The Challenger Tragedy and Organizational Pressure

On January 28, 1986 the Space Shuttle Challenger launched and tragically broke apart 73 seconds into its flight killing all seven crew members.

For a recent assignment in my Organizational Behavior class I read Diane Vaughn's article on the Space Shuttle Challenger tragedy: "The Trickle-Down Effect: Policy Decisions, Risky Work and the Challenger Tragedy". Vaughn has written extensively on this incident in American history and has conluded (as have others) that the Challenger tragedy was largely the result of an organizational failure, rather than solely caused by the malfunction of an O-ring seal, as it was originally attributed. Central to Vaughn's arguement is that NASA and its contractors failed to properly assess the risk associated with the O-ring seal and, because of overarching political and bureacratic pressures, normalized the gradual acceptance of risk over time leading to this catastrophic accident. Furthermore, Vaughn contends that these pressures trickled down through management to the engineers charged with making the final safety assessments, and ultimately contributed to a breakdown in communication resulting in an improper launch decision. Vaughn and others have so thoroughly vetted this arguement that it has become a commonly cited example of an organizational failure in educational institutions. I bring it up here because it illustrates an important issue that a variety of managers stand to learn from.

The Challenger tragedy is a highly visible reminder that managers must fully understand the risk implications that each decision has on every member of the organization. Allowing pressures to infiltrate all levels of the organization can encourage groups and individuals to push the limits of safety or risk. A pizza restaurant that promises an unreasonably fast delivery time may encourage its drivers to speed; a TV news company that permits frenzied market competition to pressure field crews may also be encouraging compromised safety. Other examples may include risky lending practices or the sale of unsafe used equipment... One way in which managers can ensure that they are protecting the organization from this type of risk is to make sure that two-way communication lines are fully open and that each employee has a clear understanding of the firm's code of ethics and risk management proceedures. Vaughn's article is an excellent analysis of an organizational failure that could have been prevented and could have saved seven lives.

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Great Depression or Cyclical Certainty?

Is the current financial crisis an isolated incident, or is it a symptom of the Information Age?



When Michael Vlahos penned “Entering the Infosphere” a decade ago, the excitement surrounding the strange new technology called the Internet was only beginning to percolate with the general public. Prior to this, the Internet primarily lived in obscure journals, technology magazines and in the back rooms of very savvy R&D departments, whose visionaries saw possibility where others implied skepticism. The Internet, albeit a clunky and less functional version of what we use today, had barely begun to make its way onto college campuses and into households, and even still, people were somewhat unsure what to do with it. Vlahos sees his version of the Infosphere through the prism of the Internet and all of its worldly potential. He states that “the Infosphere is shorthand for the fusion of all the world’s communications networks, databases and sources of information into a vast, intertwined and heterogeneous tapestry of electronic interchange…The Infosphere has the potential to gather all people and all knowledge in one place” (Entering the Infoshpere, pg 2). Vlahos contends that the Infosphere is distinguished by its pronounced lack of a physical space. In other words, if the Industrial Revolution defined itself by the formation of large cities, factories and other fixed places of business, then the Infosphere lays its cultural claim in direct contrast. The Infosphere’s omnipresence renders physical presence less important, yet it outlines a new kind of “place” that is defined by how people organize, connect and communicate using a new set of tools. Vlahos says, “The Infosphere changes us through a strange, but not alien, blending of technology and culture. We think of technology as something apart from us, as creating discrete artifacts that we put to use. But the Infosphere is not discrete; in fact, it is potentially all-encompassing” (Vlahos, pg. 3). Indeed, Vlahos goes on to suggest that for the Infosphere, and the Internet, to become fully realized within society, it must be all-encompassing and it must be easy to use and offer social, cultural and business opportunities.

As we know today, the Internet, wireless communications and the Infosphere have blossomed far beyond what Vlahos’ and many others initially envisioned. In 2005 Wired Magazine’s Kevin Kelly wrote, “The scope of the web is hard to fathom. The total number of Web pages, including those that are dynamically created upon request and document files available through links, exceeds 600 billion. That’s 100 pages per person alive” (Wired, August 2005). In a relatively short period of time, a global brain of sorts has sprung to the forefront of our culture and what makes it so remarkable is that its growth was largely driven not by a single entity but by volumes of people connecting with one another. The Infosphere and it’s related technologies have come to reshape 1st World society so thoroughly that certain aspects of it are nearly unrecognizable compared to just two decades ago. Blogging, ecommerce, mcommerce, Second Life, ipod, Wikipedia, WiMax, Glocalization, MySpace and so forth represent not only a new vocabulary, but a cross-section of common practices that are integral to culture and business today. Indeed, Vlahos’ notion that the Internet must be a place of commerce and socialization has come to fruition, manifested in the countless ways in which the two are inextricably intertwined online--perhaps there’s no better example than Second Life, a virtual world of social connectivity and real and imagined commerce. The Infosphere’s meteoric rise to the forefront of our culture has been enabled by a few key technological developments such as the exponential increase in computing speeds and broadband and wireless technology that has allowed people to surf the internet anywhere, anytime. These advancements have undoubtedly provided the foundation for recent innovations and, most certainly, future developments.
The concept of Media Myopia is crucial within the discussion of the Infosphere as well as the development of the Information age. Media Myopia basically states that new technologies, and the implementations for those technologies, are confined within the framework of the technologies and practices being replaced, thus predicting the future of new innovations prone to errors in judgment, or more plainly put: “the true meaning and magnitude of effect that any given technological advance is going to have-- on society in general and marketing in particular-- is misconceived, misconstrued and grossly under and/or over- estimated” (Forrest, et al. 1991) This concept, I think, applies not just to technological advancements but also to changing and pervasive business practices related to technological advancements and to the general shifting of waves. Technological and cultural change—Toffler’s idea of waves of change—carry with them a certain degree of myopia as well. History has shown that the incoming wave seems to move slightly faster than our ability to understand it, process it and predict its implications. The shock of the Great Depression was due, in large part, to a lack of fully formed economic concepts, practices and predictive elements necessary for a developing and flourishing industrial economy. The roaring 20’s were a period of great technological, cultural and social growth that culminated, unfortunately, with the crash of the stock market and the ensuing Depression. The events of the Great Depression could be viewed as a collision of waves, a fork in the road, if you will. Society was confronted with a choice, regress back into an agrarian lifestyle because of economic hardships or embrace the principals and tools of a new wave (Industrialism) to deal with new problems and obtain a higher standard of living. As we know, the answer to the Great Depression was not regression, but progression towards a more fully formed Industrial society--which was enabled and largely driven by the moral and political imperatives of World War II. By embracing Industrialism our society was forced to adapt and develop the ancillary fundamentals (economics, accounting, politics…) to a new wave. What that period in history represented was a Myopia on a grander scale, not just in terms of technology, since people were reluctant/unable to embrace or understand that a new wave was approaching, yet it was still able to sweep over society as if it was never in doubt.

These days, any conversation of the Great Depression must include parallels to today. We find ourselves, yet again, at the intersection of two waves. The Information Age has stormed into our society over the last two decades, aided by historic technological advancements such as personal computing, the internet and wireless telecommunications, while Industrialism’s significance wanes. The Information Age has provided a foundation for new businesses, new business models and a flourishing economy filled with opportunity. The current financial hardships we are experiencing (which have been nervously--although unfairly, I believe--compared to the Great Depression) require that we ask a few key questions: Is history repeating itself? Does generational myopia provide the framework for these sequences? How can we embrace the new wave to solve our current issues? How can we adapt our support systems (economics, accounting, social sciences, politics…) to the prevailing principals of the Information Age? I won’t use this posting to speculate on the answers to these questions, rather I just wanted to point out that these are important times, that history has shown us that our periods of great cultural and societal change often brings with it a collision that challenges our notion of ourselves and uses our Media/technological/generational myopia against us. Also, I don’t believe that these periods of collision are a bad thing, rather an unfortunate necessity in an economic system designed to regulate itself. The only potentially dangerous question is this: Does our fast-moving, open source Infosphere create a cycle of economic bubbles (.com, sub-prime…) because it essentially forces our collective culture to move faster than our ability to understand it, process it and predict it? Read more!

Finding the Newest Trends in Business

Identifying the lateset trends in business is critical to continued growth. There are a number of business trend websites out there and I have found that they come in varying degrees of usefulness, some of which depends on what the end user is looking for. Here is a quick look at some of the trend sites out there:

http://www.trendwatching.com/

This site has a tremendous amount of information in the “Current Briefing” section. In just a few minutes of surfing I found myself reading about the trend of online commerce bleeding over into the offline world. They discussed many sub-trends such as technology that is built to integrate with the web (a camcorder with a one-button youtube upload feature), avatar clothing brought to life and social networking that facilitates meetings, or meetups, for people with similar interests. The catalogue of “Current Briefings” are a wealth of trend topics. This site, however, does not seem to be a great resource if you are looking to research a specific trend or industry. I typed in Travel and Tourism in the search field and I was redirected to google search results that didn’t seem to be too useful. Nevertheless, there appears to be a ton of insightful information on this website and it is evident that they have a vast network of researchers combing society for new and unique trends.

http://www.springwise.com/

I found Springwise to be the most useful trend site overall. For me it was the right combination of generally unique, fringe trend spotting and idea generation combined with the ability to research more specialized areas. I searched under Travel and Tourism and immediately found two trends or innovations that I had not ever heard of. One was Microsoft’s interactive tables that are being tested in some big east coast Sheraton hotel rooms. Essentially, these are large interactive touch screens that provide customized local information to visitors. I can see a need for this technology, but I’m sure it is expensive and at least for the foreseeable future will only be feasible for high-end hotels looking to wow their guests with a flashy technology. Whether or not travelers will jump at this technology is a question, while it is a wealth of information, you can’t take it walking around town with you (Can you print information from these interactive tables? Not sure.). This technology could also provide hotels with another revenue stream, by selling advertisements in some form or another on these interactive tables. Perhaps, that upside could mitigate the cost issue. Only time will tell. I also stumbled upon http://www.simpatigo.com/, a site with interactive wiki-maps powered by google. This site allows the user to add points of interest and descriptions for the benefit of others. This site is new and therefore doesn’t cover a lot of areas, but I can certainly see a real-world application for it, especially for someone walking around a new city with an iphone, looking for something to do or somewhere to eat. Overall, Springwise seemed to be a very useful site.

http://www.pfsk.com/

This site seemed to be less about trends and more about pop culture quirks and fringe products. The interface seemed less formal to me, the homepage appeared to be just a fragmented blog with no overarching theme. However, when I dug a little deeper I found a posting under the Advertising and Branding heading entitled “Selling Lots of Little Media: Micro Sales Add Up”, about http://www.istockphotos.com/ and http://www.shutterstock.com/ which basically lets people upload photos and then sells them at very low prices—photographers get 25-cents every time some downloads one of their photos. This concept would also seem to fall under the category of a “Long Tail” business. Bottomline on PFSK: decent site, but you have to do a little digging to find the value.

http://www.trendhunter.com/

I was not overall impressed with this website. Firstly, it seemed to be so cluttered with iffy pop culture trends that it felt like I was standing in line at the grocery store looking at all of the cover pages of paparazzi magazines. After clicking around a bit, I did find a little more substance and was rewarded with a decent return on my search of Travel and Tourism, in which I found a little information on ecotourism. However, this site doesn’t seem to be too interested in providing real ideas and trends, rather it just seems content getting people to view things—which is a trend in and of itself, so maybe the administrators of this site do know what they are doing.

http://www.ubercool.com/

Upon first glance this site seemed to be another pop culture trend spotter, but as I scrolled down the homepage, I noticed some more substantive articles, including a glance at worldwide wealth and luxury products, the use and implications of LED lighting at the Beijing Olypics opening ceremonies and a look at how the iphone is revolutionizing the mobile phone industry. This site does not seem like one you would go to for specific research (I looked up Travel and Tourism but only found one article of little value), rather it simply seems to be an aggregator of interesting trends and fringe products.

Google Trends

Google trends seems like a valuable way to keep track of what people are searching on the web, but I can’t yet see the practical business value. Even the “How to” article admits that Google Trends isn’t necessarily indicative of what is going on in terms of consumer trends, rather it is just a look at search habits. I’m sure that this has value, perhaps as a beginning point in trend research, to give you a bit of direction or to offer an overall look at what is of interest to people. I typed in Travel and Tourism and didn’t seem to get anywhere substantive immediately, although after a little digging, I found a website that (http://www.travelweekly.com/) that could prove to be a useful resource in researching travel trends.

Overall: I found Trendwatching and Springwise to be the most useful sites, with PFSK running a close third.

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An End to the Consumer Culture?

It's not very fashionable these days to speculate about the role of the average consumer in our current economic troubles. Rather, fingers are primarily being pointed at folks who wear suits for a living. Certainly a degree of that is warranted, but is there any other logical conclusion to decades of rampant over-consumption than economic turmoil similar to what we are dealing with today? Americans have a negative savings rate and all of that buying, borrowing and credit card swiping has (surprise!) led to an inability to make mortgage payments and pay bills. My accounting professor made a keen observation about the erratic behaviour of the stock market by comparing it to an addict going through withdrawal. Will the average American have this same reaction? What will we do when we can't buy plasma TV's on a whim or fill our garages with new cars and expensive toys? Perhaps we'll have withdrawal, but maybe, just maybe, it will lead to The New Age of Frugality. Click on the link to read the insightful Business Week article.

Also, check out another article on consumerism by clicking here.

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Marketing in a Shifting World

Thoughts on Toffler and Marketing

In order to understand current marketing issues, it is critical to have a grasp on the trends that shape society. Such is the purpose behind studying Alvin Toffler’s “The Third Wave”, which examines shifting trends in terms of waves of change that wash over society, overlap with one another and ultimately create a new landscape from which individuals and businesses operate. The Agricultural age gave way to the Industrial Revolution which then gave way to the Information age, and so on. Toffler states “once we understand how these parts, processes and principles are interrelated, and how they transform one another, touching off powerful currents of change, we gain a much better understanding of the giant wave of change battering our lives today”. Toffler breaks society down into “spheres”, or sectors of society that together formulate the workings of any society. The spheres include the Techno-sphere, Socio-sphere, Info-sphere, Bio-sphere, Power-sphere and the Psycho-sphere. Toffler wrote “The Third Wave” in 1980, before many innovations such as the Internet and cell phones had fully reshaped society. He scripted prophetic passages such as: “Instead of being dominated by a few mass media, Third Wave civilization will rest on inter-active de-massified media, feeding extremely diverse and often highly personalized imagery into and out of the mind-stream of the society”. One cannot help but think of many of today’s web-based interfaces such as YouTube, Myspace, Facebook and the like, which have become fundamental social networking vehicles in society, not too mention the movement toward web-based interactive media. What strikes me as remarkable is that Toffler wasn’t describing new technologies; rather he was reflecting the currents of civilization that were already beginning to take shape within the information age—technology only later became an enabler, or a vehicle which allowed the shift to happen faster.

From a business and marketing perspective, Toffler’s writings and ideas forced me to think broadly about the past and more narrowly about the future… To me the most significant occurrence came between the first and second waves, in which consumption became divorced from production. Ultimately this was a massively important event that created an information asymmetry which, in part, fueled many of the industrial & post-industrial business models that have thrived for decades. This divorce between consumption and production gave the information edge to businesses since they had the financial and organizational means to research & develop products and markets from a top-down perspective in order to gain mass appeal and brand awareness. The average consumer had neither the means nor the time to research every product he or she consumed, thus traditional marketing played a crucial role because it was, in many cases, all the information that the consumer had to go on. Many businesses, of course, thrived under this scenario, after all they were dealing with a consumer base that was more reactive to products than proactive, and thus more open to being persuaded by savvy marketers. It seems natural that the information age would develop from this set of circumstances--technology has provided the consumer with an opportunity not only to level the informational playing field, but to in fact engage in a race for knowledge with business.

So, where does that leave us now? I suspect that this struggle for an informational advantage will lead to incredible new technologies, with capabilities far beyond what we have imagined. The readings and viewings that describe advances in Aritificial Intelligence (AI) and Conversational Interface (CI) paint the future with a decidedly Sci-fi brush, and make a compelling case in the process. AI promises to create computers with greater computational power than the human brain and CI will reshape how we interact with computer-based technology. I don't dispute that these technologies will be created, available and used in some niche markets, but what I haven't heard discussed in any of the readings is the role of the free market. Consider the Segway scooter, billed as a revolution in technological design and function, set to redefine individual transportation either on the job or in leisure. Yet the free market has not shared that view. Yes there are some niche/novelty markets for this technology (Downtown Anchorage tours!), but it has not been fully absorbed into the cultural zeitgeist. One factor is that today’s consumer is a much more knowledgeable, sophisticated & skeptical being with highly specialized needs and wants, therefore if a product misses the mark even slightly (especially a specialized product), it risks its own mass appeal. Traditional industrial/post-industrial marketing may have allowed a business to simply tell a consumer that "This is a revolutionary product!' and they would buy it, but today's information-age consumer seems to be a much more nuanced sell--almost as if to say "I need more than that". The point of the segway reference is to raise the caution that there is an unpredictable element to how and at what rate these waves take shape. The free market will determine what new technologies comprise the next new wave, and also the rate at which the shift occurs. Toffler seems to predict the rate of change to be very rapid, yet there are global and socio-economic mechanisms that could slow the rate of change. For example, suppose an unfortunate combination of natural disasters create a worldwide food and energy shortage, which then fans the flames of global inflation, places intense downward pressure on wages and increases unemployment. This dramatic socio-economic hiccup may not necessarily derail progress, but it certainly puts short-term limitations on what new advancements the free market is willing or able to accept, especially if a depressive economy reduces our wants and needs back to basic pre-industrial times. Although Toffler contends that such thinking is brought on by "a steady diet of bad news, disaster movies and Apocolyptic Bible stories" (The Third Wave, pg. 11)--and, indeed, provides an excuse for inaction--his vision of the future seems to be predicated upon steady long-term economic growth. He acknowledges that there is an element of unpredictability to the future, yet at the same time rejects that it can change history's course. Instead Toffler maintains that any upheaval and chaos is merely part of a pattern of changes that ultimately "add up to a giant transformation in the way we work, live, play and think..." (Toffler, pg. 12)—a notion that seems to assume that no challenge, however great, can ever derail waves of change.

I’m not completely convinced that the developments of CI and AI represent an entirely new wave. Rather they seem to be a natural extension of the Information Age, which carries with it a certain degree of autonomy. Surely these advancements will reshape how we interact with technology, and will have many practical uses within society (I’m envisioning ordering dinner from a conversational computer screen at a restaurant), but it seems logical that the information age would culminate with some form of symbiosis or singularity. As it is right now, our technological advancements have enabled us to live extremely different lives from one another. You and your next door neighbor can share zero commonalities simply because you can choose to immerse yourself in a very narrowly defined informational world… Only time—and the conditions shaping the global free market--will tell if there is a complete paradigm shift across all of Toffler’s “sphere’s” of society, or if the Fourth Wave will simply prove that the information age was just the tip of one iceberg. So, how does this societal information translate into an understanding of marketing issues? It is essential to understand both how businesses function in a changing landscape, and how consumers function in society at large. One must have a grasp on the prevalent trends at hand, and the savvy marketer must understand that cultural changes can be known, studied and predicted, thus anticipated.

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...For What it's Worth

It is increasingly appearing that the next President of the United States is going to inherit a volitile economy and a confidence-challenged business environment. Here is a link to an interesting article in The Economist, discussing the opinions of economists on the economic policies of Barack Obama and John McCain.

Read the Article Here!

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MBA Alaska

Why blog about being in Business school? Well, why not, these are absolutely fascinating times to be studying business in America. We are in the midst of some amazing societal changes not only in this country, but worldwide. On a grand scale we are seeing the shift from Industrialism to the Information Age trickle through our economy, our workforce and into nearly every aspect of our lives. For the past 18 months we have been witnessing the historic collapse of the housing market, and the economic damages have just recently culminated with highly controversial government intervention, commonly known as The Bailout, but formally titled The Emergency Economic Stabilization Act of 2008. Yet many questions still remain. Are we in a recession? Are we entering another Great Depression? Is the bailout necessary? Is the bailout Socialism? When it is all said and done, what will America's standing in the world be?
I don't presume that I'll be able to answer these difficult questions in this humble blog, rather I will use it to share some of my thoughts and ideas about business in the context of this unique period of our country's history. Currently I'm in my first semester of the MBA program at the University of Alaska Anchorage, and I will discuss some of the ideas and issues that we focus on in the MBA program. Some of what I will post here will be directly from class assignments, class discussions and research materials. Other postings may revolve around current events, business trends and innovation. My hope is that users of this blog will comment on postings, create discussions and help direct the course of its progress. Enjoy! Read more!