Leading the Revival of Individualism & Self Reliance

Are You Entrepreneurial? Self-Assess These 8 Attributes.

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The future quality of our work and our world is going to be governed more and more by our entrepreneurial capabilities. The emergent technologies of A.I., cloud computing, and global talent and commerce platforms will augment everyone’s capacity, and will place increased demands on each of us to define our specialist value, specialist skills and specialist contribution in the interconnected global economy.

In addition, organizational norms are going to evolve and change, mostly in the direction of less structure and greater flexibility. In the future, we are more likely to work for ourselves, or as part of a flexible team arrangement in which our individual contribution is measured carefully and rewarded commensurately.

The requirement for each of us, as a consequence, is to develop and reinforce our entrepreneurial skills, so that we can plan, learn and adapt on our pathway through a fast-changing world of work, technology and organization. It is valuable to conduct a self-assessment of our entrepreneurial aptitude. Here are the attributes to examine.

Empathy

Empathy is the primary entrepreneurial skill: the ability to understand and respond to how others feel and how they think and why they behave as they do. Those others are co-workers, team members, customers, partners, networking connections, information providers, service providers, and innumerable people with whom we interconnect on global platforms. We all are naturally empathetic, but our circle of empathy can be quite narrow. Adam Smith famously pointed out that a person living in Europe might feel some distress in the event of a massive earthquake in China that caused millions of deaths, but it would be nothing compared to the distress caused by some private, local misfortune. But this narrow circle of empathy will not suffice in the modern world. Our empathetic engagement needs to extend worldwide, across demographics, and over multiple contexts. If we want to sell our talent or our services worldwide, our empathetic reach must complement our ambition.

Interconnection

We used to call it networking. Today, the updated term is interconnecting. It is possible to interconnect with virtually any individual, any firm, any vendor or service company, any knowledge and any learning provider. On global platforms, we can offer our talents and evaluate and purchase the talent of others. On social media, we can give and get appraisals and ratings of the products and services and experiences that we buy or we sell. We can potentially analyze the customer reaction of millions, or we can be the one to offer such a reaction.

Interconnection is a practice, a constant activity that expands and reinforces our entrepreneurial capacity. By working hard at interconnecting, we can improve our performance every day. It takes effort and a certain amount of desire.

Adaptability

The first principle of entrepreneurial economics is that the future is uncertain and unpredictable, and no amount of planning or forecasting or predictive analytics will make future uncertainty any more tractable. Successful entrepreneurs embrace uncertainty, betting that they can navigate its changing currents. The attribute required for confident navigation is adaptability, being able to adjust to new and emerging conditions. Adaptability can be innovative and even transformative. If you can change course, change beliefs, change behaviors, change priorities, or change alliances to adapt to new signals from the marketplace, your entrepreneurial prospects will always be bright.

Time Preference

Consumption is an act of high time preference, the expression of desire for immediate gratification – I want it now, rather than later. Entrepreneurship requires a highly developed practice of low time preference – the willingness to save, invest and take the time required to develop a product or service offering that will yield future returns while accepting sacrifice during the development phase. Entrepreneurs live in the future rather than the present. They make bets on what consumers will buy in the future, and they spend their effort in the present to create the appropriate offering. Entrepreneurs sacrifice in the present. They may take low or no salaries, they prioritize research and development funds, they test and experiment to polish quality rather than rush to market. Check your time preference to ascertain your appetite for the entrepreneurial life.

Lifelong learning

The traditional view of education and learning is that we concentrate it in our younger years so that we can devote our mature years to pursuing a career or developing a business based on the learning foundation we have established. Today, that approach simply doesn’t work. Change, both in people and technology, is so rapid, and the enormous flow of data available for analysis from every interaction and transaction is so transformative, that the old concept of education is totally outdated. The new concept is lifelong learning. In practice, that means that we commit ourselves to learning as a practice – that we will be open to data, analytics, information, and experience, and actively use these inputs to learn, to improve, to change and to get better at whatever we do. Nothing is fixed, no knowledge is permanent. Our attitude must be that of the lifelong learner, nurturing the capability to take in new knowledge, process it, and make whatever changes are required to act upon it, without clinging to any fixed precepts.

Co-creation

One of the outcomes of interconnection and lifelong learning is co-creation: innovation as a shared, social practice. Dr. Cristina Mele of University Of Naples calls entrepreneurs “inno-mediaries“. Inno-mediaries encourage new innovators (consumers, communities, and experts) to enter into the co-creation of innovation. Each individual one of us represents a critical component. The more we work at learning and the more we work at being interconnected, the more we contribute. We all should seek to be more knowledgeable, and better equipped for the collaborative economy. Co-creation is a practice we can each actively cultivate.

Grit

Working in the future, sacrificing the present, and learning through experimentation (which inevitably results in a lot of failed experiments) all require what Angela Duckworth calls Grit – the power of perseverance. There is no overnight success, and most entrepreneurial journeys require many years, often decades, of sustained effort. The earliest years may be the most trying, when the entrepreneur is at the lowest point on the learning curve, perhaps stretched for resources, with few successful data points to cultivate. There is no substitute for stick-to-it-iveness.

Individualism

Inherent in every attribute on our list is the embrace of individualism. You probably have ideas that are different from those of others, and may be mocked for that very reason. You may pursue a path that others don’t. You may read signals from the marketplace differently. You may be an innovator, the very definition of which is challenging the status quo. The ethos of individualism is that we all are free to try as hard as we can to contribute to society in a way that is different and better. Everyone else is free to provide feedback, both positive and negative, and the entrepreneur laps up that feedback in the form of learning, taking no offense at the negative feedback, and no excessive pride in the positive feedback. Individualism is the system that generates economic growth, improved life experiences and greater social order. The entrepreneur embraces individualism in the service of all.

 

 

Without Spontaneous Order, Ridesharing Would Never Exist

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In a previous essay, I discussed how the English language and its lack of central control exemplified what economist F.A. Hayek referred to as spontaneous order.

Spontaneous order is the belief that when individuals are left to their own devices, they will organically create order out of chaos. However, since we have grown accustomed to living under an extreme regulatory state, many have lost faith in humankind’s ability to self-organize.

But the beauty of spontaneous order is that it exists whether we believe in it or not, which makes any attempt at regulation not only wasteful but harmful. Those who doubt the existence of this organic order will usually attempt to demean its pivotal role by labeling it as dangerous and destructive.

Without manmade laws, it is believed that human beings will fall victim to their alleged carnal nature and seek to do harm unto others without any regard for how their actions impact others.

We have seen this type of justification from almost every government agency in existence today. Without the FDA, it is believed by many that those in the food and drug sectors will fall prey to their own self-interest and sell harmful substances in order to earn more money and grow rich at the expense of the consumer. But many fail to realize that this is not the case. And once such example is the sharing economy.

The Sharing Economy 

When the sharing economy began rising to prominence in the marketplace, it was virtually unregulated. Its existence was born of the consumer’s desire for higher quality transportation.

When it came to hailing a ride,  consumers were not left with many choices. Cabs had been the only game in town for over 80 years. The traditional cab companies had not had to deal with competition before, therefore, they had no real reason to innovate.

But this void in the market left a natural opening for spontaneous order to occur. Without asking for permission, companies like Uber and Lyft were able to grow their own free market legacies. And the consumers were grateful.

The model was simple, if you owned a car and wanted to make money you could turn your car into a taxi and work only when you wanted. Talk about a truly spontaneous model! But it didn’t take long for doubt in spontaneous order, and a love of cronyism, to influence policymakers.

“This must be regulated,” many shouted. Without ridesharing under the thumb of government, there was a misguided belief that chaos would roam free and consumers would be placed in harm’s way. Without having to obtain the same licenses as can drivers, what would ensure these drivers would not be a threat to consumers!

Of course, these fears completely disregard the fact that traditional cab drivers are humans too, which means they are also prone to error. And while required to obtain a license, many drivers still encounter traffic incidents and wrecks. A license does not ensure safety, or only ensures government involvement.

This lack of faith in the sharing economy led to regulations that not only harmed consumers but also those who sought employment through these services.

In addition to driver safety on the road, there was also the fear of “getting into cars with complete strangers.” And even though can drivers are also strangers, these fear tactics were used by the cab unions specifically to incite government action.

The Invisible Hand

True, human beings are not all good people, however, humans are fueled by self-interest. And as a motivator, self-interest can be a source for good. The principle of the invisible hand is the belief that even when someone’s motives are purely financial, this inspiration can actually serve to help others and benefit society as a whole.

The billionaire who loves his wealth but is also creating thousands of jobs for individuals is not by default greedy. Think of the households that now have financial security as a result of this alleged greed.

The billionaire’s self-interest has actually benefited society by creating jobs. And the goods and services created will also benefit numerous consumers. This concept of the individual hand in vital to spontaneous order. It is a natural guideline that ensures things run smoothly and that consumers and the producers both mutually benefit.

It is highly unlikely that your Uber driver will hurt you just because they can. Absent the legal consequences, the driver has accepted this job as a means to make money. The passenger, on the other hand, has used Uber because they need a ride. This mutual exchange ensures that things will run smoothly.

And let’s say, for argument’s sake, that a drive is harmful to a passenger, or that a drug or food product harms a consumer. Do we need government for accountability? The answer is no.

Feedback and word of mouth provide what is needed to ensure quality and consumer safety. Yelp exists absent any government intervention and it helps consumers make informed decisions. If you harm a consumer, those harmed will signal a warning to other consumers. Just like flocks of birds are capable of swerving to avoid predators. All animals are obsessed with self-preservation, and we will do what we need to ensure we stay safe. We do not need rules and regulations for this. In fact, these rules are the same that would have most likely prevented companies like Uber from ever existing in the first place.

Consumers want to consume quality products that will leave them safe and satisfied. This mutual understanding is exactly what makes spontaneous order so remarkable.

The Future Of Work Will Be What You Make It. 8 Principles To Follow.

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There’s a lot of disinformation circulating about the future of work, much of it along the lines of “A.I. will eliminate all our jobs”. We’ve presented the more positive case – for example here – which is based on the principles of Interconnected Individualism.

We are each responsible for expanding our opportunities in this emergent era.

Our future is up to us. Self-reliance and self-efficacy are the watchwords of individualism. There is no limit to the opportunities available to each of us. We must take responsibility to identify those opportunities by asking the individual entrepreneur’s questions: Who Am I? What Do I Know? Who Do I Know? What Are My Resources? With this knowledge, the entrepreneur derives further answers to questions like How Do I Contribute? How Do I Serve Others? Technology will be an augmenting factor, helping the individual to answer these questions and support the action plan that emerges.

When we expand our own opportunities, we do the same for others in an interconnected world.

The principle of interconnection is simple. In the new technological age, we are capable of connecting to any one in the world, to all knowledge, and to a vast array of tools and infrastructure. To cite just one example, cloud computing gives each of us access to huge amounts of computing power, in our hand or on our desktop. Global exchange platforms enable market exchanges for talent or services or content all over the planet. Each time we advance our own opportunities, we are doing so in collaboration with others, and serving their purposes at the same time. Interconnected individualism can drive a new era of global growth.

We will be defined by our skills and how we augment them.

The principle of the division of labor is as old as Adam Smith. The more we specialize, the more valuable we become. The pursuit of specialized knowledge and skills becomes more demanding as global exchange expands. It also becomes more rewarding. Everyone in the world who is a buyer of talent and skills can find your profile; if you are unique in filling a specialized niche, demand for your services will be high. When you have defined your niche, collect all the knowledge you can, and utilize the technologies of augmentation to the greatest degree possible. Your personal brand will benefit.

The consumer is still boss –- by making consumer choices we continue to direct market development. An augmented consumer is an even smarter boss.

The basic laws of economics have not been repealed in the age of A.I. Consumers – using the term broadly to include consumers of final goods and services as well as businesses who consume interim goods and services higher up the supply chain – determine what is salable and therefore what is produced. They do so by buying or not buying. With the technology of A/B testing and the capacity to run unlimited numbers of value proposition experiments for unlimited consumer segments, the entrepreneur can quickly find out what sells and what doesn’t. Let the consumer decide – quickly!

The entrepreneur drives innovation, and we can all become entrepreneurs.

The outcome we are contemplating is a universal culture of entrepreneurship. Everyone is an entrepreneur. We can all ask ourselves the entrepreneur’s questions and take action on the answers. We can start a business or join a business, or plan a career or pursue a professional vocation, all with the same entrepreneurial attitude: what is my special opportunity to serve, and how do I implement in a different, better and unique way?

The new spontaneous order can be good for everyone, if we act to make it so, since spontaneous order is the result of human behavior.

The system that emerges from universal individual entrepreneurship can be called spontaneous order. When we each have the opportunity to do our best to serve others, and everyone else gets to give feedback, positive and negative, the system tunes itself. It’s the best and most just social system, without social engineering or central planning. It’s an optimistic and exciting future.

Our values and empathy for others can guide us to meaningful and fulfilling lives.

The essence of entrepreneurship is service to others. The entrepreneur’s value proposition is the offer to make a customer’s life better. To do that, we must understand our customer’s values, through our empathy, and we must reflect those values to be credible and to earn loyalty. There is no more fulfilling life than that of the entrepreneur.

Different forms of organizing, different principles and different metrics and priorities will make the AI transition work for us.

Part of the reason for the pessimism surrounding the possible loss of jobs to robots in the future is the old thinking inherent in the term “jobs”. Jobs are embedded in the old institution of employment, and of employers and employees. Future organizational forms will be a lot different. We can each be independent contractors or individual entrepreneurs. We can join a team, perhaps multiple teams. We can move in an out of teams as the work and project stages change. We will be compensated based on our contribution, as opposed to a negotiated paycheck. We’ll organize our own healthcare, and compile and manage our own networks of collaborators, suppliers and experts. We will be the ones to organize our own economics and revenues, as opposed to joining someone else’s organization. A. I. will not eliminate jobs, because the concept of jobs will be redundant.

 

This post is an edited extract from The Interconnected Individual, to be published by Business Expert Press, later in 2018.

 

 

How Permissionless Innovation Is Making Health Care Affordable

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The more government involves itself in health care, the harder it becomes to find quality services at affordable prices. As the state has inserted itself more heavily into the health sector over the last several years, many Americans are left searching for alternatives to traditional services.

Luckily, as technology continues to advance far beyond anything our grandparents thought possible, health care itself is becoming more decentralized as individuals are now able to take personal control over their medical decisions.

While older generations may be content to wait on others to improve existing services, millennials are too impatient to let others change the world without taking an active role.

As America’s favorite scapegoat, the country’s youth is constantly being accosted for not caring enough about our futures and specifically, for lack of desire when it comes to buying health insurance. Proponents of nationalized health care will say just about anything to convince young Americans to buy insurance policies we have no interest in purchasing. But while we may not be purchasing health care premiums, millennials are doing something no other generation has done before: open-sourcing health care.  

3D Print a Perfect Smile

Just last year, college student Amos Dudley was making headlines after he utilized his campus’ 3D printer in order to make his own orthodontic retainers. Unsatisfied with the appearance of his own teeth but unable to afford braces, which can cost several thousand dollars, Dudley spent his free time researching various methods of straightening teeth and applied that knowledge as he designed and 3D-printed several “invisible” retainers for his own use.

In a blog post on his personal website titled, Orthoprint, or How I Open-Sourced My Face, Dudley explains how he was inspired to take the appearance of his smile into his own hands.  

“What if you had a chance to save money, make yourself happier, and stick it to the dental appliance industry, all in one shot?” Dudley’s blog post begins. Feeling as self-conscious as most young adults feel, Dudley was resolved to do something about his teeth but, as he puts it, “At the time of writing this, I’m an undergrad, which means that a) I’m broke, and b) I have access to expensive digital fabrication tools – definitely an unusual dichotomy.”

Utilizing his school’s equipment along with two essential books, Contemporary Orthodontics (5e) by William Proffit DDS, PhD, and Orthodontics at a Glance by Gill Daljit., he was able to correct his own teeth with minimal production costs.

But Dudley isn’t the only young American who is open-sourcing the health care industry.

Health In Your Hands

Alabama resident Dana Lewis’ inspiration for designing and manufacturing artificial pancreases was born out of her own struggle with type 1 diabetes.

Since diabetes patients do not enjoy a fully functioning pancreas, which helps produce and regulate the flow of insulin throughout the body, the trick is finding some sort of device that automatically monitors the levels of blood sugar in the body and then adjusts the insulin administered. As of now, nothing on the market or available through a physician is able to adequately perform the tasks of a real pancreas, which has caused many diabetes patients to take their health in their own hands.  

Since there has been general dissatisfaction with the blood sugar monitors available to consumers, there have been previous attempts to open-source better products. Through the creation of smartphone apps that serve as alarms, these apps are meant to wake the diabetes patient up during the night when insulin levels typically drop.

While these were better than those on the market, they were still not getting the job done well enough. Which is why Dana and her husband had to ask the question:

“What else could we do?”

Dana and her husband utilized what is known as a Raspberry Pi minicomputer, an already existing medical device, and developed their own software codes that monitor blood sugar levels and adjust the amount of insulin delivered accordingly.

Thrilled by its success, the Lewises decided to offer the software code online to other diabetes patients for free. Supporters of Lewis began using the hashtag #Wearenotwaiting to express their dissatisfaction with the lengthy medical device approval process that prevents patients from getting the care they need. The “OpenAPS,” as Lewis named her artificial pancreas, was an instant success from the moment it debuted online.

By allowing others to have the software codes, over 250 diabetes patients have been able to utilize the Lewis’ innovative design. Lewis explained:

“Patients are changing the innovation pipeline. These technologies have to be ready faster.”

Which is exactly why millennials are taking the lead on health care innovation. Unwilling to sit still and gifted with tech-savvy skills, young people are using technology to become more self-sufficient and less dependent on government-riddled services.

Free Market Competition Makes the World Go Round

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When a business folds or decides to close up shop, there is usually a sense of sadness lingering in the air. But as has been discussed in the past, market failure is not a bad thing. And for consumers, it is quite excellent. One such example of this can be found in the ridesharing sector.

When the D.C.-based ridesharing company, Split, gave its last ride last year, patrons complained that this closure was a result of companies like Lyft and Uber having an unfair advantage over the competition. But many forget that this “unfair” competition is actually making ridesharing better for everyone.

In a town dominated by Lyft and Uber, Split was not able to carve out enough of a niche in the local ridesharing market. While this is surely not what Split had intended when it began its operations, competition is, after all, just a part of the market process.

Ridesharing has been one of the most free-market innovations of our time. For virtually 80 years, the traditional cab industry has had an unchallenged monopoly. When you’re the only game in town there isn’t much incentive to improve your services. Which is exactly what happened with the taxi industry.

Without a motive to innovate, the cab companies enjoyed an almost century-long reign as their services got progressively worse. Inefficiency, inconvenience, and unpleasantness became adjectives commonly associated with the typical cab experience.

Luckily, the smartphone generation found a way to improve both the quality and cost of the services historically rendered by the cab industries. Customers would no longer have to stand outside attempting to hail a cab while fighting other metropolitan dwellers for a ride. Instead, ridesharing companies utilized something most people already had: smartphones.

Finally, there was a way to improve the quality, safety, and the overall experience of a taxi ride without having to deal with the cab companies.

The cab companies did not have to deal with a direct threat to their business model and have since done everything in their power to ask local governments to regulate the ridesharing industry into oblivion. While the cab cronies have enjoyed mild success in their quest, especially in Massachusetts where a tax was recently instituted which would require ridesharing companies to literally help fund their competition, the union bigwigs have not been able to completely decimate their competition and that is simply because there is a huge demand for ridesharing services.

Now, consumers have options, not only between ridesharing and traditional cab companies, but within the ridesharing genre itself. While Uber enjoyed the first success in the market, other ridesharing apps like Lyft, have also become household names.

The cab companies have been able to survive without any real competition thanks to government subsidies and protections, something the ridesharing market has not been privy to. Without having to really compete to stay afloat, the cab companies could get away with providing low-quality services because there was no real threat of failing. Ridesharing companies, however, have not had that luxury. Each business has had to constantly assess where it stands with respect to its competition.

As a result, ridesharing companies are constantly innovating to differentiate themselves. Split, for example tried to be the app known for the cheapest rides in the District of Columbia, as long as you were willing to share your ride with other passengers going to nearby locations.

How Are We To Achieve Spontaneous Order In Our Society? Let’s Try Inverse Design.

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How are we to achieve a state of spontaneous order in our society? Let’s take a lead from scientific researchers.

Sharon Glotzer is a scientist who has made a number of discoveries that, in her words, “completely change the way you look at the world”.

Changing the way we look at the world is exactly what we all need to do in order to appreciate the potential for spontaneous order in society. So let’s listen to Sharon Glotzer’s story.

Studying Emergence.

She studies emergence – the phenomenon whereby complex systemic order results from the undirected individual behaviors of multiple participants. Starlings flying in complex ordered patterns in the sky is one example she cites, as does Steven Strogatz in talking about Sync. How are those birds communicating so that it seems like they are all following a blueprint?

Glotzer is searching for fundamental principles that govern this emergence of ordered patterns from seemingly random microscopic interactions and arrangements. She found a method: computer simulations.

The Answer Is Entirely Counter-Intuitive.

She discovered something entirely counter-intuitive. In scientific terms, she expresses it this way: entropy, a concept commonly conflated with disorder, can actually organize things. Her example is simple pyramidal shapes called tetrahedra spontaneously assembling into a quasicrystal, a super-complex spatial pattern. The shapes organize themselves – because, in conditions of entropy, “there are no direct interactions, no charges, no nothing” to direct them. In entropy, the particles have no constraints, and therefore more options to arrange themselves. They “wiggle around” freely to find their best position and orientation and alignment. The outcome is “the most complicated entropically stabilized structure that anyone has ever seen”.

Wow!

From The Lab To Society.

Let’s see if we can translate this from the lab to society. Scientists used to believe that entropy results in disorder. Entropy in society could be characterized as no government, no central control, no rule-making intermediaries, no hierarchies, no central planning, no social engineering.

As Professor Glotzer says, this way of thinking creates a complete change in the way we look at the world. We are conditioned to think of the organization of our world in terms of hierarchy and central control. Someone, or some piece of legislation, or some institutional rule is always telling us what to do and how to line up. There is hierarchy in government, hierarchy in religious institutions, hierarchy in corporations, and hierarchy in families.

In a world of social entropy, there would be no such control.

The Method Is Inverse Design.

We are told that such a world is impossible. They call it anarchy, the absence of social order. But Professor Glotzer’s research tells us the opposite. Without central direction, and just a few general rules that apply to all, her particles find “wiggle room” – i.e. individual freedom – and self-organize into a complex order that provides the best result for each of them: the preferred amount of space and the optimum alignment.

How did the system achieve this self-organization? Professor Glotzer calls it inverse design. Don’t try to design a process to achieve the desired outcome. Leave the particles alone and, using their wiggle room, they’ll get to the best outcome by their own devices.

The equivalent in society would be to get rid of all social engineering, well intentioned but harmful legislation, central planning, and hierarchical structures. How can we do this? Like Professor Glotzer, we need a laboratory where we can run simulations. It’s probably small, and protected, and a place where it’s possible to think differently and experiment with new forms of organization and entropy.

Tony Hsieh Is Applying The Method.

Tony Hsieh is the CEO of Zappos and he has famously been experimenting with just such organizational innovation in his company. In place of hierarchy, Zappos distributes decision-making in self-organizing circles, in which members have roles (often several at a time) rather than via hierarchy, job descriptions and titles. There is no manager to instruct individuals on their place in the organization. The structure is continuously changing (“50 times a day”, said Hsieh, in an interview with McKinsey (MckInsey Quarterly, Oct 2017)). It’s self-organization.

The general rules are (1) culture and values, (2) purpose, (3) market-based dynamics (meaning the organization is a market-based system). Each member has an entrepreneurial mindset for operating in the organizational market.

Tony Hsieh says he is comfortable with the fact that he does not know which way the ship called Zappos is headed. It steers itself. He rejects linearity and rigid structure. His mantra for organizational experimentation is, “Is it safe enough to try?” Zappos provides us with a real-life example of changing the way we look at the world, and of organizational entropy producing complex order.

Glotzer, Hsieh and Hayek.

Both Sharon Glotzer and Tony Hsieh are bringing to life the spontaneous order theory of Friedrich Hayek in Individualism True and False:

“…the spontaneous collaboration of free men often creates things which are greater than their individual minds can ever fully comprehend.”

How do we achieve spontaneous order in society? We need more thinkers like Sharon Glotzer and more doers like Tony Hsieh. In combination, they will change the way we organize our world.

(An interview with Professor Sharon Glotzer by Natalie Wolchover appeared originally in Quanta Magazine in March 2017.)

 

Most Americans Disapprove Of Our Decayed Institutions. (So Let’s Innovate.)

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We have reached the point where a majority of Americans express negative opinions about a wide range of institutions.

58% believe the federal tax system is unfair. 63% believe the national news media have a negative effect on the way things are going in the country. More people have a negative point of view about banks and other financial institutions than a positive one. 65% of those who describe themselves as conservative have a negative view of the effect of colleges and universities. 51% say they trust what the current President says less than previous Presidents. 54% have an unfavorable view of the Republican Party and 51% have an unfavorable view of the Democratic Party. 62% have an unfavorable view of Congress. (All of these data come from the wonderful Pew Research Center.)

Institutional Decay.

In The Great Degeneration, historian Niall Ferguson recognized institutional decline and predicted profound consequences: the breakdown of our civilization.

Unless, he said, there is a heroic commitment to radical reform.

Fat chance, you might think. Sclerosis is the normal effect of institutional decay, rather than a spark of action. Decayed Institutions become rigid structures of top down control and suffocating blankets of intermediation.

Institutional Innovation.

But there can be great hope. In the past, Institutions evolved at a glacial pace. They changed over generations. With the advent of new technologies, change can come much more rapidly – not through faster evolution, but through innovation. The new Institutions will not be designed by committee, they’ll emerge as a result of inverse design – the bottom up process of free individuals autonomously generating totally new structures.

Here’s a very brief, topline summary of the general principles that will stimulate this inverse design process.

 

From Government to Individualism

The most reactive and restrictive Institution of all is government. Its goal is control. As Individuals become increasingly augmented by technology, and increasingly able to interconnect with people, knowledge and resources all over the globe without government restrictions (on blockchains, for example), the restrictive control of government will dissolve. Whatever Institutions emerge will be user-centric, not government centric.

From Democratic Representation to Distributed Participation

Democratic representation doesn’t work, and it’s one of the reasons our political institutions don’t change. 535 members of Congress can’t and don’t represent the dynamic and multi-hued viewpoints and innovative behaviors and groundbreaking ideas of 320+ million Americans.

Technology is revealing the power of distributed systems in which millions can participate actively and develop dynamic collaborative decision-making. Distributed participatory systems will replace democratic voting and representation systems.

From Hierarchy to Networks.

Hierarchy originated in the military. Generals (and monarchs) gave orders, which were passed down through layers of command to the common soldier, who did what he or she was told, and often died or was injured or maimed as a result. From those origins, hierarchy invaded business corporations and other organizational structures.

Today, there is broad recognition that hierarchy is inefficient in the use of talent, information and ingenuity. Collaborative interconnected networks are replacing hierarchy. From these networks, new institutional arrangements will emerge.

From Institutional Control To Self-Efficacy.

Institutions exist to modify individual behavior. Eventually, they entrench themselves so that individuals can do nothing without them. We need a license to pursue a profession, a lawyer to make a contract, a banker to get a loan, a teacher or a school to introduce us to knowledge. No longer.

Individuals can now chart their own course, devise their own education, conduct peer-to-peer transactions all over the world, execute smart contracts and make or receive direct loans. Self-efficacy is becoming the new standard.

From Central Direction to Collaboration

We don’t need to be told what to do by someone older, or smarter or in a position of power. Increasingly, we don’t have to. We are naturally collaborative in our efforts to achieve both individual and shared goals. Technology platforms that enable us to reach, share with, collaborate with and transact with anyone anywhere empower us to manage our own projects, our own lives, our own enterprises and our own collaborative teams. Central direction only slows things down and limits the options that can be pursued. It’s going away.

From Made Order To Spontaneous Order

Spontaneous order is the happy result that emerges as the best outcome for all participants when there is no government, no hierarchy, no control and no central direction, just a few general rules that apply to everyone equally. When systems are left to operate under these conditions, order emerges. That’s what the term inverse design means – the act of not designing / controlling, coercing or directing has the consequence of allowing the best result for all participants to emerge naturally from their individual behaviors.

General Conditions For Not Designing.

None of the attributes listed here represent a solution. They are simply new general conditions. From here, creative and entrepreneurial individuals will act to improve their circumstances within this new context, and institutional innovation will emerge. Inverse design is not designing.

The Sunk Cost Fallacy and the Price of Foreign Policy

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There are innumerable reasons to oppose any continuation or escalation of the American occupation of Afghanistan. But disregarding the most important deterrent, the loss of human life, and even more specifically, innocent civilian life, there is one economic principle that screams out from the text of a recent Trump’s speech on America’s involvement in Afghanistan: The sunk cost fallacy.

If I were to spend an exorbitant amount of money on a dress only to decide later on that I despise it for one reason or another, it would be a fallacy for me to believe that I must continue wearing the dress in order to take full advantage of the value I already spent on it. Sure, I spent too much up front, but why would I then cause myself further anguish just because of the initial mistake of purchasing the dress? I would be doubling my losses.

If the dress example is lost on you, imagine instead a Las Vegas buffet. To justify spending the high cost of entering a buffet in Vegas, you deduce that you must, therefore, stuff your face until it becomes physically impossible to ingest anything else into your body. Sure, you may have technically gotten your money’s worth, but now you are also so sick and you have lost the entire evening you had planned.

Examples of the sunk cost fallacy exist all around us. You paid for a subscription to a bad online service so now you might as well use it (no, do not compound your error). You work so hard to get this man to fall in love with you, so you might as well stick with him, even though he is super lame (no, you should dump him). You spent so much money on a concert of a band that turns out to be terrible but you, therefore, must stay until the end (no, you should leave). You bought this movie ticket so you should stay to the end even though you hate every minute (walk out!).

All of this is fallacy. It is this belief that we are already in too deep, so we might as well double-down and keep going. Unfortunately, this almost always leads to further loss.

Trump’s plan for Afghanistan is no different.

Increasing the Cost of War

Reflecting on a speech delivered to a crowd a few months ago, Trump acknowledged America’s fatigue with constant conflict:

And we must acknowledge the reality I’m here to talk about tonight, that nearly 16 years after the Sept. 11 attacks, after the extraordinary sacrifice of blood and treasure, the American people are weary of war without victory. Nowhere is this more evident than with the war in Afghanistan, the longest war in American history, 17 years.

Upon hearing or reading this statement one might logically assume that Trump would follow these words with a promise to de-escalate the conflict. But just like our friend at the Vegas buffet or the woman with the lame boyfriend, Trump doubled-down on the failed policies of his predecessors and re-committed the American people to perpetual war.

Working up the courage to unveil his “new” plan, Trump said:

My original instinct was to pull out. And historically, I like following my instincts. But all my life I’ve heard that decisions are much different when you sit behind the desk in the Oval Office, in other words, when you’re president of the United States.

I will let you guess what is coming next. That’s right, a recommitment to the war that has already claimed human lives both American and Afghani:

The consequences of a rapid exit are both predictable and unacceptable. 9/11, the worst terrorist attack in our history, was planned and directed from Afghanistan because that country was ruled by a government that gave comfort and shelter to terrorists.

America’s war was never directed at the entire country of Afghanistan. The conflict’s enemy was originally the Taliban and all the radical groups that popped up in its place after America got involved and drove them underground. The people of America have no personal or direct conflict with the civilians of Afghanistan. In fact, many of the youths of Afghanistan were not even alive for the September 11. 2001 attacks. Of course, many have had to grow up without fathers because of America’s desire to drone first, and ask questions later.

Trump droned on:

A hasty withdrawal would create a vacuum for terrorists, including ISIS and Al Qaeda, would instantly fill just as happened before Sept. 11. And as we know, in 2011, America hastily and mistakenly withdrew from Iraq.

President Trump seems to forget that in the absence of the United States’ occupation of the Middle East, ISIS may never have come to fruition in the first place. And while a Google search and a few hours of research would clarify this for the president, he has made the mistake of so many before him and has insisted on staying the course, the consequences be damned.

Describing his plan he says:

Our nation must seek an honorable and enduring outcome worthy of the tremendous sacrifices that have been made, especially the sacrifices of lives. The men and women who serve our nation in combat deserve a plan for victory. They deserve the tools they need and the trust they have earned to fight and to win.

Suddenly, the rhetoric has changed from recognizing that we have long overstayed our welcome abroad while simultaneously putting our own soldiers’ lives at risk. Now, Trump’s words convey that to leave Afghanistan is to let down the troops who are desperate to stay and win this fight.

I cannot help but be reminded of Senator John McCain’s statements during the 2008 Republican Presidential Debates. When Ron Paul was questioned about the Iraq War, he responded that we should leave as quickly as possible. In response, McCain asserted that we owe it to the troops to stay. In fact, he even claimed that upon visiting our military forces overseas, they pleaded with him to continue the war so that they may bring victory to America.

This, once again, has sunk cost fallacy written all over it.

Iraq was a disaster even before we got there — the second time. We were never going to win that war because there was literally no reason for us to be there in the first place. We now know that there were no weapons of mass destruction. And while Saddam Hussein was clearly a bad guy, it wasn’t our war to fight. But after years and literally trillions of dollars spent, the politicians who supported the war preferred to double-down on their stances, rather than admit defeat and put a stop to the madness.

The Iraq War cost the American people over $2 trillion and Afghanistan is now into the trillions as well. Yet, we keep fighting, we keep doubling down on policies that are costing us money and human life.

But this has been going on long before the War on Terror began.

Like Iraq, Vietnam was a losing battle. Without a comprehensive view of the cultural and societal traditions of Vietnam, America was ill-prepared to intervene in a civil war. Not to mention, like Iraq, there was also no substantial reason for the United States to be there in the first place.

But no matter how badly we failed in the distant swamps and tropical mountainous landscapes of Vietnam, there was this unfortunate habit of politicians to double down when things got worse.

Cut Our Losses and End the Madness

Trump’s foreign policy blunder is not a new phenomenon, but it is a dangerous one. Throughout history, it has claimed many stubborn, prideful leaders who would rather be right than moral.

“We do not have the luxury of going back in time and making different or better decisions,” Trump said a few months ago. He continued, “In Afghanistan and Pakistan, America’s interests are clear. We must stop the resurgence of safe havens that enable terrorists to threaten America.”

It almost sounds as if Trump has put little to no effort into studying the issue of American foreign policy. The mission he spells out is the same mission we have been engaged in for years, and it just doesn’t work.  

If we get out of Afghanistan now and don’t ever look back, America will still have to deal with the 2,386 deaths and the 20,049 wounded military personnel resulting from our presence in the country. These numbers are dismal and depressing, but they can always get worse. And unfortunately, just this week it was released that this is already happening, the numbers are growing yet again.

Staying in this war will only double, if not triple or quadruple these numbers. There is nothing to be gained and everything to be lost. Yet, just like that ridiculously expensive dress I purchased and forced myself to continue wearing, Trump is effectively multiplying the negative repercussions of war.

When Musicians Feud, Consumers Are the Real Winners

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Last week, Taylor Swift’s new album officially became available on all streaming platforms. This may not seem like exciting news. After all, most albums are available on Spotify. And, the album was already released for purchase almost a month earlier.

But it wasn’t so long ago when Ms. Swift removed her entire music library from Spotify insisting that she was taking a stand on behalf of all musicians.

And while many listeners were unsure if her music would ever return, market competition provided the vessel that ultimately resulted in TSwift featuring her music on streaming platforms once again.

Streaming Revolution

Swift has long been an advocate of “musician rights,” if you can call it that, claiming that these music industry elites are suffering from crippling record sales as streaming services like Spotify, Pandora, and Apple Music have dominated the consumer music market.

To be sure, physical album sales have been suffering for years ever since MP3s became the new normal. As a millennial, I hardly remember buying physical CD’s before the invention of Napster and other pirating platforms became commonplace in the beginning of the new millennium. As a child, I remember saving up my allowance in order to buy a Spice Girls CD from an actual music store, which only a few short years later became obsolete.

But in Swift’s defense, she did manage to do something no other artist had done; she has continuously broken records when it comes to physical album sales in a time when a majority of her fans have never even owned a CD player. There is something to be said for this, as she clearly has demonstrated her popularity and demand in the music market, but that hardly justifies her stance on the matter.

Music streaming services are not “free,” in the sense that Swift claims they are. Not only do patrons pay a monthly fee to use these platforms, but each time the user plays a song, the artists are compensated. It is not an exorbitant fee per play, but if, for example, like me you have listened to the Hamilton soundtrack literally thousands of times, that can add up quickly. And I am just one person.

However, Swift has been opposed to this model, even writing a scathing letter to Apple Music condemning the company for not compensating artists enough for the privilege of streaming their music and declaring that “1989” would not be available to stream. This letter was met with criticism from many, including Foo Fighters frontman, Dave Grohl who said:

“Me personally? I don’t *** care. That’s just me, because I’m playing two nights at Wembley next summer. I want people to hear our music, I don’t care if you pay $1 or *** $20 for it, just listen to the fucking song. But I can understand how other people would object to that.”

Bad Blood, Cheaper Music

But as adamant as Swift has been in her quest to protect artists from being taken advantage of (and to be clear that is to be read with a hint of sarcasm) she has done a complete 180 within the last few months, announcing that her entire discography will once again be available on Spotify.

Celebrity gossip columns were quick to pick up on the timing of this change of heart, pointing out that Swift’s entire music catalog was being brought back to Spotify on the exact day that Katy Perry’s new album was scheduled for its release on the same platform.  

This was not lost on Perry, who said she couldn’t be sure of Swift’s intention, but that the timing was definitely suspect. From the perspective of a music consumer who, aside from purchasing a membership to “Tidal” specifically to stream Beyonce’s Lemonade album, has been a devoted Spotify loyalist, I couldn’t be happier about Swift’s decision.

I comment often on the consumer benefits of market competition and this current situation is no different. Without competing products— iPod vs. Zune, Hulu vs. Netflix, Coke vs. Pepsi, Backstreet Boys vs. NSYNC—the consumer would not have access to the very best and innovative goods on the market. The need to be constantly improving on an existing good or service in order to out beat the competitors serves only to benefit the consumers. It also is serving Swift well as her older songs are currently outperforming Katy Perry’s newest album, “Witness.”

I will be the first to admit that when Swift initially removed her discography from Spotify, I immediately pirated her albums in protest. Now, I will happily delete these files in exchange for the Spotify Taylor Swift experience. Do you hear that T-Swift? Streaming also discourages pirating, but that, alas, is a topic for another time.

Networking And Knowing: What Digital Entrepreneurs Do.

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Many of us retain a linear and sequential image of the entrepreneurial process. A hero entrepreneur looks for market gaps or identifies consumer dissatisfactions, designs a solution and takes it to market. The process is intimidating: it requires singular inspiration, breakthrough thinking, grit, money and luck, and takes a long time.

In fact, entrepreneurship is not about solutions designed by a few, it is about interactions between people, the more the better. Innovating is not a process, it is a set of collaborative practices taking place on interconnected networks.

The First Collaborative Car.

Recently, thousands of individuals around the world came together to design a new car from scratch. They did so through a project activated by Fiat called “Fiat Mio – the first collaborative car”[1]. It was a deliberate attempt to overturn the traditional development process by interconnecting with as broad a network of people as possible to gather and shape innovation ideas. Thousands of ideas from over 100 countries were gathered, and integrated into a new car launch. Moreover, all the ideas were placed in Creative Commons, so that they remain available to all, a complete inversion of the traditional route of secrecy and patent protection.

Research conducted by Dr Cristina Mele and Dr. Tiziana Russo Spena (both of University of Naples Federico II, Department of Economics, Management and Institutions, Napoli, Italy) points to this and other examples of interconnectedness as the opening of a door to an emergent and entirely new and revolutionary concept of economic, social and cultural innovation. It’s something we all do together.

Food As Social Discourse.

Think of the food industry today. Actors in the food industry, including consumers but also including farmers and food activists and nutritionists and athletes and bloggers and TV and internet personalities, increasingly spur on a social and cultural process that develops new ideas, new standards, and new perceptions of quality, authenticity, legitimacy and value. Organic, gluten free, grass fed, and low fat foods were not a single person or company’s idea offered to the market. They emerged from the interaction of innumerable participants. Food is social discourse and social practice. Food innovation is an interconnected social effort, the application of different people’s competencies and interests through resource and knowledge integration.

This rolling innovation in the food industry, propelled by the new interconnections of multiple players with different roles sharing new knowledge and combining it in new ways with established expertise, illustrates what Dr. Mele calls “connections-in-action”. Entrepreneurship is the continuous co-construction and co-creation that results from the interconnections among a network of market actors, actions, contexts and resources. Innovation is the emergent outcome. Rather than a breakthrough action of one entrepreneur or one R&D lab or one company, innovation is “a shared knowing and doing”.

The Four Practices Of Digital Entrepreneurs.

Digital entrepreneurs are the agents who integrate the activities through which market innovation emerges. Pursuing specific actions, they enable four practices that shape innovation:

Engaging: connecting market actors who are seeking opportunity to co-create innovation. These actors could be designers, thinkers, engineers, inventors, teachers, or parents, or play in any one of a myriad of roles. They have talent, they have an interest in making things better, and they are open to collaborate and share and develop ideas and projects. Engagement is the practice of expanding the variety of actors and roles – the more the better – in any collaboration to capture new possibilities for novelty.

Exploring: the continuous dynamic of knowledge creation and recombination through shared interaction – knowing and learning together. This is where problem solving occurs, through interconnected creativity, knowledge and competency.

Exploiting: the combination and transformation of knowledge in new contexts, seeking ways to re-use and re-combine knowledge and technologies. Collaborators modify and extend their concepts into new opportunities, translating knowledge in new ways and developing commercial concepts.

Orchestrating: ensuring, out of all the possibilities, the best flow of actions and resource integration. Orchestrators frame the network of collaborators to promote the most effective linkages and connections, mobilizing individuals to increase their personal empowerment and confidence, while also fostering community level speed and alignment.

Networking And Knowing.

Viewed together, these practices can be grouped into Networking and Knowing. Networking means all the ways of connecting people and resources. The emerging technologies of spontaneous order make it possible to bust the silos that previously impeded individual opportunity (such as the barriers between healthcare providers and patients in a healthcare system). Knowing means the shift of knowledge from object to action – a knowing that is co-constructed through the interaction of individuals (such as patients, doctors, researchers, medical specialists, data gatherers, etc) so that new common understanding can emerge.

Inno-mediaries.

Digital entrepreneurs are shaping markets as they create the new ways of developing, diffusing and using knowledge, and new ways to generate and promote innovation. Dr. Mele calls these digital innovators “inno-mediaries”. They encourage new innovators (consumers, communities, and experts) to enter into the co-creation of innovation by enabling new practices through the use of diverse resources.

Each individual one of us represents a critical component. The more we work at being interconnected, the more we contribute. We all should seek to be more knowledgeable, and better equipped for the collaborative economy. We should be active, constantly interacting, always crossing and blurring organizational and institutional boundaries. Everyone can be an inno-mediary.

 

[1] https://www.youtube.com/watch?v=UF6pXmt2-WU

 

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