For Christmas, I received a Kindle Fire, a grown up e-reader with many of the features of an iPad. This was not on my list, though I have been following the technology for e-books since the early work with smart paper almost two decades ago.

I have resisted the personal use of this technology for a number of reasons, some perhaps valid and some based on the known learning curve of adapting my way of working to use a new technology. Over the next six months, I will join the journey of so many others to search for the value sweet spot.

The first experience was a pleasant surprise. Like my iPhone, I have found the Kindle easy to use from the start. I took it out of the box the day before I left for Boston. I needed the latest edition of a book that I was using for a class I was teaching, and I had downloaded the book from Amazon and begun browsing it in about 10 minutes. No manual to read, all very intuitive. That’s the easy part.

Now I face two challenges with my Kindle. First, can I adapt my reading habits to allow me to migrate from hardback books to e-books? Second, can I integrate this into my work patterns to find the way the Kindle fits with my iPhone, laptop, desktop, and my various storage devices (memory sticks, CDs, etc.)? At the start of this journey, I want to record my hopes and concerns. Over the next six months, my goal is to see if I can fulfill the hopes and either find ways around the biases and downsides, or determine that they are not as important as I now think they are.

Here is the way I am thinking about e-books: There are some obvious plusses. My arms will appreciate the fact that the 14.6 ounce Kindle Fire can greatly lighten the load of a briefcase that usually contains five or six hardback books plus a laptop. I am going through physical therapy now for the strained tendons in my elbow from business travel last summer, and perhaps I can bypass that painful process going forward.

Another obvious plus is the time to get a new book. A single click replaces driving to the local bookstore or ordering a book online and waiting several days for the book to arrive. It is also slightly less expensive, though not as much as you might expect. Selection is clearly a plus, since a virtual shelf of e-books will offer vastly more selection than even the largest bookstore.

There are other potential plusses for the e-reader, though I am still exploring the reality of these. Often after reading a book, I will want to use a quote from it. I am hoping that two features of e-books will provide improvement: a system of highlighting and notes will be easily integrated with the book, and a search capability will allow me to find the particular statement I want to retrieve. Having a digital form of the book certainly could allow for the search capability, but how well this works remains for me to explore.

Today, I perceive some minuses to e-readers as well. My exploration will include checking out the reality of these supposed limitations, followed by an overall assessment of the plusses and minuses.

I am slightly concerned about spending long hours reading an electronic book, and whether this will offer the same great experience as a paper book. Of greater concern is getting stuck without a charger, realizing I cannot access the book — not an issue with a paper book. My experience of reading the first book gave me a feeling of passing through a large scroll. Often I can remember an idea in a book as being “near the top of a right-hand page, about p. 100.” Without page numbers, and sides of the page, I find the question of location somewhat disorienting.

An even bigger concern is the lifespan of the book. I have some books in my collection that are more than 100 years old, and they will still be accessible indefinitely into the future. The Dead Sea Scrolls illustrate a very long life for paper books. With e-readers and format standards in flux, will I still be able to read the e-book I buy this week in 20 years? I know I have some older software on floppy disks, and even punch cards, that are no longer useful. With the expected technology change, what life span can I expect? Also, in spite of the potentially infinite virtual shelf of books, there are many books not yet available in electronic form. I needed a copy of Money and Power by Jaque Ellul for the trip to Boston, for example, and there is no electronic copy (yet).

Then there are some more personal concerns. I tend to do a lot of reading on airplanes and while walking on a treadmill. The former doesn’t concern me so much, except for the irritation of shutting off the book during takeoff and landing. But I don’t yet know how the form factor of the e-book will adapt to the treadmill, a convenient place to combine reading and exercise. I do know it is not as rugged as the paper book when it slips and goes flying off the back of the treadmill. And while my underlining and note taking in a paper book is a bit awkward on the treadmill, I will have to see if I can perform the more exacting highlighting and note taking on the Kindle while walking at 4 mph up an incline. Another personal concern is the limitation on sharing books, something I often do with the paper books I buy. Trading and lending are more tightly controlled. Finally, I have a significant number of my books that are autographed by the authors. I can’t think of how to personalize this experience on e-books.

Some of these issues may simply be my own resistance to change, some may be solvable, and some may be things I will be willing to give up because of the other advantages of e-books. I will be tracking these things as I put my Kindle Fire to use.

A second set of issues I am sorting is how the Kindle will fit into my suite of work tools with the other electronic devices. Several people have told me, for example, that I won’t need to upgrade the old laptop I am still dragging with me when I travel. I am not convinced — yet. A primary use of my laptop is for writing while I travel. Having a real keyboard, access to Word, and being able to access documents from a memory stick are all a part of writing that don’t seem obvious from the Kindle. I am open to being wrong here, and will investigate this area, too.

The iPhone, Kindle, and laptop are all tools for accessing the web. The latter two require Wi-Fi availability, where as the iPhone does not. But the iPhone is not conducive to downloading and editing large documents. How much of such tasks can migrate to the Kindle, and which should remain on the laptop? Do I really still need a laptop, or am I holding on to an old paradigm?

I know I am late taking this plunge, compared with my more “gadget” oriented technology colleagues. Advice, experiences, and other suggestions are welcome, and I will plan an update toward the end of the year.

Al Erisman is executive editor of Ethix, which he co-founded in 1998. He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990, and received his Ph.D. in applied mathematics from Iowa State University.

Most likely he would start with disbelief, and then move to denial (it must not have been her turning south out of the neighborhood that morning). But eventually he might have a conversation and discover that she had found a route to work that he had never considered. A new freeway had opened in the past several years, but he had never tried it. The new route cut the commute time to 15 minutes.

This little scenario sounds preposterous. Could anyone be as unaware as John?

In fact, variations of this little scenario play out every day, in a large part because of the way technology and our brains intersect.

Technology and the Brain

What we learn from brain science (e.g., in Brain Rules) and psychology (e.g., in Thinking Fast and Slow) is that our brains are excellent at pattern matching. (Both fields deal with the study of the brain, but brain science looks inside the brain at the physiology of its behavior, while psychology looks at the brain from the outside, treating it as a “black box.”) When we encounter a new situation, we immediately try to match that situation with something we have seen before. Once we recognize it, we don’t have to think deeply about it at all. We can simply react. John had developed a pattern for how he went to work, and didn’t need to think about it again.

Where technology enters the picture is that it changes things, often dramatically. Of course it is not the only change agent, but its impact on modern business and life is profound, and many introductions of technology rattle the patterns in our brains. It is like new freeways being built on a regular basis in many processes in our lives. Our brain encourages us to either perpetuate old patterns or resist new ones because they don’t align. It keeps us from looking for alternatives to our preconceived notions, because we already know the pattern for many particular situations.

“Many introductions of technology rattle the patterns in our brains.”

Illustrations

Let me offer some illustrations.

A web page. In the mid-1990s, a colleague at Boeing left the company to start his own business. The first thing he needed to do was create a web page, because his new business was going to be one of the emerging dot-coms. Three months later, after finally completing his new web page, he discovered some software tools that had recently been developed. Using these tools, he found that he could have created his web page, not in three months but in half a day.

Taxes and jobs. In a recent column, I wrote about the role of technology in a jobless recovery. A “catch phrase” used by many politicians is that raising taxes on the rich destroys jobs while lowering taxes creates jobs. That may have been close to true at one time, but in an era of globalization, technology, and consumption, there is a significant reason to doubt the veracity of this statement.

Enterprise systems. Standard processes in a business enable the business to produce things (a manufactured product, a bill of material, a customer order) much faster, with lower cost, and higher quality. This is the reason many companies have gone through the pain and cost of putting in an enterprise system. But the history of implementing such systems has been filled with cost overruns and outright failures, in a large part because of resistance to change. The new way of doing things does not fit the old patterns or models in the heads of people who need to learn a new way of doing their job.

Mathematical software. In the 1960s, the technical field of mathematical software began, and today it is an active area of research with journals, conferences, and commercial products. Basically it is the construction of high quality mathematical algorithms that solve classes of mathematical problems efficiently, reliably, and accurately. These modules could be used by anyone constructing a mathematical model — from a quantum-physics simulation to a complex circuit design to the earthquake-proof design of a new building.

The motivation for this field of mathematical software was that the reuse of these mathematical software modules would allow anyone building a mathematical model to use these modules, thus making their model much more efficient and reliable. A further benefit was the time savings in building the model because the very complex task of building the module goes away, being done once by an expert and subsequently reused by many. These were available for free.

Over the years, however, all of the assumptions that went into the founding of this field have changed. For example, most people doing modeling today use a packaged modeling product that they buy, rather than software they build themselves. Most mathematical software collections are now sold with intellectual property protection inhibiting reuse, undermining the very purpose that motivated them in the first place. The assumptions that were established long ago, many of them no longer valid, have not been revisited.

It would not be difficult to fill pages with diverse examples from business and society, illustrating the way our standard assumptions, and our understanding of how things work, are no longer valid. But we work from them anyway. Why is this?

Why We Do This

Going back to brain science, we learn that our brains function the way they do for a very good reason. We are bombarded by far too much information to pay equal attention to all of it. So for millions of years our brains have developed to allow us to filter out much of the information that doesn’t really matter, and focus on those things that do. This filtering takes place through the patterns or models in our brains. They respond to the question, “Have I seen it before?” and if so, we don’t have to expend much brain energy to know what to do about the situation.

Origin of patterns. Where do these models or patterns come from? Some are developed through very careful thought. We have analyzed a collection of data and come to a rational conclusion, and our brain is prepared when we encounter the situation again. But brain scientists and psychologists tell us that many of the models in our brains have been developed much more implicitly. They are based on “tacit assumptions,” an understanding about the world that we have not formally identified, but that may be simply a part of the lore of our family, our culture, or the environment at a particular time. Prejudices come from such patterns in our brains.

An old illustration of a tacit assumption is helpful here. A woman is preparing to fix a beef roast, and before putting it in the pot, she cuts off the end. Her son asks her why she did that and she says, “That’s the way to prepare a roast (a tacit assumption). I learned this from my mother.” And like a good son, developing the patterns in his own brain, he said, “But why?” So the mother agreed to ask her mother, and they learned that she cut off the tip of the roast because she never had a pan big enough to hold the whole thing!

There is another side to this story. Just because we have always done something a certain way, doesn’t mean this is a good reason for not doing it that way. Thus we must be careful when we rethink how to do something. Other tacit assumptions may not be written down, indeed it would be impossible to write down all such assumptions, but they may still be important.

In looking at how to create a lower-cost airplane, a constant pressure from the airlines, a young Boeing engineer found that he could create a design using aluminum alloy parts in place of titanium parts, lowering both the cost and the weight of the airplane. Nowhere had it been written down that the parts needed to be titanium because of corrosion and safety issues. Fortunately the good safety-related reviews at the company discovered this before it left the design stage.

Dealing with change. The intersection between technology and the brain is a complicated one. Those models in our heads are there for a very good reason. Some of them, because of changes often driven by technology change, need to be rethought. Some of them could be rethought but should not. How do we know the difference?

Conclusions

If I could answer that question, I would be a very wealthy person. But there are a few clues. Just because we can rethink the assumptions and the way we do things doesn’t mean we must. We are all juggling far too many issues to rethink them all. And, as indicated, this is a challenging and difficult process involving making explicit the assumptions that went into a decision and working against what our brains want to do in taking the simpler path.

Going back to the opening scenario, the fact that John could have saved 10 minutes on his commute may not be all that important. A relaxing drive in the countryside may be better than a faster drive on a freeway. All things are not measured by efficiency.

That said, there are many areas where it really does matter to do things in a new way. In those cases, we must know that we have a difficult process ahead of us. We need to understand the tacit assumptions that went into the old way, often assumptions that were never explicitly identified or written down. Those who lead such change in an organization must understand that this process must go on for each person involved. It is never easy, but it is sometimes important. We should seek to do this in important areas, not in every area.

References:

Brain Rules: 12 Principles for Surviving at Work, Home, and School by John Medina. Seattle: Pear Press, 2008.

Thinking Fast and Slow by Daniel Kahneman. New York: Farrar, Straus, and Giroux, 2011.

Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

The Role of Capitalism

In the “good old days,” say 30 years ago, the system of capitalism seemed to work effectively to bring back jobs. The argument goes this way: Those who lead businesses are motivated to make even more money, so in an improved economy they will invest and grow their business. This means more jobs from that business and more money for the investors. Enlightened self interest at work.

This logic made sense for many years. But does it still hold?

The beauty of capitalism is the way it efficiently and effectively allocates resources. The business leader does not depend on a central planner, or any external master plan. By simply allocating resources efficiently in his or her own business, this will be good for that business and broadly good for the economy.

What Has Changed?

Two things have changed dramatically in the past 30 years: globalization and technology. Some would argue that these factors are not independent — the 21st century form of globalization is fundamentally rooted in technology. Technology enables the efficient coordination and movement of ideas and goods almost anywhere in the world.

In this environment, consider what might happen as the economy improves. The motivation to grow the business has not changed. But how to do that has changed. No longer is it simply a matter of adding more jobs to produce more goods and services thus increasing the size of the bottom line. Other potentially more attractive options are open to the business leader to grow the business. One would be to invest in an overseas plant, creating jobs in another part of the world while reducing jobs at home. A second would be to invest in technology enabling the more efficient production of goods and services also leading to a reduction of jobs at home. A third would be to buy a competitor, streamline the operations, and reduce a significant number of jobs.

There is nothing wrong with these investments — they make great sense according to the principles of capitalism. Further, most consumers, voting with their pocketbooks, endorse these ideas. When confronted with a purchase of two equally attractive shirts of similar quality, for example, most choose the one with the lower price. That is a vote for the business that introduces more efficient solutions leading to lower priced products. This is not big, bad business eliminating jobs, this is business responding to the demands of the market. And it is not a knock on capitalism — it represents capitalism doing what it does best.

Job growth was never what capitalism was about — it was a byproduct of the efficient allocation of resources and the self interest of growing the business. But perhaps the tight correlation between economic improvement and job creation is less than it used to be under capitalism in this technological era of globalization.

Other Voices

This thinking is reflected in two of the past Conversations in Ethix. Prabhu Guptara, then an executive with UBS in Switzerland, raised the issue this way in our 2004 Conversation:

“Another challenge comes from technology itself. There will likely be more and more skilled joblessness as technology provides efficiencies in work. Some jobs are capable of being expanded, involving services and new ideas. But even as these grow, technology eats up a middle range of jobs that require a modicum of intelligence and a certain amount of training. So today, you have to be faster and more intelligent than a computer, or intelligent in different ways than a computer, in order to retain your job. Fewer jobs will be needed because more jobs will get automated away.

“As we move into a globalized world, it is theoretically possible to have a single factory located in Brazil or China or Africa or wherever producing, for example, all the razor blades we need in the world. And completely automated! Needing not a single human being in the factory! Now you can apply this to the whole range of products … and if we can produce all the products we need in a single, robotized-factory basis (this is pushing the argument quite far, I know), then all that we need are: logistics, creativity to be able to come up with new products, and people who’ll devise computer-based methods of selling these products to everybody who can buy. But of course the problem is, if we don’t need to employ people, where do potential customers get their income?”

Guy Kawasaki, acclaimed entrepreneur, said in our Conversation in 2010,

“The purpose of a company is not to create jobs ….

“A politician may say we need to create more jobs, but not an entrepreneur. Ideally, an entrepreneur would have as few people as possible, making as much money as possible with as much greatness as possible.”

OECD Perspective

The Organization for Economic Cooperation and Development (OECD) has produced a report from its Directorate for Science, Technology, and Industry that identifies some similar themes. Here is a short quote from the abstract of this report:

“OECD economies are simultaneously experiencing a wave of technological change, intensified international interdependence, and social cohesion problems caused by prolonged unemployment or stagnant wages and incomes in parts of the population. Technology is increasingly seen as the main source of long-term growth. It is a major force for the transformation of economies, for growth in productivity, as well as for the creation of jobs and an enhanced quality of life. It is also the fundamental driving force behind globalization, which represents a huge potential for gains from intensified exchange, specialization and learning across countries. At the same time, technology is widely blamed for the destruction of jobs ….

“The perception of what governments can and should do in respect to technology is changing, however. This is a consequence of a better understanding of innovation processes and the increasing importance of technology diffusion, as well as of the new economic conditions resulting from globalization, regulatory reform and budgetary constraints. So far, reforms of existing policies in the technology field have been limited, however.”

Economic Data

Finally, we look at some data to support further inquiry along these lines. Starting before the economic crisis, in January 2007, I have plotted three distinct sets of data on a common chart for comparison purposes. One is the U.S. unemployment rate monthly normalized to its low point of 3.7 percent on July 2007 (the blue line). The second is the Dow Jones Averages monthly over the same period as a representative of the overall large business climate and value, normalized to its low point of 6627 in March 2009. The third is the quarterly data on U.S. gross domestic product (GDP) representing an overall value of the economy, normalized to its low point in the first quarter of 2007.¹

What we see in the chart is unemployment beginning to rise in late 2007, reaching a peak two-and-a-half years later and dropping only minimally. Meanwhile the Dow dropped precipitously from its October 2007 peak to its low in March 2009 but has regained most of its losses by the current time. The GDP slowed its growth and actually dropped in 2008 before returning to modest growth.

What Does This Mean?

It is true that there are often lags in hiring after economic downturns. But it is clear that companies of the DOW, at least, recovered economically without strong hiring. If it is indeed the case that job growth does not follow from economic growth and investment, at least as much as it used to, it should cause us to reconsider several planning assumptions that underlie policy. To increase job availability, more attention needs to be paid to nurturing the development of small businesses, since large business investment may or may not develop jobs. Those who advocate not raising taxes for big business and high net-worth individuals because it would stifle job creation may need to find another rationale.

Some would address the issue of job growth by seeking to limit globalization or efficiencies from technology. This, too, would be a mistake. The impact of such actions on competitiveness in an increasingly integrated world would be worse than the lack of local job creation.

Job growth is important for a flourishing society, and it will take some new, creative approaches to make this happen in the face of global, technologically based capitalism.

Al Erisman is executive editor of Ethix, which he co-founded in 1998. He spent 32 years at The Boeing Company, the last 11 as director of technology. He was selected as a senior technical fellow of The Boeing Company in 1990, and received his Ph.D. in applied mathematics from Iowa State University.

¹ The data for this graph was derived from data provided by the Bureau of Labor Statistics (unemployment data), the Bureau of Economic Analysis (quarterly GDP data), and the Dow Jones Averages using data from the first week of each month. The vertical axis for the graph represents the percent of increase from the low point during the period. The high point for the Dow was slightly more than a 100 percent increase compared with the low, while the high point for unemployment was about 180 percent above the low.

Another impact of technology on an organization is the way it affects people.

The Problems With Technology

In March, I attended a conference in Texas where philosophers, sociologists, and theologians looked at the impact of technology on individuals and societies. The tone of the conference was decidedly negative. The model response seemed to be some form of retreat from technology. One speaker, Arthur Boers, focused his remarks on a series of questions:

• Attention: Does technology affect capacity to pay attention? Does the quantity of data affect our ability to respond?
• Limits: Does reliance on technology affect community standards, morés, taboos? Is it addictive or does it affect other addictive behavior?
• Engagement: Does technology use raise expectations of self and others about how much we can accomplish and how quickly? Do speedy encounters make conflicts and misunderstandings more likely?
• Relationships: What is the impact of increasing dependence on mediated communications on relationships and communities? Are people more isolated, disconnected, lonely?
• Time: How much time does technology consume – to use, to fix, to maintain? What does such time displace? Does technology change our perception of time?
• Space: What are the implications of disconnecting “meaningful presence” from the location of our bodies? Does technology emphasize the distant instead of the close by?

These are important questions, but even good answers would offer limited help to a present-day business person. The questions don’t acknowledge the value that also comes from technology. And many answers lead us toward a retreat from technology — not an option for most in business — rather than finding a way to embrace technology without having it consume us.

There were very few at this meeting who were excited about the opportunities technology can offer, so these questions fit the tone of the meeting. The two primary speakers at the meeting had retreated to the mountain areas of Montana, finding a slower, more disconnected pace. One of the speakers was a graduate of Harvard who had taken a job in manual labor enabling him to retreat in daily life from connection with technology. The net of the conference was good and thoughtful dialogue, but while the solutions might be great for some people, they don’t have much to say to the majority of 21st century business people.

Another Perspective?

The next week I attended a major technology conference in the Seattle area on the Microsoft campus. I expected this conference to offer a stark contrast to the one in Texas, extolling the virtues and power of technology without much reference to its downsides. In an afternoon presentation, futurist Geoffrey Moore laid out a rosy, exciting, connected future of new opportunities from technology. Respondents were from high-tech companies, and my expectation was that the panel would complete the picture, offering an overly optimistic and upbeat view of technology.

To my surprise, the tone quickly turned to the mixed blessings from technology. A Google executive responded to the futurist first. He said,

“You have described my world. Last week I was in a meeting with my iPad open to a window in China and a window in Europe. All of my staff was sitting there with their mobile devices open, some were instant messaging with those in other parts of the world. Our pace was frantic and difficult. We get a lot done, but when I get home, I can’t even talk with my wife or watch television. I am constantly wired.”

Other panelists, all high tech people, joined in and here is a sampling of comments from them:

“Make your money, lose your soul.”

“Anxiety over cultural ADD (attention deficit disorder).”

“Are we heading for collective intelligence or collective neurosis?”

“We must understand the importance of the narrative we are shaping together.”

“We need to find a new story to tell and a means to tell it.”

“If you lose the thread of the narrative, you have lost your soul.”

Apparently the concerns over technology are common, whether you can retreat from it in the mountains of Montana, or you need to live with it in Silicon Valley. There was a significant difference in the questions raised in the second conference. No one was looking for a retreat from technology, but a solution that still embraced the strengths of the technology. But no one offered solutions to dealing with the challenges from technology within a wired business world.

Is it possible to have a life that interacts with people while still working within a business that embraces technology? Can a business that embraces technology still value its people (employees, customers, suppliers)? Can the technology support our lives rather than make them more difficult?

A New Set of Questions

I went back to the spirit of the questions suggested by Arthur Boers, but rewrote them in search of questions for those whose lives are within a 21st century, technology-based business.

• Attention: Technology places information from many sources at our fingertips, enabling access to ideas from all over the world. How can I embrace what that technology can bring while reserving time for thought, focus, and reflection?
• Limits: Technology makes information and connections available at any time and any place. Can I gain the benefits of this for myself and my business without having to be “on” 24/7? How do I separate needed access to information from addictive behavior?
• Speed: Technology enables the rapid communication and access of information, measured in seconds rather than hours or days. How do I manage appropriate responses allowing time for understanding, insight, and thoughtful responses?
• Relationships: Technology allows us to maintain or build relationships beyond our neighborhood and around the world, and maintain these relationships between physical visits. But it may cause me to give priority to technology mediated relationships over face-to-face relationships. What guidelines would help me balance the two?
• Time: Technology makes it possible to save a great deal of time because of its efficiency. But it may also take time both to learn new technology and to maintain old technology. How do I manage time effectively in a technological era?
• Space: Technology enables a business presence in places where we have no physical presence. Do I know enough about the differences between physical and virtual presence to make wise tradeoffs between the two?
• Perspective: Technology connects us to so many sources, but we do not have time to interact with them all. Does this cause us to narrow our focus by choosing only those sources that align with our biases? Does this directed access allow us to avoid insight and ideas from outside our search, making us less aware of alternative views or issues beyond our focus? When should we search and when should we browse?
• Truth: Technology opens up many more sources than might have been available in a library, bookstore, or newsstand. But much of this material has not been edited, nor does it have any accountable party committed to its reliability. How do we validate the information from these sources? How do we better separate fact from opinion?

How might we, and our businesses, need to change to embrace the positives from technology without being overwhelmed by the downsides?

I am not prepared to offer a simple answer to any of these questions, though I may offer some of my own thoughts in later columns. But I will ask two more questions:

• Are these the right questions, or should we add to the list or modify any of these?
• Would it be valuable to put together groups of people (at companies, in universities, and across the disciplines of sociology, technology, theology, and business) to explore such questions?

Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology. He was selected as a senior technical fellow of The Boeing Company in 1990, and received his Ph.D. in applied mathematics from Iowa State University.

For many years, I was involved in the development of technology for The Boeing Company. We weren’t developing new computers or mobile devices. Rather, using tools that were available from the market, we built applications that could create an advantage for the company.

Here are four examples.

• Using early personal digital assistants, we created a mobile tool for the airline mechanic, providing access to maintenance information and diagnostic tools. By tracking what the mechanic did, we were also able to automate the documentation of his work.
• Much earlier, we developed mathematical algorithms to allow Boeing to simulate very large scale circuit design, long before any commercial tools were available.
• We built software to diagnose problems in the supply chain in the assembly of aircraft, enabling the company to overcome the bottlenecks, which had begun to arise when trying to greatly increase the production of aircraft.
• We built the first software to enable the visualization of an airplane design, freeing Boeing from building a physical mockup in order to test that each part in the design would fit together without gaps or interference.

To my knowledge, though these tools were created between the late 1970s and the late 1990s, all are in use today in the company in some form or another.

The first example became the portable maintenance aid, a product Boeing offers to the airlines. The second enabled the company to win competitive research and development projects because of the technical edge it created. The third created documented savings for the company measured in very large numbers as Boeing avoided line shutdowns and costly delays in aircraft delivery. And the fourth was at the heart of the design of the first all-digital airplane, the 777, creating measurable design time savings, and performance improvement on the airplane.

As different as these tools were, there was a common theme. Every project had to earn its way. The measure of success was not just the technical accomplishment and the acceptance from the technical community (measured by patents or publications), but the payoff for the company. In other words, Boeing could measure the return on investment in technology, and all investments were channeled through this lens. There was no “technology for technology’s sake,” and everyone in the technology organization was fully aware of the yardstick by which we were ultimately measured.

By contrast, in the late 1970s, our organization broadened its horizons beyond the Boeing Company for a short period. We looked at applying our research talents to other industries with two objectives: we could get paid for the research and we could develop technology of value to Boeing. This took us first to the energy sector, starting with the electric utility industry. The generation, distribution, and cost-effective delivery of electricity provided a great research base and at the lowest level had many problems in common with Boeing. After the major East Coast blackout of 1977, there was research money available to address these very large and challenging problems. For a few years we were deeply involved in this industry.

New York City during the July 13,1977 blackout

But then something changed. Since the utilities were still regulated, and since the memory of the blackout began to fade, there was little economic incentive to address these problems, which remain to this day. The rate structure and the rate commissions took away the incentive for doing the research to make the generation and distribution of power more effective, efficient, and reliable. They also took away incentive to implement available new technology. The money for alternatives such as solar power also soon dried up. The problems were still there, but the economic incentives to solve them were not.

I suspect with deregulation and the concern for the environment, the picture is somewhat different today than in the late 1980s, though likely not much. But the example is clear: Market forces can provide a powerful incentive for addressing complex problems through technology. And when they are not present, it becomes much more difficult to attract the research dollars or the implementation dollars for new technology.

This brings me to the use of technology in health care. I believe the challenge of applying technology to address health care issues is more like the electric utility industry than the design and production of airplanes. The health care system has incredibly challenging problems where technology can play a significant role.

But the linkage to market forces is weak and indirect. For the people who have access to health care through insurance, those making the choices about care (the doctors and patients) are not the ones who pay for care. Making it worse, doctors sometimes benefit from more care in a “fee for service” environment, and patients feel better about it as well, even when it brings no advantage toward ultimate outcomes. This, too, is like the electric utility problem: More efficient usage lowers the income for the electric utility.

Luke McGuinness, CEO of the Dupage County Health Care System in suburban Chicago said,

“It’s unrealistic to think that the person who consumes health care is going to be able to deal with price at the same time. I don’t think we can depend on them to care about the cost.”

Insurance companies try to rule from the side, denying coverage or limiting access. Hospitals try to control costs. But this is far more indirect and less systematic than traditional market forces.

Why would bedside bar coding be slower to implement than bar coding in the gift shop? The gift shop has a bottom line, measures its efficiency, and found the investment in bar coding would pay off over a reasonable time. Hospitals must look at bar coding differently. In spite of the payoff in patient safety, and the reduction of time required for the hospital personnel, how does the hospital create the business case for the investment? Any cost savings simply result in lower payments from the insurance companies. Patients usually don’t know enough about the technology to demand its use.

Check lists in surgery provide another example. Gawande and Pronovost make the case that checklists lead to dramatic reduction of post operative infection. They are also low cost to implement, though the cultural change they require (typical with the introduction of new technology) is significant. Yet where is the incentive to make checklists standard procedure across all hospitals? It would take patients or insurance companies, armed with the data, to demand these changes in the hospitals, and this does not seem to be happening.

Electronic health records represent a third example of process technology for health care. When the hospital records of every patient are available electronically, they can then be referenced by any other health care representative with the ability to access. Today this is limited to other providers within the same system, and even here the penetration of this technology is less than 50 percent in doctors’ offices, and far less in hospitals.

One way to address this issue comes, surprisingly, from the government. The new health care legislation has identified some areas of technology that have been proven through clinical trials, and have incredible payoff in efficiency or value to the patient. The legislation has dictated that hospitals use electronic health care records by 2015, so finally there is an economic incentive to do so. Not for the bottom line of the hospital, but out of concern for the fines that the legislation would bring.

In our Conversation with Jonathan Perlin we learned what happened at the Veterans Hospital system:

Over that 1996-2004 period of time, the general cost of health care, unadjusted for nominal dollars, increased by 44.7 percent. The cost of care for veterans over that same period of time went up 0.9 percent. During that period in the VA we had measurably better quality, access to care (where we increased with hundreds of clinics during that time), benchmarked improvements in customer satisfaction, and lowered death rates for preventable illness. Also during that time we had full deployment of electronic health records providing complete access to records across the system.

Perhaps in an industry like health care or electric power utilities, some outside force for change is necessary to make progress in technology implementation that reduces costs and improves outcomes.

I have watched with interest the political bickering that is going on in this country over health care. Many conservatives seem to like health care as it is, perhaps because they have insurance and thus can get what they want. Yet this is not a market driven system. It lacks the economic connection between cost and outcome. How can we better deal with the efficient, reliable, safe, and cost effective provision of health care and the technology that supports that objective? The government role in health care seems to offer some hope for progress in this area. What are the alternatives?

Comments to ame@ethix.org

Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

But there remains the challenge of what kind of products and services to offer in the proposed business. It helps if the focus of the business is something for which you have the skill and passion, since starting a business is hard and you need to like what you do. Another consideration is the need in the market (including both the product or service and the cost). This requires a market study. But which product or service (we will use product to talk about both product and service from now on) should you offer?

Generally, books and articles on starting a business begin this way: “Suppose you want to build a business from this new product idea. What steps are required to begin the business?” What about the person who wants to start a business but is looking for a product idea?

I found an interesting source of ideas for new businesses in a lecture by Clayton Christensen, who was the presenter this past spring at the annual Technology Alliance luncheon in Seattle. Christensen is the author of The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997). Since his original book, Christensen has written four other books and given many lectures applying his basic theory to health care, automobiles, steel, and education, focusing on why disruptive technology creates problems for large firms. I believe an opportunity for small companies lies in this problem area for large companies.

I will briefly sketch his idea here, but any budding entrepreneur (or large company player) would find it worthwhile to either read one of his books or at least watch a replay of his Technology Alliance talk.

The Innovators’ Dilemma

New technologies, when first introduced, tend to be costly and complex. Think about the first large mainframe computers, or the first MRI machines. These tools, developed at great cost, are sold to high-end customers and require significant expertise to operate. This may have been the reason early IBM chairman Thomas Watson declared, “I think there is a world market for maybe five computers” in 1943. But the requirement for this same capability that is both accessible by users with less expertise, drives further development to low cost, easy to use products.

Unfortunately, companies pioneering the first high-cost, complex product development are usually unable to make the transition to the lower cost, accessible product. Examples include the big computer companies (such as IBM) that could not continue as leaders in the PC market. Similarly, the mobile device makers are different again from the PC sellers (with the interesting exception of Apple). Or the makers of complex medical devices are often not the ones who make the smaller, portable devices that can be used by every health clinic rather than a few high-end hospitals. Christensen illustrates his premise in such diverse areas as automotive, steel, and education in addition to information technology and medical products.

He goes on to develop reasons why it is difficult for the maker of the more expensive product to become the dominant supplier of the lower cost, more widely accessible product. Imagine yourself inside a large corporation with multiple billion-dollar divisions. You have an idea for a new product and you prepare the business case and take it to the senior management. Here are some objections you will hear:

1. The kind of revenue you are anticipating from this product won’t even show up on our balance sheet; we are looking for billion-dollar ideas, and even if you are successful, the revenue would measure in the millions.
2. Your idea will take away revenue from our more profitable, high-margin products.
3. We are set up to sell to large corporations; your product would require managing resellers or direct sales people, and we don’t know how to do that.
4. Our overhead cost structure would not allow this new product idea to be profitable even if we could solve the other issues.
5. Your product fits in a market space where we have no experience.

This is representative of some of the areas of objection that Christensen cites, and is very consistent with the experiences I have had as a part of a large corporation. Christensen said in his presentation, “The new ideas need an institution with a different kind of business model. Ideas within a company are always in a battle for funding. Those ideas promising better profits from better products at better prices always trump ideas for cheaper products at lower prices with lower margins.”

On the other hand, a new company built around cheaper products at lower prices with lower margins provides an opportunity for the startup. From that vantage point, with lower cost structure, a market worth millions looks quite attractive.

Finding the Opportunity

Though not the only cause, the rapid changes we have experienced in information technology over the past 50 years have led to many opportunities to create new, lower-priced products, opening the door for the entrepreneur. All of the companies creating apps for cell phones, for example, have found their opportunity exploiting this change. Telecommunications, faster chips, cheaper memory, and GPS have come together to create a market that didn’t exist a decade ago for these apps, and which is a difficult area for the “big guys” to penetrate for all of the reasons given above.

The big opportunity seems to be the low-end products where technology creates an opening that is tougher for the large company to exploit. Christensen tells the story of how Toyota started with a small car while the big companies ignored that part of the market. They didn’t start with a Lexus. But they ate the market from the bottom up. The micro mills did the same in the steel industry starting at the lower cost, low-margin rebar. Eventually they worked up the ladder in product cost and complexity, putting all of the big U.S. steel mills out of business. Exploiting technology and using a company infrastructure with lower costs was key in both cases. Interestingly, as Christensen says, this loss for the big company is not simply a problem of ignorant management, but a subtle, very difficult challenge for any big company.

This opportunity from the bottom would seem to exist in almost any area. Here is one more example demonstrating the same principle in a completely different field. I was talking with a stock broker who started his business with a great deal of effort through cold calling. Anyone with a few retirement dollars, and who wanted someone with expertise to take care of his money, would be welcomed as a client. But as the business grew, he found that very high-net-worth clients wanted personal attention, and he could no longer afford the time to handle small clients. A young entrepreneur came along with a different model, depending much more on technology to manage many small accounts, and the first money manager gladly provided some accounts to his portfolio because they no longer fit his model. Another entrepreneur developed a business from the bottom.

Conclusion

Entrepreneurs often assume they cannot take on a big company with a new offering. And if they started at the top, with the areas of highest profits for the big company, they would likely be “crushed” as Clayton Christensen says. But the opportunity is there from the bottom, taking over products that are simply not a part of the highly profitable portfolio of the bigger company. The problem for the bigger company is that, starting at the bottom, they may allow a competitor to develop, eventually defeating the bigger company. Steel, autos, computing, even wealth management provide examples of this, and bigger companies must beware of “the innovator’s dilemma.”

But while this is a huge challenge for the big company, it is a great opportunity for the entrepreneur. This is a great place to look for new product offerings for that new company.

Al Erisman is executive editor of Ethix, which he co-founded in 1998. He spent 32 years at The Boeing Company, the last 11 as director of technology. He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

It was as though I needed another example to get the point, because when I started walking down the ramp to the airplane, the line suddenly stopped. When the line started to move again, the woman in front of me, talking on her cell phone, remained in place. Last I saw she was still standing there as people walked around her.

These twin events, repeated frequently in all sorts of settings, got me thinking about the role of the cell phone in 21st-century communications. Throughout history, humans have always divided time between focused one-on-one conversation and larger gatherings including time as a part of a community. It seems to me the cell phone has shifted this balance toward more one-on-one communications, taking away the time spent in the larger group. It is not that the cell phone, like any other technology, is inherently bad. It isn’t. But like any other technology, it has a tendency that we need to be aware of, so that we can use it wisely.

I can hear you objecting, “I can do both things at once, and the cell phone has opened a new door for me.” You may think you can, but in fact research has shown that you cannot.

Here’s the way brain scientist John Medina put this in his brilliant best-selling book Brain Rules:

“To put it bluntly, research shows we can’t multitask. We are biologically incapable of processing attention rich inputs simultaneously,” p. 85.

Medina goes on to demonstrate that we can do two things at once if only one requires attention. For example, you can walk and talk at the same time. In this case, walking has become second nature and is accomplished without thinking, while the brain concentrates on the talking. The test comes, in an intense conversation, when you encounter an obstacle. You either lose your place in the conversation or stumble. I remember something similar when I mowed the lawn or washed the car while thinking through an argument. I always recognized in doing this I was not paying much attention to the mowing or washing.

This observation has huge implications for our workplace, our personal lives, and our role as a member of society. I will identify a few of these where the cell phone is at the center.

Business Meetings

The relative strengths and weaknesses of electronic conferencing vs. face-to-face meetings has been discussed in this column before. There are the issues of trust, casual conversation between events, and the naturalness associated with moving off agenda to deal with the underlying, real issues. These are tougher to develop electronically. On the other hand, the time and cost savings compared with meeting face-to-face are important, as is the data-rich environment.

But I heard something recently from someone who likes electronic meetings. The person said he liked such meetings because able to do other things during the meeting. In fact, the person told me that in an electronic meeting he routinely schedules other things: building a presentation, having side conversations, or doing instant messaging were a few of the examples given.

I thought this might be an isolated situation until I came across a Forbes Insight report from 2009 titled, “Business Meetings: the Case for Face-to-Face.” For this report the authors surveyed 760 executives (half the respondents represented small businesses (under 100 employees), while 20 percent were from midsized businesses (100-999 employees), and 30 percent were from enterprises (1000-plus employees). In terms of title, 48 percent of respondents were either owners or C-level executives.

The respondents were asked, “Why do you prefer technology-enabled meetings?” The first three responses were expected: saves time (92 percent), saves money (88 percent), and more flexibility on timing and location (76 percent). But the fourth highest response was, “allows me to multitask “(64 percent). So perhaps this is more common than I had previously thought.

This suggests that many are not cognizant of the research telling us that we cannot do this effectively. Or, they may simply not want to participate fully in the meeting, being their for defensive reasons when issues closely related to their own tasks are raised. The tell-tale signal that someone is doing something else is when the person responds to a direct question with, “Excuse me, could you repeat the question?”

Networking

Many of us in business have been a part of a networking session, a gathering of professionals for the purpose of gaining new insight, new customers, or new colleagues. Yet these days when you go to one of these events it is not unusual to see someone standing in a corner talking on a cell phone. The person has replaced meeting new people with talking to already established bosses or colleagues (or friends).

When you think about this, it is much like the contrast between the search function and the browse function. Search has been improved so much in the past decade that we sometimes forget about the importance of browsing and discovering things we don’t know enough to ask for. When we talk on the cell phone, we are doing search — connecting with someone we were seeking or who is seeking us. At a networking event, we are browsing. Both are important, but I wonder if we have moved the mix toward search.

This is not to say search is bad — it is fantastic. But there is still a role for the browse function, and our technology is enabling us to do more searching than was previously possible. We still have only 24 hours in a day and each encounter replaces another potential encounter. I wonder what this does to innovation, since many new ideas come from chance encounters with the unexpected?

I am certain there are many other places in business where we do more search, and hence less browse, gaining one opportunity but losing another.

Personal Lives

Clearly these same ideas have a great deal to do with the family as well. I know a young woman who says she spends all of her time with her kids. But every time I see her, she is texting or talking on the phone. She is with her kids (physical proximity) but not with her kids (attention rich). This extends to many of our relationships in our increasingly communications rich world.

A well-known African proverb says, “It takes a village to raise a child.” To make this work, the village (e.g., teachers, neighbors, police, the store owner) must both know the child and be aware of that child. Are we losing this as we each person retreats to his or her cocoon of direct connections, completely unaware of others around them? I wonder.

Society

As I was walking through the mall recently, I was watching person after person walk by completely disconnected from others passing by, focused again on the cell phone conversation. I couldn’t help but wonder, if a child were abducted would anybody notice? Would there be any witnesses for a trial if everyone was disconnected from their surroundings?

There is an important notion of “the common good,” what we do that benefits others in the common spaces. It is part of being in a flourishing society. I like what the biblical prophet Jeremiah said, “Also, seek the peace and prosperity of the city to which I have carried you into exile.” Even people who were not a part of a free society, but exiles, were challenged to work for the common good, not just their own. So we need to spend some of our time simply observing what is going on around us, and this means not connected for our own personal benefit.

Perhaps this is what Yogi Berra, noted American icon, meant when he said, “You can observe a lot by just watching.”

So What Should We Do?

Am I suggesting we should discard our cell phones, stop texting, and disconnect? Some would, but I won’t. I greatly appreciate my cell phone and love the way it enables me to connect.

But I believe that all of us should be challenged to spend some time deliberately disconnected. We can only give attention to one thing at a time. So we need to choose times when we will turn off our cell phones, disconnect, and observe the world around us. We might truly participate in an electronic meeting. We might make a great connection at a networking event. We might connect better with our kids and grandkids and others we care about. And we might actually become better citizens.

Conclusion

There was a time when the rhythm of life forced us to balance the search and browse pieces of our lives. When we left the office, there was no phone till we got home. When we went to the mall, we shopped and interacted with clerks and other shoppers. Because of the cell phone, we must now make this mix a deliberate choice.

There is not a one-size-fits-all solution to this challenge. Some are very well disciplined and balance their mix as a matter of course. I admit I am not as good in this area. So far I have chosen to not get access to email on my cell phone, and I have not acquired a Blackberry or an iPhone. Great tools, but these create choices that have business, family, and societal impacts.

Yesterday, I was waiting for someone for a meeting at a coffee shop and he was 10 minutes late. He sent me an email saying he had been delayed, expecting that I would access it from my phone, but I didn’t get it until I got home. Should I move into the 21st century with my own access device? I am still trying to decide.

Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

The more I have read about the twin disasters, the more I have come to believe they are connected. I will include several quotes from The End of Wall Street by Roger Lowenstein, reviewed elsewhere in this issue, as he specifically discusses the role of economic models in the financial meltdown. I have some personal insight into the role of mathematical models in oil exploration and extraction.

Here are three interrelated areas, rooted in technology, that these two disasters have in common.

Short-Term Thinking

1. Technology is at the heart of our short-term world where business leaders push the limits on quarterly (or shorter) returns. There is evidence of this both from the banking leaders and the British petroleum leadership. Short-term goals lead to “cutting corners” while making decisions with little regard to long-term consequences. The bankers and drillers both demonstrated this. Extraordinary risk was ignored in light of near-term profits.

What does technology have to do with short-term thinking? Trying to maximize financial return over the long term is technically a very difficult problem. What most people do in trying to solve this problem is to simplify it, reducing the problem to maximizing return in the short term. I wrote previously about this in Issue 66. ethix.org/2009/10/01/the-new-capitalism/.

Lowenstein comments on the role of short-term thinking in the economic crisis. For example, he says of Merrill Lynch: “… their incentives were biased toward maximizing short-term profits,” p. 75.

Regarding the Gulf of Mexico oil disaster, a June 15, 2010, story from the Associated Press reported,

“BP made a series of money-saving shortcuts that increased danger in a well described by an engineer as a “nightmare” just six days before the April 20 explosion that caused the worst oil spill in U.S. history, according to documents released Monday by a congressional panel.”

Risk in Complex Situations

2. The risks associated with the creation, packaging, and sale of subprime loan derivatives, CDOs (collateralized debt obligations), and the risks associated with deep-water drilling, were either not understood by the business decision makers, their boards, and the regulators, or were understood and ignored. Recognizing the true complexity of these situations, let’s assume the former — that the risks were not understood.

In the economic arena, here are two quotes from Lowenstein regarding executive understanding of the complex economic issues:

At AIG, “Joseph Cassano, the aggressive and volatile maestro of AIG’s swaps unit … assured the brass that … AIG had insured only the highest-ranking ‘super senior’ level CDOs….Cassano frequently attended committee meetings of the directors, in whose company he was naturally charming and genteel. He emphasized to the board that, regardless of what was happening to the market value of CDOs, the instruments were safe, and would remain so barring a catastrophic recession. The directors, understanding little about CDOs except what Cassano told them, were reassured,” pp. 112, 113.

Robert Rubin, chairman of the executive group of Citigroup, and former Treasury secretary, “… leaned with the odds. Unlike some senior execs, he understood what a CDO was, but not at the level of detail that might have aroused his concern. This half-knowledge was potentially lethal. He was enamored with the brainpower and mathematical elegance of academically trained financiers.”

To gain insight on this issue in the case of deep sea drilling, I asked the former CEO of a large oil company for his insights into the cause and cure of the oil spill in the Gulf of Mexico. Here was his response:

“I’m afraid this incident is way beyond my experience or understanding. The deep water and complex subsurface technology must make for huge challenges. The whole industry will be willing BP to find a speedy solution, and all of us will be praying that the slick dissipates without causing any lasting damage to marine environments or indeed the shoreline. After the volcano in Iceland, we are reminded again of the forces of nature and the limits of our response.”

As technology enables us to create more and more complex entities, the gap between decision maker understanding and reality must grow. I have identified this problem and offered some suggestions in a previous column in Issue 51: ethix.org/2007/02/01/executive-decisions-about-technology/.

Mathematical Models

3. In both the cases, the businesses depended on complex mathematical models to represent reality: value and risk associated with complex derivatives of subprime mortgages in the case of the banking industry, and guidance on how to drill and remove oil from the deep water in the case of the petroleum industry. Neither activity would have been possible without the use of the insight from the mathematical models made feasible by technology. There is good indication that these models were not understood by the ultimate decision makers (point 2), but also they did not represent all of the complexity of the situations they were trying to model.

We probably don’t recognize how much our modern lives depend on such models. Pharmaceutical drug design, the design of bridges and tunnels, the staging of parts in the production of automobiles, the methods to carry out Google and Bing searches, and even the decision as to which elevator will respond to your call all depend on mathematical models. The good news is that these models can very accurately represent reality in a large variety of circumstances, enabling all sorts of good things. The bad news is that it takes great care and insight to understand the limits of these models and the assumptions rooted deeply in them.

Models and Reality

In the case of the economic models, there is evidence that this was not understood as well as it needed to be. Here is another quote from Lowenstein regarding the role of Ben Benanke, chairman of the Federal Reserve:

“What is notable was Bernanke’s assumption that the academy now understood perfectly the dynamics of one of the most complex economic eras in American history. Real life is messy and admits to doubt. Bernanke’s research was steeped in econometrics, which offers the certainty of computer models,” p. 85.

All models contain assumptions that must be understood by the users of the models. Here is another example from Lowenstein. In a meeting between ratings agency Fitch Inc. and Thomas Atteberry at the FPA New Income Fund,

“Fitch reiterated that its models forecast smooth sailing for mortgage securities … Fitch’s model assumed that housing prices would rise, as they had during the boom, by an annual percentage in the low-to-mid single digits. During the question-and-answer period, Atteberry asked what would happen to the model if the housing prices were, instead, flat. Fitch admitted that the model would start to break down. ‘What would happen if housing prices fell by one percent or two percent?” Atteberry wondered. In that case, Fitch replied, the model would break down completely,” p. 88.

Similarly, models dealing with underwater drilling and extraction can guide the processes very well, but also contain hidden assumptions. It takes discussion with thoughtful questions to even identify what these assumptions might be and how they represent reality in unknown situations.

One of my all-time favorite executives at The Boeing Company was Bert Welliver, the chief technology officer of the company in the early 1990s. At one of our meetings he told me he was worried about the model development area at Boeing and cautioned us not to make the models too easy to use. “I worry about unskilled people getting their hands on these models and using them in a way they were never intended,” he told me. “We must make sure that the assumptions contained in these models are readily understood and recognized whenever they are used. The worst scenario is where someone uses the results of a model to make decisions when the results are completely wrong,” he said.

Even the scientists who develop these models often don’t fully realize how dependent the models are on the assumptions that go into building them, since some assumptions are “too obvious to state.” The modeler may never have anticipated someone using his or her model in the way they later do. Another colleague at Boeing recommended that a great deal of time should be allocated to the “stress testing” of the models, giving the users a “feel” for what the models could and could not do. This testing should include people who did not build the models, to surface assumptions that may not have been explicitly stated. And the executives who make decisions based on these model results are going to have to get a great deal more conversant in the strengths and limitations of the models.

It is difficult in this fast-paced world, driven by the bottom line, to allocate the time and expense to stressing the models and extending greater insight in the use of these models to executives and decision makers. Yet the failure to do this is part of both the economic crisis and the oil disaster.

Conclusion

The frightening thing is that technology will take us further in the direction we have been headed, enabling the push for even shorter-term results, more new ways to make money from very complex situations, and an even greater gap between the capability of the tools and the insight from those who use them. The good news is that these issues can be addressed. Perhaps these twin disasters will provide the impetus to act more appropriately moving forward.

We are left with a choice, to slow down a bit and better understand the powerful tools we are building and the implications of their predictions, or to plunge ahead at very high risk. Which path will we take?

Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

Here is just a small sample of big issues that have become increasingly rancorous:

• Food (Genetically modified seeds, local vs. global production, the carbon cost in food distribution.)
• Health care (How do we provide needed health care in a fair, cost effective way?)
• Climate change (what is the truth about the reality of the problem and what we should do about it?)
• The economy (Were the “bail outs” helpful or harmful, are we facing inflation or deflation ahead, is national debt necessary or deadly, is the recovery “V” shaped, “U” shaped, “W” shaped, or something else?)

Availability of Data

A recent article in The Economist (“The Data Deluge,” February 25, 2010) offered this attempt to quantify how much data is available to us:

“Everywhere you look, the quantity of information in the world is soaring. According to one estimate, mankind created 150 exabytes (billion gigabytes) of data in 2005. This year, it will create 1,200 exabytes [roughly the same as the number of grains of sand on the earth]. Merely keeping up with this flood, and storing the bits that might be useful, is difficult enough. Analysing it, to spot patterns and extract useful information, is harder still. Even so, the data deluge is already starting to transform business, government, science and everyday life. It has great potential for good — as long as consumers, companies and governments make the right choices about when to restrict the flow of data, and when to encourage it.”

The article went on to describe the challenges and opportunities presented to us by this amount of data:

• Finding important data in this incredible “haystack.”
• Protecting our own private information that becomes a part of this available data.
• Gaining competitive advantage for business by effectively using the insight from this data.

But I want to consider a different issue. Why, with all of this data, can’t we find common ground on the crucial issues?

The Challenge

I admit I don’t know the answer to this question, but offer four suggestions. I invite readers to offer others.

We Can’t Find the Right Data

Many of us have witnessed at least a television version of a legal trial where the judge orders that a firm provide certain data to one of the lawyers, and they respond by shipping a truck-full of data. They literally respond by burying the other side in a fog of data. This is certainly possible. And with exabytes of data, we might expect it would be tough to find what we are looking for.

But with today’s technology, the ability to search for information that exists in digital form has made this much less a problem. I would suggest that generally this is less an issue today even with the growing volume of data.

Bias

A sister problem to being lost in large volumes of information is one of the coping skills people have acquired. Simply look at only parts of that sea of information, specifically the parts that you believe you will agree with. It is a common thing these days to find people who go only to the sources that fit with their biases. I just read a posting referring to CNN as the “Communist News Network,” and have seen similarly biased references by liberals to Fox News Channel. As a result, we get a part of the picture and are ignorant of another view that we might want to consider.

Andrew Shapiro wrote The Control Revolution more than 10 years ago. He argued that as information grew, individuals might limit what they looked at, becoming more and more ignorant.

In the newspaper era, a person interested in following the debate on health care would scan the paper, and in the process might read a totally unrelated article about an important local issue related to governance in their own community. In this way, they would become broadly aware of other issues. When they use a search engine to read about only health care, the same breadth drops away. When they read only sources they know in advance share their own point of view, they lose the broad perspective even on health care. And so these rancorous discussions take place between people who have no common data between them.

Shooting the Messenger

Related to bias, some people will not listen to a message from someone they don’t agree with, regardless of what is said. I have heard ideas from Sarah Palin dismissed out of hand because of the source. Recently, someone told me they rejected the ideas about global warming because Al Gore talked about them, and Gore is a hypocrite. This may be the easy way out, but we can learn something even from those we don’t agree with. I sense the same kind of thing is happening in the political discussions, where people will just tune out when the other side is speaking.

I have had coffee recently with two former students on different days. They told me what they valued from my class more than any content is the challenge to “read from both sides.” They have been presently surprised that the only way to create a third way to look at an issue is to carefully look at both sides that are being presented. I agree with Greg Page, CEO of Cargill and the subject of the current Ethix Conversation when he says that we can even learn from the shrill voices that force us to think more carefully about our own suppositions.

I recently heard the president of the Republican Party in Washington, D.C., state respond to an accusation that they were sitting on the sidelines and not offering any alternate solutions (in this case to the problem of dealing with the state’s multibillion-dollar debt). He said they were actively engaged, pounding the table and standing in the path of the oncoming train. We need to understand this is different from creating a solution. A similar charge has been made that the Democrats are forcing a solution to health care without considering the issues raised by the Republicans.

Complexity

Unfortunately, we can’t solve the problems by just dealing with the improved approaches to dialogue outlined above. In most of the really tough issues mentioned at the beginning of this discussion, the answers are not directly contained in the exabytes of data out there. Take the economic issues, for example. We don’t have the luxury of trying a “bail out” and if that doesn’t work, do a rewind and eliminate the bailout. Also, we don’t have the luxury of ignoring global warming and later saying, “Whoops, let’s back up to 2010 and try a different strategy.”

So in all of these cases we use computer-based models to predict as well as we can. We also use history to find a situation like the one we are dealing with and try the approach that seems closest to the current situation. History is also a form of a model. Computer models are never perfect. History doesn’t contain a world as interconnected or fast moving as the one we live in today.

If we could talk with each other, we could then move the discussion to developing the parameters of the model, or discussing the similarity and differences between historical scenarios. It is here that data is available in the exabyte haystack.

But there is a problem with this as well. The models themselves are very complex, and generally it takes a well trained expert to understand the questions that are used to probe the assumptions of the model. This means people without the training would need to trust those with the training, and this is very difficult.

I will illustrate this with an example from the food issue that Michael Pollan explores in the Omnivore’s Dilemma. Talking about the concern for animal suffering in industrialized food he asks, “So is it possible to slaughter animals on an industrial scale without causing them to suffer? In the end each of us has to decide for himself … . For my part, I can’t be sure, because I haven’t been able to see for myself,” [p. 330]. Yet later in the book he talks about a better practice when he goes hunting for wild animals for his meat. Rather than an experienced expert in the slaughterhouse shooting the animal from a distance of 7 feet, he takes a single lesson and shoots a running pig from a much greater distance. “The pig thrashed briefly, attempting to lift her head…” [p. 352].

That he doesn’t even notice the irony in the two passages is not surprising. Something we do ourselves seems somehow better than what is unknown and out of our control. This is why so many people feel safer driving a car rather than riding in an airplane, in spite of the data that demonstrates flying is vastly safer.

Fundamental complexity combined with lack of personal involvement in the solution creates a level of distrust that is difficult to overcome. Perhaps this, too, is part of the issue in communication about the major issues that face us. Just as the data about flying won’t convince someone, neither will any information about these issues in our complex world be convincing either.

Conclusions

Simply having more data, even being able to find our way through it, is not enough to answer the complex questions of our day. It reminds me of the line from the poem, “The Rime of the Ancient Mariner” by Samuel Taylor Coleridge written more than 200 years ago: “Water, water, everywhere, nor any drop to drink.”

Rather, there needs to be a record of trust and a broad awareness of key issues from multiple sources. Our technology seems to be working against us here.

Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

The first time I went to the class I took his warning to heart. I started the presentation by asking them to fill in the blank: “I say computing, and you say ….” The response was startling and immediate, “Cost.” So I asked the next question. “What does any good manager do with cost?” They responded, as I expected, with, “Drive it down.” So I made a bold suggestion. “Since computing is a cost and we want to reduce it, why don’t we unplug all of our computers and fire all of the computing people. What do you think?”

There was stunned silence. And then someone said, “We can’t do that. We need this computing capability to compete and do our work.” This was the opening I needed, and we proceeded to talk about how technology helps us compete, where it is going in the future, and what this will mean for the way we do our work. And then we talked about how to eliminate waste in computing expenditure to reduce its costs.

The Internet

That was the start of 11 years of presentations to this group until my retirement from Boeing in 2001. When the Internet broke through in a popular way in the mid-1990s, we talked about how this could be leveraged. In the early days of the Internet, however, it was difficult to define all of the value that could come from it. We had an Ethix Conversation with Vinton Cerf, one of the founders of the Internet, in 2005. Now on the 40th anniversary of the Internet (late fall 2009) we see how it has changed our lives. In a report from the Silicon Valley blog, we are told:

“For what it’s worth, researchers at UC-San Diego have taken a crack at calculating how much information Americans consumed from all non-work sources in 2008, including TV, radio, movies, the Net, cell phones, video games and reading material. Their conclusion: ‘Consumption totaled 3.6 zettabytes and 10,845 trillion words, corresponding to 100,500 words and 34 gigabytes for an average person on an average day. A zettabyte is 10 to the 21st power bytes, a million million gigabytes.’”

This is obviously both an opportunity and a challenge. The opportunity is the access to so much information. The challenge, as the astute reader will notice, is that this is just the nonwork sources. What does this do to an employee who may be accessing this kind of nonwork information while on the job? For this reason, many employers restrict the access of their employees to the Internet while at work. More on this later.

But I remember trying to explain to the Boeing managers the role of Moore’s Law. Moore’s Law states that the underlying technology will continue to develop at a relentless pace over the foreseeable future, leading to a factor of 10 in price performance improvement every five years. Incidentally, this trend will likely continue for at least another 10 years according the Pat Gelsinger, former Intel senior vice president in his Ethix Conversation (Issue 57).

What this means, I remember boldly predicting, is that there will be another breakthrough as big and impactful as the Internet, before 2010. And all of us need to be prepared to take advantage of these new capabilities as they came along. This means being willing to give up the way we do things now for new opportunities.

Spotting New Technologies

Looking at the calendar, I see it is now (as I write this) almost 2010. Is there anything from technology that has been as big as the Internet over the past decade? I believe there is, but before discussing this, I want to identify three reasons why these things are not easy to spot.

1. Most technology goes through a long “incubation” period, when it is developed and used by specialists in the laboratories. When it appears in a popular way, word has already gotten out, and it is regarded by many as “old news.” The Internet happened this way. First used in the early 1970s, it became popularly available in the mid-1990s. It is this observation that gives rise to the popular statement, “The future is already here, it is just unevenly distributed.”
2. Often, technology is quickly, though only partially, assimilated and is equally quickly taken for granted. Humorist Louis CK was on Late Night With Conan O’Brien and gave what may be the best explanation of this. I say only partially assimilated, because we often find a use of a new technology, but it may be a long time before the best uses are identified.
3. A new technology can arrive “before its time.” Without supporting infrastructure, its use is limited and sometimes the technology is dismissed. The first telephone was not very useful, without roads and service stations the early automobiles were not very useful, etc. And so it is with each new technology.

What has been of significant importance in information technology since the Internet? My vote goes to two things: search and mobility. For many, these simply blur into yet another use of the Internet, but there is a great deal more to it than that.

Search

What we get from search goes beyond looking up ordinary information. It enables us to find information that might have taken months to research in the past. It is a capability that we sometimes take for granted and other times forget to use. Here is a recent personal example:

When I returned from travel recently, my wife told me the shower door had come off the track. I looked at it and it was obvious the screw holding the glider in place at the top of the door had come loose, and I would need to remove the door to fix it. But how to do that? Those naturally handy could simply find the way, but I don’t happen to be one of those people. I was stuck and would have called a local handyman to fix it. But then I remembered search capability.

I went to Google and entered “remove sliding shower glass door” and pressed enter. The first entry was a simple five-step procedure for removing the door, which even I could follow. The fix was completed in about five minutes. A friend recently asked me how to change the spacing on a Word document. I told him to simply enter “spacing for word documents” into Google and follow the steps. These examples are only the tip of the iceberg in productivity that comes from search capability.

While I have given some links to other sites in this article, I generally don’t record links. I simply use a few words and trust Google to retrieve what I am looking for. Incidentally, one of my sons (employed by Microsoft has made Bing the default search engine on my computer, so I use it regularly as well. My informal experience suggests it is not as capable for most difficult things as Google, but I would be interested in what others have concluded.

Search doesn’t simply speed the search process, however. It has opened the door to a whole new way of filing, exploiting the fact we can search quickly for items. I wrote on this several years ago in Issue 43.

The Internet itself depends fundamentally on this search capability, which is why many include it in the general category of Internet. But it is a remarkable achievement made possible by the advances in Moore’s Law (and many other innovations) that has truly changed our lives.

Mobility

My other candidate for remarkable changes from technology in the past decade is mobility. This offers many dimensions, and I will sketch a few of them here.

The USB flash drive was invented in the mid- to late-1990s and today enables us to carry movies, presentations, and documents in our pockets. Its universal connection through the USB allows us to easily pack all the presentation material we need for a meeting halfway around the world or across the city. A truly amazing and wonderful capability!

The mobile phone has become the ubiquitous device enabling communication anywhere in the world, even to those societies that hadn’t even used telephones. I recently had the experience of using my phone to talk with my wife from the Annapurna Wilderness in Nepal, two days away from the nearest road.

And of course these capabilities have also blurred with the Internet, providing mobile access to information from anywhere at any time. Here is what the Silicon Valley blog had to say recently:

Forty years ago, two computers on the ARPANET, forerunner of the Internet, communicated for the first time. Today, reports research outfit IDC, there are more than 450 million mobile devices connecting to the Net. Just mobile devices. And over the next four years, IDC figures, that number will be more than a billion. “The number of mobile devices with Internet access has simply exploded over the last several years,” said John Gantz, chief research officer at IDC. “With a wealth of information and services available from almost anywhere, Internet-connected mobile devices are reshaping the way we go about our personal and professional lives. With an explosion in applications for mobile devices under way, the next several years will witness another sea change in the way users interact with the Internet and further blur the lines between personal and professional.” The total number of devices hooked to the Net (phones, computers, game consoles, etc.) is now about 1.6 billion, says IDC, and will rise to 2.7 billion by 2013.

Ethics Questions

In the excitement of what these technologies have brought to us, we too often overlook the downsides. The challenges are many — workers wasting time surfing the Net at work, security issues when vital documents are take out the door, viruses downloaded by employees, to name just a few. I will devote more space to this in a future issue, but wanted to comment on just one area now: access to the Internet for employees. Many companies have recognized the distraction of the Internet and the time wasted, and have decided to ban access to the Internet for their employees from any device while at work.

Not surprisingly, a quick Internet search shows lots of companies prepared to offer assistance with tools and software to make sure employees don’t access the Internet from company computers. As they argue in their promotion materials, accessing the Internet slows down the company network, reduces productivity as workers waste time, etc. But as I have pointed out, these tools also increase worker productivity by extending the brains of each worker.

Blocking access is a simple solution to a hard problem. Companies wanting to tap into the extended brain power of their employees will not cut off this vital link but will find a better solution to deal with time wasters.

Conclusion

The foundation of Moore’s Law continues to push out new technologies that offer stunning new capabilities that we can both use and abuse. We must be honest about both sides of these new technologies, creating thoughtful, appropriate uses that deal with both the upsides and the downsides that come from these tools.