Entries Tagged 'economics' ↓

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?

Thanks to Sir Ken Robinson, from whom I stole this very apropos Lincoln quote which he cited in his recent talk at TED 2010.

In my recent post on Effectuation, I highlighted the work of Dr. Saras Sarasvathy, who coined the term.

One of the points she makes in her book is that entrepreneurship is a branch of design thinking. This is an absolutely brilliant insight.

First, if you are the sort who thinks that design is a discipline centered around making chairs, teapots, web pages, or books, you should read up on the topic (see below). Design is a pattern for thinking, and while design thinking often produces the “beautiful things” which we have traditionally associated with design, widespread application of design thinking is beginning to have far-reaching effects on our society.

Design thinking starts with a simple grab-bag of elements: one or more goals, and one or more constraints. Constraints might be size, cost, weight, and psychological properties of the user. Goals might be to solve a particular problem or to make money. It is then the designer’s job to propose a solution that carefully considers the effects of the available solutions to propose the best possible, most beautiful and simplest solution.

What do I mean by the effects of a solution? If you follow popular mathematics at all, you might be familiar with the work of Benoit Mandelbrot, who suggests that reality is fractal and folds in on itself to produce patterns of amazing complexity from simple constraints. Mandelbrot’s formulae are a kind of simple design constraint that produce patterns of stunning complexity.

Similarly, designers can create complex patterns on the world by building systems or objects that include very simple design constraints. We see examples of these effects every day: the poorly designed chair that pulls apart its base after a bit of use, or the well-placed door handle that gets shinier and more beautiful with every use.

But these are just objects. What about systems and institutions like the United States government or the American public school system? The US Constitution is a piece of design, as are the laws that built our school system. The effects that those designs are now producing are sometimes more corrosive than their designers would ever have imagined. Both of those institutions are in need of “design refreshes” to clear away unintended corrosive effects.

Entrepeneurship and Design

Sarasvathy suggests that in the process of effectuation, the entrepreneur first makes an assessment of what assets and connections are available to them and then asks the simple question, “What can I do with it?”

At this moment, the entrepreneur becomes a designer. They are looking at what they have as design constraints and trying to move themselves closer to their goals. Sarasvathy makes a key additional insight; after the first round, the entrepreneur asks, “What else can I do with it?”

This puts the entrepreneur into the position of being a broad-based free-thinker, going beyond the simple condition of “how do I work within these constraints to achieve a goal,” but instead towards the question “what is the set of goals that I can achieve elegantly within these constraints?” This is a powerful inversion and is one that gives an imaginative entrepreneur an amazing power to transform society.

And here is a key point of difference between society’s conception of designers and entrepreneurs, even though they effectively perform much of the same kind of thinking: a designer is typically handed constraints and goals and asked to produce a product. An entrepreneur is issued constraints (the context of their life situation) without specific goals and rises to the opportunity to choose both the goals and the path.

I sometimes get frustrated with “designers and architects” because they cannot think of their own work outside of the context of their clients. They blame their own inability to do great work on the lack of vision of their clients, and I have to say I am apathetic to that line of thinking. It is time that designers and architects throw off the shackles of their clients and become entrepreneurs themselves. Show us what you believe, not what you can be paid to do.

Great entrepreneurs have been finding ways to finance their own design thinking for eons. It’s time that businesspeople start understanding that they are designers, and it’s way past time for the greatest designers to become their own clients and produce the great work they are called to create.

Some Suggested Reading

• Effectuation by Dr. Saras Sarasvathy
• A Whole New Mind by Daniel Pink
• The Design of Everyday Things by Don Norman
• Change by Design by Tim Brown

Since the industrial revolution it has been widely assumed that sustained economic production is best arranged through corporations. After all, corporations are the only entities capable of acquiring and operating the capital-intensive means of production required in an industrialized state.

Because of the reliance on the corporation, we set out to design an educational system in its mirror image. The linear journey from first to twelfth grade, then bachelor’s, master’s, and doctorate degrees systematized learning in a way that turned people into interchangeable parts and valued mobility.

Attainment of the highest grades of education confers the ability to teach within it, for anyone so dedicated to the educational treadmill is preselected to share its values.

The large scale corporation upon which our industrial educational system has been built no longer exists as it once did in the United States. However, we continue to build cogs for this machine as though nothing has changed.

Death of the Corporation

When large scale corporations first came to be, they were built around the idea that people can achieve more by investing together than they can alone. This is intuitively obvious when you consider that the endeavors they were undertaking were things like railroads and shipbuilding.

Through World War II and into the 1970’s, most large corporations had balance sheets to match: they used big iron, or made big iron. But starting particularly in the 1980’s, corporations started to be more about ideas than about capital, and the challenge turned to removing things from the balance sheet. Winning corporations maximized profit on minimal assets (and liabilities). Production (big iron) was moved to China, Mexico, and elsewhere and off of balance sheets.

The logical conclusion of a process like this is an Enron or a Goldman Sachs; one built predominantly on ideas and on trading, with almost no physical assets. The bulk of the workers we were producing with our educational system might be suited for a job at GM, while Enron needed every last PhD to keep its web of trades flowing. And it turned out that in the end neither GM or Enron was a long term proposition.

So here we sit with the same educational system we had in 1910 producing people for the economy of 2010, when the economic landscape has obviously shifted dramatically.

The Lie of Mobility

Think 1955. If your father was told, “Bill, we’re transferring you to Kansas City,” he went. And off you’d all go, uprooting children from schools, breaking apart extended family, divorcing people from a personal understanding of place. But this was all OK, and in service of a great big beautiful tomorrow! Corporations borrowed the idea of “transfer” from the military, and as much as the “transferees” might not have always enjoyed it, they endured it because they were convinced that corporations (like the military) were a kind of higher calling.

Fifth grade in Kansas City was pretty much the same as fifth grade in Boston. People adjusted. And they forgot about their previous home, or at least came to not miss it, like an animal being sent to market learns to adjust along the journey.

After graduation from high school, you’re faced with a “choice of college.” You’re asked inane questions about what you want to study (unanswerable at that age), shown some brochures, and make a fundamentally random choice about where you want to spend the next four years of your life. And you go. And you study something (probably not what you set out to study). And it’s OK. You meet people, and your life takes some path.

Regardless of the particulars of whether you get a job doing what you studied or when that actually happens (it often doesn’t), one thing is true: by this time in your life you’ve probably been uprooted once or more and had your home ties effectively severed.

Our educational system is designed to promote an ersatz fungibility of place and to denigrate people’s relationship to extended family by offering instead a false idol of corporate, industrial superiority. The fact is that place is a kind of human right, as is extended family. Any system that asks you to devalue a relationship with place or with extended family is evil.

It might be arguable that at one time, the educational system combined with its corporate industrial twin provided better overall outcomes for more people than the agrarian model that preceded it, but it does not logically follow that a new model cannot supplant the current one. This is particularly true when the corporate landscape is now more corporate than it is industrial and the emphasis has turned to creativity and ideas over machining and production.

The idea that place is fungible is one that belongs squarely in the last model and should be jettisoned going forward.

Why We Are Susceptible to Manipulation

Behavioral economist Daniel Kahneman suggests that we have two selves: an experiencing self and a remembering self. The experiencing self perceives the world in the here and now. Your experiencing self lives in the present and is happiest spending time around people you like. The surfer who just lives to be out in the waves is primarily existing through her experiencing self. The experiencing self, it turns out, can be happy just about anywhere and in any weather. Just find people you like and the rest follows.

The remembering self is another animal. The remembering self cares about story, and about appearances. According to Kahneman, your remembering self might trick you into taking a two week vacation instead of a one-week vacation because that’s a better story, but in fact you remember them pretty much the same way because there were not many “new” experiences in the additional time spent.

Your remembering self cares about money and mobility deeply. Why? No one wants to be remembered as the person who “didn’t do anything with their life.” Getting rich and moving around a lot adds dramatic, tangible plot-points to your story, which comforts your remembering self greatly. But your experiencing self can easily be less happy. What if you are unable to turn your money into people you enjoy spending time with? What if you move away from the people and places that bring you joy?

Is it so hard to see now why so many wealthy, jet-setting people are unhappy and commit suicide? Their remembering selves have spun great stories; their experiencing selves are miserable.

A Path Forward

Creativity researcher Sir Ken Robinson suggests that we need to reinvent our educational system upon a more agricultural model, rather than the industrial model. I’m not totally sure what that means yet, but I do agree that in the developed world we must adopt these values:

• Creativity is valued
• Learning is non-linear
• Gifted children have a place to excel
• Many learning styles are celebrated
• Children are not medicated for ADHD and the like
• Children have a right to fresh, whole food
• Place is valued and cherished
• Regions become self-sufficient

There is an emerging emphasis on regional innovation and regional self-sufficiency as an economic development strategy; this is a good start. But the long term task is to invent entirely new models for life-long education. What we’re doing now is building cogs with very particular defects for a machine that no longer exists.

Several months ago, this article from the Pew Research Center categorized several states as sticky, magnet, or both; sticky means that people who live there tend to stay there, while magnet means that  it attracts people. Some states (Arizona, Florida, Maryland) are High Magnet/High Sticky, while others are one or the other, and one sad batch is neither (Iowa, New York, West Virginia).

What this study doesn’t tell us is very much about what those places are actually like, only the “raw numbers” about mobility and retention. For example, my home state of Maryland is described as “magnet/sticky” (woot) but so are Arizona and Florida, and as far as I can tell, these three states share little in common. Certainly the recent real estate bust was felt worse in those places than here.

I believe that in Maryland’s case, we are both the wrong kind of magnetic and and the wrong kind of sticky, and so to describe Maryland in this way is counterproductive because it assigns a positive spin to some inherently negative patterns of movement.

For example: suppose Maryland is “high magnet” because it attracts people who want to work for federal government contractors. This increases the per-capita income but puts pressure on roads, exacerbates suburban sprawl, and adds people to the voting base who often don’t understand local issues or have personal experience with the landscape around them. I’d call this effect neutral, if not negative.

Suppose Maryland is “high sticky” because we retain 99.5% of our college graduates (a number I’ve heard tossed around). But suppose we export .5% of our very best and brightest and our natural born “effectuators?” And suppose that the smart people we do retain get sucked into government? Again, not necessarily a bad thing, but it doesn’t necessarily lead to the most creative entrepreneurial landscape sometimes.

Maryland has a great deal going for it, but articles like this are meaningless and enhance a simplistic, 19th century view of how we want to build our society. Who are we building our society and economic structures for?

If we are building them for ourselves we need to start thinking about how they serve our everyday experience as people. I have more thoughts on this. If we want to build our society for corporations and a 19th-century conception of what education, production, and economic value is then idiotic oversimplifications like “high magnet, high sticky” might be useful.

I believe we can and must move past such Orwellian, disingenuous oversimplifications.