Software, Design, Entrepreneurship and Economics

I recently wrote an essay about how our educational system is an artifact of the industrial revolution, designed to produce cogs for a machine that no longer exists.

It received wide circulation and a lot of people weighed in with their own ideas about what’s working in education. My mother started a school when I was young, and I’ve also been in the process in the last year of evaluating school choices for my kids (who are entering middle school) so I’ve had a good deal more recent first-hand exposure to the question. And it’s got me thinking.

Play and Exploration

People learn by interacting with the world around them and by following the ideas they are curious about. Think back on your school career and try to name three teachers or three projects that really inspired you and got you excited. You can probably do that, but if I asked you to name four or more, you’d probably be at a loss.

Real learning doesn’t occur through mindless rote tasks or in any context where one is teaching to a test, and it almost certainly can’t occur in huge classes.

Kids grow when they are inspired to inquire into a subject themselves; sometimes that happens by way of a teacher, parent, or role-model, and sometimes it happens through reading or another kind of exposure to an idea. I won’t claim it’s causal, but there is a correlation between the number of books in a home and later success in life. While it is equally probable that the kinds of families that value books are also the same homes most likely to properly nurture a child, there is something wonderful about being surrounded by books and being able to select just the right book at just the right time.

Learning, at its best, should be a kind of just-in-time delivery system for knowledge and discovery.

There has been some debate as to whether schools should make any pretense of having a curriculum at all, or just focus on a kind of resource-rich play. The New York Times recently wrote a piece about how play is at the center of learning. A friend told me about the Sudbury School which has no curriculum and lets kids make up the rules. And if you read the literature, Sudbury “graduates” are as successful as anyone else.

Learning In Spite of the System

If you study the evidence, it becomes clear that the only real learning that happens in our traditional school environment happens by accident — as a side effect of our system, not as a primary result of our system. If this is true, our system is mostly wasted energy – noise and light – and not actually designed to solve the problem it purports to solve.

What do I mean by “learning by accident?” If you can count on one hand the number of teachers you had that inspired you, then your learning was by accident. If you can remember maybe just two projects from your school years that meant something to you, you were learning by accident.

The tragedy is that in our worst schools, those accidents never occur. Students slog zombie-like day after day through halls that threaten their safety, misdirect their higher calling into self-defense and trivial pursuits of one-upmanship, and generally burn them out on life and its possibilities. It’s no wonder that the survivors of this system (it’s hard to use the word “graduates” when many do not, and the process is more a trial than a system) tend towards cynicism and a zero-sum view of the world. There is no time or place for higher thinking when safety is in question.

Our very best schools – the schools in higher income areas, or our private schools – simply are rigged to increase the odds of “good accidents” occurring at a higher rate. These schools typically do not fundamentally alter the design, though, they just increase the odds that something good might happen inside their walls — through parent involvement, better teachers, and a community that is generally more able to support a learning environment.

So even our best schools are only, perhaps, 30% as efficient as they could be. The rest is all noise and heat and light. How can we unleash that untapped 70% of energy that we lose to the inefficient design we currently call school?

Homeschooling or the Sudbury method offer potential answers. However many alternative approaches carry baggage from the culture wars that make them unpalatable to the population at large, or include biases that make them less than effective.

Ideology and Indoctrination

Thanks to Hitler, it is still today illegal to home-school children in Germany. Indoctrination was such an important part of his new totalitarian state that he dared not leave it to chance. We have something similar going on in our country today. Our school system is a kind of indoctrination. We need to ask serious questions about whether we believe in the values it imparts, or whether it is something more sinister.

The extreme left and right get it wrong. This is not about warmed over hippie ideology, and it’s not about right-wing religious nuts opting out to preserve a cult-like bubble around their children. It’s also not about non-religious right-wing people rebelling against the abuses of teacher unions or big government. Education is too often co-opted by these sects and it’s counterproductive.

The real challenge is how to design an approach — which may not look at all like public education as we know it now, so stop reflexively bashing it — that scales up and works for moderates. And by “works” I mean delivers an level of efficiency closer to 90% rather than 30%, and is divorced from ideology.

Design is an opportunity to incorporate, or not to incorporate, ideology. Would you design a right-wing fork? Or a liberal toaster? Is it possible for us to design an educational approach that is simply functional, and light on ideology? We owe it to our kids to do so.

There is an insurance sales office not far from my home with a letterboard sign out front that proclaims, “The real risk is doing nothing.” Of course, they wanted you to think about the risk of not having insurance. But it got me thinking about entrepreneurship and how entrepreneurs change the world through their actions.

And I’m not talking about changing the world in some pie-in-the-sky, abstract kind of way. Recently I’ve been reading the work of entrepreneurship researcher Dr. Saras Sarasvathy, whose theory of “effectuation” states that entrepreneurs actually create the world around them through their actions.

Sarasvathy has interviewed hundreds of entrepreneurs and one common thread she has observed is that entrepreneurs believe that they are called to act when they see an opportunity to create change; they know that if they do nothing, they will achieve nothing, and things will stay the same.

And so entrepreneurs evaluate their options — what and who they know — to take a calculated risk to move a little closer towards a goal. That action might be as simple as putting together a meeting of stakeholders or researching a topic. And with that very first action, they’ve changed the game.

The entrepreneur has widened the opportunity by involving more people, or by knowing more about the subject, or attracting investment. And so in a very real way, she has changed the world around her to make the world more hospitable to attaining the goal. Her actions do not cause the goal to come true directly; it is the compounded effects of the entrepreneur’s actions that lead to a world where the goal becomes possible.

What Really Motivates Entrepreneurs

A purely rational evaluation of entrepreneurship would suggest that it occurs when someone perceives an unmet market opportunity and then proceeds to allocate resources to address this unmet need. Sarasvathy observes that this is almost never how entrepreneurs really operate.

Indeed, most entrepreneurs are haunted by the risk of doing nothing. They might say, “Well, I’ve always wanted to try this idea and I think it might work. How will I feel if I don’t pursue it?” And then they look to limit risk. Often, if someone can craft a scenario where the downside risk is affordable, they go for it. They ask, “What’s the worst that could happen? I lose a year and have to return to my job.” They are not typically motivated by the lure of the upside, but rather the fear of not acting!

Can Entrepreneurship Be Taught?

Are entrepreneurs born risk-takers, or are they just regular people that are applying a particular kind of logic? Sarasvathy suggests the latter. She says that there is nothing about her study of entrepreneurs that would suggest that there are particular personality traits that distinguish entrepreneurs from others. The only difference is their use of “effectual logic” and the subsequent learning that comes from its use.

Entrepreneurs ask, “What do I know, and what can I do with it?” They then take steps that help to change the game. Then they ask, “What else can I do with it?” Expert entrepreneurs engage in an iterative process of changing the world and then with each round re-evaluate the opportunities that their previous actions have made possible. Surely it’s possible to teach this process to people in the same way that it’s possible to teach a high-schooler how to think scientifically.

The differences come with experience. First-time entrepreneurs are likely to make mistakes around trust and judgment: they tend to trust people too little or too much, misread the character of a partner, or underestimate the importance of foundational elements like operating agreements. And so while many entrepreneurial enterprises fail, each failure causes the long-term success rate for an individual entrepreneur to increase. Failure helps entrepeneurs to know what pitfalls to avoid and it also teaches him fundamental lessons about his own strengths and weaknesses. This is why it’s so essential for entrepreneurs to pick themselves up and try again! Failure is essential to the creation of the expert entrepreneur.

The Role of Entrepreneurial Action in the World

One of the things that puzzles Dr. Sarasvathy is how effectual logic is used routinely in private sector business but is rarely applied to solving the deep social problems that we face in the world. Some beneficial businesses like micro-lending site Kiva.com got started through effectual thinking (you need $27 to break free from debt? Here’s $27), but for the most part we have consigned the world’s most pressing problems to the work of charitable foundations and non-profits. And because of the way these entities are funded (donations and partnerships), effectual logic cannot often be applied.

Sarasvathy suggests that a wave of social innovation might be unleashed if we were to change the funding model of social enterprises to better enable effectual thinking — primarily because effectual thinking is very efficient and good at minimizing risk at each step. And this goes beyond the current trend of “social entrepreneurship” that suggests that there is a class of problems that is suited to entrepreneurial thinking, and class that is not.

Why shouldn’t all entrepreneurship produce social benefit, and why shouldn’t all social problems be soluble through the application of effectual logic? This is an open set of questions, but certainly they represent the challenge of our time.

The Moral Imperative

If we believe that entrepreneurs literally affect the world to alter their own odds of success then we must also believe that there is a legitimate role for human action in the world.

The theory of effectuation additionally suggests that entrepreneurs are designers: at each stage they are using design thinking to imagine a set of possible solutions using available assets.

If entrepreneurs, through their actions, can help design potential solutions to the world’s most pressing problems, then isn’t the real risk doing nothing?

Google CEO Eric Schmidt recently outlined a case arguing that America needs to address its ongoing “innovation deficit” and spur entrepreneurship and creativity in meaningful new ways.

How did we get here? Why is it that America has an innovation deficit? It’s simple: we have lulled ourselves into complacency. America is bored because we have made ourselves boring.

Unleashing Self-Actualization

What do we mean when we talk about innovation and creativity? Really what we’re talking about is what psychologists call self-actualization. Put simply, it’s nothing more than realizing all of your unique capacities and putting them to good use. Self-actualization occurs best when it’s in the company of others who are doing the same. Companies that achieve remarkable results are typically loaded with people who are either self-actualizing or on a pathway towards it.

Abraham Maslow described this pathway as the “hierarchy of needs” to highlight the fact that people cannot become fully self-actualized if they are concerned with other more basic needs like food and security.

Like the USDA food pyramid, Maslow’s hierarchy identifies some important elements, but the idea that there is a strictly linear progression towards self-actualization, or that it is inclined to occur naturally, is probably wrong. Looking at the world around us, it’s easy to see examples of people whose lives who have petered out somewhere in the middle of his pyramid, even though their baser needs have been met.

I believe this is because we have designed 21st century America in such a way that we short-circuit the process of self-actualization in a number of important ways.

Problem 1: Suburbs

Self-actualization occurs best when people are able to connect face-to-face to discuss real-world ideas, try things out, and play. This means intellectual conversation with a diverse range of people, including a broad range of views. It means exposure to the arts, to music, and a shared desire to solve meaningful problems.

Suburbs short-circuit these important pathways for self-actualization in these important ways:

• Slowing movement: people are dispersed – gathering requires use of cars
• Lack of diversity: suburbs tend towards less diversity of views, not more
• Diverts self-actualizing motivation into materialistic and trivial pursuits

The first two points are obvious enough, but let’s spend a moment on the last one.

Suburbs divert self-actualization into pursuits like neighborhood-hopping and home improvement. It’s not surprising that we just suffered the effects of a housing bubble. With millions of peoples’ self-actualizing efforts poured into drywall and granite countertops, there was simply a limit to how much housing and home-flipping we can endure. It doesn’t do anything. Working on housing is first-order toiling, not long-term advancement.

Is it surprising that the icons of the housing bubble years were “Home Improvement,”  ”Home Depot,” and the SUV? The SUV was literally a vehicle for improperly diverted self-actualization: if I have a vehicle that lets me improve my basement and my backyard, I can become the person I want to be.

Problem 2: Artificial Scarcity of Opportunity

Suburbs have had other unfortunate side-effects: we have allowed corporations to define the concept of work. By dispersing into our insulated suburban bubbles, we have largely shut down the innovative engines of entrepreneurship that used to define America. Where we might fifty years ago have been a nation of small businesses and independent enterprises, we are more and more becoming reliant on corporations to tell us what a “job” is and what it is not.

To the extent that we are not spending time together coming up with new important ideas, we are shutting down opportunities for ourselves. And corporations are happy to reinforce and capitalize on this trend. Opportunity is unlimited for people who are legitimately on a pathway towards self-actualization. We choose not to see it because we think of “jobs” as something that can only be provided by “companies,” and not created from scratch by collaboration.

Problem 3: Reality Television

Reality television is an ersatz reality to replace our own. It steps in where we’ve failed at self-actualization. It is both a symptom and a cause of our failure. As a symptom, it shows that we have so much time on our hands that we can spend it worrying about somebody else’s ridiculous “reality.” As a cause, this obsession can only be serviced at the expense of our own shared reality.

Problem 4: Car Culture

As a society, we spend way too much time in cars. Some of this is due to the issues I already raised about suburban design. But besides that, we spend a ridiculous amount of time stuck in traffic, waiting at red lights, and trekking around our metropolises.

Cars are fundamentally isolating. Time spent in a car is time you can’t spend doing something else. Sure, they can be useful, and I’m not anti-car, I’m just anti-stupid. If we as a society are burning many millions of hours each week in our cars stuck in traffic and covering unnecessary miles, it’s hard to see how that’s helping us become self-actualized (unless it’s in the backseat) and become more innovative. It’s a tax on our time.

Some have also suggested that one reason we have so many prohibitions on what we can do while driving is because we really just don’t like driving that much. Maybe the problem with “texting while driving” is that we are driving, not that we are texting. Maybe communication is more important societally than piloting an autonomous 3,000 pound chunk of metal and plastic?

A Solution: Well-Designed Cities

We’ve had the solution under our noses all along, but we’ve chosen to let our cities languish. Historical facts about America have led our cities to evolve in particular ways that differentiate them from some of our peers in Europe in Asia. But there is hope, and we must recognize the assets at hand in our cities.

Cities offer higher density populations which lead in turn to innovation and a flourishing of the arts. They lead to efficiency of movement and face-to-face communication, which is absolutely essential for intellectual self-actualization and entrepreneurship. Well designed public places let people interact and share, and also provide a platform for festivals, celebrations, and entrepreneurship. There are simply too many positive assets to ignore.

Arguments that American cities are unlivable today are tautological and self-reinforcing. The very problems that are most often cited (crime and education) are the same problems that would most benefit from entrepreneurship and real long-term economic development activity.

The root cause for the abandonment of our cities is race. In the case of Baltimore, WASPs left when Jews became concentrated in particular areas. Jews left when blacks became concentrated in particular areas. And “blockbusters” capitalized on the fear by benefiting on both ends of these transactions. In 50 years, Baltimore (and many American cities) changed dramatically.

Young adults today simply do not remember the waves of fear that sparked this initial migration. It may be a stretch to say that we are entering into a “color blind age,” but we do live in an era where we elected the first black president. I believe we are at the very least entering an age where people are willing to consider the American city with fresh eyes.

We are at a turning point, on the cusp of a moment when people will start looking at our cities entrepreneurially, for the assets they possess rather than the history that has defeated them. We are at a point where we can forget the divisive memories of the mid-twentieth century and forge a future in our cities that is based on shared values of self-reliance, innovation, and entrepreneurship.

Designing Our Future

The design constraints we have proposed for the last 50 years — abandoning our cities, relying on cars, building suburbs and big box stores — have led to the America we see today. And I ask simply, “Do you like what you see?”

We’ve let the culture wars frame these difficult design problems for too long, and it’s time now to put them behind us and start to ask questions in fresh terms. It’s clear now the answer likely doesn’t involve old-school silver-bullets like “Public Transportation,” because simply overlaying transport onto a broken suburban design doesn’t fix anything. Building workable cities and investing in long term transportation initiatives that help reinforce a strong urban design is much more sensible.

And make no mistake: self-actualization is an intellectual pursuit, and the kinds of cities that promote real self-actualization, innovation, and entrepreneurship must become hotbeds of intellectual dialog. Truth and acceptance of facts is an underlying requirement for self-actualization, and we can no longer delude ourselves into thinking that a society built on suburban corporate car-culture makes economic sense.

To continue to do so is to prolong and widen America’s innovation deficit.

Despite all the talk of Government 2.0 and transparency, is it really possible to change the current system from within to tackle the challenges of our day? Perhaps not. One leading expert has expressed serious doubts.

We can succeed only by concert. It is not “can any of us imagine better?” but, “can we all do better?” The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country. – Abraham Lincoln, Address to Congress, December 1862

Why is it that we seem completely ill-equipped to handle the central issues of our time? I believe it is because we misunderstand the nature of design and execution and in important, tangible ways we have abandoned design in favor of only execution. This has removed an important weapon from our arsenal, and it is unclear that we can afford to live in our world without it.

Design vs. Execution

What do I mean by Design (big D) in the context of government? The founding fathers were designers. They set out to imagine a governmental mechanism that would outlive them and ensure the core values that they held dear. So, in a real sense the American constitution (and all such similar instruments) is a design object, and executing against it produces a variety of effects. Most of these effects are positive (free speech, equal protection, etc), while some are negative (a silly disproportionate influence of corporations in politics, corporate personhood).

Execution, by contrast, is the everyday operating of the governmental machine as it was designed. This includes the daily activity of Congress, the White House, the Supreme Court, and the like. Sometimes these entities engage in design behavior (making laws, interpreting them, creating policy, setting precedent by imprisoning people without trial) but mostly they do the quotidian business of government: services, revenue collection, law enforcement.

Our government is now 234 years old. Is it possibly time to reconsider some of its basic precepts? Could we possibly engage in new, first-principles design work that would alleviate some of the most undesirable effects of our system?

Arguments Against New Design Activity

James Fallows in a recent article in The Atlantic suggests that the cumulative corrosion of so many special interests on the machine of government has brought it to a standstill. He suggests that it may be time for something like a new Constitutional Convention, but points out that any attempt to conduct such a convention would be a freak-show of unprecedented proportion, and he’s probably right. If you think the special interests are bad now, wait til you give them an opportunity to participate in a founding document!

In the state of Maryland, every 20 years we have the opportunity to vote to have a constitutional convention. This year is one of those years. But while some are calling for such a convention, most politicians consider it “an exercise in futility,” citing cost as the key factor. Why cost? Because so many people would need to be involved.

But this is surely a bad state of affairs. The Maryland constitution is huge, much bigger than the US Constitution, a burden on everyone that has to execute against it, and loaded with unintended effects. Yet, the critics are probably right: if we approach our design activities with the same appeal to the lowest common denominator as we have our execution activity, a new design would be a circus.

Fallows and Maryland Senate President Mike Miller both suggest that we plod along with our broken foundations because it is the only moral thing to do and even though we may have a tough time executing our way out of our design shortcomings.

Gaining Clarity About Design vs. Execution

A few days ago I wrote a blog post about how our educational system is broken, and at the end I cited several bullet points suggesting “core values” for the design of a new system.

Several people shot back in the comments with ways in which the current system does embrace some of the core values that I suggested, at least some of the time.

And it has struck me: we’re talking about two different things. I was talking about a new, imagined design. Some people thought I was talking about how the current system needed to change its execution. Those are two very different things and it began to dawn on me: our historic aversion to new design activity has caused us to push Design Thinking out of our political debate entirely.

Today, all political debate is around execution (activity) and not design (legacy).

We Must Disenthrall Ourselves

Lincoln said it best in 1862. We must disenthrall ourselves; disenthrall ourselves with the strengths of our system’s design, and disenthrall ourselves with the notions of the past. In order to move past where we are, we need to engage in new, imaginative design thinking and do something with it.

While new constitutional conventions are probably not the most productive approach, we must make ourselves open again to talking about design activity and understand the difference between execution and design. We must try to understand how we can conduct design activity through execution of our current system, and we must gain clarity about the limits of that prospect.

It is entirely possible that we cannot meaningfully affect the design of our system by execution alone; we may need to appoint some Great People to revise our system in a way that we all can live with. While this is a frightening thought when considered from inside the confines of our current government, it may well be necessary.

Jefferson anticipated this conundrum and believed occasional revolution would be necessary. Can we prove that we’ve learned something from his design and rise to the challenge of repairing it without bloodshed?