Icelandic Volcanoes: Networks, Risk Management & Innovation

Network resiliency, risk management and innovation are frequent topics of discussion when it comes to the economic system meltdown.  Any system, however, can be looked at through the same high-level lenses.  This holds true for the air transportation system which has seen airlines, travelers and businesses impacted by a giant cloud of silica spewed out from an Icelandic volcano.  With the air transportation system shut down, there are lessons to be learned in how businesses/governments think about networks and then how that impacts the very real decisions made around risk management and innovation.  

(1) Networks are resilient only to the extent their underlying operating systems are stable.  One hears a lot about how networks are resilient, that specific nodes can be taken offline without impacting the functioning of the overall network.  However, when the operating principle of the network is disrupted, the network isn't resilient and ceases to function.  In this case, the operating principle (ability to route around what are usually short term, localized atmospheric conditions) of the air transportation network was disrupted effectively shutting it down. This demonstrates that focus needs to not only be on protecting network nodes, but also the basic underlying operating systems.  This has often received less focus than protecting individual nodes  when ensuring the continuity of networks we depend on ... international shipping system, electrical grid, etc.  It gets to the heart of risk management.  

(2) Risk Management.  Formalized risk management systems are all the rage in a lot of companies, yet in many cases they become sterile exercises where everything is included and nothing is effectively mitigated.  How many airline companies had: "Large scale atmospheric disturbances, resulting from volcanic ash" in their risk management systems?  Likely very few.  

(3) Innovation to manage risk or make money off of it.  Some reports say that there were past volcanic eruptions in Iceland that today could cause an ash cloud that persists for months.  Somewhere, there is a company or inventor thinking about a jet engine filter to allow planes to fly safely through volcanic silica.  Perhaps, this was even proposed in the past, but was never acted on because a volcano was considered a "black swan" or the cost was too high.  In any case, what may not have been a priority in the past, likely will be today as the airlines lose market cap and businesses of every type suffer losses ranging from productivity to product spoilage.  

Anticipation building as a marketing tactic

Apple's Macworld is a study in the art of extreme anticipation building. The level of anticipation is so great that Apple watchers obsessvively look for clues, scour leaks for authenticity and count down to the announcement of the next great product. The whole thing is more similar to recent movie marketing epitomized by JJ Abrams and his Cloverfield campaign ... engage enthusiasts through very controlled information delivery and then launch the product in a extremely hyped environment with minimal preview.

Apple's extreme anticipation building has clearly worked in the past (e.g., iPhone). Is it an approach that should be used as THE method for product launches? There isn't a clear cut answer, but there are some key questions that Apple must have considered to validate its current approach:

• Share value: MacWorld creates a very compressed, binary event for investors. Apple stock is extremely volatile during Macworld. Would a more conservative product launch approach reduce stock volatility?

• Revenue: Macworld clearly has many enthusiasts that want to purchase what is announced immediately. Would a more traditional product launch schedule be better attuned to products that are >$500 where some will buy based on research and others will buy based on brand?

• Cost: Macworld must clearly be the key date in the life of many developers at Apple. Does this one year cycle put artificial constraints/deadlines on the R&D cycle and delay products coming to market?

• Competitors: Macworld provides a point in time announcement that prevents competitors from scooping Apple. Is this advantage substantial or does it not matter given the prevalence of fast followers?

Everyone is Replaceable

My company had a management shift recently when one of the executives decided to depart. The stock market cut through all the discussion about the departure and declared loud and clear that everyone is replaceable; the stock currently trades above the price when the departure was first announced.

Beyond all of the discussion, though, is the question of what any organization has to replace when a key personality leaves. Senior executives are usually one of three things:

1. "leaders" (they set the vision)
2. "managers" (they make sure things get done)
   
3. "evangelist" (they sell the company to customers, the markets and employers ... beyond the traditional definition of sales).
   

It is the rare individual who successfully embodies all three.

Which of the three is the hardest to replace? My initial answer was "leader". I reconsidered after reading the book "Halsey's Typhoon", by Drury and Clavin, which detailed how Admiral Halsey took his Third Fleet through a typhoon in WWII, losing close to 800 men. He clearly made mistakes, but wasn't relieved of command. Why? Well, it's not because he was the only "leader"; there were plenty of oversized personalities setting vision. It's not because he was the only "manager"; Admiral Spruance was arguably a more effective manager. I believe he wasn't relieved because he was the greatest "evangelist" of the US effort to both his sailors and the American public.

So, how does this translate into a lesson for the organization? As much as you have to have succession plans in place for leaders and managers, companies need to carefully monitor who becomes their chief evangelist as well. Having too much tied to one person doesn't mean they aren't replaceable, but the transition is easier when the responsibility is spread.

Search and Rescue, the US Coast Guard & Web 2.0

Doctor Gray, a renown technologist, disappeared while sailing off Northern California. The Coast Guard did a thorough search before calling off the effort; most search and rescue stories would have unfortunately ended here. However, Doctor Gray's colleagues and the public mounted an impressive effort that put technology to work to continue the search. Those still hoping need only look to the pantheon of "survival at sea stories" for inspiration.

So, how is this effort actually helping the search? By working on some of the components of the search and rescue equation. Although there is some art to search and rescue, there is a lot of science as well. There is a basic equation that drives all search planning which I have paraphrased. More info is available.

The Probability that you are searching in the right area

X

The Probability that you will spot the survivor

=

The Probability of finding a survivor

The civilian effort supporting Doctor Gray improves The Probability that you are searching in the right area. It's not easy to find the right spot to search in a giant ocean. A Search and Rescue planner has to make a best estimate of where the mariner might be so that he/she can focus limited resources. By posting satellite images on Amazon's mechanical Turk that anyone can search, more bandwidth is being thrown at the problem; now you don't have to be constrained by searching a small area. This is what people are calling the Web 2.0 portion of this. Perhaps closer to open source, the modular and self contained nature of each satellite picture allows the overall effort to be divided up between many participants.

However, the civilian effort is still constrained by The Probability that you will spot the survivor. Although you might be looking at a satellite photo of the right area, cloud cover, inexperience, carelessness could prevent spotting the survivor. By having multiple people look at the same image, carelessness can be screened out, but the clarity of the photo is still a limiting factor. A survivor once told us a Coast Guard helicopter had flown right over him. Night, high seas and rain, though, lowered the The Probability that you will spot the survivor.

So, is there potential here for the Coast Guard? SETI is a proven distributed effort. Crowdsourcing is being considered as a viable solution. If the Coast Guard wants to extend and formalize this effort, there are a few next steps starting with proof of concept. I'm not sure if there is opportunity here, but I hope it is evaluated to find out.

• Validate the ability to search using satellites photos. Can the average person spot a sailboat? Could a computer program be made to do it? How often will weather prevent a suitable picture?
• Gauge the interest of the public to help more anonymous mariners. Would civilians mobilize to help out a mariner without a large public persona?
• Evaluate how quickly people would mobilize. Help needs to begin immediately as the chance for survival is a function of time.

One more comment on this story. I've read a few comments that the Coast Guard gave up and that simply gives the wrong impression. Sometimes the duration of disappearance, weather conditions and other factors make survival unlikely. In those cases, the Coast Guard has to weigh the extreme unlikelihood of finding a survivor against the danger to its own crews and the need to perform other missions, which include search and rescue for someone else. Believe me, as someone who has had to inform people that the Coast Guard was suspending a search, you do everything possible. It's not an easy decision and it certainly is not giving up.

Baffling behavior in Boston ...

The two men arrested for executing the viral marketing campaign that set off the Boston terror scare made truly baffling comments to the press after leaving the courthouse. The situation hasn't changed and the corporate sponsors still deserve the brunt of any consequences.

But any sympathy the city felt for those two has been squandered. Imagine how much different it would have been if they had expressed even a bit of contrition ... or even made a reasonable statement about how they felt they had been set up. It's such a dichotomy to think of the thousands of kids serving in the middle east compared to these two guys who don't even have enough respect for our society to make an intelligible statement.