Sunday, January 31, 2010


Mark Pincus, founder and CEO of Zynga, a provider of online social games, shares an idea he learned from John Doerr:

John Doerr (the venture capitalist) sold me on this idea of O.K.R.'s, which stands for objectives and key results. It was developed at Intel and used at Google, and the idea is that the the whole company and every group has one objective and three measurable key results. We put the whole company on that, so everyone knows their O.K.R.'s. It is a simple principle that keeps people focused on the three things that matter - not the 10.

I ask everybody to write down on Sunday night or Monday morning their three priorities for the week, and then on Friday see how they did against them. It's the only way people can stay focused and not burn out. I think these road maps are a great principle for managing your life. It keeps everybody focused, and it lets me know what trains are off the tracks.

Pincus was a soccer player and he discussed how soccer and leadership are related:

If I was going all the way back, it would be playing on my school's soccer team, because most of us were on the same team together for eight or nine years. We were at a little school in Chicago that had no chance of really fielding great athletes. But we ended up doing really well, and it was all because of teamwork. So, today, when I play in Sunday-morning soccer games, I can spot who'd probably be good managers and good people to hire. Reliability is important, the sense that they're not going to let the team down. In soccer, especially if you play seven on seven, it's more about whether you have players who pull their own weight rather that whether you have any stars. I'd rather be on a team that has no bad people than a team with stars.

And are you a playmaker? There are people who don't want to screw up, so they pass the ball right away. Then there are the ones who have this kind of intelligence and can make great plays. Their head is really in the game.

Saturday, January 30, 2010

Musings on Social Networks

If you think in terms of population, Facebook members would be the third largest country in the world after China and India. Facebook has gone from zero to 350 million members in only six years. Every week, 3.5 billion pieces of content gets shared on Facebook. The sharing of video, picture, and text - - this fundamentally represents a huge shift and upgrade in people's ability to communicate with one another.

The business world is still in a quandary regarding social networking and blogs in the workplace. Only about 10% of all corporations grant employees access to social networking sites. The primary issue is the value proposition of social networks given the "soft" and unknown cost-benefit analysis of the technology and its application. You really have a tale of extremes and potentials on the business side of social networking. For example, Kogi BBQ, which has several trucks serving Korean food in Los Angles, now has over 52,000 followers on Twitter and uses the service to tell customers where they can find its vans each day (In this case, the value proposition would produce much "firmer" data for a cost-benefit analysis). How and where does this type of success fit into a large, global manufacturing organization? Are social networking applications more appropriate for small more retail oriented businesses? One obvious critical element in the equation is the nature of the relationship between the organization and customer base along with the content and need for customer commentary regarding the information being transmitted and received between the various parties. The larger question for organizations is how do you utilize social networking as an important vehicle for news, information, and establishing channels of influence within the market space?

Look to firms in the traditional business world to come up with social networking applications tailor-made for the corporate world - - with the first step being internal applications. These would work much in the same way as Twitter or a Facebook, but keep information off the public screen and well behind a corporate firewall. The focus would be on knowledge-sharing and internal communications. A study last year by IDC, a research firm, found that knowledge workers spend between six and ten hours a week just hunting for information. Part of the goal would be to utilize social networks to find data faster, thus freeing up large chunks of their time for other things.

Many managers (and maybe a large percentage) are going to worry about allowing informal groups of workers the opportunity to spring up within an environment they cannot control. But fundamentally, networking is about saying the long good bye to silos - - where it is critical to understand that new ideas and insights come from the informal in an atmosphere of the multidisciplinary and integrative versus the formal world of barriers and constraints. Control will be replaced with a greater need for managerial awareness (Do others believe you have a strong awareness of what is going on?), conceptualization (Do others communicate their ideas and vision for the organization when you are around?), foresight (Do others have confidence in your ability to anticipate the future and its consequences?), and community building (Do people feel a strong sense of community in the organization that you lead?).

Collaboration should not be little more than boring collections of documents. Networks can be a tremendous opportunity to capture knowledge and identify experts on different subjects within an organization. Look for internal social networking systems having the ability to combine content with commentary from people whose know-how might previously not have been recognized.

Overtime the "soft" cost-benefit issues will be firmed up by internal experiences and lessons making the value proposition easier to define and measure. This will allow organizations the opportunity to splice together their internal systems with the outside world creating a platform to share know-how with outsiders.

Friday, January 29, 2010

Different Rules

Power corrupts, but it corrupts those who think they deserve it. We see our culture of entitlement regarding the "powerful" too often - - politicians who have extramartial affairs while complaining about the death of family values or those who use public funding for private gain despite condemning government waste. Time and the scale of all this has removed the surprise factor.

In a January 23, 2010 article in The Economist ("Absolutely: The Psychology of Power") is a passage that is interesting:

Dr. Lammers and Dr. Galinsky argue that people with power that they think is justified break rules not because they can get away with it, but also because they feel at some intuitive level that they are entitled to take what they want. This sense of entitlement is crucial to understanding why people misbehave in high office. In its absence, abusers will be less likely. The word "privilege" translates as "private law". If Dr. Lammers and Dr. Galinsky are right, the sense which some powerful people seem to have that different rules apply to them is not just a convenient smoke screen. They genuinely believe it.

Thursday, January 28, 2010

Agree to Disagree (In Person)

E-mail has changed the way we communicate. The productivity improvements associated with everyday communication and the transfer of data and information has been a remarkable achievement for civilization. If the future is a race between good innovation and bad innovation - - e-mail clearly represents good innovation.

But e-mail is a perfect example of doing the right thing the wrong way in some cases. Constructive conversations regarding disputes or disagreeable subjects is one of those life's lessons that we are taught to address - - the quicker the better. But many times these disputes and disagreements are handled electronically - - without the context of emotion and feeling. Page after page of back and forth with emotional disconnection reinforcing a spirit of non-cooperation. It is typically easier - - people can make an emotional disconnection from the conversation. They end up typing things that they would never say in person. You don't get the emotional and physical impact your typed words have on someone - - the whole process ends up with a touch of “non-being” in it. The technology reinforces some of our worst characteristics - - a tendency to dislike verbal conversation face to face over difficult subjects. Engineering and engineers have a long track record with ineffective verbal conversation - - you are actually giving us a tool that gets us even further from effective communication on difficult and emotional issues.

The solution is not Emotions - - those graphical representations intended to represent a facial expression and to convey the sort of emotion that plain text does not. Attaching something like on the top row and far right - - probably does not add much to a text conversation on a billing dispute. None of these expressions convey true emotion and feeling - - especially in a world and culture where non-verbal responses and interpretations are critical elements to effective communications. Disagreements and disputes need to be handled in person. Don G. Lents, the chairman of Bryan Cave, the international law firm offers the following advice - - “You should never engage in a disagreement electronically. If you are going to disagree with somebody, you certainly don’t want to do it by e-mail, and if possible you don’t even want to do it by phone. You want to do it face to face.”

E-mail saves time, but being there says more. We will have to see if video conferencing really is “being there” in the context of disputes.

Wednesday, January 27, 2010

Engineering, Bob Dylan, and Samuel Beckett

Was Bob Dylan correct - - "There's no success quite like failure"? The saying comes from the lyrics to Love Minus Zero/No Limit (1965). The actual lines are:

In the dime stores and bus stations,
People talk of situations,
Read books, repeat quotations,
Draw conclusions on the wall.
Some speak of the future,
My love she speaks softly,
She knows there's no success like failure,
And that failure's no success at all.

When you examine the last two lines, Dylan is presenting the paradox (and people appear to miss the point he was trying to make). Failure seems appealing, yet Dylan is being honest and admitting that failure is no picnic either.

Screwups, disasters, misfires, flops - - is losing really a winning strategy? It depends on the scale and scope of the failure or mistake along with the context. Scientific research, such as cutting edge work in fighting cancer, is a long sequence of failed experimentation. It is trial and error and more trial and more error. We want our bright scientific minds noticing the failures that point toward new possibilities. Failure in this context is about hope and promise for the future.

But reality is different from the experimental in the world of professional failures. Do you really want "screwups, disasters, misfires, flops" from your cardiologist during your open heart surgery? What about a mistake? Consider the innocent man on death row - - probably not a lot of merit in the notion that "epic failure can lead to spectacular success." Want to drive across a bridge with a sign hanging over it - - "Screwing Up is Good for You!!"? The words failure and mistake have much deeper and negative meanings in the world of professionals.

It is always important to learn from past mistakes - the goal of becoming a better engineer, manager, husband/wife, or mother/father has a path that starts in the past and leads toward the future. We are interested in those private histories and lessons regarding mistakes and failures not in order to know how to behave or how to succeed, but to know who we are. The learning process resides in slowing down enough to pay attention to what you might call the grammar of experience. Where reflection on experience and learning is about confronting the disconnect and demands associated with capabilities and performance. The worst thing that can come out of a reflective examination of a mistake is a failure to appreciate its symptoms and no agreement regarding the cure.

One cannot do good in our world today unless you are prepared to exert your share of power, take your share of responsibility, make your share of mistakes, and assume your share of risks. Where the word mistake is a complex mixture of vagueness and context in a culture that defines an "interesting life" as one filled with controversial success, punctuated by occasional and spectacular failures. People make their own history regarding their own mistakes and failures, but they do not make it as they please: they do not make it under self-selected circumstances but under circumstances that already exist, given and transmitted from the past. What gets transmitted is a ledger of successes and failures, linked to the humility, skepticism, and awareness of ourselves in the context of these events. Maybe Beckett was correct - - from Worstward Ho (1983):

Ever tried. Ever failed. No matter.
Try again. Fail again. Fail better.

Tuesday, January 26, 2010

What Made Us Great

From The Puritan Gift (2009) by the Hopper brothers - - the elements that made our country what it is today:

These were: a conviction that the purpose of life, however vaguely conceived, was to establish the Kingdom of Heaven on Earth; an aptitude for the exercise of mechanical skills; a moral outlook that subordinated the interests of the individual to the group; and an ability to assemble, galvanize and marshal financial, material, and human resources to a single purpose and on a massive, or a lesser, scale.

All of these elements were associated with the Bay Colony of Massachusetts Puritan origins.

Monday, January 25, 2010

Are We Rome?

I am proposing a new capstone class for undergraduate, senior level engineering students. You could have a class for each discipline with the primary focus on multidisciplinary critical analysis of pressing problems facing the nation and engineers. Mechanical engineering students could look at energy issues in the context of economics and national security. The example that I am outlining is for civil engineers students where the focus would be on our national infrastructure and our corresponding political institutions. Let’s call the class - - CE 401 - - A Critical Analysis of U.S. National Problems.

The first part of the proposed class starts with the current state of our infrastructure. The American Society of Civil Engineers currently gives our infrastructure an overall grade of D - - in 1988 the grade was a C. The cost of bringing all the systems up to adequacy is estimated at $2.2 trillion over the next five years. The problems are rather ominous - - from the average dam in the U.S. being 50 years old to water distribution systems that leak an average of 20 gallons per day per capita to more than 26 percent of the nation’s bridges are either structurally deficient or functionally obsolete. Stephen Flynn, of the Center for National Policy has best stated the dilemma:

Our forebears invested billions in these systems when they were relatively much poorer than we are. We won’t even pay to maintain them for our own use, let alone have anything to pass to our grandchildren.

What is to be done? Our recent stimulus package spent the money, incurred the debt, and did very little to repair what most needs fixing. If this is the reality, what are we going to do about it? By 2050, 70 percent of the human race will be living in cities. If cities are to be the locus of 21st century innovation, what is the role of public infrastructure in terms of technological, economic, and societal advancements? Is our declining infrastructure the canary in our economic mineshaft? A key point of the class would be to examine these issues and problems in a multidisciplinary and critical manner. What are the issue assumptions? What are the reasons and root causes? How good is the supporting evidence? Are the statistics deceptive? What reasonable conclusions are possible? What are the ways that the civil engineering profession can move forward in improving our infrastructure?

The second part of the capstone, which interfaces directly with our declining infrastructure, is the old, broken and dysfunctional nature of our federal government. Are we Rome? Jonathan Rauch refers to this as “demosclerosis - - government’s progressive loss of the ability to adapt - - like hardening of the arteries, which builds up stealthily over many years.” When the U.S. Senate was created, the most populous state, Virginia, had 10 times as many people as the least, Delaware. Now the most populous state, California, has 69 times as many people as the least populous, Wyoming. Yet they have the same two votes in the Senate. More than half of all Americans live in the 10 most populous states - - which together account for 20 of the Senate’s 100 votes. No business organizational structure would ever be designed like this - - since it takes 60 votes in the Senate to break a filibuster on controversial legislation, 41 votes, is in effect, a blocking minority. States that together hold 12 percent of the U.S. population can provide that many Senate votes. What we have is a political system where politics matters more than long-term and effective governing. Where regionalization places a premium on the equality of benefit rather than on the equality of sacrifice necessary to achieve the benefit in question. As John Adams stated:

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never has been a democracy yet that did not commit suicide.

Now we need ports and highways and an educated populace. We need 75-years worth of things - - in a world where corporations live by the quarter, cable news outlets by the minute, and a democratic system that cannot impose any short-term pain for long-term gain. The country was established as a marriage of the public and private sectors - - where things got done because we had private factories and public schools. But places like California illustrate what a private-public divorce looks like, a system engineered to ensure nothing can be done (In the 2004 election, out of 153 state and federal positions in California that were at stake - - not a single one changed party).

What are we to do? This is fundamentally the same as the infrastructure question and the critical interface point between the two issues - - “If this is the reality, what are we doing to do about it?” Do we work with our flawed governmental system despite its uncorrectable flaws or attempt to contain the damage that the system does to the rest of our society? Government has to function correctly for the private sector to flourish - - things like rule of law, expectations of physical safety, and public infrastructure that people can enjoy and depend on. What is the role and responsibilities of civil engineers in the context of our declining national infrastructure given the flaws and limits of our governmental institutions? What are the ways forward?

Sunday, January 24, 2010

Engineering and Erika Rothenberg

The picture is of America's Hopeful Future by artist Erika Rothenberg and is exhibited at the Museum of Contemporary Art in Chicago. She does a great job of summing up some of our current problems - - while still managing to convey through its humor the indomitable spirit of the nation.

We will need that spirit over the next 100 years. I am always fascinated when the 401(k) financial guru comes to the office. People take it for granted that their retirement funds can earn 8.5 percent a year (and the gurus always seem to have that historical stock market graph!). That's what everyone in the financial services industry tells you - - average of 8.5 percent over the long term. And sure, the stock market has generally gone up 6 to 8 percent on average a year. But in a larger historical perspective, that kind of growth is exceptional. What has driven the growth is the unique period of accelerating technological progress. We've gone from horses to cars to planes to rockets to computers to the Internet in a very short period of time. Technology has given us the 8.5 percent over the last 100 years. If you had done the equivalent of investing in the stock market from, say, 1000 to 1100 AD, you would not have made 8.5 percent a year. During the fall of the Roman Empire, you would have been lucky to get zero (and I am sure the good folks at Shields & Swords, Inc. were thinking they could get a 8.5 percent return on their equity - - right up until the Goths crossed the Rubicon and burned their showroom to the ground).

It is not automatic that the 8.5 percent will continue for another 100 years. Good ideas are the lifeblood of virtually every business. Unless you own a diamond mine, oil well, or patent on the wheel, you cannot afford to be complacent or let your business model become stale. The important element in the 8.5 percent equation is advancing technology and our spirit of adventure and innovation. It takes risk takers, a focus on education, access to capital, government R&D - - but most importantly it takes what Erika Rothenberg captured about the American spirit.

Saturday, January 23, 2010

"A Ragged Dick"

The Golden Age of American Management lasted, approximately, from 1920 to 1970. The best description of America's corporate chief executive in the Golden Age was provided by Vasser professor, Mabel Newcomer, in the The Big Business Executive: The Factors that Made Him (1950). The hero of the book was:

. . . a native born American, the son of a small, independent businessman. His family income was moderate. And such small jobs as he pursued during his boyhood were for extra spending rather that to help support his family. His parents managed to put him through college, with such contributions as he himself made to his own expenses through part-time employment. Upon graduation he obtained a full-time job, with no assistance from his family. Thenceforth he was on his own. While still relatively young and inexperienced, he obtained a minor position with the corporation that he eventually headed, and he gradually worked up, through operations or production, to a vice-presidency, from which he was promoted to the presidency at the age of fifty-two.

Ragged Dick is a children's novel by Horatio Alger, Jr. Published in 1868, it is a rags to riches story based on moral behavior, clean living, and determination - - the person who made his way from the near the bottom to the top by dint of dedication to the task at hand. A Ragged Dick - - our man of management from 1920 to 1970.

Friday, January 22, 2010

Marry an Engineer

Alfred DuPont Chandler, Jr. was a professor of business history at the Harvard Business School. Probably the best book that I have read on capitalism and the difference between the many forms, such as Britain, was his Scale and Scope: The Dynamics of Industrial Capitalism (1990). Chandler received his Ph.D. from Harvard in History and utilized the papers of his ancestor Henry Varnum Poor, a leading analyst of the railway industry and a founder of Standard & Poor’s, as a basis for his thesis. Chandler passed away in 2007.

Chandler had a fascinating passage regarding engineers in this book:

It is instructive to compare and contrast the status of engineers in the United States, Britain and continental Western Europe at the end of the nineteenth century. In continental Western Europe, they were accepted into the highest levels of industrial management and simultaneously achieved the highest social status. Respectable families liked to marry their daughters to engineers; this was the litmus test. In America, engineers would never achieve a comparable social status, which was reserved rather for “old money”, lawyers and descendants of the bungling Pilgrim Fathers, but they reached the highest positions in manufacturing and commerce. In Britain, broadly speaking and with important exceptions, they achieved neither authoritative positions in business nor social status; Britain’s answer to the polytechnic was the “public” (i.e., private) school, for which technology was anathema and came late. The resultant superiority of German over British engineering was illustrated in World War II when the Messerschmitt 109 and Focke-Wulf 190 proved themselves able to fly faster, higher and further, and carry a greater weight, than the equivalent British fighter planes. Such was the esteem in which the 190 was held that Winston Churchill decided to mount a commando raid on its base to seize a specimen – a raid that would be aborted when one accidentally landed in England; what Britain learned from its revolutionary technology was used in designing the subsequent Typhoon series of fighters.

Thursday, January 21, 2010

Why can't we be funny?

The law firm of Trolman, Glaser & Lichtman has produced a television commercial with the following setup:

An actress in her 30s sitting at a kitchen table says, “The pain was excruciating: It’s like I had this huge, really sharp machete chopping down on me every time I tried to move.” She continues, “It was the worst paper cut I ever had – they made the paper way too sharp.” Raising a hand to reveal a bandage on her index finder, she concludes, “Someone has to pay.” The tagline, “There are some cases we can’t win,” appears on the screen, and a voiceover concludes, “If you’ve been injured, call us, but keep in mind: you really need to be injured.”

How about this for a television commercial for engineering firm XYZ - - setup is at a local golf course:

A pastor (rabbi/imam/priest - - you pick, based on local market conditions), a doctor, and an engineer with Firm XYZ are waiting one morning for a particularly slow group of golfers. Annoyed, they decide to ask the greens keeper, who explains that they are behind a group of blind golfers who play for free whenever they want. The pastor remarks, “That’s so sad, I’ll pray for them.” The doctor says, “I know an ophthalmologist who might be able to do something for them.” The engineer from Firm XYZ looks into the camera and says, “Why can’t they play at night?” Someone who looks and dresses like Ted Knight in his role of Judge Elihu Smails in the movie Caddyshack walks onto the green and says, “At Firm XYZ we believe that when you ask different questions - - you get different answers. How we ask or what we ask really doesn’t matter to us.”

The ad is not without problems. It reveals a mindset focused completely on the practical side, in the interest of problem solving, to the exclusion of human relationships and even basic compassion. It casts engineering as a profession that is not a helping profession in contrast to medicine and the ministry. Maybe we can’t or shouldn't be funny.

Wednesday, January 20, 2010

The Common Good

Tom Friedman tells us that in order to prosper in the globalization era people and institutions should act globally, be adaptable and durable, respond to decentralized decision making, and above all embrace change. At times our interconnectiveness is producing a world of remarkable cooperation, collaboration, and coordination. Our collective response to the Haiti earthquake disaster illustrates our commitment to the global well being during times of need and emergencies.

The Haiti earthquake response effort has been a complex and unique mixture of the public sector, the private sector, and everything in between. You have the insiders, the outsiders, the idealists, the realists, the engineers, the doctors, the ministers, the saints, the sinners, the sergeants - - all part of the “caring economy” with no apparent spirit of resignation. Local search and rescue teams, religious groups, various military forces, governmental agencies, NGOs, academia - - the list is truly unique, broad and deep. One can make an argument that the size and diversity of the response has produced coordination problems – maybe too much mix and not enough match. But what global disaster responses like Haiti don’t need is a sequence of almosts and if onlys caused by a lack of resources.

You have a true Dickensian cast of supporting characters. A company like International SOS is basically a private emergency response provider. International SOS started out 25 years ago as a corporate medical response company in Asia. It offers, among other services, clinics for clients evacuated from danger spots or for routine emergencies. It now covers 70 countries. In 2008 the firm expanded into security, mainly because of the entwined nature of natural disasters and security challenges. Clients include private companies, government agencies, and non-profit groups. By Monday, their teams of ex-special forces and medical personnel had coordinated 52 evacuations, mainly through neighboring Santo Domingo. Clients on Haiti include 60 companies, 25 non-profit organizations, 10 government bodies, and 10 private travelers from the United States and elsewhere. More than 7,000 companies around the world are clients of International SOS. Is this a morally perfect situation? Probably not - - the wealthy and fortunate get the advantage of capitalistic energy and the poor and unfortunate must rely on the virtue, values, and principles of the global community. It is what it is, a curious mixture of systems, attitudes, economics, and politics. The required common thread for all the participants is the certainty or belief in action - - the idea of getting things done promoted to the status of a principle.

Dr. Elizabeth Hausler, is the Founder and CEO of Build Change. The firm helps communities build earthquake-resistant housing. Dr. Hausler has an M.S. and Ph.D. in civil engineering from the University of California, Berkley an M.S. in environmental science from the University of Colorado, and a B.S. in general engineering from the University of Illinois at Urbana-Champaign. She is a 2004 Echoing Green Fellow, a 2006 Draper Richards Fellow, and a Fulbright Scholar to India in 2002-2003. Dr. Hausler is a skilled brick, block, and stone mason and has lectured on sustainable, disaster-resistant construction in eight countries. Dr. Hausler’s approach carried out in Indonesia after the 2004 earthquake and tsunami and in China after the 2008 Sichuan quake, has been to involve homeowners in the design and building process, modifying traditional designs to improve earthquake resistance. Along the way she has trained aid officials and worked with local governments to enforce building standards. Culture and climate can be important design considerations. For example, they might have the main door on the street, when homeowners wanted it in the courtyard. It’s not good for the structure when the homeowner knocks a hole in the wall and moves the door. Look for Dr. Hausler to play a key role in the Haiti reconstruction efforts.

Disaster relief efforts have become global interventions where both International SOS and Dr. Hausler have roles to play. Engineers and engineering also play a key role in both the emergency response and reconstruction efforts. It is the point in many engineering careers where you have the intersection of engineering and social justice. Where justice means maximizing the welfare for the greatest number of people. Where justice means respecting the freedom of choice - - such as contracting with International SOS. Where justice involves cultivating virtue and reasoning about the common good. Where global citizenship requires a strong sense of community, sacrifice, and service. Where engineers are called upon to make an investment in civic virtue and moral engagements.

Tuesday, January 19, 2010

Energy Insecurity

Since 2001 prices for oil and most energy commodities have risen sharply and become more volatile. Prices have yo-yoed over the last 18 months - - first reaching all-time highs, then dropping by two-thirds, and after that rising back up to surprisingly high levels given the continuing weakness of the global economy.

In the January/February 2010 issue of Foreign Affairs, authors David Victor and Linda Yueh (“The New Energy Order: Managing Insecurities in the Twenty-first Century”) discuss our looming energy insecurities that will strike as two radically new challenges to our current global energy systems. According to the authors, the challenges are:

The first is a shift in the sources of consumption. The era of growing demand for oil and other fossil fuels in the industrialized countries is over; most of the future growth in demand will come from emerging-market countries, notably China and India. The International Energy Agency (IEA) has projected that by 2030, China will depend on imports for at least two-thirds of its oil, and India, for even more. These countries, especially China, are choosing to secure their energy supplies less by replying on commercial interests – the standard approach for all the biggest industrial energy uses over the last two decades – than by locking up supplies in direct bilateral deals with producing countries. For instance, China’s push into Africa, Central Asia, and other energy-rich regions, which usually involves special government-to-government deals, is a rejection of the reigning market-based approach to energy security. And because oil, gas, and coal are global commodities, these exclusive, opaque deals make it harder for markets to function smoothly, thus endangering the energy security of all nations. They also complicate efforts to hold energy suppliers accountable for protecting human rights, ensuring the rule of law, and promoting democracy.

The other big shift in the world energy system is growing concern about the environmental impact of energy use, especially emissions of carbon dioxide, an intrinsic byproduct of burning fossil fuels with conventional technology and the leading cause of global warming. Worries about climate change are one reason why the major stimulus packages passes since the global financial crisis began in 2007 have included hefty green-energy measures: by some accounts, these have made up 15 percent of global fiscal stimulus spending. Some believe that green-tinted stimulus measures will spur a revolution pushing for cleaner and more secure energy. Perhaps. But there is no doubt that energy systems are in for a major change. Curbing global warming will likely require cutting emissions of carbon dioxide and other greenhouse gases by more than half over the next few decades, and that goal cannot be achieved by just tinkering at the margins.

A third complicating issue is at the interface point between increasing consumption and greening. The security of oil and gas supplies is in question not only because the existing supplies are depleting quickly but also because investors are wary of pouring money into finding new resources. The problem is not underground in the rocks: technological innovation is more than amply offsetting the depletion of conventional fossil fuels. The problem lies in the massive economic and political risks inherent in new projects particularly those that supply energy across national borders and thus face a multitude of political uncertainties. Suppliers worry that there will not be enough demand to justify the investments, especially now that growing concerns about climate change have cast doubt on the future of fossil fuels without offering a clear alternative.

Energy security and military prowess have been closely linked throughout history. Modern warfare would be impossible without vast quantities of fossil fuel. In fact, the U.S. military is the single largest consumer of energy in the world. The DOD per capita energy consumption is 10 times more than the per capita energy consumption of China, or 30 times more than all of Africa. Our energy liabilities show up on the ledger in our currently military engagements. The British army calculates that it takes seven gallons of fuel to deliver one gallon of fuel in Afghanistan - - the U.S. is probably similar. The U.S. forces meanwhile consume one million gallons of fuel a day in Afghanistan and a similar quantity in Iraq. A Humvee with added armor does just four miles per gallon.

In Iraq and Afghanistan, about 40% of fuel is used to run electricity generators (The “fully burdened” cost of helicopter delivered fuel at remote outposts in Afghanistan runs as much as $400 per gallon). The military is investigating and experimenting with new ideas ranging from tents coated with commercial insulting foam to linking generators into a “smart grid” for greater efficiencies. Another idea is a mobile, hybrid power station that combines solar panels and wind turbines with a conventional generator.

For the foreseeable future, green technology and alternative energy source technology will mainly flow from the commercial sector to the military sector. Coordination and technology transfer is extremely important - - because the market is truly global with ideas and innovation quickly spreading to the rest of the world through the marketplace. For example, U.S. spending on renewable sources of energy can invigorate U.S., Chinese, and European firms that supply solar cells and wind turbines. Over time, look to the military as an important incubator for new green and alternative energy ideas, solutions, and innovations.

Monday, January 18, 2010

Forecasting and Planning

Last week we saw the destruction and human suffering caused by an earthquake in Haiti. In towns such as Leogane, 80 to 90% of the buildings have been destroyed with no functional local government or infrastructure. Haiti has a population of around nine million people with a median age of 18.4 years. It is the poorest country in the Western Hemisphere with 80% of the population living under the poverty line.

Haiti has two primary natural hazard risks – it lies in the middle of the hurricane belt and is subject to severe storms from June to October. Haiti is also at risk for earthquakes. Based on historical data, scientists have a pretty good idea that the next 35 years will bring roughly 44 earthquakes with an intensity of 7.5 to 7.6 on the Richter scale (the Haiti earthquake was 7.0). But seismologists have no clue as to when and where they’ll occur (apart from places like Haiti). Will these zones be populated or unpopulated? Will they cause large-scale death and destruction? No geologist or seismologist can say.

How, then does the world cope with earthquakes like Haiti? Instead of relying on prediction, the focus is on being prepared. If you’re lucky enough to live in a rich part of the world, engineers can construct buildings capable of withstanding very strong tremors. But if you live in a poor region, you take your chances and suffer the consequences. The main lesson of Haiti is that just because something is too terrible to contemplate doesn’t mean it’s not going to happen. Our interconnections have created a Global Risk Society - - where we all share various risks, where everything is linked to everything else.

We live in a world of statistical models, predictions, and forecasting. Our prediction and forecasting endeavors are supported by a very visible, vocal, and large group of pundits with a willingness to look into their crystal balls on almost any subject. We want predictability based on the past - - yet, history is accelerating to the point where the future becomes more and more unknowable. Engineering is different. We are fundamentally not about strategic forecasting; we are more concerned with strategic planning in a world where uncertainty and indeterminacy are givens.

As we have seen with both Haiti and Katrina, the key is not to develop plans based on predictions and forecasts, but to have emergency plans for a variety of possibilities. Think in terms of The Three A’s (1) Accept that you’re in an uncertain world - - ignoring uncertainty is not an option. (2) Access the level of uncertainty - - once you except uncertainty, look at data and judgments that covers 95% of all the possible outcomes. (3) Augment the range of uncertainty - - understand that most people and organizations consistently underestimate uncertainty.

Engineers work in a globally connected and highly complex world. Acts of terrorism, natural disasters, and credit crunches are all part of the landscape. Engineers should understand what can and cannot be predicted while concentrating on developing the skills and resources necessary for the development of strategic plans that will be sensitive to surprises. Haiti and many other parts of the developing world need an engineering community of resilient pragmatists that understands most disasters are a race between luck and doom - - where luck is the residue of good planning. Ultimately we need engineers that are skilled at improvisation for impossibilities - - who are clear headed, focused, calm, facts-based, and articulate. The rare individual that combines strategic vision with executional ability.

Sunday, January 17, 2010

The Bee versus the Hive

Who comes up with the best answers? Is it the individual or the group? Have one person guess the value of a particular item. It probably is going to depend on the skill of that one individual. Another way is to ask 1,000 people what they think the value is. The collective in this case can be more valuable because it takes all the peaks and valleys and regresses them to a collective average answer. The reason the collective can be valuable is precisely that its peaks of intelligence and stupidity are not the same as the one usually displayed by individuals.

This struggle between individual or collective answers to complex questions is one of the many challenges facing modern management. Collectives can be just as stupid as any individual (history books are full of examples) - and, in important cases stupider. Management is ultimately tasked with mapping out where the one is smarter than the many. The balancing of influence between people and collectives rests on the checks and balances of any managerial process. It requires systems and managers that can filter and monitor the decision making process. Are there sufficient regulating mechanisms for the collectives? What types of answers ought not be provided by individuals?

For example, the collective might be on the right track with respect to the value example, but having 1,000 individuals estimate the value takes time. Sometimes, with some questions, the collective can move too slowly. There just isn't enough time for the collective to come up with brilliant answers (Global warming is a great example of a really complex problem that needs a collective answer - - but, the problem has a large time constraint). The collective can also move too quickly. The stock market with its collective and speculative frenzies and overly active Wikipedia entries that jitter instead of settling down are great examples. Engineering faces all of these issues - where the brilliance of the individual is constantly balanced by collective attitudes and behavior. The "wisdom of crowds" effect should be thought of as a managerial tool - where the type of problem, the distribution of potential outcomes, the risk involved - are all elements and issues management needs to take into consideration.

Saturday, January 16, 2010

Engineering, Poverty and The Circle of Empathy

The bottom billion of the world's population attempts to survive on $2 per day. Beyond this stark reality is an additional two billion people who either cook over an open fire or a poorly designed stove. About half of our global population cooks with gas, kerosene, or electricity, while the other half burns wood, coal, dung, or other solid fuels.

Clean air, according to the E.P.A. contains less than 15 micrograms of fine particles per cubic meter. Five times that amount will set off a smoke alarm. Three hundred times as much - roughly what an open fire produces - will slowly kill you. The World Health Organization has estimated that indoor smoke from improper cooking sources kills a million and a half people annually from the developing world. In addition, the average cooking fire produces about as much carbon dioxide as a car. Given that cooking fires each release one or two thousand grams of soot in a year and that three billion people rely on them, cleaning up those emissions may be the fastest, cheapest way to cool the planet.

Building a stove is simple. Building a good stove is hard. Building a good, cheap stove can be an engineer's nightmare. A "Good Stove" must have the following characteristics - (1) Reduces fuel use by more than 50%. (2) Reduces black carbon by more than 60%. (3) Reduces childhood pneumonia by more than 30%. (4) Affordable ($10) retail or less (5) Cooks love it. (6) Gets funded - in an environment where most appliance manufacturers see no profit in making products for people who can't pay for them. You also have multiple cultural issues - ranging from fire and smoke being seen as an effective defense against insects to the functional ability to cook a wide variety of foods (e.g., tortillas, chapatis, and heavy porridges).

Saving a million and a half people is one of those worthy endeavors where engineering can directly impact the interface points between poverty and human health in the developing world. Technologist and author Jaron Lanier has coined a wonderful term - "The Circle of Empathy." The various engineering professions and organizations need to draw an imaginary circle around their current empathy space. Call it sympathy or allegiance - the circled space fundamentally defines the working area between engineering and the individuals and groups that we care about and have compassion for. Unfortunately, a huge portion of the world's poorest people currently lie outside of our Circle of Empathy. It is important to understand and remember that many of the world's deepest controversies and conflicts involve issues and ideas on whether something or someone should lie just inside or outside a particular Circle of Empathy. One of the most pressing issues facing engineering is our ability to expand our Circle of Empathy to the bottom billions. Our ability to march forward as a civilization is a function of increasing the size of The Circles of Empathy. Engineering plays a key role in this circle expansion process.

Friday, January 15, 2010

"Sayonara, Sucker"

So you are a mortgage banker in 2006 and looking at making a loan to a family that clearly can’t afford the house or is clueless to the risks of such a transaction. You understand the basics of CDOs (But you are also clueless as to the theory behind the Gaussian copula function developed by J.P. Morgan banker David X. Li to value CDOs – and 99.999999% of the Mensa membership can’t explain a Gaussian copula function either. Dr. Li recently admitted he can’t either.) and if the borrower defaults on the loan, so what? You look at the Bart Simpson calendar on your desk (or maybe you have a poster on the wall) and you fully understand your employer will not own the risk - - it will be securitized and sold to the Royal Bank of Bulgaria (a name which might be what Oscar Wilde called “a triple oxymoron”). Then you have the Bart Simpson moment, you grin and think to yourself - - “Sayonara, Sucker”.

What is a CDO you ask (Collateralized Debt Obligations)? British author John Lanchester does a masterful job explaining this and much more in his book I.O.U: Why Everyone Owes Everyone and No One Can Pay (2010). His explanation of banking, how banks work (or don’t in some cases), and the implications behind leverage ratios of 75 to 1 should be required reading for everyone. His take on CDOs is outlined below:

I have several times read explanations of how the CDO geniuses managed to turn poor people who struggled to make their mortgage payments into a source of funds as stable a U.S. Treasury bills. I can understand the explanation with at least part of my brain. The answer was that the cash pouring in went into the equivalent of a series of buckets, the top bucket being an AAA tranche of CDOs, and then, when that was full, spilled over into the AA tranche, then down into the BBB and beyond. If the flow of cash slowed down, well, it would be tough luck on the people holding the lowest buckets, which would be the first to dry up – but then, they were being compensated for that risk by the sexily high yield on the CDOs. The bucket at the top, of course would never run dry. As long as any money at all was coming in, that bucket would fill up first. That was the idea, and, as I’ve said, a part of my brain follows the explanation. But a larger part is still left reeling with incredulity at the idea that anyone could be so clever/stupid as to believe that human fallibility could be engineered into nonexistence. They had forgotten Murphy’s Law, an important principle of engineering – and not at all the same thing as Sod’s Law, which is the facetious idea that the worst thing always happens (in French, le loi de l’emmerdement maximum). Murphy’s Law is an engineering principle, and it states that if something can go wrong, it will. So the idea that something will go wrong has to be built into a machine – how to monitor it, how to fix it, and what to have in place as a backup when it fails. The designers of the CDOs forgot Murphy’s Law. That, to civilians and outsiders, is one of the things which strikes you hardest about this new type of CDOs. You can follow the basic principles of swapping and securitizing debt and stay with the thought that the various inventions were all brought in with the intention of spreading risk and freeing up capital – but there was a point at which people got carried away and the momentum behind this wave of innovative financing went too far.

Thursday, January 14, 2010

A Faster Horse

Engineering is the process of discovery - - we are in a constant struggle and search into what society, communities, and individuals want and think they need. Traditional ways of doing this, such as focus groups and surveys, rarely yield important insights. In most cases, these techniques simply ask people what they want. Have you ever been with a client and ask them the “What do you want” question and received in return the “I really don’t know what I want” declarative statement? Conventional research can be useful in pointing toward incremental improvements, but those don’t usually lead to the type of breakthroughs that leave us scratching our heads and wondering why nobody ever thought of that before.

Henry Ford understood this when he said, “If I’d ask my customers what they wanted, they’d have said a faster horse.” Although people often can’t tell us what their needs are, their actual behaviors can provide us with invaluable clues about their range of unmet needs. Engineering and engineers need to come up with a better starting point – such as a journey into the real world and observing the actual experiences of our customers and clients. Become a technology anthropologist (this would be a great major and career - - part engineer and part expert on social and cultural experiences - - with the ability to spot and document trends and insights between society and technology) and observe, study, and learn the many linkages between technology and humanity.

We live in a multidisciplinary world with multidisciplinary problems and opportunities. Invite other non-engineers on your discovery journeys to serve as interpreters and cultural guides. Inquires regarding the interface of technology and humanity will be more complete and informative as we increase the range of ways we describe, interpret, and evaluate the world of engineering and technology. Look at your customers and clients in a holistic manner - - take the time and observe what other systems they interface with on a daily basis that can be improved to help them become more efficient and productive. Shadow a customer or a client for a week - - this builds credibility, trust, loyalty and ensures deeper understanding of the “What do you want” question and issue. Through these types of activities and endeavors one starts to get ideas flowing into the inspiration space - - where people start to see the problem or opportunity that motivates people to search for solutions.

Wednesday, January 13, 2010

The Engineer as Teacher

An important element in the professional development of younger engineers is the mentoring role of the experienced engineering practitioner. The experienced engineer or manager typically plays the role of mentor, tutor, and/or coach during the early professional years of an engineer. The most common utilized term is one of mentor - - which means a wise and trusted counselor or teacher. Fundamentally the roles are one of teacher and student – a professional partnership of experiential learning viewed as an extension of the cognitive development begun in universities.

What makes a great mentor – which is basically asking what makes a great teacher (what makes a great student is a topic for further discussions!!)? It is probably the skills and attitudes that all great teachers have acquired with time and effort. First, great teachers tend to set big goals for their students. They see their students as the next owners and maybe president of their company. Or they see the bright engineer with an interest in public policy and affairs running for city council and state senate one day. Great teachers and mentors don’t think in terms of a “regression to the mean” for their students - - they think in terms of outliers and superior performance.

Great teachers are perpetually looking for ways to improve their effectiveness. They experiment, they change, they adapt - - if it isn’t working, they see and understand the need to try something else. This is especially important given the diversity found in engineers and engineering organizations. Great teachers are constantly re-evaluating what they are doing and why.

Great teachers maintain focus. It is critical that the professional interface time between teacher and student contributes to student learning. This requires planning exhaustively and with purpose – by working backwards from a desired outcome. Great teachers are strong practitioners of “I do, we do, you do” - - where the theory of design slowly over time becomes the reality of design.

Great mentoring and teaching efforts are neither mysterious nor magical. It is neither a function of dynamic personality nor dramatic performance - - it is working relentlessly in the areas that I have outlined. Most importantly, great teachers and mentors have grit - - defined as perseverance and a passion for achieving the long-term goals of the professional partnership between mentor and student.

Tuesday, January 12, 2010

Universities, Immigration, Innovation

James Fallows is an American print and radio journalist who has been associated with The Atlantic Monthly for many years. He is a graduate of Harvard College (editor of the Harvard Crimson) and a Rhodes Scholar. He has lived and worked in China the past three years. Coming back to the United States last year, he was written an article in the January/February 2010 issue of The Atlantic Monthly entitled “After the Crash: How America Can Rise Again.” The article reflects on Fallows’ observations and understanding of China while working and writing over the three year period. The article points out three important and unique elements to American culture that are cornerstones of our strength and our ability for renewal.

The first element is our university system. Of the top 20 universities in the world, 17 are located in the United States (the remaining three are Cambridge, Oxford, and the University of Tokyo). China may have all those engineers and scientists – but guess how many Chinese universities are in the top 100? Try zero. We have the best and most admired university system in the world – with a tremendous talent to attract the best and brightest from all over the globe. We need to make sure that our university system remains #1 and, this is a big and, we need to ensure that the foreign students educated in the U.S. stay in the U.S.

The next element is our receptiveness to immigration. We need to attract talented outsiders, especially as we enter an era of declining birthrates in the developed world. Fallows points out the importance and need for open and welcome immigration policies:

America will be better off if China does well than if it flounders. A prospering China will mean a bigger world economy with more opportunities and probably less turmoil – and a China likely to be more cooperative on environmental matters. But whatever happens to China, prospects could soon brighten for America. The American culture’s particular strengths could conceivably be about to assume new importance and give our economy new pep. International networks will matter more with each passing year. As the one truly universal nation, the United States continually refreshes its connections with the rest of the world – through languages, family, education, business – in way no other nation does, or will. The countries that are comparably open – Canada, Australia – aren’t nearly as large; those whose economies are comparably large – Japan, unified Europe, eventually China and India – aren’t nearly as open. The simplest measure of whether a culture is dominant is whether outsiders want to be part of it. As the height of the British Empire, colonial subjects from the Raj to Malaya to the Caribbean modeled themselves in part on Englishmen: Nehru and Lee Kuan Yew went to Cambridge, Gandhi, University College, London. Ho Chi Minh wrote in French for magazines in Paris. These days the world is full of businesspeople, bureaucrats, and scientist who have trained in the United States.

The last element is innovation - and it is closely related to our university system and our immigration policies. Our innovation engine is linked to the universities – look at the businesses and innovation in the cities in close proximity to our major universities. Be it Boston and MIT or San Francisco and Stanford – growth and innovation are fueled by this linkage. Several recent books and articles have commented on the Israeli model of immigration and innovation. Tel Aviv has become one of the world’s foremost entrepreneurial hot spots. Israel has more high-tech start-ups per capital than any other nation on earth. It leads the world in civilian R&D spending per capita. It ranks second behind the U.S. in the number of companies listed on the NASDAQ. Israel, with seven million people, attracts as much venture capital as France and Germany combined. It is a beacon for Jews immigration, entrepreneurs, and culture – regardless of the geopolitical uncertainty associated with the Middle East.

We are not without a wide range of problems and issues. Fallows does a fine job in outlining them. They range from our declining investment in public infrastructure to huge budget deficits to a sort of “triumph of tactics over strategy” mindset with respect to some of our larger long-term national problems. Our biggest problem, according to Fallows, is our dysfunctional political institutions that appear incapable of self-correcting - - government’s progressive loss of the ability to adapt. The true wealth of any nation should be measured not in money or power but rather in the ability to change and adapt. As Fallows explains:

What I have been calling “going to hell” really means a failure to adapt: increasing difficulty in focusing on issues beyond the immediate news cycle, and an increasing gap between the real challenges and opportunities of the time and our attention, resources, and best efforts.

Monday, January 11, 2010

Running up the Score

A Houston high school basketball team recently beat an opponent something like 150 to 25. The game and score were widely report by local television. Is it unethical to run up the score in this manner and what is the business equivalent?

Author and lecturer Rushworth Kidder outlines three ways to look at this or similar situations. The first way is called Ends Based Thinking, which determines ethical behavior based on an evaluation of whether the action generates the greatest good for the greatest number. So if the consequences of running up the score are acceptable to the majority of the people involved, then it is ethically OK. As we know from history and frequently witness, the product of group-think and the potential tyranny of the majority do not make the behavior ethical. We recognize that the greatest good and greatest number depend on the perceiver.

The second is called Rules Based Thinking, implying that if there is no rule against a behavior, then it is ethical. So if running up the score does not violate the rules, then it is ethical. People will and should argue that Kidder’s philosophy lacks a clear, logical, moral imperative because consequences of actions or behaviors do matter without regard to the current rule. Further, in many areas there may not be established rules – or the rules may not be ethical (i.e., many sports programs at typically younger age groups have “Mercy Rules” that would prevent running up the score).

The last idea is Care Based Thinking that relies on the concept that if an action is fair to both parties, then it is ethical. The fundamental characterization of fairness in is the Golden Rule – Do to others what you would like them to do to you. This standard is found in every major religion around the world. This idea is the key to the basketball example – the concept or idea of mentally putting yourself on both sides of the relationship or transaction (relationships are much easier for someone to visualize and understand the Golden Rule, however, our global, fast paced economy is really about transactions which have a much more difficult time with the Golden Rule) makes this a paramount resolution tool. Before going for the extra score, ask yourself: Would you want the score to be run up on you or your team?

Adam Smith made the following well-known statement – “Everyone is left perfectly free to pursue his own interest his own way and to bring his industry and capital into competition with those of any other,” he wrote, “so long as he does not violate the laws of justice.” Kidder has given us three ways to think about the business equivalent of running up the score – practices that overcharge or under serve customers, mistreat employees or suppliers, or gouge owners or investors.

Sunday, January 10, 2010

How Weird Are You?

Tony Hsieh is CEO of, the shoe seller that Amazon acquired last year. He handles his firm's organizational culture and core values with a unique approach - -

About five years ago, we formalized the definition of our culture into 10 core values. We wanted to come up with committable core values, meaning that we would actually be willing to hire and fire people based on those values, regardless of job performance. Given that criteria, it's actually pretty tough to come up with core values.

I sent an e-mail to the entire company, asking them what our values should be. The initial list was 37 long, and then we went back and forth and came up with our list of 10. Today, when we interview, we have questions for each one of the core values.

One of our values is, "Create fun and a little weirdness." So the question is: On a scale of 1 to 10, how weird are you? If you're a 1, you're probably a bit straitlaced for us. If you're a 10, you might be two psychotic for us.

It's not so much the number; it's more how candidates react. Because our whole belief is that everyone is a little weird, so it's really more just a fun way of saying that we recognize and celebrate each person's individuality, and we want their true personalities to shine in the workplace.

We have a culture book. We put it together once a year, and we ask all our employees to write a few paragraphs about what Zappos's culture means to them. It's unedited, so you get to read the good and bad. We make it freely available to visitors and anybody who asks for a copy.

Saturday, January 9, 2010

Consuming Risk Reduction

I had the opportunity to ski in Colorado over the holiday season (the picture is not of me nor a reflection on my skill level!). One of the things that is clearly noticeable on the slopes and lift lines is the number of people that wear ski helmets. I would estimate that 75% of participants in every demographic group wear a helmet. This is vastly different from the first time I skied in the early 1970's. Helmets are available as rentals and come in many different colors and styles from numerous manufacturers. Clearly safety concerns have fueled the demand, acceptance, and use by the general public. The key question - have helmets reduced the number of head injuries over the last 40 years or have people just consumed their risk reduction by taking greater risks on the slopes? Have the use of helmets increased risk taking that has led to other types of injuries - such as broken legs?

Consider, for example, the results of a famous experiment conducted in the early 1990's in Germany. Part of a fleet of taxicabs in Munich was equipped with anitlock brake systems (ABS), technological innovation that vastly improves braking, particularly on slippery surfaces. The rest of the fleet was left alone, and the two groups - which were otherwise perfectly matched - were placed under careful and secret observation for three years. You would expect the better brakes to make for safer driving. But that is exactly the opposite of what happened. Giving some drivers ABS made no difference at all in their accident rate; in fact, it turned them into markedly inferior drivers. They drove faster. They made sharper turns. They showed poorer lane discipline. They braked harder. They were more likely to tailgate. They didn't merge as well, and they were involved in more near misses. In other words, the ABS systems were not used to reduce accidents; instead, the drivers used the additional element of safety to enable them to drive faster and more recklessly without increasing their risk of getting into an accident. As economists would say, they consumed the risk reduction, they didn't save it.

Friday, January 8, 2010

Connecting The Dots

This week was marked by a chorus of cries associated with our inability to “Connect the Dots” in two high profile intelligence failures. With both Umar Farouk Abdulmutallab (a.k.a. The Underpants Bomber) and Major Nidal Malik Hasan (a.k.a. Ft. Hood Shooter), pundits are claiming that obvious patterns were missed that could have prevented both such attacks. Both cases point out the invariably ambiguous nature of intelligence gathering and analysis - - where we may be short on detail while burdened with cumbersome centralized decision making (in the case of the “Underpants Bomber”, decentralized decision making by the adjacent passenger ultimately prevented a potential tragedy). After 9/11, no one wants ambiguity, and system improvements were demanded. But by making our warning systems more sensitive obviously reduces the risk of surprise, but increases the number of false alarms, which in turn reduces sensitivity.

The running commentary on our inability to “Connect the Dots” points out author Malcolm Gladwell’s, wonderful thoughts on “Creeping Determinism.” Were there obvious patterns, signs, connection before both attacks? While in retrospect what happened at Ft. Hood may seem obvious, the problem is that it was not necessarily the case as it happened for those involved. Where “Creeping Determinism” is the sense that grows on us, in retrospect, that what has happened was actually inevitable – and the chief effect of creeping determinism, is that it turns unexpected events into expected events. The occurrence of an event, such as the attempted Christmas Eve bombing, increases its reconstructed probability and makes it less surprising than it would have been had the original probability been remembered. The press and political aristocracy are the masters of applying filters to the past to produce a series of events that seems obvious in hindsight, tossing out everything else that kept those events from being obvious as they happened. It’s connecting the dots on an otherwise blank piece of paper, having erased the previous scatter of dots from which no discernable pattern could emerge. Hindsight has provided us with stark reminders that some of those decisions associated with our two most recent terrorist attacks were wrong. However, it does not mean that those errors were as obvious then as they are now.

On a side note, the “Connecting the Dots” award belongs to Paolo Pellegrini, an Italian financial analyst working for hedge fund manager John Paulson. Beginning in 2006, Pellegrini become convinced that the United States had a serious housing bubble. With limited effort and research, Pellegrini demonstrated that housing prices had climbed a puny 1.4% annually between 1975 and 2000, after inflation was taken into consideration. But they had soared over 7% annually in the following five years, until 2005. In Pellegrini’s mind, U.S. home prices would have to drop by almost 40% to return to their historic trend line. Not only had prices climbed like never before, but Pellegrini’s figures showed that each time housing had dropped in the past; it fell through the trend line, suggesting that an eventual drop would be brutal.

A simple chart, as outlined in Gregory Zuckerman’s excellent retelling of the story in his book The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Made Financial History (2009), was the “Connecting the Dots” moment. The book makes the following point –

The chart was Paulson’s Rosetta stone, the key to making sense of the entire housing market. Years later, he would keep it atop a pile of papers on his desk, showing it off to his clients and updating it each month with new data, like a car collector gently waxing and caressing a prized antique auto. Pelligrini’s masterpiece was a guiding light that told Paulson exactly how overpriced the housing market had become. He no longer needed to guess.

No ambiguity. No shadows. No gray. The chart was about sunlight and darkness and black and white. With the chart, Paulson developed an investment strategy based on the huge bubble. In 2007 alone, Paulson earned more than $15 billion for his firm. His personal tally for 2007: nearly $4 billion. It was the largest one-year payout in the history of the financial markets.

Thursday, January 7, 2010

Engineering Virtue

Engineering ethics has a primary focus on “technical ethics” - - these are the ethical standards closely associated with one’s technical training. It is interesting to note the differences between preventative ethics and virtue ethics. By virtue, I refer to a disposition or character trait that manifests itself in certain types of behavior when the appropriate circumstances arise. For example, a person who has the virtue or character trait of courage acts courageously when the need for courage arises (e.g., the passenger next to the “Underpants Bomber” on Christmas Eve that stopped him from blowing up the airplane). The idea of virtue as it relates to engineering ethical behavior is a little different than what most engineers typically encounter - - the National Society of Professional Engineers (NSPE) has essentially a negative or preventive orientation toward ethical behavior. The ethics code is marked by terms such as “not” or “only” and other policing provisions. The first duty of engineers should be to guard against harming the public or taking unfair advantage of their specialized knowledge and skills to promote their own advantage. Given this preventive-ethics orientation, it is to be expected that engineering ethics has been expressed primarily in rules, and that these rules are primarily negative or prohibitive in character.

Congress is currently examining stiffer regulations and laws for the financial services industry in the wake of our financial tsunami. Like with many federally driven mandates, the goal is to regulate, control, and remove vice from a particular system. Rules marked by “not” or “only” however, cannot adequately account for discretion, judgment, character, and honesty. Exhibiting the virtue of compassion requires an inner attitude of concern for others that cannot be fully expressed in behavior. Having the investment banking community merely obeying a rule cannot fulfill this requirement. With the virtue of gratitude, the inadequacy of a rule such as “Express gratitude to your benefactors” is even more apparent, because gratitude requires a certain motive. Ungrateful people can exhibit “grateful behavior” as well as genuinely grateful people, so the virtue of gratitude is not equivalent to the moral rule requiring gratitude. Many ethical systems and codes are like this - - the primary focus is the prevention of vice without regard or consideration for the promotion of virtue. It is important to remember that in some engineering endeavors, such as sensitivity to risk, governing by rules, certainly not negative rules, cannot adequately define the commitment to the public good. Some of the unique features of virtue ethics in engineering are the greater place it gives for discretion and judgment and also for inner motivation and commitment.

In addition, there are three non-technical virtues or excellences to which the good engineer should aspire to. The first is techno-social sensitivity. This should be a critical awareness of the way technology affects society and the way social forces in turn affect the evolution of technology. E-mail is a great example - - on one hand you have the huge productivity improvements and impacts. While on the other hand you have technology that fragments and impersonalitizes the human experience and thereby limiting or transforming its meaning. The second is respect for nature. Engineers need to fully understand that the virtue of respect for nature cannot be acquired simply by adopting an attitude as an act of will. It includes actions, emotions, perceptions, sensibilities and understandings that are best developed in childhood - - that ultimately grow into an understanding that we share a common bond with all living things. The third is commitment to the public good. The idea that what is needed is “good works” that defines commendable conduct that goes beyond the basic requirements associated with a particular social role, such as a professional engineer.

Wednesday, January 6, 2010

Twenty-five Principles Underlying Good Practice

Two brothers, Kenneth and William Hopper, have written a fantastic and unique business book - The Puritan Gift: Reclaiming The American Dream Amidst Global Financial Chaos (2009). The book is a social history of the United States, which doubles up as a commentary on managerial culture. The book traces the evolution of American society from the 1630s to the present day. The book depicts how America's superb managerial culture, originating in seventeenth-century New England, evolved to make the United States the most powerful nation on earth.

The appendix contains what the authors refer to as "Twenty-five Principles Underlying Good Practice for the Golden Age of Management - all with Puritan Overtones." The list is presented below:

Systems and Routines
  • Principle One - All successful organizations, however simple, consist of systems within a system.
  • Principle Two - All systems are nurtured by routines, which must be regularly reviewed and refreshed.

Structures and Hierarchy

  • Principle Three - The most important sub-system in any organization is the managerial hierarchy, which is likely to be based on some form of line-and-staff.
  • Principle Four - The best type of hierarchy is "bottom-up".
  • Principle Five - Leadership should as far as possible be collective or "collegiate".
  • Principle Six - The middle manager is the keystone of the managerial arch.
  • Principle Seven - "One man, one boss" - which should be re-stated as "one person, one boss".

Decision Making

  • Principle Eight - Meetings are the medium of management work.
  • Principle Nine - Integrated decision making leads to right conclusions.
  • Principle Ten - Planning should be for the short term (say, one to four years), the medium term (say, five to eight years), and the long term (say, nine years up).
  • Principle Eleven - You should make a careful study of the mistakes and successes of the pioneers in your field - and learn from them.
  • Principle Twelve - Excellent internal communications in all directions - but above all upwards - are necessary in any successful organization.
  • Principle Thirteen - The manager must be a leader in both a practical and moral sense.
  • Principle Fourteen - You should use consultants sparingly - and "strategic" consultants never.
  • Principle Fifteen - A manager should be aware of his responsibilities to society as a whole including to his company's employees as human beings.
  • Principle Sixteen - If ain't broke, you should try to make it work better.


  • Principle Seventeen - Avoid debt like the plague - or, if that is impossible, use it sparingly.


  • Principle Eighteen - A manager should possess or acquire what is now known as "domain knowledge" - i.e., a profound understanding of the technology and business of his or her company, which can normally be gained only through a long apprenticeship in that company or in the same industry.
  • Principle Nineteen - The testing and training of managers should be pragmatic and continuous.
  • Principle Twenty - Managers who wish to reach the top should start at or near the bottom.
  • Principle Twenty-One - Job rotation (sometimes known as intra-company mobility) is desirable to create the "rounded" executive.


  • Principle Twenty-Two - Employment should in general be for the long term - by which is meant, at least, eight and, if possible, ten years.
  • Principle Twenty-Three - Complementarity is one of the keys to making appointments.
  • Principle Twenty-Four - The remuneration should promote and reward group effort.
  • Principle Twenty-Five - Avoid ostentation like the plague.

Tuesday, January 5, 2010

Year of the Tablet

Numerous technology pundits are predicting 2010 as the year of the electronic tablets – where tablets are generally viewed as E-readers. It’s important to understand how difficult these devices will be to produce, especially if done right. There are major hardware limitations with a completely functional tablet. E-readers like the Kindle from Amazon and the Reader from Sony utilize E-Ink for longer battery life and ease of reading. To make similar devices with a fully immersive color screen (you don’t think that Sports Illustrated wants a black and white version of their swimsuit issue on an E-reader do you!), you face problems with battery power, operating systems, price, and a grab bag of other technical challenges. An affordable 10-inch screen capable of streaming video, with full interaction and a constant Web connection, is going to require a power outlet every two hours.

Over 90% of existing E-readers use a display technology called E-Ink, made by the firm of the same name that was spun out of the Massachusetts Institute of Technology in 1997. E-Ink is based upon tiny capsules filled with positively charged white particles and negatively charged black ones, suspended in a clear liquid. Transparent electrodes above and below the layer of microcapsules create electric fields that, depending on their polarity, push either the black or the the white particles to the surface in a particular region of the display. Experts have commented on the room for improvement, however, E-Ink displays are relatively slow to update, which can irritate readers as they turn their digital pages. They cannot display color images or video, unlike the liquid-crystal display (LCD) technology used in mobile phones and laptops. But LCDs are much more battery hungry and are not so easy on the eye when reading for long periods. Another approach, organic light-emitting diode (OLED) technology, shows promise but is expensive and difficult to scale up.

An additional barrier to providing early tablets (None of this may matter to early buyers – the nice lady in front of me at my local Barnes & Noble purchased five Nooks – their E-reader. All five units were back ordered until late February) was the lack of software. The success of the Apple App Store and the eagerness of publishers shows that this won’t be a problem for any new devices – especially with the highly anticipated Apple tablet. The publishing community views the tablet as savior – a way to innovate and change the way we read magazines, newspapers, blogs, and books. The tablet and E-reader as life preserver – with Steve Jobs and Apple doing the throwing. The secretive Apple has made fools out of predictions in the past, but Kai-Fu Lee, the former head of Google in China, posted an item on this personal blog suggesting the Apple tablet would feature a 10.1 inch multi-touch screen with three-dimensional graphics (maybe 10 million units sold at between $200 and $1,000 per tablet in the first year). Sort of a Jesus tablet that can do anything combined with an iPhone on steroids.

Will a world of tablets help the print media – can you take the iTunes economics model and combine it with the innovative App Store model – and turn it into a model for the print world? Will people be willing to buy print media as they buy songs and music? What actually drives consumer demand (and this is the trillion dollar question) – content, technology or both? Will I be able to turn over to a client a 500-page technical report on an E-reader platform with hyperlinks to project video, drawings, graphics, maps, a Web interface, etc. – that he or she can read while horizontal in bed?

Monday, January 4, 2010

IPCC Terminology

The Intergovernmental Panel on Climate Change (IPCC) has developed the following agreed to language to characterize uncertainly and provide a comprehensive account of all aspects of assessment of the risks associated with climate change.

The IPCC uses the following terms to indicate the assessed likelihood of an outcome or a result:
  • Virtually certain > 99% probability of occurrence
  • Very likely, 99% to 90%
  • Likely, 90% to 66%
  • About as likely as not, 66% to 33%
  • Unlikely, 33% to 10%
  • Very unlikely, 1% to 10%
  • Exceptionally unlikely, less than 1%

The following terms are used to express confidence in a statement:

  • Very high confidence, at least a 9 out of 10 chance of being correct
  • High confidence, about an 8 out of 10 chance
  • Medium confidence, about a 5 out of 10 chance
  • Low confidence, about a 2 out of 10 chance
  • Very low confidence, less than a 1 out of 10 chance

Sunday, January 3, 2010


Tim Brown of IDEO has written a great book - Change By Design: How Design Thinking Transforms Organizations and Inspires Innovations (2009). My suggestion would be to make this mandatory reading for all engineers. Brown has some very good thoughts in his chapter on constraints - "The willing and even enthusiastic acceptance of competing constraints is the foundation of design thinking." Brown points out - "Constraints can best be visualized in terms of three overlapping criteria for successful ideas: feasibility (what is functionally possible within the foreseeable future); viability (what is likely to become part of a sustainable business model); and desirability (what make sense to people and for people).

We all have deadlines - Brown discusses the role of deadlines as a tool:

Though we all have deadlines all of the time, in the divergent and exploratory phase of design thinking, deadlines take on an extra level of importance. They refer to the process and not the people. The deadline is the fixed point on the horizon where everything stops and the final evaluation begins, These points may seem arbitrary and unwelcome, but an experienced project leader knows how to use them to turn options into decisions. It's unwise to have a deadline every day, at least in the earlier phrases of a project. Nor does it work to stretch it out six months. It takes judgement to determine when a team will reach a point where management input, reflection, redirection, and selection are most likely to be valuable.

I have not yet met a client who says, "Take all the time you need." All project work is bound by limits: limits of technology, limits of skill, limits of knowledge. But the calendar is probably the most insistent limit of them all because it brings us back to the bottom line. As Ben Franklin, America's first and most adventurous real design thinker, pointed out in a letter to a young tradesman, "Time is money."

Saturday, January 2, 2010

Geography of Thought

Richard Nisbett is a psychologist who has studied approaches to problem solving in Western and Eastern cultures. Whether the problem lies in engineering, chemistry, political science, or economics, Westerners are taught to take a series of inputs, analyze them, and then converge upon a single answer. At times we may find that the best - as opposed to the right - answer will have to do or that we may have to choose among equally compelling alternatives. Western group thinking tends to converge toward a single outcome.

Tim Brown, the CEO of IDEO, has come up with the idea of what he calls convergent thinking. Convergent thinking is a practical way of deciding among existing alternatives. Think of a funnel, where the flared opening represents a board set of initial possibilities and the small spout represents the narrowly convergent solutions. This is clearly the most efficient way to fill up a test tube or drive toward a set of fine-grained solutions.

If the convergent phase of problem solving is what drives us toward solutions, the objective of divergent thinking is to multiply options to create choices. These might be different insights into consumer behavior, alternative visions of new product offerings, or choosing among alternative ways of creating interactive experiences. By testing competing ideas against one another, there is an increase likelihood that the outcome will be bolder, more creatively disruptive, and more compelling.

This problem solving process looks like a rhythmic exchange between the divergent and convergent phases, with each subsequent iteration less broad and more detailed than the previous ones. In the divergent phase, new options emerge. In the convergent phase it is just the reverse: now it's time to eliminate options and make choices. It is a balance between scientist Linus Pauling - "To have a good idea, you must first have lots of ideas" and writer William Faulkner - "Killing off your little darlings."