Converging Experiences

Recently, I went to Kara Schlichting’s lecture, “From Dumps to Glory: City Planning, Coastal Reclamation, and the Rebirth of Flushing Meadow for the 1939-1940 New York World’s Fair.”  The next morning, I read Russ Buettner’s article in the New York Times, “They Kept a Lower East Side Lot Vacant for Decades.”  That afternoon, I went to the Lower East Side Tenement Museum and, in particular, watched their 20-30 minute movie on the evolution of the Lower East Side from 1840 on.

So, in 24 hours, I experienced the complexity of how cities evolve – three times.  It seems like a chaotic mess of conflicting interests, struggles for power, and strong personalities.  In the midst of all this, there are thousands or millions of people and families trying to make ends meet, get their children educated, and occasionally have some fun.  A few people make a lot of money and everybody tries to do a bit better tomorrow.

It strikes me that cities do not get engineered.  Road networks, sewer systems, and subways are engineered.  Infrastructure and buildings are engineered.  However, the cultural fabric of cities is not engineered.  It emerges from the hustle and bustle of people seeking to make money, get a job, earn a promotion, educate their kids, play a game of cards, and enjoy a ball game.  We cannot predict where all that will lead, what serendipity will prompt.

How can we research this?  I think we need to focus on insights rather than predictions.  It is reasonable to assume that the actors are rational, although they will not necessarily conform to classical economics.  I think we can assume that they will take advantage of and adapt to the environment.  However, all the rationality and adaptability of enormous numbers of independent actors will lead to an abundance of possible paths and outcomes.  Our understanding will be limited to how particular paths and outcomes might emerge.

The best approach to gaining this understanding will, in my opinion, result from studies of virtual urban worlds.  Simulated immersive representations of Hoboken, NJ and Red Hook, NY, for example, will enable exploring how “humans in the loop” as well as synthetic avatars respond to emergency warnings, actual weather, power outages, terrorist events, and perhaps even economic opportunities due to redevelopment.  We will learn about how people “game” the system and, in the process, learn what innovations to encourage and what behaviors to inhibit.

We cannot approach cities in the same ways we address airplanes, factories, and power plants.  Cities are laced with too many complex behavioral and social phenomena.  Yet we can systematically explore the ways in which cities might respond to opportunities, incentives, and inhibitions, and identify the conditions more likely to lead to one response rather than another.  Then we can think about how we might engender the conditions leading to more appealing responses.  Our methodology should focus on how to get a city to design itself in ways that improve the quality of life for everyone.

Transformation as a Wicked Problem

In 1973, Horst Rittel and Melvin Webber published “Dilemmas in a General Theory of Planning” in the journal Policy Science (volume 4, pp. 155-169).  In this article, they characterized “wicked problems” as follows:

  • —  There is no definitive formulation of a wicked problem
  • —  Wicked problems have no stopping rule – there is always a better solution
  • —  Solutions to wicked problems are not true or false, but good or bad
  • —  There is no immediate nor ultimate test of a solution to a wicked problem
  • —  Wicked problem are not amenable to trial and error solutions
  • —  There is no innumerable (or an exhaustively describable) set of potential solutions and permissible operations
  • —  Every wicked problem is essentially unique
  • —  Every wicked problem can be considered a symptom of another problem
  • —  Discrepancies in representations can be explained in numerous ways – the choice of explanation determines the nature of problem’s resolution
  • —  Problem solvers are liable for the consequences of the actions their solutions generate.

It can be useful to look at enterprise transformation as a wicked problem.   Rather than exhaustively discussing every characteristic in the above list, let’s just focus on three – no stopping rule, no trial and error, and liability for consequences.

Transformation is never done.  There may be ebbs and flows of change, but the need for change is persistent.  The nature and level of value desired by markets and other constituencies continually evolve, sometimes very slowly, but other times quite quickly as, for example, technology breakthroughs such as electric lighting are suddenly available.  The key insight here is that you need to get good at changing rather than thinking that change is something you finish.

Transformation is not amenable to nibbling.  You cannot experiment with a wide range of ways of changing and then adopt the winner.  Empirical confirmation that a new value proposition works is certainly valuable.  However, such evidence is only meaningful and useful if you have clear intentions and plans for how to accomplish changes.  Otherwise, all you have is ideas.

Transformation is real.  Good outcomes are sought but bad outcomes are possible, with the enterprise leadership liable for the outcomes.  You can lower the risk by adopting changes that others have perfected, for example, back office and supply chain efficiencies.  But, this just keeps you in the game and will not win the market returns of being the innovator rather than the follower.

Another very important consideration is not in the above list.  You need to balance creativity and continuity.  Creative new value propositions drive market innovations – and creative destruction.  New approaches to value are likely to need new competencies and capacities, while obsoleting older ones.  Organizations usually have limited capacities to absorb such changes.  Yesterdays’ machinists may not be easily transformed into tomorrows’ computer programmers.  People highly skilled at a particular set of tasks cannot quickly become highly skilled at a very different set of tasks.

Thus, a central driver of transformation is that once you become really good at something, there is a significant risk that what you are really good at will eventually no longer be valued.  What you were really good at it – perhaps the best – was likely of great value to the economy and society.  But new innovations will eventually creatively destroy that value proposition.

How long should you cling to hard-won competencies and capacities?  When is it time to shift attention and resources to new value propositions?  There is no “starting rule.”  We can add this to the list of characteristics of wicked problems.  It is not at all clear how you decide that now the wicked problem really has to be addressed.  You can always wait until tomorrow.  Eventually time and resources are no longer available and change is impossible.   This dilemma is certainly wicked.

Levels of Change

Fundamental change is pervasive across every level of life.  In this post, I compare four levels and time scales of change including evolution (millions of years), history (thousands of years), industry (centuries), and technology (decades).  This comparison leads to a few overall observations about transformation and a few insights into how people think about fundamental change.

Central concepts in evolution are species, populations, and extinctions.  Example species, in order of appearance, include plants, insects, reptiles, mammals, and birds. Relatively recent are primates, which include Homo sapiens (humans), all within the mammal species.  The populations of species tend to grow unless predators weed them out.  More significant are mass extinctions, which are defined by more than 50% of all species being eliminated.

There have been five mass extinctions, the last one of which eliminated the dinosaurs.  Some scientists argue that we are on the verge of a sixth mass extinction.  Fortunately, the time scale on which mass extinctions happen is such that we need not worry about this right now.  Nevertheless, this possibility doubtlessly represents transformative fundamental change.

Central concepts in history include civilizations, empires, revolutions and conquests.  Notable civilizations and empires include Egypt, Mesopotamia, China, Maya, Greece, and Rome.  All of these empires ended, often due to internal strife (revolutions) or external sources (conquests).  In some cases civilization ended.  It appears that the typical life of a civilization is one thousand years or so.  This does not mean that all the people disappear, but standards of living usually plummet.

Core ideas for industry include needs, markets, and creative destruction.  Markets emerge to meet human needs for food, housing, energy, transportation, finance, etc.  Industries change due to increased efficiencies (e.g., agriculture), technology replacement (e.g., horse-drawn streetcars), and consolidation (e.g., airplane manufacturing).  The winners of the competition perfect their offerings, which greatly benefits customers, until their offerings (e.g., buggy whips) are no longer needed.  Then industries face creative destruction, in part due to new technologies.

Key notions in technology are invention, innovation, and obsolescence.  Over millennia, humankind has invented tools, wheels, propellers, crossbows, and gunpowder; waterwheels, steam engines, and gears; aqueducts, drainage, sails, and rudders; steamboats, railroads, automobiles, and airplanes; and electricity, telephones, computers, and Internet.  These inventions, often rather slowly, became market innovations as technologies and infrastructures matured.  As they were perfected, these offerings tended to become commodities or, in many cases, obsolete.  In the process, most companies and, sometimes, whole industries were creatively destroyed by new market innovations and value propositions.

Reflection on these four levels of transformation prompts a notional life cycle of change operating on all four levels:

  1. New epochs eventually lead to consolidation and refinement or perfection
  2. Assumptions on which perfection is based are eventually no longer tenable
  3. New entities emerge to exploit new assumptions, but are bit players at first
  4. Existing entities attempt to adapt, even transform, but almost always fail
  5. New epochs emerge — go to step 1

If transformation inevitably fails, at least eventually, why try?  First of all, you cannot know a new epoch is emerging until after it happens.  There are economic and social benefits to sustaining the current epoch.  For example, capital assets cannot be quickly redeployed, unless via liquidation.  Further, the stewards of the current epoch will inevitably attempt to survive.  Overall, it seems reasonable to observe that, despite their inevitability, extinctions, revolutions, conquests, destruction and obsolescence are only addressed when their time has come.  We strive to hold them off even though we know they are inevitable because such is the only rational and productive strategy.

What to Keep

Enterprise transformation involves redesigning or creating new work processes that enable remediating anticipated or experienced value deficiencies.  This implies that some aspects of the enterprise have to be discarded.  Why not discard everything?  That is certainly as option, but it is called liquidation rather than transformation.

A central question is what do you keep and how does it need to change?  To avoid answering with a stream of abstractions, let’s consider a specific example.  Higher education has replaced healthcare as the poster child for runaway costs.  It is useful to look at this from the perspective of a single enterprise in higher education attempting to transform itself.

What should they keep?  Typical mission statements involve some combination of education, research, and service.  Students, their families, and employers value education as a means to a good standard of living, employees who excel at their jobs and, in general, productive, informed, and involved citizens.  Every educational institution wants to meet this need.  The question is how best to do this.  Is it classrooms and lectures, or online courses, or something different?

This is the point where strategic thinking often falters.  Most universities have made enormous investments in faculties and facilities for delivering education in traditional manners.  There is an increasing trend of “outsourcing” delivery to adjunct faculty rather than more-expensive tenure track faculty.  This saves money but does not fundamentally change the process.

The value of research is much more ambiguous than education.  At one level, research helps the faculty to be on the cutting edge, thereby enhancing the education mission.  At the other extreme, the research enterprise becomes an end in itself.  The goal is typically ever-increasing sponsored research budgets, which results in many faculty members teaching little or perhaps not at all.

If successful, the research enterprise can help the university’s ranking by increasing funding and PhD graduates per faculty member and, over time, the number of faculty members elected to prestigious academies.  It can reasonably be argued that increasing rankings will lead to increasing numbers of applicants for admissions, which will enable increasing entrance requirements and lead to better quality students.

This all seems to make sense, except for the costs of doing it.  The costs of creating winning proposals are enormous.  This is due to the 5-10% success rate at the prestigious National Science Foundation (NSF) and National Institutes of Health (NIH).  Faculty members are provided release (non-teaching) time to devote to proposal preparation and submission.  Every tenth time or so, they succeed.

Once the grant or contract is won, the university is reimbursed for its direct costs plus indirect costs, typically estimated to be 50-70% of direct costs.  These “overhead” monies pay for administrative costs (provosts, deans, libraries, etc.) that are spread uniformly across all sponsored projects.  Administrators argue that the overhead funds received do not really cover all the relevant costs.  Sponsors argue that many of the costs in the overhead pool are not relevant to conducting research.  The final overhead rate is a matter of negotiation.

The research enterprise has to be subsidized because it loses money on both the front end and back end of the process.  This is inherent to the market being addressed – NSF and NIH.  Other research sponsors such as the Department of Defense (DOD) and the National Aeronautics and Space Administration (NASA) have different award decision processes and typically higher success rates.

Industrial funding (as contracts, grants, or gifts) is such that proposals are discussed and refined along the way.  One quickly learns that the idea is a loser or is able to refine the idea until funding is assured.  The upfront costs per success are much lower.  The downstream overhead costs are still an issue, but are open to negotiation.  If a university were to strip out all the costs of working with the government, industrial overhead costs would be lower. In fact, they are typically higher because universities can get away with this.

One strategy for fixing the economics of research would be to minimize or avoid NSF and NIH proposals.  This would run into another very large obstacle.  Funding from NSF and NIH is viewed as more valuable because of their peer review process.  To get funded, one needs more than a good idea.  One has to convince anonymous peers in one’s discipline that the proposed research fits into the discipline and will advance the discipline.

Thus, NSF or NIH funding vets the faculty member as fitting in, as being valued by peers.  This lessens the burden on administrators and faculty committees in evaluating faculty members.  In effect, they have outsourced evaluation. This places great emphasis on the source of funding and peer approval rather than the outcomes of the research such as articles published, patent filings, and artistic exhibitions.

If evaluation was limited to outcomes, then the problems of money-losing research operations could be overcome in a variety of ways.  High probability funding sources would be much more important than low probability, and typically very slow, funding sources.  The marketplace of ideas, rather than solicitation announcements and peer review panels, would become the focus.  Researchers would spend much more time on producing outcomes.

The third element of a university’s mission is service, sometimes called outreach.  Support of professional societies and involvement on advisory committees are good examples.  Unfortunately, academia is highly subject to mission creep.  They find more and more services they could provide and invest resources to provide them.  The result is that the numbers of academic staff has long been growing at twice the rate of the numbers of academic faculty.  All the new vice presidents need staff assistants and growth continues.

Among the many areas that could be discussed, entertainment deserves the closest attention.  The biggest elements of many universities’ entertainment enterprise are men’s football and basketball.   They earn billions of dollars of revenue, pay millions to coaches and athletic directors, and graduate few of their “student athletes.”  These athletes rightfully should be employees of the entertainment business.

It is not a question of the merits of this entertainment business in itself.  It is a question of whether academic institutions should be in this business and subsidizing it, as the vast majority has to do.  Some argue that alumni like this entertainment and this generates increased donations to the university.  My experience is that a significant portion of these donations goes to the sports side of the university rather than academics.

One solution would be to set up the entertainment business independent of the university.  Alternatively, it could be outsourced like food services are done at most universities, and the bookstores at many universities.  The football and basketball entertainment business could be outsourced to the National Football League (NFL) and National Basketball Association (NBA), respectively.  The NFL and NBA could then pay athletes minor league salaries as done in baseball.

Considering what to keep when transforming an academic enterprise, the following conclusions seem warranted:

  • Keep the education line of business, but consider a much broader range of approaches to delivery; be cautious when investing in physical classrooms
  • Keep the research line of business, but get the economics right to generate both knowledge and money; be skeptical of low probability opportunities
  • Keep the service line of business that relates directly to the education and research businesses; spinoff or outsource all the rest

Success in adopting this strategy will depend on several other things:

  • Move to activity based cost accounting and minimize non-attributable overhead costs; aspire to achieve a near-zero overhead rate
  • Price services based on costs directly attributable to these services; include profit margins that are competitive in relevant markets
  • Retain money-losing services only to the extent that they are vital to one of more lines of business; if there are many of these, you have not faced reality
  • Outsource everything that someone else can perform better and/or cheaper; become expert at selecting and managing vendors and partners

There is one final, critical need.  Define, measure, and reward performance in all aspects of the business.  This can be problematic in academia.  Universities have great difficulty penalizing poor performance and even greater difficulty rewarding good performance.  Thus, poor performers hang around – for years, even careers – and good performers get frustrated and leave.  Fix this as soon as possible.

Execute, Execute, Execute

The lack of committed visionary leadership will doom any transformation aspirations.  However, will the presence of such leadership assure success?  The simple answer is, “No!”

Great aspirations and ideas need compelling plans to succeed.  Further, these plans have to be successfully executed to realize these aspirations.  Quite often, plan fall prey to inabilities to execute.  Consider the following examples:

  • Marketing and sales functions fail to leverage natural competitive advantages, focused instead on business as usual and trying to promote fading ideas and dying brands.
  • Sales and proposal functions fail to pay attention to idiosyncrasies of new market opportunities, resulting in non-compliant proposals and lost business opportunities.
  • Financial management functions fail to pay attention to the new cost structures of emerging market opportunities, for example “peanut buttering” overhead costs across opportunities where these costs are unwarranted.
  • IT and web support functions fail to maintain and update capabilities, resulting on stodgy and out of date capabilities, or perhaps capabilities that simply do not function at all.

What is going on in such organizations?  There are several possibilities.  Perhaps strategists and planners have not translated their high-level plans to specific action plans for these functions.  Thus, these functions are unaware of needs for any different behaviors.

Another possibility is the “as is” business simply consumes all capabilities. There is little, if anything, left to devote to the “to be” business.  Keeping the status quo functioning is all consuming, even when the status quo is on a downward spiral.  There is no energy left to nurture change.

Yet another explanation is that the staff members in these functions simply “do what they do.”  Regardless of any newly articulated strategies and plans, people put in their time until the end of the day and then go home.  The next day, they do the same things again.  No one holds them accountable for anything, other than showing up.

At worst, people resent being held accountable.  They are used to placidly positive annual reviews and modest raises, both of which prompt considerable grumbling.  They are used to being liked and fitting in.  They are used to much of the workday being devoted to discussions of children, schools, and sports.

To assure execution of plans from top to bottom of the organization, senior leadership has to convince everyone that change is for real.  A sense of urgency has to be created.  This may require large-scale replacement of the “no accounts” with new people eager to pursue change.  Key functions might be outsourced to high performing providers.  Poorly performing divisions might be sold or liquidated.  The key is to get everybody paying attention to execution, and either executing or leaving.

Three Strikes and You Are Out

The poor performance of the US healthcare system can primarily be attributed to three things.  First, the “fee for service” payment model incentivizes providers to provide as many services as possible to maximize reimbursements from insurers, either private or public.  Second, the lack of integration of archival and operational information systems undermines the delivery of effective and inefficient services.

I as well as many others have argued that a systems approach to redesigning the system of healthcare delivery would address these issues and transform the system to provide high quality, affordable healthcare for everyone.  There appears to be widespread agreement in this.  Why then is this so slow to happen?  This leads to the third source of poor performance – the orientation of senior leadership of many healthcare providers.

Three examples illustrate this well.  In talking with the CEO and CQO (chief quality officer) of a major provider in the southeastern US, with whom we had been working regularly, they commented that the best characterization of their delivery system was “chaos.”  We proposed an approach to mapping and improving their delivery processes.  The cost would be modest as the proposed team was composed of engineering faculty and graduate students.

The CEO balked at the price.  I argued that this would quickly save him much more than the cost of the effort.  He agreed with this assertion but, as a former CFO, indicated that he was not willing to spend a single dollar on process improvement.  He suggested that we try to find a grant that would pay for this effort.  He clearly saw his role as steward of the status quo.

We worked to create an alliance with a major provider in the northeastern US.  Meetings and briefings with the CMO (chief medical officer) and his leadership team led to a planned set of initiatives.  A process mapping and improvement initiative was agreed upon at modest cost; much less than the instance cited above as we had refined our methods and tools for such an initiative.

Meetings with the department heads associated with this effort led to great enthusiasm, but no progress.  Everyone was far too busy to provide access to the information needed to proceed.  I suggested that they were not really committed to the project.  They apologized profusely and reaffirmed their commitment — but still did not supply the promised information.  These leaders were also far too busy stewarding the status quo.

We reached agreement with a major, internationally renown, provider to study human-centered, computer-based systems to support patients, their families, and clinicians in delivery of out-patient services.  Funds for this research effort would be provided by an external source.  Our initial proposal, with the provider, was not submitted because they could not achieve agreement across various stakeholders by the deadline.  We decided to delay submission until the then next round, six months later.

The detailed proposal was developed and ready for submission.  A final briefing was scheduled to review the completed proposal three days before the due date.  At that point, one of the affected groups complained that they had not been given adequate time to digest and react to the proposal, despite the fact that time with them had been repeatedly requested during proposal development.  They were concerned that the proposed effort was much more ambitious than their ongoing effort in this area.

They were also concerned that they were losing control of efforts to improve out-patient services.  It was observed that their progress was both modest and slow, due to the demands of their status quo responsibilities.  Further, the proposed effort would bring in outside resources and significant external recognition. Nevertheless, the provider leadership involved did not want to antagonize this group.  They withdrew from the partnership and the completed proposal was not submitted three days later as planned.

What can be learned from these three experiences?  First, the status quo is all consuming.  The current way of doing things demands almost all attention and resources.  One executive, in a different organization, said, “Bill, you don’t understand.  I am far too busy underperforming to have the time to get good at this.”  Of course, this is not just the case for healthcare.  It is also true for education and government, for example.

Some organizations, however, escape this conundrum.  The key ingredient is senior leadership who have a vision of the “to be” organization as well as a clear sense of the path from the “as is” to the “to be.”  They communicate this vision and stay closely involved with its pursuit.  They are not afraid to ruffle feathers in the process.  Such leaders would never be characterized as stewards of the status quo.  As a result, their organizations tend to be innovators rather than reluctant followers.  Much more of this is needed in healthcare.

So, three strikes and we are out, at least for this inning.  If we look at the differences between our successes and failures in pursing change via systems approaches, what have we learned that will help us with our next times at bat?  First and foremost, regardless of the technical merits of an idea and the expertise and skills of the team, the full commitment of senior leadership is crucial.  We know from extensive studies of a wide range of industries that middle management will not spontaneously transform an enterprise.  Second, senior leadership has to explicitly commit to helping overcome pushback from the forces of the status quo.  Initially at least, visionary leadership is not the frosting on the cake – it is the cake!

Back Online

This blog has been on hold for 18 months as I have transitioned from Atlanta to Hoboken, the sixth borough of New York City.  I retired from Georgia Institute of Technology and am now on the faculty of Stevens Institute of Technology.  I am still immersed in enterprise transformation, focused on healthcare delivery, higher education and, in my new context, urban resilience.

The change of context has been amazing, the primary reason this blog has been on hold.  Greater New York City is a very large highly diversified economy with over 20 million people.  Atlanta is large as well (6 million people), but the economy revolves around being the Southeast’s supply chain and logistics hub, as well as real estate development.  New York City rivals Silicon Valley in terms of technology-oriented venture capital, while Atlanta is well outside the top ten cities for technology investments.

So, it has taken me awhile to get my feet fully on the ground in New York City and its surrounds.  Opportunities abound and corporate headquarters dot the landscape.  Mastering the train, subway, and bus system has been an important task.  One benefit has been a dramatic reduction in plane trips.  The pleasure of hopping on the train to Washington at the last minute was, at first at least, immeasurable.  Changing reservations just minutes before leaving, with no penalties, continues to be a pleasure.

Another difference has been the food.  As a vegetarian, the more ethnic restaurants the better, particularly Italian as well as Asian.  Pizza in New York is a different experience than Atlanta.  Bakeries are much more pervasive.  Pubs of every make and model are on most corners, although their appetites for college football are quite limited.  However, with two professional baseball, basketball and football teams, as well as three hockey teams and a soccer team, pubs are crowded with fans during game times.

I am a bit of a history buff and I have broadened my view of the Northeast beyond Boston (my roots) to include greater New York City.  The technological innovations here from the 18th, 19th and 20th centuries are most impressive, making Silicon Valley a “Johnny come lately” in the late 1930s and the Route 128 “Massachusetts Miracle” a very recent arrival in the early 1950s.  Stanford and MIT enjoy the applause for their association with these upstarts.  New York is much less interested in applause.   Power and money seem to be the dominant goals.

My plan is to continue Rouse on Transformation in the spirit with which it started in 2009.  The geographical footprint will be larger and the range of examples broader, e.g., including urban resilience.  However, the goal is the same – understanding fundamental change of complex organizational systems.

The Transformation Debate

Who is more American?  Is it the Kenyan or the Mormon?  Who created or destroyed more jobs?  Is it the community organizer or the private equity economizer? The candidates are focused on attacking personalities and circumstances rather than reality.

But, what really happened to blue collar jobs?  This answer is straightforward. Our blue-collar laborers became too expensive due to union agreements and healthcare costs while other countries’ laborers were less expensive and better educated.  They are more likely to have the knowledge and skills needed for hi-tech manufacturing.

It is not really just about wages, however. Germany has higher wages than the U.S.  Germany also has much higher social costs than the U.S.  Yet, their manufacturing sector is thriving — the envy of Europe.  This is due to the fact that they systematically and substantially invest in technical training for those not headed to the university.

Why would Germany make such investments?  My conclusion is that they see a healthy, educated and productive workforce as a “public good.” In other words, all Germans are better off if every German is healthy, educated and productive. This was once part of the belief system of America, but such beliefs have faded. Healthcare and education are now “private goods.”

In other words, if one wants healthcare and education, one should pay for it just like you pay for cell phones, televisions, and automobiles. No one else benefits from your being healthy and educated. If you are unhealthy and uneducated, that is your problem.  It is your problem as well if you cannot find a job and cannot afford to take care of your children.

But is that really the case?  Are unhealthy, uneducated and unemployed people of no cost to society?  Use of hospital emergency rooms for non-urgent care by uninsured people costs the average American well over $1,000 per year.  Costs of unemployment benefits add over $1,000 to the average American tax bill. Add the two items together and we are coming close to 10% of the average American’s after-tax income.

Bottom line — we are spending more per capita on compensating for uneducated, unhealthy and unemployed people than we are saving for our future.  It is very expensive — for all of us — to have large numbers of unhealthy, uneducated and unemployed people wandering around, trying to find something to eat. We need to reinvent the concept of public goods and invest prudently in health and education in ways that will yield enormous returns for all of us.

It’s Really Tough

You are leading a very successful enterprise in airplanes, automobiles, mobile devices, healthcare — or perhaps higher education. The business model that got you to where you are — successful, profitable — seems to be faltering.  The growth of revenue is diminishing while costs are escalating.  The costs of infrastructure — physical, financial and human — are inexorably growing. Customers seem to be sticking with you, but they are not happy. Cynical jokes are pervasive.

What should you do?  How about sticking to the knitting?  Just keep doing what you have always done, perhaps a little bit better and a lot cheaper. If you need to sell airline seats as cheaply as possible, charge people for everything else — baggage, food, entertainment, bathrooms, and seat belts. If revenue comes from students in seats, put hundreds of students in each classroom.  Let the students sit in the aisles unless the fire marshal protests.

Perhaps you should lead the enterprise towards a new business model. Rethink the whole transportation or education experience. But, this requires a lot of courage because most if not all of the key stakeholders are clinging to the status quo.  Embracing change means creating enemies — people whose rice bowls are threatened by change.  Leading change requires strong self-confidence and abilities to absorb enormous criticism. You will be challenging many people’s comfort zones.

What about your comfort zone?  Do you need everyone to be happy?  Do you need everyone to like you?  What if your vision of an alternative future is wrong?  What if the faltering status quo is as good as it gets?  The key question is whether you are willing and able to lead in times of change.  It’s really tough because you cannot be sure of what will happen and whether you will succeed. However, you can be sure that your willingness and abilities are exactly why they gave you the job in the first place.

One Journey to Engineering Systems

The organizers of the 3rd International Symposium on Engineering Systems asked me to provide a brief story of my journey to engineering systems — how I came to be at this Symposium on this June evening in Delft.   The idea is to stimulate your thinking and perhaps motivate you to share your stories during dinner this evening.

I have always been a planner, so the story of how I came to be at this meeting begins in 1961. I was 14 years old when I bought my first car.  My intention was to teach myself to drive, but it turned out that I was also to teach myself some engineering.  The object in Picture 1 prompted the need for this.

1952 Plymouth Carburetor

Picture 1. Carburetor

This picture shows the carburetor of the car I bought — the 1952 Plymouth in Picture 2.  This is the same model and colors of the car I bought.  However, for $35 the car did not exactly look like this one.  In fact, as I repaired body dents and rust, red primer slowly replaced much of the blue and white.

Being too young to get a driver’s permit, I decided to learn by driving through the fields in this small, island town of Portsmouth, Rhode Island — the smallest state in the United States.  Picture 3 shows my training track, which was captured during an aerial survey of the town prior to building a new road.  The track started out very bumpy but over time the Plymouth smoothed it out.

1952 Plymouth Cranbrook No. 1

Picture 2. 1952 Plymouth

Driving endlessly on this track, I became very good at left-hand turns, and right-hand turns, in second gear but could never get going fast enough to get into third gear.  I also could make it to the center of town, with its 3-4 stores, without going on a public road. This meant driving through fields normally populated by cows or potatoes. Again, it was very bumpy.  The carburetor did not like this. It failed often.  Pieces bent or disappeared.

Driver Training 1962

Picture 3. Training Track

I got to know the carburetor very well.  I constantly had to figure out how to get it functioning again.  I did not have the money to buy replacement parts.  I resolved this quandary with my Erector Set, shown in Picture 4. I used the linkages and sliders from this set to restore the carburetor’s function, although not quite in the way originally intended. The result was a Rube Goldberg version of a carburetor.

Erector Set

Picture 4. Erector Set

The Erector Set could not compensate for my lack of knowledge that cars had oil filters. Eventually the Plymouth’s engine succumbed to a lack of oil — plenty in the reservoir but little making it to the engine.  Next came a 1949 Chevrolet, again for $35.  This car’s specialty was leaks. During heavy rains, the floor wells in the front seat would fill up.  I learned that water would always have its way.

Each subsequent car provided its own lessons.  There were many lessons. We managed to successfully implant a Ford V-8 in a Jeep.  However, a Renault’s frame could not support a Thunderbird V-8, providing a lesson in mechanics of materials.  We also learned that people were happy to get rid of old cars in their backyards and we could try all sorts of things, while selling parts salvaged from these cars.

By the time I was 20, I landed a job as an assistant engineer at Raytheon, a large defense contractor in Portsmouth.  I was involved with the AN/BQS-13 sonar system, which looked much like Picture 5.  During my two years at Raytheon, before heading to graduate school at MIT, I worked in mechanical, electrical, and systems engineering. It was a wonderful immersive experience.

My ultimate task was to figure out how many spare parts to bring on a submarine, given the different reliability and maintainability characteristics of the subsystems, assemblies and components and, of course, the limited space for spare parts.  I also was able to participate in some of the discussions of the human operators of these systems in terms of the information and interface needed to support their tasks.

Sonar Room

Picture 5. Sonar Room

Picture 6 shows my current involvement.  In some ways, the hospital operating room is like the sonar control room. However, there are critical distinctions.  The information systems and the incentive systems in healthcare are much more poorly aligned with human behavior and performance requirements.  Inadequate information and poorly aligned incentives are issues that must be addressed in a broader context than depicted by Picture 6.

Operating Room

Picture 6. Operating Room

This observation reflects a life-long penchant to question external constraints — to wonder why “givens” are given. The “best” solution to a problem is almost always only best within a given set of assumptions. These assumptions often reflect constraints that, when viewed broadly, can be seen as totally arbitrary.  In this way, problem solutions are often limited by problem definitions.  I am always energized by the question of what is the real problem.

So, what have I learned?  Three lessons seem like a good number.  First, no matter at what level you address a complex system, there is always a broader context that impacts the system.  Simply externalizing the context is not a good idea; this assumption will plague you later by hindering successful operation and maintenance of the system.  For example, better design of hospital operating rooms will not, in itself, remediate the information and incentives problems of healthcare delivery.

Second, complex systems cannot be addressed successfully by a single, traditional discipline.  Appropriate consideration of interactions at different levels of abstraction and aggregation require a mix of knowledge and skills. Consequently, one professor and one PhD student cannot single-handedly address complexity successfully. Interdisciplinary approaches are needed to transform complex systems.

Third, the engineering of complex systems requires a professional community that embraces the first two lessons. For me, the Council of Engineering Systems Universities and the International Symposium on Engineering Systems is that community.  I am indeed fortunate that the 1952 Plymouth carburetor headed me in this direction five decades ago. I expect CESUN and the Symposium to be central to transforming complex systems for many years to come.