Leadership - Management Frameworks

One of my favorite analogies is the fire triangle. It's simple, familiar, and applies well in a variety of situations.

(Image from the peer reviewed journal, Wikipedia)

Anything with three primary elements that breaks if any one part is missing is fire triangable. Learning? Existing knowledge, transmission, and retention. Body building? Calories, muscle exhaustion, and repetition. Fire triangle created. Since it seems nearly every framework comes in threes, and a large percentages of these frameworks are co-dependent, the fire triangle becomes ubiquitous.

Take one fire triangle for leadership and team management:
Knowledge - What is the plan? Does the employee know what (not know how) they are supposed to do? What are the priorities, KPIs, process, routine?
Ability - Is the employee presently capable of achieving the objective?
Motivation - To what level is the employee committed to achieving the goal? How much oversight and followup is needed to keep the employee on task and giving all of their effort?

When all three are present, I see a functioning team. Everyone knows their place, is capable of doing their job, and is committed to following through to the goal. What I find most interesting, however, are diagnostic failures. I have often talked over plans of what to do with "underperformers" with managers. There are cases in which the environment has no direction or plan, but the manager believes the employee is incapable. At other times the employee simply does not have the skills to perform a function, yet the manager still believes that one more pep talk just might do the trick. Finally there are those employees who "just aren't capable," yet they switch managers and become a rising star. Misidentification is a mistake we all make, but once you recognize it, testing the hypothesis before throwing the employee out can yield surprising results.

Reputations - Expectations and the Wow

I studied at a university that is at the frontier of brand management. Messaging, positioning, maneuvering, strategy, and tactics were drilled into us. A company is its brand. A team is its brand. An individual is its brand. However, once I arrived in the day-to-day operations of a company and customer management I realized that independent of the myriad directions that one could take on a brand strategy, in the long run the reputation and brand of a company, team, or individual follows the history of customer experiences. Brand positioning must be aligned with the customer experience; otherwise, contrary to what the conspiracy theorists may say, customers stop believing the marketing. Watching the success and failure of various brands in a number of countries, I've witnessed brands gravitate to the customer experience, and the customer experience is at its best when 1) customer expectations are met, and 2) the "wow" factor is then thrown in. Below are two examples. The first is one of my favorite stories of customer service, and the other is about me.

Hampton Inn is not the highest-end brand in the hotel segment, but they strive to establish a brand that fulfills customer expectations. However, with the occasional "wow" factor thrown in during downtime, they can push the brand even further. In the "Additional Requests" field on a Hampton Inn online reservation, one guest wrote, "Please place a framed picture of Alfonso Ribeiro on the nightstand." As Hampton says, "We love having you here." Delivered as requested.

I had taken over a new department with about 30 employees. Results were okay, but not great. This was one of the few departments I had taken over that had a somewhat successful manager before my arrival, and I knew that there were misgivings about me. In the country I was working, it was nearly impossible for anyone to read every word of every document that requires a notarized signature from an authorized board member. And it seemed that every document needed a notarized signature. Accordingly, a high volume of paper came across my desk. On my second day in the role, an employee presented a document to sign, and after a five-second glance I pointed out a typo in a single number in the middle of the page. Next, an employee entered asking for help with a problem with his department. I had some familiarity with the problem from previous experiences. After about three minutes and my asking a few of the right questions to guide his thinking and get buy-in, we were able to restructure the work flows, establish KPIs, and create accountability in his team. The two of them left in awe and shared their experience with others, and it helped me immediately build trust with a new group. Now, I'm probably not nearly as smart they think. However, I at least skimmed everything I signed, and I'd seen a lot of different types of problems by this point. By going back to the team, asking how things operate, pointing out new things I learned from them, and offering feedback, I hope I was able to establish and meet expectations. However, the occasional "wow" factor can really help things along.

Disruptive Technologies, Part X - The Left Out

I commented at the beginning of this series on a few areas where I see the largest potential developments:
- Autonomous vehicles
- Energy storage
- Customized electronic education
- Water desalinization
- Terrorism

The first three I've covered in previous posts. Autonomous vehicles have an enormous cross-industry impact, but only once the truly autonomous part is achieved. Energy storage developments would increase efficiencies in the developing world and lead to large productivity and quality of life increases in the developing world. Customized electronic education provides higher quality education to motivated individuals (or parents) all over the world.

Now for the other two that haven't been mentioned up to this point. Because I follow both of these subjects, I'll simply give an overview without excessive links. I imagine I'll be covering these themes periodically in future posts anyway.

How does a technological advance occur in the terrorism space? Generally it's done by weaponizing an existing technology and then applying it in a way to maximize the psychological impact. Drive a plane into building. Grow ricin and put it in the mail. Put a bomb on a train or crowded area. Hack into a server and steal/publish personal and sensitive information. Et cetera. Thankfully, up to this point terrorist attacks have not been very creative. However, these developments in technology are opening up new doors to terrorism. What's been prevented or missing so far is a motivated individual or group, weaponizing the technology, and opportunity to implement. Advancements in technology provide more opportunities to implement, but also more opportunities to control. While I am quite bearish on the mass implementation of wearables in the short- to medium-term, I believe law enforcement will be using them widely within the next five years. Auto facial recognition scans, license plate scans, etc. will likely be allowed under the law in most countries. Combine wearable tech with the big data behind it, and a formidable security apparatus with all of its accompanying concerns is created. It's an arms race among security, terrorism, and liberty.

Developments in water desalinization are important for many reasons. Millions count on desalinization to provide them water. Water is running out in many areas of the world, Yemen being the most obvious example. Precipitation irregularity with an expanding population base will increase demand for additional water sources. Water scarcity is increasing, and there are many tools to help manage that scarcity. Desalinization breakthroughs, whether from Lockheed, universities, or various Middle East-backed projects, will create a price ceiling for water in every area bordering the ocean and prevent massive potential unrest in populated arid regions. On the world's current trajectory, water management needs to be improved significantly. Populists policies tend to fail in water management. One way to avoid this battle over a scarce resource is to improve the supply through technology. Water desalinization is the best bet for expanding the supply of water through technology, and billions of dollars are being spent to develop it. It might take a little luck, but this innovation is significant, especially compared to the status quo trajectory.

Disruptive Technologies, Part IX - Energy

This is my final entry commenting directly on the contents of the Disruptive Technologies MGI paper. I'll have one more entry on where I see some important elements that were either omitted or glossed over.

Returning to the generation, transmission, storage framework mentioned earlier, we'll break down the developments in energy mentioned throughout the paper by the authors.

A few points before diving in. There is an important point highlighted by the authors concerning peak demand. Energy is generally most efficiently produced when there is an even load. However, energy demand is not even for 24 hours per day. There is a big peak in the afternoon to early evening. From page 101, "To meet peak demand (when generation prices are highest), utilities can either build excess generation capacity or purchase electricity from other utilities or from specialized peaker plant suppliers." Accordingly, reductions in peak demand—even if that peak is merely shifted to other parts of the day—can produce huge savings. The paper's authors focus quite a bit on improvements in smaller scale batteries outside of the larger grid. However, from their writing and from my reading elsewhere, it is incredibly difficult to predict both developments and impact in this space.With this in mind, especially for the transmission and storage elements, below I've focused more in developments at the level of the general electric grid, household consumption, and business consumption.

Generation a) Oil and gas improvements - There have been incredible developments in natural gas over the last eight years. Hydraulic fracturing and horizontal drilling are global game changers in the energy industry. However, the cutting-edge advancements have primarily been implemented only in the United States and Canada. As other nations implement similar technology, and the technology progresses further (e.g., well renewal and other methods), the global energy industry will be very different from what we see today. As the authors put it (page 135), "No one can predict the geopolitical implications of such developments; there are simply too many variables in play."

Generation b) Renewables - Solar and wind continue to progress, but still have a ways to go. Solar will always have the upper limit cap on how much energy the sun produces, but there have been fairly constant efficiency gains in both the technology and production techniques. Solar does okay in certain high intensity deserts (no clouds and more hours of sunlight), but outside of them the economics need to change significantly before coming close to par with fossil fuels. Wind power simply does not appear to be viable until an improved energy storage solution comes into play. Wind is actually close to par with existing fossil fuels, but wind power exacerbates the peak load issues, as wind tends to blow more at night than the day and sometimes the wind does not blow at all. This is also true for solar because of intermittent cloud cover. The key to this is in the storage section below. If interested, one of my favorite TED talks is from a physicist on a realistic description of what green energy needs to look like going forward. going forward.

Transmission - This area was highlighted in the chapter on the internet of things. The estimate from MGI was a potential 2-4% reduction in peak demand, lower loads on the grid, and improved energy management techniques from customers. Nothing earth-shattering, but some decent improvements. One area that was not mentioned in detail was improving the regulatory structure to vary prices for customers depending on demand and supply. Consumers, however, would need to stay informed (perhaps through the internet of things) on the going rate of energy. This aspect alone could capture a significant portion of this benefit.

Storage - I've heard that there are many in the venture capital world working with prototypes of improved storage capacities, but very little is publicly available and there is not much information in the MGI report. The MGI authors do admit this is a slightly longer shot than many other points discussed, but the impact would be enormous. Just in energy production on general energy grids, we could see a 5%+ utilization impact of free energy that is currently lost because of frequency stabilization or inefficient storing of power. Wind power would instantly become far more economical. Plants could even out loads, driving efficiencies across the sector. This would also signify large impacts in the developing world, as intermittent energy is a large blow to productivity and quality of life.

There is a lot of potential in the energy industry. Drilling improvements have already been discovered and are very likely to continue and expand to the rest of the world. Storage improvements at the grid level is potentially disruptive with large worldwide benefits, but it is also the longer shot. I'm eagerly looking forward to the information on developments trickling out of the venture capital arena. Many companies should be aware of storage improvements, as the implementation would likely come quickly, and the effects would ripple through industries in both the developed and developing economies.

Side Comment: Driving in the developing world

From my previous post:

"One final note. Unlike some of the other improvements listed in the report, autonomous vehicles will likely have only a marginal impact on the developing world for both safety and infrastructure reasons. Those who have driven in these environments know how complex driving can be (more construction areas, worse road conditions, lower compliance with traffic laws, safety concerns, etc.), and that autonomous vehicles still have a ways to go before being able to navigate even just the urban areas of cities in the developing world."

One of my favorite stories about this is when I was working for a time in an office relatively close to a sketchy neighborhood. I was checking out the streets in street-view mode on Google maps. I clicked forward into the neighborhood. As I and the Google van advanced with each click, a group of shirtless young men in their late teens or early 20's appeared in the distance in the middle of the street. The Google van approached closer each time I clicked. The next picture showed the young men standing across the road in an intimidating fashion, all looking up at the Google van. I clicked forward one more time, but there were no more options to click further for street view into the neighborhood. The Google van had fled.

Disruptive Technologies, Part VIII - Autonomous Vehicles

The Disruptive Technologies MGI paper emphasized one area of which I have quite a bit of direct knowledge, autonomous vehicles.

The "self-driving car" has been progressing over the last six years or so. Google has been pushing the hardest, but other high-end manufacturers have also explored and participated within this area. First, let's start with a framework for analyzing autonomous vehicle development. Progress in this area can be broken into three distinct steps:
- Driver assistance technology. Cruise control, automatic braking, and accident avoidance falls into this category. These are not new, but certain areas show promise of progressing significantly. The primary benefits of this technology are to make driving a little less tedious and improve driving safety. These incremental benefits are good, but not revolutionary.
- Autopilot technology. Specific basic driving tasks are taken over by the vehicle's computer system. This includes parallel parking, stop-and-go heavy traffic, and highway driving. This is similar to autopilot technology in an airplane. The basic steps are taken by the computer, but if any desirable changes wish to be made or out of the ordinary events occur, the human needs to take over. The key impact here is safety. The toll in human lives and property damages from vehicle accidents is enormous. MGI estimates (page 81) that we could see 150,000 accidental deaths prevented per year by 2025. This is a great improvement, but it's still not revolutionary or particularly disruptive.
- Autonomous vehicles. The key difference between autopilot and autonomous is that the human can sit in the back seat or not be in the vehicle at all. This is a disruptive technology with revolutionary impact.

Here are a few of the effects of autonomous vehicles:
1) Real estate - Commutes become less important as average speeds to destination increases, and the commute becomes much more pleasurable. This causes the competitive advantage of near-urban suburbs to fall, and boosts that of exurbs. Also, since vehicles can roam to a parking space, urban centers can become far more efficient in their land use.
2) Vehicle ownership - Forget even having to own a car. The incentive to own a vehicle for personal use would fall, creating an opportunity for those who can efficiently move into a new age of fleet management. Also, for those who do own a vehicle, any time it is idle it can be sent roving for passengers and become a revenue producing asset.
3) Taxis/Rental Car - Forget Uber and traditional rental cars. One calls a car, it picks them up at home, and takes them to the destination. No driver costs and minimal transaction costs.
4) As mobility is enhanced, there will be many other difficult-to-foresee benefits and effects cascading through the economy.
The progress up to just before the point of autonomous vehicles is good, but not particularly disruptive or revolutionary. There will likely be many hiccups along the way to improve safety, and these improvements will likely be incremental on a fairly limited but consistent basis. However, the steps up to the point of autonomous seem far more achievable in the medium-term. Contrary to the MGI statement, "Technology is not likely to be the biggest hurdle in realizing these benefits," technology is still a very large obstacle for moving to the autonomous phase. The primary disruptive and revolutionary segment is technology challenging. To my knowledge, you can take the best near-autonomous vehicle to date, drop it in midtown Manhattan, and it will... do nothing. Contrary to what is said in some circles, I believe Google took the smart approach by abandoning the traditional self-driving Lexus design and instead replacing it with a glorified self-driving golf cart. Beginning from the glorified golf cart, Google can initially implement on a larger scale, and then more easily scale up the technology from there. Also, the self-driving cart within retirement communities can already begin producing benefits for a segment of the population that can benefit most from the technology, and the private roads in these communities can allow Google to experiment with little government interference. However, Google's transition does put a damper on those believing that autonomous vehicles will be a near-term phenomenon.

One final note. Unlike some of the other improvements listed in the report, autonomous vehicles will likely have only a marginal impact on the developing world for both safety and infrastructure reasons. Those who have driven in these environments know how complex driving can be (more construction areas, worse road conditions, lower compliance with traffic laws, safety concerns, etc.), and that autonomous vehicles still have a ways to go before being able to navigate even just the urban areas of cities in the developing world. 

Disruptive Technologies, Part VII - Cloud Technology

I was torn on the fourth section of the Disruptive Technologies MGI paper. This is an area in which I have fewer contacts and am less familiar with the majority of the areas highlighted. Based on the material presented, I am not yet convinced that cloud technology will be disruptive and transformative over the next 10 years. It is certainly possible, but I would put it as unlikely for a number of reasons.

1) Cloud technology has had incredible advancements already over the last 10 years, and the case that "the low-hanging fruit is gone" should be weighed against the case that there is potential for acceleration (pg 62).
2) While there is potential for dramatic improvements, the scope seems fairly limited, and further improvements will be necessary for cloud technology to have the impact predicted. For example, many small and medium-sized enterprises can use cloud technology to reduce costs and put themselves on a more competitive footing with larger players. Part of this benefit would stem from easily scaling operations up or down over a much shorter period of time. However, is the difference in IT capability a significant enough barrier that this change would be clearly evident? I am not so sure. It certainly bridges some of the gap, but there are many other reasons that smaller and larger firms have their competitive advantages.
3) Cloud technology is heavily dependent on bandwidth. If the bandwidth magic bullet strikes (see previous post), cloud technology can be extremely disruptive and transformative for many industries. However, to my knowledge that is a big "if." MGI admits as such in the section on potential barriers.