Thursday, December 31, 2009

Closing Out The Year!!

C.K. Prahalad is the Paul and Ruth McCracken Distinguished University Professor of Strategy at the University of Michigan's Ross School of Business. He has come up with a great list of ideas and values for managers and leaders that one should reflect on as we close out a year and enter into a new one.
  • Understand the importance of nonconformity. Leadership is about change, hope, and the future. Leaders have to venture into uncharted territory, so they must be able to handle intellectual solitude and ambiguity.
  • Display a commitment to learning and developing yourself. Leaders must invest in themselves. If you aren't educated, you can't help the uneducated; if you are sick, you can't minister to the sick; if you are poor, you can't help the poor.
  • Develop the ability to put personal performance in perspective. Over a long career, you will experience both success and failure. Humility in success and courage in failure are hallmarks of a good leader.
  • Be ready to invest in developing other people. Be unstinting in helping you colleagues realize their full potential.
  • Learn to relate to those who are less fortunate. Good leaders are inclusive, even though that isn't easy. Most societies have dealt with differences by avoiding or eliminating them; few assimilate those who aren't like them.
  • Be concerned about due process. People seek fairness - not favors. They want to be heard. They often don't even mind if decisions don't go their way as long as the process if fair and transparent.
  • Realize the importance of loyalty to organization. profession, community, society, and, above all, family. Most of your achievements would be impossible without our families' support.
  • Assume responsibility for outcomes as well as for the the processes and people you work with. How you achieve results will shape the kind of person you become.
  • Remember that you are part of a very privileged few. That's your strength, but it's also a cross you carry. Balance achievement with compassion and learning with understanding.
  • Expect to be judged by what you do and how well you do it - not by what you say you want to do. However, the bias toward action must be balanced by empathy and caring for other people.
  • Be conscious of the part you play. Be concerned about the problems of the poor and disabled, accept human weaknesses, laugh at yourself - and avoid the temptation to play God. Leadership is about self-awareness, recognizing your failings, and developing modesty, humility, and humanity.

Wednesday, December 30, 2009

The Second of Three Women


Zaha Hadid is a Bagdad-born, London-based architect. She is celebrated for her works that include the Vitra Fire Station, in Weil am Rhein, Germany (1994); the Lois and Richard Rosenthal Center for Contemporary Art, in Cincinnati (2003) and MAXXI, in Rome (2009). She is known for her abstract drawings and paintings – where abstraction is the best way to capture multiple perspectives in two dimensions, and to bring them together in a “distortion field.” Hadid is a graduate of the Architectural Association School of Architecture in London and founder of the 300 person, London based, Zaha Hadid Architects.

The December 21 & 28, 2009 issue of The New Yorker contains an interesting profile of Hadid with the following observation regarding engineering:

Still, there remained the problem of engineering: how to actually build Hadid’s visions. Architects, it has been said, don’t build; they draw. And translating her designs for fabricators and contractors had always been the sticking point in Hadid’s practice. One reason she remained in Britain (she became a British citizen in 1989) was the extraordinary ingenuity of British engineers, a tradition that goes back to the Victorian era, when they created such engineering masterpieces as the Crystal Place (originally erected in Hyde Park to house the Great Exhibition in 1851), and Paddington Station (1854). Early in her practice, she realized that civil engineers, who build roads and bridges, had much to offer her, because in civil engineering the materials employed in realizing the design often serve as the supporting structures themselves. (In a concrete roadway, for example, structure, shape, and surface are all created by the same material.) Structural engineers were also important to her, none more so than Peter Rice, the Northern Irish engineer who helped erect the Sydney Opera House and the Centre Pompidou, in Paris, whom she met and collaborated with in the nineteen-eighties. Although their collaboration did not result in any buildings, “he taught me that engineering is essentially common sense.”

Tuesday, December 29, 2009

Four Population Trends


In the January/February 2010 issue of Foreign Affairs, author Jack Goldstone in his article "The New Population Bomb: The Four Megatrends That Will Change the World" outlines four important demographic trends to watch:

  1. The relative demographic weight of the world's developed countries will drop by nearly 25 percent, shifting economic power to the developing nations.

  2. The developed countries labor forces will substantially age and decline, constraining economic growth in the developed world and raising the demand for immigrant workers.

  3. Most of the world's expected population growth will increasingly be concentrated in today's poorest, youngest, and most heavily Muslim countries, which will have a dangerous lack of quality education, capital, and employment opportunities.

  4. For the first time in history, most of the world's population will become urbanized, with the largest urban centers being in the world's poorest countries, where policing, sanitation, and health care are often scarce.

Goldstone has an interesting idea - reverse immigration. If older residents of developed countries took their retirements along the southern coast of the Mediterranean or in Latin America or Africa, it would greatly reduce the strain on their home countries' public entitlement systems. The developing countries involved, meanwhile, would benefit because caring for the elderly and providing retirement and leisure services is highly labor intensive.

Monday, December 28, 2009

"Don't Play God"

Teresa A. Taylor is the CEO of Qwest - her interesting insight into management and leadership is outlined below:

Over the years, something I really had to learn was how to truely listen. Sometimes people act like they're listening, put they're really formulating their own thoughts in their head. When I would get feedback along the way in my career, people would say, "You're not a very good listener." I would think I was, put somehow I wasn't expressing that.

You also get to a position where everything's filtered when it comes to you. So you have to dig under, and the only way to dig under is to listen. People have to believe you want to listen, otherwise you'll get the corporate gloss-over - "Everything's fine, don't worry."

And we have all had the following experience in one form or another:

"Don't play God." By that I mean I can't fix everything. I'm not responsible for every person and for every single thing. I do take things very much to heart, and I can't part the sea and I can't add a day on. The point was, you can't do everything.

Wednesday, December 16, 2009

Realism


Author Barbara Ehrenreich has written a thought provoking book entitled Bright-Sided: How the Relentless Promotion of Positive Thinking has Undermined America (2009). The book fundamentally confronts the notion of extreme positive thinking at the expense of rational realism. Ehrenreich addresses this at the individual level (i.e., subprime mortgages with escalating balloon payments) and the national level (i.e, the projected outcome of the Iraq war). She is a strong advocate for realism - in which she writes the following:

Realism - to the point of defensive pessimism - is a prerequisite not only for human survival but for all animal species. Watch almost any wild creature for a few moments and you will be impressed, above all, by its vigilance. The cormorant restlessly scan the water for unexpected splashes; the deer cocks its head to pick up stray sounds and raises a foot in preparation for flight. Many animals - from monkeys to birds - augment their individual watchfulness by living in groups so that many eyes can be on the lookout for intruders, many voices raised in an alarm call, should one approach. In its insistence that we concentrate on happy outcomes rather than on lurking hazards, positive thinking contradicts one of our most fundamental instincts, one that we share not only with other primates and mammals but with reptiles, insects, and fish.

A vigilant realism does not foreclose the pursuit of happiness; in fact, it makes it possible. How can we expect to improve our situation without addressing the actual circumstances we find ourselves in? Positive thinking seeks to convince us that such external factors are incidental compared with one's internal state or attitude or mood. It's true that subjective factors like determination are critical to survival and that individuals sometimes triumph over nightmarish levels of adversity. But mind does not automatically prevail over matter, and to ignore the role of difficult circumstances - or worse, attribute them to our own thoughts - is to slide toward a kind of depraved smugness.

Tuesday, December 15, 2009

Two Types of Problems

If you know how to solve problems, you have a shot of performing at a higher level. You obviously need some subject matter expertise, but most organizations and people would rather have someone who’s really strong at problem solving, and maybe a little less on the subject matter expertise, because most organizations feel they can teach that.

Problems can be lumped into one of two categories – either puzzles or mysteries. Engineering puzzles are defined as problems in which we don’t have enough information. It could be a lack of data, insight or poor communication – we just don't have the complete picture of the problem. A mystery is just the opposite. Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much.

When you look at a particular problem – make a careful assessment of the general conditions and ask yourself if it is a puzzle or a mystery type problem. The approach, tools, and techniques will vary based on the problem type. You can also change the problem type by your own actions. Taking a puzzle problem and collecting too much additional data and information can turn the problem into a mystery. Filtering too much available information can also turn a mystery back into a puzzle.

Monday, December 14, 2009

Results Matter

Nancy McKinstry, CEO of Wolters Kluwer, the information services company based in the Netherlands, says “Every culture is very different in how people make decisions.” She adds the following:

So the ability to understand how they interpret what you’re said to them, and how, you interpret what they’ve said, and the rules of engagement about how you’re going to make a decision is very important. In the Netherlands, where our company is based, people really want to be heard early on in the process. So if you just go to someone and say, “I want you to go take this product and enter this new market,” most likely the first response they’ll say is, “No, and let me tell you how that won’t work.” What they really want to say is, “I’m not going to commit yet to that objective until we have a chance to really sit down and explore how we’re going to do that, what your expectations are, and how we measure success.”

Then, when I work with my Italian colleagues and the Spaniard colleagues, what you find is they can’t always tell you how they’re going to get something accomplished, but they manage to get it done.

Ms. McKinstry also points out a key element of leadership – “Results matter. No matter how much somebody respects your intellect or your capabilities or how much they like you, in the end it is all about results in the business context.”

Sunday, December 13, 2009

Minitasking

In these days of overflowing inboxes, 24/7 connectivity, and multitasking as an alternative try "minitasking." Creating an action list with minitasks effectively breaks down "big" jobs into day-to-day achievable ones. Some key ideas are:
  1. When you do nothing, you make inaction a choice.
  2. Every point of contact presents an opportunity to learn and share your knowledge.
  3. Get over stranger danger - small talk opens doors to meatier conversations.
  4. Tackle assignments that provide the opportunity to do what others don't, or can't or won't do.

Saturday, December 12, 2009

Cultural Greening


The National Renewable Energy Laboratory (NREL) - http://www.nrel.gov/, a unit of the U.S. Department of Energy, is designing a 219,000 square foot “net zero” facility in the Rocky Mountain region. The term “net zero” means that it will consume so little energy that it won’t need to draw any electricity from the grid. The building is being planned and designed to utilize 25,000 BTUs per square foot a year compared to a more typical 65,000 BTUs per square foot a year. The NREL requirement is 50% more energy efficient than the new commercial energy code issues by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE).

To meet the goal, both technology improvements and cultural change must be considered. For example, putting up walls and ceilings to create individual work spaces impedes the flow of daylight and ventilation. So architects banned the traditional office. They did include a few semi-private rooms with walls that reach about halfway toward the exposed struts and girders that pass for a ceiling. Most employees, however, will work in cubicles with low dividing walls. Many aspects of energy efficient have their roots in organizational and cultural change. The NREL building is reducing kitchenettes from one for every 15 employees to every 20 employees. Using Internet-tied telephones rather than standard models while favoring laptop computers over PC workstations reduces energy consumption. Other small changes, like highly reflective interior pant and workstations in neutral hues to enhance daylighting and shutting off lights at night, will also have an impact.

The lack of privacy – not to mention the shortage of storage space, since cubicle walls are too low to hold shelves – has been a bit of a culture shock for NREL employees. The organizational culture is typically one of office, walls, and privacy. Another culture shock is no fixed thermostat – the facility will have no central air or heat and the temperature will fluctuate during the day, though it shouldn't’t go below 68 degrees or above 80.

Temperature is regulated through an age-old concept known as “thermal mass,” which involves sheathing the building in concrete panels nearly a foot thick. In summer, the panels will absorb the sun’s heat, keeping the interior of the building comfortable, much the way an old stone cathedral remains cool inside even on the warmest days. In winter, the building relies on thin sheets of perforated metal that hang down south-facing walls. The metal is painted black, so it heats up quickly in the intense Denver sunshine. Air flowing through holes in the hot sheet metal is also warmed. A fan then sucks the warm air into an underground labyrinth – a crawl space crowded with a maze of concrete blocks. The labyrinth stores the warm air until it is needed elsewhere in the building.

Thursday, December 10, 2009

"Either Caesar or nothing"

What level of leadership do you aspire to?

To reach higher office and to fulfill its obligations, you must continuously make choices that will affect other people’s money and lives. And you will be doing this in a context where other people will want your position or will be competing with you for the next higher position.

It is easy to criticize the competence of those with greater responsibilities than ourselves, and even easier to fantasize about how we would do the job better. A useful exercise: Look at your immediate boss’s job and ask yourself if you could do it well, or better – honestly. Then, stretch even further and consider the most senior leader in you line of sight – perhaps the chief executive. Learn about what that person must deal with. Get a feel for the time, energy, and capabilities required doing those jobs. What would those jobs require you to do that you can’t do now, or that you don’t enjoy now, but would have to give up? People need to realistically assess the role they are pursuing in comparison to their true capabilities.

Wednesday, December 9, 2009

Stumble Safely


Web-sites and mobile applications are increasingly bringing together citizens and governments. The focus of the integrative efforts involves turning governmental data into usefully and meaningful public information. For example, a big pile of city crime reports is not all that useful to the general public. But what if you are out late one night and you turn on a mobile application – combining crime data with information on bars, sidewalks, and subway stations to find the safest route home. In Washington DC, a Web site called Stumble Safely (http://outsideindc.com/stumblesafely/) makes that possible.

San Francisco recently unveiled DateSF (http://www.datasf.org/), a Web clearing house of raw government data that the public can download. The data sets include seismic hazard zones, street sweeping schedules, and campaign finance filings. The Web site called CleanScores (http://www.cleanscores.com/), tracks restaurant inspection scores in various cities and explains each violation.

There is significant evidence that governments’ attitude toward publishing data is changing. In the fall of 2008, Washington DC’s Office of the Chief Technology Officer asked iStrategyLabs (http://www.istrategylabs.com/) how it could make DC’s data catalog more useful for the citizens, visitors, businesses, and agencies. The data catalog contains all manner of open public data featuring real-time crime feeds, school test scores, poverty indicators, and is most comprehensive of its kind in the world. The solution was to create an organization, Apps for Democracy – and organize and manage a contest that cost Washington DC $50,000 and returned 47 iPhone, Facebook, and Web applications with an estimated value in excess of $2,600,000 to the City.

“It will change the way citizens and government interact, but perhaps most important, it’s going to change the way elected officials and civil servants deliver programs, services, and promises,” said Gavin Newsom, the mayor of San Francisco. “I can’t wait until it challenges and infuriates the bureaucracy.” The infuriating is real and present – Paul J. Browne, a deputy commissioner of the NYC Police Department stated recently “We provide the public information, not data flow for entrepreneurs.” More correctly – providing the public data when they are really interested in is information (useful and meaningful) is the heart of the issue. The availability of data, the influence of mobile technology, public need and acceptance – these are the variables and factors that will allow innovative entrepreneurs the opportunity to fill voids created by budget constrained governmental agencies.

Tuesday, December 8, 2009

Thomas Cromwell


Hilary Mantel is the author of Wolf Hall (2009), the Man Booker Prize winner of 2009. The novel traces the period of English history in which Henry VIII wants to annul his marriage of twenty years and marry Anne Boleyn. The king’s quest for freedom destroys his advisor, the brilliant Cardinal Wolsey, and creates a years-long power struggle between the Church and the Crown.

Into this impasse sets Thomas Cromwell (The Lord Protector of England, Oliver Cromwell was Thomas’ great-great-grandnephew), a wholly original man, a charmer and a bully, an idealist and an opportunist, astute is reading people: Cromwell is a consummate politician, hardened by years abroad and his personal losses. In a passage, Cromwell is counseling Henry on war with France:

“No ruler in the history of the world has ever been able to afford a war. They’re not affordable things. No prince ever says, “This is my budget, so this is the kind of war I can have.” You enter into one and it uses up all the money you’re got, and then it breaks you and bankrupts you.”

To which Henry replies:

“When I went into France in the year 1513 I captured the town of Therouanne, which in your speech you called – “

“A doghole, Majesty.”

“A doghole,” the king repeats. “How would you say so?”

He shrugs. “I’ve been there.”

A flash of anger. “And so have I, at the head of my army. Listen to me master – you said I should not fight because the taxes would break the country. What is the country for, but to support its prince in his enterprise?”

“I believe I said – saving Your Majesty – we didn’t have the gold to see you through a year’s campaign. All the bullion in the country would be swallowed by war. I have read there was a time when people exchanged leather tokens, for want of metal coins. I said we would be back to those days.”

Monday, December 7, 2009

The Dullest Bits


Like most people, I have a collection of power adapters. These are the little boxes that sit between the plug and the device, or are sometimes integrated with the plug. Their function in life is to convert high-voltage alternating current from the mains into low-voltage direct current for mobile phones, laptops, iPods, and a host of other electronic gadgets.

Some five billion devices are in use worldwide – about 0.80 devices per person. The world’s largest individual mobile operator is China Mobile with over 500 million mobile phone subscribers. The global growth rate for cell phone ownership is 24%. Assuming only a modest future growth rate of 15% for all worldwide electronic devices – it would translate into 75,000,000 additional power adapters per year.

Historically, the power conversion was made using copper wire. Typically, half the power they drew from the wall, and sometimes as much as 80%, would be lost in conversion. As a result, electricity bills and carbon emissions were both higher than necessary – to the tune of $2 billion a year.

Copper-wired power adapters cost around $2 or less – adapters with integrated circuits run approximately 30% more while having only 20% power loss. In a world and industries of intense price competition, where a fraction of penny is important, it will be highly interesting to see how economics and energy efficiency collide in one of the “dullest bits” of the marketplace.

Sunday, December 6, 2009

"The journey has been enjoyable and well worth making - once!"


According to famed historian Paul Johnson, Winston Churchill of all the towering figures of the twentieth century, ‘ . . . was the most valuable to humanity, and the most likable.” Soldier, parliamentarian, prime minster, orator, painter, writer, husband, and leader – all of these facets combined to make Churchill one of the most complex and fascinating personalities in history. His immense adaptability joined with his natural pugnacity to make him a formidable leader for the better part of century.

Winston Churchill’s life is better documented than any other in the twentieth century. He is joy to read about. His leadership lessons are still important and valuable today as they will be in a thousands’ year time. Johnson has written a new short and sharp addition to the Churchill library – Churchill (2009). The tail end of the book outlines five lessons we can all learn from a Churchill life – its amplitude, variety, and success on so many fronts.

The first lesson is: always aim high. As a child Churchill received no positive encouragement from his father and little from his mother. He was aware of failure at school. But he still aimed high. Conscious of his ignorance, he set himself to master English history and to familiarize himself with great chunks of literature. Once his own master, he played polo in win the top award in the world. He sought power and got it in growing amplitude. He never cadged or demeaned himself to get office. But obtained it on his own terms. He did not always meets his elevated targets, but by aiming high he always achieved something worthwhile.

Lesson number two is: there is no substitute for hard work. Churchill obscured his moral by his (for him) efficient habit of spending a working morning in bed, telephoning, dictating, and consulting. He also manifestly enjoyed his leisure activities, for him another form of hard work, to keep himself fit and rested and to enable himself to do his job at the top of his form. He worked hard at everything to the best of his ability – Parliament, administration, geopolitics and geostrategy, writing books, painting, creating an idyllic house and garden, seeing things and if possible doing things for himself. There was an extraordinary paradox about his white, apparently flabby body, and the amount of muscle power he put into life, always.

Third, and in its way most important, Churchill never allowed mistakes, disaster – personal or national – accident, illnesses, unpopularity, and criticism to get him down. His powers of recuperation, both in physical illness and psychological responses to abject failure, were astounding. He had courage, the most important of all virtues, and its companion, fortitude. These strengths are inborn but they can be also cultivated, and Churchill worked on them all his life. Those uncertain of their courage can look Churchill for reassurance and inspiration.

Fourth, Churchill wasted an extraordinarily small amount of his time and emotional energy on the meannesses of life: recrimination, shifting the blame onto others, malice, revenge seeking, dirty tricks, spreading rumors, harboring grudges, waging vendettas. There is nothing more draining and exhausting than hatred. And malice is bad for the judgment. Nothing gave him more pleasure than to replace enmity with friendship, not least with the Germans.

Finally, the absence of hatred left plenty of room for joy in Churchill’s life. His face could light up in the most extraordinarily attractive way as it became suffused with pleasure at an unexpected and welcome event. Joy was a frequent visitor to Churchill’s psyche, banishing boredom, despair, discomfort, and pain. He liked to share joy, and give joy. It must never be forgotten that Churchill was happy with people. He was emotional, and wept easily. But his tears soon dried, as joy came flooding back. He drew his strength from people, and imparted it to them in full measure

Saturday, December 5, 2009

The Medici Effect


The December 2009 edition of Harvard Business Review has a special issue with a spotlight on innovation. In the article “The Innovator’s DNA” – authors Dyer, Gregersen and Christensen look at the five “discovery skills” that separate true innovators from the rest of us. The five skills are: (1.) Associating – the ability to successfully connect seemingly unrelated questions, (2.) Questioning – the ability to find the right questions, (3.) Observing – acting like anthropologists and social scientists, (4.) Experimenting – mulling and tinkering, and (5.) Networking – testing ideas in a diverse set of individuals.

Per the article, the skill of associating encompasses the following:

Associating, or the ability to successfully connect seemingly unrelated questions, problems, or ideas from different fields, is central to the innovator’s DNA. Entrepreneur Frans Johansson described this phenomenon as the “Medici effect,” referring to the creative explosion in Florence when the Medici families brought together people from a wide range of disciplines – sculptors, scientists, poets, philosophers, painters, and architects. As these individuals connected, new ideas blossomed at the intersections of their respective fields, thereby spawning the Renaissance, one of the most inventive eras in history.

To grasp how associating works, it is important to understand how the brain operates. The brain doesn’t store information like a dictionary, where you can find the word “theater” under the letter “T.” Instead, it associates the word “theater” with any number of experiences from our lives. Some of these are logical (“West End” or “intermission”), while others may be less obvious (perhaps “anxiety,” from a botched performance in high school). The more diverse our experience and knowledge, the more connections the brain can make. Fresh inputs trigger new associations; for some, these lead to novel ideas. As Steve Jobs has frequently observed, “Creativity is connecting things.”

The world’s most innovative companies prosper by capitalizing on the divergent associations of their founders, executives, and employees. For example, Pierre Omidyar launched eBay in 1996 after linking three unconnected dots: (1.) a fascination with creating more-efficient markets, after having been shut out from a hot internet company’s IPO in the mid-1990s; (2.) his fiancĂ©e’s desire to locate hard-to-find collectible Pez dispensers; and (3.) the ineffectiveness of local classified ads in locating such items. Likewise, Steve Jobs is able to generate idea after idea because he has spent a lifetime exploring new and unrelated things – the art of calligraphy, meditation practices in an Indian ashram, the fine details of a Mercedes-Benz.

Associating is like a mental muscle that can grow stronger by using the other discovery skills. As innovators engage in those behaviors, they build their ability to generate ideas that can be recombined in new ways. The more frequently people in our study attempted to understand, categorize, and store new knowledge, the more easily their brains could naturally and consistently make, store, and recombine associations.

Friday, December 4, 2009

The Grand View


Murray Gell-Mann, Robert Andrews Millikan Professor Emeritus of Theoretical Physics at the California Institute of Technology, was awarded the 1969 Nobel Prize in Physics. In 1984, he helped establish the Santa Fe Institute, where he now works. He is close friends with writer Cormac McCarthy.

In his book The Quark and the Jaguar: Adventures in the Simple and Complex (1994), Gell-Mann writes about his many intellectual passions – natural history, biological evolution, the history of language, and the study of creative thinking. He also discusses systems thinking in the following paragraphs:

Why should anyone try to think on such a grand scale? Shouldn't one plan a more manageable project that concentrates on a particular aspect of the world situation?

We live in an age of increasing specialization, and for good reason. Humanity keeps learning more about each field of study: and as every specialty grows, it tends to split into sub-specialties. That process happens over and over again, and it is necessary and desirable. However, there is also a growing need for specialization to be supplemented by integration. The reason is that no complex, nonlinear system can be adequately described by dividing it up into subsystems or into various aspects, defined beforehand. If those subsystems or those aspects, all in strong interaction with one another, are studied separately, even with great care, the results, when put together, do not give a useful picture of the whole. In that sense, there is profound truth in the old adage, “The whole is more than the sum of its parts.”

People must therefore get away from the idea that serious work is restricted to beating to death a well-defined problem is a narrow discipline, while broadly integrative thinking is relegated to cocktail parties. In academic life, in bureaucracies, and elsewhere, the task of integration is insufficiently respected. Yet anyone at the top of an organization, a president or prime minister or a CEO, has to make decisions as if all aspects of a situation, along with the interaction among those aspects, were being taken into account. It is reasonable for the leader, reaching down into the organization for help, to encounter only specialists and for integrative thinking to take place only when he or she makes the final intuitive judgment.

Thursday, December 3, 2009

Home Area Network (HAN)


A global movement is afoot to make electric grids “smart.” This means adding all kinds of information technology, such as sensors, digital meters, and a communications network akin to the Internet, to dumb wires. Among other things a smart grid would be able to avoid outages, save energy, and help other green undertakings such as electric cars and distributed generation. The hope is for greater efficiency – outages cost the American economy $150 billion a year. The goal is more mouse clicks and less repair trucks and ringing door bells.

The smart grid “applications” market has the potential to be an innovation center just as the mobile phone applications market. The “home area network” or HAN is the technology in the home, the network and applications behind the smart meter. There is general agreement that it will include things such as the household’s power consumption at that instant, thermostats that are connected to the meter and smart appliances that can be switched on and off remotely. The big question is how all these devices will be connected and controlled. Will HAN be dedicated to regulating electricity consumption for instance, or will it also control home security or stream music through the room.

More than three dozen firms are marketing products for the HAN future. One is Control 4 (www.control4.com), based in Salt Lake City – it aims to provide the dominant underlying software in its part of the smart grid. The startups’ devices allow consumers to control almost everything in a house that runs on electricity. A Silicon Valley rival, iControl (www.icontrol.com) which recently raised $23 million from venture capital firms, comes at the HAN market from a different direction. Its gear – cameras, sensors, wireless hubs – it’s mainly used to keep burglars out, but can also be put to work managing energy consumption.Cisco, Microsoft, and Google will probably have intense interest in the HAM market potential.

The iControl approach highlights the potential for technology convergence. The interface of demographic shifts (i.e., the aging global population) and interested awareness and demands for energy conservation illustrates the need for a singular piece of equipment and software – something that can provide interactive home security, energy management, and home health care support tools. Access is important – web, mobile, iPhone, and in-house touch screen access. Monitoring capabilities should include the ability to review energy usage in real-time to track and compare daily, weekly, and monthly trends to pre-set energy and expenditure goals. Home health care has the primary focus of allowing customers the ability to monitor the safety and well being of elderly family members via web portals, iPhones, and other mobile applications.

Wednesday, December 2, 2009

Disagreement and Dissent

In his play, Two Thousand Years, author Mark Leigh has the following lines:

Four guys are standing on a street corner . . .
An American, a Russian, a Chinese man, and an Israeli . . .
A reporter comes up to the group and says to them:
“Excuse me . . . What’s your opinion on the meat shortage?”
The American says: What’s a shortage?
The Russian says: What’s meat?
The Chinese man says: What’s an opinion?
The Israeli says: What’s “Excuse me?”

Dov Frohman, the founder of Intel Israel made the following observations about leaders – “The goal of a leader should be to maximize resistance – in the sense of encouraging disagreement and dissent. When an organization is in crisis, lack of resistance can itself be a big problem. It can mean that the change you are trying to create isn’t radical enough - or that the opposition has gone underground. If you aren’t aware that the people in the organization disagree with you, then you are in trouble.”

Culture can play a significant role in management activities and leadership styles. A typical meeting in an Israeli firm will involve no texting, no surfing, or dozing off - - you will find intensive engagement. The intensity can increase during the open discussion periods – penetrating questions with many unconventional observations – one after the other. No inhibitions about challenging existing logic. This shows up in all aspects of Israeli culture – in the way university students speak with their professors, employees challenging their bosses, sergeants questioning their generals, and clerks second-guessing government ministers. Employees with unvarnished, unintimidated, and undistracted attitudes. The Hebrew word (really German Slavic) chutzpah – has the meaning and context of innovative thinking and entrepreneurial spirit – gall, brazen nerve, effrontery, and incredible guts.

Tuesday, December 1, 2009

The Price of Water


The availability of clean water is not a global issue; it is a series of very different local issues spread around the globe. Local conditions – such as rainfall patterns, landforms and plant species along with human demands for agricultural irrigation, industrial and municipal uses – determine whether a watershed is being used sustainably.

Moving water across watersheds has been going on for thousands of years (like the Port du Gard in central Spain near Madrid), but people are now starting to understand the true costs and environmental impacts of such diversions. Transporting water over long distances requires significant investments in infrastructure and ongoing expense for energy and maintenance. A 2009 report for the River Network (http://www.rivernetwork.org/) estimates that 13 percent of all electricity used in the United States is for pumping, heating, and treating water. As greenhouse gas regulations become law in the coming years, it is clear that reducing the energy demand of water will be a key component of climate change policy.

In addition, many of the pipes and values that make up the water infrastructure of the United States are overdue for repair and replacement. The American Water Works Association estimates that up to $1 trillion needs to be spent to maintain existing infrastructure in the next 20 years. While a portion of the American Recovery and Reinvestment Act 2009 stimulus funds are dedicated to this, it falls short of what is needed. Meanwhile, approximately 15 percent of all municipally supplied water leaks out of pipes before it reaches end users.

The net result of water’s scarcity, energy intensity and leaking infrastructure is that the cost of water is likely to increase significantly in the coming years. Sextus Julius Frontinus, master of the Roman aqueduct system and author of De Aquaeducta, made the comment that “Water should be as free as air and always supplied by government.” The convergence of climate change, aging infrastructure, and governmental budget constraints are taking both “free” and “government” out of Frontinus’ thinking.

Monday, November 30, 2009

Public Service

From The Social Contract (1762), written by Enlightenment political theorist Jean-Jacques Rousseau (1712-1778):

As soon as public service ceases to be the chief business of the citizens, and they would rather reserve their money than with their persons, the state is not far from its fall. When it is necessary to march out to war, they pay troops and stay at home . . . In a country that is truly free, the citizens do everything with their own arms and nothing by means of money; so far from paying to be exempted from their duties, they would even pay for the privilege of fulfilling them themselves. I am for taking the common view: I hold enforced labor to be less opposed to liberty than taxes.

Rousseau's robust notion of citizenship, and his wary view of markets, may seem distant from the assumptions of our day. We are inclined to view the state, with its binding laws and regulations, as the realm of force; and to see the market, with its voluntary exchanges, as the realm of freedom. Rousseau would say this has things backward - at least where civic goods are concerned.

Sunday, November 29, 2009

"You don't learn anything from talking to sameness."

Judith Jamison is the artistic director of the Alvin Ailey American Dance Theater. She offers the following advice:

When you're dealing with numbers, see the people behind those numbers, and understand that they're just like you. You just happen to have a college degree and you could be very, very smart. But they might be smart in other ways that you aren't. And give people full credit for being who they are. It's so important to remember that.

And it starts with, "Hello, how are you?" and listening.

Saturday, November 28, 2009

Jump Point

Author Tom Hayes explains a "Jump Point as a change in the environment so startling that we have no choice but to regroup and rethink the future." The economic history of the world is punctuated by Jump Points. The tricky part has been identifying them at the right time. Very often, we mistake the arrival of a stunning new invention for the Jump Point: we get mesmerized by a new innovation, think the world has changed the day a new technology leaves the lab. But that is rarely, if ever, the case. That is not the Jump Point.

Instead, technology revolution is a fitful process ("Technology revolutions always take longer than predicted, but arrive faster than anticipated."). New technologies take time to be absorbed and diffused. We are a curious species; it is human nature to tinker, and experiment, test, and play. And most inventions improve with applications, adoption, and time. Therefore, most Jump Points occur well after the enthusiasm settles and the parade has passed.

In his book, Jump Point: Now Network Culture is Revolutionizing Business (2009), Hayes writes the following:
  • The convergence of personal computing and communications has created a worldwide network that allows people to connect directly to each other without middlemen, brokers, or arbiters between them. This is a lousy time to be a middleman, broker, or arbiter.
  • Consumers, overwhelmed by information overload, struggle to reconcile the many competing claims for their attention in daily life. This is a bad time to be an attention-stealing interruption advertiser.
  • People don't want anyone dictating when they do something, buy something, or watching something. This is an unfortunate time to be in an inflexible or time bounded business.
  • People don't want restrictions on how they use, enjoy, manipulate, store, or share their property. Trying to command and control information rights is a loosing proposition.
  • Consumers are acutely aware of their power to change the equations, flip the ratios, and obliterate the old market rules. Provide mechanisms for customer influence and expression . . . or go home.
  • People don't trust their governments, large corporations, or political parties; they have an inherent trust in one another and in authenticity. This is a dangerous time to be untrustworthy, shifty, or phony - especially if you are a large, established institution.

Friday, November 27, 2009

The Age Of Nonlinearity

Engineers are linear thinkers – the systematic process of thought following known cycles or step-by-step progression where a response to a step must be elicited before another step is taken. This “inside-the-box” thinking typically involves sequential ordering of concepts within a framework of fixed constraints. It is a process with low acceptance of ambiguity and a low tolerance for failure.

Historically, reading has been the most linear of activities. People of the Western world learn to read left to right, up to down. People in the East are taught to read right to left, down to up. Either way, from our earliest days forward we have been trained to process information sequentially, from start to finish, rudimentary to complex, from point A to B to C, and so on. Essentially, we have been taught to be linear thinkers.

Consider the ideas of Tom Hayes in Jump Point: How Network Culture is Revolutionizing Business (2008):

But our information world and format is no longer linear. It is increasingly marked by hyperlinks. Hyperlinks, or simply links, are navigational elements within electronic documents that take the user form one reference or document to another. The journey of discovery from one point to another one can take us in an infinite number of directions in pursuit of a train of thought or the right information. There is an element of discovery and serendipity to the use of links. You never know where the process of exploration will take you: you may be one click away from adventure.


Since the arrival of the hyperlinked Internet, people increasingly are becoming nonlinear thinkers. Our brains have been retrained to find information and process it differently that those of the hunt and peck, assembly-line, Dewey Decimal System past. Naturally, this reprogramming shapes and informs our communications, our work, and even our world view. Instead of drilling down a single path, Web users today are more likely to let the information lead where it will. And with an array of tools to make or “tag” their paths, we are prone to set ourselves free to stumble upon new things, new ideas, and never-before-imagined places. And, we are more likely to share our findings with others, as well as take counsel of our fellow travelers. The linear world of engineering was about “search” – the future world of nonlinear engineering will be about “discovery.”


And there are broader cultural implications to this nonlinearity as well, such as a greater acceptance of ambiguity and a tolerance for failure. The social acceptance of experimentation and failure, as well as a belief in redemption after failure. That mindset comes from a core belief that trial and error – discovery – is important, and that trying is more important than dreaming. This is nonlinear thinking at work. The message for engineering – the coming market will not punish you for experimenting and failing; in fact, the opposite is true. New customers will reward your innovation and willingness to be nonlinear.

Go To Where The Jobs Are


“Go west young man and grow with the country.” The modern version of the Horace Greely (it was really John B.L. Soule of the Terre Haute Express – but no matter) recommendation might be “Go West, or East, or North, or South young men and women and grow with the world.” With unemployment at 10.2 percent and climbing compared to welcoming job markets in China, Dubai, Brazil, and Singapore – individuals are leaving the U.S for better opportunities overseas. At MIT’s Sloan School of Management, 24 percent of the 2009 graduates found jobs overseas, a jump from 19 percent last year.

Jobs don’t just come to you. More often, you have to go to the job. Too many Americans resist that truth and instead wait for their dream jobs to come knocking at their door. They treat the idea of living in a certain city or state or country as an entitlement that they’re not willing to surrender.

As Empires go, we have become a stationary bunch. The British Empire, after all, was based on people trying to get away from Britain. For a long time the only universal was to be English - you had British citizens in places like Hong Kong, India, and Africa extending the influence of British commerce, international relations, and culture. They are a country open to the sea which takes you everywhere - and they took advantage of their opportunities. At heart, the English are an island people of international merchants, traders, travelers, buccaneers, and pirates - international spirits.

Both individuals and the country are being left behind - research how many Chinese citizens are living in Africa exploring the many opportunities it provides. In some respects we have lost our “get-up-and-go” genetic makeup – where the native-born could learn from immigrants, foreign students, and anyone else who has the moxie to leave behind family, friends, and the familiar in search of a better life. Go far, stay long, see deep.

Thursday, November 26, 2009

Better Citizens


We have taken what "The Greatest Generation” build and gave us and we have become the “Grasshopper Generation.” Consumers of almost everything in our path – consumers of our economic future, consumers of our international goodwill, consumers of our energy resources, consumers of our educational heritage, consumers of the environment, consumers of our national infrastructure – consuming today without any regard for the future.

We also consume the public space where many solutions to our problems rest – from health care reform to improvements in the education system to climate change. We blame others – leaders, institutions, political parties – the current paralysis is never the fault of the “Grasshopper Generation.” But think about it – the “Grasshopper Generation” has allowed money in politics to become so pervasive that lawmakers spend most of their time raising it and selling their souls. We allowed the gerrymandering of political districts. We consume the cable TV culture of shouting and segregation. We consume campaigns versus governing. We allowed a globalized business structure and culture to have no apparent home or local interests – which rarely speak out on health care reform, education problems or our financial health and future.

As Tom Friedman pointed out in The New York Times – the “Grasshopper Generation” comes up with the same answers – we need better leaders. But what is often painfully missed is that the first step in developing and finding better leaders is for the “Grasshopper Generation” to become better citizens. We have numerous problems and issues that will require thoughtful national debate and discussions – this collective conversation is the very heart of good citizenship. Health care reform is but one example – where 80% of our cost problems are probably in 20% of our population. Should we discuss the 85-year old grandmother with liver cancer who is in ICU at $10,000 per day - that we can keep alive three additional months for another $2,000,000? Is it a hard, painful, and emotional process and discussion? Is it the toxic blend and mixture of politics, medicine, religion, and economics? Yes - - but absolutely necessary – with the firm understanding that the first steps in this discussion starts as civil conversation among concerned and informed citizens.

The solutions to our problems will be painful and will require real sacrifice from all our citizenry. It will require the “Grasshopper Generation” to become better citizens – better educated, informed, willing to sacrifice, and thoughtful – with an orientation toward pragmatic and long term ideas and solutions. It may take 10 million people marching in Washington DC on a cold Saturday in March. Not as an angry mob in search of people and places to fix blame on, but as silent and concerned citizens who understand that this is our fault and our future. That all the solutions have the same path – taking more responsibility and becoming better citizens.

Wednesday, November 25, 2009

Dangerously Out Of Scale

The debt economy – where the top of the pyramid has national debt now topping $12 trillion. The cost of servicing that debt is expected to exceed $700 billion a year in 2019, up from $202 billion this year. The surge in borrowing over the last year or two is widely judged to have been a necessary response to the last financial crisis and deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too high to postpone.

According to The Economist – thinking about the crisis and potential solutions extends to the military. Students at National Defense University in Washington DC, were recently given a model of the economy and told to fix the budget. To get the federal debt down, they jacked up taxes and slashed spending. The economy promptly tanked, sending the debt to higher levels than before. The lesson: “You’ll never get re-elected and you do more harm than good,” concluded Eric Bee, an air force colonel who took part in the exercise.

The debt economy has no exceptions – everyone, from homeowners, private equity investors, our largest bankers – have taken on enormous amounts of debt. The sub-prime debt crisis highlights what Charles Dickens said about credit, “Credit is a system whereby a person who cannot pay gets another person who cannot pay to guarantee that he can pay.” Debt did not get dangerously out of scale because the system was broken. It got out of scale, in part, because the system worked.

As The New Yorker pointed out in the November 23, 2009 issue:

The government doesn’t make people go into debt, of course. It just nudges them in that direction. Individuals are able to write off all their mortgage interest, up to a million dollars, and companies can write off all the interest on their debt, but not things like dividend payments. This gives the system what economist calls a “debt bias.” It encourages people to make smaller down payments and to borrow more money than they otherwise would, and to tie up more of their wealth in housing than in other investments. Likewise, the system skews the decisions that companies make about how to fund themselves. Companies can raise money by reinvesting profits, raising equity (selling shares), or borrowing. But only when they borrow do they get the benefit of a “tax shield.” Jason Furman, of the National Economic Council, has estimated that tax breaks make corporate debt cheaper than corporate equity. So it’s not surprising that many companies prefer to pile on leverage.

“The lack of money is the root of all evil” – and using the tax code to formulate public policy (i.e., support development and home ownership) and modify economic behavior probably goes a long way in supporting Mr. Twain’s observation. The hurdles are both political and psychological – tax breaks have been around for a long time.

Tuesday, November 24, 2009

"All models are false, . . .


. . . but some are useful.” The famous quote from George Box, a pioneer in quality control and time series analysis, perfectly sums the risks associated with advanced analytics and decision modeling/automation. The sub-prime mess is an example of the misadventures in modeling. Where financial models were seen, not as tools, but as answers. Where individual mortgages were like grains of sand – and studying the individual grains under the microscope didn’t give a clue as to what was going on in the whole sand pile. Where small changes in individual grains of sand can trigger huge and dynamic changes in the overall pile. Where complex systems tend to become more complex as time goes on – the systems never get simpler.

Modeling and decision science is a delicate balance of the core subject matter and material – combined and blended with deduction, insight, and inference. It is having the ability to recognize the difference between too simple and simply wrong. In the November 2009 issue of Harvard Business Review, Thomas Davenport outlines his thought on balancing decision tools with human intuition in the article entitled, “Make Better Decisions”:

Warn managers not to build into their business analytical models they don’t understand. This means, of course, that to be effective, managers must increasingly be numerate with analytics. At as the Yale economist Robert Shiller told the McKinsey Quarterly in April 2009, “You have to be a quantitative person if you’re managing a company. The quantitative details really matter.” Make assumptions clear. Every model has assumptions behind it, such as “Housing prices will continue to rise for the foreseeable future” or “Loan charge-off levels will remain similar to those of the past so years.” (Both these assumptions, of course, have recently been discredited.) Knowing what the assumptions are makes it possible to anticipate when models are no longer a guide to effective decisions.

Practice “model management,” which keeps track of the models being used within an organization and monitors how well they are working to analyze and predict selected variables. Capital One, an early adopter, has many analytical models in place to support marketing and operations. Finally, cultivate human backups. Automated decision systems are often used to replace human decision makers – but you lose those people at your peril. It takes an expert human being to revise decision criteria over time or know when an automated algorithm no longer works.

Monday, November 23, 2009

The Year 2020


You have two ways to increase the supply of food – find new fields to plant or invent ways to multiply what existing ones yield. The nations of the Persian Gulf are likely to see their populations increase by 50 percent by 2030, and already import 60 percent of their food. Many such countries, like Saudi Arabia understand the limitations of increasing agricultural production in desert geography. The Saudis see the same statistics as the rest of the world. Between now and 2050 the world’s population will rise by a third, but demand for agricultural goods will rise by 70 percent and demand for meat will double. Increasingly they are looking to the third world, notably Africa, snapping up land. The cold calculus is that Africa has the land, Africa has the water, but unfortunately, they don’t have the system or sometimes the financing to complete large-scale agricultural projects.

“Blood in the street” investing has come to the sleepy agricultural sector. Both increasing biofuel production and demand coupled with poor harvests in 2006 and 2007 illustrate the dangers and perils of food shortages and commodity hyperinflation – especially when the poor in the developing world spend between 50 and 80 percent of their income on food. But risk and danger always breed opportunity – investment banking firms like BlackRock and Goldman Sachs are showing increased interest in overseas agricultural development.

In the November 22, 2009 issue of The New York Times Magazine, in the article “Agro-Imperialism” – author Andrew Rice addresses what a Thomas Malthus like Year 2020 might look like:

“Beware of 2020 and beyond, because we think there could be genuine food shortages by that period,” Susan Payne, the chief executive of Emergency Asset Management, told the audience during a talk on Africa’s agricultural potential. She showed a series of slides citing chilling statistics: grain stocks are at their lowest levels in 60 years; there were food riots in 15 countries in 2008; global warming is turning arable land into desert; freshwater is dwindling and China is draining its reserves; and the really big problem that contributes to all the others – the world’s population is growing by 80 million hungry people a year. The United Nations Food and Agriculture Organization estimates that in order to feed the world’s projected population in 2050 – some nine billion people – agricultural production needs to increase by an annual average of one percent. The means adding around 23 million tons of cereals to the world’s food supply next year, a little less than the total production of Australia in 2008.

“Africa is the final frontier,” Payne told me after the conference. “It’s the one continent that remains relatively unexploited.” Emergent’s African Agricultural Land Fund, started last year, is investing several hundred million dollars into commercial farms around the continent. Africa may be known for decrepit infrastructure and corrupt governments – problems that are being steadily alleviated, Payne argues – but land and labor come so cheaply there that she calculates the risks are worthwhile.
Additional information on Emergency Asset Management - http://www.eaml.net/ and the Emergent African Agricultural Land Fund - http://www.eaml.net/


Sunday, November 22, 2009

Societal - Information - Technology Systems


The computer science community is talking about 2010 as the birth year of "Societal - Information - Technology Systems" - known as SIS. The world economy and civilization have evolved into a complex grid of networks. From the transportation network to the telephone network to your local electric grid - large, complex networks and systems marked by the same similar characteristics. The big three traits are waste, inefficiency, and stupidity. For example, utilities lose more than 50% of water supplies around the world because of leaking infrastructure. In the United States alone, congested roads cost billions of dollars a year in lost work hours and wasted fuel. The inefficiencies hit hard at key sustainability issues - if the U.S. power grid were only 5% more efficient, this would eliminate greenhouse gas emissions equivalent to those of 53 million cars.

Waste and inefficiency are tightly linked to system stupidity. The fixed network is not intelligent: roads, power grids, and water distribution systems are essentially networks of dumb pipes. Making these networks smarter is viewed as a means to increase overall system efficiencies.

Technology is the driver behind this dynamic process. The Internet has been about connecting people - but what is needed is a greater emphasis and strategic vision on connecting things. Thanks to Moore's Law (a doubling of capacity every 18 months or so) - chips, sensors, and radio devices have become so small and cheap that they can be embedded virtually anywhere. Today, two-thirds of new products already come with some electronics built in. By 2017 there could be 7 trillion wirelessly connected devices and objects - about 1,000 per person. Sensors and chips will produce huge amounts of data. And IT systems are becoming powerful enough to analyze them in real time and predict how things will evolve. IBM has developed a technology it calls "stream computing." Machines using it can analyze data streams from hundreds of sources, such as surveillance cameras and Wall Street trading desks, summarize the results and make decisions.

Not strictly limited to infrastructure, SIS is also applicable to environmental projects. One example is the SmartBay project at Galway Bay in Ireland. The system draws information from sensors attached to buoys and weather gauges and from text messages from boaters about potentially dangerous floating objects. The system was developed by the Marine Institute (http://www.marine.ie/Home/) and Dublin based TechWorks Marine (http://www.techworks.ie/). The information the new buoys provide, which previously could only be collected by going to sea, will be beamed by radio to the Marine Institute's headquarters at Oranmore. There it will be analyzed and used to guide coastal zone management plans, advice for commercial fisherman, fish farmers, and water users of all kinds.

Look for SIS applications and a movement toward automated sensing, real-time measurement, data integration, modeled decision support, value pricing, and strategic risk management. Advanced water information management could include supply chain optimization, leak management, "smart levees", weather event assimilation, and pumping/energy management.
A video of the SmartBay application can be viewed at -

Saturday, November 21, 2009

Industrial Policy


The words "Industrial Policy" harken back to an era of Lenin and Trotsky. But with climbing unemployment, 10% of all households at risk for foreclosure, an inefficient educational system, eroding pension security - if not "Industrial Policy", then what is needed? America's political system, especially as it has evolved in recent times, almost guarantees an absence of strategic thinking at the federal level. The stark truth is that the United States has no long-term economic strategy - no coherent set of policies to ensure competitiveness over the long haul.

Michael Porter is the Bishop William Lawrence University Professor of the Harvard Business School. Porter is one of the leading authorities on competitive strategy and competitiveness of nations and regions. His undergraduate degree is in aerospace engineering from Princeton University. In an October 30, 2008 BusinessWeek article entitled "Why America Needs an Economic Strategy," Porter writes the following:

We need a strategy supported by the majority to secure America's economic future. Yet Americans hear the same old divisive arguments. Republicans keep repeating simplistic free-market thinking, even though the absence of all regulation makes no sense. Self-reliance is preached as if no transitional safety net is needed. Some Republicans even argue passionately that the country should have no strategy because that would be "industrial policy." Yet the real issue is not picking industry winners and losers but improving the business environment for all American companies, something we cannot do with identifying our top priorities. Overall, Republicans seem to think business can thrive without healthy social conditions.

Democrats, meanwhile, keep talking as if they want to penalize investment and economic success. They defend unions obstructing change in areas like education, cling to cumbersome regulatory approaches, and resist ways to get litigation costs for business in line with other countries. Democrats equivocate on trade in an irreversibly global economy. They seem to think social programs can be achieved only at the expense of business.

To make America competitive, we have to get beyond this thinking. Political leaders, business leaders, and civil society must begin a respectful, fact-based dialogue about our challenges. We need to focus on competitive reality, not defending past policies.

Thursday, November 19, 2009

Eight Principles of the Network

The word "network" occupies a central seat in the lexicon of contemporary language and thought. From the emergence of "social networking sites" to the "medical network" of the family physician to the crash of our company's "IT network" to the "transportation network" in your city - - the word has become firmly attached to modern culture and business.

The study of networks is a relatively new discipline or, rather, multidiscipline. It is a hybrid science, combining, among other things, mathematics, physics, engineering, biology, sociology, and economics. At its core is an understanding that we are all connected to a vast network of life. Our natural ecology is a network, the human body is a network, and each of us is part of a social network of interdependent relationships.

The eight principles of the network from Jump Point: How Network Culture is Revolutionizing Business (2008) by author Tom Hayes are as follows:
  1. Networks are made of connected "nodes."
  2. Nodes connect directly to each other.
  3. Some nodes have more connections than others.
  4. The more connected a node is, the more valuable it is.
  5. Information in a network moves like a virus, from node node.
  6. Nodes spread information according to self-interest.
  7. Big networks contain smaller networks.
  8. Networks want to grow; the bigger, the better.

Wednesday, November 18, 2009

Hypothetical Versus Reality

A father and his son are in the den one night. The son asks his father if he could explain the difference between the hypothetical and reality. The father thinks for a minute. The best place to start is with your mother. Go upstairs and ask her if she would sleep with a complete stranger for $1,000,000. The son does as instructed and goes upstairs and discusses the issue with his mother. He comes back down and informs his father that she would indeed sleep with a stranger for $1,000,000. Good the father says, go ask your sister the same question. He does and gets the very same answer – yes, she would sleep with a stranger for $1,000,000. Finally, the son demands, what does this have to do with the concept of the hypothetical versus reality? First off, the father informed his son, we have shown that the net worth of the household has just hypothetically increased by $2,000,000. The son agreed – what about reality? The father looked at this son – the reality is we just found out we have two hookers in the house.

Life is a constant struggle and movement from the hypothetical to reality. It starts at the moment of birth with the understanding that anything and everything is hypothetically possible. Over a lifetime, the hypothetical gives way to reality. The seven-year old just starting to play baseball enjoys the hypothetical opportunity to play in the major leagues. For the vast majority, the reality of ability, interest, and circumstance changes one’s outlook from 100% hypothetical to 100% reality. Nothing is more hypothetical than birth and nothing is more real than death. What you end up with is a gradual movement from one to the other.

Engineering follows the same path, from the theory of the hypothetical to the reality of the practical. The first semester of engineering coursework is 100% hypothetical – mathematics, physics, chemistry, biology, etc. – the hypothetical foundations of engineering. Gradually the coursework moves from the hypothetical to reality. The development of a practicing engineer parallels the same path – less hypothetical and more reality. Over a 60-year career, we should probably think more about this imbalance – where more reality is needed earlier and more hypothetical is needed later. This would especially be true in industries and fields with rapidly changing technology – where retraining and constant introduction of the hypothetical, theory, and new knowledge are critical drivers of success. Changing demographics may also dictate the need for additional “theory training” as the date with 100% reality gets pushed farther into the future.

Tuesday, November 17, 2009

Decisions, Decisions

One of the key tasks of a manager is to settle six important questions within the context of decision making:
  • What decision needs to be made?
  • When does it have to be made?
  • Who will decide?
  • Who will need to be consulted prior to making the decision?
  • Who will ratify or veto the decision?
  • Who will need to be informed of the decision?

If good decision-making appears complicated, that is because it is and has been for a long time. Ideally, decision-making should occur in the middle ground, between reliance on technical knowledge on the one hand, and on the bruises one has received from having tried to implement and apply such knowledge on the other. To make a decision, if you can't find people with both qualities, you should aim to get the best possible mix of participants available. Ultimately, you are attempting to have the decision worked out and reached at the lowest competent level.

Monday, November 16, 2009

It's the water board stupid!

In the November 13, 2009 issue of Time, writer Stephan Faris addresses climate change with his article, "What If The Water Wins? Holland, master of resisting the sea, may shift strategies in a warmer, wetter world." The article addresses both Dutch technology and master planning. The technology discussion outlines Dutch advances in dams, dikes, locks and gates - engineering the grand barrier. The master planning component recognizes that taller dikes just magnify the consequences of failure. Thus, the Dutch are experimenting with surrendering turf to the water altogether, purposely flooding some areas to protect more vulnerable zones downstream.

But the most telling and important information comes at the end of the article in which Faris notes:

Yet the secret to the Netherlands' success isn't the strength of its barriers. "It looks like science and engineering," says Piet Dircke, an urban-water-management consultant at Arcadis. "But the main lesson to learn from the Dutch is funding." The country is divided into water boards, elected bodies with the ability to levy taxes whose sole responsibility is to provide safety from the waves. First formed in the Middle Ages, the water boards are the country's oldest form of representational government and a major factor in its flood-proofing prowess. "The value of a dike is only seen when it fails, " says Huizinga [Vice Minister for Transport, Public Works and Water Management]. "The water boards mean that there is always the money to maintain them."

That's the significance of Dutch history for the talks in Copenhagen, where the allocation of adaptation funding for the poorest countries is shaping up to be a major point of contention. While the Netherlands can afford to keep its citizens dry, countries like Bangladesh - equally threatened by global warming - simply can't. The World Bank has estimated an annual cost to developing countries of $75 billion to $100 billion to adapt to rising sea levels. But rich countries have been reluctant to commit the funds. In the run up to the talks, the Dutch were among the first to stress the importance of adaption. They, more than anybody else, should know what that will take.

Sunday, November 15, 2009

Faceless and Humble


In the November 23, 2009 edition of Fortune, Steve Jobs of Apple was crowned the CEO of the Decade. The article summarizes Jobs and his legend with the following paragraph:

He is the rare businessman with legitimate worldwide celebrity. (His quirks and predilections are such common knowledge that they were knowingly parodied on an episode of The Simpsons.) He pals around with U2's Bono. Consumers who have never picked up an annual report or even a business magazine gush about his design taste, his elegant retail stores, and his outside-the-box approach to advertising. ("Think different," indeed.) It's often noted that he's a showman, a born salesman, a magician who creates a famed reality-distortion field, a tyrannical perfectionist. It's totally accurate, of course, and the descriptions contribute to his legend.

During the same week, The Economist ran an article entitled "The Cult of the Faceless Boss." Bosses that keep their heads down - the faceless CEO versus the imperial boss. The current financial crisis has produced a wave of popular fury about over-paid executives and their unaccountable ways. In this sort of climate it is not just the paranoid, but the faceless, who survive.

But the article points out that "the best ambassadors for business are the outsized figures who changed the world and who feel no need to apologise for themselves or their calling. There is no long-term comparative advantage in being forgettable." As stated in the article:

Facelessness - or at least humility - is also the height of fashion among management consultants and business gurus. Corporate headhunters are helping firms find "humble" bosses. Jim Collins one of America's most popular gurus, argues that the best chief executives ae not flamboyant visionaries but "humble, self-effacing, diligent and resolute souls." Business journalists have taken to producing glowing profiles of self-effacing and self-denying bosses such as Haruka Nishimatsu, the boss of Japan Airlines, who travels to work on the bus and pays himself less than his pilots, and Mike Eskew, the former boss of UPS, who flew coach and shares an administrative assistant with three other people. I can only be a matter of time before somebody writes "The Management Secrets of Uriah Heep": "be umble, be ever so umble."

Yet there is surely a danger of taking all this too far. A low profile is no guarantee against corporate failure, as the former bosses of two companies lauded by Mr. Collins, Fannie Mae and Circuit City, can tell you. In general, the corporate world needs its flamboyant visionaries and raging egomaniacs rather more than its humble leaders and corporate civil servants. Think of the people who have shaped the modern business landscape, and "faceless" and "humble" are not the first two words that come to mind.

Saturday, November 14, 2009

The First of Three Women


Rebecca Solnit is the author of ten books, including the recently published book, A Paradise Built in Hell: The Extraordinary Communities That Arise In Disasters (2009). In the book, Solnit surveys several disasters over roughly the last century, including the 1906 San Fransisco earthquake, the Mexico City earthquake of 1985, 9/11, and Hurricane Katrina. Her central thesis is that "disaster throws us into the temporary utopia of a transformed human nature and society, one that is bolder, freer, less attached and divided than in ordinary times."

Many engineering organizations and professional societies are reinforcing their efforts in the areas of disaster planning, and post-disaster investigations, planning, and engineering. Events such as 9/11 and Hurricane Katrina have exposed disaster planning and response efforts and issues within segments of our critical infrastructure. Clearly the engineering, construction, and technology components of this are highly important, however another critical part of disasters that engineers should understand are the social and humanistic components. Sort of the "social intelligence" understanding that engineers should have with respect to the disaster topic line.

As Solnit writes with respect to the 1906 San Fransisco earthquake - people opened their homes to strangers or simply gathered in the streets to create improvised rooming houses and cafes. What many written reports emphasize is not the hardship but almost party like atmosphere that come with having survived and then rediscovered a place in the community. The joyful aftermath of a disaster, Solnit writes, "is by its very nature unsustainable and evanescent, but like a lightening flash it illuminates ordinary life, and like lightning it sometimes shatters the old forms."

Solnit argues that evidence and research does not support what is typically seen in Hollywood disaster films. The public almost never panics en masse, let alone runes wild: People tend instead to be calm, clear headed, competent, and surprising altruistic. Indeed, ordinary citizens are not only the first but quite frequently the best responders to disasters. Official efforts can go wrong precisely because they are excessively paternalistic, militaristic, and authoritarian.

Solnit believes these ephemeral utopias raise radical possibilities for social arrangements (What white elites tend to fear more than the disaster - is the social destabilization that they believe will follow. Some of the heavy handed mixtures of racism and fear demonstrated in New Orleans after Katrina get at what Cormac McCarthy wrote in his novel The Road - ". . . in the history of the world it might be that there was more punishment than crime . . ."). But they go largely unappreciated, due in large part to the mainstream medias adherence to preconceived narratives that have more to do with Hollywood Solnit claims, than with actual events. At best, ordinary citizens are depicted as passive victims who linger in the disaster area until they are rescued by the authorities. At worst, they are seen as dangers to themselves and to each other, prone to panic, looting, and violence. Only one thing can head off chaos: swift and decisive action by the police, the military, and authorities.

Dave Eggers also ways in on disaster social networks and individual efforts. In Zeitoun (2009), Eggers tells the true story of Abdulrahman Zeitoun, the owner of New Orleans based Zeitoun A. Painting Contractor LLC., and his individual and group efforts during the aftermath of Katrina. With the aid of friends and a canoe, he was able to rescue countless people and families. He was latter arrested and jailed by New Orleans authorities on suspicion of terrorist activities. The following passage by Eggers points out some of the issues that Solnit has brought up:

In New Orleans, Zeitoun was invigorated. He and never felt such urgency and purpose. In this first day in his flooded city, he had already assisted in the rescue of five elderly residents. There was a reason, he now knew, that he had remained in the city. He had felt compelled to stay by a power beyond his own reckoning. He was needed.

Thursday, November 12, 2009

Organizational Complexity

Organizations are dealing with increasing levels of complexity. From dysfunctional management to burdensome regulations – people and organizations want to understand the impacts of complexity. The current theme of the financial sector is “too big to fail” – the complexity theme associated with some of our larger financial institutions could be “too big to manage.”

Fundamentally there are four basic types of organizational complexity. The first is the dysfunctional. Examples include the duplication of activities due to mergers or reorganizations, and ambiguous or conflicting duties. This type of complexity is simply bad. The second is designed. Complexity for the sake of competitive advantage. The supply-chain and mass-customization of Dell is an example. Complexity becomes part of the business plan. The third is inherent. The difficulty of getting the work done – like open heart surgery. The actual surgery requires time and high levels of skill, but is not complex. The logistics, planning, and insurance forms/processing – that is the complex part of the process. The fourth is imposed. Largely beyond the control of the company – events shaped by industry regulations, non-governmental organizations, and trade unions.

There are three basic strategies for dealing with complexity. The first is reduction. An example of reduction is to simplify the organizational structure to make accountability clear. Review job descriptions and job classification categories might be another. Outsourcing of non-strategic activities could also be considered.

The second is channeling complexity. Some people and groups deal better with complexity than others. You may want to direct certain activities and processes to certain people and groups. Strengthening the central planning function is an example. The central team can create templates to help the different operating units with their planning efforts and assist in preparing other materials for planning and budgeting discussions.

The third is absorbing complexity. Accept it and make it part of the business plan. Absorbing is broader and deeper than channeling – giving a much more widespread group of managers the skills and attitudes they need to work with complexity. What are needed are ambidextrous people that have the ability to keep the business ticking on a daily basis while looking for ways to expand it and improve it.

Wednesday, November 11, 2009

Leadership and the Sponge


Admiral Patrick M. Walsh is the commander of the U.S. Pacific Fleet. He is one of the youngest commanders of the U.S. Fleet in history. Admiral Walsh is a Dallas native and graduate of Jesuit College Preparatory School in north Dallas. Graduating in 1973, he excelled as a student leader, academic honors student, and athlete – clearly representing Jesuit’s theme, “Men for Others.”

The Pacific Fleet’s area of responsibility encompasses about half the Earth’s surface, stretching from the waters off the West Coast of the U.S. to the western border of India and from Antarctica to the North Pole. There are few regions as culturally, socially, economically, and geopolitically diverse as the Asian-Pacific. The 36 nations that comprise the Asia-Pacific region are home to more than 50 percent of the world’s population, 3,000 different languages, several of the world’s largest militaries and five allies with the U.S through mutual defense. Walsh is in command of five aircraft carrier strike groups, 180 ships, 1,500 aircraft, and more than 100,000 sailors, Marines, and civilians.

Admiral Walsh is a graduate of the United States Naval Academy. He attended graduate studies in the International Relations curriculum at the Fletcher School of Law and Diplomacy, Tufts University, as part of the Admiral Arthur S. Moreau Scholarship Program. Walsh graduated first in his class and received a Master of Arts in Law and Diplomacy, entered the Doctorate Program with distinction and subsequently received a Ph.D. He is representative of the new breed of high ranking military leaders – like U.S. Central Commander, General David Petraeus, who is a graduate of the United States Military Academy with a master’s degree in public administration from Princeton University and a doctorate in international relations from the Woodrow Wilson School of Public and International Affairs at Princeton.

Walsh is a naval aviator with the handle “Sponge.’ It was given to him early in his career by fellow officers because he absorbs all the extra jobs that no one wanted. The idea of “absorbing” is critical in the context of leadership. Leaders, like Walsh, must absorb a huge amount of information and insight with the goal of looking deep, focusing on the things that move and change. As Larry Page, co-founder of Google, has pointed out, “If you look at people who have high impact, they have pretty general knowledge. They don’t have a narrowly focused education.” Leaders that can absorb ideas in a holistic manner and across traditional boundaries and barriers. They have both horizontal and vertical thinking and absorption skill sets. Their absorption skills allow for thinking outside the conventional mode that results in a cognitive reframing of what is possible. Leaders like Walsh and Petraeus understand that the quality of any outcome depends on the quality of your strategic thinking. Absorptive leaders realize, “I use all the brains that I have, and all that I can borrow.” Absorptive leaders have an ability to get into listen-only mode - - where listening is about learning. Where absorptive listening never allows asking the usual questions. Both Walsh and Petraeus face an environment and world that is only revealed in quick glances – no sooner known and explained, the event has changed – the known way becomes an impasse. This results in a constant struggle for absorbing. The absorptive and strategic leader must consider all the options – not just the obvious ones – and to retain these in his or her mind. Absorptive leaders have a wide-ranging curiosity and willingness to embrace change combined with an intuitive ability to see and absorb a problem or issue in a larger context and a willingness to rejigger their organizations continually to grapple with ever shifting challenges and circumstances.