November 28, 2012
Howard Schultz on the “drift towards mediocrity” in the United States

Starbucks’ CEO was a star turn at last night’s event in celebration of Harvard Business Review's 90th anniversary. Schultz has been outspoken about the management of the United States over the past eighteen months, and he didn't hold back in conversation with HBS professor, Nancy Koehn. Acknowledging that it is “somewhat unorthodox and unprecedented” for the CEO of a public company to speak out about government, he was nonetheless unapologetic, training his sights on the current state of the United States and, in particular, the looming fiscal cliff. How is it possible to have got within 34 days of this impending catastrophe? he asked. In whose interest are the politicians working? And, he warned, while not dealing with the fiscal cliff would be catastrophic, the Bandaid-based solution that politicians will likely paper over the crisis is “equally as irresponsible.”

For us to face $16 trillion in debt, with 14 million unemployed, the budget deficit, municipalities declaring bankruptcy… We’re all dressed up here in New York City, we’re getting ready for the holiday season. But America is not the America our parents fought for and promised us. The issue as business leaders, as citizens, is to understand we cannot embrace the status quo. 

"I didn’t come here to depress anybody," Schultz added, to rueful laughs from an audience which, it should be said, comprised a classic HBR crowd of senior corporate leaders and management thinkers. "I came to speak the truth." And the truth as Schultz sees it is that national leaders have lost the trust of the people. "Leadership are not putting their feet in the shoes of the American people. They’re putting their feet in the shoes of their own party and extremists. That’s a disaster."

Given the goings-on that Americans (and those who live here) have recently endured in the endless run-up to the Presidential election, it’s hard to disagree. And it turns out it was the election itself that spurred Schultz into voicing his concerns, when he discovered the many billions of dollars set to be spent on campaigning by the candidates and their parties. 

I was stunned by that. And once you’re exposed to something so inconsistent with what you believe, the question is, ‘are you a bystander? Do you walk away?’

For Schultz, walking away was not an option, and in 2011 he issued a Starbucks-wide email, Leading Through Uncertain Times, and called on his C-suite friends to boycott campaign donations “till people play nice and move the country forward for benefit of people, not party.” Back at the HBR event, he added:

Everyone in this room, Republican, Democrat, Independent, will agree with this statement: we all know that something is wrong. We absolutely know it. Yet we’re sitting here as if everything is going around like a merry-go-round, like everything’s fine.

"Do you feel alone in this?" asked Koehn of Schultz’s stand against the establishment. Delightfully, Starbucks’s founder was blunt in reply. "Everyone I talked to had a sense of understanding and sensitivity about the issue but they were afraid," he said, as the audience shifted uncomfortably in their seats. "It’s not that I’m alone. I think people do not have the courage to step out right now."

Schultz wasn’t all doom and gloom. Asked to nominate a leader who motivates him, he recommended two speeches by RFK: the "Ripple of Hope" speech given in South Africa in 1966, and the impromptu announcement of the assassination of Martin Luther King in 1968 (embedded below.) Why these particularly?

Those two speeches define leadership, courage, conviction, what it means to believe in something, what we’re lacking as society around the world… We need to find heroes once again. I don’t think we fully realize how high the stakes are, how we are allowing the greatest nation in the history of the world to drift towards mediocrity. I don’t understand why we are here. We have such greatness, possibilities, and optimism and we’re allowing this to take place. 

It was a sobering conclusion, but inspiring to see a leader take a stand on what we all know. President Obama, you should call Mr Schultz into your meetings with business leaders.

July 18, 2012
"Government spending is not a single-step transaction that burns money as an engine burns fuel; it’s part of a continuous feedback loop that circulates money. Government no more spends our money than a garden spends water or a body spends blood. To spend tax dollars on education and health is to circulate nutrients through the garden."

— This smart NYT op ed, The Machine and the Garden, makes the case that the economy is an organic, naturally impaired system, not a perfectly working machine. As the authors write, “An economy isn’t a machine; it’s a garden. It can be fruitful if well tended, but will be overrun by noxious weeds if not.” I also liked this statement, and wonder if we’ll ever be able to move on from tedious argument on the topic: “Empirically, trickle-down economics has failed. Tax cuts for the rich have never once yielded more net revenue for the country. The 2008 crash and the Great Recession prove irrefutably how inefficient and irrational markets truly are.”

February 23, 2012
"The greatest challenge to any thinker is stating the problem in a way that will allow a solution."

The above quote, c/o Bertrand Russell, is quoted in Innovation for the People, by the People, a solid overview of open innovation initiatives being considered/implemented by the various branches of the federal government. The author, David Bornstein, highlights the quote as a way to show the importance of asking the right question when trying to spark the most inventive and useful submissions to a wicked challenge. As he puts it, “the question needs to be open-ended enough so that it does not restrict creativity, or imply a method of solution, but it has to be defined sharply enough so that someone who doesn’t understand your whole mission can still solve your specific problem.” It’s a really tricky balance to get right, but absolutely critical, nonetheless.

[Story via Catherine Tomezsko.]

January 11, 2012
"Ironically, the six major movie studios have a great technology lab in Silicon Valley with projects in streaming rights, Video On Demand, Ultraviolet, etc. But lacking the support from the studio CEOs or boards, the lab languishes in the backwaters of the studios’ strategy. Instead of leading with new technology, the studios lead with litigation, legislation and lobbying."

— In Why the Movie Industry Can’t Innovate and the Result is SOPA, entrepreneur Steve Blank breaks it down. I’d never heard of the "great technology lab" he refers to, which looks super interesting. Elsewhere, Blank is acidic about the threat of the Stop Online Piracy Act—and those who support it: “when lawyers, MBAs and financial managers run your industry and your lobbyists are ex-Senators, understanding technology and innovation is not one of your core capabilities.”

December 28, 2011
"The FDA recently revealed that factory animal farms now burn through fully 80 percent of all antibiotics consumed in the United States."

Horrifying story from Mother Jones detailing The FDA’s Christmas Present for Factory Farms. In a nutshell, the FDA has decided not to pursue its decades-long quest to limit the routine use of antibiotics on animal farms, ruling instead that now it will support voluntary reform.

Now, it should be remembered that the original goal of the FDA to curb antibiotic use in such farms was not born from deference for the health and well-being of the animals. This isn’t lefty animal lib hysteria, but because, as noted here, even by 1977, "it was already obvious that routine use of these drugs would generate antibiotic-resistant pathogens that endanger humans." You know, the kind of thing the FDA is really designed to care about.

Yet the real horror of the story is not merely the stark statistic above, which should surely strike fear into the heart of all, but the insanity of the idea that somehow the billion-dollar meat industry is suddenly going to voluntarily curb its antibiotic use in a moment of thoughtful self-regulation. We KNOW that doesn’t happen, right? And then, of course, there’s writer Tom Philpott's “oh right, duh” conclusion: it's the money, stupid. As he writes, the action "could be a signal that the FDA is delaying real action until after the 2012 election, in an effort to keep meat-industry "dark money" from flowing to President Obama’s opponent. In 2011, the Obama administration has acted repeatedly to appease agribussiness [sic] interests."

What a pathetic, craven world we live in.

[Story via Maria Popova.]

December 19, 2011

A while ago, I linked to an interview in which Harvard Law professor Larry Lessig outlined some of the thinking that went into his latest book, Republic Lost. Now, here’s a slick talk (with eye-catching slides) Lessig gave at Google. It’s really well worth taking the time to watch the whole thing, for Lessig’s fantastically thoughtful analysis of where we are, how we got here, and how we might potentially extricate ourselves from the mire. I watched this a week or so ago, and I can’t stop thinking about his story of the pilot of the Exxon Valdez supertanker, which crashed in Alaska in 1989 and caused one of the world’s worst environmental disasters (starts 42:25). As Lessig points out, the ship’s captain, Joseph Hazlewood, had a well-documented problem with alcohol. But, shocking as it is that the man in charge of a supertanker was not legally allowed to drive a car (he had a DUI at the time), that’s not actually Lessig’s point. Instead, his is a starker, bleaker, much more searing conclusion, which cuts right to the heart of our collective passivity and acts as a resounding wake-up call. In his words:

Forget Hazlewood. Instead I want you to think about those around Captain Hazlewood, these other officers, people who could have picked up a phone while a drunk was driving a supertanker. I want you to think about those people who did nothing. All but one of those officers did nothing. What do we think about them? I ask this question because as I think about the problem this nation faces, increasingly I believe we are they. This nation faces critical problems requiring serious attention but we don’t have institutions capable of giving them this attention. They are distracted, unable to focus, and who is to blame for that? Who is responsible? I think it’s too easy to point to the Blagojeviches and hold them responsible, to point to the evil people and hold them responsible. It’s not the evil people, it’s the good people, it’s the decent people, the people who could have picked up a phone. It’s us. It’s we, the most privileged, because the most outrageous part here is that these corruptions were primed by the most privileged but permitted by the passivity of the most privileged as well.

Gulp. Well, it made me think.

December 16, 2011
"I am shocked that our lawmakers would contemplate such measures that would put us on a par with the most oppressive nations in the world."

— Google co-founder, Sergey Brin weighs in (in a post on Google+, natch) on the Stop Online Piracy Act, the controversial proposal that many Internet entrepreneurs believe will “undermine entrepreneurship, innovation, the creation of content and free expression online.” Read an open letter sent to Washington “to protect Internet innovation”, signed by Brin and other heavyweights,  including Reid Hoffman, Jack Dorsey and Marc Andreesen.

December 7, 2011
"Indie capitalism is, above all, a maker system of economics based on creating new value, not trading old value."

My former BusinessWeek colleague, Bruce Nussbaum, writes a hopeful Fast Company piece on the rise and rise of indie capitalism. The quote above, with its reminder of the importance of actually creating new value rather than just shifting all that was old around the place, reminded me of a great episode of This American Life from earlier in the year. In How to Create a Job, Ira Glass and his team of intrepid reporters attempted to get behind politicians’ trumpeted jobs plans. And, as Adam Davidson memorably said on attending the International Economic Development Council conference in San Diego:

This is what drove me crazy about this conference, actually about the whole profession of economic development. They’re not creating jobs. They’re just moving jobs around. Arizona steals a company from California by offering some tax break and lighter regulation. Then Texas cuts taxes a bit more, does away with even more regulation, and gets the company to move there. That doesn’t help anything. We still have the same number of jobs. But now we have this race to the bottom. Who can cut back government services the most? Who can eliminate the most regulation?

Creating, not trading. Creating, not moving around. Creating, not indulging in a pellmell race to the bottom. Let’s do that.

December 6, 2011
"On my third day,” he said, “I held a staff meeting for all 5,000 members of the staff, and I said, ‘You all think that you are in the business of paying bills. Yes, you do that. But I also think Medicare can be a force for change.’ ” He added, “I tried to reconceptualize it as an improvement organization."

New York Times columnist, Joe Nocera weighs in on the departure of Dr Donald Berwick as the administrator of Medicare and Medicaid. In Dr Berwick’s Pink Slip, Nocera outlines the shameful behavior of the Republicans in Congress, who won a “pointless victory” against the president by first blocking Berwick’s nomination and then refusing to confirm him. In doing so, they might just have consigned the one in three Americans who get insurance through Medicare to continued poor treatment within a hopelessly broken system, which seems like something of a lose-lose.

But also interesting are Nocera’s tales of Berwick’s application of management practices to encourage improvements in healthcare. The above quote was Berwick’s leadership manifesto when he arrived at the organization. What’s so great is that it’s a crystal clear vision for staff to mobilize behind. Sadly, as Nocera concludes: “17 months is hardly enough time to complete such a transformation, and it is hard to know if Berwick’s emphasis on quality will stick.”

December 2, 2011
Al Gore on Using Gaming to Help Combat Climate Change

This morning, An Inconvenient Truth filmmaker and former United States VP, Al Gore turned up at Soho House to honor the ten shortlisted agencies in PSFK’s Gaming for Good competition. The idea: to use games to encourage real action in the fight against climate change. Among the ideas: building climate change effects into existing games such as Call of Duty or Farmville, or creating projections of virtual trees which react in real time to real world conditions. Some of the ideas were impractical, and I really do think anyone who says the word “gamify” with a straight face should donate $10 to charity each time. But Gore spoke convincingly about the challenges the world faces. Here are some edited quotes:

On this week’s UN Convention on Climate Change meeting in Durban and the failure of governments to act on climate change:

How can I say this without making news? The United States is really not a force for progress there, but rather is one of the obstacles to progress there. The world as a whole at a governmental level is not doing very much to address this crisis.

On how change needs to be bottom-up and not rely on policy makers to do the right thing:

The legacy political and economic powers of the preceding 150 years, the oil companies, coal companies, coal-fired electric utilities, factory farms etc, have so much control over the levers of political power that the policies that we need to accelerate this transition are blocked… We still need changes in policy. The same general approach needs to be taken there. But it’s not coming from the top down; it has to come from the bottom up.

On how the dominance of television and business is unhealthy for common discourse and society:

The founders of our country had a sophisticated understanding that the accumulation of too much power in too few hands is always going to lead to trouble, no matter the character, virtue, nature, ideology or politics of the individuals involved. It’s a straight thermodynamic equation: too much power in one place will lead to bad results.

On the current state of government and policy-making in the U.S.:

In computer terms, our democracy has been hacked. It no longer functions with the structural integrity our founders intended it to have. 

On the influence of technology and the Internet:

The good news is that technology is gaining momentum. The architecture of the public square on the Internet is very similar to how it was when the country was founded. Individuals have easy access; there are almost no barriers to access. Ideas matter. We all know examples of how a single blogger has at times turned the course of national debate by pointing out the truths of the matter being debated. This is very, very encouraging. 

On climate change: 

It turns out the scientists actually know what they’re asking about. The laws of physics do apply. The more vapor there is in the atmosphere, the more the odds of “Snowmageddon” or flooding events go way up. In Pakistan, 20 million people were driven from their homes, further destabilizing a nuclear country. In my home town of Nashville, Tennessee, thousands of my neighbors lost their homes. They didn’t have flood insurance; the area had never flooded before. It was a once in 1000 year rainfall. Many communities are having once in 1000 year rainfalls.

On climate change skeptics and the continued need to canvas for action:

If you, god forbid, had chest pains that got worse and you were able to consult the most expert heart doctors in the world and 98 of them said “oh my God you have to start taking this medicine and you really have to change the way you eat… but then 2 of them said “I’m not sure yet”—what would you do? Some of us have friends who’d go with the two, but probably not if the pains get worse. The earth’s system is speaking very loudly. When the political process is paralyzed, the system has been hacked, and there’s a legacy of players who have the wealth and moxie to block any kind of progress, we have to build on this bottom-up shift in awareness and consciousness, to put pressure on markets to respond to this desire and ultimately to put pressure on political leaders of all parties in every country to address this crisis. 

November 23, 2011
"If we can’t get beyond the architecture of polarization, we are doomed."

Reclaiming the Republic provides me with just the food for thought I need as we here in the U.S. head into the Thanksgiving holiday. Lawrence Lessig is the director of the Edmond J Safra Foundation Center for Ethics at Harvard, as well as a professor of law at the university’s law school, and this interview came about on the publication of his latest book, Republic Lost: How Money Corrupts Congress and a Plan To Stop It. It’s well worth reading the whole of this interview, with Boston Review web editor, David Johnson; I pulled out a few other Lessig ideas/quotes that struck me below:

On regulation and the financial industries:

Frank Partnoy calculated for me that in 1980, 98 percent of financial assets traded in our economy were traded subject to the normal rules of transparency, anti-fraud requirements, basic exchange-based rules of the New Deal. By 2008, 90 percent of the assets traded were traded invisibly because they were not subject to any of these basic requirements of transparency and anti-fraud exchange-based obligations.

On Congress driving its policy agenda on the basis of fund-raising potential rather than what might actually benefit the American people:

 If every unemployed person out there had a democracy voucher [a $50 tax rebate to donate to political campaigns], maybe they [elected officials] would pay a lot more attention to unemployment, because there could be a return from paying attention to unemployment.

On the broken design of lawmaking and Congress in the U.S.:

All of the activity of negotiation and deliberation is done outside the chamber; there’s no deliberation, so you just have to ask, “Why did we create a Congress?” The framers didn’t sit down and set up a Congress so they could imagine these 535 independent contractors all arbitraging fundraising opportunities. If that’s what the institution is, then let’s just shut it down.

On the importance of thinking laterally and challenging received wisdom:

It isn’t harmful to have ideas.

October 3, 2011
"The 71,000-page tax code has become loaded with dozens of obscure but economically valuable tax breaks. Nascar racetrack operators can speed up their write-offs for improvements to their facilities; makers of toy wooden arrows pay no excise tax; and Eskimo whaling captains get a charitable deduction of up to $10,000 for hunting blubber."

In Debt Talks, Divide on What Tax Breaks Are Worth Keeping looks at the bind poor old senators are in. They are obviously against wasteful, awful, nonsensical tax breaks on frivolous and unimportant matters, see. Unless of course they apply to something that’s going on in their own state, in which case, why, they are pure common sense. Ugh. And, ahem, hello? A SEVENTY ONE THOUSAND page tax code? Who on earth does that benefit? (Please don’t actually answer that.)

And sometimes we wonder why fostering change or meaningful innovation seems so impossible. Seems more like a miracle anything gets done, ever. How depressing.

September 7, 2011
"The reason we don’t have beautiful new airports and efficient bullet trains is not that we have inadvertently stumbled upon stumbling blocks; it’s that there are considerable numbers of Americans for whom these things are simply a symbol of a feared central government, and who would, when they travel, rather sweat in squalor than surrender the money to build a better terminal. They hate fast trains and efficient airports for the same reason that seventeenth-century Protestants hated the beautiful Baroque churches of Rome when they saw them: they were luxurious symbols of an earthly power they despised."

— In Decline, Fall, Rinse, Repeat, New Yorker writer Adam Gopnik takes a look at a new crop of books tackling the topic of America’s potential decline, including That Used To Be Us, by Thomas Friedman and Michael Mandelbaum. That book’s title comes from a remark made by President Obama in regard to the decline of innovation in the United States, and Gopnik does a great job of illuminating the complexity of the challenges facing any government-sponsored innovation programs.

September 4, 2011
"Look at the exhausted Treasury; the paralyzed government; the unworthy representatives of a free people; the desperate contests between the North and the South; the iron curb and brazen muzzle fastened upon every man who speaks his mind, even in that Republican Hall, to which Republican men are sent by a Republican people to speak Republican truths—the stabbings, and shootings, and coarse and brutal threatenings exchanged between Senators under the very Senate’s roof—the intrusion of the most pitiful, mean, malicious, creeping, crawling, sneaking party spirit into all transactions of life."

— Apart from the stabbings and shootings (not yet taking place inside the Senate, at least), this sounds like a pretty appropriate description of the current state of U.S. politics. It’s not. It’s a description by Charles Dickens of his first, disappointing visit to America, back in 1842, quoted in the New Yorker piece, Dickens in Eden. Plus ca change.

August 25, 2011
"Changes need to be system wide, and that is where governments will really matter. Given that governments have concentrated on getting elected by creating fear, shifting to showing vision will be an enormous challenge. But in the end, investing in the post-industrial world is the only way to go."

Innovate or Die is a worthwhile read by Yves Smith on the mess we’re in, the reason that government needs to step up to fix things—and why it won’t. He writes:

The problem is about a lack of creating the new, something governments have little or no influence over. About four fifths of so called “new products” are refinements of old products… Yes, there is growth in areas like health care, but that hardly parallels the invention of the car, or fridges or any of the other big changes of the first half of the twentieth century. Most things that are new are just refinements – a mobile phone is just a phone made mobile, a microwave oven is just a quicker oven — or an enablement of something old: the digital revolution is mostly an enabler of existing, non digital forms of commerce or functions.

It’s not all doom and gloom, Smith assures, but it will take strong leaders to step up and take bold risks on attaining some far-off vision. No word on who these leaders might be, but let’s hope they’re poised and ready.