Stocks, flows, and the President's weight

I've noted before the importance of thinking appropriately about stocks and flows. Janice Molloy of Pegasus Communications just wrote "A Weighty Take on Stocks and Flows" for the August 2008 issue of The Systems Thinker, using stocks and flows to communicate the message of a New York Times column by Gail Collins. It's a good tale; if you subscribe to The Systems Thinker, check it out, or check out the original column.

It was fun talking through the implications of these ideas with Janice, creating a few simple models together to clarify Collins' message, and producing the diagrams that Janice used. There is a message hidden in the fun, though: be sure you understand what they really mean when someone says they'll reduce the rate at which something is growing. It may not be all that good a deal.

Looking from the outside in...seven months and a trip later

Last January, Henrik Müller posted an article called "Amerika steht mit dem Rücken zur Wand" ("America stands with its back to the wall"). Now he's made a trip through the USA and written again in "Amerikas schwärzeste Stunde" ("America's Blackest Hour").

If you read German, check out the article, and let me know what you think. If you don't, here's the short version:

• The USA faces as serious a challenge as we've faced in years, perhaps as serious as the Great Depression.
  
• The difference between this challenge and many of the others since the Depression is that individual people are now impacted in real ways.
  
• While we have some number (he doesn't really guess how many) of tough years ahead of us, we have a way in our culture of getting through tough times successfully. He thinks our situation parallels that in Germany from 1993 through 2005, but he thinks we'll be more successful in breaking out.
  

If you do read German, feel free to add key points you think I missed. You can also read his comments in Google's translation.

What do you think? Maybe more importantly, where do you think we should be headed? What should business look like? How about the economy? How about society? How should we get there? Perhaps a return to 2006 isn't what we want or need for 2010. Feel free to add your ideas below.

Prediction, system dynamics, and Future-Fusion

Recently, I made the claim that we're better off focusing on adapting to the present than predicting the future. I've made similar claims in the past, too. I've even given one example in which predictions serve a useful purpose.

That's all a bit simplistic, of course. Even system dynamicists could be said to predict the future in a way: we show behavior over time we feel is more likely to occur (although we may warn people away from point predictions based on a behavior over time graph). In other words, I might suggest that your current policies could produce a boom and bust effect in your business, but I wouldn't want you to draw the conclusion that your business will grow another 172.3% by June 15, 2009 before taking a tumble that afternoon.

Because we all would like to know the future, I've experimented with blending system dynamics and Bayesian analysis to quantify the probability of a particular behavior pattern, for example. Of course, that probability is conditioned on both the historical data and the model being correct, which is a loophole big enough for a good-sized locomotive to run through: models are always incorrect. Still, I think this approach may give more useful insight in certain cases.

Now Kshanti Greene of Stottler Henke Assocates, Inc. has shown me a Bayesian tool they've developed called Future-Fusion, and I've been exploring it a bit. They are using Bayesian networks and the power of groups to get a better handle on what the future holds. Much as Data360 looks at the past, Future-Fusion attempts to look at the future. As of this writing, they've created four test areas which you can explore: the 2008 US presidential election, the Iraq war, corporate strategy, and energy. Try it out: learn how to use the system, see current predictions, and add your own (I think you only have to create a free account if you want to add your own predictions). Perhaps you'll learn something, and perhaps they will, too.

Kshanti has pointed out a recent addition to Future-Fusion that may intrigue some of you: time. They've enhanced their technology to allow limited dynamic execution of a network model, which begins to narrow the gap between Bayesian networks and system dynamics from the Bayesian network side, much as what I've tried has narrowed it from the system dynamics side. To try that out, go to the energy model, select a prediction (e.g., "Reduced SUV sales"), click "view graph," note the numbers, and then click "Next Time Step."

I think this is all still experimental in many ways, but it's a good opportunity to learn a bit about this technology by trying it out on real-life issues. I'll be curious what you discover.

Why are we here?

Why are we here in business, that is?

You can find lots of answers, and "making money" seems to crop up frequently, at least in informal conversations. Some of you know I used to work at Hewlett-Packard. At least at the time, it was governed to a large degree by "Bill and Dave stories": tales of how Bill Hewlett and Dave Packard responded in certain situations.

Today, thanks to Tom von Alten's note on Corporate blogging, I discovered Anna Mancini's blog called From the HP Archives… (she's the HP archivist) and this Dave Packard Quote.

Why are you in business? Why is your company in business? What is your contribution to society?

Bittersweet asphalt

No, it's not that I find asphalt bittersweet (I haven't tried tasting it). It's the news that I find bittersweet.

Five and a half years ago, I published Out of Gas: A Systems Perspective on Potential Petroleum-Fuel Depletion. In that column and in the accompanying simulation model, I suggested that delays due to debates over how to allocate shrinking petroleum stocks might hurt our ability to replace energy resources in a timely fashion.

Today, I read Asphalt shortage disrupts road projects. I'm sure you can find other examples, perhaps closer to your home, in which the imbalance in supply and demand of petroleum is leading companies to prioritize one usage over another, which can cause pain for the unfavored group.

Models such as this aren't designed to predict the future, at least in the sense that they tell you that a certain event will happen in a certain year. They're intended to give insights into the likely and potential ramifications of current and proposed policies, both formal and informal, that we've created. They're intended to help us test policies quickly, inexpensively, and at low risk, so that we can be more confident when we implement a policy in our organizations. They do not provide guarantees, but they can provide very useful and sometimes unexpected insights.

In which areas would you like to think more effectively about the effect your current policies could have on your organization's future?

Systemic problems in US healthcare?

Wow!

If you know Tom Peters and his work, you know his focus on WOW!

This is different, though. This is my "Wow" at the intensity of his recent postings, intensity that trumps even his usual high-energy attitude.

Start with Ten Years in the Making!, his take on the state of health and healthcare in the USA today. Go read it the attachment, and then come back (that might be tomorrow; it's 288 slides long!).

I have not double-checked his references, but most of his slides provide references to other's work (and, if you're not familiar with his style, no, they aren't boring bibliographies).

Then check out The Healthcare14: U.S. Healthcare Trauma in 2008 and his tongue-in-cheek Proposed Hospital "Organization Chart."

There are other reports, among them the 1999 Institute of Medicine report To Err is Human: Building A Safer Health System, and there are and have been projects designed to make things better.

While I sense that Tom Peters isn't a big systems fan, it sounds as if a systems approach might help. The IOM and Tom Peters both described patterns of behavior. Patterns are usually stimulated by structures in the organizations we create.

To make a long-term change, we had best find the ways to change the structures appropriately. Focusing on the patterns alone (or, worse, simply the bad events) is literally treating the symptoms, not the disease. Treating the symptoms might make things better in the short term, but we shouldn't be surprised when they return if the disease remains present. That's where the systemic approaches come in: they can help us find the structures at work creating our problems, and they can help us test our theories about proposed solutions. That doesn't always mean the same approach, and it doesn't always mean simulation. It does mean deriving insights from system principles and applying them effectively to solve real-world problems.

If you're in healthcare, do these issues ring true? What do you see?

How to act in tough times

We seem to be in tough economic times. (Did I hear "Duh" from the back row?) Tom Peters recently posted 26 Rules for Recessions. If your business is hurting, check it out. If it's doing really well right now, check it out anyway unless you're sure you'll never be hurting in the future.

I suspect those who think their business will never be hurting are mistaken, but they may not be open to this message today.

I suspect that you are an optimist with a grounding in reality, if you stick around here. I hope you're either not hurting or poised on the threshold of a transition that will help you succeed even more (see the second point).

If your business is hurting, or if it's doing well but you'd like to prepare for the next transition, whatever that is, let's talk.

Genesys can tell you if it's good enough for you

I've written a lot recently about the benefits of working without travel or commuting; I think this will be my last for a while. Genesys Conferencing has a calculator that can tell you how much you save by holding a remote, synchronous meeting instead of traveling to one place to meet. This fits nicely in the sequence of "It's good enough for ..." postings.

Naturally, this calculator is an ad for Genesys; I'll let them own the responsibility for the accuracy of their calculator. I do regularly work with their operators in meetings I moderate, and I will say that I've been pleased with their professionalism and friendliness.

How can I help you make your next meeting more productive, less expensive, and greener?

It's good enough for the whole Chorus

First it was Kate Lister, then it was Phil Woolas, then it was Fast Company, and now it's a whole Chorus. See how a small software company has become totally virtual.

It's good enough for Fast Company

I wasn't planning on continuing this thread, but Fast Company sent me a pertinent link this morning, predicting that "Within five years, technology will obliterate the need for business travel."

While I can conceive of video offering certain benefits, I wouldn't suggest waiting for technological solutions. Perhaps one of the most engaging and effective courses I've ever attended was the all-text-based email AREOL, put on by Bob Dick at Southern Cross University twice a year since 1995 (the year I took it). The key lies in the people and the process, not necessarily the advanced technology.

How can I help you today?

It's good enough for Phil Woolas

Yesterday I wrote about working without travel or commuting. Apparently Phil Woolas, UK Minister of State for the Environment, sees things the same way; he delivered a keynote speech at the Annual Climate Change Summit in Sydney while remaining in London.

What have you been doing to reduce GHG emissions, reduce fuel usage, and thereby improve productivity? I'm curious, and I'd welcome your comments.

By the way, it's my experience that you don't need a lot of technology to make working remotely successful; you just need to think and plan carefully how you'll be effective.

Why go to work today?

Why go, indeed?

Some time ago, I described why I think most of you have had me work remotely over the last eight and a half years and how that has helped you and society. Now Kate Lister makes similar points on The Oil Drum.

Environmental optimism: an example

Glen Hiemstra commented on my blog yesterday, and he also blogged about Al Gore's speech calling for a 10-year program to end the use of carbon-based energy sources for generating electricity.

Al Gore has presented a great example of environmental optimism on a grand scale, and he's done it in a manner I found challenging and uplifting, not depressing and defeatist. You've probably read about it by now, but I encourage you to watch the video.

Environmental optimism

If you've read my blog for a while, you may you wonder: why do I spend so much time talking about environmental issues on a business blog?

The answer is simple: business operates in the environment, and we have no choice in the matter. The environment seems poised to make a few changes right now. That seems fair; it's apparently doing it largely in response to changes we've made. In times of transition, there are usually economic winners and losers. We've seen that building inefficient SUVs is not a winning strategy now (or, presumably, ever again); I want to help you (and me) think about the areas in which we can win.

Which brings me to my main point: optimism. Sometimes I post items that could seem depressing; I think my previous posting fits that description.

There are two steps to change. The first involves becoming motivated, and the second involves doing something. Facing up to the facts, as best we know them, is arguably the first thing we have to do. As we continue to get new data (even as the fundamental message hasn't changed in a while), I think it's important to keep looking at the science so we base our actions on the best insights we have.

I happened to see Great Read! Important Read! in Tom Peters' dispatches from the new world of work. While I haven't read Amanda Ripley's The Unthinkable: Who Survives When Disaster Strikes - and Why, the subject of his post, yet, I think the concept meshes well with my idea that we are the ones who can make a difference. We can do it through business, we can do it personally, and we can do it through our governments. I think it's important to push forward on all three dimensions and not to let difficulties in one of those three areas prevent us from making progress in the remaining ones.

Is that a call to become dour prophets of doom? I sincerely hope not. While I think we have to make changes soon, I think we can and should do it with cheer, energy, and a spirit of optimistic entrepreneurialism. That's one of the things I liked about teaching at Bainbridge Graduate Institute: everyone there had an upbeat, infectious approach to life, to business, to social justice, and to the environment. That's one of the things I like about Bernie DeKoven's Junkyard Sports: he takes trash that no one wants and turns it into the stuff of play. That's one of the things I like about the growing interest in wind power, photovoltaic arrays, and high-efficiency transportation: the business system is responding to a real need. I'll let you have fun and success finding (or, better, creating) more examples.

What do you think?