The New Realities - #4: It's All About the IBCs.

Human progress is marked by the transition from one socio-economic modality to the next, each reflecting man’s principal means of satisfaction.  Historians and anthropologists call them ‘ages.’  The Stone Age was followed by the Bronze Age, Iron Age, Agrarian Age, Industrial Age, Technology Age and most recently the so-called Information Age.  Over the last century or so, during the industrial, technology, and information ages, science and engineering dominated allowing massive industrialization and gains in productivity and wealth.  During this period epistemological activity was marked by the scientification of everything.  Wealth defined success.  The framework of the prevalent modality during any given ‘age’ is manifested in all aspects of human interaction.  For example, to wage a credible argument and earn the respect of peers in the academic world since the early twentieth century, one had to be able to identify independent and dependent variables and replicate results, ceteris paribus.  This gave rise to a number of new ‘sciences’ including political science, economics, and sociology, which have worn their scientific wardrobe with neither consistent appeal nor comfortable fit.

            Today, we are realizing the limits of our science-centric modality, especially as we attempt to navigate our way through current crises.  It appears economists have had it mostly wrong most of the time.  Political scientists and sociologists are having equal difficulty explaining observed phenomena.  The result is that Ideas, Beliefs, and Convictions – the IBCs – are on the rise as a locus of analysis.  Not since the period of the Enlightenment in the eighteenth century, when we moved away from the mystical to the rational, has the swing of the pendulum toward empiricism been arrested. This shift back toward IBCs signals a subtle but critical transition in our socio-economic modality from the information age to the cognetic[1] age.  What and how are being replaced by why as the central question.[2]  Scientific method is being rebalanced with a reconsideration of the arts, philosophy, religion, and history as we attempt to make critical decisions – hopefully in time to save our fragile social order.

            As we have both benefited from and endured the scientification of everything, the time has come to rebalance our analytics with an equal or greater consideration of why things are the way they are, not just what and how we do what we do.  In my doctoral research, I study why presidents do what they do in foreign policy.  I search for the threads of influence and thought that result in decisions that affect millions of lives.  In the process, I build cognetic profiles that include the intellectual capital and cognitive disposition of presidents drawn from an historical examination of their education, experiences, socializations, and indoctrinations.  What I have found is not earth shattering, but is also nearly universally ignored by scholars in this period of scientific preference.  The principal driver in presidential decision-making is not empirical data, logic, or even politics; it is the intellectual capital and cognitive disposition that form a president’s cognetic functionalities.  ‘Facts’ only become so by permission – granted by IBCs.  Asking why allows us to both explain and predict decisions.  It gives us a sense of meaning that empirical data never does, which produces a more coherent model to understand and explain our world.

            Shifting our search to why – toward a cognetic age where IBCs matter again – will also impact how we measure success.  Wealth, or net worth, may be replaced by ‘net well-being’ as we shift our preferences toward things that have meaning, not just utility. This has profound implications for how we live our lives and form relationships toward people and their organizations.  If you have a company focused on what and/or how, you better start thinking about why.  If you counsel people about their investments, well-being may be a more appropriate framework for quarterly reviews than net worth.  If you are charged with the task of defeating terrorism, IBCs may be much more important than economic aid or nation building, and much more effective than frisking grandma at the airport.  If you are a teacher, make sure your students also search for meaning while they are identifying, articulating, and calculating the whats and hows.  And, if you are President Obama, you had better stick to your why – “Hope & Change” – even in the face of sophomoric ridicule and partisan intransigence.  That’s why you were elected.

            IBCs matter, perhaps more now than they have in many decades, and may just unlock some powerful solutions to seemingly insurmountable challenges.

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[1] Cognetic is used here as simply meaning ‘thought into motion’ or the operationalization of IBCs where IBCs are as meaningful, if not more, than empirical/scientific data.  It is borrowed from the definition provided by Lt. Colonel Bruce K. Johnson, USAF, on “Dawn of the Cognetic Age: Fighting Ideological War by Putting Thought into Motion with Impact” accessed at http://www.airpower.maxwell.af.mil/airchronicles/apj/apj07/win07/johnson.html. 

Johnson serves as Air Force Reserve chief of strategic communication plans at the Pentagon. 

2 Marketing consultant Simon Sinek explains the connection between why and inspired leadership – and its importance over what and how at www.startwithwhy.com. You can also see his TED presentation at http://www.youtube.com/watch?v=u4ZoJKF_VuA.

The New Realities - #3: Ultrapreneurism.

My father’s generation created wealth through their corporate citizenship; join one and remain there for many years while vesting in a retirement plan and/or buying large cap stocks and holding on to them for just as many years.  This was a very viable path to economic security.  In 1979, upon graduation from college, I took a step in that direction by joining the marketing department of Pacific Northwest Bell, an AT&T regional operating company.  But, to the unspoken vexation of my father, I left seven months later to strike out on my own in the media business.  At my father’s memorial service in 1995, one of his friends who eulogized him said that my father never really understood what I did, but acknowledged that I seemed to like it so “so be it.”  I was then thirty-eight years old and within two years would be ‘retired’ (financially self-sustaining) myself.  I had become what was known as an ‘entrepreneur’ – creating wealth outside of, and often in spite of, the corporate world. 

            As social economist George Gilder celebrated entrepreneurs in The Spirit of Enterprise (the bible of Reagan-era entrepreneurs), he described them as those who “know that genius is sweat and toil and sacrifice and that natural resources gain value only by the ingenuity and labor of man.” He argued entrepreneurs “create the wealth over which the politicians posture and struggle … they sustain the world.”[1] Gilder’s is an over-romanticized celebration, but he aptly captured the spirit and sentiments of my generation of wealth builders.  But we too are fast becoming obsolete, replaced by ultrapreneurs who are even less systemically connected and are quickly adapting to new market conditions marked by interdependence, complexity, and volatility; and who are producing new inverted strategies of wealth creation.

            It is worth understanding the conditions that give rise to this new breed I call ultrapreneurs.  Globalism has many effects, driven principally by the liberalism of trade and geometric acceleration of enabling technologies.  As Nassim Nicholas Taleb successfully argues in The Black Swan the world today is best described as a “recursive environment” where an “increasing number of feedback loops … cause … snowballs and arbitrary and unpredictable planet-wide winner-take-all effects.”[2]  As complexity compounds, the improbable occurs with greater frequency, which brings to question a number of things, especially investment strategies.  In effect, the curve of distribution – the bell curve – flattens causing calculations of risk/reward to consider that the probability of outlier events (high positive and high negative returns) to be relatively more likely than they have been in the past.[3]  And, if complexity accelerates even faster – without contemporaneous codification of rules and consequences – the curve could become inverted.  Translation: playing within a standard deviation of the mean is no longer justified based on an assessment of relative risk and reward.  Add to this the emerging reality that systemic market risk increases in a complex financial system that has yet to develop command and control mechanisms, and that now also includes systemic fraud risk, the question becomes not whether one should be in or out of the market, but how one operates away from the market.  Furthermore, those who continue to chant the mantra of the “long run” are fools (or they simply don’t know how to interpret the short run).  In a complex interdependent market staring at either the mean or the horizon actually exposes one to more, not less, risk.  The better perspective is to view the landscape from a reasonable altitude, looking down, as events unfold, not out at the horizon.

            There are a number of people who argue that the end is near – that social collapse is imminent (even secularists).[4]  However, I would argue that Gregg Easterbrook is closer to the mark in Sonic Boom: Globalization at Mach Speed. Easterbrook claims that “job instability, economic insecurity, a sense of turmoil, the unfocused fear that even when things seem good a hammer is about to fall … are part of a larger trend, and no rising tide will wash them away.”  But he also points out that globalization has positive aspects: “ease of communication, more freedom of speech, markets closely attuned to consumer demand, [and] rising education levels in the developing world.”[5]  Adapting to this world requires a high degree of intellectual flexibility – an embrace of ideological agnosticism that produces a transcendent state of mind allowing creative reinvention.  This is the mental mindset of the ultrapreneur.  He or she is the ultimate free agent who has the same work ethic as an entrepreneur, but who remains as disconnected as possible from systemic risk and who prefers anonymity to fame.  They are hyper-independent, stealth, and highly adaptive.  They do not recognize traditional boundaries or conventions and find leverage in intelligence, not natural resources – and never debt.  They prefer networks to formal enterprise and may even operate through multiple identities.  They are a product of the natural evolution of social order in a complex interdependent world.  Ultrapreneurs will be the winners in an increasingly risk-laden world.

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[1] George Gilder, The Spirit of Enterprise (New York: Simon & Schuster, 1984), 18-19.

[2] Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007), xxii.

[3] Hedge funds are the early interpreters of this strategy.  What killed many hedge funds was not investment strategy, it was leverage.

[4] See Joseph Tainter’s 1988 The Collapse of Complex Societies, or Niall Ferguson’s more recent “Complexity and Collapse” in the March/April 2010 Foreign Affairs.

[5] Gregg Easterbrook, Sonic Boom; Globalization at Mach Speed (New York: Random House, 2009), xii-xiii.