This past winter, M&B principal and Northeast Economic Development Association (NEDA) board president, Abby Straus, appeared in the annual journal of the Kettering Foundation, Connections 2018: Experiments in Organizational Innovation.

In the article entitled: “Vibrant Communities: Reinventing an Economic Development Organization,” Straus discussed the organizational transformation underway inside NEDA to maintain its relevancy to those creating vibrant communities throughout the region. Along the journey toward reinvention, Straus explained, NEDA began to ask itself:

Who has a stake in the economic wellbeing of our communities? How might we engage them, so they feel included and want to participate in the NEDA community? How might we connect members to ideas and to each other to create value that will produce revenue? How might we support local associations in their work in collaboration rather than competition?

In answering these questions, Straus said, NEDA discovered:

… that our purpose doesn’t lie in solving problems for our members, but rather in connecting them to each other and to the solutions they—and we—create together. We learned that there is an appetite for connection and co-creation and that NEDA can provide an environment in which people of diverse backgrounds and perspectives might exchange knowledge and experience in service to creating an economically vibrant Northeast.

Checkout the full article here and tell us what you think! What are some other new ideas in community and economic development that we should know about?

 

This post, originally from January 2013, highlights one of the key frameworks in the M&B toolbox.  We use the features of complex adaptive systems to create tools, methods, and frameworks that allow us to be more agile and realize greater results than we ever thought possible.  We leverage these assets and resources to create a new and more desirable future for our clients and partners. 

The metaphor of the machine or clockwork universe continues to dominate the way we think and talk about the world.

This unusually persistent meme can be traced to Isaac Newton and Copernicus, who understood the universe in terms of elegant, linear, predictable relationships. Behavior in this world is easy to predict, and therefore easy to control.

The theory is that one can understand anything – from the human body to the universe – by dissecting it and completely describing each part. And some things work this way, like your car engine or your computer.

However, we now know that many aspects of our world defy this kind of analysis, that the universe is a system of many systems that operate by a completely different set of rules. The weather, markets, communities, organizations, ecologies of organisms and our own brains, are systems that cannot be reduced to the sum of their parts.

They are complex adaptive systems that learn as they develop. And although the parts interact in unpredictable ways, they develop rich patterns of complex order through a process of feedback that further influences their development. Over time, these systems become more complex, more coherent and more organized.

Here are some components of complex adaptive systems:

Self-organization: Complex adaptive systems are not planned by a central controller. It is the activity of agents in the system, acting individually and collectively that leads to emergent order. Like birds flocking and fish shoaling according to simple rules of interaction

Systems within systems: Within each complex adaptive system are other smaller systems that interact with each other. Some of the most complex systems humans have created, such as the stock market, food production and distribution, transport systems and the Internet interact with humans in an evolving symbiotic relationship.

Emergence: There is no command, control, planning or managing. It is the activity of all of the parts of the system which influences the activity of the other parts of the system.

Feedback loops: Through feedback, connections grow in a system, which gathers momentum, and patterns start to form, leading to the development of more complex patterns.

Simple rules: A few simple rules of interaction lead to complex outcomes. For example, a shift in the way we speak to each other – from “you must!” to “what if we?” – builds trust and accelerates communication that leads to highly synchronized teamwork.

Period doubling cascade: Complex adaptive systems periodically undergo “phase transitions” to a higher level of organization, in what is known as a “period doubling cascade”. For example, the stages of development of the human brain, the magical moment when a group becomes a high performing team and the big social and technological shifts that occur when humans invent smarter tools, such as the shift from the typewriter to the computer.

Coevolution: When the environment changes, individual parts of the environment adapt to the new conditions created by the interaction of all of the parts.

Dynamic stability: Complex adaptive systems live dynamically on the edge of chaos, where new possibilities emerge from the variety and creativity of the system. These give it life and sustain it.

This is a very different world to the clockwork or networked universe with which we are familiar, one that is much more dynamic, less predictable–and, ultimately more malleable–than the one that has shaped so many of our institutions and organizations.

Control is….an emergent property, not an option to be selected. – Dr. David S. Alberts, US Defense

 

M&B recently wrapped up worked on the COZBY LIBRARY AND COMMUNITY COMMONS, STRATEGIC PLAN 2017-2020 in Coppell, Texas. Check out this article, from the local Coppell Gazette, highlighting the new energy and excitement around the library!

 

Cozby Library reaching new levels of success
By Victoria Atterberry
Coppell Gazette 

The Cozby Library and Community Commons’ strategic plan is working out well and has received a positive response from the community.

Monday, the library board met with the Coppell City Council and the Parks Board to update the city on its progress. Library leaders said it has been successful, and many people are benefiting from the new additions and amenities.

“The community loves what’s happening at the library,” said Adrienne Morton, vice chair of the Coppell library board.

The first goal the library adopted centers on collection building and services innovation. The goal primarily focuses on growth and how to better serve the community.

“(Our) efforts there are to offer collections and services that are highly relevant to the community needs and to incorporate innovative collections and programs with those that are popular, valuable or enduring,” Morton said.

Early literacy backpacks, TAMS science boxes and Lions Club game collections for the visually impaired are a few of the new additions that came out of this plan. These new services have been popular among the community and are in high demand.

The second goal the library adopted focuses on resources, buildings, technology and systems.

“The focus here is meeting the evolving and diverse knowledge, creative and learning needs of the community by offering innovative spaces, technologies, methods and delivery systems,” Morton said.

Some of the programs that came about through this plan are the teen zone, toddler zone, study rooms, business center, meeting rooms, commons area and a drive-through book drop off. Morton said the drive-through book drop is one of the most popular features of the library.

The library also added self service checkout, laptop checkouts and catalogue tablets for easier checkouts.

“The idea is to make it easier for people to get in and out of the library and get what they need. It’s all about convenience for the community,” Morton said.

The library will soon be adding digital media workstations that will have audio, video, graphic design software and web design software.

The strategic plan includes four more goals focusing on volunteer efforts, advocacy, professional development and funding.

The library was also able to add a number of new building enhancements. Victoria Chiavetta, director of library services said the library was fortunate enough to have extra money in the budget to add these new enhancements.

New podiums have been added in meeting rooms as well as new jacks and network cables. Additional speakers were added throughout the library. The library purchased a third service desk and is also looking to replace staff desks. Since many visitors complained about noise levels within the building, the library is also planning to install new sound masking equipment.

Over the past year, library activity has grown. More and more people are participating in programs and enjoying all the feature the library has to offer.

“We love to see (residents) there,” Chiavetta said. “The library is getting used well and is quite busy.

Check out other examples of and commentary from M&B’s near decade of work in strategic planning for our libraries!

Just when some pundits were announcing the demise of the public library, and politicians are trying to defund them, libraries are undergoing a major revival as centers of community re-invention.

You can call it Carnegie 2.0.

It is 88 years since the last library was built with funds from Andrew Carnegie, Scottish-American businessman and philanthropist, but the spirit of helping communities thrive is alive and well across the United State of America.
Altogether, 2,509 libraries were built between 1883 and 1929, most of them in America (1,689,but others in UK, Australia, New Zealand, South Africa, France and half a dozen other countries.

Cuts to library budgets seems to be a bi-partisan effort. For example, in 2010 New Jersey Governor Christie slashed funding for libraries soon after becoming governor in 2010. In the same year, Newark Mayor, now Senator Corey Booker, cut the budget of the city’s library by 20% when be first became mayor.

It is not all books anymore, although they are not going out of fashion. And googling stuff is no longer reliable, as the Internet is fast becoming a place for “alternative facts”, which are not facts at all.

Libraries are fast becoming the go-to place for:
  • Starting a new project or business, creating a new product or service, or making things
  • Building a resume and finding a job
  • Checking out community talent in the same way you check out a book or a movie
  • Acquiring skills and knowledge, packaged up in smaller chunks, just when you need it
  • Offering internships for community projects
  • Enjoying edutainment for toddlers, children, teens and adults
  • Critical community conversations
  • Meeting and socializing with others
  • Working with your tutor or mentor

The new roles for librarians are:

  • Honest brokers between a rapidly expanding number of disciplines, each with its own specialist language, ways of seeing the world, and growing distrust of other models/frameworks
  • Validators of knowledge of vital importance to communities and organizations who wish to make good decisions
  • Facilitators of crucial conversations between a diverse range of interests, particularly in community decision making and planning, policy making, and implementation
  • Curators of new and ever more diverse collections, including tools, methods, processes, systems and talents.
  • Mentors, so curation, categorizing and research become skills that everyone routinely uses.
  • Trusted partners, helping people and their organizations build the capacity for the wise application of knowledge, so they become much more than “learning organizations”.
  • Conveners for meetings, events, exhibits, safer refuge in emergencies, making and designing.
  • Community systems integrators, connecting organizations and talents in the community, and employing their skills and resources to help their people adapt successfully to change.
Here is an example of the kinds of far-sighted approach that libraries are adopting. It is two version of the strategic plan Maverick & Boutique developed for the Cozby Public Library and Community Commons in Coppell, Texas – the  Cozby Library Slide Show and the Cozby Library Strategic Plan. It is a major part of our consulting practice, currently averaging 4-5 plans a year. We use our own collaborative technology – Zing – shown in the image above to help conduct the community conversations, to achieve the “join in” necessary for the projects our clients  to develop to fact-track community-wide change.

In our work in economic development and complex project management, we often encounter failed projects and programs, that came to grief due to community opposition to the proposals, and which we are sometimes asked to  resuscitate.

One of the causes of failure is the long standing engineering practice of first designing a project and then trying to “sell” it to the community.

This is why many new critically important infrastructure projects don’t get done, and the whole community ends up paying for it in increased costs and greater inefficiencies. The extra costs are often not immediately obvious until a factory closes because it is not competitive, an environmental mishap endangers lives, or an infrastructure failure disrupts commerce.

The conventional approach to designing and selling projects has been around forever, and you will find the “achieve stakeholder buy-in” in almost every request for proposal.

Instead, we use an approach called “strategic doing” which involves key stakeholders in the process of creating projects or sub-projects connected to the main project. The projects become part of a ecosystem of synergistic/self-supporting activities.

People agree to proceed with the cluster of projects — including the main project — because they have an interest or stake in the outcome. They also get to have a say in the design.

When we approach projects this way, the opposition to projects evaporates because the projects, are designed to benefit all stakeholders, are more meaningful and relevant. Rough edges are removed that would otherwise be a sources of irritation or dissatisfaction.

We adopted this “join in” approach on a recent strategic planning project for two counties — Steuben and Chemung –along the I-86 corridor in Western New York  and their seven municipalities bookended by Corning and Elmira.

We worked with 70 or so local government, community and business leaders in two sets of highly intensive three day workshop sessions just three weeks apart, to design some 50 projects to achieve their goals of developing an “innovation corridor” and simultaneously creating a more vibrant community.

The region was successful, along with the Binghamton area (known collectively as the Southern Tier), in securing one of two $500 million investments by the State of New York, in competition with other regions across the State.

We also spent a  considerable amount of time helping our client develop a governance strategy. How do you set up a multiplicity of projects for success, each with a multiplicity of different stakeholders interests?

For a start, you need a project manager at the core that can see the big picture and is determined to get things done, to work closely with each of the project teams, just as you do with complex major projects or systems of systems engineering projects. You also need the owners of each of the community sub-projects to have both a degree of autonomy for decision making but also responsibility to the greater whole. This demand clear set of rules of engagement about how each of the project teams will  coordinate with others, including a requirement to report progress to the project manager, or to seek help when difficulties are encountered.. It’s a kind of community systems-of-systems economic and community development approach.

Naturally, we have used our knowledge of how to run complex major projects, to help our community clients successfully handle the big and the complex.

Here’s a link in the a case study in the Systems Engineering Book of Knowledge about some of our methods.

The kinds of questions we ask about governance issues include:

Resources: What human, physical, financial, knowledge, support, temperaments and other resources will you need to undertake this project, who owns or has control of them, and how could you acquire them?
Optimal outcome: What is the ideal outcome from this project? What does “success” look like?
Structure: What structure will you adopt for the project that will ensure that those responsible for carrying out the project report to all key stakeholders, rather than a select or influential few?
Ownership: Who is the ultimate owner of the project and how might you obtain their support and commitment?
Mobilizing: How can we tap into the passions of people so they not only support the project, but actively help to win support for its political acceptance and implementation?
Commitment: How will we foster a sense of ownership and or “join in” so people unite behind a decision?
Hearing and acting on concerns: How do we provide greater certainty for quietly harboring doubts? In situations where consensus is not possible, how do we ensure that all voices have been heard OR people feel heard? How will we act on concerns?
Attention to results: How can we balance the needs/outcomes for the individual, the community and the organization?
Sustainability: How will we ensure that the changes that occur as a result of implementing this project will be adopted and sustained, beyond our tenure or involvement in the process?
Accountability: How can we go about flagging unacceptable behavior and actions when it may have serious repercussions/downsides for the project or the community?
Governance Innovation: How will we know when the system we set up to govern the project is not working (is not meeting the needs of the stakeholders)? How should we plan to renegotiate the way the project is managed to ensure success?

 

Two hugely influential leaders in economic affairs, on opposite sides of the planet seem to be lacking a good model of the system to help us navigate more successfully to a brighter fiscal future.

Nobel prize-winning economist, Paul Krugman, writing in the New York Times, was honest enough to say he did not have a good model of the macro economic changes that were occurring the world as a result of technological change, and doubted if anyone else did.

Down Under, in Australia, a country that has successfully weathered the global financial crisis better than most, the Federal Treasurer Joe Hockey, is presiding over an economy heading south at a great rate of knots due primarily to some major fumbles on his part.

Hockey is responsible for setting economic policy directions for the country. This week he proclaimed in Parliament that the opportunity for Australia is in services – health services, tourism services, accounting services and property services – at the very point in time that the McKinsey Global Institute is warning that the automation of knowledge work (all services) is one of the Big 12 disruptive technologies, that are helping to drive the way our world works.

As any systems thinker will tell you, the most effective way to get the best out of a system is to be able to navigate from one good model of the system, to an even better model, as the system undergoes transformations from one stage of its development to another. The second most effective way to get the best results from a system is to have a great model of that system, and to leverage the features of the system.

Krugman’s problem is he does not have, nor does he believe anyone has, a good model of the system. He points out that technological change of the “whole digital era, spanning more than four decades, is looking like a disappointment. New technologies have yielded great headlines, but modest economic results.” “Why?” he asks.

The problem with Krugman’s model, is he appears to have conflated two, if not three stages of human socio-technological development, and called it the “digital era” when in fact we already know and recognize these stages as the Information Age (50 years), Knowledge Age (10 years), and the current Wisdom Age (which is almost over before it has even begun).

The hoped-for boost to productivity gains that Krugman seeks from investments in the latest technologies is largely negated by embedding out-of-date leadership/management approaches, coordination methods and processing techniques.

Sadly, the operating center of gravity of many organizations remains stuck in the earlier Industrial Age paradigm operating according to a command and control model of management waiting for some upstart from nowhere to finish them off in an act of what Schumpeter called “creative destruction”.

The problem with Hockey’s model is it hails from two socio-technological generations in the past, an Information Age or at best Knowledge Age view of the system. He is betting Australia’s future on an economic model that is on its way out, kind of like over-investing in the horse and buggy and buggy whip manufacturing at the start of the 20th Century, just as motor cars were taking off.

The Australian government is further damaging Australia’s future prospect by cutting investment and support for R&D in the technologies of tomorrow by both the public and private sector – with renewable energy at the top of its hit list.

Instead they are giving big tax breaks – a $20,000 instant write-off – to small business for capital equipment such as cars and computers that are no longer made in Australia, or will soon cease production.

Workshop

Here is a workshop you can use to help your organization think about the structure of future paradigms. It uses a model Maverick & Boutique has developed to help people think about the paradigm shifts that occur at increasingly shorter intervals (see image at the top of the post). We have created thus model by identifying the central scientific model or essence at the heart of current and emerging paradigms, and using the new metaphor to extrapolate from the current system to the emerging system.

We have filled in the blanks for the past three paradigms using the most appropriate metaphor that fits our observations – the computer (Information Age), the network (Knowledge Age) and the ecology/complex adaptive system (the emergent era, we have tentatively called the Wisdom Age). Just for completeness, the earlier paradigm is the Industrial Age and its’ metaphor is the machine.

Our best guess for the next paradigm is the “hologram” metaphor. This conjecture is based on what we have learned from examining the contributions to our strategic planning/future creation workshops involving hundreds of people from all walks of life, in many countries.

The task is to imagine the features of the next paradigm after the Wisdom Age, to think about and describe the kinds of technologies/tools that may be emerging as well as the coordination methods, the rules of interaction, the roles that people play using the hologram paradigm as our guide.

So what features of a hologram might be useful? We know, for example, that if you cut a hologram into small pieces and shine laser light on any piece, you get a 3-D image of the whole, just fuzzier. The means for reproducing the hologram is distributed throughout the entire hologram; just as DNA is distributed throughout every cell in an organism. Thinking about this feature, could we perhaps postulate that leadership capacity or coordination capacity might be best fully distributed throughout the system, in every person, each being capable of stepping up to a leadership role when necessary, rather than being found only in a few individuals, at a single central location (e.g the C-Suite) or at nodes (e.g. team leaders).

1. What are the features of a hologram? Thinking about what it does, how it works etc.

2. Thinking about the features of a hologram (e.g. information distributed throughout the whole of the hologram), how could we interpret this for each of the following features of a socio-technological system – the technologies (tools, technologies, processes, techniques etc.), roles (jobs), rules (rules of interaction, co-ordination or leadership methods), relationships (structure, systems)?

3. Test: How well do the features of the new paradigm align with each other? How well do the features evolve from one paradigm to the next? What inconsistencies are there? What earlier features now inconsistent and need revision?

4. Improvements: What improvements could we make to the model that resolve the inconsistencies within the new paradigm and across paradigms for each feature?

DRY

Democracy of the people, by the people, for the people seems to be failing us. Politicians elected to make decisions on our behalf seem to listen more to their political supporters than the experts.

Climate change is a perfect example of the failure of the current democratic systems to deliver up good governance.

Around the world, there is a growing consensus that we need to take action on climate change. Some 97 pr cent of climate scientists agree on the science, and what the future holds if we do nothing – rising sea levels, wilder weather, displaced populations and changing ecosystems to begin with.

Even some past detractors are changing their minds. In Australia, AGL, one of nation’s largest coal-fired electricity generators, recently announced it would be phasing out its plants by 2050, and expanding its efforts in alternative energy.

But the climate deniers still fight on, hoping to persuade us that the scientific community is committing a massive fraud on the citizens of the world.. In April the Australian Federal Government announced it would be “investing” $4 million to help Bjorn Lomborg who contends that climate change is “overstated” and “not a priority”, to set up a new “consensus center” at the University of Western Australia. Lomborg is from Denmark, that is now the world leader in wind-power generation. Denmark currently generates 39 per cent of its electricity needs from wind, and plans to achieve 50 per cent by 2050. Even in nearby England, where the conservatives have been in government for the past four years, 25% of homes are powered by wind.

This is the same government that slashed investment in R&D for co-operative research centers and cut the funding of Australia’s premier research institution, the Commonwealth Scientific and Industrial Research Organization. It also abolished the Climate Commission, which comprised Australia’s best climate scientists, economists and energy experts on the basis that the $1.5 million annual operating costs was too expensive.

So what’s going on?

Its all about pandering to the base, the reliable rusted-on voters who deliver political support, and the vested interests that deliver financial support.

A few years ago, the current Australian Prime Minister Tony Abbott, defeated the then leader of the opposition, Malcolm Turnbull, in a vote to be the leader of the parliamentary Liberal Party.

Turnbull, an advocate of carbon pricing, was preparing to do the unthinkable; support the Labor Party government of the time on legislation to implement an emissions trading scheme. This plan so upset his rather right-wing backbench and some of their mining industry supporters, many of them climate change deniers, they booted Turnbull from the leadership, by a slim majority, 42-41.

Abbott survives as Prime Minister by a knife-edge majority of parliamentary support, even though his performance in the job has been abysmal. His public approval rating hit a recent low of just 29 per cent.

The breakdown of Australian bi-partisanship on climate change over the past decade mirrors what is happening in the USA. Despite overwhelming evidence from highly respected scientists at NASA and NOAA, the Republican and Democratic parties, at least at the Federal Level, are on a collision course over tougher rules for coal-fired power plant emissions.

Meanwhile, the majority of Americans (63%), like the majority of Australians (75%), believe that climate change is real and a major threat. Yet a small minority in both countries have managed to shift the political game to serve their interests at the expense of everyone else.

If the purpose of democracy is to best serve the needs/interests of the people in both the long term and the short term, then the system of Parliamentary democracy, is longer working as well as it should.

Francis Fukuyama, an influential member of the Reagan administration and author of The End of History, argues that a both-and solution is necessary: liberal democracy in partnership with an “autonomous administrative bureaucracy” composed of people whose job it is to bring the best knowledge and data to bear on any and every issue.

This was once the case in Australia, where the role of the public servant was to give fearless advice to the political leadership, no matter who was in power. Not any more. Australian political leaders now routinely get rid of department heads that offer contrary advice in favor of those who are more compliant or ideologically aligned, rather like the American model. According to Fukuyama, this leads to corruption of the system.

But even when you have a powerful bureaucracy to balance an equally powerful political class, there is no guarantee it will be any better. Consider the current European Union “administrative think” that supports austerity as a way to increase economic output.

In System Thinking terms. a lens through which it is useful to analyse any issue, corruption occurs when the goals of the system are perverted to meet the narrow needs of a few, rather than the broader interests of the many. It comes in many forms, from the extreme case of taking bribes (either administrative or political) to give a party an unfair advantage over another, siphoning off funds to pet projects of either the politicians or administrators, or by simply ensuring that an industry gets preferred treatment, and is allowed to main, harm, despoil or generally have a negative impact of citizens despite the evidence to the contrary, as occurs when there is a free flow of talent back and forth between industry and the bureaucracy.

Workshop

So here is a workshop about political governance.

1. What, in your opinion, should be the goals of the political system? Whose interests should it serve, and how should the system serve those interests?
2. What impact does accelerating change, rapidly expanding complexity and divergence and deepening of disciplines have on the ability of citizens and political class to be informed about the latest knowledge and data on complex and conflicting issues? Give examples of conflicts that are crying out for better analysis.
3. In most current systems of parliamentary democracy, citizens vote for a person to represent their interests in decision making, rule or law making forums. Is the role of representative still relevant? What might an alternative role for the political class be? Where should we strike a balance between representation and leadership?
4. What feedback loops, checks and balances might we build into any new system of democracy to ensure the system can adapt rapidly to new data, new and more robust knowledge and paradigm shifts?
5. Thinking about the way democracy works in your community, state or country what’s working well you would want to KEEP, what’s not working at all that you would want to ABANDON, what could be improved you might want to RE-INVENT, and what is so totally in the past, that you might want to TRANSFORM it into something new, that is a better fit with the emerging paradigm?
6. If you were given the task of designing a democratic system that made it possible for all people to be better and more fully informed about the best and most up-to-date data, the most reliable (or superb theories), unfettered by dogma/ideology, and with biases identified and made clear, what kind of system would you design? What features would it have compared to the existing system. Respond like this: Instead of (current state) we might have (new state).

world risks report

Anyone looking for ideas for new products and services need look no further than the World Economic Forum, Global Risks Report. Each year a group of experts get together and work out which risks are the most threatening to our existence.

Once upon a time it was pestilence, plague, the weather and other natural disasters such as tsunamis, hurricanes and tornadoes. They have not gone away, but some very clever people have found solutions to these problems, and turned them into business opportunities.

The first modern sewage systems owe their existence to cholera outbreaks in the 1830s, 1840s amd 1850s in London, United Kingdom that killed tens of thousands, as well as the Great Stink of 1858 which resulted from the overpowering smell of excrement in the Thames River. A huge underground network of sewers was built under the city to pipe it away. Later other European cities followed suit, as did cities in Northern America. Today sewage is a trillion dollar business world-wide.

Safe water supplies using chlorination really only got going in 1905, after a typhoid outbreak in Lincoln, England. The first US installation was Boonton, New Jersey in 1908. Another trillion dollar business.

Until the 1800s, millions of people every year died from infections, most of then preventable deaths. It was only when we realized that germs were the basis of disease and that antibiotics such as penicillin could kill them, that most of us began to survive, not one, but multiple infections, routinely.  We have Pasteur, Lister, Fleming and Florey to thank for these discoveries. Sadly, millions in developing countries still die from diseases every year that are preventable in the west. Yet another trillion dollar business. However, our war on germs has caused some bugs to mutate and develop resistance. Think golden staff and TB.

Here’s a list of the top 31 risks according to the 2014 Global Risks Report, and an image from the report (above) which shows the interdependencies between the risks, and how they can impact each other:

  • Fiscal crises in key economies
  • Failure of a major financial mechanism or institution
  • Liquidity crises
  • Structurally high unemployment/underemployment
  • Oil-price shock to the global economy
  • Failure/shortfall of critical infrastructure
  • Decline of importance of the US dollar as a major  currency
  • Greater incidence of extreme weather events  (e.g. floods, storms, fires)
  • Greater incidence of natural catastrophes  (e.g. earthquakes, tsunamis, volcanic eruptions,  geomagnetic storms)
  • Greater incidence of man-made environmental catastrophes (e.g. oil spills, nuclear accidents)
  • Major biodiversity loss and ecosystem collapse (land and ocean)
  • Water crises
  • Failure of climate change mitigation and adaptation
  • Global governance failure
  • Political collapse of a nation of geopolitical importance
  • Increasing corruption
  • Major escalation in organized crime and illicit trade
  • Large-scale terrorist attacks
  • Deployment of weapons of mass destruction
  • Violent inter-state conflict with regional consequences
  • Escalation of economic and resource nationalization
  • Food crises
  • Pandemic outbreak
  • Unmanageable burden of chronic disease
  • Severe income disparity
  • Antibiotic-resistant bacteria
  • Mismanaged urbanization (e.g. planning failures, inadequate infrastructure and supply chains)
  • Profound political and social instability
  • Breakdown of critical information infrastructure and networks
  • Escalation in large-scale cyber attacks
  • Massive incident of data fraud/theft

If you take a close look at the kinds of dangers we now most fear the most, they seem to be breakdowns/failures in the systems we humans have created. They are also mostly in the realm of governance. In the past governance has been the responsibility of our political leaders. And as any avid student of systems thinking will tell you, governance innovation, or the ability to redesign and influence the adoption of the rules of the system, is much more powerful than either product or service innovation.

Here’s a workshop to think about an opportunity creation approach to risk:

Workshop:

1. Brainstorm a list of risks that you, your community or your business face in a normal year. An abnormal year.
2. Choose 5-6 of the most likely or risky events with the potential for the most serious consequence for you, your community or business, and estimate the likely impact, damage etc.
3. Thinking about the 5-6 most damaging, chaotic or disruptive risky events, what if any solutions (technology, services, redundancy, forecasting, early warning, rapid response etc.) are easily or readily available to you. Make a list of the risks and how you can mitigate/reduce or bounce back easily.
4. Thinking about the risks that you cant easily resolve, especially those that have rapid knock on (chaotic effects) what could you do differently to deal with those risky events? What new disciplines might you explore for new and better solutions, or what multiple disciplines and new knowledge from those disciplines could you bring together to deal with the risk in a new way?
5. Thinking about the World Economic Forum Risks Report list of risks, how could you, your business or your community use its expertise/new knowledge/experience to prevent, mitigate, or rapidly respond to/damp down the effects of a risk, and turn it into a product or service for others to buy.
6. Whats a problem/issues you are experiencing in your community which has defied all efforts to make an improvement? In what ways might you be able to deal with this differently and become an expert in its resolution, then supply that service to other organizations or communities?

 

 

As a visitor to the USA, I have often been puzzled at how US businesses both large and small are unable to see the folly of paying wages that are insufficient for people to support themselves and their families.

Some Americans have to work two or three jobs just to get by, or supplement their inadequate earnings with food stamps or donations from charitable institutions. Some 73 per cent of Americans enrolled in major public benefit programs are from working families according to research. An estimated half (52%) of front line staff of fast-food establishments are on support.

Every time a wage rise is proposed, there is the usual gnashing of teeth, and wails of complaint that the “sky will fall in”. It’s a case of “every man or woman for themselves.”

Some argue that if employers were required to pay a higher minimum wage they would not be able to compete successfully with others. But this is false logic, because if every other employer has to pay the same minimum wages, then we would have a “level playing field.”

Some on the employer side, argue that minimum wages reduce employment. However, numerous studies suggest otherwise, although there is some evidence that minimum wages may have a small impact on employment of young people entering the workforce

But to an Australian, who grew up in a culture where every year there is a legal determination of what should constitute a Basic Wage, it seems mean-spirited and unfair.

From a systems perspective, one of the frameworks we at Maverick & Boutique use to examine the effectiveness of strategy, the clear purpose of the Australian system is to ensure “a living wage” for all, so that the whole system benefits. The clear purpose of the US system is to minimize the expenses of the employer rather than adequately compensate the employee, kind of half-way towards expecting people to work for free.

Not so the Australian system, where the principles of “reasonableness and fairness” are enshrined in the annual minimum wage setting ritual, where employers, employees and the Federal Government argue their case for an increase or not.

It’s been happening ever since the 1907 judgement against agricultural machinery manufacturer, H.V. Mckay.

The judgement wisely says this:

“The remuneration could safely have been left to the usual, but unequal contest, “the higgling of the market”, with the pressure for bread on one side, and the pressure for profits on the other.”

“The standard of “fair and reasonable” must be something else; and I cannot think of any other standard appropriate than the normal needs of the average employee regarded as a human being living in a civilized community.”

“I have invited counsel and all concerned to suggest any other standard and they have been unable to do so.”

“If A lets B have the use of one of his horses, on the grounds that he gives them fair and reasonable treatment, I have no doubt it is Bs duty to give them food and water and such shelter and rest as they need.”

Australia did not become a third world country by adopting the minimum wage. Instead, our country ranks as one of the most successful in the world, economically and socially. Here are some of Australia’s rankings (Wikipedia, 2015):

* CIA World Factbook, life expectancy, 2008: No. 6 in the world
* Economist Intelligence Unit, Prosperity Index, 2008: No. 1
* The Heritage Foundation/Wall Street Journal, Index of Economic Freedom, 2008: No. 4
* World Bank, Ease of Doing Business Index, 2009: No. 9
* United Nations, Education Index, 2008: No. 1
* World Economic Forum, Soundness of Banks, 2009: No. 2

The Australian minimum wage of $16.87 per hour far exceeds the US minimum wage of $7.25 per hour, even when the exchange rate of $US1.00 = $A0.77 is taken into account. It is the epitome of fairness and reasonableness, at least for the moment. And the sky has not fallen in.

Here’s a workshop to think about these issues:

Workshop

1. How many hours a week should you work: Thinking about your own circumstances, how many hours a week should you be expected to work to earn enough to live comfortably on your own, with a partner, or with a family?
2. What expenses should your pay cover: Thinking about your own circumstances, what should a normal week’s worth of work pay for? Think about all the kinds of expenses that you must consider in this day and age.
3. Under what circumstances, if any, is it OK for an employer to pay you less for a full week’s worth of work, than what it costs to live comfortably?
4. Over the past 20 years the minimum wage has declined in value: How did this happen? Who let it happen? What
5. Social costs of the current system: Imagine for a moment that are a sole earner, with several children, maybe toddlers, maybe teens. You earn the minimum wage, which requires you to have two jobs to make enough money to keep your family in food and a roof over their heads. What are the consequences of this for you and your family? Think about travel time, working hours, time you leave for work, time you arrive home, what the children do during the day, during the evening, your social life, your expenses, what you cant afford….
6. Purpose of the system: In an ideal world, what might be a more powerful approach to setting the minimum wages that people are paid and making sure they keep up with rising costs? Should the US continue to leave it up to the market? Or a gridlocked congress? Or should there be another system independent of politics/the market to weigh what’s best for everyone? Suggest some new and better alternatives.

MUDA

What was originally known as the Toyota Production System (TPS) has evolved into a management philosophy and set of production practices that focuses on the use of resources to create value that a customer is willing to pay for.

As Toyota became more successful around the world, interest in their processes spread. Their set of tools, now know as Lean production or just Lean, were developed to ferret out and eliminate wastes, or Muda.

Basic Lean Workshop

Here’s a set of questions to help you facilitate a workshop to start thinking about ways to reduce the original seven kinds of Muda/waste:

  1. Transportation: In what ways are there unnecessary (non-value added) movement of parts, materials, or information between processes in the system?
  2. Waiting: In what ways are people or parts, systems or facilities idle – waiting for a work cycle to be completed?
  3. Overproduction: In what ways are we producing sooner, faster or in greater quantities than the customer is demanding?
  4. Defects: How and when does the process result in anything that the customer would deem unacceptable?
  5. Inventory: What, if any raw materials, work-in-progress (WIP) or finished goods do NOT have value added to them?
  6. Movement: What, if any, excessive movement of materials, people, equipment and goods occur within a processing step?
  7. Extra Processing: What extra work is performed beyond the standard required by the customer?
  8. Engagement: In what ways, are people disengaged in the process that has an unnecessary impact on the system?

Later on, new wastes were added to the list, including the waste of unused human talent, and wastes that for the time-being are necessary to enable the production system to function, but which can ultimately be designed out of the system. Here are two more questions to consider:

  1. Focus: Which wastes (Muda 1) are unnecessary, that you might eliminate first, or wastes (Muda 2) that are non-value-added but necessary for the system to function which you can minimize until you can eliminate them?
  2. Capacities/passions: In what ways are we under-utilizing people’s capabilities, interests and passions to achieve a synergistic result?

But that’s not all. When production and service delivery systems are considered from a complex adaptive systems perspective, the approach that we at Maverick & Boutique have developed, there are at least five extra Muda to be considered, which offer even “more bangs for the buck” because they involve thinking about systems from the points of highest leverage (Meadows Institute, 2015).

Sub-optimal system transformations: What Lean does not seem to take into account are the transformational shifts that occur in the socio-technological system, which present opportunities for the elimination of wastes. These wastes become apparent when you start to think of production/consumption as a complex adaptive system.

If you adopt a linear perspective to production/consumption rather than a complex adaptive systems perspective, it is quite possible you will not be able to recognize the large scale periodic transformations of the socio-technological system, that keep arriving with ever shorter times-scales.

New technologies, and the systems that support them, come along every so often and largely displace, one or more existing products – best described back in the 1980s by Richard Foster, a former vice-president of McKinsey, in his book, The Attackers Advantage. As each new disruptive technology emerges, after an often clunky start, they race up the experience curve and often achieve productivity gains measured in the hundreds or thousands of percent. Think containerization, the motor car, digital photography, the iPhone, Amazon and the radial tire. At these transitions, the structure of the system changes, not just the technology, but the production and distribution methods, skills required and the theories/models that underpin their development.

The productivity gap between the emerging product system and the previous product system is waste/Muda.

Inadequate Conception of Risks and Solutions: Anyone who works in the risk management world will tell you that occasionally black swans and unknown unknowns or Unk Unks come along to cause major problems. Black swans are events we can imagine, but have never seen before. Unk Unks are not ever on our radar. Think events such as the Japanese tsunami which swept straight over the sea walls, the missing MH370 777, the BP Gulf blow-out which was not supposed to happen, and rise of the Caliphate in the Middle East instead of the Arab Spring. All of these are wastes, sub-optimal expressions of value that the customer does not want to pay for.

We get to understand these possibilities by seriously considering a wider range of models/theories from a broader range of experts, who can help us develop a more robust model of the system. Robust Models, says Conant, one of the father’s of complexity theory, are essential to being able to exercise control over a system. If we are still thinking linear and our competitors are thinking ecology, then we are sure to lose.

Inappropriate Scale of the Tools we Use: The use of tools and skills that are inappropriate to the scale of the problem or opportunity is also a source of waste. For example:

  • Expecting a bureaucracy to invent new products.
  • The use of mortars, tanks and fighter planes to develop a better relationship your next door neighbor creates a huge gap in customer satisfaction.
  • Using a sledge hammer to drive home a nail.

Not Preparing for the Future: The new kid on the block is anticipatory awareness. Amazon has perfected, and Big Data is trying to get its head around this idea. Amazon ships products to warehouses near you in anticipation that you (or others) will buy them within a statistically predictable window of time, thereby reducing the time the goods are kept in stock or out for delivery, and reducing waste even further. And although Big Data is trying to do something similar, the data merely confirms the hypothesis. You still need humans to figure out what new models/theories are emerging, and using an out-of-date model to run your organization costs time, which costs money. The difference between a successful and unsuccessful project can easily be the length of time you need to borrow the money. Too long and the cost of servicing the debt becomes a millstone around the project’s neck, which can quickly escalate into seriously expensive Muda.

Lean+ Workshop

Here are some additional workshop questions that help identify the wastes that the original process did not uncover:

  1. Optimal Wise Application of knowledge: How well are we achieving the wise application of knowledge for the entire system, e.g. inadequate pay for staff, negative impact on the environment, resulting in costs to the consumer after use e.g. disposal of hazardous chemicals or remediation of old mine/factory sites, which are paid for by all
  2. Transformation between paradigms: In what ways are we failing to transform all aspects of a system (roles, rules, tools, relationships, culture), so it continues to operate sub-optimally e.g. embedding old coordination, leadership, decision, learning models in a new technology/production system or product/service
  3. Robust model of the system: In what ways do we have an inadequate model of the system by leaving out black swan/unknown unknowns, trans-disciplinary learning features, etc. especially for early stage products; missing out on efficiency/productivity gains by regarding systems as a network, rather than an ecology
  4. Appropriate Scale: In what ways is the production/distribution system unable to adapt to changes in scale required, i.e. production ramp up/ramp down, raw materials shortages, natural disasters e.g. tsunami, hurricane
  5. Anticipatory awareness: In what ways are we not getting a solution to the customer fast enough so the NPV (net present value) is optimal and there is little or no waste due to capital servicing?