Flow to Stability

Thursday, November 15, 2007

Ballooning for sustainability: Bertrand Piccard and his vision

I just attended an inspiring lecture by Dr. Bertrand Piccard.

First a little background, Bertrand was born in a family of explorers. His grandfather Auguste is credited with inventing pressurized cabins for aircraft and, for a time, held both the highest altitude and deepest dive records. His father, Jackues, designed and built the deep diving vessel Trieste that managed to dive 10km below surface at the deepest point of the ocean at the Marianna Trench. This feat was not repeated with manned vessels since and currently there is no operational vessel that can readily achieve such depths. Bertrand himself continued the tradition of pushing the frontier by completing the first round-the-world trip in a balloon (the Breitling orbiter) which was also the longest in duration flight achieved. He is also a psychiatrist and hang-glider pilot champion.







So where does sustainability fit? Well, Bertrand used his achievements (and those of his illustrious family) as metaphors.

In referring to his father’s dive, he pointed at the discovery of live fish at the ocean bottom. Not only did this provide an unexpected finding to biologists, he argued that it conclusively showed that there is oxygen at those depths. Oxygen can only reach there through circulation from the surface and so by implication there are currents from the bottom to the surface. This finding would cause a slight shift in the paradigm: deep sea trenches were not the safe dumpster bins for humankind that were thought to be. Toxins and radioactive waste thrown in there would come back to haunt our biosphere sooner or later.

I use this as one example to illustrate the way that he described his explorations: not as innately valuable neither as means to an end but rather as narrations and parables of aspects of everyday life.

Ballooning thus became a metaphor for life, life attuned to success. Unlike the aggressive can-do-what-I-want-now way of living that is passed as the ideal in western societies, he argued that ballooning provides a much better metaphor. In fact, the undercurrents and forces in our lives are too strong to go against. Trying to push back against the prevailing winds costs us in resources and is usually counterproductive.

The balloon can instead search the atmosphere by changing altitude and looking for the currents more conducive to the general direction that we would like to head. Changing altitude can be achieved by throwing out ballast; the entrenched beliefs, the inability to listen, the egomaniacal certainties can be the ballast that people could throw out to explore the potential of their lives. But this does not necessarily imply a “go with the wind” attitude.

Weathermen are necessary for any flight that has a purpose. Weather forecasters are those with a vision of complex system interactions. Those that can see long-term implications of actions. Academics and politicians he implied should be the weathermen in our society. While plodding along at 40mph during the fourth day of his around the world flight, he and his co-pilot decided to search for a different wind pattern despite being instructed against doing so by their weathermen. After finding an 80mph current following approximately the right direction, they felt smug and called back to announce that they could do better than the experts. They were instructed to revert to the original altitude because while they may be temporarily flying faster they would soon end being ahead of the front and heading towards the North Pole, a largely undesirable outcome that was not apparent and instead needed systemic knowledge and forethought.

Even so, when landing after the completion of the flight, they had only minimal reserves of propane and even a minor delay could have resulted in missing their target. “That is bad planning,” he said, and the metaphor now reflected humanity’s management of the earth’s natural resources.

The Solar Impulse, his next endeavor, of building and flying an aircraft that takes off unaided and flies around the world relying entirely on solar power is designed with specific focus on sustainability. If he and his team can do this unbelievable achievement for a plane with existing technologies (20% efficiency of the PVs and current NiMh batteries) then we, ordinary people, should be able to achieve much less aggressive targets for our cars and appliances.

In talking about all these, he mentioned the issues of equity. Pictures from Mumbai underscored the chasm between haves and have-nots. Maybe calculated for a different audience, he argued that it is in the self-interest of the richer to provide for the poor lest they face the consequence of revolt. Maybe he intentionally forgot the building of police forces with military training and of mercenary armies, maybe he did not want to argue from a spiritual perspective. I did not always agree with what he said and certainly have not verified some of his assertions. From what I described, he may sound cheesy and new agey inspirational, and in some sense it might have been, but there is no denying that his vision was gripping and with a good chance of success.

Good luck, Dr. Piccard!





Thursday, November 30, 2006

For the record: my current work

Well just an "extended abstract" of it ... Later posts will elucidate (I hope)

Symbiosis as an Alternative View for Identifying Strategic Positioning Potential for the Enterprise
Enterprises do not operate in a vacuum. Their connection to a value stream beyond their boundaries is largely recognized but when it comes to guiding enterprise strategy, the prevalent perspective is adversarial. For industries that are prone to cyclical behavior, this handicaps the potential of implementing strategies that can lead to dampening of the cycles. We suggest that in the strategy design phase of Enterprise Transformation the decision-makers can consider what we call symbiotic strategies, actions that may provide long-term stabilizing effects and therefore long-term strategic advantage even in the face of tactical disadvantages.

The Enterprise of Enterprises (EoE) framework aided by a hybrid of agent-based and system dynamic models permits us explore a set of strategies with the potential to lead to symbiotic ends by avoiding costly boom-bust cycles in the related industries. We apply our approach in the notoriously cyclical commercial aviation related industries.

Hypotheses and Contributions
The objective of this paper is to show that the costly boom and bust cycles that have beleaguered commercial aviation can be dampened using sets of symbiotic strategies that have a Pareto efficient impact on the stakeholders involved. We use framework and modeling innovations to identify those strategies and to study their impact.

Cyclicality: Costs, Causes, and (Potential) Solutions
Cyclical behavior in the airline industry has been identified by (Jiang and Hansman 2004) and (Weil 1996) among others. Similar instabilities of varying degree have been observed in shipping (Dikos 2004), telecommunications, oil refineries (Weil and Stoughton 1998), and other industrial markets.

In a manifestation of the ‘bullwhip effect’ observed in supply chains, the cyclical instability faced by airlines increases the severity of variation in the demand that is faced by the airframe manufacturers. While the cycle can be observed ipso facto, attempts to predict it are faced with significant uncertainty and high stakes since erroneous forecasts may result at the very least in loss of ground to competitors. Given the unpredictability and high stakes, cyclical instabilities are associated with concomitant costs.

For the private sector that is faced with highly cyclical profitability these costs range from liquidity constraints to vulnerabilities to bankruptcy, hostile take-over, or market-share loss. Attempts to adjust by following the cycle that involve employee dismissal can result in knowledge hemorrhaging and ill-will towards the firm. On the other side of the cycle, they may lead to unsustainable growth, upward creeping unit costs, and overcapacity. The society at large is also affected due to labor distress, tax payer assumption of defaults, and a general sub-optimal use of resources.

The existence of such critical industrial cycles has spurred research into their causes. The list below summarizes some of the identified potential causes of cyclical behavior as expounded in the economics, operations research, and industrial organization literature:
Macroeconomic cycle.
Uncertainty.
Imperfect financing.
Irreversibility.
Intertemporal substitution.
Input variability.
Labor hoarding.
Inventory.
Lead times.
Technology
Decision making:
Bounded rationality,
Investment exuberance,
Strategic optimism.

Starting from a large set of potential causes, the set of strategies to counter their effect is similarly large. A sample of such strategies is given here:
Transparency
Information sharing
Uncertainty management
Lead time reductions
Output stabilization
Capacity constraining
Price stabilization (demand management)
Technical/operational product improvements
Extensive use of leasing (for capacity flexibility)
Off-cyclical behavior (buy low, sell high – shipping)
Capacity constraining
Less aggressive revenue management
Mergers
Subsidies / long-term financing
Total subsidy withdrawal
Re-regulation (price or market capping)

In the paper we discuss the more promising strategies in the context of the stakeholders that can implement them and, more importantly on their impact. The intent of investigating these strategies is to promote “symbiosis.” We define symbiotic strategy to connote an action taken by one or more EoE constituents that improves aggregate EoE system performance over a long-term horizon. Ideally, this action is Pareto efficient and not detrimental to the short-term interests of the actor(s) but not necessarily so.

The Enterprise of Enterprises Framework, Experimental Modeling, and Expected Results
Empirical evidence suggests that even in the absence of most of the procyclical factors, ‘bullwhip’ behaviors can still be observed (Croson, Donohue et al. 2004). This makes the task of symbiotic strategies to offset the causes hard enough but what makes it even harder is the need to anticipate their impact on the stakeholders and on the EoE given the high levels of system complexity involved.

To address these difficulties we use the EoE framework as a tool for distilling the critical behavior of the stakeholders and a hybrid agent-based and system dynamics modeling methodology to build corresponding model platforms. Once validated, we can then use these models to test the proposed symbiotic strategies under different scenarios and identify those strategies that lead robustly to improvements in the desired performance metrics on a stakeholder by stakeholder and on an EoE basis.

The EoE concept stems from the System of Systems (SOS) literature (Maier 1998) as currently expanded by Shah. EoEs, like SOS, exhibit purposeful, sometimes self-organizing behavior while their constituents (or components) have disparate or even competing value functions. Distilling the value functions of the constituents and the character of their interactions (couplers) provides a way of modeling the system disregarding much of the constituents’ internal complexity.

Using this structure of value functions and couplers as basis, we construct a hybrid agent-based and system dynamics model which because of its disaggregate nature (each constituent enterprise is an agent with potential diverse strategies and characteristics) allows us to examine how a potential symbiotic strategy implemented only by a subset of the constituent enterprises can affect the system behavior in the long term and of course its impact on the actor(s). This disaggregation on the level of the enterprise, rather than on the level of the industry for existing models, is a particularly useful feature when it comes to setting the macro-level enterprise strategy and accordingly the goals of enterprise transformation.


References

Croson, R., K. Donohue, et al. (2004). "Order Stability in supply chains: Coordination Risk and the role of Coordination Stock." ESD Working Papers Series.
Dikos, G. (2004). Decisionmetrics: Dynamic Structural Estimation of Shipping Investment Decisions. Dept. of Ocean Engineering. Cambridge MA, Massachusetts Institute of Technology: 101.
Jiang, H. H. and R. J. Hansman (2004). An Analysis of Profit Cycles In the Airline Industry. M. Massachusetts Institute of Technology Cambridge, MIT International Center for Air Transportation. Report No. ICAT-2004-7.
Maier, M. W. (1998). "Arichitecting Principles for Systems-of-Systems." Systems Engineering 1(4): 267-284.
Weil, H. B. (1996). Commoditization of Technology-Based Products and Services: A Generic Model for Market Dynamics. Cambridge MA, Sloan School of Management. Massachusetts Institute of Technology.
Weil, H. B. and M. D. Stoughton (1998). "Commoditization of Technology-based Products and Services." Sloan Working Papers.

Going online ...

Well this is a birthday post. Birthday that is for this blog which is my birthday present...

Herein, I am planning to sow some thoughts.

Most will not grow, not because of infertile soil mind you but because of faulty genes. Futility can sometimes be enjoyable, as Slartibartfast claims. Even worse than pleasantly futile acts are expectations so I am leaving it to that. Hope some of you can stay for the ride.

Peace.