Cases in Point

“Is it naïve to expect corporations to assist in addressing the social, economic and environmental challenges of the day?”(1)

Eduardo Porter posed this question in a column he wrote for the New York Times recently. The column lays out a chronology of corporate attitudes about the obligation to produce positive social impact as part of ordinary business operations, starting at the turn of the 20th century. What might surprise most of us is that among some of the largest corporations at the time (e.g., Eastman Kodak, Ford) concern for the well-being of employees and, more generally, the American citizenry was not considered to be at odds with corporate success. After World War II, the ethos of a successful corporate America and the good of the country became even more entwined. What was good for General Motors was good for America and vice versa.

Porter identifies the ascendancy of Milton Friedman’s economic theories as the signal development that transformed prevailing notions of the purpose of the organization. “The social responsibility of business is to increase profits….For executives to devote resources to anything else would amount to doing charity with other people’s money.” This new theory of the corporation arose at a time when globalization had begun to squeeze profits. Since then, destabilizing factors – macroeconomic, geopolitical, demographic – combined with the pressures of quarterly reporting have only reinforced this singular corporate focus on profitability.

Porter does acknowledge the rise of corporate social responsibility, noting the 7,000 plus companies that have signed on to the United Nations’ Global Compact on Human Rights, Labour, Environment and Anti-Corruption. He highlights big businesses that “appear to take a serious stand on broader social and environmental issues” such as Unilever, Costco and Novo Nordisk.  But, he closes his column on a gloomy note, quoting Margaret Blair of Vanderbilt Law School: “’I don’t think we would get very far in addressing large social concerns if we left them to corporations,’ …The ethic of shareholder value is just too strong, and our social problems are just too big.’” Porter agrees.  He believes that only elected governments, however imperfect, can address these issues. In my opinion, this either-or view of problem-solving is part of the problem itself. Workable solutions are unlikely to come from one place or the other. The solutions are more likely to have greater staying power if they are the result of joint initiatives. The drumbeat of change is growing louder and corporations are finding it increasingly hard to avoid the call to act in socially responsible ways.

Following are what I consider to be cases in point representing the many different pressures that are forcing corporations to take a more expansive view of what constitutes success. Delivering positive social impact through their core business operations is clearly a critical element in this new value equation.

Case in Point: Starbucks

Starbucks is a hipster company known for its progressive employee practices (healthcare, 401(k) matching, stock and tuition reimbursement for online degrees).  Nevertheless, it gets to be the poster child for a New York Times cover story about how commonly used scheduling software subverts its workers attempts to construct stable lives. The story describes how the company uses “software that choreographs workers in precise, intricate ballets, using sales patterns and other data to determine which of its 130,000 baristas are needed in its thousands of locations and exactly when…Scheduling is now a powerful tool to bolster profits, allowing businesses to cut labor costs with a few keystrokes.”(2) Although the article notes that other retailers use this software, Starbucks gets pride of place.

The scheduling software is good for keeping costs in check and aligning workforce levels with customer demand. But it also makes it nearly impossible for many Starbucks employees to have a life outside of work because they don’t know when or how long they will be working on any given day. This makes it hard to budget for living expenses or make childcare arrangements, for example. The article presents the story of a sympathetic and heroic single mother’s attempts to care for her child as a way of anchoring the impact of these corporate practices in reality. Her plight conveys how the true costs of enjoying Starbucks products and environment are shifted onto its employees so that prices are kept in check for those who can afford a frappuccino. Society pays these extra costs – one way or another. But they are not priced into the cost of a frappuccino.

Starbucks would seem to be the polar opposite of Walmart – everyone else’s favorite corporate villain – but with great size comes great scrutiny and great social impact. There is no escaping it. Even if your company serves up coffee beverages that have been harvested in an eco- and socio-conscious way. Even if your company does many good things for its employees. If at the end of the day, your business lacks cohesive integrity – your company will be called to task.

[The day after this article appeared, Starbucks announced significant changes to its scheduling practices designed to “improve “stability and consistency” in work hours week to week.”(3)]

Case in Point: Nestle 

“Nestle, one of the world’s largest food companies, is adopting animal welfare standards that will affect 7,300 of its suppliers across the globe,and their suppliers.” [Emphasis mine.] (4) On LinkedIn, my 500 plus direct contacts ostensibly link me to a network of more than 12.5 million, leveraging my direct contacts by a factor of 25,000. Even if Nestle’s suppliers are only leveraged by a factor of 100, this means that Nestle’s action could affect 7 million companies. What reason was given for this change and who made the announcement? The Chief Procurement Officer made the announcement and this is what he said, “In the digital world, everyone has a smartphone and they want to know where things come from and share that information…Is it good for me? Is the quality good? Has it been responsibly sourced.” The standards are wide-ranging. The company “…will not buy products derived from pigs raised in gestation stalls, chickens in barren battery cages, cattle that have been dehorned or had their tails docked without anesthesia and animals whose health has been damaged by drugs that promote growth.”

This matters more than you might think. My daughter is 17 and “Fast Food Nation” was one of her required summer reading books. Each day for the past month, over dinner, she has lamented what she has learned about how what she eats gets to our table. She is already a different kind of consumer.  I quote from one her college essay responses: “Fast Food Nation changed the way I think about every piece of “food” I put into my mouth: from wondering about the way it was grown and processed, to the distance it traveled to the store, and whether its price means anything about how good it really is for me.”

Case in Point: Walgreens

Inversions – the clever tax strategy of acquiring a company based in a country with a more favorable corporate tax structure and then claiming that location as your headquarters. Good for shareholders, certainly. And in the not so distant past, it would have stopped there, perhaps even been lauded as a sharp move. But, oh what a stink it has caused. The President of the United States has publicly called companies that pursue this strategy “unpatriotic,” suggesting that they are renouncing their “citizenship” and skipping out on what they owe (their fair share) (5).

Walgreens was pilloried in the press for pursuing this strategy. After having secured corporate income tax credits and other incentives totaling close to $50 million from Illinois over a ten-year period and publicly declaring Walgreens’ pride in its Illinois heritage, after receiving close to $17 billion in revenue from Medicare and Medicaid at its Duane Reade chain in 2013, after benefiting from legislation in the Dodd-Frank Act that limited the fees banks can charge merchants for debit card transactions, the company was an easy target for groups that represent unions, tax fairness, consumers and American citizens.

Interestingly, part of the push for the company to undertake an inversion came from large investors, several of which were cited in a New York Times article that reported the story (6). The one with the most name-recognition, Goldman Sachs, tried to back away from its association with this strategy “…saying that it did not take a position at [a meeting of investors with the company to discuss this move].”  What’s going on? Do corporate executives fail to grasp the complex environment in which their strategic moves will be evaluated? Even if 50% of them say that integrating sustainability into their core business processes is one of their top 3 priorities (7), they will need to use a far different kind of framework for translating this concept into practice than they are accustomed to.

Case in Point: The Financial Services Industry

Splashed on the front page of the Sunday New York Times during a particularly troubled time (Ukraine, Gaza/Israel, Syria, ISL, etc.) was a warning about a new wave of subprime lending – this time for autos.  “Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime….[Many of these loans] are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds…”(8)  (Yes, you too could be holding some of this junk in your retirement savings account.) This time, the arcane investment structure was not buried in the business section or only being reported in the financial journals. It was front page investigative reporting in the Sunday paper. Why? The human cost, the social impact, is devastating. Loans with interest rates that can exceed 23 percent. Loans made on defective cars. Loans that can be twice the value of the car. Auto loans made to the most economically vulnerable people for whom missed payments can lead to bankruptcy.

Financial services companies mentioned in the article – Wells Fargo, Capital One, Santander Consumer USA, M&T Bank, BlackRock – all disavow any bad practices. But they are named alongside heartrending stories of people who have been forced into homelessness to keep up with car payments. The punch line? Rating agencies have assessed the quality of bonds backed by auto loans made to people who have been forced into bankruptcy as triple-A. “A large slice of …[this type of] bond is held in mutual funds managed by BlackRock, one of the world’s largest money managers.” Somehow the argument that these financial wizards make – that they are providing credit to those who could otherwise not get it falls flat. The convoluted chain that connects BlackRock’s mutual fund with a struggling schoolteacher who has been bankrupted by an auto loan is no longer too inconsequential or obscure to be considered newsworthy. The consequences of financial engineering reverberate in the real economy, doing real damage. There is less room to hide than ever before.

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I recognize that these are a series of anecdotes and, as such, can only illustrate my point. However, I believe it is far from naïve to expect corporations to assume a more active role in addressing contemporary social, economic and environmental challenges. It’s plain to me that demonstrating how the business contributes to positive social impact is fast becoming a cost of doing business.  For innovative corporations it will also become a source of value creation.

Sources:

(1)    “Motivating Corporations to Do Good,” Eduardo Porter, The New York Times, July 16, 2014

(2)    “As Shifts Vary, Family’s Only Constant is Chaos,” Jodi Kantor, The New York Times, August 14, 2014

(3)    “Starbucks to Revise Policies to End Irregular Schedules for Its 130,000 Baristas,” Jodi Kantor, sourced on 9/22/14 at: http://www.nytimes.com/2014/08/15/us/starbucks-to-revise-work-scheduling-policies.html?_r=0

(4)    “Nestle Moves Toward Human Treatment of Animals at Its Suppliers,” Stephanie Strom, The New York Times, August 21, 2014

(5)  “Overseas Tax Inversions are Unpatriotic,” Associated Press, July 26, 2014, sourced on 9/8/14 at:  http://nypost.com/2014/07/26/overseas-tax-inversions-are-unpatriotic-obama/

(6)   “Renouncing Corporate Citizenship,” Andrew Ross Sorkin, The New York Times, July 1, 2014

(7)  “Sustainability’s strategic worth,” McKinsey Global Survey, Shelia Bonini and Anne-Titia Bové, McKinsey & Company, 2014.

(8)   “Easy Credit, Hard to Repay, Exorbitant Rates in a Subprime Boom for Used Cars,” Jessica Silver-Greenberg and Michael Corkery, The New York Times, July 20, 2014

Gusty Conditions

In my previous post, I made two claims:

  1. All companies are going to have to do more than create high utility products and services, they will also have to deliver positive social impact through their core business.
  2. Corporate employees can be “taught” something important about social impact by social entrepreneurs.

In this post, I’d like to discuss why I believe these claims are valid. The basis for this belief rests on shifts in: 1) the expectations that individuals and society have about the purpose of corporations (i.e., their license to operate) and 2) perhaps as a direct result of these changing expectations, the way that some corporations are beginning to view their relationship to society and their role in the economy.

In early July 2014, David Brooks, a New York Times Op-Ed columnist, wrote a piece on the sharing economy and the evolution of social trust. Brooks suggested that “…[t]here is a new trust calculus, powered by both social and economic forces.  Socially, we have large numbers of people living loose unstructured lives…” By “loose, unstructured lives,” Brooks means that many more people are operating outside the confines of large institutional structures for longer periods of time.

As any outsider can attest, the view from the outside is different from the one on the inside. Add to the fact that more people are on the outside looking in, disturbances such as growing economic polarization, generalized global political unrest and the inability of governments to mount effective responses to these and other large, systemic problems. It should come as no surprise that there is growing distrust of large institutions which seem to exist solely to perpetuate their own existence and enrich a lucky few.

Much of this sourness is directed at corporations. To many people, despite all the talk about the importance of their employees, companies appear profoundly unconcerned about them. Employees are treated as just another means of production that needs to be “right-sized” from time to time. Some companies even appear to be unconcerned about customers (as any telecommunications customer can attest).

In this climate, people have come to increasingly value the ability to directly negotiate with other people which technology has facilitated at low cost. The impersonal culture of big institutions is sitting alongside what Brooks calls a “personalistic” culture of peer-to-peer relationships.

Airbnb and Uber might be the two most visible and contentious companies of the sharing economy. They are causing headaches not only for the hospitality and car service industries, but also for city governments and other regulators in their respective industries because the operating model for these companies is a decentralized network which doesn’t easily conform to the structures and processes of centralized agencies and regulatory regimes. But, these sharing economy pioneers seem to not only care about people – both customers and employees – they also “…seem inclined to compromise and play nice with city governments.  They’re trying to establish reputations as good citizens…” They are changing the rules of the game and maybe even the game itself.

The emergence of a sharing economy facilitated by peer-to-peer relationships that combine technology-enabled virtual and face-to-face experiences (ultimately, you show up at the Airbnb and meet the host and other guests and you get into an Uber car and meet your driver) with a corporate ethos of being good corporate citizens is bleeding over into the traditional economy. Increasingly, even the most hidebound institutions are feeling the pinch of the “personalistic” culture.

New Yorker article published in July 2014 tells the story of the enormous difficulties facing parents whose children are presumed to be the ONLY ones with a medical condition. But there is a story behind this story which is about the “personalistic” culture that Brooks describes and its demand that institutions deliver social impact. “One of a Kind” tells the story of how Bertrand Might’s parents, Matt and Cristina, tried to discover what was wrong with their infant son. The Mights traveled from medical institution to medical institution only to have one diagnosis after another proved false and the medical practitioners lose interest when there was nothing more they could do.

When Bertrand turned seven, a DNA sequencing study that had started two years earlier, concluded that his severe disorder was caused by an inherited genetic mutation. However, “…without additional cases, there was virtually no possibility of getting a pharmaceutical company to investigate the disorder, no chance of drug trials, no way to even persuade the F.D.A. to allow Bertrand to try off-label drugs that might be beneficial.” Unless, somehow, more patients emerged. While the medical researchers theoretically could have shared their data with other medical researchers to find these patients, there were many institutional and professional disincentives that made it unattractive for them to do so. Primary among them – not getting exclusive credit for any forthcoming discovery.

So, the Mights decided that they would take to the social network and find others with the genetic defect themselves. Matt, a professor of computing, had developed a following online among both computer programmers and in the more general online community based on a very popular post that he had written a few years earlier. He decided to harness this visibility on behalf of his son. His post, “Hunting Down My Son’s Killer,” became the top story on Reddit less than 24 hours after it was posted. It went viral and its search engine ranking climbed, making it easier to find.

Within 13 months of making the post, the Mights had identified nine more people with the same genetic mutation and medical problems as their son. But they have done even more. Working with another family whose child has the genetic disorder, they have pushed the clinicians and researchers focused on this disease to pool their knowledge and collaborate on developing a clear clinical report on the disorder. The paper has been published. One of the researchers commented on the process, “It’s a kind of shift in the scientific world that we have to recognize – that, in this day of social media, dedicated, educated, and well-informed families have the ability to make a huge impact….Gone are the days when we could just say, ‘We’re a cloistered community of researchers, and we alone know how to do this.” Gone are the days when institutions are free to serve themselves without sufficient consideration of how their core processes impact real people.

As if on cue, McKinsey recently released the results from a global survey on “Sustainability’s strategic worth.” The study results note a marked shift from two years ago when the major reasons that executives gave for engaging in sustainability (which covers environmental as well as social impact) were managing reputation risk and increasing operational efficiency through lower costs. In 2014, executives were far more likely to say that they want to somehow align their sustainability initiatives with their business goals, mission or values. Rather surprisingly, nearly 50% of the CEOs said that sustainability is one of their top 3 strategic priorities and 13% said it was their most important priority.  At the same time, capturing the business value from sustainability initiatives is difficult “…because the more that companies prioritize sustainability, the more it needs to be integrated into (and even change) the core business.”  Nothing quite like having a McKinsey report to support your beliefs.

In my next post, I will document how these forces – the “personalistic” culture and its demand that corporations demonstrate that they are worthy of social trust in the way that they run their businesses – is playing out in the way that the media portray corporate actions that once would have focused narrowly on the economic returns that companies deliver to their shareholders. The winds of change are blowing, becoming gusty at times.

Sources:

  • “The Evolution of Trust,” David Brooks, The New York Times, Op-Ed column, July 2, 2014
  • “One of a Kind,” Seth Mnookin, The New Yorker, July 21, 2014
  • “Sustainability’s strategic worth,” McKinsey Global Survey, Shelia Bonini and Anne-Titia Bové, McKinsey & Company, 2014.

Change from the Inside|Out

Over the past year, I’ve been developing a concept for a new venture that partners corporations with social enterprises. Corporations get access to how some of the most entrepreneurial and innovative organizations are solving the world’s biggest problems and social enterprises get access to skills they need to scale up their efforts and the promise of more enduring relationships with their corporate brethren. We named the concept hopscotch because it represents a leap across boundaries and is meant to encourage a playful, but intense experience – the way kids feel about recess.

The idea came to me about a year ago at a social enterprise networking breakfast that takes place every month here in Baltimore. These events have become a routine fixture of the Baltimore social enterprise scene which is mostly populated by a large cohort of people in their late 20s and early 30s who are engaged in all sorts of initiatives to make Baltimore a better place to live and work.

The week before the breakfast, I had had a meeting with the head of innovation for a large company whose progress I had been following for the past 5 years. During that period, the company’s innovation programs had become fairly well established. They use an innovation software platform to facilitate idea generation and collaboration. They deploy design thinking as a tool for problem-solving and had even hired people associated with the prestigious D School at Stanford. But, even though they were making progress on what is called the “fuzzy front end” of innovation, once promising new ideas were identified and vetted, their teams lacked the entrepreneurial drive needed to get them off the ground. They were big company people who were at a loss when it came to launching a fledgling business on a small scale.

Fast forward to a week later at the SocEnt (every good group has to have acronyms) breakfast.  The way it works if you’re like me and only know the person who has invited you, is that you grab some coffee and sit at a table with people you don’t know. It is, after all, a networking event. I found myself at a table with two women who unbeknownst to me were featured presenters at the breakfast. (The breakfasts always showcase some organization that has an interesting story to tell.)

These women were part of MotherMade, a collective that helps low-income women learn how to become entrepreneurs by promoting small scale manufacture of custom-designed and environmentally friendly products. The women design and make small bags and other craft-like items that are sold to corporations as event give-aways. One of the women was a co-founder of the collective and the other was a member. As I listened to them talk about their enterprise, it dawned on me that I was sitting in the nexus of next generation entrepreneurs. The people in the room had founded organizations that busted down barriers of all sorts – race, class, gender, sexual orientation, age – to solve BIG problems. They were full of energy, had clear lines of sight to their goals, and were passionate spokespeople for their organizations.

I went home that morning and was inspired to write down a list of all the things that social entrepreneurs could potentially teach corporate managers. That list was the start of hopscotch. But what really got me excited about the concept went beyond what I felt was an obvious platform for value exchange between corporate and social enterprises. I believe that hopscotch could have a part to play in changing the role of corporations with respect to social impact from the inside out.

Today, most corporate executives understand that something is going on with corporate social responsibility. They are aware that their license to operate depends, in some measure, on the perception that they are good corporate citizens. Consumer brands companies know that they must find ways to insure that their products positively contribute to health and well-being. Large employers, especially those that are the largest employers in a city or region, recognize that their managers and executives should be sitting on nonprofit boards and that they will need to fund charitable causes. They might even provide paid time-off for their employees’ volunteer activities or match individual contributions to charities. Some even have programs for retirees that enroll them in “encore” careers in the social service sector, putting their skills and experience to work on behalf of nonprofits.

I don’t want to appear as if I think that it is anything less than wonderful when capable people devote themselves to making the world a better place or when companies and individuals engage in philanthropic activities. But I can’t help thinking – how does this really change anything? We work the way we always have and do good on our own time. Our profit-making companies get to go about business as usual. The way we work and the way our companies work doesn’t change.

In the future, and I believe it will be a future much nearer than we imagine, corporations won’t be granted the license to operate unless they are able to demonstrate how they manage for social impact in their core businesses. Not in addition to their core business, but through their core business activities. So, it is essential that future leaders are equipped to deliver this outcome. But, they can’t figure it out in the companies they work for today which operate under today’s rules. But they can by working with social enterprises which are delivering social impact right now.

Of course, not everyone buys into this view of the future.  A few years ago, I was given an opportunity to present the case for Corporate Social Responsibility (CSR) to the CEO of a very large company. In hindsight, it’s clear that I was invited to be the messenger because I was going to be shot. Let’s just say that the executive team of this company was not comprised of liberal-leaning white men – their politics tended towards libertarian. I remember the CEO stating his position as something along the lines of, “We pay people well and if they want to contribute to social causes with their own money on their own time, that’s their choice.” The idea of corporate philanthropy, let alone corporate social responsibility, had no place in this CEO’s view of corporate stewardship. This was his personal view, of course, but no one on his board had even broached the topic with him, so his personal view was de facto the corporate view. I volunteered the possibility that the expectations of employees or even the company’s customers might be different and that these expectations might be more important than any individual’s, even the CEO’s. My argument was unpersuasive. Today the company has a CSR initiative. But there is no sign that it is anything other than window-dressing and still lacks visible support from the top.

I’ve also gotten this feedback about the idea of partnering corporate and social enterprises that I think reflects an opinion which is held by more people than just the person who voiced it:

 “…[It] is not clear that businesses need to be more overtly socially conscious to…[be successful]. In fact, many businesses contribute to the public good by creating products and services that people get utility from and focusing on those core competencies is what benefits society most. I always felt that way at [Company], that our products helped people operate and manage their businesses more effectively and provide better customer service. Won’t many of your target companies feel the same way about what they do?  Does it make sense that their employees will really be “taught” by social entrepreneurs?”

Good questions – all of them.  However, there are signs that while the answer to the first question – Won’t many of your target companies feel the same way? – is mostly likely “yes,” that the times are changing.  How corporations understand their role in society is shifting. Part of operating and managing a business more effectively and providing better customer service will entail understanding how to deliver social impact. And the answer to the second question is clear to me – “Yes.”

More on why in the next blog post.

 

 

On Merits Alone

When we are confronted with something new – whether it is something as concrete as a new haircut or something as abstract as a new idea – most of us believe that we can provide an objective response.  We believe that we can evaluate something new and different based on its merits alone to determine if it is good or bad, worth pursuing or rejecting.  However, both nature and nurture suggest otherwise.

Industrial designers know how to use the way human beings are wired to experience their surroundings to elicit reactions that are not based on the actual physical characteristics of what is encountered but on subtle environmental cues. Cabin design for business class air travel is a perfect example of how designers manipulate our all too human senses so that those who shell out the big bucks for luxury air travel feel they are getting what they pay for.

Alternating upholstery tones on the seats in a business class cabin creates “a pattern that causes the brain to register less than the entire expanse.”(1) The checkerboard effect prevents people from being able to perceive the whole. As a result, business class passengers entering the cabin do not become overwhelmed by a cascade of seats. Contrast that with the phenomenon of entering the economy or coach class cabin – the deflating vista of tightly packed row upon row of identical seats and the immediate claustrophobia it induces.

Designers use another trick in business class cabins with seats that open up to become fully flat beds to distort reality. While most passengers in these cabins sit facing forward, they sleep on a diagonal, “an innovation that makes it possible to create what looks like a first-class experience in a significantly smaller space.”(2) These passengers feel that they have more room than they do because every centimeter of space is designed to “de-crowd” their experience. How much space they actually have at their disposal is irrelevant. In fact, most of them would be shocked to learn how little it really is, even in luxury class.

If we were asked to describe the business class cabin compared to coach, we would most likely call it “roomy,” and “private.” In reality it is not particularly roomy or private. But we wouldn’t really be able to tell. Even if we were industrial designers ourselves and could appreciate how we were being manipulated, we would still be manipulated. It’s just the way we are made. It’s our nature.

Over the past decade or so, it’s become increasingly accepted in the business world that human nature affects our decisions and actions at work. We are wired to respond to risks in certain ways that are divorced from reality. We are likely to take action if there is a 90% chance of success but will avoid a 10% chance of failure like the plague. If asked to place an economic value on something that is completely outside of our expertise, we come up with numbers that are anchored to whatever numbers are floating around in our heads from our most recent experiences. We shut down disconfirming points of view under all sorts of pretexts – the person expressing them is not a team player or is simply obnoxious.  Even if these observations are true, they serve to keep us from having to absorb unsettling information. Behavioral economics has emerged as a field of inquiry because traditional economic theory with its assumption of rational decision-making that is aimed at maximizing utility fails to explain the way in which people really seem to go about making economic decisions.

It’s also becoming increasingly clear that nurture, the lives we lead, profoundly shape how we evaluate new things, even in the world of work. I remember when I was first entering the work world, one of the big messages about how to conduct yourself was “leave your personal life at home.” “It’s just business” is still a catch phrase that is often used to explain away decisions that deeply impact others on not just a professional, but also a personal level. When I was younger, I struggled with an inability to completely inhabit this impersonal, highly rational business self. When I was upset, I would find myself crying in the women’s bathroom; quietly, of course, but crying nonetheless. This was NOT something that you were supposed to do in business. And perhaps it was because the way that men typically channel their frustrations – bluster and bravado – was considered businesslike, it wasn’t clear to me that no one was really leaving their true selves or their personal lives at home.

Recently reported research from a team of business school professors at Wharton and Temple University examined how the marital status of 1,500 CEOs affected the riskiness of their decisions and actions. The researchers looked at CEO decisions such as capital expenditures, innovation, R&D and acquisitions and used their company’s stock return volatility as a market-based measure of enterprise risk.

“…we find that there is a still sizable difference — about 10% greater investment [in risky activities] by firms led by single CEOs compared to firms run by CEOs who are married. And differences in stock return volatility are also quite substantial… Managerial decisions are affected by what is happening in those individual’s personal lives in ways that most of our views of business decision making do not account for.”(2)

Apparently nobody leaves his or her personal life at home – not even the CEO.  How we live our lives affects the way we perceive and respond to our options.  This happens without any conscious awareness on our part. However, we act as if this were not true. We act as if we are dispassionate decision-makers who respond to the new and different without bias. The evidence is mounting that this is a lie we tell ourselves to shut down the discomfort that we experience when confronted with something new and different. Instead of sitting in that discomfort with an understanding that both nature and nurture are doing their best to maintain the status quo, we react as quickly as possible to keep the new and different at bay. Perhaps we should take a page from the comedian Louis C.K. whose approach to developing material is all about unease.

 ”You’ve got to embrace discomfort. It’s the only way you can put yourself in situations where you can learn, and the only way you can keep your senses fresh once you’re there.”(3)

Nature and nurture could be our best friends when it comes to the new and different. But only if we can learn to resist the urge to get back to what feels safe and hang in there with discomfort long enough to have a shot at evaluating whatever it is that we haven’t experienced before on its merits.

Sources:

(1) “Game of Thrones,” David Owen, The New Yorker, April 21, 2014

(2) “Risk and the Unmarried CEO,” sourced on 5/21/14 at: https://knowledge.wharton.upenn.edu/article/risk-single-ceo/  based on Marriage and Managers’ Attitudes to Risk, Nikolai Roussanov and Pavel G. Savor.

(3) Quote sourced on 5/25/14 at http://www.huffingtonpost.com/2014/04/22/louis-ck-gq-cover-story-embracing-discomfort-photo_n_5191708.html

The Drudgery of Discovery

Science:  Knowledge or a system of knowledge covering general truths or the operation of general laws especially as obtained and tested through the scientific method (principles and procedures for the systematic pursuit of knowledge involving the recognition and formulation of a problem, the collection of data through observation and experiment, and the formulation and testing of hypotheses) (1).

What is more important in advancing discovery – the science of discovery or the discoveries themselves?

Of course, both are important. Discoveries are newsworthy and sometimes earth-shattering. They are sexy stuff. Science creates a repeatable path towards future discoveries. Science, especially its reliance on the scientific method, is decidedly unsexy. Its end point (a discovery) might be sexy, but the process, for the most part, is not.

I recently finished reading a book about decrypting an ancient language known as Linear B. While “The Riddle of the Labyrinth” is an excellent account of cracking the code that unlocked Linear B; the author, Margalit Fox, also seeks to restore credit for this achievement to a woman whose arduous and lengthy efforts created the science of discovery that made it possible to decipher this written and spoken Mycenaean language (an early variant of Greek from the Bronze Age).

Linear B

 

Linear B was discovered on tablets at the turn of the 20th century by the English archaeologist Arthur Evans. The tablets represent the earliest known European writing from around 1450 BC, 700 years before the Greek alphabet (which before Linear B was believed to be the first European writing).  If history comes into being with the written record, the Linear B tablets transformed a period that had been considered pre-history into history.

Kana Chinese

Writing systems are less common than most of us think. Spoken language can exist without them (the author notes that of the estimated 6,000 languages that are spoken today only 15% are believed to have written forms). In ancient times writing systems appear to have been even rarer than they are today.  Linear B is a syllabic writing system in which the symbols stand for syllables (such as Japanese kana). There are two other types of writing systems. Logographic languages are those in which the symbol stands for a concept (such as Chinese).  Alphabetic languages are those in which symbols stand for specific sounds (such as English).

Just how difficult was it to decrypt Linear B?

When attempting to read a script, a reader can find herself in one of four possible situations:

Language_Script 2x2

A known language in a known script such as the text you are reading right now is immediately intelligible – no deciphering is needed. However, when one unknown is introduced into the picture, everything changes, making decipherment extremely challenging. The author cites two cases which to date have not been resolved.  Rongorongo, a script believed to have written a Polynesian language that is still spoken on Easter Island, fell into disuse. So even though the language is known it is not possible to associate sounds with the symbols. Etruscan, a non Indo-European language of ancient Italy, has a script that survives and can be read (it is based on the Greek alphabet). However, lacking an understanding of word breaks and grammar, the string of sounds cannot be parsed into meaning.

If just one unknown can render some decipherment impossible, two seems like a locked box of impossibility. However, by creating a science of graphics – painstakingly inventing a framework to uncover the hidden rules of Linear B’s grammar, syntax, and structure – Alice Kober made it possible to unlock the language. By rejecting ALL assumptions, she avoided the trap of circular logic that had stymied previous decoding attempts. Others made starting assumptions that led them to what turned out to be false conclusions, dead ends. Had she not died from what many assume was cancer at the age of 43, Kober might have been able to complete her life’s work.

There are many themes that lace the story Fox tells, but three stand out:

Sexism:  In the 1930s and 40s when Alice Kober was conducting her research, the prevailing culture of sexism made it all too easy to diminish the accomplishments and contributions of a rather plain-looking and self-effacing middle-aged woman who had no time to be bothered with social niceties. The Alice Kober described in this book does not seem all that likable (or interested in being likable). She comes across as a brilliant obsessive who was denied a seat at the table precisely because she was a woman. At the time she was being considered for an associate professorship at the University of Pennsylvania (in the 1940s), women were not deemed viable candidates for such positions by men. What makes for painful reading, though, is to be reminded that at that time not even women thought that women should hold such positions.

Hero Worship: The competitive nature of discovery, even in a field most of us wouldn’t give a second thought – early history. When only one person will  ultimately get credit for the discovery even though many others have made the “ah-ha” moment possible, knowledge hoarding is a reasonable position to take even if pooling knowledge would advance the discovery. A corollary to this theme is the cultural obsession (which seems to span many cultures) with a “hero” – the person (usually a man) who ultimately solves the problem that many others have been working on for a long, long time. The credit for cracking the code of Linear B was entirely ascribed to Michael Ventris whose solution, the author makes plain, relied on at least three ground-breaking insights that came from Alice Kober but were never credited to her.

The Ends versus the Means: The relegation of methodology or science to a lower importance status compared with discovery itself. Alice Kober spent the better part of 15 years building a framework that did not presuppose anything about the language she was attempting to understand. Even though the tablets on which the language was inscribed were found on the island of Crete in the purported remains of the palace of Minos at Knossos, Kober did not assume that the language was Minoan. She did not assume that it was a remnant of Etruscan, the “lost” language of a civilization that preceded the Roman civilization. She did not assume that it was logographic (like Chinese or Japanese) even though many of the symbols made it tempting to do so. She painstakingly constructed a methodology for discovery – a science of graphics – which integrated rules and basic theories of how languages work to allow the origins of the language – its grammar, syntax, and sound – to emerge.

Kober died before she could crack the code and it isn’t certain even if she had lived that she would have been the one to decipher Linear B. However, the fact that a drab and discounted woman pursued the drab and discounted side of discovery – the science side –has consigned her to the ranks of unsung heros. I am in awe of the tremendous intellectual and emotional conviction required to let the process work, resisting the impulse to make assumptions and trusting that the truth will out. While it is easier today to source and mine data than it was for Kober, who had to do it all by hand using an intricate paper-based system, it is no easier to tease meaning out of data. Someone still has to construct a framework that makes meaning out of masses of information. And someone has to be fearless enough to look at the results without blinders to grasp its implications. Someone has to be willing to pursue the unsexy, but necessary, task of inventing a science.

 

(1) Source:  http://www.merriam-webster.com/dictionary/science?show=0&t=1396526463

The Tempo of History

…[Auerbach] viewed life on earth as a purposeful unfolding in which the tempo of history is continually roiled by events.  So, even as the world changes in front of us, it should be viewed in retrospect, since only then can such changes become part of the tempo.

Often when I’m in the midst of writing a post, I come across something that expresses the exact point that I have been mulling over. I read the above quote in a review of the work of Erich Auerbach, a philologist whose seminal books on the history of Western literature laid the foundation for the field of comparative literature. Auerbach’s perspective on change brought the seemingly disparate stories I had been reading over the past few weeks into sharp focus – they all called into question how we understand the tempo of history.

The older we get, the more acutely we are aware of not only how things (including ourselves) have changed, but also how things are changing all the time. Is it possible to identify the precise moment which initiates a significant change? Can we ever hope to see this moment clearly if change is always unfolding ahead of us, altering our understanding of the significance of past events and our sense of how they lead to what transpires in the future? Or, as the reviewer wrote about Auerbach, can we only look backwards, deep into the past, to gain any perspective on how an event has changed what follows in a significant way? And then only with the humility of knowing that what we believe with certainty in the present has the potential to be undone in the future as the long arc of perspective lengthens, exposing previously hidden information and connections?

Nobody ever goes to bed middle-aged and wakes up and says, “oh no I’m old.”

This from Richard Dawkins, an evolutionary biologist and former professor of public understanding of science at Oxford University, explaining how hard it is to pinpoint the moment at which it is clear that there has been a change in evolutionary terms. You could argue this point and respond, it depends on how long you sleep (witness Rip Van Winkle). But, I suspect that is EXACTLY Dr. Dawkins’ point – it is incredibly hard to know when a new era has dawned because it is only when the new becomes the norm that you can look back and say that things have changed. It may be possible to identify the tipping or inflection point, but it is virtually impossible to find the first point.

Scientists recently discovered a human fossil that provides evidence of the oldest human DNA. But instead of pointing back to the Neanderthals, the DNA points to another group, the Denisovans, a Paleolithic human group which scientists had believed was genetically and anatomically distinct from Neanderthals. However, the anatomical evidence suggests that the Denisovans shared physiological characteristics with the Neanderthals. This new connection has muddied the waters, opening up the possibility that there were many more proto-human populations than scientists had originally thought and that they were not as different from one another as had been assumed. Human beings appear to have had many more diverse ancestors than previously believed. The origin of homo sapiens, the first point, is proving to be incredibly elusive.

Not only might it be impossible to isolate a first point, but the nature of change itself is clearly lumpy.  At the extremes are two kinds of change. One might be defined as “slow change” – the kind of incremental adaptation that we associate with Darwin’s theories of evolution – and “fast change” – the kind that a contemporary of Darwin’s, Georges Cuvier, identified which is caused by catastrophic conditions that annihilate the existing order. You don’t stand much of a chance when confronted with fast change – you either luck out or you don’t. But, under some conditions, slow change offers options. It’s possible to see signs of slow change along the way, if you can find the clues and interpret them. Many times, of course, you can’t. For example, in the search for human ancestors described above, only recently have new clues emerged and it hasn’t been easy to interpret them.

Georges Cuvier is credited with founding the discipline of paleontology and conceiving of and proving that mass extinctions which occurred before recorded history wiped entire species off the face of the earth. But his theory was incompatible with that of Darwin who viewed extinction as “a routine side effect of evolution.” For about a century, Cuvier’s theory languished until it was possible for the scientific community to understand that one type of change did not obviate the other. If Darwin correctly surmised the process of slow change in the natural world, Cuvier correctly surmised the process of fast change. So, now we are faced with a second change challenge. In addition to the difficulty of identifying the initial point of change (its origin), we cannot know beforehand if we are in for a fast or a slow ride.

The thread of change underlies much of what we call “the news.”  Two of the news stories that received a great deal of attention in 2013 and will continue to play out in the new year share a a common characteristic – the impetus for change has been building for a long time but its origin is murky and its endpoint uncertain.  In these two instances, will we witness fast or slow change?  Are we seeing a first point or will future events force us to look further back into the past?

Story #1:  The failure of the first Massively Open Online Courses or MOOCs captured headlines in December 2013.  MOOCs have been hailed as the harbinger of a new era in secondary education, a destabilizing force that is poised to topple the traditional university, providing access to great education for those who cannot afford the dazzlingly expensive experience of a four year education at private or even many public institutions. MOOCs are seen by many as the logical next step in the evolution of secondary education, part of slow change. But will they prove to be a dead end? Because, it appears that the first and second incarnations of the MOOC have failed.

In a recently released study of one million MOOC students, only half of those who registered for a course viewed one lecture and about 4% on average completed the course. In the case of San Jose State University which partnered with Udacity, one of the first MOOC providers, to offer a MOOC with online mentoring support, the online students fared worse than in-classroom students taking the same course with only 25% of the MOOC students receiving a passing grade.  So MOOC v 1.0 and MOOC v 2.0 have failed. But no one is counting them down and out.  If MOOCs cannot declare themselves “winners” yet, those who stand behind them believe that evolution or catastrophe is on their side.  As one observer remarked, “It’s like, ‘The MOOC is dead, long live the MOOC.’ ”

Story #2: Marijuana can now be legally grown and sold in the states of Washington and Colorado.  One significant challenge facing these states is how to design a legitimate market that makes the black market unattractive.  On the face of it, this would appear to be easy. Who wouldn’t prefer to grow, sell, purchase and use pot legally rather than run the risk of a committing a crime? Well, it depends. It depends on the price that the state sets for pot. It depends on the state’s desire to profit from the market (as it does with other sanctioned “sins” such as alcohol, tobacco, and gambling). It depends on the limits to consumption that the state imposes. (Do you have to be 18?  If you give your legally purchased pot to an underage consumer, is that legal? How much pot can one person purchase in any given period?) It depends on the limits to production that the state imposes. (Who can grow it?  How much can they grow?  Where can they grow it?) These are only a handful of the most obvious factors that will affect the transition from illegal to legal market.

Among the biggest concerns facing the state, the uncertainty about the extent to which a legal pot market will encourage greater consumption and ultimately lead to substance abuse hangs over the enterprise like a dark cloud.  It’s clear that the best customers for any product are committed customers and in “sin” markets (alcohol, tobacco and gambling) those customers are also called addicts.  The designers of legal markets for marijuana look to the way markets for these other “sin” products have been designed. But because the transition has to occur quickly, the fact that these established markets are functional has encouraged state planners to borrow freely without too much adaptation or adjustment to the way these systems currently work. This has occurred despite the fact that legal markets for “sin” have also imposed huge human health costs on the state at the same time they have delivered additional revenues.  How is this story going to unfold?  It is moving quickly and is certain to have many unintended consequences.

In the course of our daily affairs, we act as if we can in fact see the first point – that we can initiate change and control the way in which subsequent events will unfold. While we know that the world we live in is complex and uncertain, unfolding in highly irregular and unpredictable ways, we act quite differently. If we were more humble and more realistic, perhaps the most we could say is what one pot dealer named Ben Jammin had to say about the changes in Washington state:

We’re not sure what’s coming – but it’s coming.

Sources:

  • “Intellectuals on a Mission, The Unbelievers’ Chronicles Road Tripping Scientists Promoting Reason,” Dennis Overbye, 12/9/13, The New York Times, sourced on 12/12/13 at: http://www.nytimes.com/2013/12/10/science/space/the-unbelievers-chronicles-road-tripping-scientists-promoting-reason.html (source of second quote)
  • “Baffling 400,000 Year Old Clue to Human Origins,” Carl Zimmer, 12/4/13, The New York Times, sourced on 12/12/13 at: http://www.nytimes.com/2013/12/05/science/at-400000-years-oldest-human-dna-yet-found-raises-new-mysteries.html
  • “After setbacks online courses are rethought,” Tamar Lewin, 12/10/13, The New York Times, sourced on 12/13/13 at: http://www.nytimes.com/2013/12/11/us/after-setbacks-online-courses-are-rethought.html
  • Penn GSE study shows MOOCS have relatively few active users, with only a few persisting to course end, sourced on 12/13/12 at: http://www.gse.upenn.edu/pressroom/press-releases/2013/12/penn-gse-study-shows-moocs-have-relatively-few-active-users-only-few-persisti
  • “The Lost World,” Elizabeth Kolbert, The New Yorker, December 16, 2013
  • “The Book of Books,” Arthur Krystal, The New Yorker, December 9, 2013 (source of first quote)
  • “Buzzkill,” Patrick Radden Keefe, The New Yorker, November 18, 2013 (source of third quote)

Boo!

Just in time for the Halloween Holiday, comes scary innovation news from Singapore and the U.S. National Funeral Directors Association – an open innovation competition called Design for Death.

Mushroom Death Suit

 

 

 

 

 

 

 

Jae Rhim Lee wearing the Mushroom Death Suit

Even in industries with processes that would appear to be at total odds with change of any sort, there is a push to move outside the comfort zone and imagine possibilities for the future (including the afterlife).  Burial practices are for the most part dictated by religious ritual. They would have to win in the competition for process least likely to change and least likely to attract those outside the profession to participate in an innovation competition, however open.  And it’s not as if there is a concern about the market for services drying up. As the old saying goes – “there are only two certainties in life – death and taxes” (Ben Franklin).  But, the industry is in its mature phase – the critical inflection point at which transformation occurs from within or without or both. Looked at this way, an open innovation competition for Design for Death might even be entirely predictable.

First and foremost in shifting the framework for thinking about death is a language change. While it may seem exasperating (even I sighed when I read the new term of art), the funeral industry is rebranding itself as the deathcare industry. (Microsoft Word highlights this term with a red underscore because it is not standard English…yet.) Deathcare shifts the focus from a narrow one of how we dispose of bodies (funerals and burials) to a more expansive one of how we acknowledge death and incorporate its presence in life.

Design for Death is the first in a series of challenges that are co-sponsored by the Lien Foundation, a Singapore-based philanthropy whose mission is to stimulate and spark high-impact idea exchange, high-intensity collaboration, and high-end value creation by leveraging the people, private and public sectors around three issues: eldercare, water and sanitation, and early education; and ACM, a philanthropy established by the founder of a Singapore-based casket company to uplift the deathcare profession. The next competitions focus on two of death’s many prequels – hospice care and community arts engagement in hospitals.

What is particularly interesting about the winning submissions to the competition is that:

  • All of the idea submitters are young – the oldest is 37 and the youngest is 24.
  • They do not work in the deathcare industry.
  • Some of them are not even designers.
  • None of them come even close to what you would call “experts.”

As the National Funeral Directors Association’s Executive Director, Christine Pepper notes,

The many entries we received from designers around the world show that innovation in deathcare doesn’t have to come from funeral directors. Ideas for how families honor and remember their loved ones can come from anyone and anywhere. The ideas and innovations presented by the designers who participated in this contest bring fresh perspectives to our profession and challenge funeral directors to think about the services and products they offer to families in new ways.

The winning ideas (and even some that did not win) are arresting, poetic, thoughtful and novel. I encourage you to visit the website to see all the entries, but note two that I really liked here:

  1. “I wish to be rain” which transfers cremated ashes to the troposphere via a balloon that seeds clouds which ultimately release precipitation.
  2. “Mushroom death suit” which uses the properties of mushrooms to decompose the body and partially remediate toxins that are released during decomposition.

And, lest you think that there is no way to measure the impact of such innovation on how society handles death, the Lien Foundation partnered with the Economist Intelligence Unit to conduct research and create a Quality of Death index that ranks 40 countries on provision of end-of-life care. The UK ranks #1 and the US is #9 tied with Canada. You can visit this site to begin your death-venture (I kid you not). For most of us, this is the ultimate haunted house.

Happy Halloween!

Difficulty and Doubt

“It’s just too hard to get things done around here.”

Classic expression of frustration heard in almost any organization, but especially in large ones. Laboring under the assumption that important activities should not be difficult to accomplish, the standard management reaction is to make things easier. When new priorities must be merged with existing ones, it seems even more important to design processes that outmaneuver the glitches that cause tempers to flare. We strive to create friction-free processes that are repeatable, reliable, and consistent. However, removing friction might be exactly the wrong thing to do if it’s important to learn and innovate.

Much of the impetus for the wave of interest in managing innovation comes from a belief that we have so little of it because the system makes it too hard. It’s true that in most organizations, processes and resources are focused almost exclusively on sustaining existing activities. With organizations running so lean there is very little bandwith available to take on something new.  It makes sense to assume that if we can remove snags and roadblocks from an innovation process, then we can free up innovators and increase innovation. But what if that’s not so? What if innovation requires friction?

Friction is the proverbial “when the going gets tough” situation.  When circumstances are not conducive but instead are daunting, it forces acknowledgement of:

  • Doubt, the limits of knowledge, even the ability to know
  • Possibility of failure and consideration of how to persevere should it be encountered
  • Probability that progress will be incremental and fitful, requiring many adaptations

Friction provides the opportunity to practice making difficult decisions and dealing with the consequences – this is the essence of learning and is a prerequisite for innovation.  When we talk about managing innovation in organizations, we are really talking about establishing habits of being curious and open to learning.  However, it seems to me that we misdiagnose the difficulty involved with innovation as a problem that should be solved by making things easier.  In fact, without difficulty, we reduce the potential for doubt, failure, and the need to revisit assumptions over and over again.  We undermine the potential for innovation.

At the same time I was reading Malcom Gladwell’s review of Albert O. Hirschman’s theories which the preceding musings are based on (1), I came across a story posted on fastcompany.com that gave life to Hirschman’s belief about the importance of  difficulty and doubt for progress to occur in any system (2). The fastcompany.com story was about 17-year-old  Easton LaChappelle who faced difficulties (lack of knowledge, skills, funding, and institutional support) that should have prevented him from accomplishing what he set out to do (reinvent conventional prostheses).

But, as Hirschman might have predicted, LaChappelle’s difficulties proved essential to his innovation. LaChappelle had to teach himself “electronics, coding, how to use a 3-D printer,” and most importantly how to do all of it on the cheap from his bedroom.  He figured out what he needed to know and how to learn it, what materials he absolutely needed on hand and how to get them, how to confirm market demand (via a Kickstarter campaign), and how to use every available opportunity to tell people his story about making prosthetics affordable.

LaChappelle’s goal was to rethink the $80,000 prosthetic arm (a price tag that doesn’t include the costs of the surgical procedures needed to use it) and find a way to make an affordable one. LaChappelle ultimately created a $400 robotic arm that can be used by amputees without surgical preparation.  Think of it as an iPhone equivalent – if you need to upgrade in a few years, it’s not out of the question.  Contrast that with the $80K arm and the technology that you are stuck with for a long time.

Now, of course, LaChappelle in many ways is not your average teenage kid.  But he COULD be.  He has a curious mind whose dictates he follows and he is flexible in how and where he learns. These behaviors are not particularly unique to LaChappelle.  Most little kids exhibit them all the time.  These are the habits of innovation and they are rarely inhibited by the kinds of difficulties that we routinely decry as the obstacles to innovation in our organizations.  But, in the same way that we squash these habits in kids by running them through the education system, we squash them in organizations by running innovation through the exercise of the business case analysis.

I am not opposed to the basic concept of the business case analysis.  A systematic thinking through of goals, constraints, resources, and potential scenarios is time well spent.  However, the hallmark of business case analysis is the degree to which we ask people with new ideas to express an extremely high conviction that they have been able to squeeze all doubt out of the picture. We do this by identifying potential roadblocks or other surprises and describing how they will be managed. To pass the business case test, we pretend that the surprises are risks rather than uncertainties (for the difference between the two, see (3) below under Sources) and that we are skillful enough to map out strategies for avoiding or minimizing them.

However, doubt, like difficulty, is critical for innovation.  Doubt is the handmaiden of curiosity.  If you believe that you know it all and you are certain of what you know, there isn’t much to be curious about and there isn’t much new to be learned.  Doubt seems ever more important when situations are complex and uncertain which is increasingly the case in all domains of contemporary life.  Hirschman’s ideas snapped me out of my blathering on about “making innovation simple and easy.”  Because, really, how can that be?  How can innovation be anything other than replete with difficulty and doubt?  The two sources of friction that create the conditions for something new to suggest itself.

Sources:

(1) “The Gift of Doubt: Albert O. Hirschman and the power of failure,” Malcolm Gladwell, The New Yorker, June 24, 2013

(2) “Meet the 17-year-old who Created a Brain-Powered Prosthetic Arm,” Liz Presson, FastCompany.com, sourced on 8/26/13.

(3)  Risk: We don’t know what is going to happen next, but we do know what the distribution looks like.  Uncertainty: We don’t know what is going to happen next, and we do not know what the possible distribution looks like.  Attributed to Michael Mauboussin, sourced on 8/16/13 at The Big Picture.

Easton LaChappelle’s TedxMileHigh Talk

 

The Curious Observer

When I’m asked to enumerate best practices for idea management or group decision-making or team-building or any activity that involves people trying to do something as a group, somewhere on my list is the practice of making sure that somebody (or somebodies) is an observer. In idea management, which typically occurs on-line using some kind of collaboration software, that somebody is called the moderator. For in-person groups (or mostly in-person – sometimes people are connected via video conference, but they see one another and interact in real-time) the term of art is facilitator. While everyone acknowledges that this role is important, in idea management it often goes to a more junior person or an administrative type; i.e., it’s important, but not that important.  For in-person groups, the facilitator is often a more experienced (i.e., “older” person or someone who has had group facilitation training). However, facilitators are rarely required to understand the content of the discussions or decisions that the group makes. They are expected to guide a process. The same holds true for on-line moderators.

However, when observers, whether facilitators or moderators, lack familiarity with the substance of the group’s discussions and decisions – not expertise, but just enough understanding to be dangerous – I believe that the group markedly diminishes its potential for innovation, the truly different way of figuring out how to move forward or solve a very persistent, complex problem. I believe that groups need curious observers. Curious observers play an essential role in discovery – the pivotal moment in all innovation that is perhaps the true “Eureka” moment. Because creating something and recognizing that it might be important in some way rarely occur at the same time. In our idealization of innovation, we tell stories that merge creators and discoverers into one person who has one blinding flash of insight. But more often than not, there are many insights along the way some of which are discovered by curious observers.

Case in point from a story about fungus from a recent New Yorker magazine(1). Mushroom fungus or polypore mycelium to be specific. (Stay with me on this one!)

Two seniors at Rensselaer Polytechnic Institute (RPI) were beavering away at a class project for an Inventors Studio class, which is exactly what it sounds like – a class devoted to guiding students in the process of invention with the long shot hope that their ideas might form the basis of a company that will bring innovative solutions into the market. These two seniors, Gavin McIntyre and Eben Bayer, were casting about for an idea that their very exacting professor, Burt Swersey, would approve for their project. They had pitched a few ideas to Swersey to no avail. Then, Bayer recalled an experiment that he had performed in another class at RPI responding to the challenge of making insulation out of perlite. Most of us know perlite as the little white plastic-like pellets that are mixed in with bagged potting soil. We also know how annoying those little pellets can be – they are lightweight and float around, settling in puffy clumps, making a mess. In his RPI class, Bayer had used mushroom spores to bind the perlite.

As a kid growing up on a farm where his dad made maple syrup and sold it commercially, Bayer had had a lot of chores to do outdoors.  One of his chores was to shovel wood chips from a pile to a burner that boiled the sap.  He had often noticed that the wood chip pile sprouted mushrooms whose mycelium bound the chips so tightly together that he found it difficult sometimes to shovel them.  He had remembered that binding property during his class project to create perlite insulation. He brought the results of that project – a glass jar of solid perlite and mycelium – to Swersey’s class.

Here’s what happened according to Swersey:

“He takes this thing out of his pocket…and it’s white, this amazing piece of insulation that had been grown, without hydrocarbons, with almost no energy used.  The stuff could be made with almost any waste materials – rice husks, cotton wastes, stuff farmers throw away, stuff they have no market for – and it wouldn’t take away from anybody’s food supply, and it could be made anywhere from local materials, so you could cut down on transportation costs.  And it would be completely biodegradable!  What more could you want?”

The rest of the story about Evocative Design, McIntyre and Bayer’s company that produces packaging material out of mushroom fungus, is quite an amazing read and I recommend it. But what stood out for me in the story is that without Swersey it is unlikely that the company and its subsequent success would have happened. McIntyre and Bayer both had jobs lined up after RPI – good jobs. Swersey urged them to forgo these jobs and continue developing their invention. They thought they might be able to work on their invention on an after-work-hours basis, but Swersey emphatically told them this would not be enough. He offered to take money from his retirement savings to invest in their company. He helped them get a grant from the National Collegiate Inventors and Innovators Alliance and got them situated in RPI’s incubator space for start-ups.

Swersey, a curious observer, was an essential part of the discovery process. Neither McIntyre nor Bayer on their own had the perspective to recognize the potential of what Bayer had initially created and what they both further developed in Swersey’s class. Bayer’s flash of insight was based on an idle observation made years earlier in passing. From his point of view at the time, using mycelium to bind perlite was a one-off to complete a class requirement. Bayer threw a “Hail Mary” pass when he brought the idea to Swersey’s class to see if it would pass muster there.

Swersey, while not an expert in mycology or insulating materials engineering, did however operate with a framework that enabled him to see the potential in Bayer and McIntyre’s invention. His “Eureka” moment was every bit as necessary as Bayer’s in this story of invention and innovation. Inventor’s Studio is the search for ruthlessly affordable solutions(2) to existing problems that can make a discernible difference in the lives of the vast majority of people on the planet who live on less than $1 a day. This framework is incredibly clear – expansive and targeted at the same time. Without it, Bayer’s little while disk of perlite and mycelium, would still be an interesting curiosity rather than a biodegradable packaging material which is used by companies like Dell, Crate and Barrel, and Steelcase, and who knows what else in the future.

Without a curious observer to hold this kind of framework in place for groups as they work to solve problems, the connection between creativity and discovery often fails to take place. This is especially true for groups of experts who have even more to overcome than naïve amateurs like the students in Swersey’s class. As their professor, Swersey’s students expected his observations and input to matter, whether or not he was an expert in their project’s specific materials or engineering. Experts, on the other hand, view their facilitator or moderator as someone who is supposed to keep them on time and on task but has little else to contribute to problem solving. And, most facilitators and moderators buy in to this definition of their role. However, when facilitators and moderators are also curious observers, they can help the experts overcome the limitations of expertise. They can call attention to the contrary point of view that groups are quick to dismiss and encourage its exploration. Curious observers can ask questions and offer potential solutions that might be foolish or wrong, essentially acting as a naïve amateur, to challenge a group’s assumptions that often masquerade as facts. The curious observer can catalyze the moment of discovery which grasps the potential in an invention, whether a thing or an idea, and become an integral participant in the process of innovation.

(1)    “Form and Fungus,” Ian Frazier, The New Yorker, May 20, 2013

(2)   Designing for ruthless affordability is a concept from the work of Paul Polak.


Polak Advocates the ‘Ruthless Pursuit of… by FORAtv

People Who Help People

Increasingly, more and more of us are living relationship-intensive lives – always on and always connected.  In a gross simplification of the history of human relationships across millennia, we have transitioned:

  • From a tribal past when we were born into a small set of relatives who collectively represented the total sum of human relationships we would experience during our lifetimes;
  • Through a long stretch of history during which technologies (e.g., transportation, communications) and clustering into urban areas expanded our relationship set to include non-relatives and even strangers with whom we would form temporary or episodic relationships;
  • Arriving at the current time, when technology has yet again reinvented the nature of relationships, stretching them from the physical to the virtual realm, and exploding the number that we can form and sustain.

As Steven Johnson asserts in Future Perfect, his book about the networked age in which we live, information technology has enabled us to form dense, diverse, and distributed networks through which we mediate a much greater array of relationships than ever before (1).  Johnson also describes how information technology has lowered the barriers that have historically blocked disruptive ideas from moving swiftly into the mainstream.  Transmitting a non-conforming message from the edges or boundaries of systems where social outliers and the disenfranchised congregate to the center is easier than ever before.  Technology also makes it easier for those at the edges to find one another and form coalitions, increasing the stock of relationships.

Relationships have always been the currency of human systems. But as they multiply and form more complex webs, the way in which we negotiate them appears to be changing.  And these changes seem to favor the relationship skills that women have transferred into the workforce from their traditional role in the home (2).  Sally Hegelsen and Julie Johnson describe these predominantly female approaches to relationships which women bring to people management in their book, The Female Vision.  Paraphrasing Hegelsen and Johnson, I note the following four:

  • Leading from the center rather than the top
  • Reaching across boundaries to establish connections
  • Negotiating with a long term view
  • Seeking the collective good

This final attribute – seeking the collective good by crafting the proverbial “win-win” in situations requiring team effort has recently received New York Times Magazine treatment (3).  An article that ran in early April 2013 discussed academic research that has begun to re-shape the way in which jobs are designed, specifically the factors that motivate people to do their work and do it well. Adam Grant, the Wharton professor of organizational psychology whose research is profiled in the article, has demonstrated that “the greatest untapped source of motivation…is a sense of service to others; focusing on the contribution of our work to other people’s lives has the potential to make us more productive than thinking about helping ourselves.”  Grant’s research finds that it is not the intrinsic value of the work itself or even how it helps us get ahead, but how it helps others that motivates us the most.   Relationships rule.

Grant has constructed various experiments to test his theories of pro-social behavior. For example, in one experiment, he put signs above hand-washing stations in a hospital.  Some signs reminded healthcare workers that hand hygiene prevents them from catching diseases and others focused on how it helps patients.  Patient-focused signage spurred 45% more use of hand-washing liquids than healthcare worker-focused signage.  Just knowing that your work will help someone else – even if you don’t get immediate or direct feedback – improves performance.  People who need people are not just the luckiest people in the world, apparently, they’re also extremely high performers.

Doesn’t all this emphasis on helping others sound “girly?”  Don’t worry.  It turns out that to avoid being a relationship-centric doormat you need to add a bit of old-fashioned male “what’s in it for me-ness?” to the mix.  Grant’s typology of human social behaviors lumps humankind into three big buckets:

  1. Givers – The altruists.  People who don’t hesitate to do a favor or share credit or perform any other selfless act.
  2. Matchers – The vast majority of us.  We hedge our social investments – it’s all quid pro quo for most of us.  We need to know “what’s in it for me?”
  3. Takers – The “winners.”  The folks who need to come out ahead every time.  Life is one endless stream of transactions in which they maneuver to come out on the plus side.

Among the Givers, those who achieve success for themselves as well as others sit on the border between Givers and Matchers.  They have a healthy respect for their own ambitions, but are also more inclined to recognize and further the ambitions of those who seek their help without overt regard for how it furthers their own ends.  Operating under the Golden Rule (do unto others as you would have others do unto you), they prosper.  They are perceived as playing nice.

Nowhere in the Grant research that is presented in the article does it state that women are more likely to be Givers than men, but the qualities of Givers – put others first, think long term, seek collective good – are those that have been traditionally identified with the operating style women bring to family systems. And, in today’s intensively networked workplace, these qualities have gained ascendance because, as Grant’s research demonstrates, they promote getting things done and getting them done well.

What the article doesn’t say, but which Grant’s forthcoming book (Give and Take) might, is that they are also approaches which promote system sustainability. In zero sum games, someone ends up with zero – the game ends.  That is the nature of winner-take-all scenarios.  In the Taker worldview, a series of short term wins equals long term success. But this equation is increasingly viewed as incorrect. It is even being challenged in the world of high finance where new thinking about effective risk management for long term investments is upending the traditional view that a series of short duration bets is an effective strategy for managing long term risk.  Sustainability is becoming the new watchword even in a workplace dominated by Takers.

Grant’s research suggests that the future will belong to the Givers who straddle the Giver/Matcher divide and the Matchers who can add more doing without expectation of immediate payback to their playbooks, straddling the divide from the other side. These are the relationship management modalities that seem better suited to an environment which aims to create sustainable enterprises. They also seem to rely on the traits that are more commonly associated with the way women relate to others than the way men do.  If these forms of relationships rule, not just because it’s nicer, but because it’s more effective to use them – might we be at an inflection point where we witness the glass ceiling finally shatter?

For fun, Barbra Streisand singing “People Who Need People”

Sources:

(1) Future Perfect: The Case for Progress in a Networked Age, Steven Johnson, Penguin Group, 2012

(2) The Female Vision: Women’s Real Power at Work, Sally Hegelsen and Julie Johnson, Berrett-Kohler Publishers Inc., 2010

(3) “The Saintly Way to Succeed,” Susan Dominus, The New York Times Magazine, April 7, 2013