Wednesday, November 21, 2012

Clayton Christensen on the early days of Disruption Theory

There's a short video of Clayton Christensen on the HBR Blog Network.  In his quiet way, he  describes the wide applicability of his theory of disruptive innovation, in spheres as diverse as chip manufacture and the military.  Well worth a few minutes of your time to hear about the early days of the idea of disruption exploding in the marketplace of ideas.  Click here.

Thursday, November 15, 2012

TED and the Enlightenment

TED's just hit a billion!  One billion views of those magical talks about big ideas.  In a world characterized by an insatiable appetite for salacious gossip about celebrities, TED talks have been viewed one billion times.  Wow.
TED set out to celebrate Ideas Worth Spreading.  And, as they say on the web site, "an idea, when received by a prepared mind, can have extraordinary impact".

Having just studied the Enlightenment in my World History course on Coursera, this TED milestone really got me thinking.  Everything about TED echoes the intellectual ferment in 18th Century Europe known as the Enlightenment*.

Enlightenment thinkers believed there were natural laws - about science, politics, technology, sociology -  that governed the way the world worked, and that those laws were discoverable by men who were all born with the ability to reason. (It took longer for general acknowledgement that women might also be capable of reason!)  One could/should rely on these natural laws - determined through observation and experimentation - to explain the world rather than relying on religious or classical texts or absolute rulers.  Men should be free and should participate in governing themselves.

Moreover, it was your duty to spread these ideas and influence everyone to live by the tenets discovered. That spread was enabled by the increased availability of books, the establishment of scientific societies, publication of scientific journals, and the collision of ideas and debate in informal settings like coffee houses and salons.  Ideas flowed both geographically - indeed bringing those ideas to other parts of the world was used as a justification for colonization - and vertically through different strata of society with the increase in literacy.  As our professor put it, ideas were packaged up for easy dissemination and thus became commoditized.

TED's dedication to Ideas Worth Spreading is highly evocative of these Enlightenment ideas.   Clearly, there's the dedication to ideas, from all spheres of human endeavour.  And there is a passion to spread those ideas to as many people as possible. enabled the spread of those ideas well beyond the confines of the fortunate few who attend TED.  TEDx conferences empowered people who love ideas to create local conferences, and add to the cauldron of ideas that is the TED community.

Bravo TED and Chris Anderson, whose passion is behind this incredible phenomenon known as TED.

*  Here's a link to a description of what Coursera's all about.  And you can look here, herehere and here for my feeble efforts to summarize lectures to help consolidate my own learning.  I'm way behind.

Thursday, November 8, 2012

Coastal Cities: Love 'em or Leave 'em

I just read Richard Florida's [1] fascinating and sobering article about the vulnerability of the planet's coastal cities.  Storms like Sandy generate a spike of interest in such topics.  Florida refers to an article in The Nation, which lays out three choices for our coastal cities:
  • Abandon our coastal cities and retreat inland
  • Stay put and try to adapt to the menacing new conditions 
  • Stop burning planet-warming fossil fuels as fast as possible 
Or in my paraphrase, love 'em (options 2 and 3) or leave 'em (option 1).

Why should we care about coastal cities?  Remember Willie Sutton's response to why he robbed banks?  "Because that's where the money is".  Well, we should care about coastal cities because that's where the people are, or an awful lot of them in any case.

The ability to trade was a major growth stimulant for early cities whentrade flowed primarily over the water.  This correlation between big cities and location on a coast, meaning that today we have coastal mega-cities, with many millions of population.

Now that we are observing rising sea levels of an average of 3 mm/year since 1993 (see IPCC 2007 Working Group report here) and tropical storms and hurricanes of longer duration and greater intensity (see IPCC 2007 Working Group report here), the risk to these cities is escalating.  If we hit a tipping point where the Greenland icepack melts, the seas would rise a whopping 7 meters.

Economics is what seems to get people's attention, and Florida includes an interesting table about the potential for financial losses in huge coastal cities.  There is huge vulnerability today and even more by 2070.

Options 2 and 3 above are not cheap.  Doing nothing may be more expensive.

This whole discussion brings into sharp focus a major frustration of mine.  There's a common slogan "Save the Planet".  I don't agree with that slogan.  The planet will do just fine no matter what we do about climate change, including nothing.  What we need to think about is "Save our Civilization".   That's 'all' that's at risk with climate change.

[1]  Richard Florida is an urban studies theorist at the Rotman School of Management at University of Toronto and head of the Martin Prosperity Institute

Tuesday, November 6, 2012

Lectures 5: History of the World Since 1300

The 15th and 16th Centuries saw a stampede of Europeans rushing to create colonies in Asia.  And they arrived as bullies.  With superior firepower to all the countries in Asia, including powerful China, they overcame wherever they went.  China was able to defend their territory and relegate the Europeans  to the margins in China.  This was fine because they were primarily after trading bases anyway.

Portugal went out to an early lead in Asia.  Vasco de Gama led the charge by sailing around the Cape of Good Hope to avoid the Muslim blockade.  And a rapacious, brutal explorer he was, bombarding ports and butchering sailors.   Pires followed, arriving in China with a similar absence of respect.  There was retribution by the Chinese, who executed Pires and resolved to keep Europeans at the periphery of their country.  Nevertheless, through European military technology, Portugal took Goa (1510), Melaka (1511), Hormuz (1515) and Macao (1535).  This was a totally different pattern from the style of conquest in Mexico. The Portuguese did not create an institutional system in their outposts, and their success was ephemeral.

Meanwhile, Spain took Manila in 1571 and transformed it into an important port for trans-shipment of silver from the Americas to China, displacing Japanese silver.  Manila Galleons carried 15 tons of silver a year along this 'China Road'.

The Dutch also acquired territories in Asia, taking Java in 1519 and establishing their permanent headquarters base for the Dutch East India Company.  But they went beyond just trading, and established plantations to grow nutmeg, mace, cinnamon and cloves.

After their initial success, Europeans faced some setbacks.  They had a growing need for profits to fund the religious wars in Europe.  Yet their fierce rivalry with each other was driving up the costs of maintaining and fortifying these Asian outposts.  Meanwhile, profits were dropping as the Arabs fought back by reopening the Red Sea Ports, and flooding the market with pepper and reducing its price.

Innovation and Getting Out of Recession

Clayton Christensen has revolutionized our understanding of innovation - and in fact business - by providing a theoretical framework around sustaining and disruptive innovation[1].

A couple of days Christensen published an article in the New York Times, showing how different types of innovation either created, destroyed or just maintained jobs in the overall economy.  And without new jobs, the US will not emerge from recession.

Empowering Innovation (what he has called new market disruptive innovation in the past) creates jobs, whereas efficiency innovation (what he has called low-cost disruptive innovation) destroys jobs.  Sustaining innovation doesn't create jobs, but does manage to preserve reduced job numbers in an industry that might otherwise fade away.  Very interesting analysis.  It takes his thinking about innovation at the level of an individual company to a thoughtful analysis of how innovation affects a whole nation.

He goes on to discuss the perniciousness of some of our financial metrics for measuring company success.  Let me take one he mentions, RONA, or return on net assets.  You can improve this ratio, like any other ratio, by increasing the numerator (return or profitability) or reducing the denominator (net assets).  Too many companies have focused on the denominator, clearing net assets off their balance sheets.  Outsourcing manufacturing activities to another party gets those big expensive factories (assets) off your balance sheet, improving RONA but outsourcing jobs and reducing your own control of your destiny in business.  And it certainly doesn't grow jobs in your own country.

I highly recommend reading this article.  It'll get you thinking.

[1] Disruptive innovation is a term of art coined by Christensen.  It's means something quite different from what you'd read in a dictionary by looking up disruption.  Read The Innovator's Dilemma to get the whole picture, or my post here to get a quick summary.

Monday, November 5, 2012

Jo Nesbo and Harry Hole

Jo Nesbo
Reading some books are like white water rafting (think Stieg Larsson and The Girl with the Dragon Tatoo).  Others are like drifting down a lazy river in a rubber tube (think Alexander McCall Smith's series about Precious Ramotswe and the The No. 1 Ladies' Detective Agency or Major Pettigrew's Last Stand, reviewed here).  Put Jo Nesbo's series featuring Norwegian detective Harry Hole in the white water rafting category - Class 5.

The Harry Hole series by Norwegian Jo Nesbo consists of nine books, eight of them translated into English.  That's already a step up on the Stieg Larsson, which left us gasping for more after just three.  I've written a couple of posts (here and here) about particular Harry Hole books, but I wanted to comment on the series as a whole, having now read everything that's available in English.

Detective series like this are an interesting genre.  The author can develop a character over several novels, and while each book stands alone, it's a particular pleasure to read the books in sequence.

Nesbo's Detective Harry Hole is tall, blond, with 'light blue alcohol washed irises' and a tenacious way of going after a criminal.  He's a lone wolf, and definitely not interested in playing office politics.  He's often a thorn in the side of police authority with his willingness to take on politically sensitive crimes, to follow up clues that could lead to embarrassment, not to mention appearing on TV for an interview visibly intoxicated.  Tormented by traumatic events of the past, he takes up extreme exercise to exorcise his demons, but still suffers from nightmares.

The thing I found most interesting about Hole is that he's a character who keeps an open mind, even after he believes he's found the culprit.  Behavioural psychologists have shown us how people will ignore new contradictory information that arrives after they've formed a conclusion, or distort it so that it actually supports their conclusion.  (Just look at reactions to the Presidential candidates to see how you can interpret 'facts' differently depending on whether you are Republican or Democrat).   However, when Hole receives new information that doesn't fit his theory, he sits back and re-evaluates.  It's an interesting character trait, and makes for particularly interesting reading because it leads to sharp turns in the plot.

Hole's, or Nesbo's, is a darker vision of Norway than we commonly see with a streak of bleak cynicism.  Take this quote about a time when Harry is chasing down someone with mental health issues.  "You mean the rat-catching game?  The innate ability to lock up people with mental illnesses, addiction problems, well under average intellect and well above average childhood deprivation?"

I found all the books difficult to put down once started and I observed my husband having the same reaction.  Although I didn't enjoy the increasingly deviant violence as the series progressed, I was able to ignore that to keep reading to discover the solution.

Reading these books makes one feel like a participant in a fad (see this article in the Economist about Scandinavian crime writers).  However, an avid reader will always be overjoyed to find books that can hold attention over the span of several books.

I highly recommend these books - I think you'll like them better than Stieg Larsson's.