Artists + Scientists = Insights

The challenge of recognizing and understanding new ideas is so ancient that we can reach back to the New Testament and read about a frustrated Matthew as he explains why he has to tell stories (parables) to help people understand the news that he brings them.

 “Therefore I speak to them in parables; because while seeing they do not see, and while hearing they do not hear, nor do they understand.”  Matthew 13:13

But telling stories, even ones with profoundly teachable moments, has its limits when the idea that must be understood is complex and its impact is pervasive. That’s where numbers come in. Numbers put us on solid ground when we want to talk about big, universal concepts.

 “Some people make arguments by telling stories; other people make arguments by counting things.” (1)

The quote above comes from an article about income inequality that compares using stories and using numbers to make the argument about why a large wealth gap is harmful to society. The author, Jill Lepore, contrasts the story argument approach used in a book on the topic, Our Kids: The American Dream in Crisis by Robert Putnam to the numbers approach used by an economic index developed in 1912 by Corrado Gini to measure national income inequality. She asserts that numbers alone have their limitations as an argument technology (2) and cites an historian of science, Theodore Porter, to explain why.

 ‘“Quantification is a technology of distance….Reliance on numbers and quantitative manipulation minimizes the need for intimate knowledge and personal trust.” …But quantification’s lack of intimacy is also its weakness; it represents not only a gain but also a loss of knowledge.’

We need numbers, to be sure. But numbers alone do not make the kind of compelling arguments that are a pathway to knowledge. The most compelling arguments, the ones that persuade, include both numbers and stories. We want to be both emotionally moved, compelled in some way, and we want to know that we are on solid ground, not simply swept away by our feelings. The definition of argument includes emotion – heat and persuasion – and a presentation of facts or reasons. Arguments are the ultimate mash-up.

Argument: an exchange of diverging or opposite views, typically a heated or angry one; a reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong.

We don’t use the term argument too much anymore in organizations – we strive to have fact-based discussions. Fact-based is code for numbers. But when numbers monopolize discussions, the exchange of ideas becomes strangely neutered. Most of the discussions we have in organizations are arguments devoid of heat and persuasion and they frequently fall short of helping a group reach a decision. In order to really “see,” we need feelings and facts.

Stories are not the only way of bringing feeling to an argument that leads to fuller knowledge than numbers alone can provide. Surprisingly, the imperative to bring feeling to numbers is taking place in the world of big data analytics. As it becomes possible to amass unimaginable amounts of data and represent it visually in various forms, it is paradoxically becoming important to develop a “feel” for how to visualize data so that it tells a story. For example, genetic scientists at Albert Einstein College of Medicine in New York have sought help from a painter and conceptual artist to “reimagine the way they represent their data…[because the] problem today is that biological data are often abstracted into the digital domain,…and [geneticists] need some way to capture the gestalt, to develop an instinct for what’s important.” (3)

The instinct for what’s important in this case comes from having a “good eye” to identify possible hooks or pivot points that can unspool meaning from data so that it tells a story. Developing this “good eye” is a capability all of us have. At some early point in our lives, we used what is called perceptual learning to detect subtle differences that allow us to discriminate between similar but different objects or shapes – the numbers 3 and 8, for example. We rely on this ability without thinking. It is an instinct.

Usually we develop these instincts slowly, over time as a result of many, many repetitions. But there are ways to accelerate the acquisition of this sort of instinct. Developing this skill boils down to a particular way of practicing. For example, in a research experiment, a set of medical students learning techniques for gallbladder surgery viewed short video clips that showed the procedure at various stages and were asked to instantly decide what stage they were seeing. Students who engaged in perceptual learning scored four times higher than their peers on tests about the procedure. Perceptual learning helps us to rapidly detect subtle differences and frees us up to consider what these differences might mean.

“One thing I try to argue is that it’s not just about bigger machines to crunch more data, and it’s not even about pattern recognition,…It’s about frameworks of recognition; how you choose to look, rather than what you’re trying to see….” Daniel Kohn, painter and conceptual artist.

The way that you choose to look at something, the framework, reveals what you see. Frameworks screen some elements out and force other elements to a dominant position. The framework teases a story from the data that gives it meaning. The combination of story and numbers makes a compelling argument that has the potential to lead to new insights.

Innovation needs both artists and scientists to find ways of looking that help us see what is possible. Facility bringing together the technologies of feeling and fact is a requirement for organizations that want to build a successful innovation capability. In our time, rather than the wolf lying down with the lamb, we have geneticists partnering with painters to unlock the mysteries of the universe.

Sources:

(1) “Richer and Poorer: Accounting for Inequality,” Jill Lepore, The New Yorker, March 16, 2015.

(2) based on the dictionary definition of technology: “the application of scientific knowledge for practical purposes.”

(3) “Learning to See Data,” Benedict Carey, The New York Times, Sunday Review, March 29, 2015.

 

The Prodigal Capitalist and the Wayward MBA

Almost 15 years ago, just after my co-author and I published The Knowledge Management Fieldbook, we were discussing what came next. I remember having seen a book on corporate citizenship from our publisher and declaring, “This is what’s coming.” The idea that corporations had an obligation to create more than pure economic value for shareholders was something that we had skirted in our book’s discussion of the wealth-creating aims of knowledge management. We referenced models that included customer and social capital along with organizational and human capital as the mechanisms by which knowledge ultimately created value or generated wealth, but we did not suggest that the purpose of employing this capital was ultimately aimed at anything beyond generating value measured narrowly in financial terms. The idea that a corporation was obligated to not only generate economic wealth but also positive impact was outside the scope of what knowledge management practitioners and theorists were discussing at the time.

There is still a great deal of debate about the obligation of capitalists to deliver positive impact beyond profits or returns to shareholders, although clearly the conversation is shifting in favor of what might be called enlightened capitalism. Conscious capitalism is what John Mackey of Whole Foods calls his expanded theory of the purpose of the corporation. Michael Porter has given the name Shared Value to what essentially is the same thing. In the investment world, sustainability, responsible or impact investing and various other terms of art urge institutional investors to take a long view, factoring in the very real social and environmental impacts of investing in companies that might make money in the short term but do real harm in the long term, ultimately exacting a harsh economic penalty. The proliferation of Corporate Responsibility or Corporate Social Responsibility (CSR) positions in companies is further evidence of this shift. It is not just a Developed World phenomenon. For example, in India legislation passed in 2012 requiring larger companies to allocate 2% of profits to CSR, a requirement that cannot be met by simply donating to a charity, became effective this year.

Younger generations, the Millennials, appear to care about the social and environmental impact of corporations. Perhaps this is because the proverbial can which has been kicked down the road looks like it has come to the end of the road on their watch. Even my less than politically aware 17-year-old remarked recently that while she liked paying less at the pump as a result of falling gas prices, she understood that lower prices at the pump only put off the inevitable need to find other sources of energy that are less harmful to the environment. She is distressed about continuing efforts to exploit fossil fuels and follows news about fracking.

While this all seems new, I’m now old enough to know that whenever I think something is entirely new, it most likely is not. It is very rare in human history to find events that completely lack precedent.  While there are undoubtedly some new aspects to these discussions about the obligations of capitalists, upon reflection, it seems as if they mark a return to a view of the corporation that was interrupted for several generations and is currently experiencing a course correction.

The expectation that the rich should share some of their bounty with the less fortunate has been around a long time – think of religious and monarchic systems. In more contemporary times, business engaging in philanthropy was an established practice as early as the late 1800s. At that time, while businesses were still primarily small and local, philanthropic activities were similarly local and small-scale (1).  Business owners were the rich people in town, benefactors who helped their neighbors. But by 1929, the largest 200 corporations in the United States owned half of the nation’s corporate wealth (2). These businesses were very large, larger than the economies of some countries at the time. And, they were no longer local. How they operated had an enormous impact on the nation’s economy. As a result, the nature of business philanthropy started to acquire overtones of social responsibility, something required as opposed to elective. That is certainly true today when 37 of the world’s 100 largest economies are corporations (3).

It appears that the corporate world can no longer dodge the negative externalities that are a by-product of its core activities as it has for almost 50 years. The past 50 years have been the equivalent of a tax holiday – the kind consumers get at the start of a school year when sales tax is suspended for a week so we can buy school supplies and clothing. But the corporate holiday from negative externalities is quickly coming to an end. It appears to have been an aberration, a misjudgment.  Many trace the misstep back to Milton Friedman and the Chicago School of thinking that he epitomized.

The catalyst for this blog post was a really terrific white paper that I urge you to read by James Montier, “The World’s Dumbest Idea”(4).  I’m not alone in having my thinking jogged by the piece. Just do a Google search and you’ll get over 180,000 results – many of which, like mine, are essays or columns that are responses to the paper. Since you can read the entirely readable paper yourself, I will not repeat it here other than to note the key points that got me thinking.

  • Focusing on all stakeholders – not just shareholders – delivers a consistently better return to shareholders over the long term.  Doing the opposite is bad business.
  • Aligning executive compensation with the interests of shareholders has amplified the interests of shareholders to the exclusion of other stakeholders. This has been a major contributor to less than stellar business results over the long term.
  • Over time, “this [exclusive focus on shareholders] led to a switch in the modus operandi [of corporations] from ‘retain and reinvest’ during the era of managerialism to ‘downsize and distribute’ under SVM [Shareholder Value Maximization].”

Montier goes on to cite a rat’s nest of pernicious effects that have come from not explicitly factoring in the needs of customers, employees, communities and vendors into the equation of running a successful business. All of them bad. Given the work I do with corporations, I was particularly struck by the fact that the focus on SVM and its negative orientation to long term investments has had a direct impact on innovation – why even bother with innovation except as window-dressing if most CEOs are only around for 6 years on average? Innovation is hugely risky, has a long pay-off period and is a drain on short term financial results. The other thought that popped into my head when reading Montier’s white paper was whether the rapid ascent of social enterprise is a remedial reaction to corporations having lost their way. We’ve had roughly two generations of corporate leadership that has, for the most part, embraced the view that a corporation’s only business is to maximize returns to its shareholders.  Everything else is somebody else’s concern.

Finally, I had a really bad moment when I realized that having received my MBA from Wharton in 1985, I was part of this wayward generation of corporate managers and leaders. My business education was based on a false, unquestioned assumption about the purpose of corporations and capitalism. I, of course, was taught at what might be considered the pinnacle of Milton Friedman’s dominance in business circles. Being a complete neophyte to the world of big business upon entering Wharton in 1983, I pretty much took it for granted that what I was learning there was based on a solid foundation. Even though I considered myself a critical thinker, it never occurred to me to question the general theory of the purpose of the corporation. So, I simply absorbed the dogma of my time and brought it along with me as I entered the business world. It’s only been in the past five years that I’ve begun to seriously reconsider the purpose of corporations and how the work I do in innovation can help them achieve sustainable growth, a concept that re-integrates longer term consideration into growth strategies.

As we head into the new year, the shift towards a greater emphasis on corporate responsibility continues to gain momentum. Rather than being a burden, I believe it will uncover new growth opportunities for corporations that will have much greater staying power. As new generations of leaders take over, these ideas will become business-as-usual. It’s up to the current generation of corporate leaders, my fellow wayward MBAs, to accelerate the process by laying the foundation today. Time for prodigal capitalists to come home.

Sources:

(1) Corporate Social Responsibility and Related Terms, sourced on 12/12/14 at: http://www.sagepub.com/upm-data/41167_1.pdf

(2) Sourced on 12/6/14 at: http://www.gilderlehrman.org/history-by-era/essays/progressive-era-new-era-1900-1929

(3) Sourced on 12/8/14 at: http://makewealthhistory.org/2014/02/03/the-corporations-bigger-than-nations/

(4) “The World’s Dumbest Idea,” James Montier, GMO, sourced on 12/12/14 at: http://www.gmo.com/America/ to find link to white paper

Culture of Innovation

“Our people are not very innovative.”

This is how more than a few leaders sum up the challenge they believe their organizations face when it comes to innovation. Their people are the problem. These leaders believe that while their people are very good at doing what needs to be done today, they are lousy at coming up with ideas to handle what might be coming in the future. However, none of the leaders who voice this opinion seem to have stepped back far enough to see that their people are delivering exactly what has been asked of them.

Organizations strive to be optimized, lean and efficient. As a result, everyone’s focus is on the task at hand, not the task that might possibly be at hand in three to five years. And performance appraisal systems seal the deal, awarding promotions and bonuses for achieving annual results that keep the existing business growing and profitable. But these are only the formal mechanisms that get in the way of a culture of innovation. They are the outward manifestations of culture. It is the informal atmosphere in which everyday business is conducted that creates culture. It’s the subtle and sometimes not so subtle messages that individuals receive when they offer an opinion or suggestion that create a culture of innovation or its opposite, a culture of business as usual.

I like the definition for culture of innovation that Adam Bryant gave in a recent webinar (1):

Culture is the collective relationships in an organization that create a welcoming environment for crazy ideas.

I believe that if people in an organization are not very innovative, it’s not because they cannot be innovative, but because when you peer just below the surface, they are being actively discouraged. How organizations discourage innovation comes in so many flavors and forms, it’s impossible to catalog all of them. One of my favorites is the tyranny of the inner circle. Inner circles form when people coalesce in little affinity groups with others who are like-minded. They drift towards one another under the banner of “getting it.” Being part of a group empowers those who “get it” to express a dismissive attitude and take a bunker-like stance towards those who “don’t get it.” Who are the most likely candidates to be among those that “don’t get it?”

New employees. Even if they are experienced, new employees just don’t get the way things work or how to get things done. They get the message that absent this knowledge, it’s best to keep your ideas to yourself.  The message is often delivered in a very subtle way. For example, in group discussions if new employees are bold enough to offer up a suggestion that runs against the group’s consensus opinion, they are perfunctorily thanked for their suggestion and the conversation moves on as if the idea had never been put forward. For a new employee, the message received is “shut up and listen until you figure out how we do things around here.” Until you “get it.”

Non-experts in the core business. In my opinion, expertise can be one of the biggest impediments to innovation. When a group of experts in the same industry or process gets together for problem-definition or problem-solving, the homogeneity of experience is often an innovation-killer. Organizations try to combat this mental closing of the ranks by bringing in people whose experience lies adjacent to or entirely outside the group of experts. But the barriers of industry jargon and a tendency to immediately head down into the weeds gets in the way, keeping diverse points-of-view on the fringe of consideration. Non-experts in the core business obviously “don’t get it,” but without a purposeful use of their differences, the experts usually shut them out.

Junior employees.  Blessed with the characteristics of the two groups described above, the junior employee lacks both experience in the core business and experience elsewhere. They really don’t “get it.”  However, rather than use what they do bring to the table (e.g., millennial perspective, a more bias-free perspective, etc.), most organizations treat junior level employees like little children who should be seen and not heard.

A close second to the inner circle machinations that actively undercut a culture of innovation is the half-hearted leadership attempt to try something. Even though innovation requires experimentation, many organizations seem to run experiments designed to reinforce the belief that their organizations are not innovative. These experiments often have the feel of throwing spaghetti at the wall to see what sticks. Let’s call this innovation-discourager the splatter wall syndrome.

The splatter wall syndrome occurs when an executive gets a bee in his or her bonnet that the organization should give innovation a try. The resulting project is usually a stand-alone event which even if deemed a success (lots of participation, a winning contribution or two that is selected for further consideration or development) doesn’t really do much to alter the status quo. There is no Act Two, no real vision for where this is leading the organization or how to take the next step. In many cases, other priorities take hold and it is back to business as usual.

If the event is deemed a failure (low participation levels, no ideas deemed worthy of further pursuit), then the result is even worse because the cynics have proven their point, people are not innovative. Despite all the talk about never wasting a good failure, in my experience, failure is rarely mined for insight in organizations. Even if everyone acknowledges that failure is a necessary part of innovation, I have yet to meet the executive or participant who wants to be closely associated with one. And outside of a few exemplary organizations that debrief on failures as well as successes, most organizations leave failure unexamined (aside from assigning blame) and quickly move on.

These are only two of the ways that a culture of business as usual gains ascendancy and a culture of innovation takes a back seat in most organizations. There are doubtless many, many more. What can be done to shift the balance? To boost the factors that build a culture of innovation so that it is at least co-equal to a culture of business as usual?

Adam Bryant proposes six rules to follow in order to create a culture of innovation. These rules also apply to strategy, but the slant that Bryant takes and which I slant even further, bend them in the direction of innovation. I like Bryant’s first three rules, but I have changed the last three so much that I’m not sure he would want credit for them. (For Bryant’s six rules see my endnotes (2).)

#1  A Simple Plan

There must be a playbook that everyone uses and it must be easy to keep score, to know whether the organization is winning or losing. The scorekeeping part feels like a restatement of the maxim attributed to Peter Drucker – “If you can’t measure it, you can’t manage it.” Ironically, according to the Drucker Institute, Peter Drucker never actually made this statement about management and measurement (3). Apparently Mr. Drucker held a much more nuanced view and believed that there are some critical aspects of managing an organization that do not yield to measurement. The same holds true for some aspects of innovation.

There is an uncomfortable tension about innovation – for an organization to be successful, it must give people constraints and an endpoint at the same time that it permits them to wander outside the lines. The innovation process starting at the fuzzy front end through launch needs to be mapped out and the decision-making criteria that progress an idea through the process need to be easily understood and transparent. Otherwise, it’s hard to engage people in the process and it’s even harder to declare victory. At the same time, innovation by its very nature doesn’t stay within the boundaries. Organizational systems do their best to root out messiness, but a simple plan for innovation needs some messiness to be effective.

#2 Rules of the Road

When a workplace is exciting and people are energized, it isn’t because the organization’s values are listed on its website or plastered on posters. But it’s also true that when people can unhesitatingly and un-ironically tell you what the organization’s values are, it’s likely that it’s a place where doing great work is possible. Values that have this effect transcend bland slogans. People actually use them to evaluate the way that they interact and make decisions.

Bryant suggests that there can’t be more than three values (human beings can’t remember more than three things at a time, take that multi-tasking!). His examples of great values: 1) “Be an owner.  Help others.”  2) “Be in.  Be real.  Be bold.”  Similarly, innovation benefits from guiding principles. They might be statements such as: “There are no bad ideas, but there are some ideas that are not right for our business at the moment.”  “Good ideas can come from anyone and anywhere.” The key: leaders must believe them.

#3  A Little Respect

I have a hard time knowing where to start with this one. It’s a little bit like a kindergarten truism and dangerously close to “be nice to others.” But, in my opinion, this might be the single-most important rule for organizations to follow if they truly want to build a culture of innovation and it may be the most difficult in the hard-driving, fast-paced, bottom-line focused world of business to achieve. Because, at the end of the day, for a culture of innovation to exist, people have to feel free to speak-up. For that to happen, others must make what Bryant calls the “Most Respectful Interpretation” of what they hear.

In some ways, Rule #3 is a corollary of Rule #2. Treating the ideas of others as if they are inherently worthwhile puts the Rules of the Road into action. This is very difficult in the culture of business as usual which is always driving towards a quick solution and seeks to rapidly dismiss ideas that seem off-topic. How many meetings have you been in where even if people don’t say anything, their body language and facial expressions say it all? The reason that it’s important to treat what people say as if it has merit, is because sometimes the merit isn’t immediately obvious. Even if it turns out that the idea won’t work, for great ideas to emerge, leaders must model a respectful attitude towards new ideas and insist that everyone act in this way.

#4  Cast the Widest Net Possible

Far too many organizations are extremely timid when it comes to who gets invited to the innovation party. Typically business units keep their innovation programs within the business unit. Despite the fact that most heads nod in agreement with the maxim attributed to Albert Einstein “we can’t solve problems by using the same kind of thinking we used when we created them,” this is precisely what tightly prescribed participant boundaries does.

Rather than take advantage of the diversity that exists within their own organizations, most innovation initiatives remain firmly fixed within organizational silos. The rise of crowd-sourcing and open innovation is the clearest countervailing force that the default position of keeping it local will ultimately be unmoored. Casting the widest net possible contributes to the messiness that is required to foster innovation.

#5  Embrace Discomfort

Innovation is not about agreement. In fact, it’s much closer to the opposite. But handling disagreement and conflict productively is hard. It slows things down and most people would prefer to avoid it. An intrepid few might decide to seek forgiveness rather than ask permission, but this does little to challenge the status quo. And it only works if the gambit is successful. Failure exacts a high price. Since a culture of innovation must somehow tolerate challenges to the status quo and resist sweeping failure under the rug, people must be able to have uncomfortable conversations, disagree and still find common ground. This is the true essence of collegiality which as it turns out is not comfortable. Common ground is not a happy place because no one gets everything that he or she wants.  But it is the productive place from which true change is possible and the crucible of innovation.

#6 Do It In Person

Or as close to “in person” as possible.  Tone, intention, enthusiasm: all of the cues and energy we get from listening and/or seeing other people. These cues are important whenever the stakes are high. But they are especially important when people are working together to develop new ideas. The cues and energy that come from working together in person (or nearly in person) frequently help groups avoid misunderstanding or clear it up quickly so that it doesn’t become a stumbling block. While the research on whether groups foster or retard creativity is mixed, the collaboration that groups need to take an idea from its earliest conception through to completion can be more productive when communication is enriched with verbal and nonverbal cues.

It’s a rare organization that will fire on all cylinders when it comes to following these six rules.  I believe that organizations which intentionally strive towards following all of them have a good chance of evolving a culture of innovation. The keys are intentionally and all of them. A culture of innovation is a constant effort to sub-optimize just enough for new ideas to break through business as usual.

Sources:

(1) “Creating a Culture of Innovation: Lessons from CEOs,” ExecuNet webinar broadcast on 11/6/14, Adam Bryant, Speaker and Author, based on his book:  Quick and Nimble, Lessons from Leading CEOs on How to Create a Culture of Innovation. [When I saw the title, my first thought was: what organization would not want to be quick and nimble?  But, the quick are also among the first to run into problems, dead-ends and failure. That’s why the fast-follower archetype has such power.  And nimble?  Nimble is not fun either. To be nimble you must be light on your feet which means you are always, always, always resource-constrained.  All that pivoting can leave you disoriented and exhausted. Being quick and nimble is not a cake-walk.

(2) Adam Bryant’s six rules for creating a culture of innovation: 1) A Simple Plan, 2) Rules of the Road, 3) A Little Respect, 4) It’s About the Team, 5) Adult Conversations and 6) The Hazards of Email.

(3) Measurement Myopia – on Drucker’s more nuanced view of measurement and management.

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.

——————————————————————————————————————————————————-

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!