Autonomous Vehicles

Various pundits are projecting that by 2020 – just four years – the driving of cars and trucks will be completely automated.  Vehicle services, whether for consumers or businesses, will be readily available for very reasonable prices.  I will not need to own a personal vehicle and my business can dispense with its fleet of delivery trucks.  Taxi or truck drivers will no longer be professions; they will go the ways of elevator operators, bank tellers, and secretaries.

Personal cars are typically in use 5% of their lives.  The maturation of autonomous vehicles will cause utilization to approach 90-100%, dramatically reducing the number of vehicles needed to meet demands.   The greatly reduced number of vehicles will, in turn, enormously decrease the demand for independent servicing of vehicles – the vehicle service companies will handle this.  The number of gas stations, repair shops, and car washes will precipitously drop.

Reduced production of vehicles will result in the supplier base for vehicle manufacturers being steadily weaned due to less demands for nuts, bolts, rims, tires, floor mats, etc.  Auto insurance, the cash cow of the insurance industry, will be transformed once accidents cannot happen.  People will not pay to avoid risks that are no longer at all likely.  I have read projections that 5 million jobs will disappear.

This all seems plausible if the automation performs flawlessly.  Then, I can sit in the back seat and snooze on the way to the office, train station, or airport.  To evaluate this possibility, I have used my frequent Uber rides as an experiment where I ask myself, “What if there were no driver in the car?”  Two examples are very revealing.

I was going to the airport for a flight to Los Angeles.  The Uber app guided the driver to take a route that would have taken us away from the airport, not towards it.  I told this to the Uber driver and he said, “I have not driven this route before.  If you know a better way, just tell me what to do.”  Everything worked out fine.  What if there had been no driver?

More recently, I was taking Uber to work on a very cold morning.  I saw that the driver who would pick me up was just three blocks away and would pick me up in three minutes.  As I watched his car on my phone, it did not move and the time increased for 3, to 4, to 5, to 8 minutes.  I called him, and he said he would be there in five minutes, which he was.

Upon entering the car, I asked him, “You weren’t in your car when you responded to my request, were you?”  He responded, “No I was in my apartment, headed to my car in the parking garage.  It took me a few minutes to get there and then drive the three blocks to you.”  Driverless cars are unlikely to have apartments, but how will customers deal with departures from “normal” operations?

One extreme possibility is that drivers will be able to ignore vehicle operations until just before an imminent accident when the vehicle signals that the human driver should take over.  They will not have manually driven a vehicle in perhaps months and they now have a few seconds to get back in the loop.  Not surprisingly, this will not work. Decades of research have repeatedly shown this.

The impacts of autonomous vehicles on the overall economy will be pervasive.  The impact on the notion of “driving” will be profound.  We need to explore these futures deeply and carefully.  Like the canal barges, steamboats, railroads, automobiles, and airplanes, these changes will inevitably happen. How can we better understand and facilitate such changes to assure positive outcomes?

The Quartet

In “The Quartet: Orchestrating the Second American Revolution, 1783-1789,” Joseph J. Ellis chronicles the planning, drafting, and ratification of the US Constitution and Bill of Rights in 1789.  The title refers to George Washington, Alexander Hamilton, John Jay and James Madison.  These four men, with support from Robert Morris, Gouverneur Morris and Thomas Jefferson, led the transformation of thirteen colonies into a united republic.

It had never occurred to me that formation of the United States of America was not necessarily the outcome sought via the Revolutionary War.  The Continental Congress adopted the Articles of Confederation in 1777.  They were ratified by all thirteen states by 1781.  The thirteen states remained sovereign and independent.  The role of the federal government was limited to diplomacy and resolving territorial disputes.

The basic idea was to form a federation of thirteen independent countries, each with their own constitution, laws, processes, and so on.  Thus, during the Revolutionary War (1776-1783), the federal government had no power to raise troops and collect taxes.  Each state made its own decisions with regard to contributing troops and money.  The result was thousands of poorly equipped and unpaid soldiers.

Having escaped the reins of the British King and Parliament, the states were in no mood to reinstitute centralized governance and control.  However, the Treaty of Paris in 1784 required payment of pre-war debts and return of confiscated properties.  The credit ratings of each of the states were such that money could not be borrowed to address these needs.  The minimal central government could not borrow either because it had no sources of revenue.

The Treaty also resulted in the Mississippi River being the western border of the colonial territories.  There would eventually be 26 states east of the Mississippi.   However, there were at that time many competing claims on the less settled portions of these territories.  Virginia, for example, was quite aggressive in its territorial claims.  There was need for a mechanism to address claims and form new states.

Washington, Hamilton, Jay and Madison felt that the federation was at great risk of imploding.  Many European powers hoped this would happen, as they did not want the competition likely from a large united republic.  Ellis masterfully tells the story of how these four men planned and orchestrated a process that resulted in thirteen states voting for something that most of their citizens did not want.  Ratification of the Constitution and Bill of Rights in 1789 was the result.

The tension between states’ rights and federal governance is woven into the fabric of our national culture.  The Tea Party is just the latest manifestation of this tension.  The Constitution provides the means for addressing this tension but does inherently resolve it.  As Ellis explains, the quartet facilitated creating, in effect, a work in progress.

The Big Short

Just watched this movie this week, after having read many of the books published on the Great Recession, as well as having served on a National Academy study committee of what happened.  During this study, I had a chance to chat with the second most senior executive at one of the major banks involved, one that disappeared in the aftermath of the crisis.

I asked him if senior executives at his bank understood the questionable assumptions underlying the mortgage-based derivative securities.  He responded, “I understood, but we were making so much money from these securities that it was socially unacceptable to raise any questions.”  Put simply, they wanted to milk the real estate bubble as long as they could.

Of course, the bubble burst and millions of people lost their jobs and their homes.  The assets of the executives in these financial firms were protected.  They even received their usual bonuses, funded by the federal bailout of these firms.  Despite the obvious fraud by financial firms and rating agencies, almost no one was indicted and convicted.  Taxpayers paid, in one way or another, for the $5 trillion of lost wealth.

This movie certainly renews the anger felt in 2007-09.  I felt then, but less so now, that Goldman Sachs, Morgan Chase, Morgan Stanley, et al. should have been forced to fail, with top executives losing all of their personal assets and serving long prison terms, eventually emerging impoverished.  This would have been cathartic, but would it have made a difference in the longer term?  Would greed, fraud, and crime in general have been deterred?

The more fundamental question concerns the nature of value in our society and economy.  I have chaired, or been a member of, a few National Academy committees that wrestled with this question in terms of overarching goals for Academy initiatives.  We eventually agreed on one overarching goal:

To foster and sustain a healthy, educated, and productive population that is competitive in the global marketplace.

This goal is very compelling.  We want people to be healthy and engaged in work and making creative contributions in general.  To do this, we need people to be educated, as that is key to health and readiness for productivity.  People also need to be trained and aided to be productive and educated so they are competitive in the global marketplace.

My earlier post on “Five Million Jobs” outlines how we could accomplish these goals for 3% of the Federal budget.  I also discuss in that post why this obviously highly valuable investment will never happen.  The reason is simple – a sizable portion of our electorate feels that health, education, and productivity are now private goods, no longer public goods.  The idea that we all benefit by everyone being healthy, educated, and productive is no longer par of the national psyche.

So, let’s go back to The Big Short.  Was the financial community focused on improving health, education, or productivity?  More generally, were they providing value to society – and were they rewarded accordingly?  There is certainly value in providing capital to buy homes, start businesses, and develop inventions with potential to become market innovations.  Investors who provide this capital deserve reasonable returns for putting their monies at risk.

The financial community has various mechanisms for decreasing risks, for example, diversifying investment portfolios.  However, the financial players in The Big Short were hiding increasing risks, with the fraudulent compliance of the rating agencies.  These players created toxic portfolios of subprime mortgages.  The risks of default were steadily increasing, in part due to adjustable mortgage interest rates that resulted in payments that many borrowers could not possibly sustain.

The rating agencies helped the banks to hide ballooning risks, but savvy players realized that the bubble must eventually burst and sold these portfolios short. Some of our smartest people found a way to make billions of dollars betting that the marketplace would soon recognize the worthless investment instruments created by the financial community.  In effect, these smart people bet against the economy, against sustained value creation.

It is terrible when the smart money bets on failure.  Greed, fraud, and other criminal activities, in contrast to value, created this situation.  The financial community often talked value creation, but they did not walk it.  Instead, they focused on big paychecks, associated perks, and enormous bonuses.  In the end, they got to keep their windfall earnings while US taxpayers bailed out their enterprises.  Their homes in the Hamptons have kept them safely shielded from the broad loss of confidence they created.

NFL Denies Referee Conspiracy

There is growing evidence that NFL referees have been instructed to make calls – particularly pass interference calls and false start calls – to control the outcomes of NFL games.  The NFL vehemently denies these accusations, but the data are very clear.  The NFL knows the outcomes that will maximize television revenues as well as ticket and clothing sales, and they are determined to make sure these outcomes happen.

Our operatives have managed to make contact with people at Black Rock Big Data Analytics who provide services to the NFL.  None of these people would speak on the record, but they provided various insights.  A key manager said, “Keep in mind that this is all about entertainment, not athletics.  We are focused on earnings per share, not Hall of Fame inductions.  Our goal is to sell beer, pickup trucks, and game shirts.”

We asked, “What does this mean operationally?”  She responded, “The Patriots and Panthers were undefeated until recently.  We maximized the sales of game shirts, and then we needed these teams to lose because there were no more shirts to sell.”  She continued, “We instructed the referees to make sure these teams lost.”  They delivered, sales improved, and the referees got their bonuses.

“Doesn’t this conflict with the whole spirit of the game?” we asked.  The response was simply, “College and pro sports are the essence of corruption, exploiting talented athletes for maximal corporate earnings.”  So, we asked, “Does it not matter that millions of people are totally focused on their teams and their success?”  The response was simple, “Of course this matters.  Our goal is to maximize the percent of their income that ends up in the NFL coffers.”

Finally, our contacts added, “You realize that the whole athletics enterprise is focused on exploiting talented athletes, university presidents, and the general public to fill corporate coffers at the expense of the health and well-being of athletics and academia.  The idea of a student athlete is a farce.  All that matters is earnings per share.”

So, we asked, how far might you take this idea?  “Well, if we look at ultimate fighting, the extreme is death of the competitors.  This could generate enormous amounts of revenue.”  We could not help but ask, “Is this ethical?”  The answer was simple, “All that matters is earnings per share.  Dead athletes are just an insurance premium payment.”

The New Reality

Our operatives have uncovered the motivation and reasoning behind various presidential candidates now emphasizing what many of them are calling the “new realty.”  This reality relates to their personal histories, climate change, economic prospects, and so on.  All of the candidates have “repositioned” their personal stories to gain voter support.

One candidate, born to immense family wealth, tells his story of hardscrabble poverty and Horatio Alger like immersion from this poverty.  The media, their fact checking having discredited this story, finds itself dismissed by the candidate.  They have to ask questions and report answers in the context of this seemingly ridiculous reality.

Other candidates advocate policies, e.g., nuclear attacks on adversaries, which make no sense in terms of costs or consequences but are great pitches for support and votes.  Let’s build a wall between Mexico and the US, or between Canada and the US.  Great idea for construction companies that build walls!

There are lots of ideas about taxes.  The majority of Americans pay no taxes beyond Social Security assessments.  Thus, income tax revenues must come from everybody else.  How can we best redistribute income from earners with high incomes to everyone else?

Our tax policies shield many high-income people by designating their earnings as capital gains.  Thus, they pay 20% rather than 40% of their income in taxes.  The real victims are people whose incomes are designated salaries.  Between federal, state, and local income taxes, as well as property and sales taxes, these people can pay as much as 60% of their income in taxes.

The candidates have long argued for lower taxes, but it has all been just rhetoric.  The country cannot function without many high earners paying 60% in taxes while the majority of people pay 0% in taxes.  This is not going to change.  The minority of people with above average incomes is going to pay dearly to support everyone else.  Otherwise, the stability of the overall social system is at risk.

The candidates, from either political party, cannot embrace this reality.  The idea that we have to redistribute income to avoid social unrest is not acceptable, except for the fact that this is exactly what we do.   The reality is that a minority of people is positioned to benefit enormously from various technology and market opportunities; everybody else will find such changes challenging.  The political system needs to spread the benefits around.

Nevertheless, several candidates are advocating zero income taxes across the board, as well as zero corporate taxes.  They would create a national Value Added Tax.  They suggest 2% but replacing the lost revenue from income and corporate taxes would require a VAT of 15-20%.  Adding this VAT to state and city sales taxes could yield an overall tax of 30% on all consumption.  Commentators have pointed this out but candidates respond with putdowns like, “You need to take a math class.”

The rhetoric really soars when addressing defense spending.  Several candidates have advocated doubling the defense budget immediately.  They argue that this will pump money into the economy.  It has been pointed out to them that the absence of income and corporate taxes will mean that such pump priming will yield little revenue to the government.  They typically respond, “Good.  Less tax revenue the better.”

Candidates’ poll standings reflect the general public’s enthusiasm for the new reality.  The simple fact that the math does not work – the deficits would be immense – is of no interest to the public.  They are apparently believing and very much liking the rhetoric.

We decided it was time to explore the genesis of these audacious positions and promises.  Our operatives posed as representatives of potential European donors to the candidates’ campaigns.  It turns out that a potential donation of $10 million is the price for getting serious attention.  $100 million gets you a meeting with the candidate, but we did not need that.

We ended up meeting with three campaign managers.  We asked about the reality of their candidate’s positions and promises.  All three managers responded similarly, “We are trying to win the nomination and then the presidency.  Period.  We will take whatever position is needed to win convention delegates and electoral votes.”

But, we asked, “What if you win?  How will you deliver on your promises?”  They responded, “Promises?  If we win the presidency, the slate is clean. Whatever we said during the primaries and the election is irrelevant.  Once we are in control, we will do whatever we want.  At that point, the public’s preferences do not matter.”

So, we commented, “You are assuming a one term presidency?”  Their retort was, “Not at all.  Any shortfalls in delivering on promises can easily be attributed to the opposition.  We want to do the right things, but we cannot because the other party stymies our every move.”  We asked, “How do you know that will happen?”  Their response was, “It doesn’t matter.  We weren’t going to do those things anyways.”

This readily begged the question, “Why do you want the presidency if there is nothing that you plan to achieve?”  With a knowing smile, they each responded, “The key objective is to keep anybody else from accomplishing anything.  We want to keep government perpetually dysfunctional.”  We asked, “What’s the purpose of that?”  With a knowing look, they replied, “While the turmoil plays out, our donors and supporters will be making loads of money, which can help fuel the next round of this charade.”



NFL Rules

Confidential sources have indicated that the NFL is considering some sweeping rule changes, all with a goal of increasing the entertainment value of the former sport.  Unnamed executives indicated that, “Our goal is for fans to have fun, to go home with memories of exciting games when their team miraculously won despite the odds against such outcomes.”

One conclusion was that home field advantage has to mean something more.  Consequently, the NFL is considering giving the home team five downs per possession, while the visiting team will still have only four downs per possession.  Purists have protested, but the NFL has reminded them that the focus is on the fans.  “Our sponsors want to sell beer and pickup trucks.  The home team winning is good for viewer retention.  If the home team is losing, fans tend to change the channel.  That does not sell anything.”

Another proposal receiving serious consideration is requiring both teams to wear identical uniforms without numbers or names on the jerseys.  This idea would so totally confuse players that miscues and mistakes would be rampant.  The idea emerged from some enthusiasts of America’s Funniest Home Videos.  The players union is adamant in their opposition to this idea.  One spokesperson said, “This is the most ridiculous idea since Bill Veeck tried midget players.”

Yet another extreme proposal is limiting each player, except the quarterback or kicker, from touching the ball more than once per game.  Each player gets one carry or one catch per game.  Enthusiasts have pointed out that this would give many other players chances to display their skills.  Naysayers respond that this would decimate the record books.  Almost no one could excel with one possession per game.

The Consolidated NFL Hall of Fame is studying this proposal.  Since the Consolidated Corporation acquired the HOF, they have changed many policies and procedures.  HOF members no longer vote on potential inductees to the Hall.  Election is now based on sales of apparel and accessories.  Not surprisingly, the result has been that players are elected in their first year of eligibility or not at all.  Once no one remembers them and their game shirts are not selling, players simply disappear from the collective consciousness.

The most controversial proposal by far would eliminate any play calling by coaches.  Head coaches, offensive coordinators, and defensive coordinators would be prohibited from directing plays.  The quarterback would be solely responsible for choosing and executing plays.  Any evidence that the coaching staff was trying to intervene in the calls would result in forfeiture of downs.  Two assessments would result in forfeiture of the game.

The backdrop for all these deliberations is the desire to increase fan enjoyment and commitment.  Everyone wants their team to make the playoffs.  Another proposal being considered is that every team makes the playoffs.  Further, each round of the playoffs would be the best two of three games rather than a single game.  The three games would be played in a one-week period.  This would push the Super Bowl into April or May.  This would yield a windfall of revenue from advertising and ticket sales.

Finally, initial ideas are emerging for decreasing the current 12 minutes that the ball is in play during a typical three hour telecast.  Another 2-3 minutes of advertising time would be highly valuable.  The most popular suggestion was to eliminate stopping the clock during a series of downs and then adding an additional minute of advertising between each of the four quarters.  Enthusiasts argue that the faster-paced game would be more exciting.

Overall responses of fans to these suggestions have been quite negative.  One fan said, “If you make the real game so short and I only get to see my favorite player once, how am I going to be able to justify three hours of drinking beer and scarfing junk food?  I already have a new pickup truck.”  Another fan remarked, “Well, at least these changes will reduce injuries.  Football is just an excuse to hang out with my friends anyways.”

Disruptive Service Innovations in Healthcare

A recent issue of The Economist provided an in-depth review of how high technology financial startups are poaching high-margin financial services from large banks.  The large banks are not standing still; they are often acquiring these startups once they prove viable.  This may keep them in the game, but high margins are being substantially eroded for services that were once cash cows.

There have been many related discussions in the vehicle industry.  Many vehicle manufacturers are trying to position their vehicles as service platforms.  OnStar by GM is a classic example.  As more high-tech vehicle services emerge, it may be that Apple and Google, for example, will be the innovators rather traditional automobile companies.  They won’t produce the cars, but they will make the profits.

Both of these examples involve industries with business models, especially cost structures, which overprice technological innovations, yielding profit margins that can compensate for enormous inefficiencies elsewhere throughout their enterprises.  In general, disruptive technology-based innovations can obsolete business models and displace mainstream providers who are deluded by the incumbency of their traditional approaches to their markets.

There is a significant opportunity to disrupt the business models of consulting service companies that provide business process improvement services to healthcare providers.  The disruption will completely undermine the construct of the “billable hour” for these services.  Consider these observations:

  • Healthcare providers are notoriously inefficient users of capacities, in part because they get paid for everything they do regardless of relevance or efficiency.  Any reasonably competent process engineer can see countless low hanging fruit in terms of process improvements.
  • All major healthcare providers are delivering the same services, i.e., caring for the same maladies of humans ranging from hypertension, diabetes, and heart disease to automobile accidents and gunshot wounds.  There is no inherent reason that they could not all provide these services in the same ways.
  • Such standardization has led to major efficiencies and increased effectiveness for sales force automation, logistics, supply chain, and inventory management, and numerous other industrial processes.  Healthcare delivery is ripe for such process innovations.

It is important to differentiate process innovations that involve direct adoption of, for example, logistics, supply chain, and inventory management, from those innovations that address healthcare delivery specifically.  The latter must draw upon evidence-based medicine to devise, evaluate, and generalize care processes for hypertension, diabetes, heart disease, etc.  Standardizing such services requires deep knowledge of diseases and procedures for screening patients, diagnosing disease states, and treating diseases.

One approach to standardizing care delivery processes has been to map the processes of each provider, leading to one-off solutions for each enterprise.  These process maps are used to identify process inefficiencies, redesign processes to eliminate inefficiencies, deploy new processes, and then evaluate both efficiency and effectiveness.  This usually requires an enormous number of consulting person-hours and, hence, is very expensive.

This approach is based on the idea that every provider is unique and, of course, every patient is unique, and only the knowledge and skills of their individual primary care physicians and specialists are adequate to know how best to treat an individual patient.  Such reasoning is deeply flawed.

The Institute of Medicine has found the following — from the time that a new best practice is proven until the majority of physicians have adopted the practice averages 17 years.  Other studies have shown that physicians’ approaches to care are much more affected by where they graduated from medical school than by research findings since they graduated.  Thus, most patients are not getting the best care.

To be fair, various thought leaders have shown that it is absolutely impossible for clinicians to keep up with the developments in their specialty.  They could spend all their time reading and still not be able to keep up.  The individual clinician, despite high motivation and commitment, simply cannot keep up with the generation of medical knowledge and delivery skills.

It might be argued that the medical literature provides all the knowledge needed to specify best practices.  However, the literature focuses on scientifically defensible knowledge rather than how to deploy this knowledge in the care delivery system.  The need to translate increasing knowledge to constantly improving best care practices presents an enormous business opportunity.

This opportunity is premised on the strong belief that there are definable best practices that every provider should follow.  These best practices can be identified and constantly updated.  Knowledge of these best practices can be deployed in terms of web-based interactive visualizations enabled by computational models that embody these practices.  Clinicians can interact with these visualizations, perform any desired “What if?” experiments, and assess the impact of updated best practices on health outcomes and financial consequences.

Once decision makers are convinced of the merits of the best care practices portrayed in the web-based interactive visualizations, it is inevitable that many will ask about how these practices can be customized to the demographics of their patient populations.  Much of this type of customization can be enabled online. Other types of customization, e.g., to their physical infrastructures, may be difficult to fully automate, at least initially.

The fully customized version of a provider’s processes and practices can be created and maintained online for their use in strategic and operational management.  Parameters within these processes and practices can be updated monthly.  Performance outcomes can be compared to predicted outcomes.  Deviations can be used to track down performance problems, for example, unusually long delays for out-patient diabetics.

The vision is to provide to medical practice what SAP provides to logistics, supply chain, and inventory management and provides for sales force automation.  This will require a combination of compelling online capabilities with deep knowledge of medical practice, as well as an efficient and fine-tuned mechanism for constantly updating knowledge of the state of the art in medical practice.  In the process, the 17 years it takes to for the majority of clinicians to adopt best practices should be reduced to perhaps six months.  This will be a major contribution.

Leading a University Research Center

University research centers are delicate organizational systems.  They bring together faculty, research staff, and graduate students for several reasons.   Centers are often formed as a result of a large NIH or NSF grant or because of a large gift or grant from industry or wealthy alumni.  So, there is money on the table and researchers are naturally attracted to funding.

Researchers can also be attracted to the research agenda of the center.  They like the center’s portfolio and other researchers involved and want to affiliate with the endeavor.   This is also true for graduate students, who are often attracted to the research portfolio but also looking for graduate assistantships.  Prudence is needed to identify students who have the potential to make real contributions.

I have found that any university will embrace a research center that is totally externally funded and places no demands on the university.    Such centers provide resources, at least in terms of overhead, to pay for use of the brand on letterhead and brochures.  If all goes well, they hit a homerun; otherwise they quietly fold after the external resources are expended.

Universities tend to have two strategies.  For things that they view as mission critical, e.g., nanoscience and genomics, they will invest far beyond any possible returns – except bragging rights.  Other things have to earn their way onto the agenda, typically by paying returns far in excess of required investments.  This excess is used to further fund mission critical areas.

If your assignment is to run a university research center, here is some advice.  First, determine whether or not you are mission critical.  If you are receiving resources in excess of what you generate, chances are you are mission critical.  If you are, in effect, paying taxes on the resources you generate, you are a cash cow, at least as long as the cash lasts.

If you are mission critical, your success is assured – the university needs you to succeed and needs to trumpet your success.  If you are a cash cow, consider alternative futures.  A commercial spinoff might make sense.  Another possibility is to move the whole center to another university.   This might seem like being disloyal, but keep in mind that you have enjoyed little loyalty thus far.

While you are still a cash cow at your university of origin – where the center was founded – there are several tactics worth considering.  First, do your best to avoid taxes.  A primary mechanism to achieve this is to secure funds that allow no overhead charges.  Since you are not getting a share of overhead, why contribute to the pool?

Why would universities accept such stipulations?  Quite simply, they cannot walk away from money on the table.  Money received in this way makes you less of a cash cow.  However, you are not getting a share of the milk – or meat! – so why should your research center contribute?  If you are really good at this, you will find the university administration wanting to talk about how they can better support you.

When I was 12 or so, I came home from Charlie Boyd’s farm with a pigeon under my arm.  I proclaimed to my mother, “Charlie Boyd gave me a pigeon!”   My mother responded, “He didn’t give you a pigeon, he got rid of a pigeon.”  If you are directing a research center, especially one newly founded, you need to learn how to identify and avoid pigeons.

Pigeons, in the context of university research centers, are faculty members who are difficult to work with and/or consistently underperform.  Deans and department chairs often tend to recommend pigeons to research center leaders.  If you manage to transform their attitudes and performance, you have solved a problem for the dean or department head.  If not, it is now your problem.

One of the primary objectives of the leader of a research center is brand development.  You want the broad community to see your center as a prime time player in the areas of its research and teaching.  My experience is that the university will not help you with this.  Their marketing and communications staff members are oriented to serving the needs of the president, provost, et al.

Thus, you need to identify the constituencies with whom you want to communicate, develop the messages and associated packaging to communicate with these constituencies, and create the capabilities and opportunities to communicate. You will, of course, be the primary one to deliver these messages.  However, getting other faculty members involved with this messaging can contribute enormously to fostering a shared mental model of the center’s vision.

As soon as possible, you want to get to the point that you are not writing all proposals and leading all projects.  Mentoring faculty members, particularly junior faculty members, is the way to grow these competencies.  An important aspect of this is providing them opportunities to present their research to senior audiences from industry and government, not just academia.  Speaking skills, as well as writing skills, benefit from frequent opportunities to use them.

Finally, as the leader of a research center you should invest little time enhancing your resume and much time doing things that improve others’ resumes.  Your center needs to be vehicle for personal growth of faculty, staff, and students.  The outcomes from your center may include many articles, books, patents, etc., but the primary product of a university research center is the people who employ their knowledge and skills to address the needs of society, typically from a long-term perspective, but nonetheless as contributions to the common good.

Thoughts on Location

Does location matter?  It depends on what you are seeking.  If economic opportunity is your yardstick, here are some interesting statistics.

Greater New York City generated $1.5 trillion in GDP for 2014.  Greater Los Angeles provided $0.8 trillion; greater Chicago $0.6 trillion; greater Houston and greater Washington, DC $0.5 trillion each; and greater Dallas, San Francisco, Philadelphia, and Boston $0.4 trillion each.  The total US GDP for 2014 was $17 trillion.  New York City generated roughly 10% of this, and these nine metro areas generated over one third of the country’s GDP.

Most of the government research-funding agencies are in Washington, DC, as are many foundations.  A large percentage of research-funding foundations and potential Fortune 500 sponsors are in New York City. The top five homes of Fortune 500 companies include California (54), Texas (52), New York (47), Illinois (33), and New Jersey (28), accounting for almost half of the Fortune 500.  New York and New Jersey account for 16% of the Fortune 500.

High tech cities, ranked by numbers of jobs, are San Jose (Silicon Valley), Seattle, Boston, Washington, Los Angeles, Dallas, San Diego, Orange County, New York, and San Francisco.  Silicon Valley once dominated in IT related jobs but has been losing jobs as companies migrate.  The majority of aerospace and defense companies are on the West Coast – Arizona, California and Washington — although their headquarters have migrated to the east, mainly to Washington, DC, but also Chicago.

In the Sun Belt, Atlanta companies include AT&T Mobility, Coca-Cola, Delta Airlines, Home Depot, NCR, Newell-Rubbermaid, Southern Company, Turner, and UPS.  These companies are focused on transportation, supply chain and operations issues.  Dallas companies include Advance PCS, Dean Foods, ExxonMobil, Kimberly-Clark, Neiman Marcus, Southwest Airlines, and Texas Instruments, a quite diverse mix.  Houston companies include Phillips 66, Conoco Phillips, Sysco, Halliburton, Baker Hughes, and Marathon Oil, obviously reflecting a strong energy sector.  Charlotte is the second largest banking center after New York City.

Multiple healthcare providers are in all major cities. The top ten cities for healthcare employment, in rank order, are Houston, Philadelphia, Baltimore, Boston, Milwaukee, Denver, Fargo (ND), New York, Cleveland, and Norfolk.  Healthcare is the largest employer in Pittsburgh.  Seven of the 25 largest employers in New York City are healthcare providers.

The essential tradeoff is economic opportunity versus cost of living.  The Cost of Living Indices for each region’s major cities are shown below.  The average index nationally is set to 100.  A major contributor to high or low values is the cost of housing.

  • Northeast: New, York (Manhattan, 217; Brooklyn, 182; Queens, 159), Hoboken (183), Washington (140), Boston (133), and Philadelphia (127)
  • West Coast: San Francisco (164), San Jose (156), Orange, County (146), Los Angeles (136), San Diego (132), and Seattle (121)
  • Midwest: Chicago (117), Minneapolis (110), Denver (103), Salt Lake City (101), Kansas City (98), Cincinnati (94), Pittsburgh (92), and St. Louis (90)
  • Sun Belt: Miami (106), Phoenix (101), Raleigh (98), Atlanta (96), Charlotte (93), Houston (92), and Dallas (92).

Clearly, the large Sun Belt cities offer jobs and low costs of living, with a major contributor being significantly lower costs of housing.  The Northeast and West Coast have lots of job opportunities but are very expensive places to live.  The Midwest is closer to the Sun Belt in costs, but not in terms of job opportunities.