No one knows whether the five revolutions described above will add up to what some futurists call the Singularity, an astrophysical term that refers to the center of a black hole where Albert Einstein’s rules no longer hold. What is clear is that the pace of change appears to be accelerating as biology, tech- nology, globalization, and information merge together to create an onslaught of both potential and peril.44
Measured by both the velocity and variety of change, most organizations already recognize that they live in uncertain times. Hence, “tried-and-true compass-setting” tools such as strategic planning, benchmarking, and mission and vision statements topped Bain & Company’s annual survey of manage- ment tools in 2002. Of the companies surveyed, 80 percent said they had used all three tools in 2002, up from 70 percent in 2000.
Even if they set the right course, however, many organizations are poorly designed to respond to the changes that they face, whether because of ignorance, inflexibility, indifference, or inconsistency. Although they may have survived, even prospered, with pockets of vulnerability in the past, the question is whether they can survive at all facing the revolutions described above, and what they can do to improve the odds of success. Instead of launching another planning process, benchmarking the competition, or writing a better vision statement, perhaps they should think about the next surprise. “Unless it’s suppressed, there’s going to be some breakthrough in
either electrical propulsion for cars or fuel cells,” R AND’s Robert Roll warns the car industry. “Or China will all of a sudden have two cars per household and we’ll be drowning in greenhouse emissions. Circumstances are going to force a change on the automobile industry. The question is how to get ahead of it.”
Getting ahead of the next surprise is easier said than done, of course.
Unfortunately, there is little hard research on how organizations can structure themselves to improve the odds of success under conditions of uncertainty.
There are plenty of lists of how innovative, built-to-last, good-to-great, or just plain excellent organizations behave, but few that provide guidance on the underlying scaffolding needed to innovate, improve, or sustain excel- lence, and even fewer that ask what matters most to high performance. As a result organizations often try to do every good thing at once, adopting fad after fad in search of something, anything, that works.
The next chapter is designed to temper that pressure by asking what mat- ters most to high performance. The first step toward improvement is know- ing what to change and what to leave alone, what to nurture and what to ignore.
NOTES
1 Albert Wohlstetter, F. S. Hoffman, and M. E. Arnsten, Measures to Protect Air Base Fuel Stocks, RM-1394, October 21, 1954; accessed at http://www.rand.org/
publications/classics/wohlstetter/RM1398/RM1398.html, June 10, 2004.
2 This quote is drawn from a March e-mail exchange with Davis; his emphasis.
3 Wohlstetter, et al., “Measures to Protect Airbase Bulk Fuel Stocks,” p. 2.
4 There is so much RAND literature cited in this report I decided it is better to provide a bibliographic inventory at the end of the book rather than clutter each page with footnote after footnote.
5 Thomas C. Schelling, “Forward,” in Roberta Wohlstetter, Pearl Harbor:
Warning and Decision, Palo Alto, CA:Stanford, 1962, p. vii.
6 Wohlstetter, Pearl Harbor, pp. 388-389.
7 Ernest R. May, Strange Victory: Hitler’s Conquest of France, New York:Hill and Wang, 2000.
8 Ernest May, Strange Victory, p. 452.
9 The software engine, called Computer Assisted Reasoning System (CARSTM), was designed by Evolving Logic, a company headed by Bankes, Lempert, and Popper, and was used to apply the company’s robust adaptive decision-making
methodology to Volvo’s problem.
10 “First Drive: 2003 Volvo XC90: SUV Now Stands for Swedish Utility Vehicle,”
Motor Trend, October 2002, access at http://www.motortrend.com/roadtests/
suv/112_0210_volvo/index.html.
11 Winston Churchill, The River War: An Account of the Reconquest of the Soudan, Carroll and Graf, 2000, pp. 162-163, originally published in 1902.
12 Scott McMurray, “Changing a Culture: DuPont Tries to Make Its Research Wizardry Serve the Bottom Line,” Wall Street Journal, March 27, 1992, p. A1.
13 The study of DuPont, Intel, Monsanto, and Xerox, was conducted by Susan A.
Resetar, Beth E. Lachman, Robert J. Lempert, Monica M. Pinto, and is cited in the bibliography at the end of the book.
14 RAND’s study team cites Nathan Rosenberg, Exploring the Black Box: Technology, Economics, and History, Cambridge, 1994, on these numbers.
15 James P. Miller, “DuPont Emerges Slim and Trim from Restructuring—Chemical Giant Has Pared Costs and Employees in Three-Year Makeover,” Wall Street Journal, April 6, 1995, p. B3.
16 Faye Rice, “Who Scores Best on the Environment,” Fortune, July 26, 1993.
17 Edward Harris, “Norway’s Kvaerner, Once a Global Player, Faces a Scaled-Down Future,” Wall Street Journal, October 29, 2001, p. A19.
18 Olga Oliker’s study, Russia’s Chechen Wars, 1994-2000, is cited in the bibliography at the end of the book..
19 See Intel’s description of Moore’s Law at http://www.intel.com/research/
silicon/mooreslaw.htm.
20 The study was conducted by Susan A. Resetar, Beth E. Lachman, Robert J.
Lempert, Monica M. Pinto, and is cited in the bibliography at the end of the book.
21 Don Clark, “Intel Bets on a New Design Strategy,” Wall Street Journal, May 14, 2004, p. B2.
22 Ellen Florian, “Special CEOs on Innovation,” Fortune, March 8, 2004, p. 89, accessed on http://www.nexis.com July 17, 2004.
23 The conclusion emerged from a series of reports conducted over the life of the New American Schools experiment.
24 James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine that Changed the World: The Story of Lean Production, New York:Harper Perennial, 1990.
25 RAND references N. Sakkab, “Connect & Develop Replaces Research & Develop at P&G,” which was presented at the Industrial Research Institute Semi-Annual Meeting, Washington, D.C., 2000.
26 Ann Harrington, “Who’s Up and Who’s Down; How Companies Rank in Their Industries,” Fortune, March 8, 2004.
27 Quoted in Ellen Florian, “Special: CEOs on Innovation,” Fortune, March 8, 2004, p. 89, accessed at http://www.nexis.com, July 17, 2004.
28 Florian, “CEOs on Innovation.”
29 Janet Guyon, “No Innovation Can Replace Direct Discussions,” Fortune, July 26, 2004, p. 167, accessed at http://www.nexis.com, July 17, 2004. (The article was available on Nexis before its publication date.)
30 I draw here on James S. Hodges, Onward through the Fog: Uncertainty and Management in Systems Analysis and Design, RAND, July 1990.
31 Peter S. Pande, Robert P. Neuman, and Roland R. Cavanagh, The Six Sigma Way:
How GE, Motorola, and Other Top Companies Are Honing Their Performance, New York:McGraw Hill, 2000, p. ix.
32 Gregory F. Treverton, Reshaping National Intelligence for an Age of Information, New York:Cambridge, 2003, pp. 11-13.
33 This list comes from Carl H. Builder and James A. Dewar, “A Time for Planning?
If Not Now, When?” Parameters, Summer, 1994, p. 8.
34 Michael Marriott, “Designing a Smarter Shoe,” New York Times, May 6, 2004, p.
G1.
35 Nano-scaling and nano-divide are my term, not RAND’s.
36 The study was authored by Richard O. Hundley, Robert H. Anderson, Tora K.
Bikson, and C. Richard Neu, and is referenced in the bibliography.
37 Gary Burtless and Robert Litan: Globalphobia: Open Trade and Its Critics, Washington, D.C.:Brookings, 2003.
38 The survey was conducted by RAND Europe in collaboration with Janusian Security Risk Management. The results were published in the Financial Times, May 10, 2004.
39 RAND’s report on the Zapatista netwar was coauthored with Graham E. Fuller and Melissa Fuller, and is referenced in the bibliography.
40 Graham Dunn, “Schiphol to Remain Prominent in Air France-KLM Tie-Up,”
Air Transport Intelligence, March 19, 2004.
41 The Army built much of its strategy on the high probability that a Soviet invasion would come through the Fulda Gap, which would open the corridor for the shortest run through Frankfurt to the Rhine.
42 These suggestions come from Paul Davis and Zalmay Khalilzad’s report, A Composite Approach to Air Force Planning, cited in the bibliography.
43 The quotes are taken from Lempert and Popper’s draft chapter, “High Performance Government for an Uncertain World,” in R. Klitgaard, ed., High-Performance Public Service, RAND, forthcoming, 2005.
44 See James John Bell, “Exploring the ‘Singularity,’ ” The Futurist, vol. 37, no. 3, May 2003, for an introduction to contemporary thinking on the issue.
in search of extraordinary results
43
R
AND and its researchers have never been interested in uncertainty for uncertainty’s sake. Convinced that uncertainty is a central challenge to organizational performance, they have spent more than a half century look- ing for ways to both “harden” organizations against turbulence and increase the odds of high performance during peace and war.Indeed, a R AND researcher named Paul Baran imagined the first version of today’s Internet as a way to insulate military communications against the chaos of nuclear war. “At the time, the nation’s long-distance com- munications networks were indeed extremely vulnerable and unable to with- stand a nuclear attack,” write Katie Hafner and Matthew Lyon in their best-selling history of the Internet, Where Wizards Stay Up Late. “Yet the president’s ability to call for, or call off, the launch of American missiles (called minimal essential communication), relied heavily on the nation’s vulnerable communications systems.”1
According to Baran, who began working on the problem in 1959, the Air Force had two options for solving the problem: a decentralized communi- cations network with regional hubs that would collect and distribute informa- tion, or a distributed network with no hubs at all.
Baran clearly favored a distributed network composed of autonomous
“nodes” that would be capable of receiving, routing, and transmitting infor- mation to the final destination through any available path. “Many of the things I thought possible would tend to sound like utter nonsense, or impractical, depending on the generosity of spirit in those brought up in an earlier world,” he told Hafner and Lyon 30 years later. Baran remembers talking with other researchers outside of RAND about the human brain, which often reroutes information around damaged cells, thinking, “Well,
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gee, you know, the brain seems to have some of the properties that one would need for real stability.”2
The only way to design such a system would be to break each commu- nication into short, fixed-length pieces that could be addressed to another station and routed through the network to their ultimate destination. That meant digital, not analog, technology, as digital technology allowed infor- mation to be moved from one place to another in packets, which were then reassembled. “By dividing each message into parts,” Hafner and Lyons write,
“you could flood the network with what [Baran] called ‘message blocks,’ all racing over different paths to their destination. Upon their arrival, a receiving computer would reassemble the message bits into readable form.”3
Although Baran eventually convinced the Air Force to pursue the idea, American Telephone & Telegraph (AT&T) was unimpressed. “After I heard the melodic refrain of ‘bullshit’ often enough, I was motivated to go away and write a series of detailed memoranda papers to show, for example, that algorithms were possible that allowed a short message to contain all the information it needed to find its own way through the network.”4Five years after starting the project, Baran finally hit the wall when the newly created Defense Communications Agency was put in charge of the effort. Conclud- ing that the new agency would “screw it up,” Baran moved on to other work.
Baran’s idea lived on, of course. With funding from the Defense Department’s Advanced Research Projects Agency (ARPA), Baran’s “packet- switching” system was eventually built in 1967. Called ARPANET, it had seven nodes, the first at UCLA and the seventh at RAND. By the 1980s, ARPANET had become the Internet, and the rest, as they say, is history.