~synthesis~

basest instincts

Might as well panic is Seth Godin's latest. I like it. Essentially, panic is the only sure impetus to creating real outcomes, or as he put it "panic is an acceptable substitute for forethought."

It is a management and leadership travesty how easily we overlook bad planning and lack of anticipation. We routinely forgive offenders that have the ability to freak out well, explode into frenetic activity, and come up with a plan overnight that should either have taken substantially more deliberate thinking, or been avoided altogether because people were keeping their eye on the ball and reacted ahead of catastrophe.

There is no shortage of examples - you only have to look at 90% of what the US Congress does to know this. Their "sudden" realization that the economy was in the dumper, and then the gun-held-to-everyone's-head reaction (TARP), is but one example. The FEMA non-response to Hurricane Katrina (something they knew was coming), and the panic and uncertainty last year with Gustav despite knowing how badly things went with Katrina is embarrassing. Even something as irrelevant Congress' random hearings on drugs in baseball should simply not be allowed to happen. Talk about panic gone bad.

In most cases, these knee-jerk reactions results in some action, certainly the perception of activity, but rarely well-thought-out, strategic approaches to complex problems that result in long-lasting solutions that make sense. The only thing you can be assured of is that a limelight-grabbing exercise will happen.

Panic-driven management is of course not limited to the public sector, it happens every day in the commercial world. Speaking from personal experience, I know of more than one "long-term corporate strategy" that panic-stricken leaders at my employer(s) authored overnight or over a weekend in response to a competitive act or even a worrying report from an industry analyst. In some cases, the ideas are good, but not "fully-baked," and end up "evolving" in the weeks that follow. The result is a more expensive strategy, as certain actions need to be undone or written-off and the ship's course needs to be tweaked so that it is aiming correctly.

In most cases though, the ideas suck, but because "we need something to present to the big boss in three hours," we put lipstick on the pig and go with it. The hope is that he is just as panicked, won't notice, and we get to live another day. In this case, the recovery cost is much higher because somehow in the post-meeting-survival euphoria, we forget how stupid the idea was, now believe our own spin, actually get the minions to go implement, blithely ignore their incredulous looks, and of course, declare victory.

Two characteristics are consistently present when you think of well-run organizations. First their strategies force others to react (i.e. they make or shape markets); and second even when things are done unto them, their effective responses make it seem as if they'd already anticipated that contingency, and had a plan that was ready to go.

Why aren't more companies like this? Why aren't more governments like this?

Simple - they're not paid to be and there is no "executive" motivation to be. Why pave the way when someone else can do the difficult, market-making work and you can follow along and ride their wake? Why bother building all those contingency plans or even do some game-theory analysis to figure out what might happen three-to-five years out when you will almost certainly be in a different job then and won't even care about this?

Cynical? Yes - but I bet if you look at the organization where you work, you will find some hints of this type of behavior. More than that, you will find that those who argue for better planning or analysis are laughed at and told to sit in the back of the room and let the action-oriented MBAs take over.

Here are three suggestions for how to avoid this (besides the obvious, which is to change human perception and expectation :-)):

Be smaller - you must sense, respond and adapt. Being smaller allows you to be most in tune with your environment and able to respond quickly.

Be more transparent - the more you expose and communicate as a leader, the more insightful, engaged and motivated your organization will be. Ivory towers are never a good thing. The out-behave manifesto must expand to include executive accessibility and transparency, so that the employees can rescue their bosses.

Create a community of committed supporters - this one is tougher. Companies like Apple, Ben & Jerry's and others have managed to do this really well - it's about creating fellow travelers that will ally with you and be as committed to your well-being as you are. I think it starts with being absolute and visible about your integrity; those that share your ideals will be there for you.

All three acts require concerted leadership and a willingness to stay with it. They don't require re-shaping human nature, or altering the what-have-you-done-for-me-lately market mentality. They are all possible, they are all practical, and they all exhibit what I believe is an organizational sense of what's right.

This is one way for us to transcend our basest instincts.

bookmaking

I've been traveling the last couple of weeks and haven't had much time to write. But this article caught my eye, and some words popped into my brain.

The New York Times reported that the US Department of Justice is opening a probe into Google's Book Search service. The class action suit filed by authors and publishers was settled recently, granting Google the license (from authors and publishers) to commercialize just about every in-copyright book ever published in the United States. The resulting potential monopoly situation has piqued the DOJ's interest.

According to the Inquisitr, Google has digitized some seven million books, many out of print, and whose authors aren't around to claim royalties. They will charge for access to the books and share the revenue with authors and publishers. You have to register your book in the Book Rights Registry to receive your share of the 63% royalties that the registry will receive. If a book is "orphaned," Google may show 20% of the content for free (ad-funded) and then sell consumers access to the rest of the book, keeping all the proceeds.

Channels Matter

Google controlling the largest digital book library in the world and the ability to set prices and conditions of use for any services provided by Book Search is problematic. There is no doubt that tomorrow's reader will prefer e- to paper, which makes Google's repository the de facto library for America, and potentially the rest of the world, depending on how this goes with the EU and other markets.

Publishers are OK with this because they have secured monetization rights to new releases, thinking that this is their greatest source of revenue. This tip-of-the-iceberg mentality is fraught with risk. Long-tail principles teach us that more than half of what interests people is not recent, today or kitsch - it's the stuff that's in the inventory that publishers just ceded. Moreover, there is a principle of efficiency or one-stop-shopping that pushes people to go towards more definitive and complete sources. Given that, it's a slam-dunk that every new author is going to want to have their newly-released book in the medium that gives them the most potential readers - Google; this will force publishers to want to push all their content through Book Search.

Of course you will all recognize this as the same dynamic and head-in-the-sand mentality that the RIAA and music industry exhibited in the face of iTunes. Looks like publishers even more naive, 'cause they don't believe this will happen to them.

Channels Rule

This is something publishers know intrinsically, but they're so entrenched in their world that they can't grasp this new paradigm, or the fact that it will subsume their current business. The individual author probably likes this because they're thinking this will results in increased royalties for their books. The Darwinian Free Market Forces (DFMF) person in me says - "Good - let them be victims of their myopia!" But the Serve Society's Best Interests (SSBI) side says - "No - we can't allow this to happen!"

Society (and the people) should control access to its members' works (especially works of art). Broad, universal control of literature, music, art, etc. can not be in the hands of a commercial enterprise, no matter how benevolent they may be, or appear to be. It belongs to the people.

Changing the Channel

What if we form a joint venture (this applies to the USA only) with US Library of Congress (LOC), National Endowment for the Arts (NEA) and the US Public Libraries and ask Google to turn this Book Search facility over to it. We will form www.booksearch.gov (or bs.gov for short - I'm guessing it'll be easy for people to remember this) as a revenue-generating facility whose profits for the first three years will go to Google (to cover their investment), and following that will go to funding the LOC, NEA and Public Libraries.

This appeases the both the DFMF and SSBI in me and allows us to keep the fruits of society's labors in the hands of the people and not the one.

<<UPDATE - to correct some typos - Thanks John>>

business habitats

I had a meeting yesterday in Beijing next to The Place, which sports one of the most amazing open-air displays I've ever seen. A colleague (David Ho) and I were talking about organizational structures, my recent post on corporate brittleness, and his perspective from living in Hong Kong and working across Asia. He came up with this really fascinating idea - that organizations have no choice but to form according to the habitat they inhabit - we had to cut our conversation short when the rest of the group showed up, so I hope David doesn't mind me riffing on this.

If we define a habitat as a social, physical space with a pre-defined set of rules and expectations, then here are a couple of examples:

America - hierarchical, ever-abrupt, time-centered, measured by quarterly performance, driven by MBAs, lawyers, and a lot of management layers. Success is defined by the last deal closed, funds are raised based on a frenetic performance rate, and sustainability is a marketing gimmick. Business is done quickly, without preamble and concluded with a strong, manly handshake as a demonstration of personal and corporate prowess.

Asia - hierarchical, sometimes abrupt, far-sighted, deliberate, outcomes measured in decades, driven by familialness, protocol, a complex, interconnected socio-corporate lattice. Success is much like a game that takes minutes to learn and a lifetime to master, Go - it's all about occupying as much space that you can hold on to for the long haul as possible. Funds are raised based on navigating that same lattice with proven ideas, trustworthiness and long-standing relationships. Business is done when the time is right, minds have met, bonds have formed, subtleties explored, and ideals intertwined. There is more preamble than not and a strong handshake connotes weakness, bluster and a profound lack of substance (read: "walk softly and carry a big stick").

Is it any wonder that operating outside one's habitat is so difficult? It's akin to a baseball player taking home run swings at fastballs, only to suddenly notice that the "pitcher" is actually playing badminton. "Steeerike Three!!"

I bet most companies don't even realize that they live in and instinctively behave according to the rules of their habitat. They are so immersed that it is nigh impossible to perceive the forest from their tree. If they have a better sense of their habitat, they'd traverse it more effectively, and use its rules to their advantage. More critically, if they aspire to do business in other habitats, their capacity to understand how they are regarded from the outside based on the filter that the other habitat uses will be of tremendous advantage, and misinterpreting this a most significant risk. Of course one must also understand the premise, rules and traditions of the other habitat.

I am reminded as ever of the words of history's most brilliant strategist (Chinese as it turns out), Sun Tzu:

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle. -- Sun Tzu, The Art of War

Master the Art of War, for it deciphers the rules of all habitats. One hopes that more MBA schools discover this text - who knows - maybe that'll lead to the occasional single or double.

the brittle truth

I heard this great quote on a TV show called Naruto: "anything that has form must one day decay."

Besides asking what the heck I was doing watching Naruto in the first place, I wondered why things get brittle as they age? Is it size? Ego? Sedentaryness? For inanimate objects, it feels like they just dry up - grapes to raisins, plums to prunes, etc. - not a happy thing. I imagine a person's "water content" also diminishes over time...

-- Oops - sorry about that - I felt oddly compelled to get a drink of water just then.

So why does it feel like the older (and larger) an organization gets, the more it "retains water"?? When organizations decay, they don't shrink and dry up, they ...congeal. Besides the "yuk" & "eeew -- gross" factor, this pendulous, ineffectual, slug-like behavior could have some dramatic effects on the world around them:

Apparently, 7,100 (or 47%) of the 15,000 air traffic controllers in the US will hit their mandatory retirement age in 2012. I don't know about you, but this doesn't make me sit back, relax and enjoy the flight!

I'm not an actuarial scientist, I didn't eat Wheaties for breakfast or sleep at a Holiday Inn Express, despite this even I can deduce that:

1. People do age (duh!)
2. It takes time to train an air traffic controller
3. The skies are crowded as it is, and we already have a lot of "close calls"
4. Planes aren't going to be replaced with Star Trek transporters anytime soon

The numbers:

1. There are 15,000 air traffic controllers today (we'll need 16,000 by 2012)
2. 3,500 of the 15,000 are in training (so there are really only 11,500 fully-qualified controllers)
3. The Department of Transportation (DOT) has found that 22% of facilities have already exceed the number of trainees they're allowed to have working at any time <-- read that one again!
4. 7,100 of the 11,500 (or 61%) qualified controllers are going to retire in three years (2012)
5. And now for the big one - it takes about three years to train an air traffic controller

Besides thinking it's time to go long on companies that sell video-conferencing technology, I'm wondering if this is just organizational decay? That as the DOT or FAA have grown older, they've just lost the ability to think clearly, forecast correctly, elevate issues appropriately, etc.? I'm sure there are many employees there who have been shouting about the impending resource gap, but maybe "management" just ignored it?

I think of the company I work for - it's now over 30 years old - and certainly some elements of it feel very sluggish. I think of the company that insures my apartment, that still today (after four years of assuring me that this was in the works) do not have a way for me to look at my policy or pay my bill online. I look at how long it took for America (a self-proclaimed super-power) to react to Katrina, or recognize that it's roads and highways are falling apart, there are so many examples.

What to do? How do organizations stay fresh? Here's one idea.

absolutely

Defining moments are often ones where difficult trade-offs are made. It can be personal sacrifice vs. personal safely - someone (firefighter) deciding to run into a burning building to save a victim. It can be commitment vs. profitability - a company altering its usage contracts after people have "signed up" to take advantage of a revenue opportunity. It can be morals vs. expediency - a politician deciding that even if citizen's lives are at stake, we don't compromise our laws proscribing torture.

These trade offs are generally about integrity (sacrifice, commitment, morals) versus necessity (safety, profitability, expediency). It is not necessarily about ethics, though they do play a role, nor is it about legality, though that also plays a role. It's about principles.

I'm reminded of a line from a film, in this case, The Contender, where the main character says: "Principles only mean anything when we stick by them when they're inconvenient." The most famous principle of all time is the ethic of reciprocity, or the golden rule - "do unto others as you would have them to unto you."

How often have you flaunted this principle in the interest of necessity or convenience? Did you feel a twinge? As individuals we should hopefully not violate this rule very often.

Publicly traded companies are ironically almost required to violate this rule - they routinely attempt to undermine their competition. But they have other principles that together form their integrity. Things like fair treatment of employees, customer service, truth in advertising, obeying commercial rules, adhering to intellectual property rights, etc. It's the idea of the new green being corporate behavior - not social responsibility or the environment, but integrity.

What about the principles of a nation? How should a country's integrity be characterized? For most, the rules governing treatment of the citizens are enumerated in their Bill of Rights or their constitution or both. But these documents don't talk very much about how the government should behave. It's not surprising - the authors probably wanted to give the government of the day as much latitude as possible, but I wonder if there are any absolutes that every leader and government of this country ought to adhere to?

I'd start with three for the United States:

1. Every person on the planet should (by the US government, defense, security agencies, etc.) be treated like they were an American citizen, and accorded the exact same rights. This is a global "do unto others..."
2. Government and religion should never be connected. Laws should not be biased by religion; the only advantage organized religion should get is their tax-free status.
3. Government should prioritize serving its citizens above anything else - for example, domestic fundamentals (national education, health care, domestic infrastructure, etc.) should come before foreign policy - you don't get to fund the latter if the former isn't funded.

The standard for adherence to the laws of the land is highest with the governments, and their accountability should greater as well. If these are the right absolutes, then they can't be violated - if the government does violate it, the individuals should be terminated.

Some might consider this drastic, but that's what absolutes are...

owning your decisions

achilles3 recently referenced a fascinating William Black interview by Bill Moyers. Black paints a scary picture of how close the relationships are between American regulators and the companies they regulate. It's often downright incestuous and painfully clear how much our regulators personally benefit when their "flock" succeeds.

Then thanks to Dana at Investorialist, I read this article about Ethisphere's list of the World's Most Ethical Companies of 2009. Turns out that many of the winners are actually members or sponsors of Ethisphere!  Hmmm.....

In both cases, the supposedly "pure" representatives of the people have personal goals that preempt their constituents' interests. I'm sure you can name other examples - another that popped into my mind is the linkage between personal oil interests among government leaders and our military incursions into the Middle East, but let's leave that for another day:).

Why are we not outraged about this? Why is there no gigantic public outcry about Black's accusations? Why are people not calling for the tarring and feathering of political leaders?? There's more widespread public angst about judging conspiracies in Olympic Figure Skating or Gymnastics than about elected and appointed officials enabling the abuse of $billions of public money! How is it that Bill Clinton's choice of where to "put" his penis while in the Oval Office caused global furor and even talk of impeachment, but his appointing Treasury/Fed/SEC Secretaries that caused millions of citizens' retirement funds to shrivel up (a whole new kind of shrinkage) received very little attention and almost no condemnation.

Is there a way to prevent these acts of impropriety? Can we create a situation where this is either not possible or at least managed? When faced with conundrums like this, my natural inclination is to consult Sun Tzu. Channeling him, I'm thinking "convert their strength to your advantage." Ah... Aikido...

Hmmm... what's "strength" to a politician? How have people successfully "convinced" them today? It boils down to one word, and despite Bill's ...best efforts, it's not "Monica" but maybe a very similar word?

Money (and people). But where should this intervention focus? With a problem this complex and  massive, the biggest contributor is the Rating Agencies. Organizations are campaigning to remove their liability shield, but I don't see the point. Fitch, Moody's or S&P don't have lawsuit-worthy money.

Every employee needs to be accountable for the rating decisions that these agencies make, so even if one person (or team) is bribed to fix a rating, there's a very good chance the rest of the org will catch it and prevent it, because of how they all get paid. Their compensation should be a guaranteed base salary (that's say 75% of current), plus a bonus pool containing an additional 50% of current. Bonuses should be paid based on the relative performance of instruments they've rated vs. other similarly-rated instruments.

In other words, if Moody's rates both a bond and a Mortgage-Backed Security "AAB," then they should each have a similar risk profile. There should be an allowable range of variance, but if they exceed that - say the MBS ends up creating returns that are consistent with a CCC-rated instrument, then their entire bonus pool is shrunk based on the losses they created.

There should be one pool for the entire payroll (from top to bottom - they're all in it together), and everyone's bonus should be affected, not just the person/department that rated that particular instrument. This encourages team behavior, and hopefully enables auto-corrections between groups in the agency to reduce risk.

This type of results-based compensation should also be applied to other organizations (including the banks) like the SEC, FAA, and others - it would result in a far more accountable workforce.

oversight Easter egg?

When the US Federal Government "took over" key American financial institutions, they imposed executive compensation restrictions, undertook Congressional investigations on bonuses, and decided to legislate how "their banks" would pay their employees.

What did the employees do? Many left. Where did they go? Some (the best and most employable investment bankers and traders) went to smaller, boutique firms where compensation is not regulated by Congress. The NY Times thinks this is a bad thing, but maybe not - here are three possible outcomes, which together might be a silver lining:

I. Dekeiretsuification

The exodus of trading talent means the big (now over-regulated) financial institutions may not be able to rebuild their brokerage/Wall Street presence. This could be a godsend if they go back focusing on their core business. Banks stick to savings and credit, insurance companies focus on actuarials, and trading companies focus on the markets.

If we can go back to a pre-1999, reinstated Glass-Steagall Act state, then government oversight of each type of financial institution is more clear, and conglomerate organizations like today's AIG & Citi are not possible. So even if bad behavior does occur, there should be less need for government intervention, and market forces would prevail.

II. Renegade Boutiquism

As these "quality" traders and brokers move to smaller, boutique firms, they will go back to their roots - commissions by the deal (no long-term view); employing aggressive, creative market-making approaches, looking for every loophole and finding new ways to create revenue streams; and doing whatever it takes to achieve hyper-returns.

Today there is a good regulatory framework (the SEC), but with one gaping hole - the rating agencies. As I wrote here, they were a critical point of failure, contributing signficantly to our current predicament. The SEC and Congress need to focus their energies on repairing this to restore rating integrity. Let the boutiques play - this is the "cowboy" end of the financial services system, and it should remain so.

III. Lax Americana

For those with a big ego who can't let go of "American supremacy," this is the tough pill to swallow. Being meekly Canadian, I'm not so wrapped up in it :-). With tight Glass-Steagall-like regulation, there is no possibility of massive American financial conglomerates. But I'm guessing that Russian, Chinese and Brazilian regulators will not restrain their banks, and these will be the new financial services "powerhouses" of the 21st century.

If US (and the West) regulators can think long term, they will first make sure that their infrastructure's dependency on these mega-banks is limited and managed; and they will resist the teenage male testosterone urge to view these "foreigners" as a challenge to their "manhood".

When they were going after the salaries and bonuses, I thought the Feds were being spuriously regulative. But provided we can re-enact Glass-Steagall, reassert Rater integrity, and stay focused on the long-term health of the economy, the result should be a stronger, more accountable, and better managed financial services system.

Let's hope the Easter Bunny is smiling...

ability, trust and chemistry

Dean Shareski wrote a fantastic open letter to his students - I'm convinced the majority of teachers would wholeheartedly agree with him - it, plus the comments are worth a quick read.

I bet that most teachers would LOVE to embrace the ideas that Dean espoused, flaunt the arbitrary grading requirement, and bemoan the fact that graduating today proves only that you were able to successfully navigate the school system during your twelve year journey.

I also had this recent conversation with Tony Wagner where we talked about his book and the survival skills students should be developing through school. Again, there was violent agreement about the rightness of this, and like Dean's post, there was virtual unanimity that this is precisely the stuff our children should be learning in school - grades be damned - we want our children to be equipped for the real world!

Finally, David Warlick reacted to US Secretary of Education Arne Duncan's view that to compete with India & China, we should teach school six days/week, eleven months/year by suggesting that we just put them all in jail. Judging from the flurry of comments on David's blog, there's even more violent agreement here:)!

So - what's really harshing on our collective mellow??? I think it has nothing to do with what happens in school, but everything to do with the the world outside school.

Here are some hurdles students must overcome to call their learning a success:

• Parents - who at the end of the day still focus on the grade/GPA and relative performance of their child(ren) - parents it seems are more competitive than students
• Universities/colleges - who still filter students largely based on grades or SAT
• Employers - who still prefer students that went to the "right" schools, ranked higher or achieved better grades

Until these three alter their behavior, there is really no way for the public primary/secondary school system to move away from what Dean, Tony and David railed against. The measure of a child's performance during school should be much more about their best outcome and less about arbitrary standardized assessments or grades.

It is rare that academic achievement is the only determinant of workplace success - there are so many other factors that go into it. I wonder whether the hiring managers of tomorrow will get sucked into the same morass that prevails today, or whether they will be able to rise above it and realize that looking at the whole person (attitude, team spirit, integrity, ability, passion, tenacity, intellect, academic proficiency) and their complete portfolio of "work" is so much more critical to the hiring process.

During informational interviews for prospective employees who might be working for me, I review the three things I look for - ability (can you get the job done?), trust (will you trust us, can we trust you?), and chemistry (will you be a part of our family and make us better?). Of these the first is how you get through the door and into the interview process in the first place - it is the easiest to judge. The second and third are what our team will evaluate when we meet with you, these are incredibly difficult to discern, but I trust our team's judgment and instincts.

It is really critical for us to get it right, and when we do, the team/family is better, and our ability to achieve greatness is strengthened. I've never cared whether a candidate went to a "good" school, and have never checked their grades.

But if it's the right person for our team, we are destined for success.

giving reality

Despite the tough times, interest in and focus on philanthropy remains strong. While the Gates, Fords, and Buffetts of the world are doing "big" things, the popularization of philanthropy started with Live Aid's "Feed the World," followed by USA for Africa's "We are the World," and now Bono's RED. Of course there are many, many others as well.

These programs are all wonderful because of the democratization/aggregation opportunity. Everyone gives what they can, and it gets added to others' little bits to create, big bits. They also call the world's attention to situations and issues we must all at least be aware of, and if that awareness leads to positive change, so much the better.

Why do people give? What's in it for them? Here are three possible answers:

1. We genuinely wish to make a difference and help change the status quo
2. It's a tax write-off
3. It's a way to relieve the guilt of being relatively better off than others

I suppose it's a combination of all three, but more #3 and less #1. If the priority was #1, then we'd be living in a very different (and changed) world. Instead, despite the $billions donated to many worthwhile causes, not that much has changed. No doubt changes do occur, but they rarely survive once the money's gone. There are counter-examples, but in the main, most giving that is targeted at persistent and endemic problems (vs. circumstantial events like earthquakes, tsunamis, hurricanes, even 9-11) results in minimal sustained (where the status quo is permanently altered) change.

These are incredibly hard problems and money alone has never solved them. If you live in the United States (still the wealthiest country in the world), you don't have to drive very far to see homeless people and shelters; despite spending a massive amount of money, New Orleans is still not back to it's pre-Katrina state.

What's the problem? To be sustainable, the recipient must continue to make the same decisions they did after the money stops. This is easy when you're in your armchair reading a blog on your laptop, but put yourself in the shoes of a sole breadwinner who now has to decide between feeding the family and sending the kids to school, because the non-profit that funded the tuition is now focused on another part of the world, thinking that their work is done here. Not so easy.

The trade-off also applies to us (the givers) - we make the choice of sending money instead of participating. We all inevitably take the easy road, which is why change never happens - the hard problems are not solved because we participate. Until we do, there will be suffering.

So why do we keep doing the same things over and over again expecting different results? While the journey is far more important than the destination, surely those of us that do give would want to see something good, real and permanent result? This is why I think it's more #3 than #1 - we really don't care what the result is, we just care that we took action, fruitful or otherwise (guilt management).

But if we do decide to care and get serious, this is what I would do.

edu-urgency?

Understanding the target audience is critical to the success of any business. Understanding the business model of your company is rather important as well. If you don't know why and how you make money, any success is a fluke.

How do schools or school systems "make money"? If a school is like a restaurant - the chef is the principal, the sous-chefs are faculty, the maitre d' is the vice principal, and the waiters are the staff. The differences (in no particular order):

1. A chef knows immediately if his work is successful, the principal doesn't
2. A chef gets paid by his customers, the principal doesn't
3. Chefs get fired if their product isn't good, the faculty has tenure
4. The restaurant (except in Ramsay's Kitchen Nightmares) succeeds by giving it's customers the best, a school succeeds by meeting its funder's targets
5. A restaurant is inspired to be special, unique and ever-evolving to attract the best clientele, a student has no choice, and will attend school no matter how un-special, average, and boring it is.

Conclusion - schools are not set up to care about their customers, just their funders. The business model for learning in this country bears almost no accountability for the satisfaction or success of its customers. The decentralized model of learning in America theoretically avoids this issue by operating "close to the customer" and being driven by the expectations of parents (theoretically closest to their children). Boy - that's really worked well hasn't it!

Instead of student-driven, adapted to local requirements, direct accountability, we have inefficiency, inconsistency, budget shortfalls, and poor leadership. More than one quarter of high school students fail to graduate. Last year more than 1.3 million graduates required remediation (inability to read, write or do basic math effectively) before entering college or university.

The situation is dire, but there's no urgency or imperative for change (I'm thinking of something at the level of "national security" on September 12, 2001). We are capable of rapid and dramatic change, we just need to feel the urgency - we felt it after 9-11, and IMO the Education crisis in this country is much, much more serious.

Moreover, we're not short on benchmarks for success in our very own backyard. Seattle Girls' School and High Tech High are proof that learning greatness is possible, and can be successful. Why are they unique? One reason is the brilliance & strength of their leaders, the other is the fact that they sit outside the system. No doubt there are many innovators within the system as well - some that I admire are in my blog roll. They should all be the rule and not the exception.

How do we create a structure that allows SGS & HTH to be the norm? To start, let's federalize learning. The distributed model has failed, let's centralize. Let's redefine success - schools must be more accountable and directly tied to the end result of their work - successful graduates. 

BUT - we must only Federalize the "what" not the "how." The Feds should finance Education, and they must define success in a way that is external to the K-12 schools. It's not about erasing creativity and local context, it's about creating a national mandate for learning outcomes - the "what." The "how" should still be in the hands of schools and teachers - they're the ones who understand their own students and community and how best to serve them.

The great thing about this approach is that no school gets left behind. Funding should be available to all schools whether rural, urban, inner city, or suburban. Every school should be held to a single standard of accomplishment, and budgets should not be victims of local or state circumstances. Many of us live in States where budgets are being cut, and education is being made to pay the price - that's not an acceptable scenario.

We must create an apocalyptic sense of urgency about Education in this country and then take drastic measures.

the target audience

Most rapid successes in the commercial world come from people who built something that they themselves would use, knowing (or hoping) that there were many others out there like them who would be similarly compelled. Their second advantage came from knowing themselves, and knowing where they'd go to shop for something like this, and how much they'd be willing to spend on it - thus was formed their marketing strategy.

But then the plague of success hits - they get bigger, hire more people, get an MBA intern. and fall into the trap of PowerPoint, market evaluation, quantitative and qualitative analyses, projections, focus groups, etc., and all of a sudden ideation and marketing become a process-laden mechanism that has its own definition of success and failure, which may or may not correlate to actual business success.

At this point, it's hard to identify that original company, its original passion and commitment to the audience, etc. At this point, things like Seth Godin's sugar-coated corporate speak emerge. Why? Because MBAs and lawyers and HR people get involved, and marketing becomes data-driven, lawsuit-proof, politically-correct "customer engagement tool" vs. the process of authentically and creatively driving demand to capacity.

This organization must get out of its strategic entrenchment and sense, respond and adapt. It must focus on what matters most, their knowledge and intimate understanding of their audience, its needs, its passions, and what the customer will pay for. They can do this by recapturing that which started them off on a path to success in the first place.

What if you didn't have that first-hand knowledge? Pete Reilly spoke of the need for new paradigms this week, specifically about why "shared pencil" and "many watching one" models for learning are not very effective, and proposes a new paradigm of "ubiquitous access" based on cloud computing and virtualization. Just two days before this, Scott McLeod wrote about the efficacy of netbooks in schools.

I admire both these gentlemen immensely - they are passionate, proven and respected educators (I am not); and while I wholeheartedly agree with their premise (that a paradigm shift is needed, as is better technology for learning), I worry that they might be missing a critical element.

The target audience.

Students are not adults. They have (as both Pete and Scott have spoken about many times) an absolute affinity with technology. The adult frame of reference is different, and the adult's filter is different, adults are not children.

The customer of a school system is the student. Like Google's advertising model, the students don't pay for the service, but if they aren't achieving the right outcomes, the funding/ads will dry up. Proof that the education system hasn't internalized this - "no child left behind," "education reform," abysmal graduation rates, etc.

What do students want? A friend was telling me recently that he bought his 14-year-old son an iPod Touch and an Acer Ferrari 1100 laptop. The former costs roughly a tenth of the latter. One day he walked in on his son doing homework with his Touch while the Ferrari sat, closed and untouched. Dad asked Son why he wasn't using the laptop (bigger screen, keyboard, faster, etc.), and Son said he was fine as-is. Dad then asked Son if he'd be good without the laptop altogether, and after a pause to think about it, Son said "yes." Dad took the laptop away Son hasn't yet asked for it.

I think Pete and Scott ought to reflect on the real needs of the customer. "Ubiquitous access" today is about mobile devices that the students already have or can get easily and cheaply. It's about schools and educators opening their minds to the idea that the customer and hence the target audience is not people like them. Students' use of technology is dramatically different from adults. Tomorrow it will change again.

The paradigm of teaching will need to adapt to the requirements and expectations of its customers, and engage them in their context. Most project-based learning schools already do this. What's more, in this new world, schools may have to re-think certain concepts - preventing text messaging (and the use of mobile phones) because it looks like "cheating" might be replaced with encouraging the use of text/mobile because it is teamwork. But as an adult, I'm sure this is already so last year...