Category Archives: Organizational Theory

Why Can’t We Solve Big Problems?: My response to the TED Discussion

This post is my (first) comment in response to the TED.com discussion “Why Can’t We Solve Big Problems? The Discussion was started by Jason Pontin, Editor in Chief & Publisher, MIT’s Technology Review.

He says:

“I think that blithe optimism about technology’s powers has evaporated as big problems that people had imagined technology would solve, such as hunger, poverty, malaria, climate change, cancer, and the diseases of old age, have come to seem intractably hard.

I ask:

I. Who says we can’t solve big problems? If I measured my child’s height, and then measured it again a week later, my friends would laugh at me if I complained to them that my child wasn’t growing. Who’s to say what the appropriate time-constants for change are, in such a huge dynamical system as our World? About a hundred years ago (only a hundred years!) the son of a President of the United States died because his blister became infected, and there were no antibiotics. That our progress isn’t shared by all is indeed a tragedy, but there’ve been many huge problems solved in the past 100 years.

II. Who’s to say that we can choose which problems are solved first, and legislate when they must be solved? That level of control over nature and mankind is indeed a very Western conceit. The “illusion of control” makes us impatient with all the small incremental steps we take as we slog through the swamp of reality, one step back for each one+ step forward. cf. The Tao Teh Ching

III. Perhaps there are seeds of an answer in Pontin’s MIT Technology Review article “Why We Can’t Solve Big Problems“? I suggest looking at the 3 orthogonal dimensions: 1) Leadership, 2) Technology, and 3) Stakeholders. The Technology is probably almost there, no? The Stakeholders are extremely diverse, many perceiving that they’re involved in zero-sum games, hence hindering cooperation. Finally, could it be that the Leadership is sorely lacking. A Leader (or Leaders) must have the charismatic power and legitimacy (of a JFK) to craft and impart a Vision that can mobilize the stakeholders’ buy-in, and the economic and political power to galvanize the Technological machines of government, education, and industry.

“Without vision, the people perish” — Proverbs

From the above ruminations, I suggest that the issues are more a matter of Will, Leadership, and Sustainable Commitment to a Vision, rather than technology, education, or short-sighted venture capitalists. We’re now in a period of technological consolidation. With hindsight, you wouldn’t want to fault the likes of Bill Gates, Richard Branson, or Warren Buffett when they were amassing their huge fortunes, that are now being directed to the betterment of mankind.

Concentration of Power: Focus, Lanchester, & Network Effect

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Consider 3 models of Systems of individual entities (think: people, computers, companies, Social Network Analysis, Network Theory, Dark Networks, … )

1) In the Analysis I offered regarding Large Organizations becoming out of touch with reality, there was the tacit assumption that individuals ‘inside’ the organization were somewhat blocked from seeing and interacting with the outside world, possibly because of more internal demands on their time, lack of visibility to the outside, lack of empowerment to deal with the outside, and an illusion of being protected from the external world.

2) In the realm of the “Network Effect”, the tacit assumption is that the individuals are not limited in their interactions with the outside by their connections. The focus is on the increased channels of communication, possibilities for collaboration, a flat organizational structure… The additional noise, spam, distractions are not usually considered (although I will address that regarding the importance of boundaries, solitude, privacy)

3) Small or large organizations where there is a strong culture of entrepreneurship, individual responsibility and ownership. Here survival is important, but the sense of urgency for innovation and growth is paramount. In an ideal situation, the organization is relatively more ‘flat’ in terms of lack of hierarchy, fewer ladders to climb, and greater exposure to the environment. There is no sense of a “zero sum game”. This is very much what I experienced at PayPal in 2000 – 2001. The company was mostly ‘surface’ (as compared to my ‘sphere’ analogy in a previous blog)… with little indication of an insulated ‘inside’ cut-off from the market.

Next, I’ll review the network effect paper I wrote in 2001 at PayPal, its relation to eBay and leveraging eBay’s Network Effect, Lanchester Theory of Markets, and concentration of power. I concluded that the best expansion strategy to leverage the network effect, and concentration of effort, was to go after one region or market at a time. Then one would more rapidly reach the ‘tipping point’ and develop an advantage that would be hard to lose.

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Why are Large Organizations Susceptible to Getting out of touch with Reality?

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My theory of “why large organizations are so susceptible to getting out of touch with reality?” First, a little math background:

The volume of a sphere scales like it’s Radius cubed

think of the number of internal parts of the organization, the number of people ‘inside’, the number of offices, departments, and so on

The surface area of a sphere scales like the Radius squared

think of the number of people in regular contact with the outside world, the external neighborhood, the current and potential customers, suppliers, regulators, and all of the external environment of the organization

The fraction of the organizations people, time, and opportunities to be “in touch with reality” (as opposed to being involved with the artificial environment internal to the organization) is then the ratio of “Area” divided by “Volume”. This is then ~ R-square/R-cubed, i.e. 1/R.

Hence, the members of an organization that’s twice as large* as another will have only 1/2 the rate of contact with the external reality.

What this means is fewer people involved with a sense of urgency for survival and growth of the organization, and relatively more motivation to “climb the corporate ladders”, and compete in a “zero-sum game” with other members of the organization.

Later, we’ll discuss the relation of this topic, with that of the “Network Effect” aka Metcalfe’s Theorem.

* 1/R if ‘size’ is based on a linear dimension. If ‘size’ is based on Volume, V then