The meltdown is my fault

Joe Rightwing is still writing to newspapers, trying to blame the financial meltdown on the government.  Like many of his fellow letter writers, Joe condemns the 1977 Community Reinvestment Act, which pressured lenders to help low-income people buy houses, as a market distortion.  Without the CRA, Joe claims, the free market would have kept the economy as level as the Bonneville salt flats. 

This is the height of silliness, for many reasons.  First, the CRA did not force banks to give $300,000 mortgages to people who could only repay $100,000 loans.  What’s that you say, Joe? There are no more $100,000 houses? Tell ya what: The government never prevented builders from erecting cheap houses.  Builders don’t like to build them because they’re less profitable.  That’s the free market at work.

I mean, really, Joe, this is the kind of “devil made me do it” excuse we wouldn’t accept from a six-year-old.

Second, the economy is cyclical whether it’s regulated or not.

Third, the Enron scandal was a wake-up call, and Joe, you didn’t wake up, didn’t even stir an eyelash.  Six years later, Lehmann Brothers is gone too.  Joe, now that you’ve been smacked on both sides of your head, smell the coffee: The free market is good, but people abuse the free market.

Mortgage brokers knowingly sold loans to unqualified buyers. (Economists call this “adverse selection.”) Middlemen securitized bundles of loans, could not even begin to measure the risk of a bundle (nor, therefore, its value), pulled a value out of where the sun don’t shine, and sold it to Lehmann Bros., who, forgetting the business cycle, bought the whole mess, lock, stock and barrel.  If this ain’t abuse, beat me with a stick.

You don’t think regulation is needed, Joe? I quote Joel Bakan: "No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons… should be left free to govern themselves."

Joe, I’m sorry if I implied it’s only you whose been hit on the head.  We’ve both been smacked.  In fact, it was only a matter of time before somebody blamed business educators for this mess.  And now, Joe, some of your fellow letter-to-the-editor writers have snarkily noted that most of the free market abusers have… MBAs.

And they’re right.  Mea culpa, Joe.  I’m a professor, and my ex-students did this.

At the 2002 meeting of the AACSB, the agency that accredits business schools, I waited anxiously for its officials, or any faculty speakers, to mention the word “ethics.”  None did.  The only speaker at the three-day conference to bring up ethics was a luncheon presenter, the CEO of Tupperware.  (There you go, Joe, I’m not anti-business. I make a point to note that in the close wake of Enron, it was a businessman, not an academic, who first said something was amiss ethics-wise.)

AACSB’s 2008 meeting was similarly light on angst about the mortgage crisis.  But it was in Honolulu, where it’s difficult to get too worked up over anything.  A few months later, the INFORMS conference – the gathering of operations researchers – focused on technical reasons why the financial engineering models didn’t work.  Not on the ethics of using them when doing so was clearly inappropriate.

At least at the University of Chicago there’s some disagreement about whether to name the new economics research institute after Milton Friedman.  At least there’s that.

The upshot is that business faculty are not exactly hammering away at this in MBA classes. How can we prepare the next generation of business leaders if we do not make it clear in every accounting, finance, O.R., marketing, and strategy class that responsible users of the free market cannot tolerate certain behaviors?

University faculty cannot make students or graduates act ethically.  But if pressure to act ethically does not begin in b-school, it’s a lot less likely that it will begin later.  MBA graduates were the ultimate cause of this crisis, but business professors were the proximate cause.

Fellow faculty members, repeat after me, and make sure Joe hears you: “The meltdown is my fault.”

What’s love got to do with it? California’s Prop 8

"The noblest motive is the public good." - Seal of the County of San Diego

Proposition 8, banning gay marriage, passed last week in California. I’m sorry it did. Here’s my view of the heart of the issue.

The public’s interest in marriage has two, and only two, pieces. Marriage is a vehicle for conserving capital – that is, for people to get themselves out of poverty or to keep themselves out of poverty – and it is a vehicle for the secure raising of children. These pieces foster a stable society with fewer people on welfare or in prison.

It seems clear that a lasting marriage can serve both pieces regardless of the spouses’ genders. 

A voter considering only the public interest, therefore, would have cast a ballot against Prop 8.  All other arguments, of which we heard many in the run-up to the election – love, hate, civil rights, homophobia – were red herrings. Or would be, if the only consideration were the public interest.

But it wasn’t. People are entitled to vote their fears and their intolerance, and they did, and they won. 

For someone aiming at the “heart” of the issue, I’ve been awfully analytic. What’s love got to do with it? I’m wary of letting love into the realm of public interest. Demagogues use love of family and love of country to swindle young people into going off to war.  Let’s leave love to individuals, and their hearts.

Crowds – Wisdom or Madness?

What are we to make of The Wisdom of Crowds (2005) by New Yorker business columnist James Surowiecki?  After all, we were brought up on Charles MacKay’s Extraordinary Popular Delusions and the Madness of Crowds. The two books are at odds with each other.

First published in 1841 and popular ever since, MacKay’s work has stood the test of time.  It introduced the notion of mob psychology, noting that cool rationality is much more likely to show itself in individuals – and disappear in larger groups. MacKay put forth the Dutch tulip bubble and the Salem witch hunts as examples.

Surowiecki uses contrary examples – including the Who Wants to Be a Millionaire audience polls – to show that crowdsourcing can work.  The idea has caught on.  Companies now crowdsource their new product development! (Look here and here for examples.)  

Well, MacKay and Surowiecki can’t both be right, can they?

The Founding Fathers distrusted crowds.  That’s why we live in a republic and not a pure democracy. The idea that crowds could be right seems to stem from John Brunner's 1975 novel Shockwave Rider and is widely implemented today in what economists call “prediction markets.” 

This somewhat interesting notion got a black eye in 2003 when DARPA rolled out its “Policy Analysis Market,” which appeared to allow anonymous people to bet on terrorist attacks. Widespread public disgust was the main result.

Moreover, if markets (that is, mobs) could predict, then a horse with nine-to-four odds at the track would actually win about four of every thirteen races against a similar field, and this is demonstrably not true. (The historical database for horse races is far vaster than any for 21st-century artificial predictive markets!) 

Did Surowiecki and the economists forget that Shockwave was a work of fiction? Ah, but careful readers see Surowiecki hedging his claim: "Under the right circumstances [emphasis added], groups are remarkably intelligent, and are often smarter than the smartest people in them."

What are the right circumstances? A French mathematician burdened by the name Marie Jean Antoine Nicolas de Caritat, marquis de Condorcet (1743–1794) proved that a large crowd is likely to be right about a simple yes-no question only if each individual in the crowd has a greater-than-even chance of getting it right.  That is, only experts should be polled.  Condorcet offers no advice on how to qualify experts. Or how to find them.

So, is it MacKay or Surowiecki?  To be sure, two heads are better than one.  And small work groups in an organization can outperform individuals. (We’ve all been through that tiresome demonstration on our HR training days.)  But two to six people ain’t a crowd…

There are two phases in every decision: divergence, which means generating alternatives, and convergence, in which all but one of the alternatives are cut away.  Crowds are good at divergent creation of ideas – the more the merrier – but when it comes to deciding (a word that means “cutting away”), I see no signs of mobs doing better than small groups or singles.

Just look at the bankers who rushed to buy securitized mortgage instruments, or voters in the 2004 presidential election. MacKay takes the day!

p.s. I’ve treated this subject in turgid academese, in a paper called “Change in Socio-Technical Systems: Researching the Multis, the Biggers, and the More Connecteds.”

There’s a bailout someone's longin’ to see...

To the tune of Ella Fitzgerald's "Someone to Watch Over Me":

There’s a bailout someone's longin’ to see

Citibank... sure wants to be

The one for Wachovia

I'm a little lamb who’s borrowed heavily

Prompt payer of bills, sure tried to be

Now Hank Paulson walks all over me

(release)

Although he may not be the man some

Would expect to pay the ransom

To my house he carries the key

Won’t you tell him please to put on some speed

Follow my lead, oh, how I need

Someone to watch over me-ee 

and Wells Fargo - Wachovia.

Followups: Maladjusted Republicans, Tax & Spend for Prosperity, and Antarctic Icebergs

Last week I ventured that voters who cling to simple answers to hugely complex questions are mentally ill.  It would be more proper to say mentally maladapted, according to former American Psychological Association executive director Bryant Welch. Welch’s new book State of Confusion: Political Manipulation and the Assault on the American Mind notes that the world was once simpler, and we are still adapted to that world – not to this one.  Moreover (and this is the main point of his book), we are ready, nay eager, to allow self-interested parties to manufacture false but simple explanations that we can buy into.  Of course he really means only one Party, and its name starts with R.

The book is reviewed in Miller-McCune Magazine.  (I recently discovered this free, non-profit journal of public issues, and like it a lot.  You can subscribe here.) The reviewer punches a bunch of holes in Welch’s thesis – and to be sure, a psychotherapist can’t make a living curing mental pathologies unless there are plenty of pathologies out there, and some therapists are not above inventing new ones from thin air. But Welch’s main argument survives the review, holes and all.

In my last entry I also recommended former U. of Wisconsin president John D. Wiley’s editorial attributing Wisconsin’s dismal economy to its business leaders’ knee-jerk “reduce taxes” answer (no matter what question is asked).  Maybe Wiley should send them to Welch for therapy.  Anyway, now here comes John E. Schwarz, Professor Emeritus at University of Arizona, whose Washington Post op-ed reasonably asks “Why is tax-and-spend worse than borrow-and-spend?”  His reasonable answer: It’s not worse, it's better. It’s not only more moral (because it doesn’t take food out of our children’s mouths) but it’s also better economically.  Schwarz shows that job creation has been far greater under Democratic administrations for the past 50 years.  No, they were not all government jobs!  They happened because government invested in expensive and risky new technologies, entailing R&D costs that no single company would pay for. The results were commercialized, creating high-paying private-sector jobs. Without increasing the National Debt.

Schwarz’ column generated a lot of comments on the Post’s web site.  One cited all the innovations that came out of RCA and other companies.  Yeah, buddy, that was then and this is now.  Private companies wanted global capital liberalization, around the turn of the century, and they got it.  The FTAs have bitten them in the ass. Now they’re in a hypercompetitive environment that won’t allow them to spend on R&D.  Another commentator claimed AT&T would still be churning out innovations if the government hadn’t busted it up.  Hoo ha!

In this month’s AARP magazine, Shirley Streshinsky writes about the 2007 wreck of the cruise ship Explorer on an Antarctic iceberg.  As it happens, my faculty colleague Dr. Bob Flood was on the Explorer. 

A business professor, Bob studies Antarctic wildlife as a hobby.  He was moonlighting as a guide on the Explorer.  Bob told his harrowing survival-at-sea story to Radio Scilly (“one of the UK's smallest radio stations”).  The MP3 file of his radio interview is fascinating.  And scary. Find it by clicking through this site.

“Just like a third-world country”

In 1985, the Australian Prime Minister used this phrase to suggest what his country would be if it didn’t get its economic development act together.  Australians were insulted by the notion, but they did heed the Minister’s call.  In 2008 Australia is a prosperous nation.

In 2000, I used the same phrase to try to spur Oregon’s ED efforts.  I use the two letters to mean economic development, but those of you who read it as erectile dysfunction aren’t far wrong.  Oregon’s economy is still limp.

This month, the former president of University of Wisconsin at Madison, John D. Wiley, uses the phrase’s shock value to jolt the cheeseheads.  His important editorial is in Madison Magazine.

Wiley attacks the staff of his state’s biggest industry association for insisting that the answer to every question is “cut taxes,” even as the association (and everyone else) watches Wisconsin’s education system deteriorate.  Wiley compares Wisconsin to other states, including neighboring Minnesota, and shows clearly that the most prosperous states do not have the lowest per-capita tax burden.

This reinforces the more international analysis I did for Review of Technology & Economic Development in ’05: “The U.S., under its current small-government ideology, is seeing its sick go without costly drugs, and its K-12 education system decline. The Scandinavian countries – the most highly taxed and regulated on Earth, and the bane of small-government dogmatists – are highly innovative and entrepreneurial. That Denmark, Finland, Sweden and Norway are innovative, congenial places to live illustrates what this journal has long noted: Economic development is served by having a healthy, educated populace.” (This paragraph also appeared in Social Culture and  High-Tech Economic Development: The Technopolis Columns.)

I spent today with management guru Ian Mitroff, a colleague at Alliant International University and at Technological Forecasting & Social Change. We discussed the Obama and McCain conversations at Rick Warren’s church.  Obama thoughtfully described complexities, while McCain told simplistic stories.  McCain walked away with the day.  Having evolved in simpler times, we are hard-wired to love linear narrative – even when it’s wrong. Inter-connected complexities leave us behind.

I advanced the notion that insisting on simple answers in the face of overwhelming evidence of a problem’s complexity can only be viewed as a mental illness. Our Dean at Alliant, Jim Goodrich, voiced a counterpoint, that it’s a common cop-out for academics to hide in complexities.  Both are true - and all three of us agreed that it is the job of the thoughtful person to make a complex story understandable (as Wiley does very well in his editorial) if we want large numbers of people to act. 

If we don’t, then only a handful of people will be willing to take action. The remainder will fall asleep, and it will be our fault.

So, shock phrases like “third-world country” are not enough; what’s needed is a compelling narrative of a complex situation. I did eventually provide one for Oregon’s ED sticky wicket, in an appendix of the City Club of Portland’s report on the Portland Development Commission.  Still not enough! Though the report got significant press coverage, the appendix was lost in the noise.  We have to keep telling the important stories. (Another thing academics are not good at.)

So far, Obama has conveyed only that he’s an admirably thoughtful guy.  He hasn’t yet shocked us (though his wife did, briefly), he hasn’t yet rhetorically cut to the heart of his complex ideas, and if he can find a way to tell the important stories, he has less than three months to tell them.

But Obama needs to be liked, and John D. Wiley doesn’t.  This gives Wiley more latitude in storytelling.  Maybe Wisconsin has a better chance than the country at large, come November.

John Edwards’ affair

USA Today laments that politicians don’t learn from history. The very leaders who denounce another politician’s extramarital affair, the newspaper says, eventually commit the same act. 

No, it’s not that they don’t learn from history.  It’s that we don’t learn from primatology.

Apes vie to be the alpha male for one reason only: to spread their genes widely.  To get laid a lot.  And you don’t get much more alpha than President of the United States.  Why people were surprised by the behavior of Kennedy or Clinton (or Gary Hart or Gary Condit for that matter) is beyond me.

As the lady sang, “… that’s why I fell for… the leader of the pack.”

Is Harvey Dent Barack Obama?

A handsome newcomer is the only hope for change, for leading Gotham away from criminal chaos.  But his dark side emerges, revealing “Two-Face,” arch-enemy of the people.

So it was with Obama, the turning point being last week’s Senate vote on FISA, the reprehensible Foreign Intelligence Surveillance Act.  Barack had sworn to filibuster the vote; in the end he rolled over and stuck it to the American people.

I’ve lost all interest in the guy.

And let’s not forget Hillary Clinton, who in an act of astonishing irresponsibility all but suggested that someone should shoot her opponent.  (She referred to the late campaign turning point when Robert Kennedy was assassinated, implying that anything could happen and she could still end up the Democratic nominee.)  I held my breath all day on the anniversary of the Robert Kennedy shooting (June 5), hoping Barack was hiding in a basement somewhere.

If some crazy had obliged Hillary, it would, truly, have been the end of America.  That Barack made it through the day gave me faith.  But then came FISA.

So, no Barack, no Hillary, no Democrat to bring responsibility back to America. And don’t even mention Republicans. Is there no one we can turn to?  Maybe only Batman…

And while we’re on politics… Three months before a presidential election, the press is all “Looks like we’re winning the war in Iraq.”  Can you say “Duh, surprise”? Do you remember that the press is “embedded” with the troops, meaning there is no truly independent coverage of the conflict by US media? Did you notice the Iraqi president has asked us to leave his country by a certain date, so winning and losing doesn’t mean anything anyway?  And finally, do you recall that there isn’t any “war,” that there ain’t no war unless Congress sez there is, that Congress is the only folks who can declare war, and that Congress has not declared war?

p.s. Here's another take on Barack as Harvey.

Cross-referencing my blogs

1. The Conscious Manager. International perspectives on management, technology, media, and personal growth.  
2. Technopolis Times. Resources for technology-based regional economic development. Technopolis Times encourages networking and alliances that help grow new and established technopoleis.  This blog is the new home of the Review of Technology and Economic Development newsletter.
3. MsM Partners' Conference Blog. Annual research and business forum for Maastricht School of Management's outreach partners, representing more than 30 countries. 

I've also become Consulting Editor for the Management of Technology and Innovation area at Elsevier's Scirus Topic Pages.  The blogs and Scirus will sometimes refer to each other.

The Future of Management

I heard strategy theorist Gary Hamel speak at the AACSB conference.  Hamel said management schools are doing everything wrong.  I found more detail about Hamel’s views in his book The Future of Management (Harvard Business School Publishing, Boston, Massachusetts ©2007).

In my classes, I (Fred) have been teaching that the most successful companies have made innovation systematic.  Hamel goes further; he says innovation must be systemic, permeating the daily activities and attitudes of every employee – and not just in R&D or product development departments.  Fear of change has been banished, the potential of every employee to contribute ideas and energy has been nurtured and realized, and organizational charts and structures change at the drop of a hat.

In this regard, Hamel likes Whirlpool, Toyota, Google, and a few others.  Here are key passages from his book: 

(p.31) While Whirlpool's innovation efforts have been widely reported, a competitor would find it hard to duplicate what is now a deeply engrained innovation system – for the same reasons it would be difficult to pick apart Toyota's multifaceted management advantage.

 

(p.34) Management innovation follows a power law: for every truly radical idea that forever changes the practice of management there are dozens of others that are less valuable and less influential. But that's no excuse not to innovate. Innovation is always a numbers game: the more of it you do, the better your chances of reaping a fat payoff.

 

(p.36) Many executives doubt that bold management innovation is actually possible. Strangely, managers are unsurprised when science advances by leaps and bounds, yet seem unperturbed when the practice of management fails to do the same.

 

(p.38) If management innovation has been mostly incremental in recent years, it may be due to a lack of daring in the choice of problems to tackle. Ask yourself, has your company ever taken on a management challenge that was truly unprecedented, where you couldn't rely on another company's experience as a guide? General Electric has. In 2006, chairman Jeff Immelt set his colleagues the goal of growing GE's top line at twice the rate of global GDP growth, net of acquisitions. No company of GE's size has ever managed this sort of growth, yet that didn't deter Immelt from taking on the challenge. If the problem is big enough, progress of any sort will be valuable, even if you never find a "solution." I once heard former U.S. Secretary of State George Shultz draw a distinction between "probems you can solve" and "problems you can only work at." As a seasoned diplomat, Shultz knows that some problems, like ethnic strife, global poverty, and terrorism, defy once-and-for-all solutions. Yet he also understands that when you're up against problems of this scale and significance, even modest advances can yield big dividends.

 

(p.102) What makes Google unique, though, is less its Web-centric business model than its brink-of-chaos management model. Key components include a wafer-thin hierarchy, a dense network of lateral communication, a policy of giving outsized rewards to people who come up with outsized ideas, a team-focused approach to product development, and a corporate credo that challenges every employee to put the user first.

 

(p.103) [Google top execs] Brin and Page understand that in a discontinuous world, what matters most is not a company's competitive advantage at a single point in time, but its evolutionary advantage over time. Hence their desire to build a company that is capable of evolving as fast as the Web itself.

Hamel’s oft-quoted aphorism: Organisations used to require intelligence, obedience and diligence from an employee – but they could get that from a cocker spaniel. Today’s organizations need employees to display passion, creativity and initiative.

I liked Hamel’s book, despite some bloopers:

• Hamel appeals to Francis Fukuyama’s largely discredited “end of history” notion.
• His reference to the “college student who spends less on an airline ticket to Fort Lauderdale than he'll spend on booze over spring break” is sadly out of date…
• His statement that “the law of diminishing returns kicks in and at some point the ratio of progress to effort starts to sag” doesn’t accord with learning theory as I understand it – and as Hamel notes, organizational learning is what it’s all about.

The main take-away for management educators is that we should be teaching how to create corporate culture.  A good idea, but most new MBA grads are in no position to create culture.  On the contrary, they tend to be overwhelmed by the prevailing corporate culture two weeks after starting their new jobs, or the second time their passionate, creative initiative is punished, whichever comes first.  In this regard, Hamel’s advice is reminiscent of the Microsoft helicopter joke.  (If you haven’t heard it, ask me.)

Still, it’s food for thought.  And at least, business schools might seek out companies that are sympathetic to this new view, and point our grads in their directions.  Or, we might emphasize Hamel’s ideas in executive ed courses.  I look forward to discussing these ideas with you; enter your comments on this page.  

GRADUATION SPEECH, LIMA, PERU, JUNE 2008

Flew down to South America to speak at PUC-Lima's MBA/DBA commencement, and to give a couple of lectures the next day. After the speech (you'll see why, if you can read this), several students asked if I would pose for a photo with their mothers. The speech took off on a letter I wrote to The Economist earlier this year.

Queridos profesores, graduandos, padres de familia, amigos y huespedes distinguidos. Me hace muy feliz de estar aquí con ustedes una tercera vez y de felicitar a otra clase de graduandos y a sus familias.

Les traigo saludos de Maastricht School of Management. Los países en todo el mundo continúan acercándose a MSM sobre las colaboraciónes para los programas de grado, y MSM ha establecido nuevas colaboraciónes este año. Se puede ser orgulloso que su grado es uno que inspira confianza por todo el mundo. Este año MSM ha publicado dos más volúmenes en la serie del libro de textos del MBA que mencioné en la graduación del año pasado. MSM trajo el congreso anual de la Asociación Internacional del Desarrollo de Gerencia a su país vecino, Suriname. Este congreso comienza hoy en Paramaribo y continúa con la semana.

En este podium hace un año, comenté a propósito de la responsabilidad social corporativa, CSR. Ahora quisiera volver a ese asunto, ofreciendo una vista simple del CSR, y observando sus implicaciones para sus carreras, estimados graduandos.

Porque sus padres y madres están presentes esta noche, quiero implicarlos en mi declaración. Me ayudarán a dar vuelta al CSR, un tema que otras personas ven como cuestión compleja y polémica, en un concepto directo y realizable:

Antes de que las corporaciones piensen en hacer el bien, deben parar el hacer el mal. Para efectuar el CSR, los ejecutivos necesitan solamente hacer lo que les dijeron sus madres: Repare sus propios líos, y refrénese de tomar lo que pertenece a la otra gente.

Antes de que las corporaciones piensen en hacer el bien, deben parar el hacer el mal. Cada derramamiento de aceite limpiado en el costo público, cada soborno para destruir una aldea para excavar una mina, decepciona a una madre en alguna parte. (Si Mamacita es economista, ella llama de estos actos los “efectos externos negativos.”)

Antes de que las corporaciones piensen en hacer el bien, deben parar el hacer el mal. El soberano carga una corporación en la expectativa de cierto beneficio social, y en la expectativa que la ley será obedecida. Es hasta la corporación simplemente al honor del este contrato.

Como cualquier buen concepto en ciencia de gerencia (o cualquier ciencia), el principio simple destapa complicaciones. Por ejemplo, los gobiernos son flojos en hacer cumplir los términos de cartas corporativas, y las corporaciones pasan mucho dinero para preservar esa situación.

Otros ejemplos - como la crisis actual de la hipoteca que originó en los Estados Unidos - ilustran que el reto real no es tanto el comportamiento de una compañía individual, pero la relación entre los sectores, por ejemplo, entre el negocio y el gobierno. Esto es, para mí y mis estudiantes, un tema fascinador e importante para la investigación.

Dije que ataría esta discusión a sus carreras. Para ocuparse eficazmente de relaciones entre sectores, es aconsejable trabajar en sectores múltiples. Intente trabajar durante algún tiempo en industria, y entonces en empresas sin fines de lucro. Quizá también para los militares, para la prensa, o para un NGO. La experiencia en sectores múltiples ahora es un requisito frecuente para los situaciones del alto directivo en cualesquiera de ellos.

El consejo adicional de la carrera se encuentra en las declaraciones recientes de dos hombres famosos.

El teórico bien conocido de la estrategia Gary Hamel dijo que las organizaciones del pasado requerían de un empleado inteligencia, obediencia y diligencia - pero (él dijo) podrían conseguir eso de un perro de aguas cocker. Las organizaciones de hoy necesitan que los empleados exhiben creatividad, iniciativa, y pasión.

Arthur C. Clarke, autor famoso de 2001: A Space Odyssey e inventor del satélite de comunicación, murió en marzo de este año, a la edad de 90. La revista The Economist dice que las visiones cósmicas de Arthur C. Clarke le dejaron con poca paciencia para aplicaciones más humildes como las políticas y la economía. Ésos, Clarke escribió, fueron sobre el “poder y el dinero, ni una ni otra cuyo debe ser… la preocupación primaria de hombres maduros.”

Por supuesto como los graduados de MSM y del CENTRUM ustedes han dominado las herramientas del negocio y de políticas, y las utilizarán para alcanzar objetivos moralejas, y quizás incluso cósmicos. Pero ambos caballeros, Sr. Hamel y Sr. Clark, están sugiriendo que los patrones y los empleados necesitan crecer, para hacer seres completamente adultos y sociales, para hacer frente a los desafíos del mundo de hoy.

Sé que sus profesores serán orgullosos como ustedes hacen exactamente esto. Y no olviden: Escuchen a sus madres! Gracias, y otra vez, enhorabuena.

Professor Puts His Body on the Line for Management Education

Or as my sister put it,

“Oh Gawd... Take Dramamine.
P.S. Are you CRAZY????”

I took some students to San Diego's High Tech Night at the Opera earlier this month. At the reception before curtain time, I won the grand prize in a drawing - an aerobatic flight with telecomm entrepreneur and stunt pilot Rory Moore.

Rory founded CommNexus and other companies. His story is here.

The flight was this morning.

I'm still alive, and did not need the airsickness bag. Had a great time, flew the plane a while, white-knuckled it while Rory turned rolls, loops, loops with half rolls, and something called a hammerhead (you don't even want to know what that is).

I wonder whether my two whole minutes of parachute training would have benefited me, had the unthinkable eventuated. Anyway, ‘twas a gorgeous day to fly up the coast past Pacific Beach, La Jolla, and Del Mar. Here’s film taken from Moore’s plane (on another occasion, not by me) as it flew inland.

In Which I Make an Excuse, and Ask a Favor

Sorry for my long absence from this page. My excuse: many travels in April (Newport Beach, Honolulu, Chicago, Palm Desert), a 3-week non-serious but inconvenient illness, and too much work. Still working on the work – was invited on short notice to be commencement speaker and to lecture in Lima, and have become a consulting editor for Elsevier’s Scirus pages. Have had to turn down, for the time being, further invitations to teach in Malaysia and Guatemala.

Cleverly managed to miss only two tango lessons during this period, at the price of infecting my beautiful teacher with the bronchitis. She’s forgiven me.

Meanwhile the world goes on, and leaves no shortage of things for me to comment on. You can help me on two remaining projects, and if you do, I can return sooner to the kind of blogging you expect here.

Project 1: An edited book on entrepreneurship and innovation for MBA students in developing countries. About half the chapters are in hand; I need volunteer authors for the remaining chapters. Email me if interested. Much appreciated.

Project 2: Events ranging from the Exxon Valdez oil spill to today’s mortgage crisis have evidenced not only failures of companies and institutions, but failures or absence of mechanisms for coordination of institutions. What dropped between the cracks of the State of Alaska, Exxon Corp., the Alyeska Corporation, and the feds made the difference between a possible recovery from the disaster and the cleanup that never happened.

Mortgage originators, bundlers and securitizers, investors and regulators constructed a shell game in which no one was accountable and (mixed metaphor coming!) the fox guarded the henhouse.

Enron, Andersen, the SEC and Congress? The Pentagon’s untraceable payments to contractors for unknown deliverables? Further examples aren’t hard to find.

Here’s how you can help, as I write non-blog articles on the topic of inter-institutional relationships in a hyper-connected world:

1. Are accountability and foxes in the henhouse the central issues here? Can you suggest others?

2. What are possible solutions that have to be looked into? Term limits in Congress? Better checks and balances? Still more campaign finance reform? More regulation of corporations? Criminal penalties for creating moral hazard?

Think out of the box and send me the results, which I will acknowledge gratefully in any publications. Thanks.

Authenticity at Work (and Famous Folks, installment #2)

“B,” one of my faculty, whose field is diversity and inclusion in the workplace, gave a seminar the other day. He talked about authenticity – when you are respected and “included” at work, you can be yourself, thus bringing all your abilities to the aid of your team and your task.

Sounds good, and it reminded me of two instances – one that supports B’s idea and one that doesn’t.

In the early 90s at the IC2 Institute, a team gathered to write a follow-up proposal to the Air Force. We decided to sit at a table in the upstairs gallery. As the group trooped through the gallery door, “G,” a woman in the group, was chatting about a sociologist who’d showed that when a business meeting happens at a rectangular table, people tend to sit across from someone they’re sexually attracted to. Lost in her academic mode, our teammate wrapped up this story just as she sat at the table across from E, another fellow in our group. No irony, no embarrassment, she was just oblivious.

A charming lack of self-consciousness on her part, and an interesting demonstration that academics don’t always connect highfalutin’ peer-reviewed research to their own daily lives.

Other team members, however, did notice what she’d done. They stifled giggles, rolled their eyes comically, shot meaningful glances to each other. One, standing behind G, enjoyed a big, silent belly-laugh. E was amused and struggled to contain himself.

This was a group that was willing to communicate on many levels, and felt easy doing so. They were also, apparently, committed to not ridiculing G, a good (and very attractive and very married) colleague who brought great expertise in the area of the proposal.

As we settled down to business, communication flowed freely, leading to an idea and a proposal that won a three million dollar grant from AFOSR.

2nd instance: My daughter Gina was writing a school report on the old bluesmen of Texas. She showed me one of her source books. I noticed an error in the book.

“Gina, these two captions are reversed,” I said. “This photo is Mance Lipscomb, not that one.”

“How do you know?” she reasonably asked.

“I knew Mance Lipscomb.”

“Daddy, you didn’t.”

Ah, but I did. Mance performed at the old Armadillo World Headquarters back around 1971. The man had no flash at all; he just sat in a wooden chair at the front of the stage and played great music. Mance was entirely authentic. He was used to playing on his front porch with friends and visitors, playing a bit, chatting a bit, sipping some lemonade. That style didn’t change when he sat before an audience of hundreds.

In that spirit, I wandered up to the stage to ask him to play a particular song. Well, he said, he knew a version of the song that might not be familiar to me, and he’d got it from a different source than Robert Johnson had, and.… His reply was turning into a lengthy discourse.

I had a ball, standing there conversing with Mance Lipscomb. The four hundred people behind me were getting mighty irritated; they wanted the show to go on.

Authenticity is great, but sometimes we have to adapt to circumstances. How, I wonder (and you might, too), could Lipscomb have continued to show his true self, and at the same time respect the fact that people paid for tickets and expected a “show”?

Encounters with Famous Folks

I'll indulge in this from time to time. Today's entry is sparked by reminiscences of plane flights. On one such, when my kids were small, we sat in the back of a Chicago-Austin flight. The woman across the aisle chatted me up because she was enamored of half-Asian children (like mine). Turns out she was Mari Michener, spouse of the famous writer James Michener. "You must come over for tea," she said. "Give me your phone number."

Weeks went by.

Dena, the wife of a colleague of mine, worked as secretary to James Michener. "Mari always says she's going to invite people to tea," Dena said, "and then she never calls them."

Michener willed his art and documents to the University of Texas. In the UT museum's basement there must be a card with my old phone number on it.

In those days I travelled frequently to Washington D.C. Congressman John Jenrette and his wife Rita had just become notorious for having, um, done it on the steps of the US Capitol. (A DC tour agency, and later a comedy troupe, were named "The Capitol Steps" in honor of the couple. Or the coupling.) Four or five times on Southwest flights out of DC I found myself just a few aisles away from the comely Rita. Never got any work done on those flights. Rita and my fertile imagination kept me thoroughly distracted.

War: Q & A

Another reader query from the archives of The Conscious Manager bears on the war and the election.

Q. Why does war exist, and is war always bad?  Do we fight because it is the right thing to do, like self-defense / prevention of harm?  Or do we fight because we want something out of it, like getting enjoyment from anger and jealousy?  If you had the chance to kill a ruthless dictator that could care less about peace, and you could kill him with one good sniper shot and get a clean getaway and no one knew that you did it, would you do it?  Also, I grow suspicious of people who want peace and then create conflict, not peace, from their actions.  -J

A. J, we're going to dispense with goods and bads, and deal with "ises."  Humans evolved, and evolution doesn't cut us much slack.  If we were constituted differently, we might not have evolved and survived as a species.  So men complaining about war may be like women complaining that men only think about sex; if either thing were different, we might not be here. (I am aware, of course, that those who've died in war aren't here.) 

The two, not surprisingly, are related.  Bonobos, critters that look like chimpanzees, don't have war.  They defuse conflicts by grooming each other and having sex.  There aren't many bonobos left.  Chimps solve conflict by fighting.  Then the winners have sex, that being the "something they get out of it."  One strategy is better for procreation, the other better for protection, and a population needs both procreation and protection.  There aren't many chimps left, either, but that's because of human-caused loss of chimp habitat, and there are (I think) more chimps than bonobos.

Is the same true for humans?  A news article in early 2003 noted that fully 12% of the current human population are direct descendants of Genghis Khan and his siblings.  So historically, young men were motivated to go to war if it represented their only chance to "marry."  Old men preferred to die in "glorious" battle because it beat the alternative, which involved having other people chew their food for them.  That is to say, old age was not a pleasant affair before modern medicine, and some preferred to avoid it.

Today, some youngsters join the armed forces, even when war looms, because it's the only route out of a bad neighborhood and a life of poverty.  (Actually not the only route: Selling drugs gets you out of poverty, affords the same probability of dying young, and you don't have to take orders from no stinkin' sergeants.)  Others are duped into it, believing their elders' bullshit about glory and justice.

Suppose we could only stop a genocide by going to war.  All other things being equal, most people would like to see fewer deaths rather than more.  All other things, though, are almost never equal, and I would tend to suspect decisions based on body-count arithmetic.  In any case, each person must choose his own battles.  We have a volunteer army, but they don't get to vote on where they will fight and where they won't.  It might be worth letting them do that!  Phil Ochs said, "It's always the old who lead us to the war, always the young who fall."  So it's like abortion, which is similarly tragic:  I don't like abortion and I don't like war, but I'm not going to tell women - or men - what they may or may not do with their bodies.

This is a tough one.  I was raised to see preventing further genocides as a duty, and as a young man I was crushed to see the U.S. fail to act on that principle, for instance in Cambodia or Rwanda.  You're a movie fan, J; go see The Killing Fields.  Should future such situations arise, I might well decide to rally others to a rescue mission, knowing violence might result but dedicating myself to miminizing it. In wars of old, non-combatants suffered in serious, but indirect, ways: via famine, rape, pillage.  In today's wars, innocent bystanders are far more likely than before to be killed directly.  This can happen in myriad ways, from mined rice fields to mis-aimed missiles to cross-fires in urban warfare.  I hope young people desiring to go to war will consider the near-inevitability of killing civilians, and think twice and perhaps decide to stay home in Peoria. 

You mention Pearl Harbor, which was a famous failure of U.S. intelligence.  I'll go so far as to say all war is a failure of intelligence, planning, strategy, communication, or preparation.  If a threat is developing against you, you should, just as in aikido, assemble overwhelming force at your opponent's weakest point.  You tell your opponent what you're going to do should he not stand down, and then do it.   This is how a mission should be defined and executed. 

Even military commanders who have mastered intelligence, planning, strategy, communication and preparation get caught by ego.  They escalate force beyond what's needed for the mission, responding to "insults" and stooping to vengeance.  Others don't understand mission at all.  I heard a recent speech by a general, who began, "My job is to kill people."  He could as easily and more accurately have said, "My job is to protect Americans and that may unfortunately involve killing people."  That guy should lose his job before he does any more damage. 

There have been isolated human cultures that, like bonobos, shun war.  When threatened, they have hired mercenaries or allowed deviant insiders to fight on their behalf.  The fighters were then exiled when the conflict ended - if the village survived - so as not to contaminate the peaceful society.  There are, in the modern world, far fewer isolated cultures.  The characteristic, if not the people themselves, may die out. 

So you're right that untrained pacifists may do more harm than good.  Their attitude that violence never settles anything is naive.  As Robert Heinlein noted, violence settled Hitler's hash pretty good.  Work on yourself first, then work for peace!  As an aikidoist, you are peaceable but skilled at forestalling conflict and applying minimum necessary violence.  You position yourself in ways that communicate your strength and your intention, but you never "attack first."  You don't interpose yourself between someone you want to protect and someone attacking her - except at the moment a blow is being struck - because it's unlikely that you understand what's really going on between them.

For the same reason, you would not assassinate even a despotic leader in cold blood.  (Another hypothetical social experiment:  Suppose all international conflicts were customarily settled by assassination.  Leaders would know before running for election that this is what would happen to them if they piss off another country.  This would put a different complexion on politics, n'est ce pas?)  You give everyone every opportunity to fix up their karma, until and unless they launch another attack.  Only then is matching violence indicated - but if you are unprepared for their next attack, shame on you. -FP

Another reader question, on a lighter note, this one from last week. I'd been talking to my friend Jim on the phone, when the doorbell rang.  I answered the door, and told him I'd call him back...

Q. I heard a female voice say, "Are you the man of the house?" and then you hung up on me.  I can't wait until you blog about that...  -Jim

A. Jim, there was a really pretty girl at the door.  She wanted to sell me a gallon jug of organic cleaning gunk for $100.  In fact, she took out a toothbrush and attacked the oil stain under my motorbike, and the grease smears on the bbq grill.  Little did she know that all the stuff I'd left in storage in Oregon four years ago was due to arrive in San Diego the next day... There's now no room in my garage or spare room for a mouse, let alone a gallon jug.  So, I had to disappoint her.

The next day I checked the grill and the bike.  The gunk had dried, leaving the stains pretty much as they had been before.  So, lucky that I had resisted her sales pitch. Which included a low-cut blouse and tiny short-shorts - tactics we tend not to teach in business school. -FP 

Sweet but Crude

Hallelujah, three of the companies we love to hate got their come-uppance this week.  Starbucks has given the boot to T-mobile, and a court has ordered Ryanair to pay thousands to the new Mrs. Sarkozy in compensation for unauthorized use of her image. (The judgment favored Hubby Sarkozy also, but he accepted only one Euro in damages.)

Over the years I’ve written twice to Starbuck’s corporate to complain about T-mobile.  It’s eerie to think about how something one has written may – or may not – have affected the outcome of events.  (I just had a similar experience with Scott Adams of Dilbert fame, which I’ll tell you about on another occasion.)

As Starbucks’ CEO is now trying to turn the company around, both of my epistolary thrusts return to relevance. First, bad wireless service wipes out the consumer loyalty won by good coffee.  Second, don’t ignore the b-school concept of core competence: My credit union, correctly claiming competence in banking but not in brewing, charges checking fees and gives me free coffee. Starbucks is good at coffee, doesn’t know spit about wireless networking, and so should charge for java and not for wireless.

I’ve already talked the VP of one small hotel chain into dumping T-mobile.  (It’s not eerie when you know you’ve influenced events.) Again, the core competence argument: Why use a phone company for Internet service?  If you want to give your guests good service, find a company that specializes in Internet.  Next on my list is the Hyatt chain, which contracts with T-mobile for wireless and doesn’t know how much bad will it’s generating. 

A couple of years ago on the Euroblog I said all I have to say about Ryanair. When you reach the Euroblog page, hit control-F and enter the search term “weeze” (sorry, I neglected to put an anchor there).

Oh yes, I said three companies… Hugo Chavez has cut off Exxon-Mobil’s supply of Venezuelan crude oil. If you’re still mad about the 1989 Exxon-Valdez spill in Alaska (or the fact that the company still hasn't paid cleanup costs) consider that vengeance is sweet… but crude.

Electoral Dance

Questions from readers! (I love it.)

Q: Clinton, Obama, McCain... your take?

A: David Brooks’ New York Times column today made it clear even to a dense marketing professor like me: Clinton is selling a product, Obama is selling an experience. 

Obama is to Clinton as the Mac is to the PC, as The Body Shop is to Walgreen’s.

Thus Barak Obama is more in tune with modern times.  He’s also more likely to get young people excited about politics.  Both valuable characteristics.

I have a suspicion about Hillary.  GW Bush eviscerated checks and balances in our government, and created an imperial presidency.  Sometimes I think Hillary looks at the imperial presidency and thinks, "I want one of those."

I personally like Obama better – though Hillary thinks faster on her feet in a debate – but the real question is: Who can better defeat McCain?

I hear the reactionary Republicans are ready to throw this presidential election rather than support McCain.  They’ll let the Dems have this one.  They’ll retreat, regroup, and rebuild strength for 2012.  But we can’t count on the GOP taking a dive; we gotta make sure the Republicans get outta the White House now.

John McCain is by far the least objectionable of the Republicans.  Trouble is, he’s old, and he will choose a running mate from among younger Republicans.  His VP candidate could be one of these neocon jerks who don’t know that they’re all washed up now, and s/he may well end up President if a victorious McCain is later incapacitated.

So is Clinton or Obama better able to prevent this?  This question can be answered only be detailed, precinct-by-precinct research in districts that may swing to the Republicans.  The Clinton and Obama campaigns have (I hope) done this research, or maybe the Democratic Party has. They ain’t sayin’. I certainly don’t have access to such research, so: I’ll vote for the Dem, whoever it may be.

 

Q: What brought on the tango passion?

A: Saw it, thought it was beautiful, took the odd introductory lesson (in Portland, then in Maastricht, then in San Diego) without learning much over a span of four years.  Finally, business travels eased up; I would be in the same city for four consecutive Tuesdays!  I signed up for the 4-week beginner sequence last month.  Now I’ve graduated, and have started taking the “Salon 1” sequence.

Check out this video of Yo-Yo Ma, and see if it doesn’t do something for you

 too.

There’s another one you must see, but YouTube won’t let me embed it in this

 page.  Right-click this URL and tell your browser to open in a new window: http://www.youtube.com/watch?v=gEe2j43X-Ms.

Like aikido, tango is a worldwide community that welcomes sincere strangers.  (I was welcomed at a tango bar in Lima last summer - here's their poster - even tho I had no skill then.) Like aikido, tango is a lifelong endeavor in which you can improve slowly and surely without end.  I love aikido and still do it, but I confess that as I get old and creaky, getting slammed into the aikido mat a couple hundred times a day is no longer my idea of a good time. So you see, there’s method in my madness.