Innovation Overreach - How Increasing Complexity calls for Greater Simplification

 

I lived in a villa in the Dubai Marina with an ICT system that was mind-boggling. Cameras, sensors and screens allowed control and monitoring via the internet. Yet none of it could be made to work. It was not even possible to adjust the temperature, which was stuck at 17°C. That is what you tend to get when you go for cutting-edge technology branded ‘smart’.

The term ‘innovation’ is used so much that it has practically become meaningless. At the same time, it is billed as the Holy Grail for overcoming every modern challenge. Whenever you hear innovation called for, it is worthwhile to question how, when and to whom it is beneficial.

Innovation is not just misrepresented in the consumer market. Consider the F-35 fighter jet, with an estimated lifetime cost of $1,5tr (!). After seven years of continuous delays, it is still not militarily operational. In short, the plane has simply been made too complicated to work as it should. For example, there are 24 million lines of computer code just to fly it. There are few systems in the world more complex than this.

Both public and private organisations can fall victim of engaging in initiatives and routines either unrelated to or that directly impede their supposed end goal and purpose. On all levels, employees are often compensated in a way to make them neither care or acknowledge this disconnect between their mission and their efforts towards achieving it.

Malcolm Gladwell argued in ‘The Tipping Point’ that, when any division grows beyond the approximate size of 30 people working together on a particular project, the links between them become too complex for the minds of individual members to process effectively, with efficiency suffering as a consequence.

In line with this logic, I believe that, when an organisation grows beyond a certain size, group belonging becomes too diffuse and diluted for members to relate to and value. When shared interests and a sense of joint responsibility disintegrate, we become willing to enrich ourselves at the expense of, and corresponding harm to, the collective. As such, I would argue that the end product of communism and capitalism is, ironically, similar in terms of the effect on organisational behaviour.

Why we fall down this slippery slope in the first place is, I believe, due to our relentless pursuit of economies of scale. Somehow, how large organisations adopt many disadvantages of scale is usually suppressed. For instance, how there can be a sharply diminishing rate of return for each additional employee once a certain threshold in size and scope is passed. Look at recent innovation at Microsoft, Sony or Nokia. Though many believe otherwise, it is not as simple as a case of not being hip enough to attract the best people. They have attracted too many!

Nonetheless, the determining success factor for increasing the wellbeing of both our lives and businesses will depend on innovation that can solve actual needs and increase efficiencies. This is different from innovation as a gimmick to fuel commerce and be able to charge a premium.

Innovation is about finding the inflection point of the greatest possible utility at the highest possible simplicity. It is here where you can see the relationship between seemingly disparate works of genius like Beethoven’s Ninth, the iPhone or the T-Ford.

From waste management and debilitating traffic and air pollution, all will no doubt require as much in terms of resolute determination as technological innovation in order to overcome.

In aiming for the goal of as simple as possible, but not simpler, it can be a challenge to resist the temptation of this wrong sort of innovation. That is, the type of innovation that allows the most resource-intense and technologically-sophisticated organizations to unlearn even the most basic abilities, such as how to make an airplane fly or how to control a thermostat. While today’s problems are ever more complex, their solutions will remain focused on simplification.

Matter of Fact - How morals distort our ability to reason logically

Meeting up with the speakers the night before our annual conference in Doha I enjoyed a candid discussion with men who together look after literally tens of billions of dollars in various projects that will decide how one of the fastest-growing cities in the world will ultimately take shape. Half way through the evening one of the guys quipped that he hoped that I was not recording our conversation. It struck me that this was one of these moments where we could look back years from now and without a sound recording, no one would be able to recall and much less admit even to ourselves, if any of our predictions about the future would prove to be flawed.

It is fascinating that our minds are almost incapable of allowing us to remember any instances when we were wrong. At best, we may be able to admit to having been misinformed and been led astray in our thinking. It’s a self-defence mechanism that even has us making up completely false memories to reframe our mistakes so that they make sense and serve a purpose.

No one, not even the best and brightest, are immune from false memories. Hillary Clinton claimed on numerous occasions with apparent sincerity that she remembered landing in Bosnia under sniper fire and running with heads down to the car for cover. When footage was found that could jog her memory of her very relaxed and peaceful arrival that day, she claimed to have misspoken.

Even worse than altering memories from our past, we suffer from similar handicaps in our failure to correctly interpret our present reality. Every day we are often unable to see plain facts, causal links or lack thereof, to anything that runs counter to our beliefs.

The TV where I sit in our open landscape office is constantly turned to CNN where for months now I have been force-fed Piers Morgan speaking on the US gun problem. For perspective: there are an estimated 300 million guns in America that won’t just disappear. Statistically, if all guns are considered equally likely to cause deaths, to reduce just one fatality you would have to retrieve 10,000 guns. Secondly, more than half of all non self-inflicted gun fatalities are constrained to ethnic minorities in circumstances involving illegal drugs, i.e., a minuscule proportion of the US population.

Yet, these uncomfortable observations, along with the groups that are suffering the most, are simply ignored and excluded from the discussion altogether! Instead, the problem is presented as impacting everyone equally. Consider that swimming pools in back yards kill more children than guns do. There you have a direct problem with an obvious solution that would see immediate and clearly measurable results. Yet, I’ve never seen a campaign against private swimming pools.

I am not using this sensitive and controversial topic to make a statement on either guns or swimming pools but to demonstrate how what we deem as morally right is often inextricable from what we perceive as being factually correct. By the same token, our concept of ‘wrong’ can distort our thinking, as our minds often fail to distinguish between being factually and logically incorrect with something that is morally wrong or unjust.

Despite living in an information age where the average person has attended college and consumes hours of news each day, we are more incapable than ever to apply rational and critical analysis. Therefore, an idea that is presented as morally normative in the eyes of the public can be sold off on that basis alone as scientific truth. 

The scariest part is that studying how blind spots function doesn’t help a person that much in trying to avoid them in his or her own thinking. My guess, and safest bet, is that if you instinctively feel that something is right and the people around you generally share in this feeling with you, assume that you are suffering from some form of delusion or another! Clearly, Oscar Wilde was onto something when he said: ‘Whenever people agree with me I always feel I must be wrong’.

Sustainability satisfied

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Sustainability satisfied

There’s a choice between quality of life and environmental degradation

 

As the World future Energy Summit came to a close last week I was again reminded about the sustainability debate. This past year, more attention has been paid to China’s increasingly important position in the world economy. It was also noted that our planet’s population surpassed the seven billion mark. A good guess is that this person was from China or India and among the great many that will be entering its exponentially growing middle class, a euphemism for getting a car and starting to eat significantly more meat and fried foods.

It is a contradiction that the most significant lifestyle changes resulting from higher income and living standards are the same that cause the greatest damage to perceived quality of life: time spent in traffic, environmental pollution and obesity-related illnesses. Combustible engines and farming of livestock are the most environmentally-destructive practices our species engages in.

The issues of farming and increased motor traffic in developing nations have significantly greater impact on global sustainability than all the world’s combined feel-good campaigns for making token gestures such as switching off our lights.

Put simply, sustainability is a sheer matter of dividing resources between people and nations. It is dictated by demographics. The size of a nation’s population and its GDP growth determines the increase in its energy consumption.

It is politically insensitive to suggest that billions of people in developing nations should be denied ‘development’ for the sake of our planet’s greater good. Yet, looking favourably on a growing middle class in developing nations is nonetheless starkly incongruent with being against environmental catastrophe.

Irrespective of our lofty morals, it is clear that our objections to benefit our own welfare at the expense of other people rarely go much beyond our urge for the new iPhone. As long as the factories are not in our own countries or with workers that look too similar to ourselves we will not give it much thought.

Pretending or believing that we have solidarity with all people equally is dangerous if not outright counterproductive. It obstructs us from seeing, and much less dealing with, the bigger problem at hand.

Leaps in technological innovation for more efficient use and generation of energy will not solve our energy problems. Coal makes up 70% of China’s power generation and is its fastest-growing source for energy in real terms. Comparatively, increasing the efficiency of these coal plants is more critical than all PV panels in the world. Yet, to make a coal plant even slightly more efficient in the next decades would be a major improvement.

Ultimately, we need to find a way for the absolute majority of the world’s population to settle with the little they have and not expect more. Inequality is nothing new, and mankind was not designed for voluntary self-sacrifice. Though we shun from admitting the reality of these intrinsic qualities in ourselves, dealing with them is the key for our long-term survival. This needs to include a degree of inequality between nations and people. Negotiating this order and dividing resources, peacefully or otherwise, is what civilisation has always been about.

The correlation between global trade and increased industrialism cannot be argued against. It is also obvious how reversing and oppressing the trend of economic expansion would be the most effective environmental initiative. Imagine a counter-industrial revolution where the pursuit of consumption is not the main measure of success. Can we radically redefine our universal model for social and economic success to slow down industrial activity and economic expansion? It is possible that this is inevitable and will occur regardless of any conscious actions we take for or against it. My guess is that this will not be voluntary or in our lifetimes. People only tend to change when left with no other option. Then we adapt.

Lasting Power - It is time to reflect on what makes a truly powerful and influential Leader (July 1)

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With the release of our Power 100 list coinciding with the finals of the 2012 European Football tournament, much time has been spent this week reflecting on what it is to have power and influence and what makes a good leader.

Lyndon B. Johnson once commented succinctly that “the only real power available to a leader is the power of persuasion.

In this region, where we are acting in a multi-cultural environment, persuasion is particularly complicated; understanding power structures, whose interests to appeal to, even what these interests are exactly.

On top of that, language barriers can exacerbate the breakdown in communication, particularly if you are unable to access the right audience and communicate clearly.

Many of the most influential in the Middle East, though never mentioned on any power lists, wield considerable power in terms of the ability to indirectly determine courses of action by having the ears and trust of decision makers.

When it comes to having the power to get your will through, there is much to be said about empathy, understanding and humility.

We talk a lot about learning from our mistakes even though we repeat them over and over again.

Not because we do not know any better, but because many do not want to lose face by admitting a mistake the first time around. Pride can get the best of us, and can break down relationships for no good reason; whether between nations, business partners or co-workers.

Interviewed in 2004, the secretary of defense under JFK, Robert McNamara said: “In the case of Vietnam, we did not know them well enough to empathise.

They believed that we had simply replaced the French as a colonial power, and we were seeking to subject South and North Vietnam to our colonial interests, which was absolutely absurd.

And we, we saw Vietnam as an element of the Cold War. Not what they saw it as: a civil war.”

It is harrowing to hear this man, responsible for the war at the height of its intensity, now admitting, or seemingly coming to the ultimate realisation that it was fundamentally a matter of a simple misunderstanding.

When misconceptions from history’s greatest leaders can lead to devastation on this scale, it is somehow a consolation when hearing about joint ventures faltering due to incorrect assumptions about the incentives and motives of people and organisations.

A key component of business is the ability to align interests and maintain stable relations between partners and not let pride become a factor. There is an irony in how success, especially if it comes quickly and unexpectedly, can be the cause of downfall.

When profits and organisations grow, egos tend to follow along the same kind of path, with interests on status and recognition becoming narrower. I think we have all seen organisations becoming handicapped by a culture of self-promotion due to taking undue credit, shifting blame or finding scapegoats. It is easy to give in to the temptation of attributing too much of a company’s success to one’s own input and start feeling entitled to an unreasonable amount of credit.

Many philosophies of management, like Taylorism, even seem to encourage a paternalistic approach that overestimates the ability to command and control outcomes. Being able to maintain a work atmosphere where he or she who takes credit is perceived as secondary to the task at hand.

Making team members feel that their mutual interests are aligned, and also that they are part of a greater cause and purpose, is far larger than mere self-interest.

Being able to achieve that balance is the real mettle of leadership and lasting power. It is with these thoughts in mind that we hope you enjoy this year’s Power 100 list, which we are sure will generate much debate as to the true qualities of leadership, and the values attached to these.

Communication and Management: Knowing where to set the balance between good cop, bad cop is a difficult balance for a manager to get right

 

Knowing where to set the balance between good cop, bad cop is a difficult balance for a manager to get right

 Defining an outline of standards of which the organisation’s members are to live up to is what the art of management is often understood to consist of. That, and using the right balance of carrot and stick to get the desired results from employees. In practice, however the ambition level that you define for others to live up will tend to have a limited impact on their actual performance. Particularly in multicultural work environments, it often risks belittling people if they are held out to feel insufficient in the light of targets they can’t achieve. This is even in cases where they have actually performed at the very top of their potential. The consequence is that instead of maximising potential it stunts and demoralises team members. 

Unquestionably, pushing the limits by setting high expectations is a must. Knowing how to be inspirational and optimistic is pitted against the need for being critical and realistic to an organisation’s weaknesses. To be effective as a leader, it is imperative to have a very accurate estimation of what the actual potential really is. That can be very tricky. Having enough empathy to inspire the confidence that allows the lines of communication throughout a company to offer an undistorted reflection of what the key factors and issues are that determine performance. This skill is not so much about being the most intelligent with superior analytical abilities. It is more valuable to be in touch with and have the trust of the organisation to get the relevant information to analyse. 

On the one hand I see the diagnosis of this problem being a matter of interpersonal skills. One needs understanding and empathy to both see and be told of the real situation being faced by those on the frontlines. While it is very easy for anyone to relate to the concept of a person born with exceptional talent and motivation, we are very reluctant to see any person as having inherent constraints to his abilities. We rather excuse any/every shortcoming with a blanket explanation of being a matter of education. While many like to see this is an expression of tolerance, it is rather the reason for miscommunication and severe miscalculations of expected outcomes from mismatching the required competencies with the task at hand.

 On the other hand, I see these types of disconnects in organisations as the consequence of an ingrained legacy from colonial times. The common idea is that any manager needs to uphold an image of superior knowledge compared to the others in his team. This quickly becomes a handicap in that communication is stilted in fear of revealing uncertainty and doubt. I see this mindset as probably stemming from the entrenched ways of how colonies were managed. Organisational structures were impeccably designed to monitor and micro-manage labour that carried out minutely standardised tasks. A consequence and requisite for these multilayered hierarchies was distancing between those in power from those carrying out the work. 

Today, this kind of approach is rarely beneficial to any activity besides the possible exception of assembly lines. Yet, the same thinking is seen all over the world. Standards are still being mistaken for standardisation.

 The reality of the marketplace today is that companies are more dependent than ever on a diversity of talents if they are to compete. And for talents to flourish, a degree of trust is required to shift from an environment shackled in conformity to one of freedom that makes creativity possible. Power, as with mastery of any art, is revealed in the control one has without having to resort to frameworks and monitoring. 

A good sign of organisational health is where being fault and blame-free is deemed as lacking initiative and not as a virtue. 

Oscar Wendel is the conference manager of Construction Week.

The Spectre of Corruption - From top to bottom, from the West to the East

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The Spectre of Corruption - From top to bottom, from the West to the East

The globalised economy has done wonders in decreasing market distortions that obstruct the laws of free enterprise. Trade barriers and State-run monopolies are easy to spot, and therefore easy to adapt to. Rarely are they the reason for a company deciding against doing business with, or setting up operations in, a country.

The major market distortion today is due to corruption, an issue that seems to be increasingly complicated, causing greater unpredictability in markets. For India and China, possibly the most recurring and important question is how corruption may hold them back from reaching their potential, and how it can be alleviated.

Corruption is, by its nature, a sensitive subject, and difficult to measure, as few are honest about participating in it.  Even the definition of corruption is dependent on cultural perspectives. In some instances, particularly in developing nations, the practice of incentivising those in a position to expedite requests can possibly have the effect of increasing efficiency and seen to be a form of tipping.  

While the West prides itself on appearing to have eliminated corrupt practices, I see the continuing slide in their competitiveness as simply being another form of corruption.

I was following the news of the new leadership in China being installed, interspersed with reports of the CIA director David Petraeus stepping down. An intricate marital affair had been uncovered. The story also included the top commander for Afghanistan, John Allen. With the expansive email correspondence that the FBI found, it left me with the impression that these leaders must be incredible at multi-tasking, or they really literally have no time or focus for getting any work done at all. Which, granted, explains a lot.

The problem is not that the men in leadership positions are repeatedly abusing the trust and power placed in them. Rather, we have been made to accept these behaviours, and that there are different sets of moral codes that apply. Or, rather, that do not apply to those in positions of power.

The escalation of what I am describing has been extreme in the last five years alone. The banks and rating agencies that conspired and profited from junk debt being given Triple-A ratings and sold to gullible investors is not too different from the former IMF chairman taking too many liberties with a New York chamber maid.

One would almost think that egregious displays of recklessness and hedonism are the traits of any male leader, whether it is in politics, business, military, the Catholic Church or in entertainment. They are becoming ever more difficult to tell apart! The acts of transgressions themselves are not so frowned upon anymore. It is when our leaders lack the skill to avoid getting exposed that we feel let down.

The failure to live up to a certain moral standard is not the problem in itself for the economies in the West. It is the corruption it breeds in how the most crucial individuals whom we count on to give direction are left unchecked for having even basic competencies, judgment or even accountability as opposed to the expectations that we have from every functioning member in society.

We have got it the wrong way around when prosecuting even minor infractions of a minimum wage labourer becomes a bigger priority than monitoring those in positions of power to see that they even do any work at all.

Whether an emerging economy or a member of the G8, how corruption is dealt with will unquestionably influences the ability to inspire confidence and attract investment.

As a yard stick, it is wise to apply the same scrutiny to oneself before laying claim to any moral superiority over anyone else. To recall the famous quote by Pogo: “We have met the enemy, and he is us”.

Oscar Wendel is the conference manager of Construction Week.