Review of Climate Wars by Gwynne Dyer

Climate Wars – Gwynne Dyer – Review

Since the Intergovernmental Panel on Climate Change published their 4th report in 2007, the influence of anthropomorphic climate warming has been made clear to many although enough skeptics remain to challenge the anthropomorphic cause. And the recent global economic recession has driven concerns about climate to around 20th on the list of the typical American’s concern. Jobs and the economy are near the top of the list as of 1st quarter, 2009.

Yet, key contributors to the IPCC 2007 reports have become even more concerned about the momentum that GHG emissions and the climate response can be. Well known scientific voices like Jim Hansen, John Holdren, and Dan Kammen (UC Berkeley) have spoken out about the need to take action even more proactively than that encouraged by the IPCC 2007 reports – the need to bring atmospheric CO2 back down to 350 ppm.

Politicians are naturally caught between the realities in our face today, the economy, less dependence on foreign fossil fuels, health care, social security, and economic migration just to name a few of the 21st Century challenges noted by James Martin and Bjorn Lomborg and the future problems of climate change. In part this reluctance to go beyond the IPCC reports is based upon the uncertainty that remains about GHG emission, climate response and various potential triggers such as methane release from previously frozen tundra and perhaps methane hydrates in the deep ocean.

I was reminded of the complexities that politicians face when reading Holmes Hummel’s dissertation on “Interpreting Global Energy and Emission Scenarios – Methods for Understanding and Communicating Policy Insights.” When you are faced with around 700 scenarios projecting GHG emissions resulting from various energy policies from many different groups around the world, with obscure data sets and differing models and an order of magnitude or more of differences – what are you to believe? So you go to the experts and trust their interpretations of limited data and incomplete models. Once a benchmark is set by the IPCC, it’s risky to challenge it.

But Mr. Dyer notes that the IPCC could only accept inputs of research material that had been peer-reviewed and published by the end of 2005. Peer reviewed work had to be submitted to the review process well before that time. Much has been learned in the past 6 years hence the current concerns by Jim Hansen and others and that has caused them to lower atmospheric CO2 targets from 450 ppm down to 350 ppm.

One lesson any broad thinker takes from these inputs is that a useful metaphor for understanding the response of the climate system is the oil supertanker. It takes miles to stop one once you decide that’s what you want to do. In climate terms, the equivalent is decades during which a number of positive feedbacks may occur that take matters out of your hands (like a sudden storm or surprising current in the supertanker metaphor).

Mr. Dyer has created a very helpful set of facts and narratives to help us better understand the climate change dilemmas that we face. He interviews several of the leading scientists post IPCC 2007 and gets their current views of what is in store for us – not only in climate change but in social stress that will accompany inevitable warming. The stresses will be larger or smaller depending upon how much warming occurs and what our responses are to mitigation, adaptation and suffering.

His review of several key aspects of climate history and science from conversations with various experts provides a foundation for speculating on the potential meaning for us and our children in the 21st century. He reminds us of the history of climate and how there have been at least five mass extinctions in the past 450 million years, and only the K-T extinction 65 million years ago seems to be related to a meteor strike. Several others seem correlated to higher CO2 in the atmosphere and possible hydrogen sulfide release from stagnating and overturning (anoxic) oceans in warming temperature (Canfield Oceans).

Mr. Dyer supplements his interviews and reviews of climate history with seven scenarios that describe events that might occur as the planet warms during this century. Although he does not explicitly identify the primary drivers, I suggest that most if not all of his narratives are basically founded on the tensions between actual climate response and our human actions with application to the issues in specific regions. What we do affects climate and vice versa – a typical feedback system reality.

Unfortunately, as behavioral economists and game theorists caution, humans do very poorly at protecting their future selves from known possible adverse consequences. So we are sobered by the challenges covered in the narratives such as: 1) who has rights in the ice-free Arctic, 2) how will India and Pakistan resolve dwindling water resources from the Indus waters, 3) what to do about economic migration from Central America into the US as drought strikes the tropics, 4) should geo-engineering attempts be initiated to make up for delayed action, and 5) what are the indicators of impending disaster – to name a few of the questions. Do we wait until disaster is in our face before taking action?

If you are concerned about population growth, over-burdened planetary environmental services, and anthropomorphic climate change, you will find Climate Wars provides provocative insights to our climate challenge of the 21st century. Have you thought about the planet that you will leave for your children?

Review of Strategic Management Dynamics

I have been looking into system dynamics to better apply systems thinking to sustainable management, that is, helping businesses integrate ecological thinking (being aware of the environmental consequences of your business) to business decision making and finding profits along the way.

In the research of what's current with system dynamics tools today since Jay Forrester pioneered it's development in the 1970's, I came across a different use of system dynamics that helps provide a more visual understanding of system dynamics applied to a business architecture. The key advantage is that it ties closely to the PowerPoint and spreadsheet tools typically found in the modern company's management toolkit and helps tell the story of how management decisions will influence future performance. That work has been done by Kim Warren - my review of his book on the subject follows below.

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It is an ongoing task to keep abreast of the best management practices in our global economy. As a result, we are always searching for better tools to be more insightful, to be more effective, and to get better performance. When one finds a tool that seems to resonate as useful because of challenges we have experienced in the past we are motivated to add it to our toolkit and skill set. But our experience has also taught us that we tend to initially have high expectations which are typically followed by some resetting to a more pragmatic view and finally, if one spends the time becoming skilled, the new tool becomes a necessary addition to our management skill set.

I was reminded of this recently watching a baseball game in which the batter struck a sharp grounder down the third base line. The third baseman charged to his right, scooped the ball up as he dropped into a crouched slide to arrest his momentum, and then rose, right foot planted to make a hard accurate throw to first base for the out. The experienced commentator noted that in the past one was taught to first stop, turn, plant your right foot, and then throw to first base. But this slide, plant and throw scheme was definitely fast, fluid, and effective – artistic in execution. He was impressed and remarked that handling the play like he had been taught - old style, the throw would have been too late for the out. The third baseman had demonstrated this technique that set a new standard of skill and effectiveness.

This is how I would describe Kim Warren’s Strategic Management Dynamics, a new tool to add to your management ‘game’ a skill that with some practice, will lead to better insights of the dynamic architecture and future of your business. It will help you understand where past performance will likely lead in the future and how one can change that to get better future performance.

What I found resonated with my experience was the use of system thinking to take a holistic view of your company’s operation. This fits well with the sustainable management movement that is beginning to become a major part of most organizations as they remake their business for the economic realities and environmental constraints facing us in the 21st century.

Second, it focuses on the strengths of system dynamics to capture the feedback, resources (stocks) and control points (flows) of the corporate architecture. Presenting the dynamics in a graphical language helps bridge barriers to effective discussion between top-down strategists and bottoms-up, spreadsheet-focused, operational managers of the business.

Third, you haven’t lost the system dynamics insights behind a dashboard that which allows others to be unsure where the numbers come from. In Strategy Dynamics, the familiar spreadsheet view of the company is clearly evident as well as the dynamics.

Fourth, Strategy Dynamics better bridges the silo-focus that commonly exists in companies that hinders effective understanding and collaboration across business units. It is easier to see how marketing and sales initiatives dealing with intangibles like attracting and retaining customers or managing employee retention affects capabilities and interacts with product development and day-to-day business operations.

Fifth, a lot of decisions involve tradeoffs between short-term and longer-term performance. Strategy Dynamics makes those choices more tangible and sobering because it often takes a few years to see the impact of decisions that lead to success or failure. Being able to intelligently simulate those in advance just enables better decision-making.

Finally, as many organizations begin to focus on other intangibles like “how much will being ecologically proactive attract customers” or “how to understand how my corporate social responsibility program improves bottom-line performance,” the Strategy Dynamics approach helps tell the performance story to the often skeptical C-level management team and shareholders who have to keep an eye on the bottom-line.

I highly recommend Kim Warren’s strategic management dynamics enhancement of the system dynamics toolkit for enabling more insightful and effective management decision-making. It will definitely improve your management ‘game.’

A Context for Discussion of America's Priorities

Introduction
We need the wiki forums of Web 2.0 to help create effective discussions that help us solve the challenges facing America – and the World. The common aspiration for many of us, to “live, love and leave a legacy” is better served by addressing these challenges in a “bottoms up” approach with discussions that are enabled via web communities. These forums are where we can better align differing opinions in the process of collaborative compromise and, as a result, foster action to achieve the agreed upon ends. Any city, state or nation, even the world, has only so many intellectual, physical and natural resources that can be applied to the end of identifying and implementing solutions. Our discussion must take this into account, to identify the most pressing issues first. For example, from my research, I believe many experts would list clean energy, climate change and sustainable societies as among the most important challenges facing the world. But an expert’s view is not always a universal perception or necessarily inspiring enough to cause grass roots social alignment for real change. A discussion among all of us as stakeholders in our future is a better way to prioritize our challenges and shape our future.

Solutions in the Larger Context
Our nation exists in a global economy and environment. This reality is readily evident today with the global discussions of climate change and the disruption of the credit markets linked to the subprime mortgage lending in the United States over the last half decade. Our financial resources are being diminished by the fall of the US dollar and the ongoing costs of the conflicts in Iraq and Afghanistan. Clearly we have suffered from our own hubris about our role and the capabilities of the United States to shape the global community whether it is in political, social, environmental or economic terms. We do not have the financial, organizational, influential or moral strengths to drive the solutions for the many challenges that face our global community and shape the context of solutions that we design for our own national needs.

The world on the one hand demands our leadership and cooperation while at the same time expecting us to also provide financial leadership for the less fortunate. We are assigned the bulk of the responsibility for green house gas emissions with no credit for the technology and economic well-being our economic growth and technological leadership has fostered throughout the world. We are castigated for the unintended consequences of the conflicts in Afghanistan and Iraq but find qualified support for even acknowledged responsibilities of NATO to join in resisting the Taliban forces in Afghanistan.

It seems that to focus on solutions for specifically American issues such as universal health care, legal reform, aging demographics, energy independence, environmental protection, etc. will result in solutions that short change the impact of the many global demands on our available resources. We may have well-intended American solutions that cannot be funded or effectively implemented because of over arching demands placed upon us by the global community. For example, it is hard to see how Americans can continue to pay for expensive drug research through higher domestic prices while foreign governments can apply price controls for distributing the same drugs or expropriate intellectual property to permit local manufacturing for much reduced costs. It is hard to see how we can afford to make available marginally-qualified cutting-edge treatments for every disease while many foreign countries restrict those same treatments based upon documented efficacy, if they are available at all. It is hard to see how we can subsidize the costs of adaptation for climate change in less-developed countries and to be the leader in GHG emission reductions at the expense of our own economic growth while allowing, for example, the BRIC countries to catch up on a per capita emissions basis before restricting their own aggregate emissions.

Like it or not, existence on this planet is presumed to be purchased through creating value that allow ourselves and others to better “live, love and leave a legacy,” to our own pursuit of happiness. Abruptly changing the rules on how ‘creating value’ may be done is almost certain to significantly harm our ability to retain the social law and economic order that presently protects our right to the pursuit of happiness. It is also hard to see how solutions can be implemented that do not include the commitment of every human to doing their part to effect agreed-upon solutions. Disagreements are essential to avoid the traps of ‘groupthink’ but passiveness in letting others carry the burden of effecting solutions is socially irresponsible as well. For example, it is difficult to see just a relative few in this country continually returning to Iraq and Afghanistan to carry on the commitment we have to fostering stable democratic rule in those countries. They are sacrificing to keep us safe at home while at the same time the majority of us continuing to live as if we have no personal risk to share to preserve our security.

Social Messes
Let’s begin by taking a closer look at the challenges that shape the global context that frame our discussion of American Solutions for real change. Robert E. Horn has described these large challenges as ‘social messes’ because they inherently are difficult to resolve given the many differing and conflicting views. These include views on what the problem is, what solutions are desired, which are affordable (against other demands for the same resources required to implement a solution), which groups benefit and which groups sacrifice, the relative value of near term solutions against longer term risks and rewards are just a few of the issues that makes consensus and collaboration difficult.

What are these social messes? There are lists complied by various individuals and organizations such as the United Nations, special study groups in the developed world, and globally known individuals such as James Martin. These challenges form the context of American leadership in the global community, where we commit our resources, how we collaborate with the global community on solutions, what trade-offs we make in our national interests and the legacy we expect to leave our children. Here is only a partial compilation from a variety of sources-not in any particular priority.

1. Climate Change, including: Species extinction, Biodiversity threats, Adaptation to rising seas, melting polar caps and glaciers, Expanding deserts, Reduced food crops,Economic impacts of reduced GHG emissions, New legal theories of rights & responsibilities, Migration of disease vectors, Economic migration
2. Aging Demographics, including: Social Security, Medicare costs and capacity, Workforce replenishment
3. Clean Energy, including: Reduced GHG emissions, 80 to 100% reduction in CO2 loading of the atmosphere, Energy Efficiency
4. Environmental Protection, including: Planetary capacity for humanity, Consumption and Environmental Stress, Population growth overwhelming Planetary ‘Services’ (Resources)
5. Universal Health Care, including: Affordable health care
6. New Technology Risks, including: Nanotechnology, Nuclear Proliferation, Biotechnology
7. Pandemics, including: Global mobility enables disease diffusion, Environmental change foster wider habitats for disease
8. Clean Water, including: Disappearing glaciers, Massive consumption and stress from , climate change and population growth
9. Oceans Preservation, including: Declining fish stocks and disappear coral reefs – symptoms of overfishing and climate change, Increasing pollution from fertilizers and civilization’s waste
10. Economic Migration, including: Poorer country citizens to wealthier countries, Business migration from high tax locales to lower tax havens
11. Nuclear Proliferation & Waste, including: Inherent hazards of driving to ‘clean’ nuclear power
12. Education, including: Effective national education (is 50% dropout real?), Effective global education, both child and adult
    
    Feel free to add to the list. There are many more with priorities depending upon your perspective.

Accelerating Change
The many changes we face as a global community are also accompanied by rapid change brought about through the advancement of mankind and our innate ability to develop and leverage tools that enable us to shape our circumstances, both locally and globally. These tools give us hope that we can manage our existence on our planet without pushing the envelope of our environment through some catastrophic ‘tipping point’ that destroys a substantial portion of humanity and limits our future as a species.

The progress in biotechnology, nanotechnology, electronics and information technology, and global networking through the Internet are among the main drivers of ever faster change. These add ever more complexity to our tools, our communications and our capabilities to further change our environment and ourselves. Keeping up with these changes means we are continuously adopting new tools and services along with the skills to use them. It is no wonder that minimal learning curves are essential for devices and services that help us with our many daily tasks so we have time to focus on our core interests and needs including family and livelihood.

One has to ask if there is a limit to how much change we can absorb as well as afford. There is simply a limit to our attention. This limit has not changed substantially since we moved from hunter-gathers through agrarian societies into our modern post-industrial information age. In comparison with the advancement of our tools, our brains have remained relatively the same in capability. Perhaps our intelligence has improved some through our easier access to more and better foods but not by the same scale as making tools that has taken us from stones to make hatchets to nanotechnology probes to manipulate individual atoms.

Limited Resources
When considering the global scope of our social messes, we realize that we are limited in a number of ways. We are not only are limited in our ability to adapt to accelerating change, we have limitations in the time to decide and take action, resources to use, intellectual insights, collaboration approaches for a discussion, common views of the legacy we want to leave for our children and the willingness to agree on the economic changes and sacrifices that may be needed.

I watched with interest the National Geographic shows on “The Human Footprint” and “Aftermath: Population Zero”. Both cause one to pause and reflect more on how seriously we are impacting our environment. It is easy to speculate on what metaphor is appropriate to better describe our circumstance in ways that help us appreciate the scale of the challenges we face.

Two come to mind. First, consider exponentially doubling every day lily pads in a pond that start in just a small section and over the course of a month only become alarming as they suddenly in the last few days go from less that one eighth of the pond surface being covered to completely covering the pond. The lesson is to be wary and seek to understand the implications of exponential changes.

Second, consider that in just the last century we have dramatically increased our consumption of our planets “services”, for example, clean water, natural minerals, trees, oil, etc. The metaphor I see here is like one going from the luxury of living comfortably during a cruise on an ocean liner to suddenly being faced with being adrift in a lifeboat with a number of passengers and crew. Quickly the norms of social behavior, the beliefs of what is urgent and important to focus on, the expectations of our roles and how we work to survive, and the sacrifices we are willing to make for our own benefit and for the group are subject to change. These changes can be quite dynamic as the perception of the peril evolves with time and not at the same pace for everyone. Perhaps one could expect to be saved quite quickly from a nearby ship and thus see little need for significant change. On the other, one could be in a vicious storm with any number of threats facing the lifeboat occupants. Decision making must be rapid and centralized, orchestrated by someone designated in command. Or perhaps, rescue for unusual reasons is expected to be uncertain, at least for many days, perhaps weeks. Then the hard discussions begin, decision-making may be slow and the sacrifices in personal well-being are very real. Does the television series “Lost” or the historical events surrounding the “Mutiny on the Bounty” come to mind?

We are living in a global economy and our lives are typically based upon improving our circumstance. This has generally has meant consuming more of what others produce. This gives them economic incentive to contribute and has resulted in very complex social and business networks evolving. So far, however, it seems that economic growth is accelerated when inexpensive labor is available. Note the use of slaves in the history of the world and the modern equivalent of moving manufacturing and services to the lowest labor-cost markets when possible. This benefits the consumer’s expenses side of their budget while bolstering the revenue side of the low-cost market’s laborers. That sounds like a win-win, but when both sides of each book of accounts are considered for each party, the net gain may not seem so real. Consumers may see lower wages or wage growth and lower-cost workers may find the environmental and social costs are higher than expected. Economists can show a tendency for overall economic well-being to increase, but is that also true when ‘free’ natural resources are being consumed to the point of near exhaustion?

Where this affects us today is the reality that the developed countries who are high consumers (especially the U.S.) are only a small part of our planet’s population. It is natural for less well-off to seek to enjoy many of the things that developed world consumers do. Consider the growing economies of China and India each of which today may claim a few hundred million moderate consumers out of their combined 2.5 billion people. It has been estimated that if everyone on the planet consumed resources like the developed world, we would need four planets to sustain our consumer life-styles. This may take a good part of this century to reach, but we haven’t even yet learned how to properly achieve sustainable use just our one planet’s resources. And like someone once noted – “We don’t know when we’ve had enough, until we’ve got too much” which can be inverted to “We don’t know when we’ve used too much, until we can’t get it anymore.” Hmmm. Will only our children pay attention because they have to?

Top Down Leadership, Bottoms Up Alignment
The potential for global warming and disappearing resources drive the urgency for clean energy development along with diminished use of fossil fuels and a significant reduction in coal-fired carbon dioxide emissions. But this is only one of our social messes. There are many as noted above. And our American political leaders seem to lack the ability to articulate a vision that we can align to. Perhaps this is too difficult given the broad cultural disparity in belief systems in this country ranging from differing interpretations of ‘scientific observations’, various religious frameworks and a tendency for many to eschew personal responsibility in favor of demanding others, especially the government, to provide for them. I claim no special insights here other than to express a sense of discomfort in our apparent willingness to blame others for our adverse circumstances and the inclination of the press and our politicians to dwell on trivia in what should be a serious series of discussions. In an April 2008 Fox News focus group during the Democratic presidential nomination campaigning, Frank Lutz noted that there was a trend of dissatisfaction with both Democratic Party candidates. The continual focus on Barak Obama’s Rev. Wright associations and his comments on the “bitterness of rural America” while Hillary Clinton is continually pressed on the veracity of her claims such as ‘landing under fire’ is rightly seen by most moderates as missing the point of demonstrating that either candidate has the ability to shaping a consensus for a national vision on anything.

A national vision for dealing with our social messes is absolutely essential for each citizen to both endorse as well as change their behavior. Real change will occur only if Individuals align with being a part of the solution rather than continuing to exacerbate many of our ‘social mess’ problems by pursuing the lifestyles and pursue the expectations that were the norm of the 20th century. We have seen how the wars in Iraq and Afghanistan have languished, in part, because only a few took ownership in sharing the personal costs and family sacrifices as well as the benefits of more personal security at home. Leaders that ignore finding the right balance of vision, sacrifice and personal responsibility in framing our expectations for the 21st century will only continue to diminish the future of our children that they so fervently argue they are focused on preserving.

I recognize that this is an extremely difficult task. Life is complex, diverse organizations and societies have many conflicting agendas in play, and the laws of physics do not work well in social management. Even human expertise and intuition fail us. Philip Tetlock noted in his book “Expert Political Judgment” how difficult it is for even experts to forecast the outcomes of our many social dilemmas and conflicts. What is sobering from his 18 year long study is how simple statistical algorithms best even the acknowledged ‘experts’ whether they be flexible thinkers (foxes) or convinced that overarching behavioral laws shape the outcomes of social conflict (hedgehogs).

Perhaps this is why the social and marketing experts in our Internet world are pioneering deep dives into data mining with many statistical tools to ferret out consumer behavior and to search to terrorist and illegal activities. Nathan Eagle of MIT (now at the Santa Fe Institute) demonstrated how the simple tracking of cell phone use could lead to predictions of 80 per cent probability what a person would do next if you know what they were doing now. He is also exploring how this knowledge can lead to better prediction of the spread of potential pandemics – another social mess we are facing.

It is likely that Barak Obama intuitively understands this importance of vision and articulates it in a way that appeals to the youth that have sustained his campaign. However, vision without the insights and tools to shape it into an effective process for addressing the social messes of the 21st century will simply add another disappointing footnote in the history of political leadership.
So is there a way forward? I think so. It resides in our willingness to change our focus outward and join in the discussions that can lead to consensus and effective action, one ‘social mess’ at a time. This, I understand, is one objective of Newt Gingrich's ‘American Solutions’ website, to encourage the discussions that lead to change and, in the words of Stephen Covey (and others), “to live, love and leave a legacy” worth striving for.

Grand Challenges, Risks and Visions

I follow Irving Wladawsky Berger's posts on Always On and sometimes comment. In his post on "Innovation and Fundamental Research" he raised the point about getting the universities more involved in the Grand Challenges. At the time of generating my reply I interpreted "Grand Challenges" more in the sense of James Martin in his "The Meaning of the 21st Century" which are much broader than those outlined by the Grand Challenges addressable by high-performance computing which Mr. Berger was actually referring to via the Wikipedia description. My comments to his Always On post on "Innovation and Fundamental Research" are given below as shaped by my interpretation of humanity's Grand Challenges as outlined by James Martin.


Little Reward in Grand Challenges

Encouraging research in the grand challenges is not an easy task when the risk-reward is viewed from the perspective of the individual researcher. Engaging in these Gordian knot problems where political reality often defies common sense seems to offer too little reward to risk one's relatively narrow career window opportunity to come up with breakthroughs that really resolves these challenges. There are far too many tradeoffs to easily find consensus as to acceptable solutions (hence Robert Horn’s interest in Visual Language to help create broader understanding among different perspectives and their tradeoffs).

Let's consider the recent Nobel Prize that was granted to Al Gore and the 1000 or so contributors to the IPCC reports on climate change - and their recently published assessments of the consequences of global warming. I happen to know one of the authors - Prof. Stephen Schneider of Stanford from his mid-70's book "The Genesis Strategy: Climate and Global Survival" (related to dealing with climate variability) that I read while at the National Center for Atmospheric Research in Boulder, CO. Al Gore gets the headlines and these 1000 researchers and scientists are told to now let the politicians decide what to do with their projections of the potential changes and their consequences. To me, that can be interpreted as telling them that the "adults" will now take charge - both for the visibility and for the tough decision-making. If one could trust politicians to be relatively unbiased and appreciative of the science and pragmatic in balancing special interests against the good of the commons, that would be a reasonable solution. But given their dismal public approval ratings, one should not expect too much.

Grand Challenges Need Grand Visions

These grand challenge problems clearly take a systems and interdisciplinary approach and likely require regulatory actions to bridge the long-term time horizon and uncertainties of the challenges compared with the shorter-term nature of human action and investor focus on quarterly profits. Prof. Bruce Lusignan engaged Stanford students from a variety of engineering, business and legal disciplines in grand challenge-like courses as early as the late 1960’s in semester long projects – like “defining a framework for managing the resources of the oceans”. His intent was to foster interdisciplinary thinking among engineers and those who manage the business of society. It is refreshing to see UC Berkeley, Stanford University, MIT and others put more effort today into interdisciplinary collaboration working with industry on smaller than grand scale, yet still complex problems.

We can hope that a political awakening to the need to create visions that capture the imagination and commitment of our citizens will encourage effective collaborative action on these grand challenges. So far we are encumbered by inertia and self-interest of a globalized consumer society and motivated more by sticks rather than carrots because of little pull on the vision side of human motivation. We talk about what we wish to avoid but not what we wish to achieve given the reality of an inevitably changing world and corpus humanity. Perhaps more innovation is required in creating a vision of the future of humanity rather than where my health care will come from or how efficient my carbon footprint is. With a common vision comes focus and commitment from the bottoms up rather than the inefficient top-down hierarchical business model of the 20th Century. Open systems are emerging for a reason. Is someone willing to do a “wisdom of crowds” or “electronic markets” exercise in defining or predicting a common vision or are we too diverse a crowd of micro-markets to permit finding the overarching grand visions that lend to sorting out the many grand challenges?

Recommended reading – James Martin “The Meaning of the 21st Century.”

Leveling Wind Power Variability and Environmental Hypocrisy

This is a comment I added to an Always On blog post by Ed Ring titled "The Double Standard" about the conflicts involved among landowners, environmentalists and companies developing wind power. You will find Ed's post and reader comments at http://alwayson.goingon.com/permalink/post/16140


My comment (added to several already posted in response to Ed's short post) is repeated below.



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Just a few weeks ago I was driving near Wasco, OR on US97 on the way to northern Idaho. I noticed a wind generator farm not far from Biggs Junction on the Columbia River. Upon doing a little research I discovered that a Scottish company (PPM Energy) has a number of wind farms of which this one is the 24 MW Klondike Wind Farm. You can find an interesting paper on the use of farmland and the benefits to both the company and the farmers at http://www.rnp.org/Resources/Klondike%20Paper.pdf .

What struck me about this was its relation to the problems with green energy and wind power that are nicely highlighted in the book "Heat" by George Monbiot (http://www.turnuptheheat.org/). He looks at the real challenge of reducing carbon emissions by 90 per cent (using the UK as the example) to be effective in limiting global warming from carbon dioxide emissions without reverting to third world country economies. As noted above and in George's book, the variability of wind makes it unreliable and therefore power companies pay significantly less for a MW of wind power as opposed to a MW from water, gas or coal-generated power. Wind power must have a storage component to improve the availability / reliability of that solution to carbon-free power generation. Now recall Ellensburg and Wasco are near the Columbia River. Doesn't that sound like a good source of storage give the dams that regulate water flow and generate power? It would seem that the combination of water power and wind power in reasonable proximity complement each other, especially when the wind power component is a modest fraction of the water power element. Given that water conservation is also on the global environment horizon, reducing water flow required just for power generation seems to be an added benefit for humans and fish and . . . Obviously the challenge is more complicated that this little thought exercise - perhaps someone can add some additional pro - con facts to my suggestion?

And as for the environmentalist hypocrisy, we all are subject to that failing, especially when our backyard is threatened by something "different". One antidote for "lazy thinking" is more discussion that exposes more facts about the realities. Most people will eventually listen at least a little if approached persistently with good intent. Ghandi illustrated this through his experiments with "Satyagraha" (http://www.quietspaces.com/satyagraha.html) and Steven Covey with his insights shared in his "The Seven Habits of Highly Effective People" (http://www.stephencovey.com/7thhabit.html). As global warming impacts more people in tangible ways, the motivation to find practical solutions will help overcome our differences in what are reasonable compromises among being in a “consumption economy”, being "green" and being "sensitive" to preserving our natural spaces. We have the tools for the discussion. We need to choose to use them.

Review of The Strategy Paradox

The Strategy Paradox
Why Committing to Success Leads to Failure (and What to Do About It)

A review of Michael E Raynor’s book on creating strategic flexibility.

Summary

I highly recommend Raynor’s work as a complement to his joint work with Clayton Christensen The Innovator’s Solution, David G. Thompson’s Blueprint to a Billion, and other works that address developing flexible, innovative organizations, such as Fast Innovation by Michael George. You will regain confidence that spending more time with scenario planning and real options will put your corporate strategy at a more efficient risk-reward location in the production possibility space for your industry. Raynor also describes how to better align Corporate Venture Capital investments so that strategic flexibility allows your CVC to do more than just serve as another investment tool for investing shareholder profits.

Commentary

Most senior managers have engaged in the corporate strategy creation process at one time or another in their career. The experiences are often less than satisfying as apparently well thought out plans are often derailed by events that were unanticipated or discounted. The difficulty that companies face in developing an ongoing process that creates a succession of insightful strategies is reflected in the statistics of company performance. For example, David G. Thompson in Blueprint to a Billion extracts data from his research on the statistics of company success. Out of more than 7400 companies that went public since 1980 only 387 achieve $1 billion in revenues. In summary, he notes that “… only 5 % of American companies that have gone public since 1980 reached $1B in revenues and these accounted for 56 % of employment in 2005 and 64% of market value.” Only a small percentage of companies drive employment and market value. The rest are placeholders. Raynor suggests many of them could do much more by becoming proficient with strategic flexibility.

Recall that Richard Foster and Sarah Kaplan in Creative Destruction recount how the average life of a company on Forbes100 has declined precipitously since 1927 in performance relative to market average. Only 39 of the 100 companies remained in 1987. And only one of the two companies that outperformed the market through 1987 has continued to do so—GE. Disappointing performance against market averages was also noted for S&P 500 companies from 1957 through 1998. Accelerating change and complexity in our global economy is part of the problem. Part is also related to the difficulty in maintaining successful strategies and contingency plans, and in adapting corporate culture to match changing needs with increased flexibility. These must be balanced with maintaining a focus on managing resources, talent, and relationships that create sustainable competitive advantage and differentiation. Joseph Schumpeter’s observation that capitalism actually thrives on creative destruction by eliminating inefficient and non-competitive companies presumes that companies cannot change fast enough to meet new marketplace needs. Thus, the most effective way to reallocate underutilized resources devoted to a less-efficient company is to simply retire that company from our economic system and encourage others to redeploy those resources.

Raynor revisits tools that we have used in the past—scenario planning and real options—and then suggests a more effective way to apply these tools. First, he notes that commitment to a clear strategic direction is essential for a company to maintain competitive focus. That is why it is hard, for example, to get many groups responsible for technology roadmaps for infrastructure and service delivery excited about projections beyond 18 to 24 months. They want to be aware of potential surprises that might arise in the next 3 to 10 years, but they don’t really want to spend any time or money to obtain that awareness. Given that the future is by nature evermore unpredictable as the time horizon extends, those potential disruptors are only possibilities. Spending more than a very minimal amount to maintain an ongoing scan[1] of these potential disruptors is generally outside the remit of most well-managed operational budgets. The significant downside of this tension between running a well-managed operation and dealing with accelerating changes in the competitive marketplace is that a company will tend to pick a more conservative strategy which results in less differentiation from competitors.

This tendency reminds me of swarm behaviors observed in nature when a school of herring, for example, is attacked by tuna. The herring appear to follow a few simple rules to reduce their risk of being eaten. First, they try to stay close to their neighbor but not too close. Second, they try to move towards the center of the chaotic “tornado-like” swirl of fish that forms. Managers are biased to pick strategies in the same herd-like fashion. This tendency is not surprising because companies are similarly biased to punish competitive shortfalls, even if only by reputation, so unless managers are brain-wired to live on the edge, they will naturally steer to the strategy map’s conservative middle.

The numbers support this explanation. In Thompson’s statistics, only 374 of 7,454 companies reached $1 billion in revenues, while 2,019 disappeared from the public exchanges. That’s a 5-to-1 ratio of dissolution to exceptional success. Because these public companies are most likely managed by smart people who seek good advice and use accepted tools for planning, it seems that these tools often don’t work well. As a result, they are discounted, hedged, and even ignored.

Raynor believes the responsibility for scenario planning and creating real options to generate strategic flexibility falls on the Board of Directors and the CEO. That’s because operating divisions must limit how much they invest in creating strategic flexibility (as opposed to contingency flexibility). The real options that the BOD and Corporate Office cultivate are either discarded, if not needed as the future unfolds, or exercised, if it becomes clear that some division of the company needs to change their strategy and the change should include exercising an available real option. Lacking a real option makes it difficult to implement a strategic readjustment, while having an option makes it easier for the company to successfully adapt to the new environment.

Real options are typically created by forming partnerships, joint ventures, or limited investment in new companies. Each has its merits and shortcomings as described in the book.

Raynor uses examples from Johnson & Johnson, Microsoft, Bell Canada Enterprises, Sony, and Vivendi to show how these companies have successfully used (consciously or intuitively in the cases of J&J, Microsoft, and BCE) strategic flexibility. Unsuccessful examples include Vivendi and Sony: Vivendi’s CEO gambled on one vision of the future that never came to pass. Sony, on the other had, developed perfectly good strategies but not enough flexibility (Betamax, Minidisc, and now maybe the PlayStation 3). He also details Alliant Energy’s use of strategic flexibility. He summarizes their formation of a five axis scenario space and how to reduce the complexity of analyzing the 32 scenarios that defines. This is particularly informative for those of us who have been encouraged to distill scenarios down to two axes and four quadrants of potential futures simply to reduce the complexity of analysis. This has always left me (and others I’m sure) feeling that the baby was probably tossed in bathwater of simplification. So it’s no surprise that many scenario exercises are discounted.

The example companies Raynor discusses typically have more than one operating division. As a result, the scenarios and real options approach is more understandable because it benefits from leverage from both synergies across divisions where appropriate and the likely existence of a Corporate Venture Capital group that can develop investments and relationships to cultivate real options.

How this approach is used in smaller single operating unit companies and startups is less clear. The smaller the company, the more all resources are focused on a current strategy and tactical contingencies. Fewer resources (probably none) are available to develop real options. As Christensen and Raynor note in The Innovator’s Solution, these smaller companies must have flexibility to find where the profits lie before they scale up operations. The primary solution for the smaller companies, especially entrepreneurial startups, is to cultivate very tight relationships with current and potential customers and to understand “the jobs they hire your product to do,” as opposed to making contingent new investments or pursuing partnerships and alliances before identifying successful profit strategies.

Thompson in Blueprint to a Billion does, however, emphasize that small companies who partner with larger companies to create Big Brother alliances have much to gain. The big brother company is probably viewing the smaller company as a “real option” relationship or at least a tactical contingency. Thus, smaller companies should spend at least some time thinking about scenarios and real options to better determine who they should seek as marquee customers and big brother alliances. Whether these steps are part of creating strategic flexibility or simply “must do’s” as part of a well-focused strategy, I believe that, after profit pools are identified, scenario planning with real options thinking should be biased towards creating a perspective from the big brother partner’s or alliance partner’s point of view. This will help filter out those relationships that are more likely to meet the expectations of both companies.

One topic Raynor does not discuss is how these methods apply to developing government policies. Perhaps the number of stakeholders is too large or perhaps those stakeholders are too politically motivated to allow Raynor’s disciplined approach to gain traction in the political arena. Given the scope of challenges facing the world, however, I would hope that some advisory groups are either using similar methods or implementing what Raynor suggests to create strategic flexibility. Recent books such as Planet India by Mira Kamdar and The Coming China Wars by Peter Navarro highlight the pervasive impact a rising East Asia will have on many important aspects of our lives. We should be using the best planning tools at our disposal to produce the most effective strategic flexibility we can to deal with the severe uncertainty of our global future.

In summary, I highly recommend Raynor’s work. It will move scenario thinking and real options higher in your list of useful tools for developing strategic flexibility. For companies that support a corporate venture capital function, this will help address the sobering reality that most CVC’s only survive about three years. Raynor suggests that CVC’s die quickly because their investment focus does not really provide the corporation with strategic flexibility. Instead, the investments generally appear to be just another way to manage shareholder profits. This could be resolved, Raynor notes, by returning those profits to the shareholders to invest more in line with their individual financial objectives.

In short, if you want to know how to improve your strategic planning with scenario thinking and real options so you can better allocate risk and reward, you will find Raynor’s book offers new insights worth exploring.

Michael L Olson, March 2007
[1] SRIC-BI’s SCAN Program is one that enables companies gain early insights into potential social, cultural, technology, business and other trends to maintain a holistic picture of the possible disruptors of the broad array of businesses in the world today. Another is The Map of Decade project annually reinvented by The Institute for the Future.

Speculations of a PC Gamer

Computer games have been around for decades. I can remember Pong when it first showed up in the pizza parlors in Palo Alto and a friend noted that there might be a business there. Unfortunately, I was more interested in satellites, systems development and cool technology firsts like using VLF signals for tropical wind-finding to support global weather modeling.

Role forward several decades and I find myself pondering the utility of online experiences enabled by World of Warcraft and Linden Lab's Second Life while at the same time relishing the solo gamer experience on a high end gaming PC (personally built) with dual-core processor, DirectX 10 capable Nvidia graphics, 2 GB DDR2 RAM, Creative SB X-Fi sound, 24 in LCD display, etc.

What's it all mean to me? You will find some commentary in an article on my website www.PleiadesTechnologyFutures.com on the topic of "Internet addiction" that I made regarding a story about someone who found their "real" life seriously disrupted by hours spent managing a guild in WOW. In short, I believe virtual environments are here to stay. Managing the time and experiences between the real and virtual is just another adaptation we will be making. Take for example that just recently, IBM has let it be know that more than 1600 IBMers are "experimenting" with Second Life as one of their innovation projects. This is only a surprise in that a large multinational is actually encouraging so much employee time in understanding the new rules enabled by virtual environments.

Having worked for a global multinational recently, I can appreciate the challenges of collaboration across time zones among widely dispersed project teams. Communication, and more importantly, the intangible social connections that encourage effective collaboration are very hard to maintain. Good virtual environments allow bringing in the communication tools and scenario simulations (See Fortera Systems Inc.) of the real world along with some of the social features necessary to establish high-performance teams. As one IBMer remarked (paraphrased) "After the SL workshop on Almaden Island, all of us stepped outside the conference hall and had an 'avatar' party for a half hour. It was more fun than we thought." Avatars seem to offer an avenue for personal expression that may actually give a better insight into a person who cannot express the same via their "real" body and resources in the real world.

As the role of virtual world economies become more visible with financial transactions of virtual creations for real world money make the news, it becomes apparent that something is going on that can become a significant part of the global economy with time. This is enabled as communication bandwidth, computing power and effective human interfaces become both cheaper and more powerful. Going into space is very expensive and only a few can be supported to cross those unknown seas - like the sailors of the first millennium and a half. But developing and creating in a virtual environment is much less expensive, and may become even more attractive as real world consumption of real goods expands with the concurrent expense of challenging environmental baggage.

I commented to Jonathan Chapman regarding his early 2007 New Scientist interview article "Better by Design" regarding his book "Emotionally Durable Design" -with the following:

"I also recognize the environmental impact of ever increasing developed world consumption – having some of those habits myself – and see as well that challenge of the rise of consumption in the developing world, especially in East Asia where 2.5 billion potential consumers in China and India are marching rapidly up the economic ladder. One potential safety valve is perhaps shifting the satisfying of human needs per Maslow’s "Hierarchy of Needs" into the virtual environments experience. We now have the ability to create quite compelling experiences in games like World of Warcraft, user-created worlds like Second Life, and even economic transfer of virtual wealth to real wealth. So perhaps much of the human need for changing experiences can be more easily met in terms of environmental impact in the virtual communities on the Web rather than [entirely] in the real world. And what is learned in the virtual, the best of the best, can then perhaps be what is actually built in the real world. So our Darwinian selection [for great products] is done in the virtual world rather than through the trash of the real world. "

Stickiness can be a problem in today's virtual worlds (like early web sites) as the "utility" is far from mature save for maybe some "Serious Games" virtual simulations and entertainment from Massive Online Games like World of Warcraft. However, if you believe computing power and communications bandwidth will continue to follow somewhat exponential improvements described by Gordon Moore, Phil Edholm and Marty Cooper, the barriers to utility will fall with time.

As for me, as I occasionally find time to explore the scenic green and blue archipelago of "Far Cry" (64-bit), the eerie story line in "F.E.A.R.", the expanses of "Oblivion: The Elder Scrolls IV", the stealth challenges of "Hitman: Blood Money" or "Splinter Cell: Double Agent", the City 17 environment of "Half-Life 2", the real-time strategy of "Company of Heroes", the world of aviation with Microsoft "Flight Simulator X" and compare those experiences to Pong of the 70's, it seems clear that Today's teenagers will find virtual environments a natural place for both work and play.