What’s More Important? Your Job or Your Impact?

Business and government both spend millions of dollars, and huge amounts of human workforce hours, performing “impact studies”.   Whether it’s environmental impacts with highway construction, community impacts with light rail systems, human health impacts with cell phone use -- we study the human impact of almost everything -- except for how we impact each other on a day to day -- personal level.   Let me share two examples.

I practiced as an Emergency Room physician for over 20 years.  Medicine is a service industry, and customer satisfaction is just as important in medicine as it is in the restaurant business, the plumbing business, or a retail store like Home Depot.  Your satisfied customers are your best, and cheapest, source of advertising.  They generate your reputation.

In the ER, patients can be superficially divided into “horizontal” and “vertical”.    “Vertical” patients walk in, usually have a non life threatening problem, and sit in the waiting room the longest, watching the television that is suspended from the ceiling.  They have been triaged to wait because their needs were deemed to be less serious than other patients.    “Horizontal” patients, on the other hand, are frequently brought in by an ambulance on a stretcher, or walk in the ER and are immediately whisked back into the ER and instructed to lay down horizontally on an Emergency Room cart.  They are the true emergencies.

Probably 9 out of 10 ER patients fall into the category of the not-so-sick  “vertical”.  The remaining 10% of ER patients, that are “horizontal”, are frequently so sick that they rarely remember the entire ER experience—sometimes not regaining full consciousness until well after the ER visit.  The “vertical” patients usually remember everything about their visit – how long they waited, how much time they actually spent with the doctor, how painful were the blood tests, etc.  “Horizontal” patients rarely remember any of those things.

Doing your job well, is only a small part of the overall

IMPACT

you have on your customers.

In the ER my job was to treat the “horizontal” –the sickest of the sick, but my impact was on the true majority of patients – the “vertical” walk-in patients.  The “vertical” patients were much better advertising for our ER than the critically ill, “horizontal” patient.  The “vertical” patient majority remembered if they were treated kindly, and how long they had to wait to see the doctor. They remembered if the doctor was compassionate, and they remembered how quickly their pain was treated—and because they remember, they tell their friends and family about their ER experience.   They were our best advertising!   The ER team could easily see their main impact as taking care of the critical “horizontal” patients—but the ER team had to consciously realize that the “vertical” patients were, by far, the greatest number of patients they impacted –-  and it is that impact that the “vertical” patients tell their friends and family about.  The vertical patients generate the reputation of the ER.   

Our job was to care for the “horizontal” sick, but the impact and 

marketing was to the less sick, “vertical” group.

My second example of impact is one from the world of business that I hear at least a couple of times a week.   In this time of economic downturn, jobs are scarce and jobs postings frequently flood the Human Resource departments with applications.  Most applicants that I talk to complain that they NEVER get a response from the companies that they have applied to!   I am sure in this environment that it would be common to get 50 applications for one position.   So, the job of the HR department is to select from that pool of 50 applicants, the one person that is best suited for the position.  However, I doubt if they consider their impact on the remaining 49 applicants.    

The HR department has a great opportunity to present their company in a positive light, by responding to each applicant with a timely and appreciative response.  This might be the applicant’s first interaction with this company.   No response from the HR department might make the applicant think—“If this is how they treat people before they are hired, how will they treat people after they are hired?”   This economy will eventually shift, and in the future there might be a shortage of talented staff.   Has this HR department left a favorable impact on future applicants?   In this example, the HR department has successfully hired one person, but they have negatively impacted 49.   Have they considered that these 49 applicants could be potential future applicants, or even future customers?  The HR department has done their job, but are they aware of their impact?

Do your job well –-  but remember to be aware of your impacts!

How to Sell Your Boss on Social Networking

 I find myself giving this mini talk frequently lately, so I thought I would just formalize the talk:   "How to sell your boss on the value of social networking for your company."  It’s a 10 step “elevator pitch”

• We used to get our news and information in manageable amounts from sources we trusted – the newspaper or the evening news on television.
• Around 1985 the internet appeared and ever since we have had ever increasing amounts of information, to the point now, where most of us feel overwhelmed just trying to “keep up”.
• The internet, with all of its options, created the “Me” generation – we want everything customized to our specific needs – Starbucks coffee, iPods with “our music”, designer everything – and most importantly for work, we want our information filtered to give us the most important news that relates to us.   RSS feeds initially allowed us to created custom web pages in our attempt to get the news that WE needed.
• We are now so overwhelmed with information options that we don’t know what sources to trust—for example, you can go online to find a validation of almost any concept --  Elvis sightings on steroids. 
• The paradigm shift:  We moved from having manageable amounts of trusted information in newspapers and television, to trying to find information we can TRUST in the mass of information on the web.   Trust is now the main commodity.
• Social Networks provide the layer of trust to information.  Our online “friends”, people that we either know, trust, or feel that we share common values with, provide that trust.
• In the distant past information was “pushed” to us from newspapers or television. In the recent past we “pulled” information from the web as we frantically tried to check emails, read blogs, follow our favorite web sites, and read multiple online newspapers. 
• Social Networking is not a Push or Pull; it is a Sharing of information from trusted “friends”.  People that know us send us information based on their knowledge of us.   It’s like having hundreds or thousands of human search bots scanning the web for information that is pertinent to US—It arrives to us as links in tweets, facebook posts, etc.
• Facebook vs. Google.    When you do a search on Google, a computer algorithm provides the same search results to everyone who posed the same query.   There is no specific knowledge of YOU, like a social network would have.  Now imagine that you posed a query to Facebook:  “Where is a good Chinese restaurant in Spokane?”  The responses from a social network would be far more customized to you—your "friends" would know -- do you value price, ambiance, quality, quantity of food?  PLUS you would trust your network’s opinion more than an algorithm—you could be more confident that it was not a search result that someone either paid for or manipulated with search engine optimization.
• Social networks help you solve the information overload dilemma with manageable amounts of information from sources that you trust.

Why is the 380 million egg recall important to your business model?

I went to China about 10 years ago, just to explore what this huge country was up to -- from a business perspective.  It turned out to be a real cultural eye opener -- on many levels.   I was on a tour of a small village with a group of Americans, when we came upon an open air market.  Lots of fish, fruits, vegetables, and a small amount of beef.  I remember that the side of beef was hanging in the open air, on a large metal hook.   On that 70 degree day, some flies were buzzing around it.  You simply told the owner how much beef you wanted and he would shave it off with a knife, wrap it in paper, and you were on your way.   The Americans in the tour group were appalled with the "unsanitary" conditions, and said they would never eat that beef!   

In today's news is the story about the 380 million eggs that are being recalled for possible Salmonella contamination.   32 million cartons of eggs being recalled from only ONE company--Wright County Egg of Galt, Iowa.   I am waiting for someone to do the math an tell me how big a pile of 32 million cartons eggs is:  I will guess that it would fill up a football stadium--but that's only a wild guess.  These eggs were packaged under at least 10 different brand names, and distributed to multiple states.  There are multiple suspect illness cases related to these eggs, and fortunately so far there have been no deaths.

Back to China.    I recall responding to the Americans that were so upset with the open air beef--"I feel safer eating beef in this market than I would eating hamburger in the States".   This one side of beef was slaughtered in the morning, and will be completely sold within a matter of hours.  No cross contamination of thousands of other beef parts.  The beef could be easily traced back to the ranch it came from.    Most importantly, even if the beef in China had been contaminated, it would only impact less that a hundred people, all of whom probably have been dealing with the same butcher for years. 

In the States we have a limited number of beef, pork, chicken and egg producers.  As this egg example demonstrates, these contamination events now impact MILLIONS of Americans at a time, compared to the "unsafe" China market, that could only contaminate less than a hundred people at a time. 

What does this have to do with your business?    

Complexity Creates Vulnerability

Whether it is a down computer system at your bank, a malfunctioning satellite that shuts down Blackberry phones for part of a day, our electric grid, just in time inventory, or a computer virus--we have created a system where our complexity makes us more vulnerable to interruptions and malfunctions than we have ever been in the past.  Will the "efficiencies" of our food producers start creating more problems than they solve?   Will the vulnerabilities created by our technologies reach a tipping point where the risks are outweighed by the benefits.  What streamlining efficiencies have you initiated in your business?  Is there a risk associated with these new shortcuts? 

What vulnerabilities have you created for your business model?    Would you be able to operate without computers, the internet, the power grid, and just in time delivery?

This unprecedented egg recall is a great example of how our businesses should routinely re-evaluate our models for new vulnerabilities that we are creating daily by our ever growing complex systems. 

How much of our Critical Thinking is Hardwired?

I have always believed that many of our critical decision making styles are hardwired into our brains, passed down from our very distant human predecessors. One example, is our use of pattern recognition for quick decision making in survival situations--this impacts the way we make decisions to this day---we try to fit new situations into old patterns that we understand, trying to employ the old pattern responses that have successfully worked for us in the past.

This video is a fascinating look into Monkeynomics -- the hardwired decision making that exists in our primate ancestors--decision making that is amazingly the same decision making hardwire that we have -- passed down from our ancestry. 

If we accept that some of our decision making skills are hardwired, then it might be easier to explain why very smart people continue to make bad decisions.  Our challenge is to understand and appreciate the "humaness" of our decision making process. Once it is understood, we can be "on guard" during a critical decision event--on guard for our hardwired human decision making pitfalls.

Please take the time to watch this video ( 19 min )   I hope you enjoy!

Critical Thinking: Connecting the dots and the end of the Personal Computer

A big part of critical thinking is just watching the world around you, and then trying to “connect the dots”.   For example:  Why did Hewlett Packard (HP) buy Palm??  Why does a computer/printer company want to expand it's phone business?  Yes, HP was already in the phone business, but hardly anyone new it.

Have you noticed that the price of a PC and the price of a smartphone are at the cross point on a graph?  The low end PCs and the high end smartphones are almost the same price.   

Conclusion:  PCs will soon become as extinct as your land line—for a few reasons.

I stopped using a land line 5 years ago – why pay for an extra phone line when your cell coverage is ubiquitous?  Well, to be honest, I didn’t really totally dump it, I still keep the number on the most basic, cheapest plan, which I think is around $16/month.  The first reason for keeping it, is that my land line number is listed in 411 Directory Assistance. Amazingly, 411 for cell phones (example: www.cellpages.com)  hasn’t really caught on .  Anyone know why??    When you call my land line my answering machine message says: “Call my cell at xxx-xxxx”.  The second anachronistic use for my land line is that it is an integral part of my home alarm system, but that too is becoming web based.  My point is-- we are slowly letting go of the landline, and soon it will go the way of Film, Watches, and CD’s.   What is the next big piece of technology to disappear?   Answer:  your PC, laptop, netbook – they will all be history in a couple of years!

First clue:  Hewlett Packard just bought Palm smartphones.   Apple computer owns the iphone, and Google has the Android.  Second clue:  Cloud computing means you no longer need a hard drive to store your data because your storage is on the web, and storage costs are practically free.   Third clue:  Computers are getting so cheap that they will be giving them away in cereal boxes pretty soon.  The profit margin is going, going, gone.  The PC will die, but the keyboard and monitor will live on!!!

Imagine a world where your only connection to the internet was your cell phone, all of your passwords were stored on your phone, and all of your data was stored for free in the cloud.  It would be a perfect world if the keyboard and the screen on your smartphone were more PC sized--more user friendly.   How about if your smartphone was just your conduit to the internet, but yet it had the ability to wirelessly connect with a dumb keyboard/monitor?  What if you were simply able to place your smartphone next to a dumb keyboard/monitor, the phone and keyboard/monitor connect ( wireless and encrypted ) allowing your internet access on your phone to be conveniently managed with a full size keyboard and monitor?  Once you are done at the keyboard/monitor, you walk away, the connection is terminated, and no data is stored on the keyboard/monitor.  Bye, bye PC!    I think Hewlett Packard got it right.   Keyboard/monitors would be cheap and ubiquitous--they would be free perks, just as wifi is free almost about everywhere.

Where does this leave Microsoft?  Will cloud computing, smartphones, and the death of the PC be the end of Microsoft?    Maybe your smart phone will use your large screen tv as a monitor, with a wireless keyboard.    How about the benefit of just having all of your data in the cloud rather that spread out over multiple computers--work, home, ipad, etc?   How will this paradigm shift affect the way that you do business?

Can WikiLeaks be perfect ? Forever ?

As reported in the New York Times today, The White House was pretty upset with WikiLeaks.com, and it's founder Julian Assange.  Apparently  some 92,000 secret military reports relative to the war in Afghanistan were leaked to WikiLeaks, which in turn released them to The New York Times and two other news organizations, Der Spiegel in Germany and The Guardian in Britain. The documents covered a 6 year period from January 2004 through December 2009. It sounds like everyone involved was trying to do their best to protect the people that might have been exposed by this leak.  

WikiLeaks feels that it is their duty, right, and responsibility to expose governments and business.  From their webpage:  "WikiLeaks is a multi-jurisdictional public service designed to protect whistleblowers, journalists and activists who have sensitive materials to communicate to the public."  I would mostly agree, but with any power, comes a warning of caution.   WikiLeaks proudly states on their webpage:  "Before the Dec 2007 national elections, WikiLeaks exposed $3,000,000,000 of Kenyan corruption and swung the vote by 10%. This lead to enormous changes in the constitution and the establishment of a more open government — one many hundreds of reforms catalyzed by WikiLeaks." 

"Swung the vote by 10%"  That's pretty powerful stuff!   Powerful enough that I would guess that somewhere in the future, someone will try to take advantage of this power to swing a vote, by "leaking" to WikiLeaks a forged document--it only has to be good enough to fool.  How good is WikiLeaks verification system?  Did they verify all 92,000 leaked documents that they just received about Afghanistan?  I don't know.   I can only hope they fully appreciate the potential power they hold.


But if WikiLeaks has the power to swing an election, they will eventually get the attention of some evil-doer who wants to game the system with a fake document.  How long will WikiLeaks be perfect in their scrutiny?  Can they be perfect--forever?    If they can swing an election, could they inadvertently be fooled into releasing documents that ultimately resulted in a war? What if WikiLeaks  is infiltrated, and hires an analyst with an agenda??  Could the senior team at WikiLeaks ever become biased?  Could they release some leaks and bury others?  Who is watching WikiLeaks?  


All tough, and interesting questions.  What do you think?

Does your company need a Chief Complexity Officer?

The world is just getting too complex--we all see it in the workplace and our personal lives--everyday!  We just moved into a new house in February, and the previous owner was kind enough to leave us most of the Owners Manuals for everything related to the house--water heater, snow blower, alarm system, sound system, sprinkler system, etc.  What he didn't leave, we were able to find on the Web.  Being the compulsive, organized person that I am, I created an 8 1/2 x 11 manila folder for each piece of equipment in the house that required some sort of manual.  We are now over 40 folders.  Will I ever read them in their entirety?   NO.  Did I have to read some of them--absolutely--you almost need to be an electrical engineer to operate a home entertainment system nowadays.   Hopefully, I won't need to go deeper into the manuals unless something goes terribly wrong.         C'mon,   40 files to operate a house!

I will spare you the details about my monthly repeating health insurance payment through Quicken, the one that no one seems to be able to stop from repeating--Quicken, the bank, no one.  So, this out of date payment ( my insurance premiums have been raised multiple times since this started ) keeps getting paid every month unless I manually go in to cancel it, only for it to reappear the following month!  It's takes me less time to do a monthly delete of this rogue payment, much less time than it would take me to continue the battle with tech support.

The world is too complex, the world knows it's too complex, and it is totally unable to control itself.  Take for example, the story on NPR this week about the Department of Homeland Security (DHS).    DHS is responsible for providing briefings to 108 committees, subcommittees, and caucuses .

Michael Chertoff was quoted in the NPR story  ""We calculated that in 2007-2008, there were more than 5,000 briefings and 370 hearings," says Chertoff, who was secretary of the department from 2005 to 2009. That consumes an awful lot of time. But truthfully … most people miss the biggest problem. And that is that the direction you get from the committees tends to be inconsistent."

At the time of  9/11 DHS  reported to 86 such committees -- their goal after 9/11 was to reduce that number.  Nine years later the number is UP to 108.

My real concern is that all of this complexity adds to our collective vulnerability.   BP's complex engineering and management resulted in the Deepwater Horizon disaster, communication satellite failures result in millions of Blackberries going down, and our hyper complex financial system resulted in the recent recession.   It took me months to figure out what the whole credit default swap fiasco was all about.

How do we manage complexity before it totally overwhelms us?  Will we reach a tipping point when the benefits of our complex systems are outweighed by the vulnerability that they subject us to?   Will we reach a point when we finally have to actively start simplifying government, technology, finance, and our own lives.  I don't want to start sounding like Ted Kazcynski--but I am concerned.  Will we need Chief Complexity Officers (CCO) in our companies to manager our out-of-control complexity?  I think we will.  The CCO will be the one high level person, whose sole responsibility is to look at the big picture.   Look at the risk to benefit ratio of each new complexity that creeps into our operations.  We can either give complexity free reign, or start managing it.  We better make up our minds -- Soon!

What do you think?????

BP's Deepwater Horizon Blowout -- Critical Thinking Failure-- Part II

"Stop, Think, Don't Do Something Stupid" is the advice that Dr. Robert Bea, Professor of Engineering at the University of California Berkeley, tries to reinforce to his engineering students.   This is the same advice that he would have suggested to BP and Transocean a few months ago.  Dr. Bea, who was interviewed on 60 Minutes this last May watch entire video, has investigated the Columbia Space Shuttle disaster for NASA, the Katrina disaster for the National Science Foundation, as well as investigating numerous other oil rig disasters.  He is currently investigating the Deepwater Horizon Blowout at the request of the White House.


Bea painted a picture of two managers having a discussion/argument on the deck of the Deepwater Horizon about the procedure to cap the well--before the disaster occurred.  The BP manager wanted to remove the heavier "mud" prior to capping the well, while the Transocean manager wanted to leave the "mud" in place.  The heavy "mud" could act to reinforce the cement plugs keeping the pressurized oil from gushing to the surface.   BP prevailed, and the "mud" was removed, even when they had the knowledge that the annular rubber rings in the BOP (Blow Out Preventer)  might have been damaged, AND that one of the two control pods was not properly functioning.  The rest is history.


Bea believes that BP took this shortcut in order to save time when it came time to activate the well.   Eventually the "mud" would have to be removed for actively using the well, and Bea felt that BP wanted to remove the "mud" as early as possible to save time--and money-- down the road.

Mechanical systems failed--but once again it was the human decision making process that was the ultimate, and preventable cause.  I will guarantee that BP and Transocean had volumes of safety procedures, as well as standard operating procedures.  Unfortunately it all boiled down to a human decision, made under time and money contrainsts, resulting in a gamble to take shortcuts.  When you gamble big, sometimes you lose big.  


Space Shuttle Columbia, Katrina, BP --- all underpinned by a huge technological database of information, all subverted by the human decision making process.   The result of BP's Deepwater Horizon Blowout will be the usual legislation, laws, standards, and regulations that always follow a disaster.   But the next black swan, random disaster will be brand new, and likely not covered by any newly enacted legislation.  Instead, I propose, that we need to start paying attention to the "humaness"  that makes future disasters inevitable.  The bad news is:  as our society becomes more complex, these disasters impact more people, impact more of the environment, and cost billions of dollars that could be spent on more important things.  The good news is: we each have the abilities within our reach to fine tune our mental models for decision making, and hopefully avoid future catastrophes.  We need to learn to control our hard wired humaness that encourages us to take these disastrous mental shortcuts in our thinking process.

The BP disaster was not a failure of technology--it was human thinking patterns.  
We can do better! 

Dr. Bea is an engineer that investigates the technical aspects of these disasters.   I am going to try to contact him, to see if I can spark some interest in him to investigate the "humaness"  aspect of disaster prevention.  Hopefully, by improving the technology systems along with our decision making skills, maybe we can start preventing future disasters.

The 3 R's + Retrieval = your new peripheral brain

Reading, Riting, and Rithmetic -- the classic 3 R's taught in our Industrial Age school system, are slowly starting to come to terms with the new digital age.  Lee Rainie proposed a new addition, the 4th R that he calls Retrieval.  I first heard of this a couple of weeks ago during his web cast for the World Future Society:  "Internet Evolution--Where Hyperconnectivity and Ambient Intimacy Take Us"

Google has totally changed how we think, learn, and remember.  In medical school in the 80's we had a 5x7 three ringed notebook crammed with medical "pearls" -- bits of priceless medical knowledge that, in theory, would be at our fingertips during a patient medical crisis -- when we didn't have time to run to the hospital medical library.  Along with this looseleaf binder, we also stuffed the pockets of our white coats with as many spiral bound 5x7 abridged textbooks as the coat would hold.  Google changed everything.  Nowadays, medical students don't really need to "learn" as much as they need know how to "retrieve" something from the web in a microsecond.  When you think about it--is there really big difference between "knowing" vs "retrieving"?   In med school we called these 5x7 life savers our "peripheral brains"--an attached brain that resided in our pocket instead of our cranium.   When will a body of knowledge, the field of medicine as just one example, become so large that it is unrealistic to expect any human to "know it all"?

Rainie proposes that Retrieval is now the new 4th R.  I totally agree, and it is not an optional skill -- it is mandatory.  Just as in the field of medicine, where it is IMPOSSIBLE  to know it all--these are fast becoming the days when being familiar with something, and knowing where to retrieve the details, will be considered the new "knowing". 

So if Retrieval is the new "knowing", how does one know which Google search results are to be true and trusted -- and which are not .   Taking this all one step further, the new "knowing" will be based on which web based answers you consider to be "true".  Finding the truth in a long list of search results will be the future challenge of "knowing".   

Your two future challenges will be:  
1--Creating a set of trusted sources to be the "files" in your web based peripheral  brain.
2--How do you or your company become a trusted source for others?  

The  "Information Age" will have to evolve to the "Trusted Source Age".

Upcoming Free brain food

I have been a member of the  World Future Society for years, and have attended many of their annual conferences, the next is scheduled for  July 8-10 at The Westin Boston Waterfront Hotel in Boston, Massachusetts.  "A thousand of the world’s top minds and thought-leaders will collaborate and debate the major issues of the twenty-first century." They are offering 3 free webinars in advance of the conference.  I have no financial interest in promoting the webinars, but I am planning on watching.   If you want to "hang out on the fringe" of thought provoking ideas, I suggest you explore some of these:

The Virtualization of America (and the World) A Conversation with Michael Rogers Time: Tuesday, June 8, 2:00 PM EDT US (6:00 UTC) Register Now Here The Internet will change tremendously in the next 10 years. A more important question is, how will it change us? Children born this decade will have to learn what “offline” means, because being online will be the normal condition of life. It is an era of social reorganization equaled only by the rise of cities 6,000 years ago. But unlike urbanization, this enormous transition will take place in a matter of decades rather than centuries. At WorldFuture 2010, “practical futurist” Michael Rogers will describe what will be gained in this historic transition, what will be lost, and what challenges are ahead. Internet Evolution: Where Hyperconnectivity and Ambient Intimacy Take Us A Conversation with Lee Rainie Time: Thursday, June 17, 2:00 PM EDT (6:00 UTC) Register Now Here Imagine the implications of the future that most technology experts foresee: Wireless devices are embedded in everything including us; cameras record activity in all public spaces; databases catalogue our online moves; invisible, ambient networked computing makes us available to more people in more ways; software exhibits humanlike thinking; and a direct brain-to-computer interface is possible. These are just some of the future scenarios predicted by experts, as documented by the Pew Internet & American Life Project, directed by Lee Rainie. At WorldFuture 2010, Rainie will discuss the most recent, widely covered Future of the Internet Survey, which asked Internet experts from across the globe for their take on how the Web will evolve in the decade(s) ahead. The City Sustainable A Conversation with Jennifer Jarratt and John Mahaffie Time: Tuesday June 29, 2:00 PM EDT (6:00 UTC) Register Now Here What’s the future for the metropolis? Except for some experiments in planned communities, cities develop haphazardly over the ages. At WorldFuture 2010, leading futurists Jennifer Jarratt and John Mahaffie will introduce alternatives to the city of today, which are masses of people, buildings, and structures linked together chaotically. The tools for reinventing the city in the twenty-first century include new building technologies that bring sustainability and greater efficiency into construction and changes in the very concept of “city” from urban concrete to green communities.

BP's Deepwater Horizon Blowout -- Critical Thinking Failure-- Part I

Scott Pelley interviewed BP explosion survivor Mike Williams on 60 Minutes (5-16-2010). Watch the entire interview.     Williams, the Chief Electronics Technician for Transocean, the builder of the rig, related how the Blow Out Preventer (BOP) was apparently damaged 4 weeks before the Deepwater Horizon oil rig blew up and sank on April 20.   The BOP is a rubber annular ring that surrounds the drilling pipe.   "It is the most vital piece of safety equipment" on the rig.   It acts as a gasket that prevents oil and gas, normally under enormous pressure, from coming back up the drilling pipe.   "It seals the well shut in order to test the pressure and integrity of the well, and in case of a blowout, it is the crew's only hope".  During a test 4 weeks before the disaster, while the gasket was tightly closed, the drill pipe was accidentally moved through the closed BOP.  "Later they discovered a double handful of chunks of rubber in the drilling fluid".  Mr. Williams stated that his supervisor responded to the rubber chunks in the drilling fluid -- "It's no big deal".   

A billion dollar project, that was costing $1million per day, manuals full of policies and procedures, safety drills, and I am sure, many hours of scenario planning by the engineers and builders -- does it all come down to one person making a horrendous critical decision?  This disaster wasn't just an equipment failure--it was a human failure.   Humans have been making poor decisions forever -- this is nothing new.  What is new is the complexity of our decisions, and the scope of impact.  Our decisions now impact Millions and cost Billions.  What is not new, and is the reason that bad decisions will continue, is that our hard wired "humaness" allows us to make bad decisions--our human qualities of denial, gambling on outcomes, trying to plug unique situations into old learned patterns, and making decisions on inadequate data.


If the supervisor indeed wrote off the chunks of rubber as "no big deal", he was then a victim of classic "Shuttle Thinking"  --  A unique, once in a lifetime situation, inadequate data as to the amount of BOP damage, a bit of denial that the situation was serious, all leading to a gamble of "its probably not going to be a problem".

Part II  A discussion on Dr. Robert Bea's comments on 60 Minutes.  Dr. Bea, a professor of engineering, investigated the Columbia Space Shuttle disaster for NASA as well as the Hurricane Katrina Disaster for the National Science Foundation.  The White House has asked Dr. Bea to investigate the Deepwater Horizon Blowout.

Steins law and the New Year

Welcome to the New Year -- a perfect time to review my last post on  Stein's Law:   "Things that can't go on forever, don't"

My last look at Stein's Law was about chasing economic tides that obviously can't go on -- the housing bubble, credit default swaps, $150/barrel oil, etc.  Everyone rushing in, trying not to be the "only one" not making money on the gold rush du jour.   Regular folks lost a lot of money hoping that they could jump on the bandwagon and make some money on these rising stars.    We all know how that ended!   Even though they thought housing prices would continue to rise into the next millennium -- housing prices dropped like a rock.

What does all of that have to do with the New Year?  Well, Steins Law also applies in reverse.   Only this time, people find themselves at the bottom looking up, believing that the recession, depressed housing prices, depressed bank stocks will go on forever.  Steins Law says that they won't.  Things will come back.  How long will it take is the question.

Steins Law is valid at the top of a boom--the boom won’t last forever.  It is also valid at the bottom of a bust--the bust won't last forever.

Start the New Year fresh, look for signs that the economy is turning around.   Most novices buy stocks when it is a "sure thing" as the market is rising, and sell stocks, trying to cut their losses, when the market is crashing.  The true skill is to be a contrarian and follow Stein's Law  -- sell when the market is rising, and buy when the market is tanking.

2009 was a challenging year.  Flu epidemics and recessions that can’t go on forever, don’t.      

Look for opportunities in 2010.

Happy New Year!