Machine guns are to Google as _______ are to profit

I live in Ottawa. Today President Bush came to visit.

H-O-L-Y C-O-W! Cops: everywhere. Helicopters and airplanes all over the place. Super cool snipers sneaking around rooftops. Dogs, barricades, security checks, blinders, tents to get in and out of cars, they even shut down this main street running through the heart of the city. Like putting a clamp on your carotid artery.

If there’s a guy that understands dynamic systems and organic organizations it’s the person running security around here. Man I’d love to meet whomever it is. Think of all that complexity, all those dynamic relationships, all that roiling real-time information.

Whatever system the President’s security team uses has to have some pretty neat applications. Think close: political campaigns or major band tours. Think far out: traffic solutions or managing bandwidth on suddenly viral sites.

Sound naïve? I recently had the opportunity to ask an older, highly successful entrepreneur for his best advice. Here it is: find a problem, fix it.

Can’t say I was impressed. But I smiled politely and we kept on chatting.

Further into the conversation he tells me about a problem he’d solved, the intricate system he built to keep it solved, and his staggering profit upon the system’s sale.

Suddenly I saw his point. Fix it – permanently. The unstated corollary: make the solution into a system, sell the system.

Think Google, Froogle, Google Scholar, Adwords – replicated systems. Profit juggernauts.

Entrepreneurial “how to”

One of my clients helps people make career decisions and he’s great at it. He’s also a great entrepreneur. A few years ago he was a top 40 under 40 entrepreneur.

Two nights ago we were draining glasses in a moderately swank fusion restaurant, discussing the unique challenges faced by entrepreneurs. He was telling me all the tricks of entrepreneurial success. Boiled down, here they are:

  • Identify a market niche you’d like to own.
  • Build something that solves a problem in that niche, even if it only sortof works.
  • Put it out there and use the momentum to improve it.
  • Experiment on pricing as you go.
  • Leverage that success to solve another problem.
  • Replicate the above.

The hard part, he says, is continuing to see the big picture while struggling with the daily grind, constant push for products, and mind-numbing concentration required to consistently deliver a consistent outcome.

I thought this was great stuff, got all excited, and started evangelising some of the ideas I’ve written about here. Paradigms. Tribal business. Potent principles. These ideas always get this guy going and we ended up pounding out two new products for his company before we were done.

We were just wrapping up, quietly staring about the place, pondering our chat when Alan sighs out this blast of pent-up energy and says, “You know I’m flying at around 10,000 feet. When we talk, you take me up to 300,000 feet. It makes a huge difference, thanks.”

Heh. Always nice to hear that.

Look!

A few days ago I met one of life’s undeclared mentors. One of those people that have seen so much, done so much, and achieved so much that nearly every idea is weighted with a multitude of applications.

One thing he said: Everything I see, I try to understand what it does instead of what it’s for.

I’m convinced that one of our most powerful capacities is to shift paradigms. Those that can reframe, re-jig, reverse – they will ultimately succeed. Those that only see what is in front of them will be fed by the first group.

Below is a poem by US Poet Laureate, Billy Collins from Sailing Alone Around the Room. If we recognize the power of paradigms for solving the complex problems of our day - are we teaching our children to see?

First Reader

I can see them standing politely on the wide pages
that I was still learning to turn,
Jane in a blue jumper, Dick with his crayon-brown hair,
playing with a ball or exploring the cosmos
of the backyard, unaware they are the first characters,
the boy and girl who begin fiction.

Beyond the simple illustration of the their neighbourhood
the other protagonists were waiting in a huddle:
frightening Heathcliff, frightened Pip, Nick Adams
carrying a fishing rod, Emma Bovary riding into Rouen.

But I would read about the perfect boy and his sister
even before I would read about Adam and Eve, garden
and gate,
and before I heard the name Gutenberg, the type
of their simple talk was moving into my focusing eyes.

It was always Saturday and he and she
were always pointing as something and shouting “Look!”
pointing at the dog, the bicycle, or at their father
as he pushed a hand mower over the lawn,
waving at aproned Mother framed in the kitchen doorway,
pointing toward the sky, pointing at each other.

They wanted us to look but we had looked already
and seen the shaded lawn, the wagon, the postman.
We has seen the dog, walked, watered, and fed the animal,
and now it was time to discover the infinite, clicking
permutations of the alphabet’s small and capital letters.
Alphabetical ourselves in the rows of classroom desks,
we were forgetting how to look, learning how to read.

Who’s an ox?

I think I missed my own point last night. The sift experiment isn’t about finding bright answers. It’s about finding the right pieces.

In Davidson’s analysis, the subjects were given more than enough pieces to complete a puzzling problem. The task was to see which pieces were relevant to the solution.

In my analysis, entrepreneurs often don’t even have all the pieces (let alone extra useless ones). The sift experiment brings more (hopefully helpful) pieces into the game. Davidson’s research suggests this will help in a significant way.

Not Einstein? Use sift.

An interesting note from the Nature of Insight and an article by Janet Davidson. Davidson was studying the relationship between insight and intelligence. From the table below, it’s clearly nice to be bright. The results show that highly intelligent people are more insightful (these problems require insight of one sort or another). Well, that’s to be expected. Also expected is the benefits of being cued, or guided, when working through a problem – especially if you aren’t the brightest bulb in the pack. But here’s the clincher – if cued, the average subject increased her score by 47 – 58 percent on questions requiring insight. Being cued when you’re bright doesn’t get you much, but being cued when you need some help gets a whole lotta benefit.

Insight performance by intellectual level and problem type
  High ability Average ability
Problem Type
Uncued
Cued
Uncued
Cued
Restructuring for relevance
4.2
4.3
2.3
3.4
Recombining relevant info
3.8
4.1
1.9
3.0
Solutions via past experience
4.0
4.2
2.1
3.3

See, besides being witty, pithy and plump with candour (as advised by Seth Godin) – sift is on the hunt for evidence that entrepreneurs can benefit from some guidance. Note, the intelligence of the researcher isn’t in question. That frees me up to be as dumb as an ox – I only have to find the bright answers.

Do you answer questions requiring recombination of information, less than obvious information, or a set of past experiences you haven’t built yet? If you aren’t Einstein, maybe sift can help.

Complexity challenge

I’ve written before on the cross-over from science into business and cited with gushing enthusiasm the insights of Edward O. Wilson. I’ve just finished reading Veran Allee’s book the Future of Knowledge. Her book is a pretty good overview of where we’re at and the challenges we face when managing this new organic world of information.

Because Verna’s book is an overview, she relies on many other thinkers to do the heavy lifting. One of those people is John Hagel who’s called for (what he calls) the molecular organisation. The problem with molecular organisations is that we don’t know how to work one – or even build them intentionally. Verna says we’re in trouble because we while we think in terms of processes (instead of functional units), we need to think about webs and networks which don’t work well with our current resource management systems. And while we’re busy trying to stretch our processes to meet the challenge – the challenge keeps getting bigger.

The problem is bigger than we think. Or perhaps more Mutant X than we imagine. Knowledge theorist Max Boisot says we don’t have the software systems or even the language to handle the task. But we do have the brains – or some of us do. And he posits that the information-based economy is driving a species-level evolution. There’s a few that can handle the shift. And many that can’t.

While some of us are busy mutating, Verna points out that the rest of us face a most complex and difficult challenge: the temptation to simply incorporate networks into existing frameworks and tools – and then convince ourselves we are introducing something dramatically new and different. We use new language but not new concepts. And we get this strange mix of new words and old concepts. But bad analogies and inappropriate tools threaten to mislead or subvert the very principles that are being introduced by the mutating few.

Verna points out that we need a shift in consciousness; we are experiencing a meta-level dilemma. On one hand, old logic is insufficient to reason our way through current challenges. On the other hand, our only tools are the linear business principles, processes and systems we currently work with. So, for the time being, we must be very clear on the worldview we are operating from. And we need to approach learning with a much higher level of self-reflection than has ever before been required.

The problem then is that we are faced with complex issues and we don’t have the mutants we need to get the job done. In the meantime, we can’t solve complex issues with the same tools we use to solve complicated ones. David Snowden (Institute of Knowledge Management) makes a clear distinction between complicated and complex. He says an airplane is complicated, but all its parts may be known, understood, engineered, and managed. The truly complex includes too many variables to ever be known, fully understood, or managed. Humans are complex. Organisations are complex. Life is complex.

As a result, Complexity Theory concepts are increasingly used, both metaphorically and literally, in a business context. Complexity theory is an umbrella of interdisciplinary exploration of a set of theories from physics, biology, chemistry, sociology, cybernetics, nonlinear dynamics, nonlinear mathematics, and chaos theory. Also included are psychology, anthropology, and organisational behaviour.

Once Complexity Theory is embraced we can move from the mirage of a predictable world to the reality of a world of probabilities. We leave behind the deterministic economy of physical goods, production lines and dive into a knowledge-based economy. The human skills of pattern recognition, heuristic approaches, and experimental inquiry are suddenly valued. We get to explore. We get to taste, touch and experience. Our talents for metaphor, poetry, and music are suddenly business propositions instead of past-times.

Now can you see why Maslow’s challenge was so important to recognize? Is it suddenly clear why education is such a critical enterprise? Does it jump out at you that innovation, insight, and vision share a measure of magnitude that renders skills like time management and memo writing laughably overrated and utterly irrelevant?

We aren’t facing a world air-travel vs. space travel or dvd’s vs. hard-disk storage. There’s money in those things but the solutions are out there. We are facing melting ice caps, extinguished biodiversity, mounting municipal waste, decaying social systems and an alarming absence of movement toward anything that promises solutions. I’m not all in on the species-level shift stuff but geez, it’s a million miles closer to where we need to be than most of us are. We aren’t overhauling education. We aren’t tearing down hierarchies. We aren’t abandoning home pages. Why?

Feel the biorhythms

I’ve been pondering the goofiness of biorhythms. Not because I think they work – but because I think they should work. I just think that what’s out there right now is simplistic and running everything off my birthday is absurd. The point is that humans cycle. I know I do.

Everyday for the last nine years I wrote in a journal. Each morning I characterize the weather (overcast, chilly, calm), I note my mood (creative or philosophical or apathetic – etc.), and then I write. By now I can almost predict my mental and physical cycles. And assuming I’m not a statistical outlier – given the right data, I could track someone else’s.

I’ve also been chatting over email with Evelyn Rodriguez about innovation, insight and the incubation thereof. I’d read about her Nevada trip and pinged on her incubation trips. Given the deep need for innovation that I briefly mentioned earlier – anything that enhances innovation is worth some attention.

So there’s natural human cycles, incubation periods, and innovation. Shouldn’t we know more about this? The economic significance of a better understanding is difficult to overestimate. Consider the challenges we face and the dearth of solutions we’re playing with.

Imagine: we’re in the desert dying of thirst. Incredibly, we’re standing bucket in hand, with a well at our feet. Problem is – we don’t know how to use the bucket and aren’t plumbing the well. The desert’s our challenge, the well is our brain, the bucket’s our knowledge – what’s missing? A process of innovation.

Lucky for me – lucky for us – I meet Ed Bernacki today. Who’s Ed? Look here.

We’re crammed full of potential solutions and Ed’s off in the right direction. I’m looking forward to learning something from him real soon.

By the way, it looks like five days from now I’m going to peak physcially, emotionally, and passionately AND, at the same time, become incredibly stupid - yikes!

How to be insightful

Another book I’m currently reading (I’m reading 16) is “The Nature of Insight” edited by Robert Sternberg and Janet Davidson. It’s 16 articles, mostly by psychologists, on the current state of understanding on insight. I was super keen on this book until I discovered it was written in1995. Now I’m just keen.

Davidson, one of the editors, wrote chapter 4, “The Suddenness of Insight”. She starts with this:

Many of the world’s greatest contributions have derived from insightful problem solving [in the technical sense of this phrase]. If major discoveries do stem from sudden realizations, then it is important to understand the conditions under which these realizations occur. Unfortunately, little is known about the mental mechanisms underlying insightful discoveries, and even less is known about individual differences in the ability to make these discoveries.

This underlines the hilarity, the awful truth, and the vast opportunity of our time. In a day when iPods are our most innovative examples we still have authors like Thomas Homer-Dixon writing books titled “The Ingenuity Gap: Facing the Economic, Environmental, and Other Challenges of an Increasingly Complex and Unpredictable World”. Mr. Homer-Dixon lays out a myriad of examples that illustrate the almost insurmountable challenge of complexity in most of our current societal issues. His conclusion: We are on the verge of a melt-down and there’s no solution in sight (check the slick pun!).

We’ve got scientists saying we don’t have a handle on insight. We’ve got endless, catastrophic problems to solve. And we’re raving about iPods…

Fortunately Davidson has some early insights on insight:

High-IQ individuals are slower, not faster, than lower-IQ individuals in analysing problems and applying insights.

Insight can be trained.

Well point one is encouraging for slow-pokes like me. But point two: trained! Now we’re gettin’ somewhere.

Thunk thoughts

I’ve been reading Human Action by Ludwig von Mises for nearly two years. It’s a bloody dense book.

This morning I got to his chapter on “The Role of Ideas”. He makes two important points early. Action is preceded by thinking - thinking and acting are inseparable. And, individuals think - there’s joint action, but no joint thinking.

These points seem blasé until one realizes (with startling apprehension) that economics is nearly entirely focused on action, with no comprehension of thinking. We economists don’t consider how thoughts are thunk.

This is part of my bubbling enthusiasm for Nova Spivack’s new manifesto - The Physics of Ideas. Nova’s out to track ideas. He’s after a science of moving from individual thought to broader, societal response. He’s on the doorstep to an important gap in economic understanding.

I’m excited about the possibilities. I hope Nova keeps me in the loop.