Over the last several years one
of the nice things about doing the Corpwar newsletter are the conversations I've
had with smart, influential people (most of them here in the States but also in
the EU and a growing number in the Pac Rim and China). Occasionally they will send
along books or papers or links to interviews they've done (Note: apparently being
on The Daily Show isn't as much fun as you might think...).
One paper came as a result of a conversation with Bob Prieto.
He was the chairman of Parsons Brinkerhoff (think Bechtel). Bob, a nuclear engineer
by training, is one of those people you meet and realize, very quickly, you are
probably not the smartest person in the room. At the time he was an SVP of Fluor
Corporation and was part of the Fluor pitch group for doing work on widening the
Panama Canal. That's the scale of Bob's world. Pretty big. Actually pretty huge.
I had called Bob for some advice and the conversation turned
to the condition of our economy at the time (it was 2008) and how we got into that
dire condition. His take was fascinating. After the call he sent me a paper that
uses the construction industry as an analogue to the economy (and vice versa). It's
intriguing, especially since it was written around the time the economy tanked.
It makes you realize nothing really happens in a vacuum and not much is truly invisible
before it becomes a huge, grotesque mess. If you Google Bob Prieto and Black Swans
you’ll get a good taste of his insights which are remarkably impressive.
If you take the time to read the short paper it will likely make
you think in terms of cause and effect in your own industry and business. When one
thing happens, all potential outcomes are somehow effected and possibly remapped
entirely. I find particularly useful the paper's framework of the “analogue” (understanding
one thing to understand another).
Bob's paper, which at only six pages is very tightly written,
addresses several categories of vulnerabilities inherent in highly engineered systems.
But the thinking is remarkably portable to systems I guarantee you have, in some
form, in your business as well (or your house for that matter).
For example, Bob discusses the vulnerability of tightly coupled
systems that go unidentified as such by management. This is very scary because what
may look like RANDOM EVENTS can actually be highly coupled. He provides a simple
example of a fire in a small building outside of Chicago that disrupted telephone
service for much of the country. Why? Because (to quote the paper) "It seems
that most transcontinental land-lines passed through that single building and they
were destroyed in the fire." Excuse me? How could somebody not know, or know
and not do something about, that vulnerability? He gives another example of why
the price of anti-freeze went up 300% a while back. Turns out ethylene glycol was
made in only two places here in the States and one of them, a small plant in Idaho,
burned down with the obvious price result.
Bob also discusses the risk of failing to KISS (Keep It Simple
Stupid), inadequate core capacity (and lack of key redundancy), the danger of positive
feedback loops (aka progressive failures—which, as an effective recruiter, I was
often paid to induce at target companies) and other strikingly relevant concepts.
So read the paper. It's short and punchy and can help you ask questions that could
potentially save your company, your equity holders, and you.
Bob has graciously given me permission to "spread the paper
around" so feel free to forward it. I guarantee it will lead to some interesting
and likely useful conversations.
