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Intervention by Denise Caruso Read Intervention by Denise Caruso, Executive Director of the Hybrid Vigor Silver Award Winner, 2007 Independent Publisher Book Awards; Best Business Books 2007, Strategy+Business Magazine

archive for October, 2008

‘WE INTERRUPT THIS BROADCAST …’
HOW A LITTLE BIT OF FAILURE CAN DO A LOT OF GOOD

by ~ October 29, 2008

I was recently talking to some German friends about their trips to the United States. Apart from the standard touristy things they found memorable about the U.S., they were all greatly impressed that they could go shopping for almost anything in the middle of the night. Even to modern Europeans, the concept of midnight shopping seems fantastic. Imagine their amazement when I explained that, in the U.S., they could go shopping on almost any holiday as well.

Today’s business culture thrives on on performance, success, winning, and constant availability. The world continues on its frenzied trend toward 24×7 services, “five 9’s” of up-time, and six sigma products. The drive to succeed has provided us with all sorts of modern conveniences—and plenty of modern instances.

Perfect.

But I’d like to say a few words in defense of failure, because I believe failure has an important purpose and we can’t simply wish failure away by focusing on success. In my view, systemic failures can be averted simply by introducing some planned imperfections into the systems we build. One of the lessons that should be learned from the current financial crisis is how securities originally thought to be insular from the housing market were proven to be directly on the financial fault line.

Here’s the problem: when a system (such as a computer network, power grid, or financial market) performs steadily for a period of time, it fades into the background and seems as certain as the rising of the sun. Over time, a complex and interdependent mesh of relationships develops. Because these dependencies aren’t explicit, it becomes nearly impossible to predict how the beating of the proverbial butterfly’s wings in one part of the system can wreak havoc in another.

Is there a way to tease out the dependencies in such networks and develop complex distributed systems that fail safely? I think there’s a simple solution: introduce the element of failure. Shoot for 4 9’s instead of 5. Interrupt the broadcast so that we can run the drill before the disaster strikes. Learning to fail on a regular basis could help us deal better with much larger, systemic failures in the future.

DON’T TRUST THE BADGE! OIG CENSURES THE TSA FOR POOR CONTROLS OVER UNIFORMS AND BADGES

by ~ October 14, 2008

Next time you stand in line at an airport, take a moment to reflect on how your driver’s license is more likely to be accurate than the badge displayed by the TSA employees. A front page story in Monday’s USA Today reported on how the United States Office of the Inspector General (OIG) chastised the TSA in an an audit report for improperly managing badges, uniforms, and passes issued to personnel.

The agency overseeing security at the nation’s airports failed for years to track security passes and uniforms of former employees, creating widespread vulnerability to terrorists, says a government watchdog report obtained by USA TODAY.

The Transportation Security Administration lacked centralized controls over the secure passes issued to some of its employees, according to Department of Homeland Security Inspector General Richard Skinner. The passes grant people access to the most sensitive areas of an airport, such as where baggage is screened or planes are parked

Investigators found numerous cases in which former employees retained their passes long after they had left the agency.

The investigation also found that TSA uniforms were frequently not collected when employees left or were transferred.

People using improper badges, IDs or uniforms — particularly in combination — “could significantly increase an airport’s vulnerability to unauthorized access and, potentially, a wide variety of terrorist and criminal acts,” the report said.

For all the effort the Department of Homeland Security has devoted to constructing a nationwide identification system (such as Real ID and New York’s “enhanced driver’s license“), the revelation that even the TSA can’t properly manage identification for its own employees highlights the absurdity relying on identity systems for security. It’s a Catch-22: the more a security system relies on IDs for access, the more valuable the IDs become to attackers. After all, why would a terrorist bother to infiltrate an airport as a mere traveler when it’s easier and more effective to infiltrate as a TSA official? Continue reading »

MONEY CAN’T BUY YOU TRUST:
WHAT WE WON’T BE GETTING FOR $1 TRILLION

by ~ October 12, 2008

Managing Risk is Not Enough
Late last year, I sat in a meeting in which several bankers were present. During the meeting, one of the bankers said something that in retrospect belongs in the highlight reel of “famous last words.” The comment went something like this: “We’re bankers! We understand risk, because it’s our business. We know how to manage risk. That’s why industry and government are looking to us to solve risk-related problems.”

As ridiculous as this statement now seems (especially to those of us whose retirement funds have been decimated) I’d argue that the statement holds true—even in a grizzly market. Yes, good bankers do know how to manage risk—their own risk. Which is why the best investment bankers view a recession more like a sabbatical, while the rest of us have to figure out how to keep food on the table. And even as the government is coming to the rescue, the Fed won’t be doing the risk management part: they’re paying bankers to figure out how to get out of the mess they’ve created. Talk about a win-win!

Not that these guys aren’t suffering. Here’s a bit of anecdotal evidence of how bad things have gotten: Continue reading »

RESPONDING INSTINCTIVELY TO THE FINANCIAL CRISIS

by ~ October 7, 2008

Today, there was some interesting discussion in the New York Times on human instincts for punishment and forgiveness. According to the article, researchers have found that within a population, some percentage of people (between 10 and 40%) are attuned to following their “referee instincts” by ensuring evil-doers get their due. This instinct has clearly come into play during the wide-spread financial crisis:

The public urge for punishment that helped delay the passage of Washington’s economic rescue plan is more than a simple case of Wall Street loathing, according to scientists who study the psychology of forgiveness and retaliation. The fury is based in instincts that have had a protective and often stabilizing effect on communities throughout human history. Small, integrated groups in particular often contain members who will stand up and — often at significant risk to themselves — punish cheaters, liars and freeloaders.

But allowing such impulses to play out on a grand scale can also exacerbate a crisis. The article continues:

Some experts believe that Japan’s disastrous delay in bailing out its banks in the early 1990s was caused in part by a collective urge to punish corrupt bankers, and they fear a similar outcome today.

Game theory suggests alternative approaches to resolving social dilemmas. In running various gaming scenarios in which participants respond to each others’ uncooperative behaviors, the best outcomes for all players are achieved when players follow simple tit-for-tat strategies and allow for forgiveness. On this subject, the article states: Continue reading »

THE MYTH OF SELF-AWARENESS

by ~ October 1, 2008

Yesterday, Olivia Judson published a piece in the New York Times about how human beings are almost incapable of being objective, particularly when it comes to the subject of themselves. This creates severe difficulties for studying humans as individuals, cultures, and civilizations. She points out:

The literature from psychology shows that, as individuals, we are good at seeing other people clearly, but poor at seeing ourselves. Most people, for example, describe themselves as being better drivers than average, and consider themselves better looking than other people consider them.

It seems the observer’s paradox applies also to self-observation. Who knew?