Quality and Innovation

AIG is falling. Bailouts are flying. All of the rules of business have changed, and the seismic shift is both electrifying and frightening. But there are opportunities to be embraced, and many of them are summed up in this article entitled “Why Small Companies Will Win in This Economy“. Here is my favorite part, a veritable mantra for the 2010′s:

Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage.

Thanks to Betsey Merkel (Twitter: @betseymerkel) who initially Tweeted this. And thanks to Valdis Krebs (Twitter: @valdiskrebs) without whom I wouldn’t have seen Betsey’s insightful retweets and started following her too.

I’m out in Colorado this week working with the NEON cyberinfrastructure team to put together presentation material for a big review meeting they’re having in June. It’s a challenging project, chock full of interesting and complex envisioned science experiments, elaborate engineering to design, construct and collect data from sensors scattered all over the country (and even airplanes), and the need for a high-performance interconnected software and hardware architecture to keep it together and maintain the data flow.

In short, it’s a hugely complex project – and for these presentations in June, we may only have an hour to condense all that technical information down into something understandable, well-organized, and compelling. How do we do it?

The answer: using effective storytelling. Quite randomly and serendipitously, I ran into a blog post by Chris Spagnuolo this morning (Twitter: @ChrisSpagnuolo) called “12 Things I learned from Story Time”. Apparently he went to the library recently with his 3 year old, and while listening to the story and observing the behavior of the children and the storyteller, extracted lessons for professional presentations. (I have a 3 year old too, so this post really connected with me!) Here’s a snippet of his insight into how to give a high quality presentation:

Ah, the expert mind…it always convinces us that we can’t learn from “simple” experiences. But after it was over, and I reflected a bit on Story Time, I realized that there were valuable lessons to take away from it that we can all use in our presentations. Believe it or not, librarians and others who read to children at Story Time may be some of the best presenters in the world, and we’ll never see them on TED or hear much about them (plus they have some of the toughest audiences in the world). If you really want to get your presentation game on, maybe you should start reading books to the itty-bitties at your local library.

I’ll encourage you to click through to read the 12 lessons. The suggestions complement Stephen Denning’s insights into storytelling as a leadership tool as well. Thanks for sharing, Chris.

New neuroscience research suggests that an intensive quality assurance “initiative” is launched in the human brain between the ages of 11 and 17. The March 23 issue of LiveScience reports:

When a child is born, their brain is not fully-formed, and over the first few years there’s a great proliferation of connections between cells. Scientists call this process synaptic pruning, and speculate that the brain decides which neural links to keep based on how frequently they are used. Connections that are rarely called upon are deemed superfluous and eliminated. Sometimes in adolescence, that pruning process goes awry and important connections are lost, which could lead to psychiatric disorders such as schizophrenia, the researchers think.

This could provide a model for how to effectively achieve innovation or increase innovation: plan for a period of intensive acquisition of new ideas and new signals, and then follow up with an extended period of review and pruning to filter out the ideas that retain their value for the group’s purposes. Approaching innovation specifically from the perspective of an active cycle, followed by a reflective cycle, would be supported by these conclusions from neuroscience. Social network analysis could provide a useful modeling tool to study the efficacy of this technological process.

Today around midday, Ron DuPlain (Twitter: @rduplain) asked me if I wanted to catch lunch with him and Michael Davis (Twitter: @yellowfish_md). Only thing is, I don’t know Michael Davis. Don’t worry, Ron said, he’s a cool and interesting guy and you’ll probably find out you have a lot of business and professional interests in common. Ron is a great conversationalist so I knew I would be safe – if I had nothing to say, he’d cover for me! So I tagged along.

Turns out I had a great time – Michael is indeed an interesting guy, and shared stories about his business, Yellowfish and his pursuit of a mobile lifestyle while homeschooling 3 kids – something I decided to call the “Urban Amish” way of life after I found out more about it. (Oh, and the secret codes on wine labels that can serve as quality measures.) Just listening to his perspective on things, and his ideas over lunch, I was able to get some different ideas about stuff I was working on at work.

And that’s when I got the Million Dollar Idea. Wouldn’t it be great if there was a “business dating service” for technical people? You could sign up, take the eHarmony-like survey, and every so often (as often as you said you’d like to, on your questionnaire) go out to lunch with 1, 2 or 3 randomly chosen technical people in your area with similar interests. As part of your mutual interview, you could figure out if you shared philosophies, or approaches to problem solving, or interests. It would be like Twitter, only in person, and only for an occasional lunch. If you find out you are “professionally compatible” you could choose to do business together, or refer your new contacts to people who need their services. This might also be a boon for job-seekers in a down economy.

And it doesn’t have to stop there – if you ran this kind of company, whose role was to form connections between people and set up lunch dates – you could also get sponsorships from lunch places. They might be able to give you coupons for a free coffee or appetizer with your lunch, just to bring in business. Or maybe they’d have other ideas for helping you bring more people into their lunch venues.

I’m not likely to work on this business idea myself anytime soon, but I would definitely be a customer if there was a service like this. There may actually be services like this already, but there are none here in Central Virginia that I’m aware of. However, I would be glad to support anyone who wants to start up this kind of business. (If you read this idea and end up starting a service, let me know! It would be nice to know the idea actually went somewhere.)

Andrew Grove’s political commentary today in the Washington Post (“Mr. President, Time to Rein in the Chaos”) was interesting to me not because of the opinions presented, but because of his unorthodox suggestion: successful change management can emerge when leaders deliberately allow pain, then rescue the masses once the pain has become too unbearable:

I have found that to succeed, an organization must travel through two phases: first, a period of chaotic experimentation in which intense discussion is allowed, even encouraged, by those in charge. In time, when the chaos becomes unbearable, the leadership reins in chaos with a firm hand. The first phase serves to expose the needs and options, the potential and pitfalls. The organization and its leaders learn a lot going through this phase. But frustration also builds, and eventually the cry is heard: Make a decision — any decision — but make it now. The time comes for the leadership to end the chaos and commit to a path.

We have gone through months of chaos experimenting with ways to introduce stability in our financial system. The goals were to allow the financial institutions to do their jobs and to develop confidence in them. I believe by now, the people are eager for the administration to rein in chaos. But this is not happening.

Would you, as a manager, take this kind of approach if you knew it would effect the change you wanted?

The ethical implications of this strategy are remarkable to me. First, put yourself in the frame of mind where you’re thinking about organizational change management – adopting a new software package, or reorganizing the hierarchy. Change like this is tough, and often results in mental and emotional pain as people adjust to the new state of the workplace – not physical pain, but definitely pain in the sense of its official definition. But is it appropriate to allow this pain in order to achieve benefits – both for those who have “suffered” and the organization as a whole?

I have no answers to offer – but think that this dilemma might be illuminated further by understanding the ethical standards for pain management and research that have already been explored by the medical community.

According to some researchers, it’s the end of the world as we know it – sometime this century, in fact. Economists and policy researchers have actually envisioned it coming for about three centuries, though.

The most recent tap on this subject came on March 7, 2009, when journalist and Hot, Flat, and Crowded author Thomas L. Friedman published an Op-Ed in the Washington Post, entitled “Is the Inflection Near?” He describes how the economic, financial and political systems that we have established in the world – particularly in the west – are inherently unsustainable, and that in order to achieve a truly green world, our fundamental systems for living life must shift:

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

We can’t do this anymore.

What would you think if I told you that this was actually not a new idea, and that the notions Friedman presents were determined by a simulation done over thirty-five years ago? Furthermore, what if I let you in on the fact that people have been thinking about this conundrum since the late 1700′s? It may sound outlandish, but in this case, truth is stranger than fiction.

The simulation that I refer to was done in 1972, with a model called World3 which was coded in the object-oriented Modelica environment. It’s the subject of the Club of Rome commissioned study called “The Limits to Growth” (full text is here). Although the model has received criticism for some of its assumptions, a redaction in 2002 upheld many of the outcomes of the model. In 2009, Dr. Dennis L. Meadows (who directed this research) was awarded the 25th Japan Prize from The Science and Technology Foundation of Japan. Recall that the Japanese were the ones who initially recognized Dr. W. Edwards Deming for his contributions to revitalizing the economy – decades before the Americans embraced Deming’s teachings – and spawned the quality revolution in U.S. business in the late 1970′s and 1980′s that has embossed the landscape of how we do business today. From the Japan Prize announcement:

Dr. Dennis L. Meadows served as Research Director for the project on “The Limits to Growth,” for the Club of Rome in 1972. Employing a system simulation model called “World3,” his report demonstrated that if certain limiting factors of the earth’s physical capacity – such as resources, the environment, and land – are not recognized, mankind will soon find itself in a dangerous situation. The conflict between the limited capacity of the earth and the expansion of the population accompanied by economic growth could lead to general societal collapse. The report said that to avert this outcome, it is necessary that the goals of zero population growth and zero expansion in use of materials be attained as soon as possible. The report had an enormous impact on a world that had continued to grow both economically and in population since World War II.

We also have a rich literature dating back centuries that has studied the relationships between population, environment and technology. In the 1700′s, English economist Thomas Robert Malthus studied these relationships in terms of the projected effects of uncontrolled population growth. “Before Malthus, populations were considered to be an asset. After Malthus, the concept of land acquisition to support “future large populations” became a motivating factor for war.” (citation) The 20th century Boserupian Theory of Ester Boserup, in contrast, suggests that advances in technology will drive the capacity of the world to support population. Researchers like Steinmann & Komlos (1988) have simulated the interplay between both paradigms over time and suggest that there is a cyclical dominance. (I note that references to Malthus and Boserup, let alone Meadows’ World3 model, are rarely on the lips of policymakers.)

In my opinion, it is not climate change we should be worried about per se, but the social, economic and global political system that drives human interactions with each other and with the environment. Climate change may be a symptom, but it is just a tracer for the attitudes of unbounded material growth that are contributing to the effects (if you want to learn about climate change and policy, Prometheus is a good place to start – my point is not to argue the merits of “is it” or “isn’t it” happening because others including Pielke, Jr. do that very well). Regarding climate change, we need to decode what the data is trying to tell us about how we’ve structured our large-scale systems of interaction with one another – rather than merely trying to control our personal “carbon footprints” or recycle more (though these may be important ingredients in the solution).

There is nothing new under the sun. Only today, the forces of production, consumption and population have metamorphosed into a crisis of sustainability – a “perfect storm” to test our ability to live and work in the limit case.

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Steinmann, Gunter & Komlos, John (1988). Population growth and economic development in the very long run: a simulation model of three revolutions. Mathematical Social Sciences, Vol. 16, No. 1, Aug 1988. 49-63 pp. Amsterdam, Netherlands.

John Hunter shared some excerpts from Warren Buffett’s 2009 Letter to Shareholders. I particularly liked this one part where he reflects on the outcomes of economic modeling and forecasting:

Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.

I’d like to amend this: Beware of geeks bearing formulas who a) can’t tell you what every part of the derivation means, b) don’t know the model’s underlying assumptions, and c) don’t know what “threats to validity” are. (And if you’re the geek in question, be able to explain how your models and forecasts work!!)

Models can be a great way to capture the dynamics of social and technical systems, and simulations can help us explore how these systems will evolve over time – but how those models are initialized, and the simplifying assumptions they use to generate results, are just as important as the answers they propose.