Questions on growth: a follow-up

After all of our good questions about growth, we've gone silent, so I was about to change topics. Then I saw The Growth Bubble on Tom Fiddaman's MetaSD and its link to Thomas Friedman's The Inflection Is Near?

It's a Friday night after a long week, so I'll leave it to you to make the editorial comments.

R in the news

If you're nervous about applying free software in your work, see what the New York Times had to say about R, the free statistics system. Thanks to Andrew Gelman for pointing out that article.

I'll highlight another free tool in my next posting.

Dealing with risk and uncertainty

Times are uncertain. Risks seem high. We may feel that the price of missteps is high; we know it's hard to decide what steps to take.

In situations such as this, how do you make decisions in and for your organization? How do you plan effective actions? How do you solve the inevitable problems that arise?

The German psychologist Dietrich Dörner, author of The Logic of Failure, has made a career of studying why people make mistakes and what we can do to improve. One of his key pieces of advice is to use computer simulation to get insight about the situations we face so that we can make better decisions in real life.

Perhaps today's uncertainties are your signal that the time is right to apply more systemic approaches in your work and to ground your planning, problem solving, and decision making with simulation that takes into account factors important to your business. Perhaps it's time to test and rehearse your plans before you implement them.

That's what we've been discussing here, and that's how I help others. If you're concerned that your standard approach to business may need augmentation in today's world, perhaps I can help you, too. Drop me an email or give me a call. There's no obligation—only opportunity.

Climate forecast: Germany

"In keinem anderem Land der Welt liegt bis dato eine präzisere Kalkulation der Klimafolgen vor. Sie soll die Grundlage für politische Planungen bilden." ("In no other country of the world do such precise calculations exist regarding the effects of climate change. They should serve as the basis for political planning.") That's what it says in Regierungsprognose enthüllt Folgen des Klimawandels für Deutschland in Der Spiegel for September 2, 2008 (you can read the entire report, too).

Now I'm mindful that I've recently written about the dangers of forecasting. Jay Forrest has reminded me of limitations to my claim; taken to extremes, it might suggest we can't usefully predict the rising of the sun in the morning or the need to buy food at the store (or grow it in the earth). I certainly don't mean to take it that far, and I'll write more about those limits someday.

Without having read the full report (it's 159 pages, after all), I suspect that this report can be useful if viewed at least like a scenario planning exercise: what could happen? How much in advance do we need to prepare? What are the triggers that would indicate it is time to prepare? If the time to start preparing is in the past, can we make strides in that direction without compromising our ability to deal with other futures, too? In other words, can we create robust plans for the future?

Or perhaps it's more accurate than that. I'd welcome ideas from people who have read it and have particular insights: what did you expect? What did you find? Were there any surprises? Does it seem credible?

And where are the rest of us in thinking about changes we'll face?

Fooled by Randomness: some thoughts

I read and wrote about Nassim Taleb's The Black Swan some time ago; now I'm reading his Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets.

I'm struck by the application of his ideas to environmental and ecological issues. It seems as if we're placing most of our societal bets on growth, a bet that has played well for centuries. Given the current news, though, those seem like some of the investment bets Taleb describes as foolhardy. A prudent "investor" (citizen or business person) at this stage in the Earth's development might place most or all money on bets that can't lose much. Betting on the ability of the planet to absorb more growth, on nonrenewable energy sources to remain plentiful, or on technology to increase efficiencies sufficiently yet again seems like a risky bet, given the news of the day (and year and decade).

That's consistent with the precautionary principle; do check out THE YEAR IN IDEAS: A TO Z.; Precautionary Principle from The New York Times.

What do you think?

For more on Taleb's book, see words by Andrew Gelman, Wikipedia, and James Glassman.

Tipping points

A few years ago, thanks to a lead by John Sterman, I posted a note about a Proceedings of the National Academy of Sciences (PNAS) article that attempted to quantify the carrying capacity of this planet. The concept of carrying capacity is important; if you try to exceed the carrying capacity of an ecosystem, you will eventually be brought back. What's even more worrisome is the potential that you might eat up carrying capacity while you're in overshoot: if you do that, the equations suggest you'll eventually suffer a collapse.

There's another concept that's discussed both in the systems literature and the popular press: the tipping point. That's the claim (loosely) that systems may reach a point where a slight addititional change will lead to a qualitatively different state. Often the definition includes something about irreversibility (you can't go back) or at least about the difficulty of reversing a change due to the reaching of a tipping point.

Now John Schellnhuber and his colleagues have published Tipping elements in the Earth's climate system in the February 12, 2008 issue of PNAS. They've also published appendices, not in the printed version, that provide their formal definition of a tipping point, evaluate other potential tipping elements, and describe how they elicited the information for the main article.

Those of you interested in tying systems concepts to the real world (hopefully that's just about anyone doing systems work, although some may be more interested in some applications than others) might find this of real interest. Those of you wondering about the risks of climate change might find it informative.

For a report on Schellnhuber's lecture at the annual meeting of the AAAS, see John Schellnhuber’s Third Industrial Revolution, a New Approach to Addressing the Hazards of Global Warming by Julia Whitty in Mother Jones.

System dynamics, black swans, and the management of business

I'm currently reading Nassim Nicholas Taleb's The Black Swan: The Impact of the Highly Improbable. While I intend to tell you more of what I think when I'm finished, I have an early impression, based on stories such as what he calls "Hume's problem" (or the turkey problem). That's a problem in which everything seems to be getting better and better, only to change direction suddenly and drastically for the worse. In his example, the turkey sees life as a daily succession of friendly humans offering food, only to have it cut short in a manner seemingly quite out of character for life as the turkey has perceived it. (As Taleb points out, it all makes eminent sense to the butcher.)

I think that's part of the reason for system dynamics as yet another tool for thinking and working. As Geoff Coyle points out in his System Dynamics Modelling: A Practical Approach, top management is concerned about things such as the consequences of actions, the likely future, and robustness against uncertainty (p. 15). One of the basic parts of the system dynamics approach is to challenge preconceived notions of the extent of the system causing the current situation: are we looking over a broad enough time span, are we including enough of the actors and actions, and are we paying attention to feedback effects (what Taleb calls recursive effects on p. xxii), where something we do today might come back and affect the situation we face tomorrow?

While there are no guarantees, that unfortunate turkey, had she had good training in system dynamics (or a competent system dynamicist at her side), might have been inspired to look at life over a 5-10 year time span, not just the few months she had experienced. That might have surfaced the fate that led to her demise as part of a regular pattern (albeit one that occurred rarely compared to her lifespan). Had she looked not only at the friendly human feeding her and the other turkeys eating with her, she might have noticed the butcher looking eagerly over the fence from time to time and asked about his role in her life. Had she realized the implications of those observations, she might have decided not to become quite so friendly with her "caretaker," she might have decided not to eat nearly as much (if she were scrawny, might her fate have been different?), and she might even have encouraged the other turkeys to join her in an escape attempt.

Now I don't think that the use of system dynamics conveys infallibility; in fact, that's why I'm reading Taleb's work, to figure out more places my insights may be fallible so that I can make them more robust.

Taleb advocates tinkering as a way to make progress; I see system dynamics as a way to tinker faster and think more effectively in support of your (and my) goal of more effective action.

While my comments may be out of the main focus of Taleb's thesis (system dynamicists tend to focus on the deterministic, not the random, even as they seek to help you be able to respond better in the presence of the random), I don't yet see them in contradiction. I offer them to you in the hopes they are of use to you. Now it's my (and your) task to try to disconfirm them; the longer we can't, the greater the likelihood there's something worth attending to!

If you want to tinker faster with the situation you find yourself in but don't want to risk your business each time you tinker, let's talk.

Thanks to Andrew Gelman for his posts that led me to Taleb's work.

Which OS for your business?

CIO Magazine has been looking over the shoulder of CareGroup CIO John Halamka as he tests various operating systems for deployment in his organization. See the final series as he tests Ubuntu, along with his decision. It may not be what you think. (If you like this article, you might also like this.)

Is business getting worse?

Bloomberg says "CEOs See `No Clear Signs' of Crisis as Woes Intensify." Are things really getting worse, even as people put smiles on their faces, as that article seems to indicate?

We obviously won't know for a while. Even if things get worse for some companies, others will likely do okay, and some will thrive (or, if things go well, others will likely do okay, and some will suffer).

To a large degree, the key is being good at responding to what happens, not simply what happens. We get good by being lucky, by thinking clearly, or by having been in this situation before and having learned (or by some combination of those). While I have no help for you in the luck category, there are myriad approaches to thinking clearly, and I've tried to touch on a few in Making Sense With Facilitated Systems.

You might say that there's no way to experience the future before you get there (the third alternative). As Dietrich Dörner and Harald Schaub point out, that's not necessarily the case. Simulation (system dynamics, usually) is a way to explore challenges we might face in the future and to learn which strategies are likely to be more successful.

How are you preparing for the challenges you might face? If you'd like to talk about some of the possibilities, drop me a line.

Better than a spreadsheet

So you're a manager, and you have numbers to calculate. How do you do that? Most likely, you fire up your favorite office suite and create a spreadsheet.

With the problems people have highlighted about spreadsheet usage, I find that I've been using a spreadsheet less and less. Most of the time that I open a spreadsheet these days, it's for a legacy application. I tend to use J.

I've written about J elsewhere. I was tempted to give a short introduction here, but I realized I'd be duplicating what others have said, and their attempts are, no doubt, better.

What prompted me to write this morning was my experience of yesterday. I needed to track some data, and so I set out to create a simple database. I have PostgreSQL available, but that seemed excessively powerful. I really should update my PostgreSQL installation, and I didn't want to take the time for that. I thought about Base; then I could pick whether I wanted to use PostgreSQL, its internal database, or something else.

When I realized that I'd likely want to analyze the data with J, I remembered that J has an SQLite addon, thanks to Oleg Kobchenko. I installed it (it's tiny), and I was up and running with a relational database in minutes. Now I just need to brush up on my SQL.

So, check out J. It's free, and it runs on most systems.

Making the move to open source software (don't forget to FLOSS!)

As frequent readers may have detected, I make use of a fair amount of open source software (also called Free/Libre/Open Source Software or FLOSS) in my work. Sure, it's less expensive, but I tend to do it because of other advantages it provides.

You might get the impression that I think switching to open source (or, for that matter, switching to any new software) is easy, and you might be concerned that it's harder than I let on.

You'd be right to be concerned. Solveig Haugland has just published a good article called A very important post for decision-makers considering OpenOffice.org. Read it if you're even considering moving your company to a new system. (If you're only moving yourself, it's a lot easier; you become both the pilot test and the implementation, and you can control the speed and extent of your transition.)

If you'd like to dig more deeply into the economic impacts of FLOSS, you might be interested in Study on the: Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU, prepared for the European Commission's ICT Task-Force. The final report was published November 20, 2006. I can't get that report to load successfully this morning, but a September 26, 2006 draft of the executive summary does work.

I've not read the entire 287 pages, but I have read the executive summary. I'd like to highlight one point on page 12 of the report:

Avoid lifelong vendor lock-in in educational systems by teaching students skills, not specific applications...

Whether you're a fan of open source software or not, I think that's incredibly important advice. Some software, some products, some processes, and some technologies have incredibly long lives (I'm using an editor that traces its heritage back to the 1970s), but others come and go. It's much better when we, our employees, and our new hires understand general principles and then can apply those principles in specific cases than when we only understand specific cases and have to start all over when we face a new specific case. Think about that as you hire, as you train people, as you learn yourself, and as you consider what gets taught in the educational system where you live.

Be careful out there

See Alert: Critical Windows Attack Underway and Virus Disguised as IE 7 Download.

Assuming you have the option, this sounds like a very good time to use a browser other than IE, to read emails in plain text instead of HTML, to avoid clicking on links you aren't sure of, and to be generally careful. Currently just over 50% of you who visit Facilitated Systems use IE.

By the way, when I send long URLs by email, I sometimes use TinyURL.com to shorten the link. I always use the Preview Feature in creating those links so you can see where you're going before you go there. In case you get a link where that's not enabled, you can apparently set it for your computer, too.

More on spreadsheets

I've written about the risks of spreadsheets before, but Friday's comp.risks brings news of a different sort of problem caused by spreadsheets with a DWIM mentality.

The moral of the story is the old, familiar one: pick the right tool, which is not necessarily the easy tool, for the job.

spreadsheets
software quality
business risk

Spreadsheets: dangerous to your organization?

Most of us use spreadsheets regularly. Indeed, starting with Visicalc, spreadsheets have been a major convenience factor for personal computers of all sorts, enabling non-programmers (or programmers who want an easier way) to make valuable calculations.

For some time, I've been worried about spreadsheets. For example, I've noted that it's far too easy to enter a value in a cell, overwriting a formula, and then forgetting to set it back to the formula. I've seen such errors get discovered weeks or months later when, for example, faulty but hoped-for financial projections in a spreadsheet don't come true.

Comp.risks posted potentially valuable links to sites that discuss errors in spreadsheets, and their work seems to validate my suspicions. Hardwiring, that overwriting of a formula by a constant, is "very common," although its incidence can be eliminated by protecting all cells with formulas. (No, I don't always do that, either.)

If you're so inclined, check out the research, and consider how you can insure the spreadsheets in your organization won't lead you astray. Consider best practices they suggest.

For even better security, I might suggest beginning to move to an array programming language, in which the calculations and the data are clearly separate and can be examined separately and easily. J is one such language; its tacit expressions can provide an easy path to a personal, custom calculator that can provide you the data you want and that is quite insusceptible to hardwiring errors. Check out Easy J for a quick introduction.

spreadsheets
software quality
j language
business risk
array programming language

Making the world a safer place

We'd all like the systems (both the computerized ones and the harder-to-see organizations of people, processes, and tools that also compose systems we use) that protect our lives to work well and never fail, whether they are the safety features in nuclear power plants or the clinical procedures and equipment in our hospitals. Yesterday's comp.risks had two postings about failures in computerized medical systems, reminding us that many of our traditional beliefs about what causes failures in such complex systems aren't consistent with research.

In 1990, James Reason wrote the excellent and very readable Human Error, describing how errors are made in practice and describing how they can be reduced. Richard Cook and the Cognitive Technologies Laboratory have created a Web site with many short (and some longer) articles helpful to those designing such systems. Nine Steps to Move Forward from Error is food for thought for people thinking about how to make improvements after a significant system failure has occurred.

What's that got to do with us? Some of us manage people who create or use such systems; we need to know what good, current research tells us. Sometimes the pressures we put on others may create the problems we're trying to avoid.

Some of us may design such systems. We especially need to know what the research is discovering, for we will make many decisions and recommendations that affect safety and performance.

Some of us may simply use such systems. Normally, we may not need to know much of this. When systems fail, though, we may become part of a concerned and vocal populace that cries out for action. Knowing what research suggests about dealing with the aftermath of such failures helps us advocate for actions that will help us, not actions that may create even bigger problems in the future.

These concerns don't only apply to life-critical systems; we're also involved in business and organizational systems daily. The penalty for failure in those systems may not be someone's death, but it could involve people's livelihood.

By the way, comp.risks is a good way to stay abreast of the risks associated with the development and use of computer systems.