Here is a recent talk I gave on the use of networks to solve social and environmental problems.
Here is a recent talk I gave on the use of networks to solve social and environmental problems.
"Increasingly I believe that we can form a new social contract using the technology available to transfer increased decision making authority to the individual. Rather than "fan the fire" or fight the status quo we should use the technology to avoid the current nodes of power and explore alternative approaches at the individual level. Everyone acknowledges that the current paradigm shift in technology will have profound economic and social changes, but we should not overlook the chance to change the political system."
On Saturday September 24 I am speaking at an event for WiseTribe. I am interested in what they are doing because I think they are exploring a new form of "organization" that could be common in the future. Some of my remarks are below.
I have three interests:
2. Creativity and early childhood learning
3. Complexity science
• Entrepreneurship is a result of individual empowerment and leads to economic well being. I spend most of my time teaching people to use social entrepreneurship to solve social and environmental problems. My hope is that eventually we can drop “social” because entrepreneurship becomes so responsive to society’s problems.
• Creativity interests me because it is the basis for invention and innovation. I study it from the perspective of the young child because so many geniuses say their secret was to maintain a childlike attitude.
• Complexity is important because it brings so much insight to understanding people, organizations and networks. There are three types of problems—simple, complicated and complex. Tying your shoes is a simple problem. Building a bridge is complicated, but follow engineering, apply math and bingo a bridge is built. Complicated problems are linear and deterministic. These are the kinds of problems that AI will solve, leaving only the complex problems. Complex problems have independent variables that produce emergent features that are not caused by the variables. Stock markets and social problems are examples of complex problems. Black Swans are a subset of complex problems.
• Now if we take complexity in a simple form to understand people, organizations and networks, we see that the roles of each component changes throughout history. When we lived in caves 40,000 years ago the individual was paramount and there were no organizations or networks. Why—no trust and no sharing
• Roll forward to the Dark Ages—individuals are enslaved, kingdoms and the Catholic Church are dominant organizations and there are no meaningful networks.
• Next 1800s in the U.S.--individuals are becoming empowered after the French Revolution, many small networks such as railroads emerge and the government is emerging as a powerful force. The government increases its dominance throughout the 19th and 20th century because small disorganized networks lend themselves to dominant nodes or organizations.
• However, what we have today thanks to computing and the Internet is large, well organized and connected networks. In this environment what network science tells us is that we no longer need large nodes like government. When networks are organized, information exchange is easy and we no longer need large organizations like universities or governments to store and organize information.
• Now we could talk about how to redefine government or the modern university, but the more interesting question to me is how do we bring about change through the power of the networked individual. Stanford Social Innovation Review has a very interesting article in which they discuss the new concept of emergent strategy. Emergent strategy, as opposed to the traditional strategy concepts of Michael Porter, focuses on an iterative approach using networked partners to solve problems. Trial and error, decentralized exploration, solid evaluation at every step, transparent reporting—these are the features of emergent strategy, 21st century organizations and movements. In fact this has always been the approach of movements like Gandhi and Mandela. This approach based on emergent strategy has also been embraced by the Rockefeller Foundation, one of the most accomplished social organizations in the U.S.
• Now how does all of this apply to WiseTribe? WiseTribe is not an organization. It is a movement, of networked individuals, focused on social and environmental change. WiseTribe is an alternative to government for the management of society—for economic, social and political well being. The government is no longer the default solution. We need to iteratively explore this new power, figure out how to communicate it to more and more people and use WiseTribe(s) to solve the impossible problems that are the ones really worth solving.
Previous thoughts on related subjects are here.
You might think this would be a post on the environment, but it is actually about what might be a bigger threat to the extinction of humans. For the first time in history we now have the ability to interfere with evolution.
An article on autism helped me to see this point. The silly article was about whether we should use the word "cure" when talking about autism. The week before a student had presented the idea that the autistic might be the next evolutionary species in the human line (Neanderthal, Homo sapiens sapiens, etc.) Novel idea, particularly from an 18 year old student. I have no opinion on such a question particularly given my lack of expertise on autism. Obviously if we "cure" autism we might very well kill off the future direction of human evolution.
Such an issue is of particular interest to me when I consider morality. After a very good education in meta-ethics, I now think that much of morality should be concerned with "not doing harm to future generations". Plato did not have much to say on genetics or the environment, but these topics look very relevant today.
To think the government might have to legislate on evolution is very scary, especially when one considers that humans are not really built to survive. Cock roaches, alligators and turtles are all very old surviving species. We humans share very few characteristics with these species.
I believe that the economic prosperity of individuals can be achieved through individual empowerment and entrepreneurship. Regardless of whether one discusses poverty, equity or the wealth gap, empowerment combined with entrepreneurship provides a solution that offers the most effective approach.
I began studying individual empowerment after I concluded that government economic development programs will never address poverty effectively. The simple reason is that government programs typically focus on government objectives and not individual solutions to problems. I saw this mistake by governments all over the world when I worked at One Laptop per Child.
For individual empowerment to succeed, there are three necessary conditions that must be met for the individual:
To these conditions must be added access to information, which I explain in a TEDx talk--"The Poor Know How to Overcome Poverty".
If we look at the conditions for individual empowerment, we see that condition 1 frames a psychological requirement. Condition 2 dictates a minimum level of education (FA Hayek thought it should be through primary school). Condition 3 addresses the constraint or boundary that must be overcome.
Now if we think about applying this three-part framework to entrepreneurship for disadvantaged peoples, we might use the same types of conditions:
(We would also have to provide access to information.)
Condition 1, trust and sharing, would be required to address the worldwide problem of most entrepreneurs--finding good staff. Of course, most of the reason they cannot find the staff is that they have not learned how to trust people, which demotivates staff and prevents delegation. Education would be specialized training on identifying opportunities and execution. Condition 3 would address the limiting boundary--capital. Capital is also frequently cited by entrepreneurs around the world as one of their biggest problems.
I think that many programs fail to address the psychological issues and access to information. Much as the early Head Start programs succeeded when they realized they had to feed the children breakfast, any program to overcome poverty has to address the fundamental issues which include the participants psyche and their risk profile. And, of course, no economic program can succeed without access to information because therein lies the opportunity for the individual to help themself...which brings us back to individual empowerment.
(These conclusions are derived in part from teaching a national program for over 200 small and medium size businesses.)
SSIR has an article in the latest edition, "Is It Time to Ditch the Word “Nonprofit”?", which suggests we need a new term to replace "non-profits". An alternative approach might be to stop creating non-profit organizations. Why do we have 1.5 million such organizations in the U.S., or roughly 1 for every 4 for-profits?
The obvious solution is to convert non-profits to social entrepreneurship. This was not an alternative considered in the SSIR article. Of course, the writer has a startup that raises capital online for non-profits. Except for some human rights issues, I think all the UN Sustainable Development Goals could be achieved by entrepreneurship.
To quote a saying I like, "non-profit is a tax status and not a mindset". Your social entrepreneurship venture can be a non-profit, although I would not recommend it. There is better capital access in a for-profit business model and business approaches are a much faster way to solve social problems. The more important issue is to make more business people realize their for-profit models can be used to address social problems. That would be a better article from SSIR than an article on the terminology of non-profits.
I will be giving a talk (with an exercise) on "Validating the Idea" for StartUP FIU on Thursday, June 16 at 615 pm at the MARC Pavilion on the Doral campus. This talk will be a good example of the content that we will be giving to teams in the incubator program starting in September. To apply to the incubator, please go to the StartUP FIU website.
I am the Director of StartUP FIU and the strategy is described in this Miami Herald article.
One of the great things about Miami is the unique and insightful comments of the foreigners that live there. This morning a very successful Mexican businessman told me he thought Donald Trump should announce the lovely Kim Kardashian as his Vice Presidential running mate. His reasoning was as follows:
To this very compelling logic I could only add one point. Whenever Presidents blunder and get into situations bad for their re-election, a President frequently creates a situation to distract the attention of the American voter. With Ms. Kardashian as VP, the opportunities to distract the American voter are almost endless.
In the early years of this blog there were many funny posts and cartoons. This one on HUTM is probably the most popular. I would not say that we are returning to comical posts here at SF, particularly making fun of such a serious subject as U.S. Presidential elections, but it is tempting :-)
Photo credit: Twitter.com
If you click on the link of Ms. Kardashian, probably best not to do it in the office.
A few things I find interesting.
In the last few months various initiatives at MIT have signaled a change in approach at that university toward environmental problems. (I am not sure this is an institutional view and might just be the view of various groups within MIT.) No longer is there time for long term solutions and changing human behavior. Problems must be solved now before it is too late. Other organizations I am sure share this proactive approach which goes well beyond mere conservation.
A story on Medium, "How an Army of Ocean Farmers Are Starting an Economic Revolution", describes a new way to do ocean farming that immediately reduces environmental issues, but provides almost a balanced diet from the ocean. A point that did not occur to me until I read the article is that all life began in the ocean. Therefore the ocean has the ability to provide all the nutrients to keep us alive. Land-based alternative sources of nutrients required less energy so early man moved away from the ocean as a principal food source. Scaling may have also been an issue in an ocean food supply. As the article shows, the ocean can be a more environmentally friendly, highly productive food source with modern technology. We may have to go back to our origins to survive.
A recent post, "The Business Model to Downsize Government", talked about how the private sector could lead social change. I wanted to come back to this theme when I had more evidence than some research from HBS. I now have several confirmations that show that Tulane University was the local leader in rebuilding New Orleans after Hurricane Wilma. Local government was apparently so corrupt and inept that a group of people, including the leadership at Tulane, took into their own hands to plan and execute a recovery.
Perhaps we have a data point where the private sector addressed and solved a large, complex social problem.
Also, interesting to note that one of the multiple networks of Tulane University (the Trustees) engaged in the project and then energized the other networks to support. Successful organizations have multiple effective networks, but it only takes one network to capture the attention of the other networks and bring to bear the full resources of the organization.A reader wrote to correct me. The hurricane was Katrina.
I continue to believe that we are in the early stages to downsize government. I believe that the private sector can take over many services and provide comparable or better services at a fair price. Better technology and communications infrastructure make this possible. Prominent examples to support my view include Uber, Airbnb and Bitcoin.
The problem is that the private sector and individuals need to take the initiative because the government will never willingly reduce its scope. In a reduced government model who might be the advocates for new positions and approaches. An article from HBS, "Do CEO Activists Make a Difference? Evidence from a Field Experiment" by Aaron K Chatterji and Michael W. Toffel, shows that business leaders might fill this role. The article states:
"CEOs can sway public opinion, and potentially to the same extent as prominent politicians. Moreover, Cook's CEO activism increased consumer intentions to purchase Apple products, especially among proponents of same-sex marriage."
Perhaps if more CEOs shared their opinions on social issues we could accelerate change and save the histrionics of the current political era. Might even get a sales increase from thoughtful positions.
Many people believe that we are at or approaching another technology revolution or paradigm shift similar to the steam engine or the transistor. Candidates for the technology to mark the next paradigm shift are artificial intelligence (AI), Internet-of-Things (IOT), nanotechnology or perhaps a less publicized technology.
The concept of a paradigm shift was first introduced by Immanuel Kant, further developed by Thomas Kuhn and recently explored in detail by Carlota Perez. Perez has done much analysis of the cycle of a paradigm shift, where the last stage is the widespread introduction of the technology in many applications. At this stage the technology risk is lower and the greatest amounts of capital are attracted and invested.
Yesterday Lyft, the car sharing service, announced a $500 million investment from General Motors. The blog AVC, where the principals are investors in Lyft, announced that the money is to "develop a network of self-driving cars". I think this Lyft investment will be looked back on as the first big investment in Perez's last stage of a paradigm shift to AI everywhere.
(For more reading on Carlota Perez, an excellent starting point is her paper: FINANCE AND TECHNICAL CHANGE: A NEO-SCHUMPETERIAN PERSPECTIVE .)
On the off chance that you are pondering your own sanity over a more leisurely holiday period, I would like to tell you that you are not alone in considering such matters. I have started a new book, "Genius At Play: The Curious Mind of John Horton Conway" by Siobhan Roberts.
This is a great book for holiday reading if you enjoy:
Don't be afraid. Very few equations. Excerpt follows.
"So I had this great idea of using the notion of “double parallax” to see 4 dimensions. Your left eye’s picture and your right eye’s picture theoretically could differ not only by horizontal parallax but also by vertical parallax. That makes 4 positions, which would give your eyes the input they need to see in 4 dimensions. And what generated the vertical parallax was the helmet. I made it out of a crash helmet, cut various bits off, bolted on a visor, and put these army surplus periscopes in place. One of them moved my left eye diagonally downward to the middle of my chin, and the other moved my right eye diagonally up to the middle of my forehead. The net effect was that my eyes were displaced vertically, and to rather more than the usual horizontal displacement, about twice as much."
Roberts, Siobhan (2015-07-14). Genius At Play: The Curious Mind of John Horton Conway (Kindle Locations 1246-1253). Bloomsbury Publishing. Kindle Edition.
Part of the benefit of teaching is what you learn from the students. Yesterday in class one of my students made what I thought was an interesting observation. More and more companies are disrupting themselves. He said that the ability to disrupt your own company was a competitive advantage. In other words, consistently disrupting your own company is a unique input or expertise that satisfies the conditions for a competitive advantage.
For those who forget how to define a competitive advantage, the definition is below.
The expertise of disrupting oneself is similar to the expertise of designing airplanes for quick rebuilding. This airplane manufacturer can crash, rebuild and test again faster than their competitors. This expertise enables them to get to market faster. The self-disruptor is constantly identifying a smaller feature set that satisfies an unserved portion of the market. The ability to see the unserved need and match it with a feature set repeatedly becomes a competitive advantage.
The more I think about this idea the more I like it. Imagine that you are running a food company. It might be easier to identify new products looking for ways to disrupt existing products rather than the more traditional ways used in the food industry.
One of the most challenging issues in corporate management is the training, development and support of employees. The current environment increases the challenges for the reasons listed below.
In considering the development of a new approach to corporate staff development and support, four factors need to be considered.
Corporate Strategic Goals and Objectives
I am sure most F500 corporate CEOs are confident that the company strategy is well articulated. Now imagine that we are onboarding a graphic designer contractor to a project. Imagine the contractor is from Tajikistan, a Moslem woman and English is her fourth language. Now how confident are we about the clarity of the strategy given the social, cultural and language issues? How confident are we that our information and support systems have been designed to recognize the particular needs of this woman contractor?
Since the 2008 financial crisis, U.S. federal regulators have scrutinized large corporations. Scrutiny with respect to risk exposures increased after the Snowden affair of 2014. Such events of extreme consequence will probably increase. Therefore, it becomes incumbent upon corporations to keep their staff abreast of regulatory requirements but also the philosophy and concepts underlying the regulation. I hope the woman contractor from Tajikistan is familiar with, for example, FCPA regulations.
The pace and scope of change has increased as computing power has increased, whether we examine the actual change or the pace at which new information circulates in world markets through informal communication systems (such as Twitter or WhatsApp). This complexity strains employee’s ability to stay current and understand new issues sufficiently to develop proactive strategies.
Standards for Software, etc
Employees and third party workers all over the world have become accustomed to beautiful interfaces for a large feature set of necessary information all on their phone. Formats include You Tube videos, Slideshare presentations, e-books, PDFs, MOOCs and 100 other formats and delivery mechanisms. On any subject you can get information in the format you prefer. Few corporations have yet reached this level on proprietary applications let alone their information archives (if they even exist).
Next post I will talk about the solution.
Today the AVC blog has a story about their portfolio company Kickstarter joining President Obama and the UN to fund raise for Middle East refugee relief. This is an interesting "partnership" for several reasons:
Since WW II corporations in the U.S. have gone through several "periods" in which the nature of the corporation was redefined. First we had simple companies that produced mostly industrial products and the bare consumer necessities.
The first noteworthy change was the conglomerate period in the 1960s where acquisitions of any kind added value. High PE (price-earnings multiple) companies purchased low PE companies but the added earnings plus cost savings were erroneously valued by the market at the higher PE ratio.
Then in the 1980s the first private equity firms appeared to do LBOs (leveraged buyouts). In the early days the PE firms were able to buy undervalued companies, strip out and sell unnecessary assets and earn a nice profit selling the remaining company.
As the undervalued assets disappeared, the private equity firms switched to doing rollups. Buy a platform company in an industry and then buy multiple companies in the same industry. This strategy produced scale, economies of scale and administrative cost savings.
Today we see a trend toward companies themselves (with no help from Wall Street) outsourcing operations to reduce costs and focus on the areas that are critical to creating value for the customer. More on this theme in this article from Danielmiessler.Com, "The Future of Renting vs. Buying".
What all of these examples make clear is that the concept of a corporation changes to address the opportunities to extract additional value. As Ronald Coase made clear in his Nobel Prize winning work, corporations are formed as a means to reduce (transaction) costs. While this logic was originally applied to understand integration efforts in corporations, starting with the LBO phenomenon we see corporations basically decoupling functions and assets to lower costs. This trend toward decoupling will only accelerate in the years ahead as we become comfortable with using IT to manage and control a wider and wider range of remote third party functions.
NYU Professor Aswath Damodaran is a leading academic who specializes in the valuation of stocks, companies, goats and any other asset that is not an option. The Professor's blog, Musings on Markets, is a pleasure to read, very well reasoned and very educational for those interested in things financial.
Recently the Professor wrote an article, "Beijing Blunders: Bull in a China Shop!". He begins the article by discussing how it is not trivial for him to criticize China. China has the assets and wherewithal to significantly disrupt the professor's life. I commend the professor for writing the article in which he pulled no punches. More professors should consider such articles if and when warranted.
In eight years of blogging I rarely refer to a person as "Professor", although I frequently reference academics. It is a sign of my continuing respect for Professor Damodaran.
Stanford Business has a new article out this week, "Exploring the Ethics Behind Self-Driving Cars". It is a great article if you teach ethics in an academic setting, but the more important point is to put us all on notice. There are many new issues we need to address as artificial intelligence is added to our lives.
The article frames one conundrum. Should the car be programmed to protect your life or should it also consider the lives of pedestrians and people in other cars. Personally I think we should separate the car from the software. I can buy my car from BMW but the AI software comes from Google or Apple or MIT Automotive. Yes, there may be some issues similar to using Windows on so many different computers, but I could pick the moral position I want. No General Motors ethics for me. (BTW, whose software would you trust more--General Motors or Google or Apple)
By chance I talked to some industry people on this topic last week. They say that their analysis shows that driverless cars will have fewer accidents than human drivers. Maybe, as soon as we eliminate all human drivers we will not have so many ethical questions and the professors at Stanford can go back to thinking about Resource-based Theory.