performance.  Most organizations try to improve these metrics.

Peter Drucker famously said, “There is only one purpose of a business: to create a customer.”  People become customers – or constituencies — of an organization when the organization provides something they value.  Understanding, enhancing, and providing value should be the driving issue in an organization.  If one does not create a compelling value proposition, organizational success will be limited and likely fleeting.

Are there tradeoffs between organizational performance and other aspects of the organization?  For example, might one tradeoff organizational performance versus compliance with policies, procedures and regulations?  One certainly would not want the quest for performance to undermine workforce safety or contribute to environmental degradation – although this happens with great regularity.

What about organizational performance versus diversity, equity and inclusion?  My sense is that everyone agrees that a diverse, equitable, and inclusive workforce benefits every type of organization.  But how do we get there?  At one extreme, we simply stop hiring any white, male candidates.  That will quickly get the numbers right.  More reasonably, we focus on making sure that female and minority candidates are competitive.

That works too, albeit much more slowly.  However, we need to put this in context.  I have recently participated in two National Academy workshops on advancement of faculty members, i.e., promotion and tenure.  We learned that 90% of faculty members hired nationwide over the past decade have been adjuncts and part-time faculty, with much lower compensation, no benefits and no job security.

The implications for diversity, equity and inclusion is that everybody will be treated equally poorly.  Unwilling to trim administrative costs, universities will focus on cutting faculty costs and continue to mercilessly exploit everyone with low wages, no benefits, and no job security.  My sense is that this was not the intent of the diversity, equity and inclusion advocates.  Should we really try to argue for sustaining the benefits of positions that will steadily disappear?

It seems to me that we need to embrace the future value proposition and the metrics of organizational performance that are sustainable.  Is promotion and tenure why a university exists?  That is very faculty-centric.  Are graduation rates the primary metrics?  That is very student-centric.  Another possibility is that universities should prepare graduates to enable innovations that transform society and the economy.  Then, of course, we should determine which administrative functions enable such outcomes. 

Consider compliance functions.  A colleague at Georgia Tech once commented to me that his worst nightmare was a call from the university’s Chief Compliance Officer.  My experience has been that the worst environment in which to work is a culture of compliance laced with administrative incompetence.  The enforcers take everything completely literally.

An experience at Waffle House illustrates this.  I had taken two guests from industry to breakfast at the Waffle House around the corner from my office.  We ate lightly and the whole bill was around $12.  Waffle House does not provide itemized receipts, so the receipt did not indicate what each person had eaten.  The university refused to reimburse this expense because I could not prove that no alcohol was consumed.  Waffle House does not serve alcohol.  I paid the bill personally.

Another university with which I was affiliated decided that faculty and staff had to prove they had actually taken trips for which they reported expenses.  They required either a picture of the traveler at the venue visited or a letter from the person visited attesting to the fact that one had actually met with them.  This became extremely controversial when a Dean refused to ask the Secretary of Defense to provide such a letter.  This requirement was eventually rescinded.

I was in a workshop when a senior Air Force executive proclaimed, “I would be comfortable with the government spending $10 to assure that every $1 is appropriately spent.”  This immediately led to suggestions that the whole government budget be spent on compliance rather than defense, education or health.  The Air Force executive, the most senior person in the workshop, was not amused.

At another university, it was discovered that a faculty member was being reimbursed for travel by the university and another organization – for the same trips.  He was reprimanded and his credit card cancelled.  To be absolutely safe, the university cancelled the credit cards of all 6,000 employees.  People were now required to use personal credit cards and submit expenses for reimbursement.

To ease this process, the university arranged for one credit card company to issue cards to everyone.  The university soon discovered that people were using these cards for personal purchases, for which they did not request reimbursement.  This seemed reasonable to many people as the cards were in their names.  However, in negotiating with the credit card company, the university had obtained a $10 reduction in the annual fee, which they claimed was effectively income to the employee.  Playing it safe, the university again cancelled the credit cards of all 6,000 employees.

The university installed a new travel management system so that filing of travel expenses was automated.  The user interface to this system was absolutely terrible, prompting a raft of complaints.  At a university-wide meeting where this was addressed, a manager in finance commented that installing this system had enabled reducing staffing by one person.  Someone quickly reacted with, “So, now you have 6,000 people spending time doing this job!”

A large aerospace company, with whom I worked, installed an automated timesheet system.  Every ten minutes, it prompted each of many thousands of employees to enter the charge code for what they had worked on for the past ten minutes.  I asked colleagues how they felt about this.  One reaction was, “It’s irritating as hell, but you sort of get used to it.”

All of these example illustrate how people adapt to and cope with organizations’ proclivities to formulate and implement policies, procedures, and regulations that slowly but surely undermine organizational performance.  This is in part due to people wasting time on non-value-added activities.  It is also due to the employee cynicism that emerges and festers.  The primary purpose of the organization slowly fades into the background.

When We Misunderstand the Signals

I have been involved in a variety of engagements with automotive companies over the past three decades.  These companies’ abilities to understand marketplace desires 3-4 years in advance is a key element of success.  There are several compelling examples of getting this right and numerous instances of getting it wrong.

Beyond uncertainties about customers’ future desires, these companies also face considerable uncertainties associated with competitors’ likely decisions and plans.  I have encountered a variety of instances of automotive competitors announcing major investments that they have no intent to pursue.  The companies with whom I was working entertained making comparable investments, later learning they misunderstood the market signals.

Many years ago, I was engaged by the South African Foundation for Research and Development to provide a keynote talk on innovation and then facilitate discussion among the 100 plus workshop participants on their issues and concerns related to launching their ventures.  The top concern was the availability of venture funds to get started.  We had expected this.

The next morning, we announced a venture fund that would provide $50,000 seed money based on a one-page proposal.  We asked participants if we could help them to complete and submit their proposals that day.  There were no volunteers.  The discussion shifted to the question of what was holding them back.  Everyone felt forming a company was much too risky.

We pressed them on this.  Why were they in the workshop if this was not a top aspiration?  They responded that forming a company seemed like what they should do since their first choice was unavailable.  What was that, we asked?  A secure lifetime position in a government agency or institute.  We had misunderstood their signals about venture formation and investment funds.  This was actually their second choice.

For many years, I was very active in the Atlanta technology community, attending many events and occasionally giving talks on my latest book.  I was able to chat with a variety of highly successful entrepreneurs.  I recall asking one high profile CEO, “How did you come up with such a great (software) idea?”  He responded, “We didn’t. It took our customers a couple of years to convince us of what they really wanted.”

At the time, I was CEO of Enterprise Support Systems (ESS), Inc. a spin-off of Search Technology, Inc., of which I was the founding CEO.  ESS developed and sold a suite of software tools and related consulting and training services.  Roughly 80% of our sales were to Fortune 100 technology companies, all well-known name brands.  Our dominant strategy was to move from division to division of these companies with one division vice president opening a door to another.

Our vision of being a product company like Microsoft with its MS Office Products caused significantly delayed recognition of the demand for and value of our services.  We eventually realized that we thought our customers primarily wanted software tools when they really wanted expert users of these tools to help them succeed.

A senior executive at one of our major clients put it succinctly, “I am not at all concerned with the cost of your software or your services.  I am concerned with the overall cost of success.  Your tools, and especially your services, greatly enhance our chances of success.  You may make better profit margins on your software tools, but without your services, your tools are much less valuable.”

We validated this message with other clients.  It was unanimous.  This created an opportunity and a problem.  We found that we needed sophisticated tools for customers to feel the pricing of software and services was justified.  Sophistication for this customer based meant solid mathematical foundations, references to key publications, and abilities to teach users about these underpinnings.  We succeeded with this for two of the four tools in our Advisor Series portfolio of tools.

The problem this created related to the sophistication of our staff.  We hired, in succession, two senior sales executives.  They had rich experience bases and great expertise, but they both lacked a deep understanding about what we were selling.  Put simply, when your primary clients are PhD electrical engineers and computer scientists, you have to be able to approach them in their comfort zones.

These two senior sales executives expanded our customer base to include companies we would not have imagined buying our software and services, but the new customers could not relate to the key elements of our value proposition.  Follow-on sales were limited.  We parted ways with these senior sales executives on good terms.  We all realized our game was different.

We recruited resellers of our software tools in over 20 countries.  Some were very successful, but many were not.  All of them leveraged our software tools to sell a modest amount of software and large service projects.  Our branded tools gave them competitive advantages to sell services.  Their profit margins on the software were respectable but small compared to the service revenues.  All of these relationships were eventually not worth the costs of maintaining them.

Another conundrum involved customers requesting ideas, and perhaps proposals, for how to solve problems of importance to them, but then buying the actual solution from other vendors with lower service prices.  We gained revenue and profits from our ideas, but it did not seem that these modest returns were sufficient to justify investing scarce talents in such marginal returns.

We explored dramatically reducing prices for our software tools – from $10,000 for a corporate license for 20 copies to a license for $99 per copy.  This turned out to be a terrible idea.  The cost of the box and manual was much greater than the cost of software.  Major corporations purchased one $99 license and then wanted substantial support services, which we already provided — but they wanted these services for free for their $99 purchase.

Understanding market signals is very complicated.  You want to provide customers what you are ready to provide but, of course, that is in your interests and not necessarily theirs.  The market may have completely unrealistic expectations – for example the current AI hype cycle – that do not make sense for you or anyone to attempt to serve.  Yet, it seems that the market is demanding it.

Addressing this dilemma involves finding the signal in the noise.  This can be facilitated by systematically combing the evidence.  What evidence?  For example, one of the functions on our Curis Meditor research portal enables reviewing 50,000 global English-language news articles – per day!  Digital assistance helps this process enormously.

This could help you to determine, for instance, that your competitor’s announced investment does not make sense and must be a ruse.  Thus, there are possibilities of making sense of external market signals.  The prospects of internal market assumptions being wrong is a more difficult challenge, as illustrated earlier. 

A good starting point is to make these assumptions explicit and then seek evidence that supports or refutes them.  Talking to your current and prospective clients and customers is one of the best available means to make such assessments.  Perhaps they will eventually convince you of what they really want.

When the Unpopular Position Is Correct

Most organizations and people like to think that everything is under control, proceeding as planned, and the sought outcomes will be realized.  If anyone suggests otherwise, they will be chastised for not being team players, perhaps for having bad attitudes, or quite simply for being outright wrong.  Unpopular positions are seldom socially acceptable in organizations.

It is worthwhile to understand how these organizational values and norms can result in enormous wastes of resources and time to address problems that desperately need attention if the organization can only accept that they are happening.  It is quite common for this recognition to be delayed until no one can deny the organization is in trouble, and resources and time are inadequate for strong, successful responses.

There are few better examples of when we were not paying attention to looming dangers than the Great Recession in 2007-2008 stemming from the bursting of the real estate bubble and the coronavirus pandemic emerging in 2020, chronicled by Michael Lewis in The Big Short (2010) and The Premonition (2021), respectively.  In both cases, political leaders downplayed the risks and magnitudes of the likely consequences.

What most struck me about both events is the extent to which some of the smartest people in the US were betting against the country by shorting investments where severe losses would provide them enormous gains.  These people could see what was coming and adjusted their investment strategies accordingly.  Most of the population, however, was being misled by their leaders.

Over the past three decades, the US auto industry has grappled with the reality of no longer being market leaders.  Chevrolet Impalas and Ford Galaxies have been replaced by Honda Accords and Toyota Camrys as the best-selling cars.  Cadillac and Lincoln have been displaced by BMW, Mercedes and Lexus as aspirational luxury cars.  My experiences working with several companies in this industry was that everybody recognized this but nobody felt empowered to articulate it.

Another challenge emerges when current market positions are not sustainable.  In other words, things are not going as well as everybody thinks.  In one of my university leadership positions, I discovered that my unit was receiving over 50% of the funds from one division of a government agency.  I learned that this was due to a champion in this agency, who was soon to depart.  I argued that we needed to diversify.  Everyone ignored my arguments until research revenues plummeted.

A value proposition that was once competitive can become no longer competitive.  At another university, I met with leaders of an online educational program that I learned was being challenged by a top-ranked competitor that was offering a first-rate program for tuition less than 10% of our offering.  I suggested that our moderately-ranked offering would eventually see greatly reduced market share.  Astoundingly, university leaders decided to raise prices.  They remain alive but struggling with enrollments.

Technology can undermine market positions.  I gave a dinner talk to a large group of insurance executives.  I asked each table to discuss what they felt was the greatest threat to their business.  A bit later, every table reported the same conclusion – driverless cars.  In all US states, premiums are legally limited to matching claims.  Many fewer accidents will lead to greatly reduced premiums and, hence, sharply declining revenues.

We worked with these companies to explore alternative scenarios.  All scenarios resulted in dramatically decreased revenues over the next 10-15 years as driverless cars gain market share.  This led to detailed consideration of the types of insurance needed in this morphed ecosystem.  They saw opportunities to compensate in part for the losses.  These possibilities made it socially acceptable to discuss the scenarios.

I have consulted with two of the three largest providers of dining services in the US, e.g., via industry, government, and academic cafeterias.  It is a fiercely competitive business with very low profit margins.  During a strategy offsite, the CEO made a radical proposal to raise prices.  The other members of the executive team asserted that this would be the kiss of death.

He outlined the following logic.  If prices were raised by $2 per meal, almost all of the increase could go into the quality of the food.  He projected that customers would willing to pay for decidedly better meals.  They pilot tested the idea it was hugely successful and widely deployed.  What his team perceived to be a terrible idea was in fact a great idea that resulted in increased revenues and profits.

A competitor, perhaps 2-3 times larger than us, approached me about possibly acquiring us.  I had recently been through another acquisition “dance,” which we declined, and would have dismissed this opportunity, but considered their CEO a long-term friend.  Our company was very carefully managed.  My meetings with him and his team suggested that they were not as careful.

This company had developed a computer-based training system, with associated hardware, for training crews of Army tanks.  They were in the process of bidding on an Army contract to build a large number of these training simulators.  The CEO was quite confident that they would win.  His executive team tried to caution his optimism and not “bet the farm” on winning.

He was not deterred.  He was so confident that he made a major investment in constructing the factory to produce the training simulators, before the winner of the competition was decided.  They lost to a company that provided a much lower bid.  They were left with an empty factory and significantly depleted assets.  As far as I know, they never completely recovered from mismanaging these risks.

My experiences across the companies I have founded, and the many who have been clients, is that unpopular positions should be acknowledged and attention invested in due diligence concerning them.  I have found that opportunities are very seldom sure things, and you and your team are never as good as you pretend.  You can compensate for these shortcomings, in part, by making risk management a core competency.  There are rarely, if ever, good opportunities to bet the farm.  A portfolio of investments, some larger and many smaller, will lead to at least a few wins and no large losses.  Finally, as illustrated by the dining services vignette, an unpopular position may actually be a great opportunity.

When Stakeholders Thwart Change

People who are advantaged by the status quo tend to be averse to changing it.  Consequently, those who are favored in this way tend to herald its merits and distain the alternatives.  Why wouldn’t we continue the policies and strategies that generously rewarded them in the past.  As leader of an organization needing to entertain fundamental change, you need to be able to understand and manage such reluctance.

I served on an Air Force Scientific Advisory Board study of science and technology investment strategies.  We considered what investments were needed to assure “pervasive battlespace awareness.”  I commented that this can be enabled in many ways, but key stakeholders on the study committee reminded me that they produce satellites, airplanes, and missiles.  They needed those solutions to prevail.

This reflects their strong desires to sustain investments in incumbent capabilities and sustain current jobs.  Not surprisingly, this motivation is pervasive.  People do not want their economic supply chain to be disrupted.  They want paychecks, promotions, and pensions to flow as they expected.  They want this economic supply chain to perpetually persist.  Of course, that has really never been the case.

Despite easy automation of routine clerical jobs, manual labor is retained to keep people employed.  I encountered this when living in Europe.  Despite strong priorities and desires to sustain investments in incumbent capabilities, these positions were steadily disappearing.  It appeared that a primary motivation for sticking to the status quo was desires to avoid the costs of training people for new jobs.

Moving to professional personnel, there is no reason for each faculty member to prepare fresh class notes for each course.  Nevertheless, this time-consuming rite of passage continues.  Every faculty member gets to research and determine how best to teach western civilization, a topic taught for well over 1,000 years.  How many new ways can there be to do this?

Disciplines that dominate academic cultures tend to be sustained despite their seeming marginal relevance.  For example, in my world, many faculty members extoll the virtues of mathematics, even when purely mathematical solutions of the real problems at hand are intractable.  Faculty members who pursue empirical approaches to these problems are distained as applied practitioners – not pursuing fundamental knowledge.

The concern among these recalcitrant stakeholders is not employment.  It is self-esteem.  They have spent decades becoming highly skilled and expert at what they, and their colleagues, perceive to be fundamental and pervasively important skills.  The possibility that these skills, while still important, are now of limited rather than pervasive value is very difficult for them to accept.  Thus, they do their best to thwart change.

Fortunately, as Max Planck asserted, disciplines advance by funerals.  Thus, faculty members who strongly defend yesterday’s status quo eventually disappear, while making as much fuss as they can in the process.  Stakeholders thwarting change are recurring phenomena and a challenge for leaders trying to balance faculty interests.  However, time heals the challenges at hand with, of course, younger stakeholders, perhaps unconsciously, awaiting their turn.

A common refrain is, “We’ve always done it this way.”  Thus, for example, GM’s executives insist that the first year of a new car has to be a coupe, despite the fact that the public is only buying sedans and now, of course, SUVs.  GM eventually abandoned this practice after dramatically losing market share.  Executives thwarted change as long as they could.

Another example is college’s expectations of student attrition.  Within engineering, the common guidance was, “Look to your left and look to your right.  Next year only one of the three of you will still be here.”  Why is this long-held norm a good idea?  Why were “weed out” courses created?  Fortunately, student success initiatives have significantly eroded this tradition.

Underlying all of the above is a strong tendency to revere “the good old days,” even though they were not really good for everybody – or even anybody.  Before cars, New York City had to remove 100,000 tons of horse manure each year.  No one missed it.  Few people want to get rid of electricity, refrigeration, air conditioning and indoor plumbing.  The good old days were more old than good.

How about values and norms such as honesty, discipline, and hard work, possibly pulling oneself up by one’s bootstraps?  Such values and norms tend to only make sense for those stakeholders with requisite opportunities.  These are often the stakeholders with the economic resources to be healthy, get educated, and pursue opportunities.  Others may be able to relate to these aspirations but be in no position to pursue them.

Beyond concerns about losses of jobs, income, benefits, and self-esteem, there is another primary reason to thwart change.  Key stakeholders may not trust change in the sense of being wary that their interests will be discounted and ignored.  Their experiences tell them that no one will protect them from the downside of change.  History provides much evidence that they are correct.  The winners relish their victories and disdain the losers, even though losing was built into the game for many people. 

Several years ago, I studied how defense companies succeeded in transitioning from defense to commercial markets.  I could only find one company that transitioned successfully while retaining the majority of the same employees – Kaman Corporation.  It is much more common for companies to redeploy financial and physical assets without retaining the previously valuable people and competencies.

In another engagement, I helped a large defense electronics company consider a transition to commercial electronics.  The most outspoken opponents were the engineers who believed they worked on the cutting edge of technology in defense and would be relegated to mundane applications in commercial markets.  The company decided to abandon these commercial aspirations.

I had a similar experience with the transition from my first to second companies.  We had long felt that we needed product lines that provided recurring revenue beyond our service revenues for research and design services.  In developing a portfolio of products, we learned that customers wanted the tools hosted on IBM PCs, or maybe Apple Macs.  Our software staff had complete disdain for these platforms compared to the $100,000 engineering workstation to which they accustomed.

Consequently, the launch of the second company included only one of the 20+ software engineers of the first company, as well as one person in finance and one in marketing.  We had to consciously build a new culture around low-end work stations, an 800 number for customer support, and other functions customers expected.  Also of great importance were product upgrades every 12 months or less.

Can everybody win from transformational change?  You need well-articulated plans for those who want to be part of the transformation, including new roles, objectives, and incentives, as well as the training required to succeed.  However, you should not expect everyone to join the process.  Many – hopefully not most – of your best people will have other opportunities and priorities.  For some, their self-images – e.g., as mathematicians or software engineers – will not be compatible with where you are headed. 

You can expect that significant stakeholders will attempt to thwart your aspirations for fundamental change.  Their reasons may be quite rational, far from capricious.  This will be less of a problem if you understand and expect such reactions.  Your primary objective is to lead the organization forward to sustainable success.  Your job is not to make sure everybody is happy.

When Abilities to Execute Are Secondary

It’s a great idea, but can we do it?  Can we make it happen?  We are going to boil the oceans and then provide everybody gourmet seafood dinners.  Ok for those who eat seafood, but how is this going to be accomplished?  Making the elements of a solution happen – executing — tends to be an enormous challenge.

What if everyone in the world had smart phones, state of the art laptops, and high performance broadband connectivity?  Wouldn’t everything be ok then, at least eventually?  These capabilities would help, but life involves much more than technology.  What about economic opportunities and access to food, healthcare, and education?

I have been involved in seemingly endless conversations about digitally transforming an enterprise.  The idea is to eliminate paper, become totally data driven, and to embrace evidence-based decision making.  Sounds great if data are available and curated.  Let’s reflect on what success will require.

If one wants data-driven, evidence-based strategy discussions, there are a few precursors:

  • Does one have the requisite data over a meaningful period of time?
  • Have these data sets been curated to assure that they represents a valid corpus?
  • Have inconsistencies and incompatibilities across data sets been identified?
  • Have models been identified that can provide valid projections of future outcomes?

Assuring appropriate answers to these questions is difficult work.  In my experience, many organizations treat these questions much too lightly.  They want to avoid the difficult work and “install” solutions quickly.  Two examples provide good illustrations. 

A large aerospace company asked me to help them determine what knowledge management solution to acquire.  I asked them, “Where is poor knowledge management hurting you?”  After much discussion, they chose foreign military sales.  We then proceeded to address that one specific problem to learn what knowledge management really meant and how it could help them.

The CEO of a large appliance company asked me what knowledge management solution they should acquire.  I asked him the same leading question.  His team concluded that production plans often resulted in appliances being produced that no one had ordered and appliances not being produced that Walmart, in particular, had ordered.  They noted Walmart because this customer charged a penalty for undelivered products, i.e., the profit they would have made had the products been delivered.

We tracked down how production forecasts were developed.  Field representatives provided projections of appliance sales, by product, in their region.  These forecasts were compiled and resulted in production plans.  We talked with field representatives about how they came up with their forecasts.  A common answer was, “I look at last quarter’s orders and decide where to increment them up or down.  By the way, what do you do with those numbers?”

The knowledge management problem was that key participants in the production planning process did not know how their inputs affected the process.  Beyond managing knowledge, the company needed to do a much better job at sharing it.  This led the company to create an initiative focused on who needs to know what and how this knowledge is shared.

Once one gets past the above hurdles of data access, curation, and modeling, several new questions become central:

  • What economic, social, and political forces are likely to affect the future?
  • How are these forces likely to impact our projections of future revenues?
  • Are our competencies well positioned for this competition?
  • Where will we experience challenges – performance, cost, customer satisfaction?

To address these types of questions, we need to move beyond “what is” to address “what if.”  Questions associated with “what is” can be addressed with the data sets noted above.  These data sets are inherently about was has happened, not what will or might happen.

“What if” questions can be informed by but not answered by empirical data.  This is simply because the future has not yet happened.  Nevertheless, execution happens in the future.  A digital strategy, or equivalent, that is limited to examining the past will be very much inadequate.  Emerging forces, their impacts, and abilities to compete are all about executing in the future, a future that is quite likely to be significantly different than the past.

Abilities to execute are usually addressed within the context of the incumbent enterprise’s abilities to scale what it has long been doing.  This perspective has merits – unfortunately, often only briefly.  A company’s ability to steadily increase quality and decrease costs can sustain and perhaps grow revenues for existing offerings.  This worked for Henry Ford’s Model T for almost 20 years, but the competition came to offer better models in more than one color.

How can an organization catch up with what will be needed?  How should they plan to execute in the future?  These questions tend to be major challenges, often insurmountable challenges.  Many, perhaps most, organizations think they are doing their best to execute their processes today.  Their processes may be outmoded and inefficient, but they have little time to think about this possibility.

Consider briefly the domains of healthcare, education, and energy.  Technologies will potentially impact all three domains.  Telehealth and artificial intelligence will change key elements of healthcare.  Online learning, including the unbundling of learning, will profoundly affect the economics of post-secondary education.  Renewable, yet intermittent, energy sources will challenge reliable and resilient provision of energy.

These three domains are likely to execute in the future much differently than they execute today.  Those who wait to see what happens are unlikely to be tomorrow’s leaders.  In contrast, those who see execution in the future as primary, and consequently play central roles in designing these futures, will undoubtedly lead their domains into those futures.

Several years ago, I was engaged with a large information technology company in developing an R&D strategic plan.  They had an agreed upon social norm that surprised me.  Apparently, marketing had a tendency to dream up wild ideas.  Engineering and manufacturing would explain the difficulties of executing their visions.  Someone from marketing would invariably say, “Oh, come on.  How difficult could that really be?”  The technical folks complained to top management.  This execution-oriented challenge was henceforth banned.

When the Competition Surprises You

Consider two surprises for General Motors (GM) and how they reacted, initially poorly but later quite successively.  Both illustrations involved Ford surprising GM. The first led to a major failure and the second to a substantial success.  Indeed, failures to achieve corporate objectives are quite common in the automobile industry.  Not every vehicle is a home run – far from it.

In 1981 General Motors began planning for a complete refresh of its intermediate size vehicles:  the front wheel drive A-Cars and the older rear wheel drive G-cars.  The GM10 program would yield vehicles badged as Chevrolets, Pontiacs, Oldsmobiles, and Buicks.  This program was to be the biggest R&D program in automotive history and with a $5 billion dollar budget, the most ambitious new car program in GM’s then 79-year history.

The introduction of the Ford Taurus in 1985 was a huge market and business success, and a complete surprise to GM.  It was one of the first projects in the U.S. to fully utilize the concept of cross-functional teams and concurrent engineering practices. The car and the processes used to develop it were designed and engineered at the same time, ensuring higher quality and more efficient production. The revolutionary design of the Taurus coupled with its outstanding quality, created a new trend in the U.S. automobile industry, and customers simply loved the car.   

The Taurus forced GM to redesign the exterior sheet metal of the GM10 because senior executives thought the vehicles would look too similar.  Many additional running changes were incorporated into the design in an attempt to increase customer appeal.  The first vehicles reached the market in 1988, ~$2 billion over budget and two years behind schedule. 

All of the first GM10 entries were coupes, a GM tradition for the first year of any new platform.  However, this market segment had moved overwhelmingly to a four-door sedan style. Two-door midsize family cars were useless to the largest group of customers in the segment — members of the Baby Boomer generation were now well into their child rearing years and needed four doors for their children.  GM completely missed the target segment of the market.  From 1985 to 1995 GM’s share of new midsize cars tumbled from 51% to 36%.

The Lincoln Navigator is a full-size luxury SUV marketed and sold by the Lincoln brand of Ford Motor Company since the 1998 model year. Sold primarily in North America, the Navigator is the Lincoln counterpart of the Ford Expedition. While not the longest vehicle ever sold by the brand, it is the heaviest production Lincoln ever built. It is also the Lincoln with the greatest cargo capacity and the first non-limousine Lincoln to offer seating for more than six people. 

GM was completely surprised by the Navigator.  They had not imagined that customers would want luxurious large SUVs.  GM responded with the Cadillac Escalade in 1999, intended to compete with the Navigator and other upscale SUVs.  The Escalade went into production only ten months after it was approved.  The 1999 Escalade was nearly identical to the 1999 GMC Yukon Denali, except for the Cadillac badge and leather upholstery. It was redesigned for the 2002 model year to make its appearance and features fall more in line with Cadillac’s image.

In 2019, 18,656 Navigators were sold, while 35,244 Escalades were sold. Escalade has outsold Navigator every year since 2002.   GM had clearly adapted to the surprise of the Navigator.   One can reasonably infer that the company learned from the GM10 debacle.  Surprises happen.  Be prepared.

The Taurus and Navigator were two of the best ten cars we identified in our study for GM, along with the worst ten cars.  Other winners were the 1955 Chevrolet, the 1964 Pontiac GTO and the 1964 Ford Mustang.  Interestingly the proponents of these cars were heralded as heroes but later demonstrated this accolade to be premature as Ed Cole advocated the 1971 Chevrolet Vega, John DeLorean failed with the 1981 DMC-12, and Lee Iacocca tried to kill the minivan program, which basically kept Chrysler in business.  The Vega and DMC-12 made our list of the ten worst cars.

What differentiated success from failure.  First, one needed to correctly predict what the market would want when the car rolled out several years later.  The 1957 Edsel suffered from an unexpected recession. Second, there needed to be a system development process that resulted in the intended vehicle.  This may seem obvious, but capricious decisions by top management were often associated with failures such as the 1982 Cadillac Cimarron and 2001 Pontiac Aztec.

We recently studied 12 cars withdrawn from the market in the 1930s, 1960s, and 2000s.  We leveraged hundreds of historical accounts of these decisions, as well as production data for these cars and the market more broadly.  We found that only one vehicle was withdrawn because of the nature of the car.  People were unwilling to pay Packard prices for Studebaker quality, the two companies having merged in 1954.

The failure of the other 11 cars could be attributed to company decisions, market trends, and economic situations.  For example, decisions by the Big Three companies to focus on cost reduction resulted in each manufacturer’s car brands looking identical, effectively de-badging them.  Mercury, Oldsmobile, Plymouth, and Pontiac were the casualties.  Honda and Toyota were the beneficiaries.

We worked with Rover on the initial conceptual design of the Mini Cooper, before Rover was bought by BMW, who then brought the Mini Cooper to market.  We considered four stakeholders: young women, young men, young couples, and young couples with children.  The design differences for each stakeholder were interesting.  For example, the back seat plays a different role for couples with children.  Young women and men differ in dashboard preferences.

The original design of the mini Copper broke the mold and revolutionized the auto industry in this segment. Its clever use of space, compact design and excellent road handling led to consumers judging it as a fun, affordable and classic sporty icon.  It moved far beyond its roots as a humble people mover.

Much more recently, attention has shifted to hybrid and battery electric vehicles (BEVs).  Our studies of BEVs have shown that the industry needs to move beyond federal and state subsidies to grow the market.  The increasing commitments of auto OEMs – original equipment manufacturers – suggest that electric drive trains will soon come to dominate the private vehicle market.

Driverless cars are waiting in the wings.  The marketplace for driverless cars has been quite complex and turbulent, laced with enormous hype..  All of the major automakers are working with a range of technology companies.  Investments have been huge, although aspirations have recently mellowed, exemplified by Uber and Lyft selling their driverless car units.  Here are the primary relationships (in alphabetical order):

  • Apple working with Hyundai and Kia
  • Argo AI acquired by Ford and Volkswagen
  • Aurora acquired Uber’s driverless car unit
  • Cruise Automation acquired by GM, Microsoft and Walmart
  • NVIDIA working with Audi, BMW, Honda, Mercedes-Benz and Tesla
  • Toyota acquired Lyft’s driverless car unit
  • Waymo (Alphabet) working with Fiat Chrysler, Jaguar, Nissan, Renault, Volvo and Magna

What surprises are ahead?  I think the main surprise is that all the hype was just that, nothing more.  Increasingly capable sensors and smart software will make your vehicle — that you will still drive — safer and more efficient.  Over time, perhaps a decade or so, your vehicle will become capable of driving itself, initially on open highways.  Driverless cars will become pervasive at the pace that unmanned elevators became predominant.

What can be done about surprises?  No amount of due diligence can eliminate them.  Fortunately, most markets are forgiving.  I cherish the Corvette but not the Vega, the Mustang but not the Edsel, and the 1959 Eldorado but not the Cimmaron.  We like to win frequently, but do not expect championship trophies every year.  Even the vaunted Apple had its Lisa and Newton.

Some surprises become market innovations; most do not.  However, surprises can also cause others to innovate.  Technology failures or shortcomings can prompt investigations of how such limitations can be overcome.  The only way for everything to succeed is for all improvements to be only incremental.  Personally, I am glad someone thought of indoor plumbing rather than improved outhouses.

When the Organization Is in the Way

There are times when organizations are performing excellently but, despite their confidence, their futures are not bright.  Kodak and Polaroid dominated the film and instant photography industries, respectively.  My mother inherited a quantity of Kodak stock in the 1930s.  It provided generous returns for several decades.  People would always seek “Kodak moments” and needed a stock of film.  Wouldn’t they?  Well, no.

These companies knew that digital photography would eventually prevail.  Indeed, they invested in R&D that created the technologies that could displace film, instant or otherwise.  However, despite their dominance in their markets, they just couldn’t “pull the trigger” and cannibalize their existing cash flows.  Instead, they let competitors do this, catalyzing their eventual demise.

Why?  Their organizations were totally focused on selling film.  The metrics in their incentive and reward systems were driven by film sales and decreasing costs of production.  They, in effect, provided free cameras to sell film, as Gillette provided free razors to sell blades.  What if consumers wanted pictures, but not prints?  This future was easy to imagine but difficult to accept if your paycheck depended on prints.

What happened to Digital and Xerox?  Digital dominated the minicomputer market and Xerox basically invented personal computing.  I worked extensively with Digital, less so but significantly with Xerox.  I used the 50th PDP-8, of 300,000 sold, to conduct my PhD research at MIT.  Digital “owned” the academic research market.  The DEC System 10 was next, followed by the VAX series, selling 400,000 units.

The rapid rise of the microcomputer, or personal computer, in the late 1980s, and especially the introduction of powerful 32-bit systems in the 1990s, quickly eroded the value of DEC’s systems. DEC’s last major attempt to find a space in the rapidly changing market was the 64-bit Alpha. DEC saw the Alpha as a way to re-implement their VAX series, but also employed it in a range of high-performance workstations. The Alpha processor family, for most of its lifetime, was the fastest processor family on the market. However, high Alpha prices could not compete with lower priced x86 chips from Intel and AMD.

I was heavily involved with DEC in the 1990s helping them plan several new generations of Alpha chip using our product planning toolkit.  One strongly stated objective for each generation was that it retain its Guinness Book of Records status as the fastest processor in the world. This objective dominated even when processing speed provided users minimal benefits.  Technical excellence was highly valued at DEC.  There was a sense that DEC knew what people needed even if they did not.

The Apple II arrived in 1977, followed by the PC in 1981, and the Apple MAC in 1984 with its classic Super Bowl ad.  Many of the appealing features of the MAC were pirated from Xerox.  The document company, Xerox, was still trying to figure out how personal computing would sell more paper.  Between this perspective and unacceptable market pricing, Xerox fumbled the future.

Back at Digital, CEO Ken Olsen discounted the possibility that anyone would want their own computer.  Their DEC Rainbow was clearly too little, too late.  IBM, in contrast, realized the era of developing everything yourself was over and outsourced most everything to strategic suppliers, e.g., Microsoft.  This was too much of a leap for DEC, presaging their disappearance in 1998.

This brings us to communications and cellphones.  I worked extensively with Motorola throughout the 1990s.  Their analog technology dominated the market.  They had invested in digital technology and knew this was the future, but did not want to cannibalize their analog market position.  Other players, such as Nokia and Qualcomm, did not hesitate.  Their digital phones decimated Motorola’s market leadership.

Motorola was still innovating, however. A great example is an R&D investment by Motorola in magnetoresistive random access memory, where data is not stored as electric charge, but by magnetic storage.  The research team developing this technology was requesting $20 million.  Our technology investment analysis tools indicated the net value was $546 million.  After carefully listening to a presentation on the basis of this estimate, the Motorola CEO was sufficiently impressed to commit $40 million with the request that the additional funds be used to reduce risk and accelerate transitioning this technology into their semiconductor business.

The success of this technology contributed to the formation of Freescale Semiconductor, Inc., which was spun off from Motorola in 2004. In 2015, NXP Semiconductors completed its acquisition of Freescale for about $11.8 billion in cash and stock. Including the assumption of Freescale’s debt, the purchase price was about $16.7 billion.  Despite such successes, Motorola’s core communications business was struggling and was sold to Google in 2012 for $12.5 billion, less than the value generated by one significant R&D investment.

Nokia focused on increasingly inexpensive phones and came to dominate the global market.  They could not imagine that their $50 phones could be displaced by Apple’s $500 iPhone.  They were wrong.  Consumers did not realize it, but they wanted versatile digital devices that also included a phone.  Nokia faded and was sold to Microsoft for $7.2 billion.  Microsoft did not fare much better.

Both Motorola and Nokia suffered from being hardware companies that also provided software.  Their technical expertise in hardware was superb.  However, they tended to develop new operating systems for each generation of devices, which was both expensive and slow.  In contrast, Apple’s OS and Samsung’s Android, courtesy of Goggle, provided regular updates to all users, including those using past generations of phones.  The cultures of Motorola and Nokia, as well as Digital, never embraced this approach.

How does the organization get in the way of change?  For all of these cases, organizations had well-developed processes and metrics, which everyone had learned and came to excel in their execution, resulting in bonuses, promotions, and other accolades.  These practices had become embedded in their organizational cultures.  Everyone “knew” how to act and how to succeed.

However, key elements of this organizational system were premised on assumptions that were no longer true.  Many people recognized this.  However, it was not socially acceptable to articulate these perceptions.  People felt that they needed to maintain focus on keeping the predominant business model functioning and producing.  That’s what they did until this no longer worked.

All six of these companies were founded with excellent core technology competencies and compelling value propositions.  They each led their markets at some point, in some cases for many years.  The designs of their organizations, indeed their organizational values and norms, were driven by how they achieved this success.  Over time, their markets evolved, typically driven by competitors’ offerings.  These companies did not evolve in step with their markets.  Their value propositions become obsolete.

Joseph Schumpeter has termed this process “creative destruction.”  New value propositions are embraced by markets and incumbent competitors fade.  This is great for consumers and the economy.  However, as these examples illustrate, creative destruction is terrible for the incumbents that cannot adapt.  Consequently, the average number of years a successful company remains in the Fortune 500 continually decreases – from over 60 years in the 1950s to less than 20 years today.

N-Factor Authentication

2-factor authentication provides an extra layer of security to your account to prevent someone from logging in, even if they have your password. This extra security measure requires you to verify your identity using a randomized multi-digit code that your service provider texts to you each time that you attempt to log in.  Alternatively, they may call you and ask you to verify that you are trying to log in.

New technology has emerged that can divert these texts and calls to a third party that pretends to be you.  They can mimic your voice, answer your security questions, and show their location as yours despite their being far away.  This has prompted service providers to add new levels of authentication.  The industry is calling it N-factor authentication.

Via your Apple watch, or equivalent, they can sense and decode your DNA is real time. If they can sense that you are holding the phone, you will be admitted to the service.  Next-generation phones will be able to sense what you ate for your last meal.  If you respond correctly to this phone query about what you ate, you will be admitted to the service.

Some of these levels have been criticized as intrusive.  If your blood alcohol content (BAC) level exceeds legal levels in your state, you will not be able to access your accounts or, for that matter, start your vehicle.  Your phone will still work so you can call for a ride.  However, your credit card will not be authorized if you decide to have one for the road.

What if the authentication system is wrong?  It sensed you ate cauliflower, but you actually had broccoli.  What’s your recourse?  You can submit your claim to the State Authentication Agency.  There is an online claim form, which makes it easy if you can prove you are who you say you are.  What did you eat for lunch? 

How We Adopted Regrettable Practices

I recently finished reading Patrick Wyman’s The Verge: Reformation, Renaissance, and Forty Years that Shook the World: 1480-1520 (Grand Central, 2021).  He chronicles the transformation of business and political processes during these two decades that provided the foundations for Western European dominance over the successive generations.

Military aggression and conquest, financed by new approaches to debt and repayment, dominated the 15th and 16th centuries.  The business challenges of empty ships sailing back from Africa were addressed by the trade in slaves.  America’s embrace of the slave trade in the 17th century simply reflected business best practices of the times.  Finances dominated any sense of ethics or fairness.

Many of the unfortunate practices that we eschew today have deep-seated roots over centuries or longer.  Slavery predominates our consciousness today, but mistreatment and degradation of indigenous people and women has a long history as well.  Degradation of the environment has long been the stock and trade of colonizers and immigrants.  Exploitation of natural resources has been an economic prerogative for millennia.

Exploitation for the benefit of the prevailing castes has long dominated human activities.  As Warren Buffett has characterized it, the progeny of the “lucky sperm club” accumulate wealth and other benefits to the detriment of the not so lucky.  This is not at all a new phenomenon and has not been an accident.  It has been with us throughout human history.

Perhaps this is inevitable.  Humans hunt bears for meat and hides.  Bears eat meat and big fish.  Big fish eat smaller fish. Small fish eat plankton and algae.  Does this food chain model apply to relationships among humans?  Is it inevitable that the lucky sperm club gets to “eat” lessor humans?  Few people would agree with this. 

However, what can be done to overcome this seemingly natural tendency?  Reparations have been discussed.  How might we compensate blacks for having endured slavery for 500 years? How can we compensate  indigenous people and women for having endured mistreatment and degradation for several millennia?  We might write large checks – millions of dollars – to each of hundreds of millions of people.  We could devote the whole GDP and more to reparations.

Would this work?  Would diversity, equity, and inclusion now be balanced and fair?  I doubt it.  Large numbers of people would have large amounts of money – briefly.  Those steeped in the tendency to exploit others would quickly figure out how to secure these funds with bogus promises and propositions.  The privileged castes would soon have again secured all these resources for themselves.

Instead, these resources need to be invested in helping everyone to be prepared, participate, and prosper in the future economy.  Everyone needs to be able to differentiate opportunities from scams.  Everyone needs to be able to differentiate bluster from well-reasoned projections.  Everyone needs to learn how to identify and scorn baseless rhetoric and fear mongering.

We need a renaissance in American education.  People need to understand why things are the way they are, for better or worse.  People need to understand evidence-based assessments versus empty bloviations.  The media needs to be held accountable for their support of empty bloviations.   Advertisers need to quickly curtail investment in these empty bloviators.  The integrity of the media needs to be restored.

Above all, we need a well-educated and well-informed American electorate.  We need a population that has no patience with bull shit.  We need a voting population that holds politicians accountable.  Politicians who posture, lie, and try to compensate for poorly-held positions should face stunning defeats in elections.  This requires a well-educated and well-informed electorate.  This has to be a priority.

Education and communications are the keys.  Education obviously needs to include reading, math, and science, but also civics – how the government works.  The teaching of civics has declined in recent decades, apparently due in part to efforts to improve test scores in reading and math.  We need every citizen to be sufficiently educated to reach well-informed decisions.  Everyone.

We also need to fix communications.  This requires authoritative assessments of communicated assertions and conclusions.  This might involve every communication, whether from news media or social media, being labeled with a rating.  This might even include anyone’s Facebook posts or personal emails.  Of course, most people have no way of knowing whether their communications are based on sound evidence.

More importantly, every assertion by newscasters on CNN or Fox would be rated.  Over time, people would know which commentators are reliable and which ones are usually communicating unsupported assertions.  Rating services would emerge that provide assessments of commentators and pundits.  Educated citizens would understand these assessments and turn to those that can be trusted.

Dissemblers would be seen as entertainers and perhaps comedians, although their assertions and rants seldom prompt chuckles.  The media would cease to report such diatribes because savvy advertisers would not want their brands associated with such people.  These people would be left to social media, at least those outlets that did not ban their postings.  Facebook’s recent troubles suggests this might actually happen.

Research Questions

Research involves pursuing answers to questions.  How can I reset the clocks on my kitchen appliances?  A Google search usually provides a ready answer to this question.  One would not think of publishing an article on having answered this question, nor would any media outlet encourage such a publication.

Do I have any bakers’ yeast?  This leads to researching the cupboards and perhaps the refrigerator.  This research leads to a yes or no conclusion.  One would not think of publishing an article on having found the yeast.  Despite the success of this research, there is no generalizable finding to be reported.

Who killed Roger Ackroyd?  Agatha Christie reported on the research to answer this question.  Hercule Poirot sleuths his way to determining James Sheppard to be the killer.  Poirot confronts Sheppard who commits suicide.  The research question was answered but, as intriguing as the story may be, little is added our knowledge of murder.

Scientific research involves seeking answers to real, rather than fictional, questions to which there are no “off the shelf” answers.  Scientific research also involves addressing questions whose answers are of broad importance.  No one knows what I want for lunch, although no one but me or the waiter at the pub really knows the answer.

So, scientific research addresses important questions where are no existing sources of answers.  Research sponsors can tell us what questions are important to them, but it may be that answers are available, but not readily apparent.  Thus, the first consideration is whether existing answers can be found.

In recent years, most people would start by searching Google.  I just searched on “Do pickles affect icebergs?” It resulted in 28 million “hits.”  At 10 minutes per hit, it would take me 25 years to reviews this corpus.  Fortunately, there are much more powerful and efficient ways to approach this need.

I recently pursued the question, “What are the patient states and transition probabilities in substance abuse?”  Using the Curis Meditor research portal (www.CurisMeditor.com), hosted on the Northern Light SinglePoint platform, I searched 40 million research articles to identify 250 highly relevant articles, mostly medical research articles.

I then used Northern Light’s machine learning capabilities to “read” these articles and provide relevant insights.  From these insights, and fully reading several articles, I formulated an evidence-based state model of substance abuse.  This process required 6 hours, not the months required if I had solely relied on Google.

This state model of substance abuse provided an evidence-based hypothesis.  We might have used this model to predict the future course of substance abuse.  However, we were interested in whether new social interventions might help diminish opioid abuse.  In other words, we wanted to  explore “what if?” rather than “what is?”  How do you address a research address questions regarding what might happen versus what will happen if the future replicates the past?

We could assume that estimates of current states are good predictions of future states.  If the future interventions of interest are intended to affect the independent variables of the statistical model of current outcomes, it might be reasonable to assume that this the model of “what is?” can reasonably predict the future.  But, if these interventions have not been previously employed, this assumption is questionable. 

More typical are situations where models of the past cannot provide acceptable predictions of the future.  Then, we cannot construct our model by totally relying on past and current data.  Other than relying on psychics or other prognostications, we need to start with first principles to formulate a mathematical model of the phenomena underlying the prospect of predicting possible answers to our research question.

What are first principles?  There are a rich set of principles for dynamic motion, e.g., F=MA and E=MC2, electrical current, e.g., E=RI, and fluid mechanics, e.g., Q=VA.  There are also principles that cut across physical domains such as continuity (e.g., of mass and energy) and conservation of momentum. 

What about behavioral and social phenomena?  There are models of human behaviors related to driving cars and piloting airplanes, troubleshooting failures, coordinating multiple tasks and other human-system oriented tasks.  The ability to formulate such models is abetted by the requirements for humans to conform to the constraints of the systems they are operating and maintaining.

Social phenomena of interest for our research on opioid abuse concern how people relate to each other via their social networks.  In particular, it has been found that current addicts can be coached into recovery by former addicts – termed peer recovery coaches.  Thus, the model used to address this research question had to include a representation of each person’s social network and the status of the members of the network, i.e., susceptible, addicted, in recovery, etc.

We used this model to address a rather unfortunate real-world experiment as the coronavirus caused the isolation of people from their social networks.  Our model predicted that this would lead to increasing instance of overdoses and deaths. This is what happened in Washington, DC and elsewhere.  The predictions of our model were in the ballpark of the actual measurements.

Does this validate our model?  This question involves several subtleties.  At one level, did we answer the research question?  Yes, we did.  Was the answer “correct”?  We certainly did not accurately predict the exact number of overdoses and deaths.  So, perhaps the answer is “no.”  Were our predictions in the range of possibilities that could have happened?  The answer is arguably “yes.”

Consider our abilities to predict the paths and intensities of hurricanes.  There are multiple American and European models for making these predictions.  Weather forecasters rely on all of them to inform them on the range of possible futures.  The key is to understand what might happen by computing possible futures, knowing that a point prediction of what will happen is inevitably wrong.  I explore this notion in great depth in Computing Possible Futures (Oxford, 2019).

The Best of Times, The Worst of Times

Charles Dickens’ immortal phrase portrays a time of radical opposites taking place at the same time in a 1859 historical novel, A Tale of Two Cities. set in London and Paris before and during the French Revolution.  Are we at a similar time of radical contrasts?  Are similar consequences likely?

Current technology and economic trends portend astounding improvements of health and education, as well as productivity in general.  Yet, perhaps almost half the US population is not prepared to share in the prosperity.  The education needed to participate in the skilled technical workforce is not widely available.

The half of the population that feels left behind resents the other half of the population.  Politicians and various pundits have taken advantage of this pervasive resentment.  The result has been insurrection at the Capitol, not quite up to the assault on the Bastille in 1789, but the largest assault on the Capitol since 1814.

What does all this portend?  We might expect wise and prudent political leaders to orchestrate compromises that assuage the anger from both sides.  However, these leaders are focused on re-election and need the support of the angry political bases.  Hence, we risk stasis, nothing being done other than cultivating distrust and anger.

Fortunately, the private sector is investing and innovating to create jobs and economic growth.  A significant portion of these investments need to focus on creating the workforce, and consequently the consumers, needed for success.  This can involve partnering with high schools and community colleges to educate the workforce.

I am reminded of William Hartsfield’s slogan of the early 1960s when, as Mayor of Atlanta, he characterized the city as “too busy to hate.”  We need to get busy, investing in people to enable well-paying jobs and economic growth that benefits everyone.  The private sector must play a very significant role in this as the public sector, with its current stasis, cannot competently address the challenge.

Who Wants to Change?

What would you like to change?  Your eating habits and weight?  Your exercise habits and fitness?  Your salary and financial situation?  What about your opinions.  How about your fundamental beliefs? 

It is much easier to avoid eating fried foods than to avoid flawed thinking.  Entertaining evidence that shows your opinions and beliefs to be simply wrong is very difficult to do.  Almost all of us avoid this to some extent.

But what is evidence?  If we measure the width of our laundry door and determine that the new dryer will not make it through the door, we seldom seek another source of measurement.  The dryer simply won’t fit.

However, we are making these measurements ourselves with agreed upon measurement tools.  Most of the evidence we consider is not so pristine.  We do not have the tools and we do not make the measurements.  We have to trust others.

Consider the “simple” question of whether you have diabetes.  According to the Mayo Clinic, “A fasting blood sugar level less than 100 mg/dL is normal. A fasting blood sugar level from 100 to 125 mg/dL is considered prediabetes. If it’s 126 mg/dL or higher on two separate tests, you have diabetes.”

So, 125 is sort of ok and 126 is bad.  Why?  It is a rule of thumb that seems to work in terms of predicting what interventions are needed to control diabetes via various medical interventions.  Why did nature set this threshold?  Nature didn’t; we did and it has seemed to help controlling diabetes.

Yet, it seems rather arbitrary.  18 years old for voting, 21 years old for drinking, 30 BMI for obesity are other examples.  A BMI of 29 is fine and 31 is horrible.  These rules of thumb, sometimes embodied in laws and regulations, are reasonable but certainly not “correct.”  They simply reflect administrative, regulatory, legal, and perhaps social agreements.

What about vaccines?  The medical evidence is pretty clear, but many people are more comfortable taking horse worm treatments rather than FDA approved coronavirus vaccines.  There is much evidence to support the latter and no evidence to support the former.  Should we accept Kristi Noem’s, governor of south Dakota, assertion that “everyone has a right to die”?  Do they have the right to kill others in the process?

This raises the question of “Who’s liable?”  Should governor Noem be liable for advocating policies that result in many deaths?   What if every politician was criminally liable for any assertion they made that was provably false?  If found guilty, they could not run for any other federal office and would not be eligible for any federal benefits.  If particularly egregious, they would face federal felony convictions and imprisonment.

That would certainly weed out the politician population, but housing all the felons would be a challenge.  The change we actually want is for people in leadership positions to be thoughtful and truthful.  This brings us back to evidence.  How does anyone know if what they are saying is “true”?  Are people just repeating what they heard?  That might have worked when we all listened to Walter Cronkite, but this era of social media has made everyone – and consequently no one – a trusted authority.

If you cannot really trust anyone, then those whose opinions and beliefs align with yours are the most palatable and digestible.  There is no need to change opinions and beliefs because you are already right.  Everybody feels quite comfortable hunkering down in their comfort zone and lashing out at people with differing opinions and beliefs.  The resulting tribal polarization leads to camps rather than communities.  That seems to be where we are.

So, no one wants to change.  We want our predispositions to be affirmed.  Learning and changing positions requires too much work.  It is much easier to believe that everyone else is wrong. 

Failures of Complex Societies

Joseph Tainter in The Collapse of Complex Societies (Cambridge University Press, 1988) and Jared Diamond in Collapse: How Societies Choose to Fail or Succeed (Viking, 2004) provide compelling evidence for how complex societies fail.  I am not going to rigorously follow their analyses.  However, I am going to leverage their insights into the sources of failures.

Tainter argues that sustainability or collapse of societies follow from the success or failure of problem-solving institutions.  Societies collapse when their investments in social complexity and their energy subsidies reach a point of diminishing marginal returns.  In other words, the levels of complexity overwhelm resources.

Diamond argues that deforestation, pollution, soil depletion (or erosion), climate change, and hostile neighbors lead to diminishing competitive advantages.  While Tainter focuses on organizational missteps, Diamond emphasizes natural resources as wee al political and social adversaries.

Where are we headed? Three scenarios seem plausible:

  • We will get beyond the current landscape of challenges to new levels of technological innovation and prosperity
  • We will try to maintain the status quo, but societal services will eventually be overtaxed and under resourced leading to significant curtailments of services
  • Marginalized constituencies, on the left and right, will revolt leading to new radical leadership and capital flight to other, less-threatening venues

How might we know which scenarios are emerging?  Here are a few leading indicators:

  • Innovation and Prosperity: New starts, venture capital, acquisitions and/or IPOs
  • Curtailments of Services: Budget deficits, decreasing investments, public sentiment
  • Revolt and New Leadership: Protests, primary fights, changing of the guard

What should we do?  We need to balance risks across alternative futures.  This should include investments in “options” on alternative futures.  In other words, avoid big bets on one possible future.  We also need to manage failure scenarios across ecosystems such as health, education, energy, finance, etc.

We also need to be flexible and adaptive if society, as we know it, disappears.  This requires resources imbued with flexibility and adaptivity.  This could mean stockpiling canned goods and toilet paper in the basement.  More important, however, is an outlook that expects change and is open to new ways of addressing it.  This means questioning the sustainability of the status quo, particularly the underlying assumptions.

Complex Societies

Our society is amazingly complex.  It serves an enormous number of purposes.  An overarching goal is to persist.  Without persistence, society could not serve all its other purposes.  However, these purposes often compete and conflict for attention and resources. 

I have spent much time trying to improve defense systems from my commissioning as an Air Force officer 50 years ago, to serving on the Air Force Scientific Advisory Board for two terms, to membership on numerous advisory and study committees.  The education has been wonderful.  My impact, it seems to me, has been marginal.

For the past two plus decades, I have addressed healthcare delivery.  My focus has been on the complex adaptive system of health and wellness.  This research seemed to gain attention among thought leaders.  We managed to get health enterprises to rethink their organization and operations.

For almost a decade, I have studied how higher education is organized, incentivized, and responds to strategic challenges.  We have published several compelling analyses.  However, leaders in academia tend to be stewards of the status quo.  Projections of substantial challenges are only of interest if they will occur during their times in office.

In recent years, I have addressed energy and climate change, to both mitigate global warming and mitigate the consequences of global warming.  This challenge cuts across society and threatens enormous vested interests, including consumers’ insatiable appetite for energy for transportation, food, and heating/cooling.

Security, healthcare, education, and energy all interact across the fabric of society.  There is also water, food, transportation, finance, retail, etc.  These interactions can be considered at both macroeconomic and microeconomic levels.  The Federal Reserve Bank uses the FRB/US model of the U.S. economy and other tools to simulate the macroeconomics of the overall economy.

Microeconomics is concerned with firm-level behaviors, which include decisions about product and service offerings, strategic and tactical investments, pricing of offerings, workforce development, etc.  These decisions are addressed in the expected macroeconomic context of broad competitive forces, as well as interest rates, inflation, etc.

The central actors in our complex society are firms and families, which sometimes are synonymous, e.g., Cargill, Dell, DuPont, Ford, and Walmart.  Government may define the macroeconomic puzzle, but firms and families provide the puzzle pieces.  Their decisions and behaviors determine what is produced, how it is priced, and what is purchased.

The organizational and social system of all these intelligent agents is often termed a complex adaptive system.  Such systems can be influenced, e.g., by tax policies, but they cannot be controlled.  This is due to the abilities of the intelligent agents to learn, adapt, and self-organize.  They figure out ways around rules, incentives, and penalties.  When society eventually recognizes these workarounds, it prohibits them or acknowledges than as innovations and encourages them.

In these ways, these microeconomic innovators disrupt the macroeconomic landscape, which may benefit everyone in the long term.  This reminds me of John Maynard Keynes famous statement in 1923, “In the long run, we are all dead.”  My interpretation is that we should avoid investments that are painful in the short-term and mid-term, and with highly uncertain benefits in the long term.  The microeconomic innovators have no patience with such odds.

Times of Ruffians

We are facing broadly-based attacks by the latest ruffians, supported by their Republican and media co-conspirators.  This has repeatedly happened before.  What can we learn from these incursions of barbarians?  Masses of uneducated, illiterate ruffians overwhelmed everyday citizens.  Social consciousness and civic pride meant absolutely nothing.  It was survival of the fittest. 

The Visigoths were an early Germanic people that emerged from earlier Gothic groups who had moved into the Roman Empire and played a major role in defeating the Romans at the Battle of Adrianople in 378.  They were soon followed by the Vandals, another Germanic people who established Vandal kingdoms on the Iberian Peninsula, Mediterranean islands, and North Africa in the 5th century.

The Sack of Rome in 410 AD was undertaken by the Visigoths led by their king, Alaric. At that time, Rome was no longer the capital but retained a paramount position as “the eternal city” and a spiritual center of the Empire. This was the first time in almost 800 years that Rome had fallen to a foreign enemy, and the sack was a major shock to contemporaries, friends and foes of the Empire alike.

Attila, frequently called Attila the Hun, was the ruler of the Huns from 434 until his death in 453. He was also the leader of a tribal empire consisting of Huns, Ostrogoths, Alans and Bulgars, among others, in Central and Eastern Europe.  Quite some time later, Genghis Khan (1158-1227) was the founder and first Great Khan of the Mongol Empire, which became the largest contiguous empire in history after his death. He came to power by uniting many of the nomadic tribes of Northeast Asia.

The sack of Constantinople occurred in 1204 and marked the culmination of the Fourth Crusade. Crusader armies captured, looted, and destroyed parts of Constantinople, then the capital of the Byzantine Empire.  A bit later, Ivan IV Vasilyevich commonly known in English as Ivan the Terrible was the grand prince of Moscow from 1533 to 1547 and the first tsar of all Russia from 1547 to 1584.

So, the uneducated and impoverished, economically challenged, and prone to violence segments of our population can sometimes prevail.  However, they eventually overreach, ruthlessly plundering and severely punishing people, who eventually rebel.  A new order is established and ruffians are suppressed.  The new order may also be authoritarian, but liberal democracy may persevere and prosper.  This could take years, decades, or longer.

It does not seem reasonable to wait and hope.  Some combination of carrots and sticks seem warranted.  Carrots could include opportunities, for example training, to join the new economy discussed in my last post.  Sticks could include denial of benefits such as access to air travel or public transit, or perhaps pricing of benefits, e.g., higher health insurance premiums for those not vaccinated.  We can curb extreme ruffian behaviors.  Carrots will attract them to socially beneficial behaviors.  Sticks will make it very inconvenient to continue ruffian behaviors.

But, do we have the collective will to do this?  In contemporary society, ruffians are also voters.  Politicians, whose overarching objective is to get re-elected and retain power, covet these votes.  Thus, they proclaim the ruffians to be patriots.  They offer the ruffians nothing but affirmation, but that is apparently enough.  Ruffians are not looking for policies, programs, or problem solutions.  They want to be recognized as rough, tough, and self-sufficient patriots.  If we think otherwise, we are at risk.

Stories

I have been thinking about the roles stories play in our lives.  By story, I mean an account of past events or the evolution of something.  Of course, a story can also be an entertaining account of imaginary or real people and events.  Many stories provide a combination of explanation and entertainment.

Stories usually have a time frame.  Stories about the past are called history.  Stories about the present are termed news.  Stories about the future may be forecasts or science fiction.  Sources of historical stories may have to be trusted to be believed, as one can seldom “know” they are true.

The types of stories include personal, family and professional.  Stories can address events in neighborhoods, towns, cities, states, and countries.  Religion is laced with stories, as are sports.  Religious services and sporting events tend to be stories in themselves.

Stories serve a variety of purposes.  They can explain what happened, provide guidance on what you should do, and possibly provide predictions of what will happen. Stories can educate in terms of what you need to know and entertain, providing enjoyment.

Stories providing guidance might be rule-based, e.g., the Golden Rule.  Guidance might be expressed as step-by-step procedures, i.e., do A, then B, then C.  Methodologies are less prescriptive, i.e., consider X, then Y, then Z.  Often the guidance is implicit and must be inferred.  Religious leaders and sports coaches may help with this.

Are stories useful?  Stories are a primary way of communicating social and cultural norms.  People understand and remember stories much better than abstract principles.  Family stories can enable people to know the events and connections that knit the family together.  Stories can be quite entertaining, jokes being an exemplar.

How can one know if stories are “true”?  This is tricky.  Did the Holocaust happen?  Did the Apollo astronauts really land on the moon?  Did 911 happen?  There are people who believe that these three things did not happen, or were just staged.  I believed they happened, but have no empirically-based knowledge.  I just believed what I was told.

One might argue that things experienced with your own eyes are real.  However, everything I “know” about these three things is due to television or published materials, not first-hand experiences.  Not much of what any individual knows is based on first-hand experiences.

I had just finished reading a chapter of a children’s history book to one of my young children.  I said to her or him, “That wasn’t just a story.  It really happened.”  They responded immediately, “How do you know that?”  I said that I did not really know, but believed it was true because I trusted the source of the information.

“How do you know who can be trusted?”  They are leaders or teachers who would not mislead us.  “Well, how do they know what happened many years before they were born?”  They trusted somebody else.  I realized their observations were correct.  I believed someone who believed someone else, who believed someone else, etc.

We cannot really “know” the truth of all the stories we have come to believe.  Most of the confluence of stories that influence our lives are, in effect, taken on faith.  However, what if we move beyond assessing whether all stories are true to simply determining which stories are false.  We can refute stories that available data contradict.

This approach is premised on people paying attention to and understanding available data.  Unfortunately, the motivation, knowledge, and skills to do this are far from pervasive in our society.  One third of Americans lack numeracy skills to make calculations with whole numbers and percentages, estimate numbers or quantity, and interpret simple statistics in text or tables.

Beyond these skill deficiencies, there are the psychological biases and heuristics identified by Daniel Kahneman, Amos Tversky, and other researchers.  For example, people ignore base rates, e.g., the probability of being struck by lightning.  They base probability estimates on their abilities to imagine outcomes happening.  They pay too much attention to statistical noise.  They seek information that confirms preconceptions.

Social media has greatly exacerbated these limitations.  Hordes of self-proclaimed pundits broadcast every story imaginable, targeting those who ardently believe their versions of reality.  In this way, erroneous beliefs are repeatedly reaffirmed.  Marketing research and political polls assess these beliefs and target products and services accordingly – and target political appeals as well, seeking money and votes.

We could ignore this misinformation, chalking it up to first amendment rights.  However, when these story tellers undermine public health and wellness, you have to pause and reflect on the state of affairs.  Are there any limits on freedom of speech and the consequences of what people say and advocate, as well as how they behave?

Do the unvaccinated have the right to cause the increasing deaths of children?  Do politicians have the right to ban protective measures?  People in “stand your ground” states have the right to shoot people they perceive to be threatening.  Might this type of thinking evolve to the point that drivers have the right to kill pedestrians that they perceive to be threatening?  Clearly, social values and norms should limit such behaviors and need to be revisited.  However, consensus in this arena is rapidly diminishing.

Who Pays Taxes

I am in the middle of reading Rebellion, Rascals and Revenue: Tax Follies and Wisdom Through the Ages (Princeton University Press, 2021) by Michael Keen and Joel Slemrod.  This delightful volume provides an entertaining history of taxation, which they define as “the extraction of resources by coercive rulers.”  This got me thinking about taxation in the US.

The population of New York City is almost 8.5 million.  65,000 of these people play 51% of the taxes.  In other words, 0.8% of the residents of the city pay 51% of the taxes.  The top 1% of earners nationally – 1.4 million people — pay 40% of federal income taxes.  The top 10% pay 70%.  The top 25% pay 87%.

Is this a good or bad situation?  Let’s just assume that federal, state, and local budgets are a given.  We have to fund these budgets somehow.  Medicare, Medicaid, and Social Security consumes 50% of the federal budget, so many millions of people depend on these budgets.  We need the 1% to pay these bills.  Perhaps we could get them to pay for everything.

Double the taxes on the 0.8% of New York residents.  Then, 99.2% of the population of the city would live tax free.  Increase the taxes of the top 1% nationally by 150%.  Then 99% of the US population would live tax free.  Other than for the top earners, the US would be a tax-free country.  I can imagine 99% of the electorate voting for this.

What would the 1% do?  They would certainly lobby to avoid this fate.  As they provide a huge fraction of campaign donations, they might motivate legislative relief.  Yet, the electorate favoring the tax-free model might turn these Members out of office and replace them with tax-free advocates.

The 1% could abandon New York, and then the US.  They could move their investment funds, hedge funds, banks, and corporations to more tax-friendly havens.  Alphabet, Amazon and Apple might be among the first immigrants, followed by Facebook, Microsoft, and Twitter.  They would relist on the exchanges of their new home countries.

Without the 1%, taxes on the middle class would have to increase substantially to meet the budget requirements noted above.  This might work if we could greatly increase their incomes.  Here is an extreme scenario.  A one-time redistribution of all the wealth in the world would result in something like $20,000 per person.  What would happen then? 

Perhaps they would all invest in index funds.  Very unlikely.  They would buy food and clothes and perhaps plots of land.  Although, who would own anything to sell?  Slowly but surely, I imagine these expenditures would creep back into the hands of the most talented.  Eventually, we would be back in the same place, perhaps decades or even centuries later.

An alternative strategy would be to use these resources to prepare everyone to fend for themselves in our complex world.  Everyone would be educated.  Appropriate, productive jobs would be created.  New wealth would be created.  A portion of everyone’s $20,000 would be invested in this endeavor.  I can imagine that many would not be pleased that this happened to their allotment.

This sounds overwhelming.  Is there a more straightforward way to achieve income tax equity?  We simply need to increase median per capita income in the US to parity with Sweden (16% higher than US) or, better yet, Singapore (51% higher).  This would increase personal income in the US by $1.5-4.6 trillion.  In 2020, the total income taxes collected in the US was $3.7 trillion.  Thus, the increases due to higher median incomes could easily contribute significantly to the US tax revenue.

How can we increase incomes by 16-51%?  We need higher-paying jobs?  This requires greater productivity for existing jobs or, for new jobs, greater value added.  The 25 million new jobs in the skilled technical workforce, that I have discussed in earlier posts, provide opportunities for substantially higher incomes.  The average starting salary for a new STEM graduate is $70,000; for a non-STEM graduate is it $30,000.  It may be reasonable to assume that the newly minted entrant to the skilled technical workforce will earn $50,000 at the outset.

25 million people earning $50,000 amounts to $1.25 trillion.  Thus, improving the incomes of one-sixth of the US workforce, results in almost achieving the low end of the above goal.  If another 50 million people earn an additional $20,000 due to higher productivity, we add another $1 trillion.  Improving the incomes of just half of the US workforce heads us toward the middle of the above goal.

Achieving these impressive outcomes requires that we provide the US workforce with the knowledge, skills, and tools to be competitive in the global marketplace.  Education, training, and internships will be key.  We can afford this investment because more people will be paying higher taxes, while also enjoying the personal benefits of significantly higher incomes.  And, coercive rulers can still extract resources from the 1%.

How to Get Ahead

Let’s say technology innovations relevant to your enterprise happen every N years.  Further, it takes you M years to decide to adopt an innovation and once adopted the innovation is sustained for L years.  To remain at the forefront, you need at most M = 1 and L = 1.  That way, you will always be on the cutting edge of technology.

Should you focus on reducing M or L?  M means that you are deploying platforms M technology years behind.  L means you are sustaining platforms that are eventually L + M years behind.  Further, should you focus on technologies with small or large N.  For N = 1, the number of years behind equals the number of technology generations behind.

Obviously, the answers to these questions depend on the consequences of being behind.  We need to differentiate competitive versus sustaining technologies.  Competitive advantage decreases by e-A(L+M) for competitive technologies and by B (L+M) for sustaining technologies.  Thus, the losses are either exponential or linear.

We could formulate a few equations at this point, but let’s just think it through. L+M is a major problem unless you have at least one of the following capabilities:

  1. You can upgrade to new technologies whenever they become available
  2. You can adopt technologies before they exist, by investing in options

So, either you are sufficiently fast and flexible to adapt to changes as they happen, or you have invested in technology options that enable rapid execution once uncertainties have waned.  Both of these can contribute to achieving L+M=0.  This is common in commercial industry.

However, defense agencies take 20+ years to agree on requirements for weapon systems platforms they will use for 30-40 years or more.  That’s how you end up with requirements for card readers on ships and floppy disks on airplanes.  There has to be a better way.

Capabilities 1 and 2 above can change the game, except for one fundamental hurdle.  The “waterfall” of mission to requirements to capabilities is in the way, often stretching the process over decades.  A “spiral” model would enable addressing missions, requirements, and capabilities in parallel.

The waterfall model reflects the supposed arms-length relationship between government and industry.  However, with many defense markets now effectively monopolies or duopolies, government-industry relationships could benefit from discarding this outmoded model.

Here is a possible approach.  New mission needs are addressed by teams of users, technologists, and payers.  Their goal is to synthesize alternative concepts for meeting these needs, for example, a human piloted aircraft, a remotely piloted aircraft, and a swarm of drones.  Their task is not to determine the requirements for each concept.  Instead, perhaps using three teams, they are to formulate a conceptual design for each alternative.

One or more of these conceptual designs in then chosen for detailed design and development by the same team, likely expanded to include additional competencies, for instance, test and evaluation.  This team is not working from requirements because no one will be asked to bid on meeting requirements.  Instead, government and industry, and perhaps academia, will collaborate to synthesize and refine detailed designs and specifications.

These specifications will be issued in an RFP for competitive bids to manufacture the fully designed solution.  These bids will not include design and development as that will have been completed.  Instead, the bids will be limited to fixed-cost production proposals.  Nevertheless, the production workforce so dear to Members of Congress will likely be sustained in their districts. 

By replacing the charade of market-based competitions, the time from concept to deployment can be substantially reduced.  Since time is money, the costs of systems will also be very significantly decreased.  If options-based thinking is embedded in the design and development processes, capabilities 1 and 2 noted above will be inherent.

How will this impact industry?  The work needed will be streamlined, for example, by eliminating the onerous requirements process.  Industry will support design and development via time and materials contracts.  Consequently, all intellectual property, except for manufacturing processes, will be government owned.  As production contracts will be fixed price, industry can add any level of profits they think will be competitive.  Industry’s proposed fixed unit price will not be audited.

I understand that this would be a dramatic change in how government and industry do business.  Consequently, it would be could to pilot test this approach on a set of mission needs where L+M problems are imposing severe risks of not creating needed competitive advantages.  Once successful and refined, this approach could be applied more broadly.

Health, Education & Productivity

A recent email brought notice of four impressive National Academy reports.  Two were 2021 reports on High Quality Primary Care and The Future of Nursing.  One was a 2017 report on Pathways to Health Equity and the other was a 2012 report on Primary Care and Public Health.  These are all impressive pieces of work.

The findings and recommendations of these efforts are well reasoned and likely, if implemented, to lead to improvements.  However, the greatest constraints on health and wellness outcomes, as well as the costs of these outcomes, are not due to medicine, drugs, or reimbursement practices.  Fragmentation of the US health and wellness ecosystem greatly constrains what improvements can be entertained and adopted.

There is a central faith in the US that the free-market system will result in better outcomes.  Your health and wellness provider wants to maximize what they charge you.  Your health and wellness payer wants to minimize what costs they will reimburse.  Pharma wants to charge you as much as possible.  Everyone is trying to maximize their profits and provide you the minimal quality of services you will accept.

Doctors are often limited to 20 minutes per patient to sustain provider cash flows.  Payers may, in my experience, deny every claim, hoping you will not figure out how to protest.  Pharma will charge you enormous sums for drugs for which there is no evidence of helping you, but you are convinced are your only choice.  Patients are cash cows being milked whenever possible and, if not inconvenient, legally.

Health and wellness used to be the poster child for predatory financial practices, but this sector has given way to higher education.  The increases in the costs of higher education have far exceeded the increases in health and wellness.  Now, students have become cash cows, accumulating student debts far in excess of total US credit card debts.  We will soon get to the point that former students are still paying off loans when their children are in college, accumulating their own debts.

The government-backed student loan program gave universities license to steadily raise prices to fund out-of-control administrative and staff costs while moving to part-time faculty to reduce the costs of delivering education.  The fact that 25% of these faculty members are on welfare – mainly Medicaid and food stamps – did not give pause to university executives.  They are just trying to balance their bloated budgets.

To be fair, a significant percentage of budget increases are due to having to provide remedial tutoring to students whose K-12 experiences did not prepare them for college, as well as mental health services for a large percentage of students stressed out by the whole experience.  A large percentage of K-12 programs do not prepare students for college, or really for anything.  For example, only 37% of US high school graduates are proficient in reading.

Consequently, colleges in striving to accommodate increasingly ill-prepared K-12 graduates have to fund remedial services.  An alternative would be national standards for high school graduation, but local control of K-12 education works against this.  Local taxpayers are unwilling to fund the K-12 programs that would yield college-ready high school graduates.  Thus, a large proportion of US high school graduates are not prepared to compete with graduates from Asia and Europe. 

My recent analyses show that students graduating from high school with GPAs of 4.0 and math SATs of 800 will do quite well in college.  For the most part, parents invested in these students in terms of attention, time and money.  A large proportion of students did not experience such investments.  Here is a likely indicator of the problem – if you do not achieve a 3rd grade reading level by the end of 3rd grade, chances are you will never go to college.  Thus, the die is cast for 9-year-olds!

We would also like our healthy and educated population to be productive and competitive in the global marketplace.  Focusing on productivity is a mixed blessing.  On the one hand, it causes employers to invest in technologies to enhance human productivity.  On the other hand, they may invest in automation to eliminate human labor. 

Employers want the lowest cost means to secure revenues.  Thus, home healthcare workers, one of the fastest growing segments of employment, are inadequately trained and very poorly paid.  Nursing is poorly paid and older nurses are encouraged to retire to make room for younger nurses who earn less.

Higher education has rapidly moved to low-cost part-time faculty members.  Increasingly high-quality online offerings may eliminate the need for faculty members.  Everyone will learn physics from Richard Feynman and economics from Paul Samuelson, even though they are no longer with us. 

The overarching goals are maximizing revenues, minimizing costs, and optimizing profits.  Cash cows are zealously sought.  Exploitation of consumers and workers is all too common.  The free-market economy has benefits, for example, in terms of innovation.  However, these benefits are not widely shared.  The winners gain enormously.  Everybody else joins the herd of cash cows.

The fragmentation of our economic and social system enables everyone to focus on their personal success in terms of income, education, and health – and automobiles, bank accounts, and housing.  The theory is that everyone doing this will lead to all of society being better off.  For those pundits arguing this, I would like to see hard data that supports these assertions.  Absent such data, they should be immediately fired or flogged.

Addressing Complications

The world seems to be coming increasingly complicated.  Everything seems connected to everything.  It seems reasonable to argue that this has long been the case.  Diseases migrated from the old world to the new world, as did social and cultural norms.  However, this process took years or decades.

Now, accelerated by technology, it takes days or less.  Communications technology, in particular, has enabled rapid access to information and social connections, ranging from CNN and the Internet to Google, Facebook, and Twitter.  Consequently, we are engulfed in connectivity.

We thought this connectivity would be a total blessing, but it truly is a mixed blessing.  We all used to get the same news, perhaps from Walter Cronkite and Newsweek and Time.  Now many people get only news tailored to their preconceptions.  They never see or hear anything at odds with what they already believe.

In fact, media and personalities design news for them, independent of any factual basis.  If they think Jewish space lasers started the California wild fires, the news they see will encourage that.  If they think Donny Cheetos won the last presidential election, the news will reinforce that.  The goal is to get their votes, while not committing to doing anything to directly benefit these voters.

This is truly unfortunate, but Darwin will take care of this conflict, as the current surge of coronavirus cases among the non-vaccinated illustrates.  However, the complexity of the relationships among national security, healthcare delivery, higher education, and energy and climate are more profound, even without adding transportation, power, water, food, etc.

We cannot address problems in each of these areas like we are playing Whack-A-Mole.  Simply moving problems around seems momentarily successful, but ultimately a failure, wasting resources and the time to respond effectively.  Society needs to address this matrix of interacting challenges wholistically.  It is not about who wins today.  It is about how everyone wins tomorrow.

It starts with understanding the complications.  Education leads to health.  Education and health lead to productivity.  Healthy, educated and productive people contribute more to the economic pie that they all share.  The equation is simple.  If more people are contributing to the pie than are drawing from the pie, then everyone is better off, everyone has the potential to join the contributing class.

Quite simply, if someone is drawing from the pie to eventually becoming capable of contributing to the pie, then over time everyone will be better off.  Everyone needs help at some point; everyone can provide help at some point.  Helping everyone enables everyone at some point to give back.  The gift may be large or small.  The key is to make sure that everyone perceives the gift.

The Spectrum of Talent

Economic growth, many argue, stems from technological innovation.  Does technological innovation depend on the flow of STEM talent from our educational system?  That certainly was not the case in the 19th and 20th centuries.  Inventors emerged from all corners of society, few equipped with degrees in science and technology.

The transformation from inventions to innovation more significantly depended on highly educated people to design factories, create supply chains, and fashion communications that attracted consumers to fuel increasing demands for digital devices, communications platforms, designer clothes, sports and entertainment.  Turning a good idea into a pervasively desired commercial offering takes talent.

It seems to me that great ideas – inventions – emerge from a wide range of insightful, creative, and committed sources, many steeped in experience more than education.  Educated talent is brought to bear to scale technical inventions into market innovations.  Many, perhaps most, inventions are not scalable and do not “make the cut.”  A few do and are enormous market successes.

What limits success?  Do we need more inventors or innovators – or both?  Another possibility is that the market can only absorb so much success.  Are we all ready for digital devices, driverless cars, teleportation, and space travel?  Perhaps innovations happen when ideas converge with compelling needs.  Then, educated talent makes sure we learn about, embrace, and can afford inventions that become innovations.

Talent, then, is waiting in the wings for inventors to create things that can be transformed into innovations.  How might we facilitate this?  It seems to me that we need to get inventors and innovators to frequent the same pubs.  Transformation is a social process that, while watching one or another sporting event, gets people talking about what each other does.  The key is bringing ideas and talent together.

I am not limiting this idea to scientists and engineers – creators and exploiters of technical knowledge.  The pub needs to be welcoming to artists and artisans, humanists and historians.  The currency is ideas and insights, not bucks and bitcoins.  Enough alliteration.  You get the idea.  We need the full spectrum of talent to address problems and create valuable solutions.

Here is a crazy idea.  What if pubs had agendas, say on Mondays to avoid competing with sporting events?  Each Monday would address a different challenge – education, energy, healthcare, etc.  Each pub would somehow capture all the ideas discussed and provide them to a national clearing house.  The ideas from thousands of pubs would be aggregated and presented on a weekly PBS show, What America Thinks.  I realize polls try to do this, but they don’t offer pub food and drinks.

We need the discussions and debates to be live and hands-on, not filling in forms on your tablets or laptops.  Teams, Webex, or Zoom might provide the venues, but I want to see if the person I am arguing with drinks beer, wine or vodka, and has fries or a side salad.  When he or she makes a great point, I want to buy them another drink.  I want to be able to show them pictures of my grandson, my favorite red panda at the zoo, or the classic 1940s car I am restoring. 

I think we have the talent, energy, and enthusiasm to address and resolve major societal challenges.  However, this cannot be an academic exercise pursued by specialists.  It needs to be a team sport that we pursue together.  While I advocate meeting in pubs, it could be in churches or at social clubs where all perspectives are welcome.  The venue has to allow all values, concerns, and perceptions to be heard, not necessarily agreed with but heard.

Rethinking Health, Education & Productivity

As I have discussed many times before, a compelling overall goal is a healthy, educated, and productive population that is competitive in the global marketplace.

  • Anyone who is not healthy is a drag on the national economy
  • Anyone who is not educated is a drag on the national economy
  • Anyone who is not productive is a drag on the national economy

Consequently, we need to invest so this does not happen.  Everyone, regardless of age, health, disabilities, ethnicity and inclinations, needs to receive the investments necessary to keep them from being drags on the economy.  Everyone contributes, in one way or another!

How can this be accomplished?  We need to move beyond rationing healthcare, education, and workforce training.  We need to make sure that everyone is enabled to be contributors.  There are no spectators; only participants.  This may involve working, volunteering or making woodcraft or clothing for others, but not avoiding participation.

Let’s put this in perspective, according to AARP, American’s population of people 50 years old and older constitute the third largest global economy behind the US and China.  100 million older Americans and disabled Americans represent market forces.  Globally, of course, the impact is even greater.  Everyone can be and should be contributors.

To maximize this possibility, we need to start earlier in pre-school and K-12.  No one – no child, no teen, no adult – should be left behind.  We want to maximize everyone’s potential to their benefit and ours.  Monies spent on health and education are not costs.  They are investments that will benefit everyone.  Healthy, educated, and productive people are human capital assets.

We include financial and physical assets on balance sheets, but not human capital.  We tend to want to maximize financial assets, minimize physical assets, and employ as little human capital as possible.  However, humans are central to manufacturing products, delivering services, and consuming both.  Henry Ford lowered prices and increased pay so that people could afford his cars.  Without humans, our economy disappears.

Investment Priorities

We have, of late, been focused on federal policies to assure and enhance the STEM talent pipeline in the US.  There is a widespread sense that the pipeline is not as robust as the economy and competitiveness requires.  Are we trying to “fix” STEM? 

Maybe, but we need to keep priorities in perspective.  As I have frequently articulated elsewhere, the overarching goal is a “healthy, educated, and productive population that is competitive in the global marketplace.”  Thus, the STEM talent pipeline is just one element, albeit a very important element, in the complex adaptive system we need to address to achieve the overarching goal.

The starting point is health and wellness. Population health involves integration of health, education, and social services to keep a defined population healthy, to address health challenges holistically, and to assist with the realities of being mortal.  A healthy and well population is an asset that can provide the basis for competitiveness and economic growth.

Next is education, ranging from pre-school to K-12 to post-secondary education, which includes colleges ranging from community colleges to baccalaureate-granting institutions to graduate and professional schools.  Also important is job-related training received from employers, including the military.  The objective is lifelong education.  Learning is an ongoing process, not something one finishes.

Workforce productivity is enabled by heath and education, but requires substantial additional investments.  Some of this investment is in training to gain needed knowledge and skills.  Another major investment is in the technologies to leverage knowledge and skills.  This can include, for example, technologies to support detection, diagnosis, and remediation of failures of increasingly complex systems, for example, increasingly autonomous vehicles.

The intent underlying these elements of the overarching goal is to foster not the lowest-cost workforce, but to enable a workforce that can successfully compete in any arena.  This workforce will likely be highly compensated, but its effectiveness and efficiency will yield revenues and profits that dwarf the investments in people needed to succeed, now and repeatedly, in the global marketplace.

Consider returns on such investments.  The costs of health, education, and productivity are fairly clear.  What are the returns?  People work, create value, earn incomes, consume value created by others, and pay federal, state, and local taxes.  There is a multiplier effect as people’s expenditures become other people’s income, and their expenditures become other people’s income, etc.  Taxes are paid on all these incomes.

All of these cash flows can be financially modeled, over time.  ROI can then be calculated using a discount rate appropriate for borrowing the monies needed for these investments.  As reasonable as this sounds, it is not done.  Instead, highly fragmented and well-resourced vested interests focus on assuring their “rice bowls.”  Elected legislators aid and abet this feeding frenzy.  Consequently, there are no society-wide overarching investment priorities.

DoD Acquisition as a Sport

The US Department of Defense acquires systems to equip forces to assure the national security of the country.  The process of acquiring systems is termed Acquisition, which involves a very complex organizational system across the Office of the Secretary of Defense, the four (now five) military services, and the aerospace/defense industry.  It is very competitive.

If Acquisition were a sport, how might it be characterized?  We can immediately eliminate sports such as archery, badminton, golf, ice dancing, skiing, and tennis, where results are totally dependent on individual performance.  While individuals such as the Secretary of Defense or the Military Service Secretaries can have enormous impacts, they have influence but not control over this complex adaptive system.

What about baseball, basketball, football, and hockey – the big four in the US?  Baseball focuses on the duel between pitchers and hitters; Acquisition is not at all this focused.  Basketball relies on five key players, of which two or three need to be superstars.  In football, the quarterback, running backs, and wide receivers dominate.  Hockey is similar, with a goalie charged with preventing goals.  Lacrosse fits in here as a hybrid of basketball and football.  Acquisition is not at all like this.

This leads us to rugby and soccer.  These sports have rules, but they do not stop the clock for commercials.  Players have “positions,” but anyone can score.  Players do not wear protective gear.  Rugby allows carrying the ball while soccer does not.  Both sports are much more fluid and not dominated by referee decisions.  Of course, at the other extreme is cricket where games can take several days, meals, and sleeping.

So, what kind of game is Acquisition?  Here are ten rules of the game:

  1. Games can take many years, sometimes with delays of multiple years.
  2. Teams typically include the usual players with occasionally surprise draft choices.
  3. Rules of the game are fluid, subject to influence by many stakeholders.
  4. Officials can appear from anywhere and invoke unheard of rules.
  5. Proprietary advantages can be declared unfair and made public technology.
  6. Plays that have long been successful can be ruled illegal.
  7. Winning can include a nominal trophy, but not all the expected accolades.
  8. Proposed pricing is open to renegotiation after winning.
  9. The fruits of winning may diminish but pricing commitments remain.
  10. Winning does not necessarily result in subsequent higher seeding.

Despite all this, the same teams seem to win all the time.  It is as if the Red Sox and Yankees merged, the Celtics and Lakers did as well, the Cowboys and the 49ers followed, and the Canadiens and Maple Leafs also merged to win the trophies every year.  All that remains are the commercials for beer and pickup trucks.

Is Everything Connected to Everything

For many years, my research related to design, operations, and maintenance of national security and space systems.  Over the past two decades, I have added healthcare delivery, higher education, urban systems, as well as energy and transportation.  These complex ecosystems interact in myriad ways.  In particular, they interact in terms of claims on societal resources.

Is it more important that people are healthy or educated?  Is green energy a higher priority than transportation?  Is national security an element of competitiveness?  It seems like there are tradeoffs everywhere.  Is that the case and, if so, how do we address them?  It seems to me that we do not want to tradeoff someone’s heart surgery versus refueling an F-35.  There needs to be a more principled approach to this.

I have found this approach to be useful.  For the sake of argument, let’s limit the discussion to national security (S), healthcare delivery (H), higher education (E), and energy and climate (C).  We are interested in formulating an investment portfolio that maximizes society utility U (S, H, E, C).  How might this be done?  Here is how we might proceed.

W start by asking the S, H, E, and C constituencies what they could deliver for budgets equal to 80%, 100%, 120%, and 140% of their current budgets.  Given that they are seeking to maximize their budgets, each would argue for how they could increase U(S), U(H), U(E), and U(C).  That is exactly what we want them to do.  Once they make their arguments, how do we decide?

We need to decompose U (S, H, E, C) into U [U(S), U(H), U(E), U(C)].  Then, we need to consider interactions.  Are we better off if people are healthy and educated, or if they are nationally secure or energy secure?  There are many possibilities here and much debate is warranted.

What is the appropriate form of U (S, H, E, C)?  A simply weighted linear formulation presents the problem of allocating all the resources to the investment that will receive the greatest increase of utility, although the nature of diminishing returns will limit this extreme.  A functional form that includes cross terms, e.g., U(X) times U(Y), will limit this extreme, but requires assessing weights in a much more complicated fashion.

Another approach is to employ a weighted linear formulation but pursue a range of scenarios that systematically vary the weights.  What is the best outcome for S, H, E, and C?  Once we understand these distinct possibilities, how can we creatively decrease the distances among the outcomes?  My experiences have been that once everyone understands different views, many creative proposals emerge.

The key is to get each stakeholder group to understand the perspectives of the other stakeholder groups.  Usually, everyone realizes that compromises are necessary to moving forward.  Everything is connected to everything, but this need not deter us from making incremental progress that everyone values.  We are not in a “zero-sum” game where there are only winners and losers.  We can all take turns helping each other out.

What Has Changed

I began my career as an engineering assistant at Raytheon over 50 years ago.  Since then, I have founded and managed five high-tech companies, and held faculty positions at six universities.  These experiences led to working with 100+ companies, agencies, foundations, etc.  What has changed over the course of this journey?

  • Increased computing power at steadily decreasing costs, big data, and visualization technology enabled, but did not always lead to, increased evidence-based decision making.  There were substantial investments in ICT in banking, finance, and retail.
  • Substantial consolidation in the healthcare, aerospace and defense, automotive, and semiconductor industries led to much larger enterprises and but steadily decreasing competition.  A few companies dominate each market sector.
  • Between the mid 2000s and late 2010s, applications to form businesses that would likely hire workers fell 16%.  New business applications fell 24% in 2008, 4% in 2011 and 6% in 2014, and grew just under 1% last year.  Bottom-up innovation suffered.
  • Online service delivery soared, especially for retail and mobility services.  Supply chains became increasingly automated.  Portable digital devices became pervasive with consumers.  Online social media flourished.
  • Starting perhaps with the 9/11attacks on the US, terrorism has taken center stage, increasingly accompanied by cyber threats and the manipulation of elections, pervasively intertwined with social media, fake news, and conspiracy theories.
  • Driven by the recent pandemic, remote working from home and online education soared, undermining the value of bricks & mortar as well as the industries that serve these establishments, e.g., food and maintenance services
  • Despite the power of computing and connectivity, humans remain behavioral and social animals with desires, inclinations and biases similar to their less computer-oriented and connected ancestors.  We have become digital natives, but still natives.

How should we interpret these seven trends and what do they portend for the future?

  • Continued technological innovation will increasingly enhance efficiency and effectiveness of healthcare, education, energy, national security, and other domains, leading to enormous service improvements with lower costs.
  • Workforce displacement will be substantial as routine jobs and tasks will be increasingly automated while there will be strong growth of jobs for the skilled technical workforce; many will be educated and trained in community colleges.
  • The total population will need to be educated, equivalent to a high school graduation rate of 100%, to be able to join the skilled technical workforce.  To accomplish this, US community college capacity will need to triple.
  • Substantial investments will be needed to facilitate these changes and keep the US competitive in the global marketplace.  Beyond investments, policies associated with immigration and employment will need to be aligned with these objectives.
  • All of the above will require new perspectives on change and associated visions for pursuing these changes.  Discussions and debates will center on global competitiveness and needs for a healthy, educated and productive workforce.
  • Equitable access to opportunities and services, such as healthcare and education, will receive particular attention and targeted investments, both to increase equity and leverage talent in the global competition.  There will be a shared sense that no one can be left behind.

The Inequality of Hidden Taxes

The 2020-21 “multi-demic” of the coronavirus, economic disruption, and racial unrest has prompted a wealth of promising ideas for how to improve everyone’s lives in terms of health and wellness, economic security, and racial equity.  As appealing as these ideas may be, they will face enormous implementation challenges and hurdles.

We have been here before — in 1968.  Atrocities in Vietnam, the King and Kennedy assassinations, and riots across the country from Watts to Washington precipitated general unrest.  The Kerner Commission addressed the riots and provided quite reasonable recommendations for addressing racism.  They were never implemented.  What challenges and hurdles deterred action then and might affect us now? 

There are certainly social and cultural divides underlying political deadlocks and occasionally deadly conflicts and violence.  We need to work, as some articulate, to “heal the soul of America.”  Such aspirations are similar to those following 1968.  Progress should, hopefully, provide a foundation for shared aspirations.

However, even if the social and cultural divides were ameliorated, we will still face enormously complex economic and political issues.  The United States is, quite intentionally, a highly fragmented ecosystem with responsibilities, resources, and discretion at national, state, and local levels.  This fragmentation hinders creation of integrated solutions for almost everything except possibly national security.

Lack of understanding of the causes and implications of this fragmentation causes widespread public misunderstanding of why seemingly good ideas encounter opposition and often fail.  I contend that increased public understanding of the complexity of the US ecosystem will enable enhanced advocacy and well-informed voting that, over time, will increase support for broadly-based initiatives.

Heath & Wellness

Consider three examples — health, education, and energy.  The US spends more per capita on healthcare than any other country, and achieves rather mediocre results, particularly for those challenged by social determinants of health.  Why does this happen?  Our health system is designed to address acute care rather than chronic care.  Chronic issues are judged to be responsibilities of individuals, rather than “the system.”

Healthcare providers make most of their profits from acute care for cancer, cardio, and ortho conditions.  Payers minimize expenditures on chronic care because the payoffs are too far into the future.  Providers, payers, drug companies, and medical device companies have optimized their organizations to prosper in these conditions.  They have become vested interests opposed to needed changes.

More specifically, over the past several decades in the US, wages have stagnated at an annual growth rate of 1-2%, particularly for low wage workers.  At the same, the costs of labor to employers have grown annually by 8-10%.  This difference is due to the steadily increasing costs of health insurance.  Healthcare providers charge patients with employer-based insurance roughly twice what they charge Medicare and Medicaid patients.  They make up their losses on these patients by over-charging others.

Put simply, people are sacrificing wage increases to pay health insurance increases to compensate for other people’s healthcare costs.  Employee co-pays have increased, but people still like their “free” insurance.  However, it is far from free as they have sacrificed possible substantial raises to this “hidden tax.”  People are unknowingly subsidizing patients for which the government will not pay the full costs of healthcare.  The government has masked this exploitation of wage earners.

Education

It would be great if everyone was healthy and educated.  A small proportion of the US population is very well educated, better than any other country.  However, the overall level of student achievement is well behind other OECD countries.  We do not invest in everyone and a large proportion of young people are left behind, particularly those in poorly performing K-12 schools.

16% of graduates produced by K-12 education are STEM ready.  This limits the number of STEM college graduates, whose average starting salaries are $40,000 higher than non-STEM graduates.  Another major problem is the limited number of non-college bound students who are unprepared to join the “skilled technical workforce” to manufacture, operate, and maintain the increasingly complex systems upon which our society depends.  Solving this problem requires transforming K-12, but local control of K-12 often stymies any changes.

The costs of a college education have soared, leading to student debt exceeding the US credit card debt.  This has delayed marriages and home purchases, as well as having children.  These escalating costs have actually replaced healthcare as the poster child for uncontrolled costs.  Faculty salaries have increased quite modestly, but the costs of administrative staffs and salaries have soared.  One well-known university system has more staff than students, not counting faculty members.

One driving force is the desire for tuition to be high for those who can pay it, while everyone else gets a 50% discount.  Another driving force is the need to provide remedial courses for those whose K-12 education was inadequate.  Then, there are the costs of advising, mentoring, placement, and mental health services for the many students not prepared to perform and compete in the supposed meritocracy of academia.  The classroom has become a decreasing element of higher education.  The end result is a “hidden tax” on both those who can afford it and particularly for those who cannot afford it.

Energy

There seems to be increasing acceptance, grudgingly by many, of the need to achieve carbon (and methane) neutrality to halt global warming.  This will require shifting to electrical power that relies on hydro, solar and wind energy, and possibly smaller, safer nuclear plants.  This will totally disrupt the fossil fuel industry, which is not a monolith – there are over 3,000 electric utilities and 9,000 fossil fuel companies in the US.

This fragmentation of the energy industry will make it quite difficult to formulate an agreed-upon path forward.  Government incentives, investments, and regulations, as well as training for new jobs, will be important.  Public understanding and engagement will also be critical.  We need methods to engender this understanding and engagement. 

Energy consumption is a central element of the energy domain.  Everyone pays increased taxes, directly or indirectly, to subsidize car ownership and usage.  There are “external costs” of automobiles, the measurable costs for parties other than the car owner.  Several studies have assessed the main externalities of driving to be the costs of congestion, accidents, air pollution, noise, climate change, nature and landscape damage, water pollution, oil pollution and energy dependency.

A variety of estimates hover around $0.33 per vehicle mile driven.  There are 3.3 trillion miles driven annually in the US, so the external costs are a bit over $1 trillion per year.  Dividing by 260 million US residents of driving age yields roughly $4,200 per person per year.  The number of cars owned is correlated with family income at 0.70.  The extent of car usage increases with income.  Thus, the “hidden tax” of $4,200 per year disproportionately affects lower income people, even those without cars.

This tax is very much hidden.  It is mostly paid by government, either now or eventually.  It includes the healthcare costs due to pollution, noise, temperature, etc.  Put simply, $4,200 is annually spent on each person in the US regardless of the extent of their driving.  This $1 trillion could be much better invested in health and education than in compensating for energy misuse.

Stakeholders

There are many millions of jobs associated with healthcare, education, and energy, as well as trillions of dollars of investments in the status quo.  Corporations, unions, and advocacy groups will resist transformation of these domains, despite the high costs and poor performance of healthcare and education, as well as the clear dangers of continued reliance on fossil fuels.  Paychecks and corporate bonuses are at risk.

However, a society that is fair and equitable would not have these hidden taxes.  People with higher incomes would pay more of these costs, and they might declare them as tax deductions. People would get credit for paying for other people’s health, education, and energy consumption.  These hidden payments would become transparently apparent to everyone.

As reasonable as this may seem, it will face challenges from all the people being subsidized.  Their challenges will be tribal, perhaps couched as ideological, but the simple explanation is that they are used to getting benefits that they have not earned.  To avoid this loss, they will devise self-serving arguments about principles in conflict with their complete lack of truthfulness and integrity.

The public needs to be engaged and educated to understand the complex challenges we face.  They need to be well informed to wisely choose which policies to support and advocate.  This education and possibly demonstrations should be provided collaboratively by a range of partners representing economic and political interests, scientific and technical expertise, and the social and spiritual elements central to this ambitious societal endeavor. 

An equitable society does not impose hidden taxes, particularly taxes that penalize lower income people, often with them being unaware they are being taxed.  Instead, they feel their paychecks are somehow less and less sufficient to pay their bills.  Exposing hidden taxes can help to create a more equitable society.

Theory to Practice

According to Wikipedia, “Critical race theory is an academic movement of civil rights scholars and activists in the United States who seek to critically examine the law as it intersects with issues of race and to challenge mainstream liberal approaches to racial justice.  Critical race theory examines social, cultural and legal issues as they relate to race and racism.  This theory is loosely unified by two common themes: first, that white supremacy (societal racism) exists and maintains power through the law; and second, that transforming the relationship between law and racial power, and also achieving racial emancipation and anti-subordination more broadly, are possible.”

Let us, at least for the sake of argument, accept this theory.  What do we then do?  How do we translate theory to practice?  Consider two extremes.  We could make sure that no one has privilege.  For example, we could work to assure that everyone’s educational opportunities and accomplishments mimic those who attend the worst schools.  Arithmetic would be the highest level of math taught to anyone.  Currently, 16% of high school graduates are “STEM ready” for college.  We could make sure that no one is STEM ready. 

OECD reports that 50% of US high school grads cannot read at an 8th grade level.  We could make sure that this is the highest achievement for all US high school grads.  Taken together, these two aspirations could enable eliminating all advanced placement courses in high schools.  We could also eliminate all summer camps for STEM and coding.  This would enable scaling back requirements that teachers have appropriate education for the courses they teach.  Lots of people could teach arithmetic, especially if all “advanced” operations – addition, subtraction, multiplication and division – are taught with calculators.ß

The implication is that all technically skilled jobs would be outsourced to other countries that continue to produce graduates with leading-edge knowledge and skills.  Our high school graduates would work for them, performing administrative and manual tasks that they have not yet determined how to automate.  These would be very poorly-paid jobs as anyone could do them. 

Consider the following. “In 2018, the top 50% of US all taxpayers paid 97.1% of all individual income taxes, while the bottom 50% paid the remaining 2.9%. The top 1% paid a greater share of individual income taxes (40.1%) than the bottom 90% combined (28.6%).”  Eliminating high-performing individuals, over time, would shift the tax burden to the masses of poorly-paid people.  Consequently, government services such as Social Security and Medicare would be dramatically reduced.

Consider the other extreme.  We would right past wrongs, in part, by investing in assuring that all people are healthy, educated, and productive so as to be competitive in the global marketplace.  No one – no child, no teen, no adult – would be left behind.  We would invest in disabled and older adults to enable them to be involved, productive, and contributing to society.  No talents, competencies, and motivations would be wasted.

Consequently, the US would invest heavily in health and education, as well as in R&D to facilitate industry investments in productivity.  As amazing as this may seem, overall government investments in health, education, and productivity would decrease as healthy, educated, and productive people tend to have well-paying jobs and need less assistance.  They also tend to foster healthy, educated, and productive children.  It is a virtuous cycle that can be stimulated and sustained.

Back to critical race theory.  We may be able to broadly embrace it in principle.  However, what are going to do about it in practice?  One extreme would destroy the US economy.  The other extreme is admittedly very ambitious.  Do we really have a choice?  Giving up is predictably awful.  Aspiring to transformation can yield enormous upsides, albeit with some risks.  My bet is that we can make this work, perhaps differently that we currently expect, but with much more upside than folding our tents and retreating to the forests.

The Business of Lying

Bill Bryson’s remarkable book, Made in America: An Informal History of the English Language in the United State (William Morrow, 2001), chronicles the history of the English language in the US.  His chapters on travel, cooking, shopping, and advertising are particularly compelling.

A key element of Bryson’s story concerns how we are convinced to value, for example, cars, meals, and clothes as well as how advertising motivates us to buy into such stories.  Is this due to our being deceived or is there a deeper explanation?  First of all, proponents of a product or service can legally claim almost anything – marketing has been characterized as inherently lying.

The First Amendment of the US Constitution states that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

In the history of the First Amendment, the Supreme Court has never ruled that false statements are totally without protection under the Constitution.  In United States constitutional law, false statements of fact are statements of fact (as opposed to points of law), that are false. Such statements are not always protected (or prevented) by the First Amendment.

When consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence.  False advertising is described as the crime or misconduct of advertisements that contain false, misleading, or deceptive statements to promote the sale of property, goods, or services to the public.

So, what happens when an advertisement lies?  One needs to file suit to block the advertisement.  This suit will wind its way through various courts until perhaps one wins, many years and many dollars later.  Thus, the risk of publishing a false advertisement is rather small, particularly if one has deep pockets.  Consumers have a right to know what they’re purchasing and its full price, but the costs of pursuing this right are steep.

The Federal Trade Commission (FTC) regulates advertisements. The FTC operates by prevention over punishment. This means that if an advertiser is caught trying to publicize deceptive advertisements, the FTC will simply ask that they revise the advertisement.  However, false advertising claims can be filed in civil court if you have the patience and resources to prevail.

False advertising law says that if the plaintiff can prove their case if they can show that the advertising was false or misleading, the advertisers lied about something of importance, the consumer saw the false advertisement; and the consumer purchased the service or product because of the advertisement.  This seems straightforward but in practice can be quite difficult.

More broadly, marketing is often thought to be synonymous with lying.  Marketing, to many people, automatically means manipulation, lying, and corporate greed. “Ethical marketing” might as well be a joke. And marketing “gurus,” in particular, are suspected of habitually using marketing lies to manipulate potential customers.

However, consider what marketeers think about this.  They lie to consumers because consumers demand it. Marketers tell the stories consumers want to hear, and consumers believe them. Some marketers do it well.  Marketing is about taking data, facts, research and creating a story that people want to hear. Sure, it might be about selling something, but it is still a story based on perceived facts.

People want to believe that rugged pickup trucks and sleek sportscars increase one’s attractiveness.  They want to believe that beauty and attractiveness will result in successful relationships.  They want to believe that matriculation at particular colleges will guarantee lifelong success.  They want to believe such things and marketeers are all too happy to create stories that portray these “truths.”

Storytelling is only one part of marketing. Marketing also involves social conversations, via tools, technology, data, people, products, non-profits, donations, etc.  This is much larger than a simple statement of marketing is lying.  It is telling stories that people want to hear, e.g., a particular purchase will make you a more appealing person.  People want to believe that it is all that simple.

Marketeers argue that people can make decisions for themselves and are in control of the actions they take. Part of those actions or inactions is realizing the truth around them, that they do not need the latest gadget or that they can make a cheaper healthier meal for themselves if they spend 30 minutes cooking rather than opting for chips and cheese dip. They don’t need to give into the social pressures around them.

But the truth is, marketeers argue, people are lazy. They are unwilling to put in the effort to think for themselves. They don’t want to figure out what food is best. They don’t want to make an effort to take care of themselves.  Otherwise, self-inflicted heart disease would not be the top killer in the US. Or people would not want to smoke or do drugs to be cool. 

It is easier for people to not think, to let other people tell them what to do. And that lack of consumer initiative is what gives marketing a bad name. Typically, people after they make a bad decision blame everyone including marketing, but not themselves. “Oh, I didn’t realize that the hot cup of coffee I ordered was hot”.  Marketing gives people choices and how people want to choose or not, is their freedom and their responsibility.

The argument continues.  We also live in an age of transparency where anyone can spend five minutes searching for the truth about something before buying or being influenced.  With unprecedented access to information the only excuse for being “lied to” is a person’s lack of caring about themselves.  The majority of marketing efforts are based on data and research not someone thinking about how to make up a false claim to sell products.  It is about telling believable stories that people want to hear.

There appears to be a big distinction between public relations (PR) and marketing.  PR, marketing claims, communicates lies more often for the direct benefit of the brand.  Of course, there are brands that are created specifically to con people out of money, but there are outliers in every industry and should not be considered the rule.  It seems to me that this is an example of the pot demeaning the kettle.

I have summarized the gist of marketeers’ defense.  Where does that leave us?  We could just rely on caveat emptor, Latin for “let the buyer beware”, the principle that the buyer purchases at his own risk in the absence of an express warranty.  An ultimate example is a current TV ad for a prescription drug that ends with “May lead to severe depression and suicidal tendencies.  If this is not normal for you, contact your physician.”

The First Amendment guarantees freedom of speech.  It does guarantee the veracity of what is said.  Consequently, political campaigns, in particular, often involve falsehoods that can border on slander.  These can be addressed with civil suits, that will be resolved years after the elections.  Facebook and Twitter have tried to curb the more outrageous of these tendencies, but new outlets quickly spring up to support the business of lying.  As Bryson aptly points out, we have been doing this for many centuries.

Making Money Without Providing Value

What if you could make money by selling people securities, or equivalent, that have no inherent value, but people think will eventually be worth substantially more than they paid you for them?  You can potentially make money from an endeavor that provides no value to the economy or society.  You can make money off of money despite the complete lack of intrinsic value.

Isn’t this how shares of stock work?  No, it is not.  Shares of stock provide partial ownership of a company that sells products and services to the marketplace, gains revenues from these sales, and makes profits from these sales and shares these profits with you, as an owner, via dividends.  If they are good at this, the values of their shares increase and your (very) partial ownership is more valuable.

A Ponzi scheme, according to Wikipedia, is “a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity, and they remain unaware that other investors are the source of funds.”  This is a great example of a “something for nothing” investment that deludes investors.

According to Investopedia, “A cryptocurrency is a digital or virtual currency that is secured by cryptography, making it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. They are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.”

Analytics Insight argues that, “Just like any other investment, crypto assets come with lots of risks, but also plenty of potential rewards. However, without a doubt, cryptocurrency is a great investment, especially if you want to acquire direct exposure to the demand for digital currency.”  In other words, such investments are worth it if you believe other people believe in them.

This brings us to market bubbles.  Bubbles eventually burst, whether joyful children playing with soapy water create them, or greedy people playing with other people’s money fashion them.  One of the earliest economic bubbles concerned tulip bulbs in Holland as chronicled by Mark Dash in Tulipomania: The Story of the World’s Most Coveted Flower & the Extraordinary Passions It Aroused (Broadway, 2001).

Tulipomania involved speculative buying and selling of rare tulip bulbs in the 1630s by Dutch citizens.  Coveted bulbs changed hands for amazingly increasing sums, until single bulbs were valued at more than the cost of a house.  When the bubble burst, the value of bulbs quickly plummeted and fortunes were lost.

We recently experienced a real estate bubble as chronicled by Michael in Lewis in The Big Short: Inside the Doomsday Machine (Norton, 2011) as well as Alan Blinder in After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead (Penguin. 2013).

In real estate mortgage markets, impenetrable derivative securities were bought and sold.  The valuations and ratings of these securities were premised on any single mortgage default being a random event.  In other words, the default of any particular mortgage was assumed to have no impact on the possible default of any other mortgage.

The growing demand for these securities pressured mortgage companies to lower the standards for these loans.  Easily available mortgages drove the sales of homes, steadily increasing home prices.   Loans with initial periods of low, or even zero, interest, attracted home buyers to adjustable-rate mortgages.  Many of these people could not possibly make the mortgage payments when the rates were adjusted after the initial period.

This real estate bubble led to people buying and flipping houses they often could not afford, but prices were rising so quickly they could move on before the adjustable-rate mortgage caught them.  One friend was building a house in Florida and someone offered him an audacious price. He accepted and starting building again. Another audacious price arrived. He accepted again and then again.

This was of less concern than one might think because people expected to flip these houses by selling them quickly at significantly increased prices.  This worked as long as prices continued increasing, but as more and more lower quality mortgages were sold, the numbers of defaults increased and dampened the increasing prices, which led to further increases of defaults.  The bubble quickly burst.

The overall phenomenon outlined in the post is about making money without providing value.  It about betting on other people’s greediness and gullibility when looking for quick, easy wins.  In contrast, there is the satisfaction of gaining a fair return for providing a highly valued product or service.  Either way, it is money in the bank, but these two approaches seem, to me, far from equivalent.

Games for Life

I have always enjoyed playing cards.  When growing up, card games were frequent in my family and quite serious in the sense that you did not joke around.  You seriously and studiously did your best to win.  I play cards every day, now online.  In this post, I consider how card games can help us to lead a cognitively rich life.

Of course, the first question must be, “How can card games contribute to cognitive health?”  Here are the five games I play every day and their characteristics that seem to relate to cognitive life skills.  First of all, consider the characteristics these games seem to have in common:

  • Competition against other players and random chance
  • Uncertainty about who has what cards and what cards remain hidden
  • Uncertainty about competitors’ strategies and plans for winning
  • Managing knowledge of what has happened and what is still possible

These seem to be skills we would like to sustain in general.  Now, let’s look at the specific games that I play each day.

Bridge: You have a partner and two competitors. Hands are played until there is a winner.  Someone always wins. Hands are likely to win when: 1) Points in hands support bids, 2) There is “transportation” between hands, and 3) You have stoppers for No Trump bids.

Cribbage: You have a competitor. Hands are played until there is a winner. Someone always wins. Hands are likely to win when: 1) You have double runs (8-16 points), 2) You have three 15s & 3 of kind (12-16), and 3) You avoid your opponent pegging 3 & 4 of a kind.

Gin Rummy: You have a competitor. Hands are played until there is a winner. Someone always wins. Hands are likely to win when: 1) You are dealt runs or 2–3 of a kind from the outset, 2) You draw low rather than high cards unless completing a run or 3 of a kind, and 3) You discard high cards early so your opponent does not catch you with points.

Hearts: You have three competitors. Hands are played until there is a winner. Someone always wins. Hands are likely to win when: 1) You have Clubs & Diamonds stoppers, 2) You have no low Hearts unless you have many Hearts, and 3) Your opponents discard high hearts.

Solitaire:  You have no competitors other than chance. One hand is played. There are no “Foundation Piles” where you can move aces, twos, etc. You will seldom win without Foundation Piles. Hands are likely to win when: 1) There is balance across values – no three Kings and four aces, 2) There is balance across black and red cards, 3) You can manage uncovering right columns, and 4) Your Kings are not trapped.

Overall Strategies

Three strategies work for all five card games:

  • Know what has been played
  • Know what competitors have drawn
  • Know what is no longer available

Observations

Several insights can guide how you proceed:

  • Potential winnability of hand is often readily apparent; restart if winning is impossible
  • When game involves multiple hands, losing a hand is not fatal
  • Switching from one game to another can require a cognitive reset

The last point is particularly relevant to older folks like me.  Brain games, I think, are more helpful when they force you to switch gears and not just rely on well-learned patterns.  For example, in cribbage, cards that add to 15 are important but irrelevant in bridge.  When first switching from cribbage to bridge, I look at my hand and see the 15s. I immediately need to do a cognitive reset because 15s are no longer relevant.  The speed of my reset often amazes me.

I think, but have no real evidence, that this improves my cognitive health.  Frequently having to switch gears between one game format to another keeps me, I think, being cognitively limber, sort of like cognitive stretching.  My one mile plus walk each day is supposed to help my physical stretching, but I am not as enthusiastic about this challenge.  The competitive nature of the walking challenge is not as much fun!

 

Intuitions That Mislead Us

One of my recent readings has been the late Hans Rosling’s Factfulness: Ten Reasons We’re Wrong About the World — and Why Things Are Better Than You Think. (Flatiron Books, 2018).  It is a fascinating read, loaded with valuable insights.

Hans Rosling asked chimpanzees to answer 13 multiple-choice questions about the state of the world.  Each question had three choices (A, B & C).  For each question, he provided each chimpanzee with three bananas, with stickers on each for A, B and C.  Whichever banana a chimp picked up first indicated their response to the question.  Not surprisingly, the chimps scored 33% correct, outscoring 90% of humans asked the same questions.  Rosling’s book provides an in-depth exploration of why this happened.

He attributes humans’ poor performance to ten human instincts that mislead us and trap us in outdated world views.

  • The gap instinct – Separating things into two opposing sets, e.g., us and them, rather than seeing a continuum
  • The negativity instinct – Focusing on negative outcomes, e.g., in the news, causing expectations of the worst
  • The straight-line instinct – Projecting linear trends rather than understanding countervailing forces
  • The fear instinct – Fearing unlikely outcomes that our ancestors my have experienced but are now very unlikely
  • The size instinct – Focusing on large numbers rather than calibrating them against baselines such as using per capita estimates
  • The generalization instinct — Automatically categorizing and generalizing, possibly stereotyping; look for differences within groups and similarities across groups
  • The destiny instinct – Assuming innate characteristics determine destinies; transformations are occurring across societies; slow change differs from no change
  • The single perspective instinct – Preferences for single causes and solutions; single perspectives likely miss the essence of problems; multiple perspectives needed
  • The blame instinct – Tendencies to seek clear, simple reasons for bad outcomes, often attributed to human actions within systems that facilitate these bad outcomes
  • The urgency instinct — Desires to take immediate action in the face of a perceived imminent danger; leading to fear, stress, and far too often bad decisions and actions

He explains how factfulness can be applied in education, health, business, journalism, and politics.  His overall argument is that a fact-based world view combined with refined critical thinking can help overcome these debilitating instincts.  We can outsmart the chimpanzees.  By the way, he never actually ran that experiment.  The outcome was completely predictable without enticing chimps into eating so many bananas.

Rosling’s discussion of ten instincts that regularly mislead us reminded me of Daniel Kahneman’s Thinking, Fast and Slow (Farrar, Straus and Giroux, 2011), a wonderful integration of his many years of research with Amos Tversky on psychological heuristics and biases, findings that I have long tracked.  It is quite interesting how people steadfastly mislead themselves, resulting in unfortunate decisions and consequences.

These ten instincts frequently undermine business strategies by fostering bad assumptions about future market situations, including an enterprise’s presumed competitiveness in that future.  I address this in great detail in my books Start Where You Are: Matching Your Strategy to Your Marketplace (Jossey-Bass, 1996) and Don’t Jump to Solutions: Thirteen Delusions that Undermine Strategic Thinking (Jossey-Bass, 1998).  It is all too common for executives teams to ignore current facts, often because it is socially unacceptable to admit what is happening.

The Wild West of Commodity Trading

I recently read Javier Blas and Jack Farchy’s The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources (Oxford University Press, 2021).  This fascinating book reads like a novel, almost a page turner.  What will the traders do next?

They chronicle the history of commodity traders of oil, grain, metals, and almost anything.  They focus on four case studies that illustrate how the markets for natural resources were transformed:

  • Opening up of markets that had previously been tightly controlled – above all, oil.
  • Collapse of the Soviet Union in 1991, which redrew a global network of economic relationships and political allegiances.
  • The spectacular economic growth of China in the first decade of this century.
  • Financialization of the global economy and the growth of the banking sector, beginning in the 1980s.

Developing counties nationalized their natural resource industries.  Traders took control away from big players, e.g., Seven Sisters in oil.  The result was that markets, not providers, set commodity prices.  Commodity traders tended to be risk takers, e.g., Marc Rich, who would bet on prices swings, often making enormous profits.  Blas and Farchy report on some of his amazing deals, e.g., rescuing Jamaica from insolvency.

Wikipedia describes “Marc Rich (as) an international commodities trader, hedge fund manager, financier, businessman, and (indicted) financial criminal. He founded the commodities company Glencore, and was later indicted in the United States on federal charges of tax evasion and making oil deals with Iran during the Iran hostage crisis.  He fled to Switzerland at the time of the indictment and never returned to the United States. He received a widely criticized presidential pardon from U.S. President Bill Clinton on January 20, 2001, Clinton’s last day in office; Rich had made large donations in his lifetime to the Democratic Party and Israeli organizations.”  Rich died in 2013 at 78.

The 1990s saw the rise of futures, options, and derivatives.  Commodity futures had been is use for hundreds of years.  Options could be used to hedge the downsides of futures.  This enabled the financialization of the oil market, including a new generation of math whizz-kids fluent in the language of Wall Street.  Who you knew, long the strong suite of commodity traders, was joined by what you knew in terms of financial analytics expertise.

Next up – the collapse of Soviet Union in the early 1990s.  The collapse led to the complete fragmentation of natural resource markets and opportunities for commodity traders to buy for prices far below market prices. The risks of doing business in the new Russia were substantial. The rules on private ownership of property were still being written, and there was no guarantee that a trader would be allowed to hold on to its share of Russia’s natural resources industry.  The tycoons and gangsters soon got involved and murders were frequent.  By the late 1990s, Vladimir Putin was in charge and western traders exited with what profits they could.  These commodity traders had taught the Russian oligarchs how to play the game.

The collapse of the Soviet Union had huge impacts on countries that depended on it such as Cuba.  When the price of oil soared and the price of sugar plummeted, Cuba was in trouble.  The traders paid in advance for Cuba’s sugar, who used the funds to buy oil through the traders, who were later paid in sugar, which they sold on the world market.  This worked until sugar crop yields weakened due to inability to afford fertilizers and pesticides.

The 15 new countries formed by the dissolution of the Soviet Union had natural resources, but little money.  The traders responded by setting up a system of barters involving oil, alumina, corn, milk, etc.  The “wild west” atmosphere was charged with corruption and conflicts, sometimes bloody.  What was paid for wasn’t always what was delivered, e.g., “aluminum that rusted.”  For the trading industry, it was a Darwinian period of consolidation which only the strongest survived.

Shell and BP started trading functions, but avoided risky countries.  Enron moved from trading of gas and electricity into trading virtually anything regardless of risk.  They went out of business in December 2001, filing for bankruptcy in a massive accounting fraud.  CEO Jeffrey Skilling and chairman Kenneth Lay were both found guilty of multiple counts of conspiracy and fraud. Its collapse was one of the largest ever in corporate America, transforming the crooked Enron logo into a symbol of impropriety.

China is the next case study, where Deng Xiaoping, the successor to Mao Zedong, unleashed three decades of spectacular growth in China.  The Chinese economic boom started almost immediately after Deng unveiled his reforms in 1978, but it didn’t make a significant impact on commodity markets until much later. However, by 2018, China had become the world’s biggest consumer of commodities by far, along with Brazil, Russia, India, et al.

Commodity prices soared.  Commodity traders that bet on these trends did very well.  Commodity traders would fall over one another to secure the precious raw materials necessary to feed China and other emerging markets’ seemingly bottomless appetites for commodities. And oil was the most prized resource of all.  The market for commodity options also soared.

Out of this reactive mix of a world desperate for oil and petrostates hungry for cash sprang two companies that leapt into the big league of global oil trading in just a few years — Mercuria and Gunvor who became critical outlets for Russia’s oil, helping to keep the billions of dollars flowing into the Kremlin’s coffers and providing a young president Putin the confidence to become more assertive on the world stage.  Their ability to connect Russian oil supply with Chinese when the market was booming had made them all rich.

Africa benefitted greatly from the increasing global demand for natural resources.  During the 1980s and 90s, the economies of African countries had suffered from low prices. During the 2000s, the economy of sub-Saharan Africa quadrupled.  Corruption increased as leaders had to be bribed for access to countries’ resources.  Commodity traders became the gatekeepers, providing these leaders a range of side benefits. Nevertheless, the African middle class benefitted from the economic growth.

The late 2000s brought the global financial crises, precipitated in part by the real state crisis in the US.  The crisis in credit markets was imperiling the global banking sector by the spring of 2008.  The commodity traders “shorted” futures markets, resulting in enormous profits.  It was a boom time for speculation.

In the late 2000s, bad weather led to soaring food prices and contributed to protests that precipitated the Arab Spring.  Commodity traders became more central than ever in feeding the world – which allowed them to make the biggest profits they’d ever seen.  Ethanol mandates, in part due to soaring oil prices, championed by traders in this area, further reduced the flow of corn into the food supply chain.

Politicians were soon protesting these outcomes and advocating regulation of the industry.  When one of the biggest players went public, i.e., conducted an IPO, an increasingly transparent world resulted, making it ever harder for less scrupulous commodity traders to make money through corruption or bribery.  It was a shift that some in the industry would later come to regret, as the greater visibility of the public markets also meant greater awareness of the scale and significance of the commodity traders.

Seemingly from every side, the industry was under fire. It was not just the corruption probes that were darkening the outlook.  In part that was because the great engine of the commodity boom, China, was slowing down.  However, the traders had several far deeper and more structural problems. The first was the democratization of information.  A second challenge to the traders’ profitability was threatened by the reversal of the liberalization of global trade.  Finally, as the world increasingly turned against oil and coal consumption, the traders’ business suffered.

But if anyone had thought the commodity traders were going to sail off quietly into the sunset, or that the world could somehow find a way of functioning without them, they would have been sorely mistaken. There may be pressure on the business model the commodity traders have hewn to over the past half century, but their position at the heart of the world’s commerce in natural resources means that they remain as essential to the global economy as ever.  The traders will likely remain powerful actors in world affairs for years to come. But after decades in the shadows, their influence can surely no longer be ignored.

 

On Being Colonized

During the Era of Colonialism (late 1400s to the mid- to late 1900s), European powers colonized most of Africa, the Americas, Asia, Europe, Oceania, the Middle East and the Arctic, excluding Antarctica.  This typically involved oppression and exploitation of indigenous ethnic and racial groups inside the geographical area colonized.  This oppression and exploitation often is reasonably characterized as genocide.

For example, between 1492 and 1600, 90% of the indigenous populations in the Americas died. About 55 million people perished because of violence and never before seen diseases like smallpox, measles, and influenza.  Another example is the impact of Burmese pythons “colonizing” the southernmost regions of Everglades National Park. Populations of raccoons dropped 99 percent, opossums 99 percent, and bobcats 88 over a 15 year period.

Apex predators simply destroy peoples or species that are not prepared to compete for survival.  Thinking about this phenomenon reminded me of experiences Alan Blumberg, John Casti and I had when participating in the shooting of the History Channel two-hour special Threats to Earth.  All three of us were featured in numerous interview snippets on how various naturally occurring, human-caused, and alien-initiated threats might affect civilization.

Let’s jump right to aliens!  First, they wouldn’t show up in rafts or rowboats.  They would have to be rather sophisticated to find us.  Indeed, they could easily be more sophisticated than us.  Perhaps they would want to colonize Earth.  We would become workers – or food.  They might breed us to create the choicest cuts.  We would learn how to digest and thrive on plant-based foods.  Their diseases might wipe us out.  They would move on to other planets, like most talented apex predators.

Perhaps we could reason with the aliens, convince them we are far superior to cattle, pigs, and chickens.  However, they are likely looking for food, not friends.  Then we might fight them, everyone equipped with an AR-47, backed up by DoD’s military might.  But their weapons could make ours look like bows, arrows, and spears.  They perhaps could dematerialize a squadron of F-35s in seconds.  Our last chance might be to offer tribute if we can figure out what they value – adoration might not make it.

This could be social justice coming full circle.  After imposing a half-millennium of genocide on the world, we get to experience the full rath of an apex predator who is simply trying to feed its hungry population.  We may have thought that our approaches to them were all in good taste, but they were simply pleased that humans taste good.

Humans as Apex Predators

Simon Winchester’s latest book, Land: How the Hunger for Ownership Shaped the Modern World (Harper, 2021), caused me to think about humans’ roles in the overall ecosystem. Are we apex predators, meaning that we regularly eat many other species but no other species regularly eats us?

The contrast that interests me is not apex versus non apex. It is apex predator versus social, caring animals. Winchester’s panorama of humans dominating geography and displacing (too kind a word) other peoples, ranging from native Americans to aboriginal Australians, certainly provides evidence of predation rather than social caring.

Beyond displacing others, Europeans enslaved millions of native Americans and many more millions of Africans. Seemed like predation to me. There is no way to spin this positively. Instead, it could be characterized as genocide.  These atrocities are brilliantly chronicled in Isabel Wilkerson’s profound book Caste: The Origins of Our Discontents (Random House, 2020).

What is different about human predators is that we eventually realize what we have been doing. In democracies, the oppressed eventually get to articulate what they have experienced. Public opinion evolves to be sympathetic to these complaints. There are attempts to make amends, although not without strong forces attempting to defend that status quo.

That is perhaps understandable, but it still begs the central question.  To what extent are we apex predators versus social, caring animals?  It seems to me that the historical evidence supports our inherent tendencies to apex predation, followed by reflections on our dominance and entertaining the possibility of being social, caring animals. This is quite different than a lion regretting that he or she ate you.

This suggests there is hope that human animals might consider — in advance — the implications of their actions on others, whether the others be indigenous populations or other species. Thus, despite being apex predators, we can work to moderate our dominant behaviors to be less fundamentally disruptive to the overall ecosystem.  This work will be very difficult and progress will likely be quite slow, but it is what social, caring animals should do.

Perspectives on Work

I recently finished James Suzman’s fascinating book Work: A Deep History, from the Stone Age to the Age of Robots (Penguin Press, 2021).  He chronicles humans’ work practices over many millennia.  The meaning of work has changed dramatically over this period.  Perspectives that we take for granted emerged much more recently than one might have expected.

We were hunter gathers until 10-12 millennia ago.  Work involved finding enough food to consume that day.  Such work required roughly 15 hours per week.  Once agriculture emerged, the time worked increased to enable harvesting and storing food for the future.  This was caused, in part, by dramatic drops of temperatures that meant one could not live off the land for the whole year.

Time spent working continued to increase, but this was not driven by the “food quest” as he terms it.  The work required to feed ourselves – per capita – has steadily decreased.  1.3% of the US population is engaged in producing food.  10.9% of the population is involved in processing and serving food, more than half of which work in food service establishments.  Thus, the work of roughly 9 out of 10 US residents do not directly involve the food quest.

A key insight is that the hunter gathers did not have much “stuff.”  Any stuff they had, they had to carry as they moved about.  Consequently, they were not the consumers on which our current economy is totally dependent.  Conspicuous consumption emerged much, much later.

The agricultural revolution enabled population growth that depended on sustained growth.  Circumstances often prevented this.  Subsequently, the industrial revolution enabled population growth that also depended on sustainable growth.  Other circumstances prevented this.  Both led to periodic starvation, accompanied by public health issues challenges due to population growth that led to declining adult life expectancy.

John K. Galbraith (1908-2006) argued that Americans had everything they needed and wasted money purchasing things they did not need.  Advertising stoked consumer demands, as it continues to do.  Advertising was created by Benjamin Franklin in 1729 to sell his brainchild Franklin Stoves via his Pennsylvania Gazette.

Thomas Malthus (1766-1834) predicted that linear economic growth cannot compete with exponential growth of population.  He missed the prospects of technological innovation. Suzman discusses other perspectives of various thought leaders on the economic value of labor, including Benjamin Franklin’s (1706-1790) aphorism that “time is money,” Adam Smith’s (1723-1790) The Wealth of Nations, David Ricardo’s (1772-1823) Principles of Political Economy and Taxation, John Stuart Mill’s (1806-1873) Utilitarianism, and Karl Marx’s (1818-1883) Das Kapital.  They all wrestled with defining the value of work in contrast to economic value not attributable to work.

Suzman argues that dogs were, effectively, the first robots, used to do work rather than being eaten.  This was a rather unique argument to me.  He includes other domesticated animals in this argument as well, although Sony and others have yet to provide robotic chickens, pigs, and cows to help out around the home.  He notes that horses replaced oxen and cattle as workers; the latter became food.

Suzman moves on to slavery.  While Aristotle imagined machines replacing slaves, Rome eventually was substantially dependent on slaves to enable the agricultural ecosystem.  Clearly, the goal was to delegate physical labor to other peoples – or species.  Our pursuits of automation nicely fit here.  The goal was to avoid the costs of labor unless, of course, one owned the labor.  Then, one wanted to minimize the costs of sustaining the labor resource.

Agricultural productivity yielded surpluses that enabled feeding others, leading to the growth of cities with populations that consumed rather than grew food.  New jobs included soldiers, architects, construction workers, and shop keepers.  People tended to affiliate with people in similar jobs, often clustered in the equivalent of neighborhoods, to form communities of practice.  Family affiliations were diluted a bit when so many neighbors were not relatives.

Literacy enabled cities to establish functioning bureaucracies and legal systems to organize and manage large populations and projects.  Economic progress led to economic differentiation among the wealthy, middle class, and lower classes.  This led to what Keynes termed “relative needs,” or keeping up with the Joneses.  Inequality, Aristotle argued, became an inescapable fact of life.  Suzman points out this was not the case for hunter gatherer communities.

Cotton and sugar from slave labor if the US and Caribbean fueled the economies of Europe with increasingly machine-driven textile mills leading the way.  Growing agricultural productivity quickly reduced the needs for human labor, driving people to the cities to work in the mills.  Coal became the primary energy source for steam engines, while also fouling the environment.  Suzman reports that the jobs in these mills were miserable, in terms of both working conditions, safety, and health.

The industrial revolution led to a stream of new products and novelties, ushering in the embrace of conspicuous consumption, first for the wealthy but trickling down over time to everyone.  Clothing tended to the luxury of choice.  Without the demands for mass-produced goods, the many factories would not have been built and the enormous numbers of manufacturing jobs would not have been created, paying wages that enabled these workers to also buy these mass-produced goods.

Suzman reviews Frederick W. Taylor’s (1856-1915) scientific management.  Taylor helped Henry Ford cut production time per vehicle from 12 hours to 93 minutes.  He set the stage for human resource management.  Taylor felt that people worked to make money to buy things.  They did not make products; factories did.

Unions were legalized in the UK in 1871 and in the US in 1935.  Work hours per workweek steadily declined until Henry Ford popularized the five-day 40-hour work week in 1926.  During the Depression, Kellogg cut workdays to 6 hours, until workers lobbied to return to 8-hour days, leading to larger paychecks.

By the 1980s, worker productivity and wages became decoupled.  The rising costs of employment benefits, namely healthcare, depressed wage increases.  Deregulation played a role as well.  “Since the Great Decoupling, asset ownership has proved a far more lucrative way of generating additional wealth than hard work.”

Between 1978 and 2016, US workers gained 11.7% in wages; CEOs saw a 937% increase in renumeration, due mostly to McKinsey’s deceitfully framed “war for talent.”  This contributed to the 2008-2009 crash that undermined the public’s confidence in economists, and subsequently climate scientists and epidemiologists.

He discusses the growth of service sector.  Manufacturing absorbed displaced agricultural workers and services are absorbing displaced manufacturing workers. He contrasts valuable jobs (e.g., teaching, medicine, farming, and scientific research with pointless jobs (e.g., corporate lawyers, public relations executives, health and academic administrators, and financial service providers).

“There is evidence of bureaucratic bloat everywhere, but the scale of it only becomes clear when looking at how it has afflicted organizations and institutions like universities, whose basic purpose has not changed substantially for centuries.”  Over 20+ years, teaching faculties have increased by roughly 3% while administrative staff have grown by well over 200%, while the number of clerical, service, and maintenance jobs decreased by one third.

Suzman addresses death by overwork.  Mental health challenges are common as is workaholic tendencies – the unhappy union of high drive and low work satisfaction.  “The global aggregate from Gallup data collected in 2014, 2015 and 2016 across 155 countries indicates that just 15% of employees worldwide are engaged in their job. Two-thirds are not engaged, and 18% are actively disengaged.”

“Since the Great Decoupling, the wealthiest 1 percent of people globally has captured twice as much of the new wealth generated by economic growth as the rest of us. The richest 10 percent of people on earth now own an estimated 85 percent of all global assets, and the richest 1 percent own 45 percent of all global assets.”

Suzman concludes with, “History is a better guide to the future on the nature of change. It reminds us that we are a stubborn species: one that is deeply resistant to making profound changes in our behavior and habits, even when it is clear that we need to do so. But it also reveals that when change is forced upon us, we are astonishingly versatile. We are able to quickly adapt to new, often very different ways of doing and thinking about things and in a short time become as habituated to them as we were to those that preceded them.”

Work, a very long ago, involved simply finding enough to eat that day, consuming roughly 15 hours per week.  The agricultural and industrial revolutions dramatically changed this.  Much more time was required, often involving harsh, unsafe, and unhealthy working conditions.  Life is easier in the service economy, but apparently not particularly rewarding.  Inequality has dramatically escalated and, for many, the quest for food — and clothing, shelter, health, etc. – has become an increasing challenge.  Automation technology may exacerbate this unless we revisit and transform the relationship of work productivity to income and sustenance.

 

Rules for Robots

Isaac Asimov introduced three rules for robots in his 1942 short story “Runaround,” which is included in his 1950 collection I, Robot.

  • “First Law: A robot may not injure a human being or, through inaction, allow a human being to come to harm.
  • Second Law: A robot must obey the orders given it by human beings except where such orders would conflict with the First Law.
  • Third Law: A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.”

I spent two decades studying how computers can adaptively aid humans to perform tasks, particularly in multi-task situations.  We developed a design framework and, in 1994, formulated the first law of adaptive aiding, building on Asimov’s formulation.  “There are conditions under which it is appropriate for computers to intervene and assume authority for task performance; in contrast there are no conditions under which it is appropriate for computers to unilaterally hand tasks to humans.”

Consider how such laws or rules might apply to AI-based cognitive assistants to support task performance in health, education, finance and other domains.  Such cognitive assistants are intended to support both the providers and consumers of services, e.g., both clinicians and patients in healthcare.  The use case of particular interest involves accessing and digesting information to make decisions.

Consider Amazon’s Alexa or Apple’s Siri on steroids such that it deeply understands medicine and healthcare, the structure and content of education, or financial principles and processes.  What would we like to expect from such cognitive assistants, whether we are a provider or consumer of services?  What capabilities and behaviors would we like, and what inclinations of these assistants would hopefully be absent?

Here are my ten desires:

  1. I want to be able to trust what it tells me
  2. I want evidence for assertions, if I feel it is necessary
  3. I want to be able to choose how evidence is presented – verbal, written or graphical
  4. I want explanations for recommendations
  5. I want context-specific explanations that reflect my circumstances
  6. I want it to remember me and my preferences
  7. I want it to remember my past decisions and the basis for these decisions
  8. I want to interact with it as I would another person
  9. I want to be able to talk with a real human, if I feel it is necessary

10. I want the real human to be someone I know or at least in a position I recognize

I want to avoid the following:

  1. I do not want my data shared unless I provide explicit permission
  2. I do not want to have to provide information it should already know
  3. I do not want to do much typing; speaking would be easier
  4. I do not want recommendations that are not evidence-based
  5. I do not want assertions or recommendations that cannot be explained
  6. I do not want to feel that I am expected to understand domain nuances
  7. I do not want to feel that the range of my questions is limited
  8. I do not want to feel that it is controlling the process of interacting
  9. I do not want to feel that I am just a generic person

10. I do not want to feel that I am interacting with a chatbot

These two sets of preferences pose interesting design challenges.  First, are they representative of everybody’s preferences?  Second, are some more important than others?  Third, how do design choices influence the extent to which these preferences are fulfilled?  The only way I can think of successfully addressing these challenges is via human-centered design, a process of considering and balancing the value, concerns, and perceptions of all of the major stakeholders in a design initiative.

People will tend to engage with, and perhaps pay for, services that comply with these rules for robots.  Their engagement will expand to the extent that their confidence increases.  To the extent that services do not comply with these rules, they will eventually cancel their subscriptions, delete the app, and continue their search for robots that comply.  Providers should be aware that people will not compensate for robots’ deficiencies by supplying their own labor.  They will have high expectations.

One Overarching Goal

Many problems and potential fixes are being considered and debated to address the pandemic, associated economic slump, and economic and social inequities. Climate change is hovering in the wings.  How do all these potential initiatives fit together? I think we can integrate all of these ideas by thinking about how they all support pursuit of one overarching goal: Foster a healthy, educated and productive population that is competitive in the global marketplace.

Who plays an important role in pursuit of the goal?  Every aspect of our economy and society has an important role to play in achieving this goal.

Health & Wellness Services need to invest in keeping people healthy — physically, mentally, and socially – and engaged in the economy and society.  Minimizing the population of those unhealthy and unwell will greatly reduce economic burdens. This will result in both money earned and money saved with everyone healthy and productively contributing.

Educational Institutions need to invest in fully educating 100% of the population to have the knowledge and skills to gain fulfilling and rewarding employment. Society needs 100% of citizens to be capable of contributing to rather than consuming public resources. Poor education undermines the nation’s talent stream, undercutting productivity needed for competitiveness.

Energy Providers need to invest in energy infrastructure that will keep everyone productive, affordably healthy, transported, and heated or cooled as needed.  Ignoring the impacts of climate change will incur $ trillions of remediation costs – repeatedly.  Prevention and early mitigation are more affordable and will create much innovation and many good jobs in the process.

Security Agencies need to invest in protecting the national and economic interests of the US against all competitors & adversaries.  A priority should be to avoid poached competitive advantage, which subsequently provides little if any advantage. Oppressed peoples need help if they are to become talented strategic partners.

Industry needs to invest in training and job aiding to enhance workforce productivity and quality of work outcomes.  Poorly trained and poorly paid workers are marginally productive, at best.  Investments in technology should be used to augment rather than replace human workers.  Such workers will become the backbone of the skilled technical workforce resulting from achieving the overarching goal.

Government, of course, has a role in all of the above. One role is leadership in getting the wide range of stakeholders to commit to a national agenda for success.  This includes communicating the vision for how the overall goal can be achieved.  Finally, it also involves incentivizing and often investing or co-investing in initiatives to advance towards this goal.

Too Many Stakeholders and Too Many Ideas

There are many complex contexts that involve a wide range of stakeholders with a broad array of ideas for improving the context of interest.  Such contexts can range from neighborhoods to wards to cities to states and countries.  I am involved in one right now with 200+ ideas; a few years ago, I played a central role in a context with 1,000+ ideas.

Typically, each idea is linked to one or more committed stakeholders who anxiously hope their idea will be chosen for investment.  Yet, the overall organization can only seriously commit to and execute perhaps five ideas.  How does one winnow a set of hundreds or perhaps thousands of proposed initiatives to five?

The first step is to cluster similar ideas.  This often reduces the number of alternatives by a factor of ten or so.  It is important to communicate to stakeholders that they are now co-owners of a cluster.  This provides important feedback that their suggestion had an impact.  It also provides them a venue, albeit much smaller, for advocacy of their idea.

So, now we have perhaps 20-30 clusters.  How do we get to five?  Now we need to consider attributes of clusters – potential impacts and costs of the pursuit, as well as likelihoods of success.  This can lead to surprises.  For example, planting trees at the corner of 5th and Green Streets scores well versus providing after school tutors for all pre-school students, which would be very expensive and raise school taxes.

This suggests a portfolio approach.  Perhaps the portfolio can include three low cost, low risk obvious winners; one moderate cost, moderate risk initiative that may benefit many; and one high cost, high risk aggressive initiative that may benefit everybody.  This yields a 60% chance of winning results, perhaps a 70% chance of better than that and an 80% chance of a home run.

The key is to get all the key stakeholders to understand the portfolio.  Moderate success is almost guaranteed.  Greater success is likely.  Total success is a stretch, but most of the investment portfolio is a likely winner.  The overall idea is to transform hundreds and perhaps thousands of ideas into successes such that key stakeholders are fully aware that they influenced and can take pride in this achievement.

Beyond the mechanics of the decision process outlined above, the absolute key ingredient is stakeholder involvement in the process.  People need to feel that they influenced the formulation of the clusters and had opportunities to advocate for their preferences.  Their favored options may not have made the cut, but they should feel that the results were arrived at openly and fairly.

So, what happened in the situation with 1,000+ ideas?  Nothing at all!  The leader was unwilling to antagonize anyone by not supporting their idea, so none of the ideas were supported.  The spreadsheet with 1,000+ ideas was archived.  A plan was developed that was so general that it could possibly include any of the 1,000+ ideas and possibly any other ideas.  In fact, the plan was sufficiently general that it could be readily adopted by any other institution.  This plan was not a source of competitive advantage.

Transform Work to Transform Culture

Most organizations want members of their workforce to be more collaborative, share information, and make better and faster decisions.  These pursuits are often termed workforce culture transformation.  For very large organizations, for example, elements of the federal government, this can be a daunting aspiration.

Consider experiences with two examples of transforming work.  Over the past couple of decades, computing and networking have transformed the processing of paper into processing computer files of documents, spreadsheets, and presentation slides.  My paper files have all but disappeared, replaced by over 50,000 files on my laptop.

All of us have learned new skills as this transformation has evolved.  For example, efficiently finding items among 50,000 files requires an organized hierarchy of folders with file names that include dates of creation or update and version numbers.  Further, Y2K taught us a bit about specifying dates.  I will be all set for Y3K!

The second example of transforming work is much more recent.  Over the past year, we have, perhaps unwillingly, embraced Teams, Zoom and other platforms for online meetings, education, and virtual get-togethers with family and friends.  There are social limitations, e.g., no after meeting drinks, but online gatherings are better than expected.

Another transformation, less of work than personal life, is how we shop.  Online retail was quickly growing before the pandemic, but has subsequently accelerated.  I bought all the new furniture for my apartment in Washington, DC while sitting in a comfortable armchair with my laptop.  When I arrived in DC, everything had arrived, watched over by the concierge.  I still find it amazing that you can buy a couch this way.

The “work” of our professional and personal lives has been transformed.  Has this made us more collaborative, inclined to share information, and better and faster decision making?  Consider these experiences:

  • My network of professional relationships has greatly expanded due to meeting attendance being logistically much easier.  In addition, the number of people viewing my public presentations has been much greater than when limited to physical attendance.
  • My inclinations to seek information to support problem solving and decision making have steadily increased, as has my willingness to share information, especially if the information is publicly available, but the recipient was not aware of this.
  • My decisions are better informed, both by evidence sought and by comments and suggestions from people in my professional network.  Decisions are faster, but whether they are better is still uncertain.  I have been able to get rid of bad ideas quickly.

There is a pervasive factor underlying these experiences.  I trust the people with whom I am interacting to be open and honest.  I trust the information sources I query, particularly if the people I trust have recommended these sources.  I trust the dialogues associated with the decisions entertained and scrutinized.  A culture of trust is precious and a culture of distrust can be totally debilitating.

Returning to the original question of cultural transformation, I think it can reasonably be argued that the transformation of professional and personal work has affected the culture of work.  Notice that all the changes indicated have resulted from the experiences of working differently, not from training on how better to collaborate or make decisions.  Training on how to work differently is nevertheless warranted.

Another factor is the design of work.  Work tasks that are redesigned to require collaboration and require access to and sharing of information are likely to facilitate and enhance these behaviors.  If it is required that decisions be evidence based, workers will learn how to access, analyze, and present evidence, perhaps abetted by appropriate training.  These skills will likely help them with career advancement.

Technology and circumstances have transformed how we work, but these changes have, quite reasonably, focused on how to do the work as we have long done it.  We now have the opportunity to redesign this work to better leverage these pervasive capabilities.  I expect our collective redesign of work, if fostered by trust, will further transform our culture of collaboration, information sharing, and decision making.

How to Be a Republican

I grew up in New England in the 1960s and 70s.  My whole family was Republican.  We supported John Chafee, Edmund Brooke, Eliot Richardson, and Nelson Rockefeller.  Social liberals and fiscal conservatives.  These types of Republicans are long gone.  Nixon, then Reagan, and recently Trump discovered that courting southern whites could win elections.  Social liberalism was gone and fiscal conservatism only applied after the elite garnered the spoils.

I personally liked the debates between the conservatives and the liberals.  William F. Buckley and George Will on one side and Daniel Moynihan and John Kenneth Galbraith on the other.  I watched such debates with my grandmother as a ten-year old and was captivated.  The basic idea was to present a line of reasoning and then defend it.  It was great fun for both sides of the argument.  In the process, I learned much about politics and government.

Given that everything I admired in the Republican Party has been expunged from the party, my only choice is to be an Independent.  I could, of course, affiliate with the Democratic Party, but I am not in favor of the US evolving into a single party state.  We need contrasting points of view that are well argued with compelling evidence.  Conservative and liberal views need to be discussed and debated.  The public needs to understand the pros and cons of these contrasting views.

How might that happen?  I was immersed in it via Firing Line, McLaughlin Report, and other politics-oriented shows that brought together conflicting points of view for argument, discussion, and debate.  CNN and Fox, in contrast, separate the conflicts to different cable channels.  Facebook, Twitter, and WhatsApp take this segregation of perspectives to an extreme.  You only are exposed to opinions with which you already agree.

In an earlier post, I argued that we need to return to pubs, get off the couch, and roost on barstools next to whoever might be there to hear and engage with conflicting opinions.  A great example of evidence-based discussion and debate concerns sports.  When arguing about the GOAT (greatest of all time) in any sport, anyone can now immediately access data to support their arguments on their iPhone or equivalent.  It can be rather compelling.

Interestingly, I have found that people never assert “alternative facts” about sports.  Statistics for batting averages, touchdowns thrown, and three-point baskets are accepted as correct.  Statistics on the weather are similarly accepted.  Economic data fares pretty well too.  Public health data was once well accepted, but has become politicized of late. Political polling data are, rightfully, less credible.

Discussions based on data mutually judged to be valid can still lead to disagreements, not about what we know, but about what to do.  The conservative and liberal pundits noted above were great at this.  Moynihan captured the essence of this in a memo to Nixon, “Everyone is entitled to their own opinion, but not their own facts.”  Most people I chat with in local pubs would agree with this assertion.

Another place where free and informed discussion reigned were town meetings that I experienced growing up in a small New England town.  The annual town meeting provided everyone an opportunity to discuss and vote on the annual town budget.  Data and plans were presented and participants requested chances to speak.  The debate could be heated, but a vote eventually happened and the budget was set.  I am not at all sure that this still happens.

However, technology could enable town meetings for larger populations.  Data and plans would be presented, people would electronically ask questions, and a moderator would sort, categorize, and pose questions to speakers.  In some cases, the author of a question would be given the floor (or screen) to elaborate their questions or comment on the responses of the speakers.  Electronic meetings could be held for neighborhoods, wards, and cities as a whole.  Everyone would much better understand each other’s perspectives.

Choosing a party affiliation could be based on the philosophies and policies advocated by the different parties.  Tribalism would hopefully fade as more people came to understand the facts and the policy alternatives.  People would also gain understanding and the means to influence policies.  There would be increased engagement and talking at pubs, social groups, and online meetings.  The result would be an ongoing creative balance between conservative and liberal perspectives and priorities.

If this worked as I have outlined, I would quite likely split my votes among candidates from both parties because I would know what each candidate stands for and, from the online meetings and my iPhone data device, have a sense of whether I should believe them.  If this worked really well, I might even rediscover how to be a Republican.

Brick by Brick and Other Innovations

I recently read Robertson and Breen’s Brick by Brick: How Lego Rewrote the Rules of Innovation and Conquered the Global Toy Industry (Crown Business, 2013).  As my children, grandchildren, and I have been long-time Lego fans, this book was fascinating.  It led me to think about innovation more broadly.

But first, let’s consider the Lego story.  Lego means “play well” in Danish.  Three generations of founders (Ole Kirk Kristiansen, Godtfred Kirk Kristiansen, and Kjeld Kirk Kristiansen) committed to the Lego Play System, all centered on very well-designed interlocking bricks.

Two decades of strong growth hit headwinds in the late 1990s, with electronic and online offerings capturing the attention of children and their parents.  The partnership with the Star Wars brand, despite the skepticism of some Lego executives, provided a burst of growth.  However, they realized that they needed to broaden their view of innovation.  They adopted the “seven truths of innovation” that were pervasive in management circles at that time.

  • Hire diverse and creative people
  • Head for blue ocean markets
  • Be customer driven
  • Practice disruptive innovation
  • Foster open innovation – heed the wisdom of the crowd
  • Explore the full spectrum of innovation
  • Build an innovation culture

Senior executives hired to pursue these truths restored Lego’s growth, but they were not yet out of the woods.  They created a large number of new products, but poorly managed their development and roll-out.  For example, their financial management system was unable to tell them which product lines were profitable. In addition, no one among top management really understood the technologies on which they were betting.

They had pursued the seven truths, but executed poorly and wasted substantial time and money.  With a new top management team, they revisited the seven truths.  Beyond getting the basic management systems up to snuff, they focused on reconnecting with their core audiences – seven-year-old boys and several hundred thousand adult enthusiasts.  These audiences were quite frank about what they liked and disdained.

Lego brought new discipline to renewing product lines for Lego City and Duplo, as well as new products such as Bionicle, Mindstorms, and Architecture, with much crowdsourced energy and creativity from enthusiasts for the latter two.  They carefully learned how to balance internal and external sources of ideas.  They learned how to dovetail discipline and creativity.  This led to increased revenue and eventually profitability.

This gave them confidence to attempt a disruptive innovation – Lego Universe – a massive multi-player online game.  They teamed with NetDevil, a Colorado-based game developer.  It was a rocky relationship with Lego wanting everything perfect before launch, which was not the modus operandi of the online game industry. Overpriced when they came to market, Universe was shut down in a bit over a year.  Minecraft, a competing startup that was crudely similar to Lego, took over with a much lower price point.

They bounced back with Lego Games – board games that players build from bricks and then play – and Ninjago, an exciting world of ninjas battling against evil.  Lego succeeded in its pursuit of the seven truths.  In the process, they learned that, “The most difficult challenge in business is not to invent an innovative product; it’s to build an organization that continually creates innovative products.”

This fascinating book caused me to revisit my list of many great individual innovators, some of whom are profiled by Isaacson (2015).  Here are ten notable innovators:

  1. Telephone (Grosvenor & Wesson, 1997) — Alexander Graham Bell (1847-1922)
  2. Electricity (Jonnes, 2003) — Thomas Edison (1847-1931)
  3. Automobiles (Watts, 2011) — Henry Ford (1863-1947)
  4. Flight (McCullough, 2015) – Wright Brothers (1867-1912; 1871-1948)
  5. Computing (Maney, 2003) – Thomas J. Watson, Sr. (1874-1956)
  6. Relativity (Miller, 2008; Poincaré, 1902) — Albert Einstein (1879-1955)
  7. Cubism (Miller, 2008; Poincaré, 1902) — Pablo Picasso (1881-1973)
  8. Satellites (Butrica, 2014) — Arthur C. Clarke (1917 – 2008)
  9. Internet (Ryan, 2010) – Robert Kahn (1938 – ) and Vinton Cerf (1943 – )
  10.  Digital Devices (Isaacson, 2011) — Steve Jobs (1955-2011)

Most of these people are well known and need no explanation here.  It surprised me that the science fiction author Arthur C. Clarke originated the design of communications satellites in a piece published in Wireless World in 1945.  Art and technology often coexist quite creatively.

The sixth and seventh entries in the above list illustrates another fascinating example of crossing borders between technology and art.  This border crossing was motivated by Henri Poincaré’s famous book on geometry (Poincaré, 1902).  Reading and discussing this book led to Einstein’s relativity theory and Picassos’ cubism (Miller, 2008).  Science and art drew on the same intellectual roots to invent new conceptualizations of space and time.

Beyond the Lego Group, there have also been innovative organizations such as Bell Labs – The Idea Factory (Gertner, 2012).  There have also been innovation ecosystems.  James Burke’s Connections (1978) provides numerous examples.  He identifies two principles:

  • The greatest impact of a technology is rarely what the originators envisioned
  • The greatest returns on investments in technology rarely accrue to original investors

In The Innovators (2015) Isaacson profiles hackers from Ida Lovelace to Vannevar Bush, Alan Turing, John von Neumann, J.C.R. Licklider, Doug Engelbart, Robert Noyce, Bill Gates, Steve Wozniak, Steve Jobs, Tim Berners-Lee, and Larry Page.  The path to innovation is seldom smooth.  However, as Joel Mokyr elaborates in Lever of Riches (1990), innovation is central to economic growth and prosperity.

What do the innovators in the above list appear to have in common?  They can be characterized as creative visionaries, who perhaps saw connections and distinctions not apparent to most people.  They were persistent, despite setbacks.  They learned from these setbacks.  A CEO of a very successful high-tech company in Atlanta told me, “It took several years for our customers to convince us of what they really wanted.”  Lego had that experience as well.

References

Burke, J. (1978). Connections. Boston, MA: Little Brown.

Butrica, A.J. (Ed.).(2014). Beyond the Ionosphere: Fifty Years of Satellite Communications. Washington, DC: National Aeronautics & Space Administration, NASA History Series.

Gertner, J. (2013). The Idea Factory: Bell Labs and the Great Age of American Innovation. New York: Penguin.

Grosvenor, E.S., & Wesson, M. (1997). Alexander Graham Bell. New York: Harry Abrams.

Isaacson, W. (2011). Steve Jobs. New York: Simon & Schuster.

Isaacson, W. (2015). The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution. New York: Simon & Schuster.

Jonnes, J. (2003). Empires of Light: Edison, Tesla, Westinghouse, and the Race to Electrify the World. New York: Random House

Maney, K. (2003). The Maverick and His Machine: Thomas Watson, Sr. and the Making of IBM. New York: Wiley.

McCullough, D. (2015) The Wright Brothers. New York: Simon & Schuster.

Miller, A.J.  (2008). Einstein, Picasso: Space, Time and the Beauty that Causes Havoc. New York: Basic Books.

Mokyr, J. (1990). The Lever of Riches: Technological Creativity and Economic Progress. Oxford, UK: Oxford University Press.

Poincaré, H. (1905). Science and Hypothesis. London: Walter Scott Publishing. Originally published in French in 1902 and German in 1904.

Robertson, D.C., & Breen, B. (2013). Brick by Brick: How Lego Rewrote the Rules of Innovation and Conquered the Global Toy Industry. New York: Crown Business.

Ryan, J. (2010). A History of the Internet and the Digital Future. London, UK: Reaktion Books.

Watts, S. (2011). The People’s Tycoon: Henry Ford and the American Century. New York: Vintage.

The Invention of History

I have just finished reading Robin L. Fox’s The Invention of Medicine: From Homer to Hippocrates (Basic Books, 2020).  I found it interesting that numerous medical treatises were attributed to Hippocrates many centuries after his death.  It seems that the content of these treatises was more credible if attributed to Hippocrates.  I have read of similar claims about the Bible and other historical texts.  Later writers invented history to support their assertions.

This is more complicated than just these two instances.  Many years ago, I was reading to one of my children, Rebecca or Will.  After finishing, they thanked me for the interesting story.  I responded, “That wasn’t a story.  I was history.  It really happened.”  Their precocious response was, “How do you know that it really happened?”  I told them that I believed the story was true but I did not really know.

How much of our knowledge is believed rather than known to be true?  Certainly, our experienced knowledge – it is cold and rainy today – has a strong empirical basis.  What we have personally experienced in the past has a strong empirical basis, although memory of past events is not 100% reliable.  However, much of what we were told by parents and teachers, or read in books, is more believed than known.

“History is written by victors” is attributed to Winston Churchill, but its real origins are unknown. It indicates that history is not grounded in facts, but the winners’ interpretation, which prevails. The victors impose their narrative on historical records.  An unusual counter example is the Goths sacking Rome but having no written language to chronicle their exploits – so, the Romans wrote the story.

We typically assume that our educational system will instruct us in evidence-based history.  This can be a tenuous assumption.  The southern states in the US have long taught a narrative about the Great War of Northern Aggression that differs substantially from the history of the Civil War taught in the north.  German lessons on the Treaty of Versailles similarly differed from Allied accounts.  Reports on the recent elections pose challenges as well.

So, what do we reasonably know?  Did the Holocaust actually happen?  Did we really land on the Moon?  Who was actually responsible for 9/11?  Do the police really mistreat blacks?  Does smoking cause lung cancer?  Do poor diets contribute to obesity?  Did Jewish space lasers cause the California wild fires?  The First Amendment of the US Constitution allows people to claim absolutely anything.

I feel that I need a safe place from all the misinformation.  I completely ignore Facebook, LinkedIn, Twitter, WhatsApp, etc.  Their purpose in not evidence-based informing of the discussion and debate.  I discount CNN, CNBC and Fox News.  I pay attention to The Economist, New York Times, Washington Post, IEEE Spectrum, and Technology Review, as well as publications of the National Academies.  If these outlets agree, I am comfortably ready to believe, at least until next week’s reports.  That’s how evidence-based thinking works.

Of course, not everybody — actually relatively few people — pay attention to this collection of periodicals and publications.  They pay attention to Facebook, Twitter, and perhaps Fox News.  Their reality has no basis in – well, reality.  That doesn’t matter.  What they believe is how they vote, protest, and insurrect.  They embrace invented history and will defend it to their deaths, or perhaps ours.

What do we really know?  In Emperor of All Maladies: A Biography of Cancer (Scribner, 2011) by Siddhartha Mukherjee, we learn of the many times the medical community was absolutely sure of the best treatment, e.g., radical mastectomies, to later learn they were completely wrong.  This unfortunate outcome is completely different from arguing that Jewish space lasers caused the recent California wild fires.  The former was well informed but wrong; the latter was ill informed and staged to gain political attention.

We need to educate the American public to differentiate sound scientific evidence, which may be displaced by better evidence, from political theatre where, due to First Amendment rights, people can claim absolutely anything that gives them political attention.  An important transformation of our society would be strong inclinations to label people as political clowns.  If these people reaped broadly-based disdain and contempt, we might see a transformation of political discourse.  Unfortunately, social media make their antics all too easy.

 

The Old and New Normal

The old normal involved lots of bus, metro, and uber rides to meetings with sponsors, colleagues, and friends in pursuit of new opportunities, progress on existing opportunities, and just plain socializing.  Transit time was at least an hour per day and sometimes two, sitting in a bus, train, or car catching up on your email and often connecting by phone.  It seemed completely natural, perhaps even convenient.

In March 2020, almost a year ago, everything changed.  No more travel.  Skype, Teams, and Zoom became the neighborhood.  It was ok with people you knew, a bit more awkward with people you were just meeting.  Shared white boards seemed to help.  The loss of beers and margheritas at the end of the day was unfortunate.  That was when you learned whose kids played soccer, what sports teams were winning or losing, who liked gardening?  All gone.

The vaccines give us hope, but what will be the new normal?  How long will we persist with masks?  I can imagine being cautious for quite some time.  Not only masks, but social distancing and washing our hands.  We might pay more attention to healthy behaviors, as well as to less healthy behaviors, perhaps even less healthy eating behaviors.  More fruits and vegetables, and less chips and fries might prevail.

This begs the question of whether hunkering down during the pandemic was just a holding action or an opportunity to learn new practices.  I have certainly renewed my relationship with my wok and enjoyed experimenting with new oils and spices.  I like the results, although eating the same meal two days in a row is more acceptable than three days in a row.

Music is a good companion when cooking, but cannot compensate for compatriots at a pub, absorbing and debating the latest political, economic, and sporting news.  It is interesting to argue, albeit delicately, with people who disagree with your perspective, who have a very different life experience.  It is not only interesting; it also informs your world view.  Those people with whom you completely disagree are also fans of your sports teams!

I think pubs are perfect laboratories.  We host a pint, or equivalent, and cheer on something.  During the ads for beer or pickup trucks, we reflect on other stuff.  We relearn Rufus Mile’s maxum, “Where you stand depends on where you sit.”  Only a few people embrace ridiculous positions.  Most people have very good reasons for their positions on economics and politics, often based on experiences we have never had.

This down to earth meet at the pub experience has become very complicated by social media.  Facebook, Twitter, and WhatsApp have created online worlds where everyone in this virtual pub completely agrees with you.  There are no divergent opinions to reflect on and digest.  All of your assertions are immediately embraced.  You soon realize that you are absolutely correct about everything.

So, what’s the new normal?  I sincerely hope we go back to meeting at the pub.  The inherent self-reinforcement of social media will only lead to pockets of completely self-convinced agreement on delusional perceptions and consensus.  Democracy requires conflicting perspectives and priorities.  This will not happen on social media.  It can easily happen at your neighborhood pub.  Let’s make that normal again.

Mentoring

I often encounter people seeking mentoring.  What are they usually seeking?  My sense is that they are facing one or more dilemmas.  They are seeking help to make sense of and address these dilemmas.

One dilemma is that they are facing an important decision about what to do next in their careers.  They can see soon completing their PhDs and don’t see the right future for them.  They do not want to replicate their PhD advisor, in part because of limited realistic opportunities in the current chaos of higher education.

Another dilemma concerns those who do not want to pursue academia, but do not understand opportunities available in industry and government.  They have no role models for such endeavors and do not see where they might lead.  This is, of course, due to them not having relationships with any faculty members who have done this.

A third dilemma involves people needing, voluntarily or otherwise, to consider alternative futures.  These are typically talented people who stayed in positions that no longer met their needs, but they had been unwilling to seriously consider alternative career paths.  In other words, they had been stuck.

Their first question typically is, “What opportunities do you think I should pursue?”  I avoid this question.  Instead, I pose another question, “What would you find sufficiently interesting and rewarding that you would look forward to spending every working day doing it?”

This might lead to responses such as NFL quarterback, MET opera star, or famous writer, but it seldom does.  Instead, people respond with answers such as:

  • “Figuring out solutions to tough technical problems.”
  • “Helping people deal with their health problems.”
  • “Teaching students about science and ecology.”
  • “Finding ways to help people be more energy efficient.”

Admittedly, the people I encounter are not necessarily representative of the whole population.

Given their response, we then discuss how these needs are currently addressed in terms of organizations, offerings, and current success.  The overarching question is, “Are there realistic opportunities to do this by joining one of the current players?”  If the answer is positive, “Is the compensation associated with these opportunities sufficient?”

Often, this is an important hurdle.  If so, I then ask, “Can you imagine a value proposition where society would be willing to better compensate you?”  People are usually fairly creative at this point.  As they propose approaches, we continually ask, “Why isn’t somebody already doing this?”

A common answer is, “XYZ company could do this but they aren’t.”  I suggest that they have two choices – join XYZ or compete with them.  The next stage of mentoring involves helping them to engage with XYZ.  We tell them that we, as an academic think tank, have been studying them and wondered why they have not expanded their value proposition to include the idea we have developed.

This is usually an important learning experience.  We may learn that our idea does not make sense.  More often, we learn why their corporate culture and infrastructure could not embrace this idea.  We propose to help them adopt this idea.  Sometimes they accept this help, but often we do not gain traction.  Then, we may proceed on our own, but often this does not make sense.

Either way it is a tremendous learning experience for those being mentored.  They now have an initial understanding of what it takes to innovate in an arena of particular interest to them.  They also gain experience in developing a line of reasoning for how to explore alternative futures driven by their interests, not just what jobs seem to be available.

It seems to me that we should provide students with more than just knowledge and skills, and we should provide employees with more than just jobs, tasks, and pay.  Human capital should be developed so people become increasingly more valuable to organizational performance, market innovations, and economic growth, both narrowly within their organizations and broadly across society.

The scorecards for all supervisors, managers, and executives should include mentoring.  The question is not how much they have improved their own resumes, but how much they have improved everybody else’s resumes.  Success is not just a matter of having the best athletes; it requires having the best team.

An Agenda for Change

What needs to change to transform our society in the ways needed to achieve new levels of equality, performance, and value creation?  I have nine suggestions in two broad areas.  In general, we need to move from status quo practices to best practices as shown in the table below.

 

Function

Best Practices

Status Quo Practices

Operations

Decision Making Evidence-Based Precedence or Doctrine Based
Decision Influences Transparent Opaque
Process Flow Coordinated Disjointed
Information Flow Seamless Fragmented

Strategy

Responsibility Value-Based Task-Based
Economics Ecosystem Based Cost Center Based
People Source of Value Source of Costs
Innovation Central to Growth Increases Uncertainty
Philosophy Human-Centered Money-Centered

 

Let’s first consider operations practices. We need to move away from precedence-based decision making – “We’ve always done it that way’” and doctrine-based decision making – “We have to conform with ideological values.”  A stakeholder that asserts something to be true better have his or her data at hand.  Otherwise, other stakeholders will laugh them off the stage.

It should be very clear whose and what resources are being used to influence decisions.  Hidden influences should be exposed and subject, at least, to the court of public opinion.  The objectives of those trying to “buy” outcomes should be open for all to see. These activities should be documented in Q1 and K1 filings with the SEC.  If these influences do not want public exposure, they should not be in the game.

Digital transformation is central to the changes needed.  This will also require organizational transformation to assure that everyone is running on the same gauge tracks.  Goods and services, as well as associated information, need to move in seamless and coordinated flows of value to all stakeholders.

The success of these changes of operations practices will substantially depend on changes of strategy practices.  Responsibility needs to be driven by value delivery rather than task completion.  Economic models and assessments need to address ecosystem-wide cash flows rather than simply account for gains and losses within each cost center.

Understanding and supporting the roles of people need to become central.  We have long characterized labor as costs of production and tried to minimize costs via work practices, automation, and other technologies.  An alternative view is that people enable value creation, especially when they are educated, trained, and supported to contribute to value.  People, at all levels, can invent, innovate, and drive economic growth.

I am advocating an overall philosophical change.  Our energies, investments and endeavors need to be human-centered rather than money-centered.  The goal is a healthy, educated, and productive population that is competitive in the global marketplace.  Rather than maximizing the Dow Jones, Nasdaq, and S&P indices, we need to maximize human potential and the outcomes of human potential.  As a result, these three financial indices will also be maximized.

Frustrations With Change

There are several forces currently driving change in our society:

  • Pandemic impacts that have completely upset the status quo
  • Economic impacts of the pandemic that have left many in dire straights
  • Disproportionate effects of economic, educational and social inequities

These forces have led to an overwhelmed healthcare system, enormous unemployment, and intense frustration on the parts of those affected by one or more of these forces.  Substantial protests and, more recently, well-planned and orchestrated insurrections have been the result.  Many people are both frustrated and extremely angry.

In parallel, social and demographic forces are steadily changing the US population.  Minorities – blacks, Hispanics, and Asians – are an increasing proportion of the population.  Education has increasingly become the means to highly-compensated employment.  The urban educated population is gaining an increasing share of the economic pie.

Interestingly, immigrants are aggressively and successfully playing this game.  While the first generation of immigrants may be a net burden on public resources, the second generation of immigrants are net contributors, and the third generation contributes far beyond native populations.  Immigration is a net good deal for the US, creating many jobs and substantial economic impacts.

However, the frustration and anger remain.  Being unable to attain appropriate education and well-compensated employment, not to mention the rights to vote, yield an enormous sense of discrimination.  Losing your chance of being the fifth-generation family member to earn your living at the local auto plant feels like a birthright denied.  However, business as usual is being fortunately and unfortunately disrupted.

The overarching issue is not getting back to normal; it is getting to what normal should have been.  As indicated in my last post, the priority has to be fostering a healthy, educated, and productive population for everyone.  No one is left behind because the societal ethos is that everyone succeeds.  Everyone’s success preempts frustration, anger and protest.  We are too busy succeeding!

A Wicked Problem

Wicked problems defy formulation and resolution.  They involve conflicting values, concerns, and perceptions that lead to conflicts, strong positions, and perhaps even hatred of the “others” who have opposing views.

We are faced with roughly 50% of the country being in fundamental conflict with the other 50% of the country.  Actually, Biden-Harris won 51.3% of the vote while Trump-Pence won 48.7%, but that’s pretty close to 50-50.

The Biden-Harris constituency includes a majority of women, blacks, Hispanics, and Asians.  Trump-Pence won white men in general and non-college educated white men in particular.  The majority of white voters chose Trump-Pence in 2016 and 2020.

White voters want the country to remain a white majority country, but the demographics of native births and immigration are steadily moving in the other direction.  Another force is the increasingly educated urban – and suburban – population that supported Biden.

It is tempting to label the Trump portion of the population white supremacists.  This is reasonable in part, but not in general.  Many people are simply disaffected with where the country seems to be headed.  They feel left behind and losing out.

They are right!  Traditional blue-collar jobs will increasingly be automated, ranging from agriculture to mining to truck driving.  Yet, the many projections I have reviewed include a greater number of new jobs than lost jobs.  Who will fill these jobs?

People with the right technical skills will secure these opportunities.  We need to invest in the capacities to educate and train people for these jobs.  Here are some stepping stones.  First, the high school graduation rate in the US should be 100%.  This may require reconceptualizing high school for some, but that is sorely needed.

Second, the percent of students receiving advanced education and training after high school should be 100%.  Elsewhere, I have argued that this will require tripling the capacities of community colleges, and tailoring curricula to opportunities.  We need the skilled technical workforce to include everyone.

Third, people should expect and experience rewarding and well-compensated employment that leverages their hard-earned expertise to create and service leading-edge products and services.  Everyone needs to feel that they are creating value for themselves, their families, and society.

Fourth, and likely quite controversial, people need to elevate their aspirations.  When I read Amy Goldstein’s compelling book Janesville: An American Story (Simon & Schuster, 2017), I was struck by vignettes reporting four generations working at the GM plant, all hating their jobs, but enjoying the good pay that enabled buying off-road vehicles and speed boats for nearby lakes.  Is that the best deal available?

We need a healthy, educated, and productive population that is competitive in the global marketplace.  We need this population to be inventive and enable innovations that change he marketplace.  Past generations gave us electricity, indoor plumbing, and television.  Recent generations provided cell phones, the Internet, and social media.  We need the current generation to do their part.

So, why is our current problem wicked?  It is if we are trapped by our fundamental disconnects – white versus multi-racial; rural versus urban; poorly versus highly educated.  However, these distinctions may be diminished if we focus on what everybody wants.  I would expect that we could agree on wanting a healthy, educated, and productive population that is competitive in the global marketplace.  Everyone benefits from this and, together, we can make this happen.

Knowing and Being

This book provides a great tour of philosophy, primarily German, in the early decades of the 20th century.

Eilenberger, W. (2018). Time of the Magicians. Wittgenstein, Benjamin, Cassirer, Heidegger and the Decade that Reinvented Philosophy. New York: Penguin.

Darwin’s Origin of the Species (1859), Einstein’s Theory of Relativity (1905), and Freud’s Psychoanalysis (1917) had upset Kant’s Critique of Pure Reason (1781) that saw human life as immutable rather than subject to the evolution of life forms, space-time variations, and underlying psychological predilections.

The questions of interests to these four men included:

  • What does it mean to exist?
  • What can be known; what is knowable?
  • What can be influenced, affected?

They encountered much angst in pursuing answers, as well as challenges gaining and retaining positions that paid enough to sustain themselves and families.

Eilenberger covers the period 1919 to 1929.  The four main characters are:

  • Ernst Cassirer (1874-1945): Neo-Kantian pursuing an idealistic philosophy of science.
  • Ludwig Wittgenstein (1889-1951): Worked primarily in logic, the philosophy of mathematics, the philosophy of mind, and the philosophy of language
  • Martin Heidegger (1989-1976): Best known for contributions to phenomenology, hermeneutics, and existentialism.
  • Walter Benjamin (1892-1940): Contributions to aesthetic theory, literary criticism, and historical materialism.

Contemporaries, although a bit older (except for Arendt), include:

  • Friedrich Nietzsche (1844-1900): Philosopher, cultural critic, composer, poet, and philologist who exerted a profound influence on modern intellectual history.
  • Gottlob Frege (1848-1925): Father of analytic philosophy, concentrating on the philosophy of language, logic, and mathematics.
  • Bertrand Russell (1872-1970): Polymath, philosopher, logician, mathematician, historian, writer, social critic, political activist, and Nobel laureate.
  • G.E Moore (1983-1958): One of the founders of analytic philosophy with Bertrand Russell, Ludwig Wittgenstein, and Gottlob Frege.
  • John Maynard Keynes (1883-1946): Economist who fundamentally changed theory and practice of macroeconomics and economic policies of governments
  • Hannah Arendt (1906-1975): Political theorist with lasting influence on political theory and philosophy; a most important political thinkers of the 20th century

Historical figures who hugely influenced contemporary thought at that time were:

  • Gottfried Wilhelm Leibniz (1646-1716): Prominent polymath and one of the most important logicians, mathematicians and natural philosophers of the Enlightenment
  • Immanuel Kant (1724-1804): Comprehensive and systematic works in epistemology, metaphysics, ethics, and aesthetics have made Kant one of the most influential figures in modern Western philosophy.
  • Johann Wolfgang von Goethe (1749-1832): Works include: four novels; epic and lyric poetry; prose and verse dramas; memoirs; an autobiography; literary and aesthetic criticism; and treatises on botany, anatomy, and color.
  • Georg Wilhelm Friedrich Hegel (1770-1831): Philosopher and the most important figure in German idealism

The struggles of these four men with the questions noted earlier were interesting, but I found it difficult to relate to their angst.  Rather than addressing such universal and perhaps absolute questions, I am more attuned to understanding my experiences and perceptions.  Finally, on page 246 of 365, I encountered this paragraph, with which I highly resonated.

“For the Renaissance, the foundation of all this opening of the self and the world is the ability to give symbolic expression to our own experience. It is this that enables our entirely individual vision of the world to take shape in the form of a work, even if it is only the matter of playing the flute, making a gesture, a drawing, or a calculation.  Having become a sign, and having been placed in the public sphere, a “work” can then be a starting point for others, for successors to open up themselves and the world; this is culture as a continuous process of symbolically guided orientation, or indeed an opening up, even in the form of a whistle, a movement, or a sketch, or a calculation.”

Reading this book caused me to delve into the history of contemporary western philosophy from the 17th century until now.  The number of schools of thought and leaders of these schools is rather amazing.  Perhaps not surprisingly, I find myself sympathetic to the school founded by William James (1842-1910) and Charles S. Peirce (1839-1914) at Harvard, and later John Dewey (1859-1952) at Chicago, in the late 19th century.

“Pragmatism is a philosophical movement that includes those who claim that an ideology or proposition is true if it works satisfactorily, that the meaning of a proposition is to be found in the practical consequences of accepting it, and that unpractical ideas are to be rejected.”  This sounds a lot like science and engineering to me, which is probably to be expected from a pragmatic American.  Thus, the earlier three questions should be logically and empirically addressed.  If the answers have practical value, then one can accept their truth at least tentatively until better answers are formulated and evaluated.

This book was, obviously, very thought provoking.  It caused me to revisit topics I have not addressed since being an undergraduate more than 50 years ago.  I paid attention to these topics then because they were course requirements.  This time, I was simply fascinated and wanted to know.  Of course, I have only touched the surface of this broad topic, totally biased to Western rather than Eastern thought and not exploring indigenous cultures.  An interesting question is whether philosophizers in all cultures pose the same fundamental questions.

Understanding and Managing Complexity

If you think the complexity of the current situation – pandemic, global warming, and race relations – is overwhelming, I have a suggestion for coping with the complexity.  The just published issue of The Bridge (https://www.nae.edu/Bridge.aspx) provides a wonderfully broad and intriguing set of perspectives of how complexity is manifested throughout our society.  We cannot eliminate complexity, but we can understand it and develop useful mechanisms for coping with, and perhaps even leveraging, complexity.

This issue reports the “seven habits of highly effective systems thinkers.”

1. Specialize less, systematize more. Working across divisions and abstractions can inform and guide better concepts, principles, models, methods, and tools. On matters of complexity, engineers need to confront the true value of various specializations, how far they can take us, and how they are rewarded.

2. Get over physics envy, try ecology envy. Less Newton, more Darwin. Engineering achievements and ruins both hinge on reductionism fueled largely by physics. It’s time to refocus on deep lessons from nature and culture and all their evolutions.

3. Evolve logic and psychologic. Engineering training and algorithms encourage context blindness. Being sensitive to environments will require exercising intellectual senses as well as prudent forms of engineering.

4. Foster discipline over disciplines. Complex systems can change faster than the mind can conceive them, and “solutions” can trigger undesirable outcomes. Staying attentive to failure modes requires discipline.

5. Relate first, rationalize next. Complexity builds from relationships. Relating to one another is a civic act and engineering should be too. Rationality works only part time—and it’s often hard to tell which part.

6. Progress comes from participation. Engineers often feel conflicted about being “hired guns” or “order takers.” Active reflection becomes a challenge. Broadening participation across populations may alleviate this discomfort. If there are no sacrifices, one might say, there’s no engineering. Similarly, if there’s no public participation, there’s no progress.

7. Focus more on care than creation. Capitalism is fueled by newness and novelty, or so the belief goes. But maintenance and care are sources of essential wisdom and traditions. Vital systems that support people need more care than reckless new creations.

Crossing the Information Chasm

Facebook, Twitter, and other emergent platforms have resulted in the Balkanization of the world of information.  There are large subpopulations that believe the moon landing was faked, climate change and the pandemic are hoaxes, and the presidential election was fraudulently stolen from Donald Trump. They only pay attention to information sources that support these views.  Everything else is seen as fake news.

Does this matter and, if so, what can be done to remedy the situation?   Does the prevalence of believers of disinformation have any impacts?  Certainly, persisting in the use of fossil fuels and not wearing masks affects others, as well as themselves.  A Darwinian perspective would suggest that they will suffer the consequences of their behaviors and, over time, this subpopulation will steadily decrease in size.

This assumes, however, that they just passively accept these consequences.  Another possibility is that they aggressively conflict with other subpopulations that do not support their views.  They might organize, and possibly weaponize, to counter their “deep state” adversaries.  The result would likely be armed conflicts that were associated with originally coining the term Balkanization.

Another possibility is a broad, national initiative to open a dialog premised on the assumption that each subpopulation has compelling and valid reasons for holding their mutually conflicting beliefs.  From this perspective, everyone is right in the context of his or her lived experiences.  The next step, then, involves understanding and appreciating these experiences.

How have rural, black, LGBT, and other groups experienced life in terms of economic rewards, social acceptance, and interactions with government agencies?  How have these experiences influenced perceptions?  How have others attempted to affect these perceptions?  How might society invest to improve people’s personal situations?

This may all sound unrealistic.  However, we cannot continue to accept rampant polarization.  We need to proactively and humanely address the sources of these huge disconnects and invest in finding common ground.  Perpetual conflict will not result in the growth and satisfaction that we all seek.  We need to thoughtfully look out for each other.

Changing of the Palace Guard

It is interesting to live in Washington, DC and observe how sponsors and colleagues are reacting to the changing of the palace guard.  Most of these people are at least one level below the political appointees of the palace guard and will not be leaving.  They seem relieved, not existentially but practically.  Their new superiors may be in place for the next four years.

It appears that the next set of players will be experienced and competent.  That is a welcome relief.  I was privy to a high-level discussion of the White House’s stated criteria for political appointments over the past four years.  It is essential, I was told, that candidates have no expertise relevant to the agency they would lead and be destroyers rather than builders.

Flurries of executive orders dismantled policies and regulations intended to protect health, education, and environment.  This was motivated, in part, by enormous donations from fossil fuel companies to political campaigns and disinformation efforts to confuse and mislead the public.  The swamp that was to have been drained was actually carefully nurtured.

Government is intended to serve and protect the interests of all citizens.  Individuals, companies and other organizational entities attempt to maximize their personal gains from government coffers, but this is a consequence of our public-private ecosystems, not the primary purpose of these ecosystems.  Much greater transparency could help to moderate these very natural tendencies.

What can we expect?  The pandemic and its health and economic consequences will remain to be addressed.  The looming threat of global warming and its impacts will need considerable attention and investments.  Social and economic equity will require considerable work.  The difference will be that these challenges are not going to be denied.  We will openly recognize them and address them with expertise, resources, and commitment.

With the vaccine on the way, we will hopefully move back towards economic normalcy.  New leadership will also provide confidence in a “back to normal” government that will professionally address and manage the substantial challenges we face.  Further, we will again see consistent and truthful communications about what is happening and how the government is responding.

 

Problem Solving in Complex Adaptive Systems

It is important to distinguish between understanding complex problems and solving them. Solving problems in complex adaptive systems can be quite difficult and often intractable. Climate change, global warming and their consequences provide a compelling example.

The science seems clear in terms of carbon emissions and greenhouse gases that lead to global warming. The relationship between warming and fires, hurricanes, and flooding, due in part to increased ocean temperatures, seems we’ll understood.

The solutions to this problem include lowering emissions and mitigating the impacts of fires, hurricanes and flooding. On the longer term, it is a bit more complicated, e.g., rising temperatures making the southeastern US uninhabitable for humans, animals and crops some time between 2040 and 2060.

The solutions involve decreasing our reliance on fossil fuels, not building in flood zones, and better management of the environment, e.g., wetlands and forests. Are we really ready and willing to do this?  It will require mobilizing the economy and society — government, industry, and the workforce — for major changes, indeed transformation of the economy and society.

Pursuit of this agenda requires understanding the nature of the complex adaptive socioeconomic system involved.  This system is populated with intelligent agents – individuals, organizations and associations – that learn about and adapt to studies, strategies, policies, incentives, and regulations to “game” the system to the advantage of their organizations and themselves.

Horst Rittel, almost five decades ago, characterized addressing such systems as wicked problems.  A wicked problem is a social or cultural problem laced with incomplete or contradictory knowledge, large numbers of people and opinions involved, substantial economic burdens, and the interconnected nature of these problems with other problems. Problems such as poverty, sustainability, equality, and health and wellness – and climate change — plague our nation and our world.

Consider Rittel’s ten characteristics of wicked problems:

  1. Wicked problems have no definitive formulation.  Climate change cannot be fully addressed by “just” attending to carbon emissions.
  2. It is difficult to measure or claim success with because of connections among problem where boundaries cannot be defined.  Climate change involves issues across the environment, governments, industries and populations.
  3. Solutions to wicked problems can be only good or bad, not correct or incorrect. There is no idealized end state for climate so approaches involve tractable ways to improve the situation rather than solve it.
  4. There are no best practices when tackling wicked problems, although history may provide a guide. Approaching climate change is likely to require making things up along the way.
  5. There are always multiple explanations for wicked problems, with the appropriateness of explanations depending greatly on the perspective stakeholders.  Climate change is a threat to several industries and workforces.
  6. Every wicked problem is a symptom of other problems. The interconnected nature of socioeconomic systems illustrates how education interacts with health, employment and lifestyles.
  7. Solution strategies for wicked problems have no definitive validity tests because humans created wicked problems and natural science approaches are inadequate for addressing whether climate change is fixed.
  8. Solutions to wicked problems frequently involve a single chance of success because significant interventions change the problem space enough to limit the ability for trial and error optimization of solutions.
  9. Every wicked problem is unique.  One will never encounter the same problem twice in the complex adaptive system of climate change, as key stakeholders will have reacted to earlier interventions, often precipitating new problems.

10. Policy decision makers attempting to address wicked problems must be empowered to act fully responsible for their actions.  Climate policies that significantly affect large populations and industries should be well informed, well communicated, and amenable to learning and improvement.

Based on these characteristics, problems have indeterminate scope and scale. Social problems such as inequality, political instability, death, disease, or famine tend to be wicked. A key role for problem solvers involves mitigating the negative consequences of wicked problems and positioning the broad trajectory of culture in new and more desirable directions. This mitigation is not an easy, quick, or solitary exercise and demands interdisciplinary collaboration, and most importantly, perseverance.

Let’s apply this thinking to addressing climate change.  This ecosystem can be characterized as a multi-level enterprise where the levels for this domain are people, processes, organizations, and government.  The perspectives and proclivities of stakeholders at each level include:

  • Government:  Elected officials have great difficulty trading off short-term versus long-term costs and benefits, due to a large extent to the concerns, values and perceptions of their constituents – citizens and companies.
  • Organizations: The vested interests in energy extraction, refinement, and use are enormous and are naturally inclined to sustain status quo business models, and the benefits these models provide to these organizations.
  • Processes: Processes for extracting, refining, and utilizing fossil fuels are well developed, employ millions of people, and represent trillions of dollars of stock market capitalization.
  • People: People have long exploited natural resources and come to depend on the benefits of these resources in terms of both consumption and employment.  Changing consumption habits is very difficult.

So, addressing climate change is clearly a wicked problem.  What might we aspire to accomplish in transforming this system? Here are three priorities:

  • Regulations to reduce emissions of carbon and methane
  • Regulations to eliminate coal-fired power plants
  • Regulations to eliminate building or rebuilding in flood planes

As noted above, key stakeholders are likely to invest substantially to thwart such regulations, with lobbyists generously facilitating campaign contributions to Members of Congress willing to join the anti-regulation chorus.

Significant investments in communications and education will be needed to gain public support.  Substantial incentives will also be needed to compensate those most affected by these regulations.  Examples include:

  • Investment tax credits for extraction companies, as well as broader industry, investing in climate-friendly offerings
  • Investment tax credits for those moving capital from extraction companies to climate-friendly technology investments
  • Incentives for transportation companies to shift investments to climate-friendly mobility offerings

These types of incentives will only indirectly benefit the workers displaced by these regulations.  Thus, investments will also be needed to accelerate the creation of new jobs, particularly skilled technical workforce jobs.  Further investments, likely in community colleges, will be to train or retrain large numbers of people for these jobs.  Elsewhere, I have estimated that community college capacities will need to be tripled.

A key issue is the time profile of introducing these regulations, incentives, and investments. Regulations could be phased in over 5 years.  Incentives and investments could begin now and continue for 10 years or more. The results would be slow changes, but anticipated changes that stakeholders could plan for over time.

What would be the costs of all these changes?  To put this question in perspective, consider the costs of mitigating the impacts of climate change.  In an earlier post, I noted that the costs of mitigating floods resulting from global warming would, within ten years or so, require annually 10% of global GDP.  If we add in the impacts of fires, droughts, and other weather related impacts, the costs of NOT changing completely dwarf the costs of the proposed changes.

The immediate next steps involve building an increasing constituency for addressing the wicked problem associated with our complex adaptive socioeconomic system.  We need, over time, for everyone to own climate change challenges and, similarly, own the solutions.

Designing as Dialogues in Contexts

Subramanian, E., Reich, Y., & Krishnan, S. (2020). We Are Not Users: Dialogues, Diversity, and Design. Cambridge, MA: MIT Press.

The authors’ central argument is that we have a much deeper relationship with the things we create than just being users. Social media provides compelling examples of how the usability of the interface, while important, trivializes the sense of how these media affect our lives.  They impact the personal, social, and political ways in which we interact with the world.  Thus, we are not only users; we are designers of the overall interactions with the artifact and other people.

This book reviews the history of designing through various lenses, ranging from nonmessy to slightly messy to more messy to most messy.  The messiness comes from the extent to which designing considers context, which includes behavioral and social phenomena, as well as environmental and cultural phenomena.  At the extremes, the contrast is between designing as algorithmic optimization versus designing as dialogues and explorations by often-heterogeneous stakeholders.

The book conceptualizes designing as a dialogue among stakeholders, the assemblage of which operates as a complex adaptive system.  Stakeholders discuss and debate, pursuing common ground, likely enabled by boundary spanning mechanisms.  The nature of these mechanisms varies with differing contexts.  In my experience they are often pictures, sketches, and diagrams that enable divergent domains to communicate.  The authors refer to this collection of mechanisms as models.

They argue for a “conceptual flat space” where all the representations of phenomena appear by themselves but with traceability to elements of the context, enabling multi-dimensional views.  We have approached this with the construct of “views.”  Views enable seeing the relationships between levels of abstraction as they apply to particular phenomena and stakeholders.

The process of boundary-spanning modeling eventually leads to a theory of the artifact.  This theory can be embodied in what we call “policy flight simulators.” One of their examples is a game – Rubbish! – that addresses solid waste management in Bangalore.  This game enables stakeholders to be immersed in the complexity of their system and learn how other stakeholders perceive the system.

The ultimate challenge is not designing for the future but designing of the future. The authors’ compelling and down to earth case studies cause me to request that they address designing for global warming. How do we span the boundaries and find common ground among all the stakeholders in the energy ecosystem. The authors have, I think, the right prescription but how do we make it happen?

Investment Strategies

How do people envision the future?  How do they consider uncertainties? How do they think about investing today to have a better tomorrow?

People seem willing to invest in their personal futures, e.g., retirement. They seem willing to invest in their children’s futures, e.g., education. The further they look into the future, the more difficult this becomes, e.g., their grandchildren’s retirement.

The more broadly they look, the more difficult it becomes. They might invest, perhaps modestly, in the futures of nieces and nephews. What about neighbors or other people in the community?  How about people in other countries?

People appear to have temporal discount rates for the future and spatial discount rates for distal people and phenomena. A child dying next door is a tragedy; 100,000 people dying from a tsunami on the other side of the world is a statistic.

We handle this as a society by taxing everyone, combining the resulting resources, and committing to longer-term and broader investments. Other social organizations, e.g., churches and other non-governmental organizations, do this as well. Many people benefit from this.

However, we are not explicitly and systematically addressing a key question. How much should we invest in assuring that the population of the US is healthy, educated, and productive so as to be competitive in the global marketplace?  This is not just “no child left behind”; it is “no one left behind.”

What would be the benefits of 100% of our population being healthy, educated, and productive? What if all disabled people could work and all elderly people could age at home?  We cannot address this here, but my projections show dramatically increased government revenues and substantially decreased government expenditures.

The logic is simple: everyone is productive, pays taxes, and needs less government support. The resulting surpluses can be used to help others — globally — to join the cohort of healthy, educated, and productive people. This is not pie in the sky; it is pie for everyone.

This makes moral sense.  It makes economic sense.  Why don’t we do it?  In part, it is short sightedness.  More fundamental, however, is the philosophy that everyone should take care of himself or herself.  Almost no one does this.  We use roads, drink water, benefit from sanitation and public health, take advantage of education and healthcare, and are defended from numerous risks.

Each of us, except perhaps for hermits in the woods, are cared for in many ways.  Yet, there is a pervasive sense among many of us that we are “self made” people.  It was our true grit that resulted in our success.  No one helped us with school, college, graduate school, and placement in plum jobs.  We accomplished all of this with no one helping us.

Why cannot everyone else do this?  The reason is primarily circumstances.  Not everyone is a member of Warren Buffett’s “lucky sperm club.”  Buffett happened to born in the right country, to the right parents, at precisely the right moment, to absurdly reward his special talent at asset allocation.  Consequently, he became one of Malcolm Gladwell’s “outliers,” with superior intelligence and motivation to work hard and, crucially, being at the right place at the right time.

So, Buffett was lucky.  Very few people are this lucky.  A larger population has a share of good luck.  A substantial population enjoys modest luck.  Such luck affects how you leave the starting blocks in the race of life.  Some people accelerate with great energies. Many struggle to stand up and then walk rather than sprint.

The key elements are health, education, resources and a social network that cheers you on throughout the race.  Many people are deficient in these elements.  We would all be better off if such deficiencies were quite rare.   We can, as a society, decide to make this happen.  Investing in the health, education, and productivity of everyone can, as noted earlier, provides a quite positive return on investment to everyone.  We just need the will to do this.

 

Progress at the Speed of Trust

Stephen Covey originated this idea in his book The Speed of Trust (Free Press, 2006).  Progress is limited by the extent to which key stakeholders trust in the endeavor of interest and support its pursuit.

There are multiple levels of trust.  At one level, we are concerned that leaders and other authorities will not mislead or lie to us.  We want them to be looking out for our interests, not just their own or vested interests.

At another level, the concern is with the extent to which the vision and plan they are articulating makes sense and is likely to succeed.  Is there any trustable evidence that the plan will work? What are the risks of failure?

Yet at another level, can we trust those involved to actually execute the plan?  Do they have the commitments and resources to implement their plan and achieve their vision?  What are the risks of execution difficulties?

Consider how these notions of trust apply to the pandemic, the economy, and climate change.  Let’s start with sources of evidence that can be trusted.  For the pandemic, I would include the US Centers for Disease Prevention and Control (CDC), more broadly the National Institutes of Health (NIH) and the World Health Organization (WHO).  They spend billions of dollars on keeping track of what is happening and likely to happen.

For the economy, the US Federal Reserve tracks the Consumer Price Index, Gross Domestic Product, Employment, Housing Starts, Stock Indices, and numerous other metrics.  The European Central Bank (ECB) does the same thing for the European Union.  There are, of course, numerous business news outlets that report on stock prices, business earnings announcements, new product releases, and mergers and acquisitions.

Regarding climate change, the UN Intergovernmental Panel on Climate Change (IPCC) reports a wide range of metrics. The US National Oceanic and Atmospheric Administration (NOAA), and its numerous subsidiaries, track and project changes.  The US National Academies of Science, Engineering, and Medicine (NASEM) regularly issues reports on climate, health, and a wide range of consensus studies.

Digesting this wide range of materials can be an enormous undertaking, but publications such as The Economist, New York Times, and Washington Post, to name just a few, often highlight findings of these governmental organizations.  Much less trustworthy are Facebook, Twitter, and other social media.  There is no assessment of the credibility and veracity of such postings.  Consequently, outrageous lies, proliferating rumors, conspiracy theories, and outright misinformation are rampant.

So, there is pretty good basis for achieving the first level of trust.  The second level – the vision and plan for moving forward – is more difficult as it involves moving from assessments of “what is” to projections of the consequences of “what if,” e.g., outcomes of choices of particular strategies or policies.

The governmental organizations noted above might provide well-reasoned speculations on how to move forward on health, the economy, and climate change.  However, such projections are laced with uncertainties about what will really work and how well it will work.  This is often addressed by asking, “How accurate have their past projections been?”  This is akin to relying on a baseball pitcher’s won-loss record and earned run average.

The third level of trust is also a challenge.  Will the commitment and resources be available to achieve success?  This is a political rather than technical challenge.  Health, the economy, and climate change involve many government actors who have to authorize policies and appropriate resources to implement these policies.  In recent years, in particular, these actors have been unwilling to appropriate resources to maintain physical infrastructure, for example, before it fails.  Colloquially, they just kick the can down the road.

Combining the misinformation on social media, the uncertainties associated with alternative plans forward, and demonstrated inabilities of governmental actors to commit to plans, it should not be unexpected that the public does not trust society to deal with health, the economy, and climate change.  These impedances are surmountable with concerted educated-focused communications, as long as politicians and pundits do not undermine the process.

Beyond trust, there is another consideration.  Are people willing to behave in the ways needed to support the success of plans?  The pandemic has a mixed record on this.  Many people, perhaps most, are agreeing to facemasks, social distancing, and washing hands, yet a reasonable large number of people see it an as infringement of their rights.

Much more abstract is people’s willingness to align their lifestyles with good health and well being.  The prevalence of chronic diseases associated with poor lifestyle choices decreases quality of life and life expectancy, while also greatly increasing healthcare costs.  Of course, there are many social determinants that influence the prevalence of chronic diseases.

Our economy is gong through a transformation as automation and artificial intelligence enable replacing humans in many routine jobs.  At the same time, emerging new jobs provide opportunities, for example, as coal mining jobs disappear, two of the fastest growing jobs are solar panel installation and wind turbine maintenance.

We need to create educational opportunities, likely via community colleges, to create the skilled technical workforce that can perform these millions of new jobs.  At the same time, people need to be open to being retrained for these new opportunities, many of which will be well paid.  This will increases those with good middle class wages enabling, for example, making tax-deferred contributions to retirement savings accounts.

Addressing global warming, as well as mitigating the impacts of global warming, will require decarbonizing our economy.  We will need to move from fossil fuels to clean energy, such as solar, wind, and possibly nuclear.  We will need to increase use of public transit, which is much more energy efficient than individual transportation.  We will need to reduce waste, particularly packaging and plastic.

These will require major changes. People have long exploited natural resources and come to depend on the benefits of these resources in terms of both consumption and employment.  Consequently, changing consumption habits will be very difficult.

Beyond individual consumers, processes for extracting, refining, and utilizing fossil fuels are well developed, employ millions of people, and represent trillions of dollars of stock market capitalization.  Further, the vested interests in energy extraction, refinement, and use are enormous and are naturally inclined to sustain status quo business models, and the benefits these models provide to these organizations.

Finally, consider government.  Elected officials have great difficulty trading off short-term versus long-term costs and benefits, due to a large extent to the concerns, values and perceptions of their constituents – citizens and companies.  Thus, many people do not trust government to do the right things.  Evidence is ignored, commitments are continually delayed, and problems grow.

We need a restart focused on the three levels of truth outlined earlier.  Business as usual – muddling through and kicking the can down the road — will no longer be an acceptable, albeit mediocre, practice. It is much too late.  We need to rebuild a society-wide foundation of trust that will enable a consensus on visions, plans, resources, and execution.

Hope in Troubling Times

How can we deal with all the negative things swirling around us?  A natural tendency is to hunker down and avoid the bad vibrations. Just wait out the negative things until positive things are possible.

Of course, if everyone does this, anything positive could be a long time coming.  Michael Curry has a proposal. Curry is the Presiding Bishop of the Episcopal Church and preaches fairly often at the National Cathedral in Washington, DC.

I have met Bishop Curry a couple of times during services at the Cathedral. Once he provided me a personal blessing. This experience and his compelling sermons have made me a fan of Michael Curry. No one else can pause during a thoughtful sermon to a thousand or more Episcopalians and say, “I could use an Amen right now,” and enthusiastically receive it.

Bishop Curry’s new book is Love Is the Way: Holding on to Hope in Troubling Times (Avery, 2020).  He focuses on agape love — brotherly love, affection, caring, good will, and benevolence — and how it can change the world.  His argument is compelling, just like his sermons.

But this book is not a philosophical treatise. It is the story of Michael Curry’s life as a preacher, mentor, and a black man making a difference in the world. It is laced with very moving stories.  Many are about his experiences, often involving little known people who epitomize his approach to life.

Curry’s book will cause you to explore your own values and beliefs, including the role played by faith.  This includes defining the authentic you.  His compelling story will not only appeal to Episcopals and Christians, but also to those affiliated with Judaism and Islam, as well as Native Americans.  Bishop Curry’s message is universal.

After reading Michael Curry’s fascinating book, I moved on to Good Company by Arthur M. Blank (William Morrow, 2020), cofounder of Home Depot and owner of the Atlanta Falcons (NFL) and Atlanta United (MLS). I was not expecting a confluence of themes and messages.

What do an Episcopal Bishop and a Jewish billionaire have in common?  They have very similar philosophies about people, caring, giving and contributing to society. Their respective books provide persuasive bookends to their compelling philosophies.

Having lived in Atlanta for three decades, this alignment of philosophical agendas probably should not have surprised me. Blank is Jewish and the Atlanta Jewish community has strong ties with the Atlanta Black community. Blank’s book relates captivating stories of black leaders of the Civil Rights movement, as well as his caring responses to recent NFL players’ protests.

More down to earth is the pricing practices at Blank’s Home Depot, as well as their workforce practices.  They intently listened to customers and employees, wanting to learn about their desires and complaints. Post Home Depot, his decisions regarding seat width in Mercedes-Benz Stadium, as well as food and drink prices at the stadium portray an intense focus on other people’s needs and desires.

Similar to Bishop Curry, one of Blank’s core values is giving back.  He discusses his efforts, in partnership with other organizations, to resurrect the Westside of Atlanta. His message is that you can only move at the “speed of trust.”  Blank had engaged employees, termed associates in all his businesses, in choosing recipients for his many philanthropic endeavors. He wants them to frame and recommend grants, as well as enjoy the satisfaction of giving.

My recent blog posts have been less than optimistic. These two books have renewed me. We are capable of doing what is right and doing it well. Thank you Michael and Arthur. The title of this post is the subtitle of Michael Curry’s book. I’ll end with the heading of the last section of Arthur Blank’s book  “There is enough (economic) pie for everyone.”

Transforming Anger

It is so very easy to get angry about the current situation in the US.  Pandemic, recession, hurricanes, flooding, fires, earthquakes, protests about racial injustice, attempts to pack the Supreme Court and undermine elections are all woven together over the past six months.  It is almost a perfect storm of calamities.

My anger is not about natural events, although we could have been paying much closer attention to these possibilities significantly earlier.  We have handled these problems so poorly, relying more on bravado than expertise.  You cannot talk your way out of natural events.  Nature does not negotiate.

Anger does not do me any good. To defuse it, I have substantially scaled back my consumption of news.  There are too many pundits with too many opinions.  Further, nothing surprises me because I have, in effect, been trained to expect the worst.  Dastardly deeds flourish.  Anything is apparently acceptable.

Consequently, I have decided to stem my anger and just be frustrated.  I can creatively deal with frustration.  One outlet is the Washington DC Panda Cam where you can watch the progress of the now one-month old panda cub.  This 2-pound cub will become a 200 to 300 pound adult.  This is comparable to an 8-pound human baby growing to be an 800-1,200 pound adult.

Another outlet is walking outside, especially now that DC is having lovely Fall weather.  The expanse of green trees and gardens is relaxing.  Within the next month or so, Fall colors will amaze us.  The birds and the squirrels do not seem angry or frustrated.  They just do their things, oblivious to the calamities we perceive, although climate change will likely eventually affect them.

Interesting and satisfying distractions become the new avocations.  Reading history reassures me that we gotten past bad stretches before.  I leaven contemporary non-fiction, such as biographies, with occasional murder mysteries.  I have been ordering books from Amazon because visits to my favorite bookstores confront me with outpourings of the cottage industry of tell-all insider revelations.

I am hoping that the plethora of calamities will cause society to wake up and look at the challenges we are facing.  Avoiding issues and delaying addressing them are not viable approaches to a desirable future.  We need to pull together, devise some plans, invest accordingly, and act decisively.

Unfortunate Themes

Here is my recent reading/watching list:

  • Evil Geniuses: The Unmaking of America by Kurt Anderson (Random House, 2020)
  • The Secret Life of Groceries: The Dark Miracle of the American Supermarket by Benjamin Lorr (Avery, 2020)
  • Talking to Strangers: What We Should Know About People We Don’t Know by Malcolm Gladwell (Little Brown, 2019)
  • The Social Dilemma directed by Jeff Orlowski (Netflix, 2020)

There are five themes woven though these publications:

  • Greed is good — Geniuses
  • Workers are abused — Groceries
  • Strangers are wrong — Talking
  • Connectivity is pervasive – Dilemma
  • Conspiracies are persistent – Dilemma

Add in the pandemic, hurricanes, fires, and earthquakes and it looks like we are going to Hell in a hand basket. Are there any positive signs?

Government workers, below the levels of political appointees, are dedicated and doing the right things — often rather quietly. Health workers and educators are doing their best to keep providing essential services. A large percentage of citizens are wearing masks, social distancing, and washing their hands, trying to avoid infecting others.

Nevertheless, the themes outlined earlier embody very powerful forces. The results, among many outcomes, have undermined the middle class. Working class wages have stagnated for decades, while jobs have been contracted out, steadily depressing wages. Pensions are disappearing and healthcare is rare for contract jobs. The income of the ruling class and its net worth has soared.

Is there a ruling class in the US?  We have a ruling class in the sense of the economic golden rule. He who has the gold makes the rules. There are 12,000 registered lobbyists working to influence Congress.  That is over 22 per Member of Congress.  Their goal is to influence the rules.

These lobbyists and associated organizations contribute billions of dollars to political campaigns, which is needed for each election.  Expenditures are dominated by media buys – see communications below.  Those who contribute all these monies get to highly influence the rules of the game.

The nature of communications in society has changed.  Gladwell’s case studies of miscommunications involve war, fraud, murder, suicide, and all sorts of unfortunate outcomes.  We assume honesty and see people as transparent, unaware of differences and circumstances we cannot know.  When we find that we are wrong, we blame them.

The social dilemma of communicating 24×7 results in disappearing attention spans. “Breaking News” pervades every moment of our lives.  We collect and tally “likes” similar to breaths.  We see all these services as free, but that is only because we and our data are the “product.”  Over time, these services know us better than we know ourselves.  This enables Amazon to send us products before we have ordered them.  We are amazed to get the product the same day.

Geniuses and Groceries show us that most people are subject to the prerogatives of the folks in charge – those with the gold.  Talking shows us how often we are simply outright wrong.  Dilemma portrays us as addicted to instant gratification and willing to be manipulated to get our next fix.  These findings do not lead me to try to rekindle my natural optimism.

A Reformed Optimist

“Everything will work out in the end and, if it doesn’t, it is not the end.” This was a theme in the movie The Best Exotic Marigold Hotel (2012) but attributed to Paul Coelho and John Lennon much earlier.

I am an inveterate optimist, but I am reconsidering my inclinations.  Look how we have handled things lately. Kurt Anderson’s Evil Geniuses (2020) provides a compelling commentary on “recent history.” Economic inequality has increased enormously — by design. Almost all the growth in wealth has gone to the top few percent of our population. Lots of people are very frustrated.

The pandemic has exposed much of this inequality in terms of who loses jobs and who gets sick and dies. The government has avoided being honest, not wanting to affect elections. Pandemic protections have become an issue of freedom and masculinity.

The big challenge is waiting in the wings. Climate change has led to global warming, and the impacts of global warming have included intense hurricanes, broad flooding, and pervasive wildfires.  Nature – physics, chemistry, etc. — underlying all of this does not watch CNN and Fox. Nature just does what it does.

We know what to do to mitigate global warming and mitigate the impacts of global warming. We simply are unwilling do this. The key players want to win elections, lubricated by massive funds from lobbyists. The fact that they are destroying civilization is ok with them, as long as it does not happen while they are in office.

Of course, the Earth will be fine for quite some time. It has endured meteor impacts, ice ages, widespread plagues and, most significantly, the impacts of creative people aspiring for personal benefits.  Maybe this is the central idea.  The Earth will be ok without us.  Civilization will have been just a blip across the millennia. Then, we are gone, like the squirrels sallied from your attic, and everything works out in the end.

Death by Complexity

Joseph Tainter’s The Collapse of Complex Societies (Cambridge University Press, 1988) presaged Jared Diamond’s Collapse: How Societies Choose to Fail or Succeed (Viking Press, 2004).  Both books provide vivid explanations of how societies fail and why.

Societies create mechanisms to deal with new challenges.  Walls are built to thwart Mongol hoards.  Regulations are created to deter fraud and corruption.  Programs are designed to assure equity of access to education and health.  Each of these initiatives leads to a new layer of societal complexity.

Each of these layers creates a set of vested interests in the operations of the layer and the economic benefits of these operations.  Consequently, it is very difficult to eliminate layers, even if the original motivation for the layer has disappeared.

Adding layers is much easier.  The benefits of the layer, to both those targeted to receive these benefits and those compensated to provide these benefits, can be quite substantial.  That’s why they are very reluctant to forego these benefits, even if the provision of these benefits no longer makes sense.

So, societies keep adding layers that consume resources.  Eventually, a new challenge emerges – a pandemic, climate change or alien invaders – and there are no resources to invest in a new layer.  All resources are being consumed to support earlier layers of complexity.  This is a harbinger of societal failure.

Where do we currently stand?  There are layers that many people do not realize exist.  For example, the blog on Downsizing the Federal Government indicates, “The federal government spends more than $20 billion a year on subsidies for farm businesses. About 39 percent of the nation’s 2.1 million farms receive subsidies, with the lion’s share of the handouts going to the largest producers of corn, soybeans, wheat, cotton, and rice.”

Transportation subsidies are probably the largest, with public transit receiving $50 billon per year.  Airplanes, aluminum, athletic shoes, automotive, microelectronics, and oil are among the largest corporate recipients of subsidies, with the top 10 recipients receiving $30-40 billion per year.  Layers of bureaucracy administer all of these subsidies.  There is a labyrinth of vested interests, advocates, and lobbyists.

We also have layers that administer Social Security, Medicare, and Medicaid, as well as layers that regulate agriculture, aviation, banking, education, energy, environment, finance, healthcare, transportation, etc. These activities create economic value in the sense that the millions of employees involved translate their salaries and wages into consumption.

The complexity is staggering during “normal” times, but can become overwhelming during crises such as the mortgage meltdown (2007-2010) and the current pandemic.  The impacts of climate change are lurking around the corner, which over the coming years will consume an increasing portion of global GDP.

Might the layer of complexity added to address the impacts of climate change precipitate societal failure?  The risk of this is sufficient to warrant careful and thoughtful anticipation of this possibility and careful consideration of mechanisms to mitigate this outcome.  Our typical approach of “too little, too late” is no longer viable.  Actually, it never was but we muddled through.  Muddling is now a sure way to guarantee enormous negative societal consequences.

 

Disruptive Innovation in the Public Sector

How can innovation be cultivated in the public sector?  Consider defense, education, and healthcare.  These three primarily public sector systems are ripe for disruption and innovation. Enormous improvements of services and decreased costs are undoubtedly achievable. The key question is how to disrupt the status quo. Let’s first consider how a direct approach might work, and then discuss a different approach to influencing these systems.

Each of these systems includes deeply embedded processes that have long served vested interests.  These interests will aggressively work to thwart changes that strongly threaten heavily defended rice bowls. The fact that some constituencies are dramatically underserved and costs for those who are served are highly inflated will not deter the stewards of the status quo.

How can change be accomplished in the face of these vested interests and their strong intent to thwart change?  One has to change the value propositions for at least a few key stakeholders such that other key stakeholders are willing to compromise. Examples changes might include:

  • Defense contractors having to underwrite the risks of their investments
  • Government no longer backing loans to college students
  • Medicare no longer paying fee for service reimbursements

These changes, if actually implemented, would force key stakeholders to first fight these changes and then totally rethink their investment strategies.  Likely consequences include:

  • Defense companies will exit market. Given the monies available, this industry can be reconstituted much less expensively.
  • Universities will not survive without students subsidizing inefficiencies; education can be reconstituted without these enormous inefficiencies.
  • Health insurance companies will withdraw from market; centralized risk management will improve coverage and substantially lower costs.

Millions of jobs, primarily white-collar jobs will be lost.  However, as outlined below, millions more high-paying jobs could be created. Automation will replace white-collar administrative jobs. Augmented intelligence will lead to greatly improved services, greatly reduced costs, and human-focused high quality jobs.

To do this, a consensus will be needed to totally thwart lobbyists and their campaign donations. Then, the pushback from Congress, relative to Federal expenditures and jobs, will have to be sidetracked. Of most importance, a clear and significant upside has to be articulated and perceived to be compelling.  This will likely be an overwhelming challenge.

Nevertheless, the pandemic has offered significant insights. Education can be more efficient when you have no choice. Healthcare can be more efficient when you have no choice. Defense, with its long time scales and enormous contractual commitments, cannot change quite so quickly.

Consider the possible impacts of disruptive innovation. Defense employs 3 million employees; education 36 million; and healthcare 18 million. These three sectors total 57 million or roughly 36% of the US workforce.  Thus, changes would be overwhelmingly disruptive, yet potentially immensely innovative.

The consequences of such disruptive changes might eventually be very attractive.  However, the almost immediate psychological and sociological impacts would be overwhelmingly negative.  Millions of jobs would disappear.  This has happened before when machinery automated the textile industry in the Northeast.  Automation has continued to eliminate manufacturing jobs. The Erie Canal killed the stagecoach business almost overnight.

When I first entered the workforce as an assistant engineer, several of us shared a secretary who was an amazing typist.  Now my colleagues and I are middling typists and do all our own clerical work.  I have not interacted with a bank teller in years, or a librarian as I access most things online.  I do most of my shopping online and things that I order just show up, sometimes the same day.

It seems to me that people who become auto workers, clerical workers, retail clerks, etc. have a usually unspoken assumption that these jobs will persist and their skills sets will remain employable.  I think that many, but not all, of the jobs in defense, education, and healthcare noted above will remain, but the needed skill sets will change.

An increasing proportion of jobs will be augmented by technology, particularly assistive technologies that directly help people do their jobs.  They will interact with assistive technologies via keyboards, touchscreens, voice and gestures.  They will come to see these assistants as team members.  These assistants will learn much about their human team members and continually improve their support of the team.

Humans will need to be trained to understand and work with these technologies.  This will happen initially in conjunction with their education and then via on-the-job training, which will become a key element of life-long learning.  People will no longer assume that they learn a skill at a young age and then earn a living from that skill for their whole careers.  Continually gaining new knowledge and skills will be key.

K-12, or maybe even K-8, will need to prepare people to be life-long learners.  Everyone will need to successfully complete high school, but not necessarily in pre-college tracks.  Many will aspire to join the “skilled technical workforce” where enormous job growth is projected.  This workforce will keep our technology-laced economy functioning well and be able to cope with inevitable hiccups and upsets.

What about deeply the embedded and inefficient processes that have long served vested interests?  People who expect to continually learn and address change will morph these processes with the help of assistive technologies that can identify sources of inefficiencies, and perhaps even inequities.  To the highly skilled technical workforce, these processes will be transparent and their improvement will be inherent.  We will not need to battle Congress, lobbyists, and campaign donors.  These entities will still play their games, but the increasingly technologically intense infrastructure of society will readily absorb disruptive innovation with people who know what they are doing managing the changes.

Is this utopian or dystopian?  The idea that millions of well-educated and technically skilled people can constantly improve society for everyone’s benefit seems achievable to me.  The value of making society’s processes transparent in terms of both efficiency and equity seems easily arguable.  On the other hand, I can readily imagine that the 535 elected Members of Congress might perceive such a future as undermining their perquisites and hence dystopian relative to business as usual.  However, many might argue that business as usual has already become dystopian.

The Game of Life

I have just finished reading a wonderful book by Maria Konnikova, The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win (Penguin Press, 2020).  Konnikova is a PhD psychologist who researches decision making and risk.  She decides to study this in the domain of poker.  She begins as a total novice and goes on to win major amounts professionally.

She argues, at least early on, that life is like poker.  You estimate, if only implicitly, the probability that your hand is better than opponents and place your bets accordingly.  You eventually win or lose.  This argument caused me to ask, “Is life really like poker?”   It seems to me that most things are not win or lose propositions.  Everything is not a sporting event.

To explore this question, let’s first clarify the notion of probability.  The most common interpretation is in terms of frequentist probability — the probability of a random event denotes the relative frequency of occurrence of an experiment’s outcome, for repeated experiments. This makes sense for the probabilities of cards being dealt by the dealer, less so for probabilities that opponents hold particular cards.

You typically know much more than just the cards showing on the table.  You know what each opponent has bid at each step of the round.  If you have read her book, you have watched their hands and made various inferences.  Now, you are in the realm of subjectivist probability — the degree of belief in the likelihood of an event. Bayesian probability includes expert knowledge as well as experimental data to estimate prior probabilities and, via Bayes rule, updates of estimates based on new evidence to yield “a posterior” probabilities.

Where do frequentist probabilities apply?  They apply to cards, dice, and many games because these entities are inherently structured by design.  Thus, one can calculate the probabilities, assuming fair dealers and other game mechanisms.  We often assume, implicitly at least, that frequentist probabilities apply to non-designed phenomena, e.g., weather, traffic, sporting events.  However, this is just a heuristic.

So, how should we approach life beyond poker?  I am in the business of academic research and often pursuing research funding.  Research proposals, if competitive, can be win or lose. On the other hand, proposals negotiated with sponsors or clients can have a range of outcomes and change over time.  Intellectual merit and broader impacts are important, but can you deliver compelling results and impacts when promised?

Relationships with colleagues, friends, sponsors, and clients are, hopefully, not limited to winning or losing. My investments in such relationships are not all or nothing. They are much more nuanced.  These relationships support identifying opportunities, developing ideas, securing resources, executing the research, and reporting the results. Winning or losing is only one element of this and often not a major element.

Earning grades in classes and eventually degrees can seem like win/lose.  Gaining promotions and tenure can seem like win/lose. There is not just one winner, but it can feel that way.  Similarly, election as a society fellow or Academy member is not so crisply win/lose, as more that one person can win.  Yet, people feel they are likely to win or lose.

Degrees, promotions, and tenure are based on assessments of potential to perform in the future.  Do your credentials portend continued excellence?  In contrast, election as fellows or Academy members is based on a track record of past performance. Nevertheless, it is all about performance relative to somewhat standardized metrics.  Did you garner more poker winnings than your competitors?

Is this really how everything works? Much of my professional strategy has been to try to maximize probabilities in my favor or, better yet, remove uncertainty completely, for better or worse.  If the probability becomes zero, I obviously move on to other opportunities.  This, I hope, seems reasonable.  Investing enormous energies in losing propositions seems like a terrible investment for everyone.

Wrenches in the Works

It is very difficult to foster change and innovation in complex social systems.  You need to understand key stakeholders; their perceptions, concerns, and values; and how to gain their support for central elements of the changes being entertained.  It can take much time and work to build a coalition capable of moving forward.

Examples of success include the United Nations (1945), World Health Organization (1948), North Atlantic Treaty Organization (1949), World Trade Organization (1995), and the Paris Climate Agreement (2016).  These organizations have served us well, if not perfectly.  The central idea of all of these organizations is that collaboration can yield benefits for everyone.

Many aspects of these organizations remain fragile and depend on strong, committed leadership for sustained success.  They can occasionally withstand a steward of the status quo as a leader who wants to avoid any changes, but regular doses of visionary leadership are needed.  What is much more difficult is disruptive leaders or key stakeholders who throw “monkey wrenches into the works.”

Such disruptions can undermine plans, programs, and outcomes. More fundamentally, they can undermine organizational culture and effectiveness.  Dispirited staff members and organizational constituencies can result.  Over time, the sponsors of the organization can come to question their investments and, quite possibly, curtail them.

Disruption can sometimes be a positive force.  For the example, the current pandemic has disrupted higher education and forced consideration of operational efficiency and effectiveness.  It helps a bit, in this case, that the disruption is a natural rather than a political force.  Significant improvements will eventually result.

The worst situation is capricious disruption, typically not by the leader but by a key stakeholder.  We have experienced much capricious disruption from the White House in the past few years, seeking to undermine and perhaps destroy long-term alliances and institutions. Hopefully, the next leader will not be a capricious disrupter.

Such behavior is not unique to our current situation. Our extensive studies of the automobile industry have unearthed many examples of “car guys” (always men) capriciously derailing vehicle development programs and imposing their gut feel on otherwise reasonable processes.

In my many associations with universities, I have experienced senior leaders capriciously clinging to doomed strategies despite overwhelming evidence of likely failure.  They felt, it seemed, that they could not be faulted for doing nothing.

These two examples of capricious decision making share a key ingredient. The leaders absolutely knew they were correct. No argument could dissuade them. After all, it was their call.  They usually invoke this claim when they cannot justify what they want to do.  This is a strong sign of bad leadership.

A Real Deal

We have in the US over 400 years of injustice in our country. Native Americans, African-Americans, and more recent immigrants have all been abused. We have taken advantage of them for the benefits of mainstream Americans at the time.

What was this mainstream?  Initially it was immigrants to Massachusetts and Virginia. Over time, we added Irish, Germans and Italians and, more recently Latinos and Asians. All of these immigrants faced challenges, but eventually held their own, except for the Native Americans and Afro-Americans. They have yet to catch up. Reservations and plantations were not good launching pads.

We have portions of our population that are hopelessly behind the other segments of our population. Mentoring and financial incentives can help but will not broadly compensate for centuries of second-class citizenship. This is not a problem amenable to quick fixes.  A systemic change is needed.

We need to invest broadly in health, education, housing, etc. to steadily increase the levelness of the playing field — the living field. This will be costly, but all these costs will create jobs and opportunities for health workers, teachers, construction workers and all the others that support them with supplies, services, food and so on.  We did this with the New Deal during the Great Depressions.

This new initiative could be called a Real Deal because it would provide all citizens what the Constitution really proclaims. Everyone would really be equal and really have unalienable rights to life, liberty and the pursuit of happiness.  Everyone would have access to the resources needed to be healthy, educated, and productive.  They would be ready for opportunities.

The Nature of Evidence

Show Me the Evidence was a popular book by Ron Haskins and Greg Margolis published by Brookings in 2014. The central idea was that economic and social policy should be based on credible data rather than just opinion and advocacy. This seems reasonable, although ideology has of late disrupted these intentions.

Can this idea be reasonably generalized to a wide range of domains?  The answer clearly depends on the existence and accessibility of relevant data. There are also issues of types of data.

One class of data concerns “what is.” How many people live where, work where, have what levels of education, and what levels of income?  How many cars, appliances, books, etc. sold last year? These types of data are increasingly available.

Another class of data concerns “what if.”  You cannot measure what has not yet happened. If we implement policy X will outcome measure Y increase?  There are many examples of this type of question.

Will school vouchers increase enrollment?  Will tax reductions lead to greater investment?  Will increased fuel economy regulations decrease global warming?  These types of questions require methods for predicting the future consequences of current actions.

One approach to prediction is extrapolation. One assumes that the past measured relationship between X and Y will continue even if the values of X and Y are outside the ranges previously measured.  This can be a tenuous assumption.

Another approach is to develop a mathematical or computational model of the phenomena underlying the relationship between X and Y. This requires an understanding of these phenomena, which sometimes can be gleaned from published studies of these phenomena.

Usually this involves much more work, which may be justified if the problem of interest is important. It may also involve convincing stakeholders in the problem that your assumptions are valid and computations correct. This can be a challenge for stakeholders without technical backgrounds.

Additional challenges include difficulties when the underlying phenomena are not understood — by anybody — or there is no consensus on the nature of the underlying phenomena.  Developing multiple models and comparing their predictions can address this.  A good example of this is the use of multiple hurricane models to predict their paths.

One can also use sensitivity analysis to assess the impacts of uncertain parameters within computational models.  Quite often, a few parameters strongly affect predictions while others have minimal impacts.  One can then focus on refining estimates of the most impactful parameters.

Scenario analysis is often employed to explore different strategies rather than just trying to fine-tune one scenario.  This can include varying initial conditions and, in general, identifying the conditions under which each scenario is superior to the other scenarios.

These techniques enable one to explore what “might” happen.  However, this exploration rarely results in knowing what “will” happen.  One ends up with a set of well-reasoned possibilities and insights into leading indicators of how these possibilities may be manifested.

Are such results “evidence-based”?  In the context of pursuing “what if” rather than “what is,” this is about as rigorous as one can be in terms of addressing what might happen.  What will happen will have to wait until it happens.

Can all decisions be addressed this way?  No.  Some decisions are based on what one believes to be right.  This is the realm of values and ethics. Consider the Golden Rule — Do unto others as you would have them do unto you.

What is the evidence that this rule is correct?  Many religions advocate a version of this rule. So, it is popular. However, lots of things are popular. That cannot be sufficient evidence.

Another rationale is that it makes sense, at least for humans if not for lions and gazelles, or wolves and rabbits.  Perhaps it makes sense if we are all going to get along together.

Thus, getting along together is a value. One reason we value this is that everyone benefits and does not feel marginalized. Another reason is that it inhibits resistance, confrontations and possibly violence.

Let’s consider the Constitution. All people are created equal and everyone has inalienable rights to life, liberty and the pursuit of happiness. What is the evidence that this is right?  We do have evidence of the consequences for people living in societies that do not prescribe to these values.

However, that is negative evidence. What is the positive evidence that these values are good and useful?  Having aspired to live by these values, however imperfectly, for 200+ years has resulted in a dynamic, thriving country. And, we aspire to live less imperfectly in the future.

But the conundrum remains. We have no evidence of how the country might have progressed under a different value system. There have been no randomized clinical trials.

Of course, we have no evidence for alternative college majors, alternative mates, and all the jobs we did not take. We likely believe that we made good choices, particularly if the consequences were good. However, we have no evidence that these were the best choices.

Interestingly, we sometimes have evidence that decisions were poor because the consequences are sufficiently negative to know that we would rather have avoided these choices. The type of models discussed earlier can help with this. While we cannot predict exactly what will happen, we can often predict that undesirable outcomes are very likely and get rid of bad ideas quickly.

So, everything cannot be evidence based. It would be unwieldy, impractical, and often impossible. Nevertheless, when it makes sense, evidence-based decision making is a good practice.

The Loss of Time

When all the days seem the same and the patterns of daily life endlessly repeat, you can begin to feel that time is gone.  The clock has stopped.  Nothing progresses. Everything is now.  The future, even the past, is on hold.  Everything will repeat, again and again.

Of course, repetition has always been true. Birth, growing up, leaving the nest, maturing, aging, failing, and dying is a familiar pattern that usually takes 60-80 years.  However, the pattern now takes only months.  Millions of people have been accelerated through these transitions.  Hundreds of thousands have experienced their lives short-circuited.

But, why does time seem so untidy?  It is because the usual patterns are disrupted.  Saturday and Sunday used to be different from Monday through Friday.  A chance to unwind for brunch at a favorite pub has disappeared.  The homemade mimosas don’t seem as good, even though they are much less expensive.

There is a loss of predictability.   We used to know, if only implicitly, how most days would play out.  Now, it seems more ad hoc, and mostly limited to Zoom exchanges.  The times at the pub where you could learn your colleagues’ political persuasions and sports team preferences are gone.  This limits your opportunities to congratulate or commiserate with this week’s outcomes.

People are meant to socially interact to accomplish work, discuss and debate, have fun, etc.  Now, almost the whole world only exists on screens – TV, laptops and phones.  It helps if you already know the people online.  If the relationships are new, it is a bit difficult to feel that you have actually met these people.

Quite often, I arise to ask myself what date it is. My answer, “August.”  What time is it?  My answer, “Morning.”  Unless there is a Zoom meeting scheduled, I don’t need to be more precise.  If the current situation persists, my answer to the date question will be, “2020.”  Time is suspended until – well, who knows?

There are other more subtle differences.  How long will it take to commute to my office and be at my desk?  It used to be a 30-40 minute walk.  Now it is 20-30 seconds depending on whether I swing by the coffee pot for a refill.  So, round trip, I save more than an hour commuting, although I lose out on 5,000 or more steps.

This extra hour per day, combined with Saturday and Sunday being just like Monday through Friday, results in many more work hours and significantly increased productivity.  I have completed items on my “to do” list that were not due for several weeks, sometime months.  Rather than 40 work hours per week, I could now have 80 hours.

There is a down side to this.  Working 80 hours is not a sustainable strategy.  My response has been to ration work and allocate hours to other activities that can also be pursued in semi-quarantine.  As I quickly tire of TV, this involves much reading.  In the past couple of weeks, I read:

  • In light of recent events, Narrative of the Life of Frederick Douglass: An American Slave.  This compelling first-hand report of the horrors of slavery in the US moves beyond abstractions to the harsh daily reality of being a slave.
  • A recent wonderful read was Andrew Lawler’s Why Did the Chicken Cross the World?: The Epic Saga of the Bird that Powers Civilization. It is a wonderful chronicle of history, geography, and science.  I raised chickens as a boy, yet I learned so much from this book.
  • I took a break — a holiday — with two of my favorite murder mystery and detective novelists, John Grisham’s Camino Winds and Michael Connelly’s Fair Warning.  I find that reading each of these “page turners” within 24 hours works best for me.
  • Most recently, I quickly consumed Mary Trump’s Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man.  I am not usually attracted to “tell all” books, but her professional credentials and inside access made a difference and was, to an extent, a quite chilling portrayal of a dysfunctional family.

Consuming five books in a couple of weeks is a substantial benefit of time being lost.  I am no longer in a rush to anywhere.  Yet, despite the benefits of so much time, I really miss watching a crucial sporting match at my local pubs and sharing highs, lows, insights, and boasts.

 

 

Dealing With Risks

This is a very risky time. What does that mean?  Risk equals the probability that something unfortunate happens times the consequences of it happening. It seems like both sides of this equation are working against us.

So, what to do?  First, we need to differentiate risks to you and the general public. If you have been wearing a mask, washing your hands, and observing social distancing, your health risks are fairly minimal.

However, your economic risks are not just related to your behaviors. Other people who ignore these guidelines can lead to consequences that re-close the economy, not to mention lead to millions of more cases and many thousands of more deaths. Nothing you can do will fully control your economic consequences.

How can you influence other people’s attitudes and behaviors?  The ballot box is your best choice. Elect well-informed, evidence-based policy and decision makers — and communicators — who are not focused on themselves.  Instead, we need leaders who are primarily concerned with the medical and economic health of everyone.

A Complex Society

Recent challenges suggest that the complexity of society in the US has become increasingly difficult to understand and manage.  We seem to have great trouble agreeing on anything.  Consequently, we do not act to quickly understand what is happening and competently develop and execute compelling courses of action.  Let’s explore the sources of the impasse.

To begin, consider three substantial challenges that are currently threatening us, or lurking in the wings.  The current pandemic is an obvious major challenge, with more viruses on the way. Without thoughtful leadership, the various players have pretty much “done their own things,” currently with unfortunate consequences.

The next challenge will be the impacts of climate change.  See my recent post on “There’s no vaccine for the sea level rising” (blog.oup.com).  We are ill prepared for the pending consequences. There are some who deny this threat and others who argue that mitigation of this threat will undermine the economy.

Third, we have the challenge of seriously pursuing social and economic equality.  Massive investments in health, education, and social services will be needed to substantively level the playing field for all citizens.  These investments will have to be sustained for a long time, although as my recent post on this topic outlined, the returns on these investments will be substantial.

Various characteristics of the US society make it very difficult to pursue these major, long-term challenges.  One of these characteristics is our market-driven economy.  Entrepreneurs should solve all problems by creating a variety of solutions, from which consumers can choose winners.  This approach does not work very well for major societal challenges.

Another characteristic is the emphasis on states rights.  Each state can determine its own approach to these challenges.  This typically results in a lack of shared approaches and solutions.  It can also result in a state doing nothing, which can lead to citizens of that state infecting citizens of another state that did adopt a thoughtful and proactive approach to the challenge.

A third characteristic is what is termed a “Tragedy of the Commons.”   The basic idea is that everyone exploits a shared resource – the commons — for personal benefit rather than making sure that everyone benefits.  A related characteristic is individualism which prompts people to focus on “Me and my own.”

A fifth characteristic is tribalism.  This is particularly virulent now, and greatly exacerbated by social media.  The central theme is “Us against them.”  Anyone who is not like me is my enemy.  This stance provides an extremely poor basis for creating shared solutions that serve everyone’s interests.  In fact, one tribe may advocate a solution that does not meet its needs but assures that a rival tribe suffers more.

What kinds of solutions does a society with the above characteristics create for the above types of challenges?

The system of healthcare delivery in the US is highly fragmented.  It is a federation of millions of entrepreneurs with no one in charge.  Responsibility for the health of the US population is limited to a wide range of providers of individual services focused on particular morbidities and procedures.   People pay for each service separately, often encountering and having to negotiate provider-payer tensions.  A further complication is pharmaceutical pricing practices, which often makes drugs and devices unaffordable for many people.  The market-driven economy delivers very expensive services that result in poor outcomes relative to other OECD countries.

K-12 education in the US involves local control over content and delivery.  For example, local communities can decide to teach “creation science” instead of evolution. The quality of K-12 education depends on the wealth of the school district in terms of the tax base that typically funds education.  The result is that many students are very poorly prepared for college.  Colleges have to provide remedial courses for these students, which increase the costs of college.  National achievement tests could ameliorate this if schools would provide the education needed to pass these tests, but compliance would be local decisions.

The national security ecosystem in the US is composed of many agencies, e.g., DoD, DHS, CIA, NSA, FBI, etc.  These agencies often have conflicting agendas, for example, the Air Force wants more airplanes and the Navy wants more ships.  Information is often not shared across agencies.  Congress, which funds these agencies, is usually focused on near-term budgets and annual appropriations.  Congress also provides pressure to create and sustain weapon system production and other government jobs.  Every Member of Congress wants to deliver federal monies to their District or State.   Costs are inevitably increased by the ways in which budgets are sliced and diced.

The fragmentation portrayed for these three domains leads to complexity far beyond what is inherently necessary.  How might this fragmentation be remediated?  First of all, we need to understand the essential phenomena and relationships among phenomena underlying these domains.  We need to map the processes – the “physics” – of these domains.

Second, we need to understand how interventions – policies, regulations, and investments — propagate among phenomena.  Do policies, for example, motivate or hinder investment decisions by healthcare providers?  Do regulations positively or negatively influence decisions by school districts?  What interventions might increases investments by aerospace and defense companies?

Third, these types of understanding should enable portraying costs and benefits of interventions over time.  Short-term benefits may be very clear, but long-term benefits may be much more compelling – assuming people pay attention to the long term.  For example, investing in the education and health of children yields enormous returns on investment – see my July 1st post.  However, government often sees these expenditures as costs rather than investments.

Fourth, we need to communicate value propositions to all key stakeholders.  This requires an electorate that understands such lines of reasoning, as well as creativity in how best to communicate them.  We should think in terms of compelling evidence-based stories rather than academic lectures.  Stories focused on individuals and their successes will likely work better than statistics.

What is in the way of doing the above four things?  What are the barriers to success?  The short-term orientation of government is a pervasive barrier to investing in the long term.  If investments in the future require reallocation of short-term expenditures, there are numerous carefully guarded “rice bowls” in the way.

Distrust of expertise and impatience with analysis play major roles.  “Not invented here” rears it head when investments cross agencies and state jurisdictions. In a recent health-related project, a state executive asserted, “The people in Montana have nothing in common with the people in Mississippi.”  I asked, “Not even biologically?” and was ignored.

Social media could provide a means to communicate the process and outcomes of the approach outlined above. However, social media actually tends to be problematic.  There are far too many ill-informed opinions and outright false information circulating throughout social media.  Most people used to rely on trusted sources for important information, but trust is currently in short supply.

At some level, the whole situation seems insurmountable. Key stakeholders are, in effect, advocating destruction of the country to assure the next quarter’s bonuses and dividend checks – or the upcoming elections. People will not let pandemics, sea level rise, and racial conflicts challenge money in their pockets right now.

I think we need to develop a new story.  Moving beyond fragmentation and addressing the three example challenges could present enormous new economic opportunities, with many new high-paying jobs.  There would also be investments in education for these new jobs.  We can frame the need to recover from the pandemic as an opportunity to redesign ourselves.  Of great importance, the new story needs to emphasize “we” rather than “us versus them.”

Here are some key messages that might be considered:

  • Everyone can prosper regardless of race, gender, religion or sexual preferences
  • Investments will be made to assure this; education and training will be universally available
  • No one will be left behind; everyone will have the same opportunities available
  • Commitment and hard work will still matter; no one is entitled to investments in their success without effort
  • The playing field will be level, and the best ideas will prevail; everyone will benefit from the consequent competitive advantages

How can we afford to deliver on the promises embodied in these messages?  A detailed analysis in my July 1st post addresses this question.

The above intentions may seem quite reasonable and possibly affordable. However, there are significant limits on how predictably we can influence the complex ecosystem of society.  We may be able to predict how the average citizen will respond, but we cannot predict how each individual will respond, both to the above messages and to each other.

We also cannot predict what other messages — often contradictory messages — might be communicated, accepted, and recommunicated repeatedly.  It is crucial that we have leadership, at all levels, committed to get us all on the same page, singing the same song.  Our current inabilities to address the challenges discussed earlier could be our complete undoing unless we align our intentions and energies in making the needed changes.

Social & Economic Equality

We have been awash in protests of racial inequality. Assuming we agree inequality is bad — not everyone does — what can be done to greatly diminish this inequality?

Those who have suffered this discrimination are poor, unhealthy, and uneducated. How can we address these discrepancies?  We could just give everybody money.  This idea has merits, but it should only be part of a more integrated response. Quick cash to spend does not suddenly make one healthy and educated. However, these are the keys to long-term success.

What if we created an economic, health, and education system so that everybody has the potential to succeed? Everyone is prepared, regardless of race, ethnicity, gender or sexual orientation. This could be powerful. The US should help to make sure that everyone succeeds relative to their abilities and motivation to succeed.

How could we afford this?  We are already paying for the lack of this. For example, according to NIH, the cost of substance abuse in the US is $0.75 trillion per year. A good portion of those monies could be redirected towards mitigating the causes of substance abuse.

There is a broader message here. Why don’t we invest in addressing pandemics before they get out of control? Why don’t we invest in fixing infrastructure before it fails?  Why don’t we invest in people so they are never uneducated and unhealthy?

We need to think in terms of a Social and Economic Balance Sheet that values investments in human capital.  It has been argued that human capital is an intangible asset owned by an individual, not the organization where they are employed.  Hence, this asset is not owned by the organization.  People can leave the organization at will.

However, despite this mobility, this asset remains in the economy, perhaps locally but certainly globally.  Thus, the Social and Economic Balance Sheet should reflect human capital assets at perhaps the national level.  Where will the money come from to invest in creating these assets?

It is unlikely to come from companies, especially for investments in the education and health of children, where such investments need to start.  Federal, state, and local governments need to be the primary investors.  Their returns on these investments are healthy, educated, and productive citizens who contribute to society, in part by paying taxes.

How might these investments be economically justified?  Somewhat simplistically, governments invest X dollars per year for 20 years and then receive Y dollars per year for the subsequent 45 years.  X includes education ($10,000) and healthcare costs ($2,300), which totals $12,300 per year, on average for, children and teens.  Y includes Federal incomes taxes paid ($10,500), state and local income taxes paid ($5,000), property taxes paid ($3,300) — which typically pay for schools — and contributions to social security ($8,000), half of which is paid by the employee and the other half by the employer, which totals $26,800 per year, on average, for adults 20 to 65 years old.

Would an investor be willing to invest $12,300 for each of 20 years and then receive returns of $26,800 for each of the subsequent 45 years?  Ignoring inflation for the moment, we need to take into account the discount rate that any investment analysis would typically consider.  The discount rate (DR) is the interest rate used to determine the present value of future cash flows in a discounted cash flow analysis because a dollar received in the future is worth less than a dollar received today.  Using DR, one can calculate the Net Present Value (NPV) of future cash flows.  The table below shows NPV for several values of DR.

DR

2%

3%

4%

5%

NPV

$330,751

$180,828

$86,269

$26,244

What about inflation?  Any inflation rate above 0% increases the above numbers. For example, assuming 3% inflation increases the leftmost bar from $330,751 to $729,104.  This happens because the $26,800 annual return on investment has increased to $98,395 when an individual is 65 years old.

The current yield on US treasury bonds is 1.25%.  That is the interest rate that the government would have to pay on funds borrowed to invest in this idea.  Inflation in the US has been running at 0.3%, historically a very low number.  Using these rates, the NPV of the proposed investment is $538,253.  Thus, this investment in people should be very attractive.

These projections are of the direct returns of creating a healthy, educated, and productive citizen who contributes financially to society.  Not shown are the indirect and often intangible contributions of citizens.  For example, having children creates new human capital that can repeatedly provide the magnitude of returns shown above.  Creating art enhances the lives of many.

With such impressive returns, why wouldn’t the government invest in creating healthy, educated, and productive citizens?  A primary difficulty is that the US Congress has no Balance Sheet.  It is totally focused on this year’s and next year’s Income Statement, which totally ignores future returns on human capital investments beyond next year.

Government does not have to inherently operate this way.  Having conducted government-funded research projects in Singapore, I have encountered much greater emphasis on the long term.  How can we know whether that makes a difference?  One key indicator is home ownership. 91% of the population in Singapore owns their home; home ownership in the US is 65%.

We somehow have to convince Congress that investing in people can yield enormous returns*.  A primary difficulty is getting started. Members of Congress that approve the above investments in children and teens will not see the impressive returns during their time in office.  However, if there was a Social and Economic Balance Sheet that showed $500,000 in assets for each child and teen benefitting from these investments, we could watch the legacy growing.  Years later, then Members of Congress would look back with gratitude for the commitments made years earlier.



* Rouse, W.B. (Ed.).(2010). The Economics of Human Systems Integration: Valuation of Investments in People’s Training and Education, Safety and Health, and Work Productivity. New York: John Wiley.