Monday, May 24, 2010

The Hidden Influence of Social Networks

We're all embedded in vast social networks of friends, family, co-workers and more. Nicholas Christakis tracks how a wide variety of traits -- from happiness to obesity -- can spread from person to person,showing how your location in the network might impact your life in ways you don't even know.

People aren't merely social animals in the usual sense, for we don't just live in groups. We live in networks -- and we have done so ever since we emerged from the African savannah. Via intricately branching paths tracing out cascading family connections, friendship ties, and work relationships, we are interconnected to hundreds or thousands of specific people, most of whom we do not know. We affect them and they affect us.

Nicholas Christakis' work examines the biological, psychological, sociological, and mathematical rules that govern how we form these social networks, and the rules that govern how they shape our lives. His work shows how phenomena as diverse as obesity, smoking, emotions, ideas, germs, and altruism can spread through our social ties, and how genes can partially underlie our creation of social ties to begin with. His work also sheds light on how we might take advantage of an understanding of social networks to make the world a better place.



At Harvard, Christakis is a Professor of Medicine, Health Care Policy, and Sociology, and he directs a diverse research group investigating social networks. His popular undergraduate course (Life and Death in the US) is podcast [available on itunes]. His book, Connected, co-authored with James H. Fowler, appeared in 2009, and has been translated into nearly 20 languages. In 2009, he was named by Time magazine to its annual list of the 100 most influential people in the world, and also by Foreign Policy magazine to its list of 100 top global thinkers.

What Chief Executives Really Want

by Frank Kern, Business Week

A survey from IBM's Institute for Business Value shows that CEOs value one leadership competency above all others. Can you guess what it is?

What do chief executive officers really want? The answer bears important consequences for management as well as companies' customers and shareholders. The qualities that a CEO values most in the company team set a standard that affects everything from product development and sales to the long-term success of an enterprise.

There is compelling new evidence that CEOs' priorities in this area are changing in important ways. According to a new survey of 1,500 chief executives conducted by IBM's Institute for Business Value , CEOs identify "creativity" as the most important leadership competency for the successful enterprise of the future. That's creativity—not operational effectiveness, influence, or even dedication. Coming out of the worst economic downturn in their professional lifetimes, when managerial discipline and rigor ruled the day, this indicates a remarkable shift in attitude. It is consistent with the study's other major finding: Global complexity is the foremost issue confronting these CEOs and their enterprises. The chief executives see a large gap between the level of complexity coming at them and their confidence that their enterprises are equipped to deal with it.

The Rational Optimist

Bottom of the Barrel, Seed Magazine, Lee Billings

A new book argues that marketplace innovations will make the future brighter, better, and more prosperous, but is such unbounded optimism rational?

Last Saturday, the acclaimed science writer Matt Ridley released his latest book, The Rational Optimist. I’m sure it’s destined for strong sales numbers, particularly among what seems to be the increasingly dominant target demographic for most popular nonfiction books: Jet-setting business-types looking for stimulating-yet-comforting reading material to kill time as they travel between Very Important Meetings around the world. And of course, if at those meetings such elites even idly discuss the ideas they glean from their reading, the book’s success and influence may grow even further.

Ridley’s reassuringly contrarian thesis, as conveyed via this extract in the Sunday Times and this article in the New York Times, is that today’s eco-pessimists are shortsighted in their prognostications of doom and gloom. According to Ridley, people of the world a century from now will probably be, on balance, far more prosperous, wealthy, and fulfilled than those today. Markets are the key to this bright future, particularly the way in which they allow goods, services, and ideas to proliferate and intermingle for the benefit of all humanity. Economic growth is an unalloyed good, and will not cease for the foreseeable future.

It’s an appealing message, and Ridley makes a thoughtful and compelling case. He also carefully includes caveats stating that the “business as usual” approach of rapacious consumption of nonrenewable resources will indeed lead to ruin. Salvation apparently lies through humanity changing its ways, though somehow without many constraints on modern consumerism. In Ridley’s view, hope springs eternal, but it is better known as “innovation.”

Yet all this rings somewhat hollow against at least one of his illustrations of the proliferation of prosperity markets allow: a summation of his morning routine.

“As I write, it is nine in the morning. In the two hours since getting up, I have showered in water heated by North Sea gas, shaved using an American razor running on electricity made from British coal, eaten bread made from French wheat and spread with New Zealand butter, brewed tea using leaves grown in Sri Lanka, dressed in clothes of Indian cotton and Australian wool and read a newspaper made from Finnish wood pulp. I have consumed goods and services from dozens of countries.”

The key enabler for Ridley’s globalized morning rituals is not just markets, but also cheap, plentiful fossil fuel. What markets (and the specialists they’ve given rise to) seem to have innovated is the ability for all of us to easily binge on the stuff. This binge is precisely what presently makes goods and services from around the globe affordable to so many people. From this perspective, the constant reliance on goods shipped from the other side of the planet is both a sign of prosperity and of potentially catastrophic inefficiency and interdependence. Suddenly deprived of inexpensive fossil fuels, Ridley and other residents of developed nations should rationally (if not optimistically) expect to awaken each morning to an existence far less comfortable and more precarious than he or most anyone else wants to admit.

Thursday, May 20, 2010

Your Money, Their Pockets

"To put it bluntly, as this book does: the efficient-market hypothesis does not work. It never has. Markets are not self-­correcting. Left to their own devices, bankers at the biggest institutions can’t seem to stop themselves from speculating with borrowed money until they inevitably crash the system"

Louis Uchitelle, Your Money, Their Pockets, New York Times Book Review, April 25, 2010

In a book review of:
13 Bankers: The Wall Street Takeover and the Next Financial
Meltdown
, By Simon Johnson and James Kwak, 304 pp. Pantheon Books. $26.95

Thursday, May 6, 2010

How a New Jobless Era Will Transform America

How a New Jobless Era Will Transform America
By Don Peck
The Atlantic, March 2010

Peck begins his article with:

“The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.

How should we characterize the economic period we have now entered? After nearly two brutal years, the Great Recession appears to be over, at least technically. Yet a return to normalcy seems far off. By some measures, each recession since the 1980s has retreated more slowly than the one before it. In one sense, we never fully recovered from the last one, in 2001: the share of the civilian population with a job never returned to its previous peak before this downturn began, and incomes were stagnant throughout the decade. Still, the weakness that lingered through much of the 2000s shouldn’t be confused with the trauma of the past two years, a trauma that will remain heavy for quite some time.

The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work.

All of these figures understate the magnitude of the jobs crisis. The broadest measure of unemployment and underemployment (which includes people who want to work but have stopped actively searching for a job, along with those who want full-time jobs but can find only part-time work) reached 17.4 percent in October, which appears to be the highest figure since the 1930s. And for large swaths of society—young adults, men, minorities—that figure was much higher (among teenagers, for instance, even the narrowest measure of unemployment stood at roughly 27 percent). One recent survey showed that 44 percent of families had experienced a job loss, a reduction in hours, or a pay cut in the past year.

There is unemployment, a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment—chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that it is perhaps society’s most noxious ill.”

He goes on to suggests “If this persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults – and quite possibly those of the children behind them as well.”

Various economists have suggested various forms of the potential recovery from this recession, but the one that seems the truest to me is the one proposed by Robert Reich. He has suggested that the shape of the recovery is an x (as in algebra, x stands for the unknown). He argues that there will be no recovery until we find an entirely new model of economic growth.

The author points out, “The economy now sits in a hole more than 10 million jobs deep – that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started…”

Peck considers that many of the layoffs will become permanent restructuring of industries, and that if jobs come back that they will require new skills. He also considers innovation as the typical way new jobs are created in situations like this, but he is not optimistic about the prospects for innovation now.

“Ultimately, innovation is what allows an economy to grow quickly and create new jobs as old ones obsolesce and disappear. Typically, one salutary side effect of recessions is that they eventually spur booms in innovation. Some laid-off employees become entrepreneurs, working on ideas that have been ignored by corporate bureaucracies, while sclerotic firms in declining industries fail, making way for nimbler enterprises. But according to the economist Edmund Phelps, the innovative potential of the U.S. economy looks limited today. In a recent Harvard Business Review article, he and his co-author, Leo Tilman, argue that dynamism in the U.S. has actually been in decline for a decade; with the housing bubble fueling easy (but unsustainable) growth for much of that time, we just didn’t notice. Phelps and Tilman finger several culprits: a patent system that’s become stifling; an increasingly myopic focus among public companies on quarterly results, rather than long-term value creation; and, not least, a financial industry that for a generation has focused its talent and resources not on funding business innovation, but on proprietary trading, regulatory arbitrage, and arcane financial engineering. None of these problems is likely to disappear quickly. Phelps, who won a Nobel Prize for his work on the “natural” rate of unemployment, believes that until they do disappear, the new floor for unemployment is likely to be between 6.5 percent and 7.5 percent, even once “recovery” is complete.”

The author covers the cession and America’s youth, men and family in a jobless age, and the social fabric. He ends with, “We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come. We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.”

This is an important article worth reading and discussing. It’s available online here.

How a New Jobless Era Will Transform America

By Don Peck, The Atlantic, March 2010

Peck begins his article with:

“The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.

How should we characterize the economic period we have now entered? After nearly two brutal years, the Great Recession appears to be over, at least technically. Yet a return to normalcy seems far off. By some measures, each recession since the 1980s has retreated more slowly than the one before it. In one sense, we never fully recovered from the last one, in 2001: the share of the civilian population with a job never returned to its previous peak before this downturn began, and incomes were stagnant throughout the decade. Still, the weakness that lingered through much of the 2000s shouldn’t be confused with the trauma of the past two years, a trauma that will remain heavy for quite some time. The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work.

All of these figures understate the magnitude of the jobs crisis. The broadest measure of unemployment and underemployment (which includes people who want to work but have stopped actively searching for a job, along with those who want full-time jobs but can find only part-time work) reached 17.4 percent in October, which appears to be the highest figure since the 1930s. And for large swaths of society—young adults, men, minorities—that figure was much higher (among teenagers, for instance, even the narrowest measure of unemployment stood at roughly 27 percent). One recent survey showed that 44 percent of families had experienced a job loss, a reduction in hours, or a pay cut in the past year.

There is unemployment, a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment—chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that it is perhaps society’s most noxious ill.”

He goes on to suggests “If this persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults – and quite possibly those of the children behind them as well.”

Various economists have suggested various forms of the potential recovery from this recession, but the one that seems the truest to me is the one proposed by Robert Reich. He has suggested that the shape of the recovery is an x (as in algebra, x stands for the unknown). He argues that there will be no recovery until we find an entirely new model of economic growth.

The author points out, “The economy now sits in a hole more than 10 million jobs deep – that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started…”

Peck considers that many of the layoffs will become permanent restructuring of industries, and that if jobs come back that they will require new skills. He also considers innovation as the typical way new jobs are created in situations like this, but he is not optimistic about the prospects for innovation now.

“Ultimately, innovation is what allows an economy to grow quickly and create new jobs as old ones obsolesce and disappear. Typically, one salutary side effect of recessions is that they eventually spur booms in innovation. Some laid-off employees become entrepreneurs, working on ideas that have been ignored by corporate bureaucracies, while sclerotic firms in declining industries fail, making way for nimbler enterprises. But according to the economist Edmund Phelps, the innovative potential of the U.S. economy looks limited today. In a recent Harvard Business Review article, he and his co-author, Leo Tilman, argue that dynamism in the U.S. has actually been in decline for a decade; with the housing bubble fueling easy (but unsustainable) growth for much of that time, we just didn’t notice. Phelps and Tilman finger several culprits: a patent system that’s become stifling; an increasingly myopic focus among public companies on quarterly results, rather than long-term value creation; and, not least, a financial industry that for a generation has focused its talent and resources not on funding business innovation, but on proprietary trading, regulatory arbitrage, and arcane financial engineering. None of these problems is likely to disappear quickly. Phelps, who won a Nobel Prize for his work on the “natural” rate of unemployment, believes that until they do disappear, the new floor for unemployment is likely to be between 6.5 percent and 7.5 percent, even once “recovery” is complete.”

The author covers the recession and America’s youth, men and family in a jobless age, and the social fabric. He ends with, “We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come. We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.”

This is an important article worth reading and discussing. It’s available online here.

Saturday, May 1, 2010

Complexipacity

David Pearce Snyder, who coined the term "complexipacity", in his introduction to the special edition of On the Horizon on "Complexipacity", commented:

"I began to use “complexipacity” in the strategic briefings that I conduct. I started to ask my audiences – typically senior managers and executives – whether their decision-making environments had become more complex in recent years. (Essentially everyone agrees that it has.) I then ask if they think that daily life is becoming more complex. On this, there is always an immediate consensus; everything, they agree – from commuting to work to planning for retirement – is more complicated that it used to be.

Finally, I ask “How many of you have encountered a problem or situation that exceeded your complexipacity?” After a brief pause while the audience digests the new word, hands begin to go up around the room as people recognize that this term – one they had never heard before – actually describes their own unarticulated concerns. Once those misgivings were given a name, they immediately gained validity. Complexity emerged from the shadows of their subconscious to become an expressed concern. And, if growing complexity is a problem, everyone agrees, increased complexipacity would clearly be a good thing to have."

The contents of the special edition are:

Complexipacity, wisdom and education, Tom Abeles
1, 2, a few, and many, Paul Schumann
Higher education in management: reinventing the paradigm to gain the capacity to handle today's complexity, Keitiline Ramos Viacava,Eugenio Avila Pedrozo
Finding and reducing needless complexity, Eric G. Olson, Sara J. Moulton Reger, David S. Singer
On becoming more complex (and what to do about it), Thomas Owen Jacobs
The capability of young people, Sheila Rossan
Achieving complexipacity in schools, Wayne B. Jennings
Developing personal complexipacity, Richard G. Maynard
Fast adders: complexity and computer consequences, Tom Abeles
Book Review - Moral Machines: Teaching Robots Right from Wrong, Tom Abels
“Complexipacity” What is it? Do we need it? Can we get it?, David Pearce Snyder