Big Data and more statisticulation


by Irving Geis in How to Lie with StatisticsToday’s New York Times made my hair stand on end. Kenneth Chang’s piece,  Parsing of Data Led to Mixed Messages on Organic Food’s Value,  admirably points out how easy it is to confuse the public. The article raises good questions about research methods, standing by institutional reputation not merit.  I wonder  Is this  just another sign of academic practice needing a bit of a makeover?

The Case in point

Stanford, whose sterling reputation lifted higher with news celebrating its latest Nobel prize winning economist, added new fodder to the debate of organic vs. traditional agriculture methods and practices.  The respect enjoyed by Stanford university and its published research shuts down public questioning and personally, reminded me of Darrell Huff‘s 1954 slim volume How to Lie with StatisticsA sentiment also captured whimsically by  Irving Geis in his  illustration(shown on the left)  in the same volume.

Huff coined the phrase “statisculation,” to refer to those who use statistical material to misinform people.  Chang’s article doesn’t judge. He merely helps  innocent readers understand something about meta-analysis, a perfectly acceptable method that produces very useful and cost-effective insights by re-examining other researchers’ data. Also customary in scientific circles, the Stanford published results and conclusions, raise questions and challenges pressed by other researchers.

The problem is that this dispute and airing works for closed loop academic circles where everyone understands and accepts the evaluation process, and accepts that knowledge and acceptance never comes with only one paper.  Chang’s article points out that Kirsten Brandt, the scientist who led the England Newcastle University published 2011 study  though also a meta analysis, produced very different results, did not enjoy the wider public audience and hit the social media airwaves.  Consumers  making daily buying decisions instead are made vulnerable by sound bytes shared by those who stand to benefit the most from the Stanford University researchers’ findings–that organic doesn’t offer material differences.

On average Stanford’s findings may be true, but since when do we actually care about the average?  The tomato I buy isn’t average, and how, where and when its produced changes its quality.  For example, this year the drought didn’t produce the same volume or quality of tomatoes locally as last year. Chances are the nutritional quality differs too. So why would averages across geography and year prove meaningful to compare?

Big Data and its ongoing hype does offer  greater opportunity. The capability to look at and analyze more attributes, makes it possible to discover more relationships. produce new insights, increase our understanding of subtle differences into the relationship between things or ideas.  The cost/benefits of this explosion of hype around the promise of big data and analytics however in the short-term may prove disproportionately beneficial.  As the Chang article illustrates, more data doesn’t improve the analysis quality. Limited capability to test and engage in the healthy scientific defense process, may lead to greater manipulations or statisticulation.

Few people capably and competently understand differences in error terms or appreciate that some reported differences just aren’t as significant as others because the method relied on averages and not the full range of the distribution. If I’ve already lost you, then perhaps you should take a look at Darrell Huff’s book.

Required reading for any published author and every student is a basic primer in statistics.

 

Advertisements

Spreading Optimism in Data analysis, can it save us?


Last night, I ventured out of my normal routine and headed off to a “Meetup” with folks who sought to “create space and opportunities for ongoing collaboration of non-profit data partners and data enthusiasts to explore interesting data sets for the greater good.”

Four Ways to Slice Obama’s 2013 Budget Proposal,

[Note, the full interactive graphic can be found at The New York Times ]

Big data and Business intelligence or applying analytic and visualization tools to explore and understand data have been steadily gaining their share of business headlines in the last few years.  If I was more deft, I’d be able to show you a graphic illustration.  But that’s the point of why I went to the meetup.  To learn where and how to do exactly that!

I met several people, bolder than I, willing to put their ideas out in front of others before they were fully baked. Even better, these individuals were bold enough to push their initiatives in spite of the usual skepticism.

Compelling policy action with data

For example, the overlap of homeless people in neighborhoods with vacant buildings and apartments, sounds like a solution begging for grease to make happen.  One attendee, a researcher, wanted to document the problem and then find folks willing to help change the situation. The grease might be converting the vacant properties to low-income housing, or an unemployment  PLUS housing voucher system.  Better yet, why not offer training in home and building maintenance,  a program for home repair that puts the homeless to work to earn their rent? The researcher came looking for help to find the data and see what if anything could be done in Chicago.  I happened to have investigated this questions briefly (see my post on the Rosenwald homes) and shared with her that indeed there were lots of organizations and public private partnerships working on this issue.  For her, the meetup proved useful and helped her further her interests.

Policy wonk that I am, I recognize wider issues these simple ideas overlook.  What I applaud however, is the willingness and gumption of technically skilled, many highly educated PhDs who have voluntarily bound together to tackle the status quo.  In spite of my own experiences and deeper understanding of the problem, the Data luck meetup tapped my ever-present optimism and willingness to engage, and I guess that’s what prompted this post.  I too, sense  a good argument, made with honest data,  can and should sway people to correct problems.  Don’t you?

It’s certainly hard to roll back a policy after it’s been implemented.  When new information or new insights emerge, typically the absurdity of the original solution only manages to compromise best intentions.  The results represent the flaws or misconceptions of the original framers of the problem.  The revelations of more problems, as in the example public housing created of co-dependence and how it helped sustain poverty for people who grew up in these projects.  The emergent data just as easily undermines the willingness of lawmakers to find a better solution.  Instead the aggregate data leads them to impose more rules and regulations to prevent cheating which does little to correct the underlying problem.

How is it that we have growing government? Adding rules to correct for the limitations of the original legislation, like any patch, is easier than starting over and addressing the problem from scratch.

Amending vs legislating

The Constitution, of 1789 was an overhaul within 10 years of the final ratification by all 13 colonies of the first constitution, or the Articles of Confederation which had effectively bound the states after the American revolution. Beginning with 10 amendments, in two centuries, Congress has amended the constitution only17 times, while it enacted numerous laws.

Today, Congress appears to be passing less legislation, as illustrated in the following summaries featured by Ezra Klein in the Washington Post and govtrack.

The scare of governmental encroachment, or interference in our lives may be the rallying cry of many; additional data however, suggests other factors.

Congress                       No Action  Action      Failed      Enacted # and %

106th (1999-2000)            7460            922           28           558 (6%)

107th (2001-2002)            7750             841           5              350 (4%)

108th (2003-2004)            7045              932         13           476 (6%)

109th (2005-2006)           9141             930         22           465 (4%)

110th (2007-2008)            9218           1382       39           442 (4%)

111th (2009-2010)            9239             998        26           366 (3%)

112th (as of 8/4/2011)    3956               305         7              20 (0.5%)

(source: http://www.govtrack.us/blog/2011/08/04/kill-bill-how-many-bills-are-there-how-many-are-enacted/  )

Drafting a bill, as the blog points out certainly requires some thought, and the leadership in each party tends to only let those bills with a chance at passage actually reach the Congressional floor for votes.  This explains the relative low # of fails, in spite of the discrepancy between the number enacted and those receiving some action.

Not clear how to interpret the relatively low proportion of enacted legislation.  Is it a sign of efficiency, or the complete log jam that makes progress impossible? Anyone know whether repealing a piece of legislation , such as the repeal of Glass-Steagall would be tallied as enacted?

The challenge

One thing is clear, having more volunteers who are not part of a political action committee, or beholden to a particular ideology other than honest analysis, can only help.  The value of new tools and data visualization certainly helps, but as the presenters at last night’s Data luck meetup reminded, you still have to clean the data before beginning the analysis.  I’m eager to learn how to use some of these tools, and access more data to help tell a different story.

I’ve got no problem using shame to illustrate the inadequacy of a policy, or the stranglehold of private interests that stand in the way of progress.  What do you think? Any and all suggestions are welcome.

Medicare, time to replace the model


Problems, by in large are man-made.  Humans, among all living beings, are the only ones who actively make their own environment, and specifically the cultural constructs of that environment.

Sure animals show similar behaviors, birds build nests and ward off other intruders; but animals don’t prosecute killers, nor does the animal kingdom employ different species  to build out their environment.

Unemployment or the Federal Deficit are both human problems  of our own making.  Irrespective of the choices made,  passive or  active, logically motivated or merely “the right thing to do,” problems arise from some break down  in objective  reality.

Today David Brooks , New York Times column  entitled Where Wisdom Lives, describes the philosophical choices the Republican Party and Democratic Party must face to resolve the Medicare problem and present political  logjam.  For all his brilliance and clear understanding of the interdependent pieces that have brought Medicare to this looming state of insolvency, he uses his answer to define the problem.   Good  technique for effective communication, but not a good fit for problem solving.   His mention of  Medicare’s basic structural flaw–reimbursement as pay for service model, suggests an alternative assessment.

What problem exactly was Medicare intended to resolve?  Wikipedia describes Medicare simply as a social health insurance, providing those eligible to receive “covers 80% of the Medicare approved amount of any given medical cost.”   So is the problem the insurance or the costs? or social coverage?

The Pay for Service model, a wonderful cultural construct and mental model of  healthcare delivery  matches the model used in the care and health of automobiles.  Auto insurance policies are structured very similarly to health insurance plans.  Correspondingly, these models also shape government regulations that curb the practices of the insurers, mandate coverage and resolve claims.  Fundamental differences between cars and people seem  entirely irrelevant when choosing or defining the problem that Medicare in its current model solves.

Cars are disposable and replaceable; and the marketplace  determines both reimbursement limits and clear, directional prices that consumers and insurers incorporate in their choices.  Where is the human depreciation schedule, or  the human after market and blue brook valuation equivalent  to those that exist in the automobile market?  No matter how abhorrent an idea, these do exist in part created by Medicare and the Federal government.  In the automobile insurance market, there’s no philosophical debate about when to send a  car to the junkyard or rebuilt.  Not all body shops’ repair or service estimates match nor do every insurer’s reimbursement.  The insurer establishes the limits of what it will pay, and the insured chooses replacement or repair.

In the healthcare system, insurers may expect a co-payment or ask that you obtain  pre-certification before a procedure, but people rarely, if ever, are given a cost estimate.  Most health practitioners couldn’t give one  if they wanted to.  Billing departments set the price and the invoice reflects what Medicaid, or the insurers have negotiated for reimbursement.   At the auto shop, if it’s an insurance related claim, sure there is some pricing adjustments.  But for the majority of service, maintenance or repairs, the repair shop provides the estimate. Then based on an understanding of the cost and relative perception of value, its possible to negotiatewhat work  is done   When our body may  need “repairs,” or “servicing” doctors increasingly review the pros and cons of the different alternatives with us, but cost does not enter the conversation., other than whether insurance may or may not cover the procedure.

In short, the pay for service model is NOT the model of healthcare in the US , because the choices we make are not based on price, they are based on a higher ethical or moral standard of care.  For Automobile service, price is directly linked to the  election of a transaction for service.  Choices for obtaining healthcare services are often made for us, not by us.  Who is making the choice for whom?  Perhaps the idea of Medicare was to make it clear that eligible people would get the healthcare they need.  Philosophically the burden for charitable care was shifted to society, the public and off the care providers…for both medicare and medicaid.  The arrangements for payment preceded the mechanisms for pricing and though adjustments have been made,  the absence of clear market signals compromise the objectivity of any proposed change. Market signals may be inappropriate for healthcare services, and the recent downturn have demonstrated that even a well established market system like the automobile industry couldn’t respond swiftly enough and required governement assistance.

David Brooks  points to the  two parties opposing philosophies that pit wider market driven control against central planning.  What it doesn’t do however is help us use our experiences with a very broken pay for service system to recognize how badly this model fits the consumption process of health care delivery. Rather than getting stuck in a philosophic debate, or stoking the fire of fear, can’t we find a better fitting model?

Goodness of fit test for a model?

Ever been asked to solve a story problem?  Fit, is crucial  when  choosing a method, or evaluating which  different math  model best matches  the information and situation presented in the story or problem.  Wikpedia on solving math problems explains :

“This question can be difficult to answer as it involves several different types of evaluation.”

Likewise, here is a more complete explanation of matching models and problems that teachers:

” In this step a chose of how to solve the problem will have to be made. The choice could be as simple as writing a math equation. More complex problems may require the formulation of an algebra problem or the use of a problem solving strategies. Strategies such as guess and check, draw a picture and work backwards can be used on many types of problems. Sometimes more than one strategy will work on problem in which case the solver can select their favorite strategy or use the easiest one.
Read more at Solving a Math Story Problem: Five Easy Steps for Completing Any Problem

Much of the debate continues to focus on philosophy. The  insurance model  doesn’t fit the larger understanding of the problem.  Evidence points to runaway costs, or services untethered to a cost based evaluation where there is no market mechanism  to help providers and recipients  make a service choices. Just as a car that goes in for regular maintenance is cheaper then the breakdown on the road, the missing cost signals have also compromised  both our attitudes and service mechanisms to provide lower cost maintenance health regimens.  Likewise, it is difficult to discuss quality of care in the absence of cost.  Not every investment to prolong life may prove qualitatively appropriate, yet insurance companies are making the call for us.  If that is morally repugnant, then let’s find a some common ground and then move forward before it’s too late.

Costs of Care , a social venture non-profit organization committed to greater transparency of costs in healthcare delivery offers this model:

In the American political system, our ability to get mired in philosophic debate is  ever present.  Our ability to find the best frame , or clarify our intentions and find the best model match is imperfect at best.  But there’s no time to waste if we are serious about tackling ticking time bombs like Medicare.

I’d be pleased to hear further thoughts or  suggestions that might help either redefine the problem or be a better fit for the problem as defined.

Fostering intersections for value creation


Intersections are some of my favorite haunts.  Maybe it’s because I have a bird’s-eye view of a vibrant intersection in West Town, just at the SE edge of Chicago’s First Ward.

Intersections aren’t just about studying traffic patterns; rather they are a wonderful place to watch and engage in value creation.  Major thoroughfares mean lots of traffic, people exiting one bus in exchange for another, drivers changing their heading from east/ west to head north/ south.  But if all they did was merely pass through and keep their focus on their destination, there would be no story.

In my neighborhood  a tiny specialty pie shop has managed to not only make people stop but now brings lots of new people into the neighborhood, as it has become a destination.  Similarly, the now open Senior center and local library branch in  a rejuvenated old department store, complete with WiFi, has also helped alter the mix of people on the street.  Of course, the pre-existing establishments call to other regular patrons, such as  the MoneyGram, the live chicken store or the competing packaged liquor stores.  It is precisely that intersection of the old with the new that marks the evolutionary changes in the few blocks of my local community area.

In the virtual world, Twitter creates  intersections too.  I happen to follow  @HelenWalters, who last week tweeted  a direct response to another tweet. A reference inside the sufficiently roused my curiosity; and made me stop and track down the originators. After a few steps off my beaten feed, pleasantly I found the following link:  From STEM to STEAM.  The story describes the vitality possible when inserting Art into a more technical engineering setting and system.   A tweet  furthered my own connections to others and the emerging value interdisciplinary efforts make possible.  As the soft electronic murmuring of the Chicago Ave bus announced itself to the corner passers-by floated through my open window,  the convergence of virtual intersection and reality struck me as similar experiences.

In my own tangible geographic circle of connections, I  recently connected two Chicago academic champions/leaders, one representing   medicine, economics and public policy, the other Design.  In this case, I created an intersection by introducing independent journeymen, both of whom had noticed and were open to the exchange of value, but the opportunity had not arisen. Sad, how two very prominent institutions in the same geography with similar social goals have no simple means to connect and share. Why aren’t there more established venues for sharing, where it is as easy for the pie minded and the seniors to engage with the high school students as they change direction and catch their transfer bus?  Or the leading institutions don’t have a little more shared summits, or at the very least a central bulletin board.  In the virtual world, there is more than one of these…yet that takes more intention than providing a simple intersection like my corner.

Community development whether it is tangible or virtual needs some birds eye perspectives and active connectors.  Maybe it’s culture and maybe it’s just people, but our primary motivation seems focused on the prospect of gain, or advancement of our current position and not sharing for mutual gain.  There has been a series of conferences held in Chicago that all describe the richness of the region.  The city of Chicago’s boundaries make clear how far its services extend; yet Chicago is also a metropolitan area whose residents pay Federal taxes. In exchange, the region benefits from ngoing infrastructure connections, such as our interstate highway system, support for the electricity grid, our national currency and bank wire system etc.  Public private planning partnerships in Chicago extend  back to the first Burnham plan, which produced shared rewards and fostered the character and physical attributes that make Chicago a world-class destination.

Personally, it’s no longer enough to hope that good intersections will foster community development.  My corner is a good example of what can happen from limited or case by case planning.  Synergy doesn’t happen by itself, it needs more than the road bed for people to connect and it is through connection that exchange happens and with it community development.  I’m cheering on adding art into the traditional venues where science, technology, engineering and math are highly concentrated and can’t help but bump into each other.

My  hope in the coming weeks is  to share more  stories, especially those that relates to my growing efforts  in Design Policy.  With the help of students and colleagues, I am actively trying to set about laying plumb lines to connect different perspectives and help lay solid foundations to further intersect  public policy and design.  Happy to have you join me, or share your own stories and experiences in engaging people around natural intersections.

Policy makers, are human and far from perfect planners.


For all the resources and knowledge that the markets seemingly digest with great efficiency and timeliness,  business and government leaders both stop short of taking on the problem of rare events.  Perhaps it’s for the reasons that John Camillus outlined in HBR May 2008, that

“Companies… can’t develop models of the increasingly complex environment in which they operate.”

Certainly when stakeholders have competing interests, decision-making is often difficult.  But I’m wondering in light of the number of “unimagined,” or “unpredictable” events  whether it is merely the  impossibility of predicting a rare event that leads to blindness and wreak havoc on balance sheets.  BP recently estimated that the DeepHorizon Well disaster would cost a total of $40bn, a record loss for the company that knocked down its pre-tax profits but did not knock the company out.

The ever-changing environment further seems to diminish our willingness and resolve, as a society to be proactive and tackle the possible train wreck in our future. Public policy and governments intentionally move slowly, often requiring at least one of three pressure points to force an issue: a pressing problem, politics or the clear consensus on a particular agenda item. Oddly this is often characterized as the Garbage can approach to Policy making shown here:

In the US the debate and legislative agenda setting process is quite contentious.  The Congressional Budget office is no longer universally viewed as the objective arbiter ;and even the supreme court’s  independence  appears tainted by  partisanship.

Who leads and who follows is difficult  to figure out in the best of times, with consensus  rarely making it easy for us to gain some clear forward movement on a variety of locked issues.

Commentary on the vaunted aftershocks printed in the New York Times as the disaster first unfolded, characterizes the problem in Japan as one of hubris.

Japan’s vaunted scientific and technical prowess has taken on the character of a kind of myth, and that myth has deluded the nation’s politicians and business leaders. But it has been obvious all along that science and technology can deal only with things that fall within the range of what may be expected. And also that it is all too likely that some things that happen in our lives will indeed be “beyond all expectations” — and that it is precisely for this reason that we are able to live those lives. What, after all, would be the meaning of a life in which everything that happened was “within expectations”?

The philosophical issue is a luxury in the face of true uncertainty.  At this moment, no one knows, or can know, what the consequences of all these changes will be.  The markets continue to fill this void and do what they do best– provide clear interpretative signals of hope, faith or despair.  They churn out at amazing speed, bite-size digestible cues devoid of emotion, the technical analysis that crunches large quantities of data often sends out a  beacon to guide future activity or give a verdict on the event.

But something is different.  Today, the message is not directional.  Perhaps we have hit a new realm of complexity.  Certainly the market research reports keep coming; but the outlook is one of vast uncertainty.  The hyper-kinetic global market is confronting the cross currents of disrupted supply chains rendering the models incomplete and making impossible their estimation of  just how far, or how long the economic shocks will reverberate.  Again, the echoes printed by the NY Times:

“The outlook is unusually uncertain, ”  Mohamed El-Erian of Pimco characterizing the market fall out of Japan’s crisis.

” Uncertainty hangs like a cloud over the future of the global and American economy, ”

“The uprisings, the Persian Gulf, Japan: It’s very likely that the global economic impact will be larger than most people now imagine,” Bernie Baumohl, of the Economic Outlook Group said. “Electricity and gasoline prices will stay high and consumers are nervous. Guess what, that’s not an atmosphere conducive to corporations wanting to hire workers.”

If ever there was clarity and a clarion call for clear vision, faith and leadership from Washington, that time is now.  But  public policy process offers no clear resolute answer.  The routine or over reliance on patterns that repeat to help us plan are insufficient.  We must face the reality that our future is exceedingly less likely to  resemble the present and will differ dramatically from the past.  Some changes will continue to occur incrementally, slowly as it takes time for the impact of the events such as the absence of critical parts or the shortage of oil to work its way to our shores.  Our over confidence in yesterday’s routines and outcomes is understandable.  In the face of disaster, however our instincts have to kick in and we hope that whatever plans we’ve made they will help sustain us going forward.  Insurance for our cars, homes, health and business insulate us from the unexpected costs.  The Federal government continues to respond and step in when business or people find it impossible to fully underwrite the risk of rare events, it’s why the government sells flood insurance and offers guarantees to our bank deposits.

The Science-policy Gap

Note that the level of confidence in a particular model tracks differently for the scientific community than it does for society at large. Scientists rely on the dissemination and debate of inferences drawn from various model representations that largely occur in publication, with citation and competitive grant process.  In contrast, social policy typically requires a weight of evidence or a strong threshold of agreement within the scientific community before confidence arises.   Further details are  available in the original article entitled Uncertainty as Information: Narrowing the Science-policy Gap, published in the Ecology and Society Journal.

The verdict is out


My own uncertainty stopped me from publishing this last week,  so I decided the first step was to hit the button and let it go.

In spite of the change in the headlines, the  atmosphere of doubt continues to make us feel unsteady and every foothold  appears loose.  This past week, uncertainty forced itself front and center with the headline Air Strikes in Libya, questions back home.  In this  New York Times story described President Obama’s decision  as ” a new dynamic whose consequences were especially hard to predict.”

In the last few years, the world has lived through, the unthinkable, surviving more than one “beyond all expectations” disaster. It certainly is not merely a testament to our resilience, but at every occurrence, I’m disturbed by  the absence of credible back up plans or adequate preparations .  In the US, complex financial trading  was not the cause for the financial meltdown of 2008. Rather than sustaining the myth of their mastery, the titans of finance when finally caught playing hot potato amidst an ever-widening, global market,  managed to  shatter the illusion that they were prudently managing and pricing ever-present risks.

In the Middle East, I share Thomas Friedman’s mixed sentiments

” As one who has long believed in the democracy potential for this part of the world, color me both really hopeful and really worried about the prospects.”

Yes, the situation raises both fear and hope as the future of the region,  abruptly severs itself from the past, is just too wide open. We’ve seen how Japan’s greatest natural disaster is quickly being dwarfed  by another event, the unfolding nuclear power crisis.  All in all, the odds are favoring unpredictability.

In each case, the initiating event was a difficult problem to predict, as limited occurrences make each nearly impossible to model the timing of their occurrence with accuracy.  Were these events inevitable? No, there was no certainty that they would occur, but there was a small but distinct possibility and yet we deferred plans and preparations for this rarity.

My Father, 20 years ago began to sell Long term care insurance.  At the time, he was in his 70’s and incredibly healthy.  He himself saw no merit in buying it, but believed strongly in the merits and value of the products.  As it turned out, he died abruptly so he was right, he didn’t need it.  In the US, we stopped building and authorizing new nuclear power plants after mistakes in the control room at Three Mile Island raised the nation’s consciousness to the consequences of a serious error.

Only in the midst of concerns about global warming and rising global demand for scarce fossil fuels that have increased the risks associated with extraction from more complex environments has nuclear power been considered a possible alternative. But the news from Japan has  reawakened the consciousness of  the lasting threats of an error outweighing the possible benefits.

History of the use of nuclear power (top) and ...

Image via Wikipedia

In the face of uncertainty, our response is merely to rely on what we know, and accept the current system limitations and downsides  Policy wise, to satisfy the  increasing appetite for energy and electricity, the US remains dependent on fossil fuels and small investments in alternatives.

At the end of the day, it’s not the complexity associated with rapidly accelerating changes that we can’t seem to face.  Maybe, like my father, it’s our unwillingness to apply the logic to ourselves, and believe that it’s a risk we actually might have to face in which case the costs outweigh the potential benefits for the possibility we can’t imagine as real.  Or, maybe it’s merely the  magnitude of some risks, the rare ones that we can’t hedge, can’t contain and so we  fail to even address.   I’m not merely wondering why so  many miss  Nassim Taleb’s analysis of Black Swans.

I suspect we will need something else.  For example, a little more focus and outrage than what we have manage to muster domestically in the aftermath of these disasters.

Challenging the norm


Often, I find myself baffled by gaps in common understanding. The result has been a divisive congress, general discontent and a bit of general stagnation.  Why do my visceral reactions to events, and the news as it unfolds, differ so dramatically

On the instinctive level  we are very similar.  For example, flight is the adrenaline fueled response to the sense of fear.  But then we don’t all have the same fears do we?  Anyone out there enjoy the smell of fresh skunk?  My guess is that most find the scent unpleasant and I suspect that our degree of discomfort correlates   with the strength of the smell and the strength of  sensitivity to scent  which in turn varies the reaction.  Did your nose wrinkle a little at the sight of these cuties?

Word choices too have a way of triggering mental images or associations.  Speakers and listeners can easily find themselves connecting to very different ideas, as these varying images of ice in water illustrate.

Intuitive leaps, or the manner in which we understand or attach meaning to our observations in the world can quickly diverge. It is easy to understand how one missed connection can lead to dramatically different conclusions. Few people follow the same process when problem solving.  In fact, in business there are hundreds of possible strategic  frameworks.  The  approach chosen, merely extends from our own unique chain of prior experience and  perception of fit within the associated context.  The likelihood that my choice match your solution set depends on the degree of overlap in our experience set. Variation in our choices is healthy all the way around, as long as we are each willing to learn, or accept the possibility of more than one right answer, method or  result.

Communicating and orienting everyone to the same mental model or construct is a particularly telling and ongoing leadership and political challenge.  How do you help your organization or constituents adapt when the situation or circumstances change? How do you help construct and leverage the mental model of how things work, whether they could be made better or differently? Or even how do you help establish a common accepted set of norms?

Last week, graduate students in the communication workshop I co-lead, shared some key findings from their small participant sample research into electricity practice and awareness.  No matter what the age, many people referenced lessons learned from the continuous message or directives received from their parents.  The almost universally assimilated message was that flipping the light switch cost money.  Many of the research participants were able to recall the message, some even pass it on to their children;  but few managed to question the basic premise or get any further research to support the supposition.  In fact, this idea could be found as the basis for many of their other conclusions about electricity conservation and costs.  Little dissonance exists around the relationship between turning on lights and added electricity costs. The shared experience, or valued experience of frugality appear  almost universal.

In contrast, yesterday’s NY Times, page one headline asked “Taking Loaded Gun into Bar? In 4 States, It’s Already Legal. ” The profiled Gun rights advocate, Mr. Ringenberg, expressed that carrying loaded guns protected him from other people’s guns.  Whereas an individual patron in one of the bars felt differently: “It opens the door to trouble.  Its’ giving you the right to be Wyatt Earp.”

Guns in bars?

 

The absence of a universal or shared consciousness about guns baffles me. Similarly baffling are the public opinion poll results attesting that a significant proportion of Americans  believe that our president is a Muslim, or that he is not an American citizen, the latter of which is an impossibility under the constitution.  Perhaps, the answer lies in the nature of our construction of mental models, or the means by which we construct reality.  Wikipedia explains mental models as thought processes that help us interpret the world around us as well as shape our behavior.  Our mental models or the manner in which we conceptualize the task play a large role in how we view ourselves and the world.  Our decision-making chain and the construction of norms, which evolve according to personal psychological dispositions, often impair social efficiency. We don’t realize the full benefits of a fully congenial society, because our individual construction or acceptance of distinctive norms about people and their behaviors  lead to diverse expectations that  need neither objective logic or facts as their basis.  If you are paranoid or easily threatened, I imagine your mental models may foster a resolve to take control and lead you to connect self-preservation with gun advocacy. Or you may simply be a strong believer in individual liberties and thus you connect freedom with gun advocacy. In contrast, a belief that though freedom is a right, there are some boundaries in which society takes on the larger requirements of preservation.  Just as I can’t do everything alone, so too my participation in greater community assures that my basic needs, including protection, are met more broadly.  In the same way that I don’t have to grow my food or hide my money under the mattress. In exchange for my own labors, I can interact and benefit from the services provided by the police, the grocer and  the banker.  My mental model connects freedom to a more complex set of benefits and dissociates the person from the weapon of harm, e.g. a gun.  This doesn’t make us passive, though in the presence of someone with a weapon,  my not having one  may prove a less effective life-preserving strategy. But critical to my life-preserving strategy is the belief that everyone accepts and honors the basic concept ” thou shall not kill,” and it is the collective belief that will keep me safe.  I’d certainly like to learn how to further the formation of common norms in our thinking and allow us to move from conflict to a more cooperative if not coördinated  system of interaction.

Resolving what are increasing complex problems requires close examination of the components or constructs that we hold but may have never questioned. Our challenge is not to let our own knowledge, or mental models, however acquired when left unchallenged can sink us.

There are always consequences


Whatever your politics, health care was on a collision course and few players have willingly taken on these challenges in the last 10 or 20 years, or even attempted to create and champion  true innovations in care. That’s what I concluded from last night’ s consulting round table at Chicago Booth on the meaning of health care reform.

From a series of short presentations by local  healthcare consultancies, SG2 and Kaufmannhall, and providers,Advocate Healthcare and Northwestern Memorial Hospital,   I learned how major players in healthcare are both  unprepared and ill-equipped  to usher in the changes embodied in the recent passage of Federal legislation.    Last night, the brief overviews shocked me. I was disappointed to hear that the information technology revolution has somehow skipped the health care sector, that major providers appear largely unaffected in the basic information delivery and  back office processes.  The health care delivery system has largely been observers, not leaders, in adopting or championing  technology applications   used in other sectors  to spearhead  change, drive enormous efficiencies as well as disrupt the fundamental economic structure.  Today,  deadlines to carry out electronic health records are forcing health care providers to face challenges that other prominent industries resolved decades ago. We don’t think twice about the ubiquitous acceptance and the ease of using bank cards anywhere.  The  transaction systems , payment processors and equipment long ago reached an agreement on standards.  Similarly, moving data from any PC to another and across the Windows, APPLE divide to effortlessly transmit  data in voice, or digital format over the telephone or cable lines.  But  the platforms that some doctors, and or hospitals, have used to record patient visits, tests and physician notes are untested at scale necessary and need to evolve much further to allow the ready transmission of data.

As this realization penetrated, I began to consider the broader implications.  For years, this ”  interoperability gap” prevents  basic efficiencies and simple improvements in service .  Pharmacies have managed to overcome this with insurers and even their suppliers, the natural extension of retail market supply chain efficiencies.  So why haven’t the core of the health care system–hospitals and provider systems followed?  Can we really blame these failures on the government’s failure to spend more of our tax dollars to upgrade  basic computer hardware and platforms upon which Medicare and Medicaid reside?  If you recall Y2K as the IT industries shortsighted take on date formats and what a  big deal investment that cost to repair.  Well, healthcare has its own upcoming crisis in records management.

Analytic thinking won’t save us

Now Booth and of course the University of Chicago’s unwavering belief  in market theory, is synonymous with their reputation for applied analytics to problem solve.  All but one of last night’s five presenters were Chicago schooled (one Harris, my alma mater, and the rest Booth). As I listened,  I hearkened back to another recent discussion of Booth alums that I chair and focuses on issues in strategic management practices. Last week, we reviewed Michael Porter’s Competitive Five Forces Framework,  and wondered why so few managers seem to take the strategic offensive and proactive approach.  Last night’s  emerging insights into healthcare, helped me understand how the very qualities that make doctors incredibly good diagnostician is exactly what keeps them from taking a broader systemic approach. The US relies on an evidence based medicine framework.  This approach is used by physicians to treat patients, how pharmaceutical companies win FDA approval, and how insurance companies compute their reimbursements. I’m not suggesting this is a poor model, but it is not a management model. One of the respondents made this point clearly when he asked “What other industry gets away with charging at every turn as you make your way through the system?” When we shop at a store, the price we pay  assumes and integrates the total operating costs from labor to distribution to supply chain and technology support. In health care, provider service fees rarely integrate or absorb  other related costs. Instead , the activity or related service  charges  are billed  individually, often by multiple parties. No accountability, no coöperation and no integration of activities toward  the outcome  merely increase the overhead for each provider in the chain, driving up the inefficiencies and resulting in ever rising costs.

IT needs outstrip available resources and the impact on GP

Accenture estimates, on average, that the technology spend in most industry sectors approximates 7-8% of their annual expenditures. In contrast, physicians spend only 2-3%.  Accenture also  estimates that  medical records will make up 50% of all data storage by 2020 . This is a sea change that will impact not just the health care sector, but begs larger questions about available programming and maintenance resource support, and raises security and privacy concerns.  In health care the availability and anticipated ease of record transmissions across the health care delivery network will usher in changes that few providers have fully imagined, or begun to plan. All the panelists agreed, that no one has thought through what a connected health care delivery systems looks like.  Well I think IBM has, or at least they have smart technology videos that suggest they do. But IBM doesn’t deliver the care, they merely sell the systems that I’m speculating few health care providers have bought.

What is most incredible to me is that systems and technology providers who specialize in health care systems are poorly equipped to support the ramp-up of the technology upgrades  funded by the stimulus package and health care reform legislation. Today, there is no interoperability across platforms…what? These problems, long ago addressed by banking and many other industries show how far  health care systems lag behind. I guess the market was to blame. Doctors weren’t spending and developers weren’t getting enough volume to test and improve their offerings. All I can say, is thank goodness for Health care reform. Nothing was making this sector realize the benefits and processing efficiencies,  data security and  fraud prevention solutions that have been a significant growth sector for other industries especially the technology sector. If you are worrying and agonizing about what health care reform is costing the  American taxpayer, take a look at how much its delay  has reduced the overall GDP. Why is it a tragedy for doctors, or  cardiology specialists to experience a downturn in their income when they squandered their advantage  rather than in investing in change or the future delivery of care?  We should be crying and outraged at the dearth of innovations in how patient care is delivered, or the missing standards for sharing medical information . OK, maybe that is too much to ask from any one profession, but it is precisely the arrogance and  culture of  the medical profession that has prevented the growth of capable management and innovation.  So I’ll hold my tears as the doctors undergo the inevitable consolidation and shakeout and begin to experience what I and many other professionals and laborers  in other sectors underwent in an earlier era or are currently experiencing.

The market will continue to drive the face and structure of health care delivery

Guess what, it seems that  few, if any, health care provider teams are capable, or know how to give care in the information connected world.   Health care is close to 20% of the US GDP. The sources of innovation in health care  have been in the corridors of the equipment manufacturers who continue to push the envelope.  The rapid advances in  digital imaging, diagnostic and even mobile monitoring tools continue to enhance quality diagnostic support and treatment tools but where is the advancements in the actual delivery of care?  The minute clinics are a start, and progress in remote monitoring is another; but the vast majority of services are controlled through the same channels and it’s time resources were put to re-imagining them in the internet era.    Advocate explained how little an impact the passage of health care reform made on their strategy;  because nothing in the bill changes these wider market dynamics.   The anger unleashed by the recent passage appears  misdirected at the government when the same providers who have ignored the larger , less sexy innovations happening in the back office  stymied the advances in  efficient payment and patient record transmissions. Why aren’t we as outraged when we have to pay for a xerox hard copy of our medical records or be responsible for  keeping copies of old x-rays or  mammogram films to share with the technicians when we return for followup or annual screenings?  The costs of our visit increases because few providers were willing to apportion more of their income stream to invest in developing these systems and championing the delivery of care in a fully connected world.  You may have seen and heard how little of Medicare and Medicaid’s budget goes into research and development. That means those systems have not been updated to take advantage of the tools and efficiencies that we take for granted daily when we use our ATM or credit cards.  The fairness of whether doctors should or shouldn’t get improved reimbursements for these patients is not the question.  Doctors need to look at the larger picture, and not obsess about the current and impractical fee based approach to service but to roll up their sleeves and address the much more challenging systemic issues in the overall system that brings suppliers and providers to collaborate and find or create alternatives that are economical for everyone.

I’m merely reiterating, that whatever your politics, the familiarity of the collision course to other  industry sectors has spared health care and cost us plenty.  Doing nothing was the plan for the majority of  players when it came down to willingly assume the risk and challenge to automate,or even attempt to create and champion  true innovations in care. Like the banks, not all the providers were capable or had the size, scale  and spare resources to effect  these changes.  Like banks, only government payment incentives and regulations are helping hospitals  to meet the needs of customers in riskier and less desirable neighborhoods.  The rise and crash of the HMO marketplace and managed care efforts of the early 1980’s made them all gun-shy. The American public reacted as visceral as they did this past summer. But sometimes we don’t have a choice, we have to endure some pain see improvements. If you have a broken limb that is hurting, a doctor may have to inflict more short term pain to reset it. If the doctor has complete information about you and at his fingertips imagine how quickly you might be able to get treated, and how much more assurance you have that there will be less post op risks and even better, you’ll get one bill not a series of separate ones from the surgeon, the hospital the radiologists and the pharmacist. It will take a lot of bravery to get us through what is the inevitable and long overdue system changes. Stop fighting and start cooperating.

Jobs, Ironing and Innovation


This morning, Peter Orzag’s impending resignation caught my attention; but a headline about ironing boards in the Washington Post awakened my curiosity. Reader comments spurred further thoughts. In spite of the usual descent into a reckless hash slinging competition, I found some tasty bites along the way. References to IIT inspired me to add my own two cents. My reactive comments included questions I had not seen addressed –either by readers or in the original author’s complete circle of points identifying the challenges and options the Indiana manufacturer faced in its quest to keep its 200 remaining jobs. In my tweet of the story, I put out a call for innovation to rescue the company. I also thought I’d take a few more minutes to quell my increased curiosity.

Who was Home Products International, HPI, other than the Chicago based parent company? Being privately held since 2004, I checked out the hedge funds who bought them. Neither the majority stake holder, Third Avenue Management, or HPI,  struck me as holding ideas painted in the original article as typical of  American manufacturers –e.g. eager for protection in the face of the inevitable onslaught of globalism. What exactly did a value based investment company such as Third Avenue find valuable enough to acquire a company painted as nearly doomed by The Washington Post article?  I persisted in my cursory research with the intent to assemble a case study to share with future clients; or better, I might include HPI as a prospect or future client. Increasingly, I found it harder to reconcile the article’s attributions of the Indiana company’s image and management team with what I was reading on the home pages of the investor holding company or that of Home products itself.

HPI is an international consumer products company specializing in the design, marketing and manufacture of quality, innovative housewares products.

Home products sells not just one ironing board, but among their 20 variations in ironing boards they also are the proud creator of an innovation in ironing. Yep,  HOMZ features this innovation in ironing boards on their landing page!   In the war for profits,  I was ready to offer a series of  ideas to help the company pursue innovation as a competitive tool in their arsenal.  Home products however, seems to have mastered the basics of innovation quite admirably. Here’s what core77 had to say about the Homz Revolution 360 ironing board in May 2008:

“Not only is its shape more akin to the human torso, not only does it hold shirts taut across its surface, but the entire ironing bed rotates so you don’t have to keep flipping the darn shirt. (Not horizontally, it rotates on the same axis as one of those kayak-rollers.)”

Take a look, judge for yourself!

a rotating axis that matches the human torso?

The suggested retail price is $99, currently exclusive at Bed Bath and Beyond for $129…a far cry from the simple $7 variety mentioned in the Post this morning. I tried reaching the Indiana plant this morning to learn just which of the 20 varieties of ironing boards available they manufacture. I count a voice mail asking to leave a message so I don’t have the answer.

How and why it is that The Washington Post chose this little Indiana ironing board manufacturer to profile this morning, I don’t know.  Certainly,  there are lots of little towns with small plants struggling to survive.   The article suggests  futility when choosing to innovate using traditional approaches that lower costs by introducing process efficiencies, or streamlining distribution or economizing along their supply chain. In the battle to equalize the basic costs, against emerging economies like China, India or any of the Central and S. American countries, these little American plants wont’ be able to survive using these tactics alone. Should the US continue the artificial supports that tariffs offer but complicate larger trade relationships?  These companies need to find the means and show themselves as competitors who lead not merely follow. They need to use some of their more promising tools in the innovation box…such as a new business model, or as HOMZ demonstrated product innovation that inspires us a little.

Home Products new ironing board inspires me, renewing my faith that positive rewards flow to those who innovate in the full sense of the word. Does it inspire me sufficiently to buy a replacement for my standard 30-year-old model? Well, not yet. I haven’t been able to track down whether it is or isn’t manufactured in the US. I know that it’s price tag is far from the $7 quoted in the article; which I did not find for sale at Target …their lowest price model is $23.99 online. Using Google as my first research tool, I inadvertently discovered that Williams Sonoma sells a very high-end ironing board for $180 manufactured by Brabantia, a Dutch company with locations all over the globe. Relative to the HOMZ product, it offers a resting shelf for completely ironed and folded items…not really revolutionary, and not reason enough for me to spend an extra $172. If I want to buy American, keep jobs and help the economy I still have some research to do. The questions for the policy makers trying to sort out these issues requires that we all learn more about the ironing board business, and how to find the equilibrium between creating or maintaining some domestic jobs based on innovation! I’m open to suggestions.