The cost of networks

Not all networks are created equal. And I’ll take this moment to point out this more challenging aspect of innovation in general, and sustainable innovation in particular, having just ran across yet one more glaring example. Everyone, myself included, talks about the critical role of networks in the innovation process. We rarely talk about how those same networks go bad.

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A conversation on Dot Earth around talking about, versus building, new companies

I had a recent conversation, continuing across two posts, in Andy Revkin’s Dot Earth blog earlier this week. The first was on a cool new company, Ecovative Design, that came out of RPI’s Inventor’s Studio and an interview of Eben Bayer, the CEO and co-founder: “A Young Green Innovator Turning Fungi into Jobs Muses on the Path to Breakthroughs” with some of my comments towards the end. The second is a Your Dot, an additional comment I posted on “The Innovator’s Challenge: Moving From Idea Networks to Action Networks” to elaborate on the challenges of building networks that do things…

The normal dysfunction of organizations

The more corporations grow in size, power, and political rights, the greater our need to understand them. The greater our need, particularly, to understand how they so easily go bad. The recent in-depth article by Peter Thamel and Mark Viera, on Penn State’s Board of Trustees’s Painful Decision to Fire Paterno explains as much about the dangers of normal dysfunction in organizations as it does about the crimes committed.

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The unknown knowns (aka Rumsfeld’s missing quadrant)

[T]here are known knowns; there are things we know we know.
We also know there are known unknowns; that is to say we know there are some things we do not know.
But there are also unknown unknowns – there are things we do not know we don’t know.”

—Former United States Secretary of Defense Donald Rumsfeld

Rumsfeld made this famous statement (and made this statement famous) on February 12, 2002 at a press briefing on the absence of evidence linking the government of Iraq with weapons of mass destruction. Brilliantly, he used it to cite the very lack of evidence as evidence we needed to act.

A great commentary by Geoffrey Wheatcroft in Saturday’s NYT, A World in Denial of What It Knows revisits this statement to suggest a willful ignorance of what we already know may be the defining trait and lasting legacy of our time. Wheatcroft points this out to explain the Irish financial meltdown, and beyond:

Unknown knowns were everywhere, from Wall Street to Brussels, from the Pentagon to Penn State. Ireland merely happened to offer an extreme case, where “everyone knew.” They just chose to forget that they knew.”

This reminds me of Upton Sinclairs warning from an earlier time and society run amuck:

it’s amazing how difficult it is for a man to understand something if he’s paid a small fortune to not understand it.

If money is at the root of all evil, then we must better understand how to better understand things.

To Wheatcroft’s brief list of unknown knowns, I would suggest we add the following:

  1. Societe General, and USB’s, unknown risks of “rogue” traders
    Are we really expected to believe these were rogue traders? With every trade in the markets, there is a typically a winner for each loser. Has an investment bank ever called in the police to haul off the rogue traders on the upside of these extreme bets?

  2. BP’s unknown maintenance problems
    On both their Transalaska pipeline and their Deepwater Oil Rig BP had extensively and pre-emptively documented the problems leading up to its disastrous leaks and outright spills.

  3. Congress’s and the Supreme Court’s unknown subjugation to corporation
    There is no denial here, simply no admission that corporations will soon own policics by rejecting a corporate spending limit in political campaigns. If anything, this reflects an even deeper and more willful ignorance that corporations are not, in fact, the same as individuals. As Justice Anthony M. Kennedy wrote for the majority,

    “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.”

  4. Goldman’s, Merrill’s, Lehman’s (and every other private equity fund’s) unknown derivatives risks
    Too big to fail. Enough said.

  5. DOE’s funding of VC’s funding of cleantech
    Solyndra, anyone? Granted, this is more cmplicated but not for the former venture capitalists who were brought in to oversee the DOE funding of clean technology. My colleague Martin Kenney and I wrote an article Misguided Policy about this, attempting to understand how so many smart people could spend so much dumb money.

  6. NCAA Division-1 Football
    Even before Penn State and JoPa’s willful denial of young boys in danger, there was USC’s semi-pro teams, Miami’s hookers and hit lists, Ohio Stae’s tattoos for memorabilia program, FSU’s test-taking program, and so many others it just gets harder by the day to feel the requisite shock.

  7. College administrators unknown risks of clearing out peaceful protestors
    Or, the unknown effects of pepper spraying students peaceably assembled. This one was too close to home. Anyone who witnessed the student riots of the 1960s and 1970s should know better.

  8. Climate change
    At least this group has its own label—climate science deniers.

Of course, looking back on it now, the very fact that Rummy created a rhetorical 2X2 and left the last quadrant empty—the one about those things we don’t know we already know—serves as just one more data point that we so willingly ignore what we know when we don’t want to.

Teaching failure

Seth Godin has a thought!  Joking—he’s got plenty of thoughts.  This one was particularly interesting because it poked a sore spot in me about teaching innovation and entrepreneurship: The difference between a failure and a mistake.  He makes a useful distinction that, even if it’s not going to change Webster’s definitions, should change how we talk about and teach innovation.

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An (innovation) revolution in our midst

The fields of innovation and entrepreneurship are undergoing a revolution of sorts.  We are slowly and inexorably recognizing that our obsession with ideas—how to have them or how to buy them—fails to explain how breakthroughs actually happen.  It's no longer easy to believe that a single idea drove Apple's iPod (which in a decade has become its biggest business) or Edison's lightbulb when we consider the dozens of other companies who were already selling those same ideas in the market when their proverbial and literal light bulbs went off.  As with any scientific revolution (and conveniently self-referential), it's not a single idea that drives the revolution but rather a subtle accumulation of similarly new ideas from different sources.  In this case, the revolutions is about the role of entrepreneurship, of action and experimentation, in making breakthroughs happen.

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