“Success, like utility, is a function of the individual. You should celebrate the fact that what gives you utility (happiness) is as unique to you as your thumbprint or your DNA.”
– Dr. Rick Nason-
Read Dr. Nason’s full article here
“Success, like utility, is a function of the individual. You should celebrate the fact that what gives you utility (happiness) is as unique to you as your thumbprint or your DNA.”
– Dr. Rick Nason-
Read Dr. Nason’s full article here
Republished from Faculty of Management, Research, Research Profile
FoM Research Profile
Collaboration exists as a midpoint on a continuum ranging from cooperation to partnership. Collaboration involves two or more parties acting together to achieve a common goal and can be used as a strategy to empower community economic prosperity. Despite the growing body of literature investigating ways to build collaborative relationships with Indigenous populations, there is a dearth of similar literature addressing collaborative relationship-building with Black communities. One objective of this community research partnership is to fill a gap in our understanding of the collaboration process with the goal of creating knowledge that can be used in an academic setting, workplace setting and in the community. Historically, there have been harmful relationships between Black communities and researchers, resulting in mistrust. By engaging in participatory action research (PAR), the project is putting an emphasis on building trust between participants in the study and the research team. PAR is an applied research approach in which participants—those with a stake in the outcomes of the research—take on an active co-researcher role. Our goal is co-create knowledge with community on how collaboration between organizations (e.g., academic institutions, government, non-profit) and the community can create innovative opportunities to remove systemic barriers for economic prosperity for marginalized African–Nova Scotian and Black community members in Halifax.
Community Partner: Delmore Buddy Daye Learning Institute, Dr. George Frempong and Sylvia Parris.
Grant Funder: Mitacs Accelerate Grant – $30,000
“The Dalhousie MBA FS/L program has been one of the best and most rewarding experiences of my educational journey”.
Judith Chambers, MBA(L) Candidate (Class of 2022)
Judith Chambers’ MBA journey begin five years ago, and she’s looking forward to graduating in 2022. The intensive sessions and connections made, remain a highlight for the program, and continue to serve as a motivational driver for many participants.
Both MBA students and Alumni alike will agree that the Faculty and Staff of the CEGE program are the best around. Judith highlights a handful of Professors that have left an impression by way of inspiring.
In my final few courses of the MBA Leadership program and I could not be prouder of this accomplishment. I started on this journey in the winter of 2016 and expect to graduate in the spring of 2022. When I decided to pursue a Master’s degree, I considered several other Universities, however it was the blended program delivery and the flexibility at Dalhousie that was the deciding factor. A key part of my decision-making process was the work life balance.
From the very first interaction with CEGE’s Sarah Hayes and Michelle Hunter I felt welcome and inspired. The ability to connect with others in the program and make new and lasting friendships was an added benefit. The on-campus intensives were by far my favorite part of the program. It has been these connections that provided ongoing motivation and support to get through some of those more difficult courses.
The Professors in each course were highly interactive and accessible. I was fortunate to take a couple of courses with Professor Jim Barker and Professor Heidi Weigand who challenged me to think outside the box and helped to develop my leadership style and management skills. In my current course Leading in Complexity with Professor Rick Nason and yes, the same Dr. Nason who teaches Corporate Finance, the course has so far been unique, inspiring and fun.
As a lifelong learner the Dalhousie MBA FS/L program has been one of the best and most rewarding experiences of my educational journey. This experience has helped me develop and grow both personally and professionally and I cannot wait to graduate and be part of the amazing alumni at Dalhousie.
“Complexity science is still relatively new to business, but its applications are both many and profound. Many managerial jobs are being replaced by artificial intelligence which leaves only the complex jobs for managers to manage. Managers who do not understand the distinctions between complicated and complex, as well as those who are unable or unwilling to embrace complexity are being left behind.”
The Faculty of Management, Dalhousie University is dedicated to advancing experiential learning, teaching and research. Despite the COVID-19 disruption, research is ongoing and continues to be top priority. CEGE Connection reached out to Dr. Rick Nason, Associate Professor Rowe School of Business, for a virtual interview to ask about his current research projects and how he forges connections with students, alumni, and the wider business community.
Currently I have four papers in progress:
Managers and Complexity – in this paper I build a framework for classifying managers along two different dimensions. The first dimension is their knowledge of systems thinking and more particularly their level of understanding of the distinction between systems that are complex and systems that are complicated. The second dimension is their willingness or their ability to embrace complexity. Complexity science is still relatively new to business, but its applications are both many and profound. Many managerial jobs are being replaced by artificial intelligence which leaves only the complex jobs for managers to manage. Managers who do not understand the distinctions between complicated and complex, as well as those who are unable or unwilling to embrace complexity are being left behind. The framework helps to classify managers and has implications for hiring, retention and managerial training and development.
Complexity and Healthcare – this is work that is being done in partnership with a recent CR MBA alumnus Keira Lum, who wrote about this research in an April 14, 2020 CEGE post. This research starts with an interview survey of health care professionals, both front line professionals as well as administrators. The survey asks a variety of questions to get the health care professional’s opinions about, and knowledge of, the role and implications of complexity in health care. This research is important as it quantifies the need that others have suggested that more training is required in health care professional skills about complexity and the role it plays in health care both medically, as well as administratively.
Non-Profit Risk Management Framework – In February, I co-authored another book in my series on risk management for Business Expert Press. The title of the book was Risk Management for Non-profits. My co-author was Omer Livvarcin and together we developed a robust risk management framework for the specific use of non-profit organizations. We are in the process of formalizing the theory along with the best practices that underlie the framework. The timing for the book was unfortunately fortuitous, and thus the framework has already been used successfully with several non-profits on an emergency basis as a result of COVID.
Revisiting the Honda Effect – The Honda Effect is a very well-known and studied analysis of the strategy used by Honda when they first entered the North American market in the 1970s. The original analysis started a debate in the field of strategy between those who believed in emergent strategy versus those who believed in planned strategy. Working with Doug Reid, a professor of strategy at Queen’s University, we are reframing the strategy debate in the context of systems theory, and more particularly arguing that Honda implicitly used best practices from complexity theory and that was what made them successful. By bringing systems thinking into strategy, the paper helps to show that the proper type of strategy framework used should be in alignment with the systems characteristics of the market being entered.
Muddle Through – to manage to do something although you are not organized and do not know how to do it. Cambridge Dictionary
For approximately the last five years I have been putting thoughts together for a new book project. The tentative working title for the book is “Muddle”. I started thinking about “Muddle”, or more accurately “Muddle Through” while writing my book on complexity, “It’s Not Complicated: The Art and Science of Complexity in Business” which was published by University of Toronto Press.
Muddle brings together concepts from two areas of management that do not get nearly enough attention: complexity science and risk management. In addition to these two management disciplines, my conceptualization of muddle also brings together behavioral economics, as well as sociological economics. Behavioral economics are all the human quirks and irrationalities that we exhibit as individuals, while sociological economics are all the human quirks and irrationalities we collectively exhibit as a group. It is important to note that the quirks that we as humans exhibit as a group are most definitely not a scaling up of our individual quirks.
Muddle also deals with the critical difference between the Knightian definitions of risk and uncertainty. This has major implications as we “muddle through” our new work reality of big data and artificial intelligence changing the role of the human in the workplace.
We are certainly going through a period of great uncertainty. Whether or not we want to admit it, we are experiencing a period of muddling through. Perhaps an even more disturbing thought is that the “leave it to the experts” experts are also for the most part muddling through.
“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.” Donald Rumsfeld
Donald Rumsfeld was widely ridiculed when he made the above statement. His “… known knowns, … known unknowns, and … unknown unknowns, … “, may have made rich fodder for comedians, but perhaps it is time that we admit that he was onto a very important concept.
In this day and age of digital assistants, an exploding internet of searchable knowledge, and expert pundits, we expect, and dare I say, demand, that someone knows something (and does something). The reality however is quite different. Most real experts will admit that the more they learn, and thus the more they know, the more they realize that they don’t know.
At times like this it is critical to look at the work of Philip Tetlock, whose work is highlighted in his very readable book (co-authored with Dan Gardner), “Superforecasting: The Art and Science of Prediction”. Tetlock has made a career of tracking the forecasting ability of a wide variety of experts. His results are surprising; experts are not very good at forecasting. In fact, they are terrible. One especially surprising, and even troubling result is that the more confident and the more professional the expert is judged to be, the worse their forecasts turn out to be!
We cannot simply rely on experts in even simple times, much less complicated and complex times such as now. Asking Alexia what to do is not going to work, except for maybe telling us what stores are currently stocked with toilet paper. Sadly, hoarding toilet paper is not going to be the ultimate solution to our current situation.
Collectively we need to appreciate the wisdom of Rumsfeld sayings and realize, regardless of your opinions of his politics, that his “unknowns unknowns” is a concept that we need to accept and embrace at the present time. However, we also need to appreciate that he also commented on “known knowns”, and “known unknowns”. This is where a knowledge of systems thinking and the difference between complicated and complexity come into play.
Complicated things work by the rules of physics or mathematics. They are certainties and are completely reproducible; if you do the same actions, you get the same outcomes. Complex issues however are based on people interacting and adapting. Complex issues are not reproducible. They exhibit properties of emergence, tipping points, feedback loops, multiple scales and levels and many other properties that lead to “unknown unknowns”.
Complicated systems are easy to manage. You apply the rules or laws governing the system. Complex systems however require a radically different approach. Trying to “solve” a complex problem like it is a complicated one almost always creates negative unintended consequences. It is my fear that in trying to “solve” the COVID-19 problem, we are creating even bigger problems with even longer lasting negative consequences.
“The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence.” Charles Burkowski
In my book “It’s Not Complicated”, I suggest three simple guidelines for managing complexity. The first is to recognize what type of problem you are dealing with; is it complicated or is it complex. The second guideline is to think “manage, not solve”. The third suggestion is to implement a “try, learn, adapt” approach.
It is the height of folly and arrogance to state that you have a solution to a complex problem. No one has a solution to a complex problem, thus the need to “manage, not solve”. However, in hindsight, I believe that this COVID-19 crisis is likely to be the seen as a mismanaged complex problem, and in addition the crisis of social media hysteria and “solution screaming”.
Complicated style decisions are being made, and defended, based on incomplete and fuzzy data. Our search for “the” solution is massively counterproductive. Furthermore, the increasing polarization of society – another complex social media effect in my opinion – means that when new data and new ideas do come forth, they struggle for an audience due to the entrenchment of existing views. It is almost as if we as a society never learned Bayesian analysis, or one of the key lessons pointed out in Superforecasting, namely to “update your beliefs”.
“In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.” Eric Hoffer
The COVID-19 crisis is likely to change a lot of things. It already has. We need to change and learn as well. We need to start thinking more critically. We need to start realizing that social media, like all tools, can be great if used properly and harmful if used carelessly. We need to appreciate the difference between risk and uncertainty as models and AI are increasingly implemented in complex situations they are totally unsuited for. We need to learn and appreciate the difference between what we know, what we think we know, and what we don’t know. We have to come to grips, and even celebrate, that our world is part complicated and many parts complex. We have to continue learning. In short, we need to muddle through.
Dr. Rick Nason, PhD, CFA
Rick Nason, PhD, CFA
 For an excellent short summary of the properties of complex systems see: https://www.cecan.ac.uk/sites/default/files/2018-06/The%20Visual%20Communication%20of%20Complexity%20-%20May2018%20-%20EcoLabs.pdf
The 2019–2020 Management Teaching Excellence Awards (MTEAs) were presented in January to three professors in the Faculty of Management.
Tony Walker is an assistant professor in the School for Resource and Environmental Studies who brings a decade of professional practice as an environmental consultant to his role. He teaches courses such as research design methods and pollution abatement for graduate students, and team-teaches the interdisciplinary undergraduate management course. He has supervised 23 directed study courses and helped many of his students go on to publish in peer-reviewed journals.
Myriam Mora Hernandez, the MES student whose research Walker supervises, presented his award. She says he began helping her before she arrived in Halifax and is the one who gave her the confidence to apply to grad school. “He helps you believe in yourself and motivates you to continue learning on your own,” she says.
“I exist for my students,” Walker said when he accepted the award. “We all do. I consider them my junior colleagues.”
Rick Nason is an associate professor of finance in the Rowe School of Business who consults internationally on a variety of finance, risk management and complexity science issues. He has been the faculty advisor for the Dalhousie Investment Society since it started in 2011 and coaches graduate and undergraduate case competition teams. He’s known for expecting his students to understand current events and how they affect financial management.
Jesse Salomons, the Corporate Residency MBA student who presented the award, says that Nason is the most influential person he’s ever met. “He sets the bar high for his students, but also for himself,” he says and notes in Nason’s parlance that “he gets us outside the comfort zone and into the growth zone.”
When he accepted the award, Nason said he had planned to move on to something else after two years of teaching, which is his second career. He has been at Dalhousie for 18 years. “The reason I’m still here is the students,” he says.
Laura Cumming is a senior instructor in accounting in the Rowe School of Business. She was a faculty advisor for the Rowe Women in Business Society when it launched in 2015, and in 2013 initiated the Rowe School of Business Volunteer Income Tax Clinic in partnership with the Canada Revenue Agency. Cumming is known for playing music before each class to help students feel relaxed and engaged. She started the Faculty’s Teaching Community of Practice in 2016 to help instructors explore teaching challenges and techniques together.
Kevin Vigneau, president of the Dalhousie Commerce Society, presented her award. He says that Cumming is known for genuinely caring about all of her students, not just those at the top of the class, and noted that the real-world examples she provides emphasize concepts that help her students get jobs in the real world.
On accepting her award, Cumming joked that “people are often surprised at how shy and introverted” she is and recognized her teaching colleagues as well as staff in the Undergraduate Advising Office and Management Career Services who all contribute to the student experience.
Given annually, the MTEAs celebrate teachers who, per the award’s guidelines, “display the qualities of superior teaching, excellent understanding of the subject area and interest in the needs of the students.” Student ratings are integral to the selection process, and the selection committee includes student members. First awarded in 2010, the MTEAs are made possible by a donation from alumnus Bill Black.
Kevin Ebert MBA(FS) Class of 2014 sent in a question to Dr. Rick Nason:
“Major FI’s around the world currently see Canadian consumers being massively over-levered and the Toronto/Vancouver housing markets as ‘bubble-concerns’. Viewed another way: Consumer spending, via low interest rate credit, has been the ‘fuel’ for Canada’s economic performance and GDP growth. What advice would you give MBAs currently leading Canadian-domiciled companies, looking to maximize growth & opportunity, while minimizing risk/exposure to these issues?” Kevin Ebert MBA(FS)
In the fifth installment of striving for success in 2019, Dr. Rick Nason discusses consumer spending, economic performance and GDP growth.
Dr. Rick Nason:
Consumer spending is the only engine behind GDP. If consumers do not buy anything, then businesses don’t make things, which in turn means that businesses don’t buy anything, and so on into the box top of the classic box of Moirs chocolates. So, we cannot put the blame on consumers.
Having said that, Canadian consumers are arguably over-leveraged. However, we have also been, in my humble opinion, coasting on a variety of made-in-Canada factors for a very long period of time. I won’t go into the specific factors that I believe we have been coasting under for fear of this being labeled a political blog. I am sure that the reader can make their own list.
As Canadians we are incredibly lucky. We have a relatively stable and responsible government (my comment in the previous paragraph notwithstanding), we have an embarrassment of natural resources, and we have, for the most part, a suitable climate. What this has produced is a corporate culture that has become fat and lazy; despite our daily machinations about working such long and hard hours. Of course, some of us (ahem ahem) have literally got fat and lazy, but we will leave my personal state of affairs out of this blog.
I believe that there are two short and simple responses to your question. The first is to stop thinking that you are a Canadian company. Yes, take the advantages that being Canadian provides you, but take those advantages and learn to play on the world stage. Yes, that means that you need to leave behind some of the Canadian advantages, such as protectionism, behind. But wake up, we are a big country with not many people. As the rest of the world develops, it is learning to do more with less, and on a much larger scale of people, and yes, that includes a much larger base of consumer spending. That means that the rest of the world is developing experience at scale. We do not have the scale, and to get it you must go out and think and behave globally.
Leaving your familiar backyard is scary. I remember leaving my neighbourhood when I was approximately 10 years old with a group of my friends to play a street hockey game against a neighbourhood on the other side of the town that none of us had ever been to. It felt as if we were taking a trip to the moon. It sounds silly, but I think that is what many Canadian companies still feel. Admittedly, as Canadians we have one heck of a nice neighbourhood, but how are you to develop your street hockey skills unless you get out there and test your skills, and learn new skills from other neighbourhoods? (Hope you appreciate my Canadian spelling of “neighbourhood” in this paragraph and the home-grown theme of street-hockey.)
The second, and related solution is to compete! compete! compete! Except for hockey, and perhaps only women’s hockey at that, we have forgotten about how to compete. (Okay – time to break the no politics rule.) Take for instance interprovincial trade. We don’t even want to compete interprovincially! Historically, there were arguably some valid reasons to prevent too much competition. Unfortunately, that is now being laughed at by the rest of the world (although one prominent figure with arguably worse hair than mine – although I have undisputedly the more natural complexion – is making a mockery of international trade and competition for the moment.)
Since you brought it up, Canadian financial institutions, in particular, have forgotten how to compete for the simple reason that they never needed to. Retail Canadians, and corporate Canada for that matter, are notoriously sticky consumers of financial institutions. We pick our financial institutions based on proximity, and the only time we change is when we change our neighbourhood – and even then, we keep our old accounts going. Canadian financial institutions constitute a classic oligopoly.
I love Canada. If you slit my wrists, instead of red and white blood cells you get Maple leaves, hockey pucks, and whatever crap the pulp mill in my neighbourhood was spitting out the day that I was born. However, I got most of my post-secondary education south of the border, and spent most of my non-academic career south of the border. The difference in the willingness to compete, in both academia, and in business continues to astonish and annoy me. We are a wonderful and blessed country, but if you want GDP growth (we can argue whether that is a worthy goal or not), we gotta step outside the neighbourhood and compete.
 For those of a too tender age who did not get the reference, do an internet search for vintage Moirs Pot of Gold Chocolate box
Craig Macklin MBA(FS) Class of 2014 sent in a question to Dr. Rick Nason:
“I’ve taken a position of continually considering the changing global business environment as a way to remove complacency in my strategies when improving a company’s results…what are the 2-3 most important elements you see globally, that company leaders should pay attention to so that they can start getting comfortable being uncomfortable, especially in the face of the looming recession?” Craig Macklin MBA(FS)
In the fourth installment of striving for success in 2019, Dr. Rick Nason discusses the changing global business environment, getting comfortable being uncomfortable and removing complacency in strategic thinking.
Dr. Rick Nason:
Being comfortable with being uncomfortable is likely to be a phenomenon of the 20’s; the 2020’s that is. The pace of globalization, the pace of AI and Big Data, and the pace of FinTech, HealthTech, RegTech, PersonTech, WhateverTech, combined with a demographic shift in the workforce that has not been experienced since the end of the Second World War will mean that the role and responsibilities of the manager are going to be altered like never before.
Trying to fight the onset of these forces facing the manager is a Sisyphean task. I believe that we are already experiencing the less than optimal individual managerial actions of a cohort nearing retirement who are striving to make their methods that worked in the 1980’s and 90’s effective today. This is for an age when the seemingly inexperienced millennium upstarts, with nothing more than gumption, upset another industry on an almost daily basis. It is a phenomenon that I call the “constipated middle”. That is, it is the group of relatively senior managers who are hanging on to a world that no longer exists in hopes that they can make it to retirement without being exposed. By the way, the same effect is true for those who are relying on their credentials for success, regardless of age or experience.
If you have ever been in one of my classes, or heard one of my seminars, then you know that one of my favorite quotes comes from philosopher Eric Hoffer. He stated, “In time of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists”. You need to select whether you will be learned, or a learner. Unfortunately, and ironically, as academics, we focus on being learned, despite our proclamations that we are institutions of higher learning. The evidence is clear; our focus on rubrics (please, shoot me now!), multiple choice tests, objectivity in marking, tests designed for computer marking, etc… This is reinforced with our emphasis on credentials; gotta get more letters behind my name to be competitive (and so I can be picked by the HR computer filters for a promotion)!
The first rule of becoming comfortable with being uncomfortable is to be a learner. Learn broadly. Learn creatively. Learn diversely. One of my favorite techniques when I am faced with a problem, is to go to the bookstore and buy the three magazines on topics or areas that I know nothing about and have zero previous interest in. Going into places you have never gone before not only works for StarTrek fans, but also for your ability to learn, to be creative, and to develop your dots. Managers would be much better off if they would only spend as much time and effort on their network of learning as they do on their professional networking and building their social media profile.
Being comfortable with being uncomfortable means you need to develop the skill of learning. However, this is much more than knowing stuff. Knowing stuff is a commodity; hey Alexa, what’s … ? Knowing stuff is an almost valueless commodity today with not only the developments in AI, but also the ready access to AI. The new learner doesn’t source knowledge but connects knowledge. The manager who can connect the most dots, as well as the most diverse dots, is the manager with the competitive advantage. The person who knows stuff is being replaced by a bot, or someone with a decent internet connection in an emerging economy who is willing to put in the effort to know more stuff, more efficiently, and to do it for less than you spend on coffee in a day.
What is left after AI takes away knowledge is empathy. Rita McGrath, a Columbia University professor, wrote a short Harvard Business Review article titled “Management’s Three Eras: A Brief History”. In this paradigm shifting article, she talks about how management was first about technology; how do manufacture a pin most efficiently. Then came scientific management and Taylorism; how do we optimize the assembly line. The third era, the era we are coming into, she labels the “era of empathy”, and I agree with her. Empathy is nothing more than understanding people; and I stress that empathy is not sympathy or pity. Empathy is understanding why people think and act as they do. Empathy does not mean that you agree with them.
In a related, but tangential theme, Geoff Colvin’s book “Humans are Underrated”, states that many professionals mistakenly try to fight the onset of the bots by asking: “what is it that I can do that a computer, or a bot cannot do?” Colvin’s answer is nothing! He states that the better question to ask is: “what is it that I can do that people do not want or will not allow a computer, or a bot to do?” I think he is on to something. What is left after AI takes the basic knowledge component is relationships, and I don’t mean relationships of the swipe left or right variety.
I would be remiss, as well as hypocritical if I did not mention the importance of complexity. I believe that all of the above is wrapped up in complexity. The manager of the 20’s needs to understand and appreciate complexity. That is a different set of skills, and a different set of attributes than we normally associate with management. Our management paradigms, as well as our educational paradigms, both in business education, and general education, have almost completely ignored complexity. I believe that complexity knowledge is the killer app for managers. I have a recommended reading on complexity if anyone is interested.
Ultimately being comfortable with being uncomfortable is being comfortable with being a human being, rather than some stereotype that the media and business schools give us of the business leader. Being comfortable with being uncomfortable requires humility, self-esteem, and a thrill and lust for the challenge. That’s what makes being a manager fun!
 McGarth, Rita, “Management’s Three Eras: A Brief History”, Harvard Business Review, July 30, 2014, https://hbr.org/2014/07/managements-three-eras-a-brief-history
 Colvin, Geoff, “Humans are Underrated: What High Achievers Know That Brilliant Machines Never Will”, Portfolio, 2016
Nancy Fijan MBA(FS) Class of 2013 sent in a question to Dr. Rick Nason: We all have pressure and noise in our lives, and in business, sometimes it manifests itself in rash decision making by executives. And for publicly traded companies, this can be costly – for example, the recent $40 million SEC settlement that Elon Musk paid for his tweet about going private. In addition to this $20 million civil penalty and $20 million fine imposed on Tesla, he had to give up his role as chairman of the board for at least three years. Is this a lesson about the risk of being too transparent? Or is the complexity of business running up against outdated regulations created before the social media age?
In the third installment of striving for success in 2019, Dr. Rick Nason discusses transparency, and how risk is ever-evolving in the age of social media.
Dr. Rick Nason:
Elon Musk had sanctions imposed upon him by regulators after tweeting some of his thoughts on the prospects for his company Tesla. The question is: Is this a lesson about the risk of being too transparent? Or is the complexity of business running up against outdated regulations created before the social media age?
I am going to slightly (hopefully only slightly) reframe this question to “is regulation adequately adopting to changes in complexity and transparency brought about by social media?” The answer is “NO!” in my opinion.
Regulation is in place in large part to manage downside risk. For those who have taken a class from me or read any of my books, knows that I believe that risk is the “possibility that bad or good things may happen.” Thus, simply managing downside risk is about as intelligent and practical as chewing your food with only your upper teeth. From the outset, regulation is missing half of the equation. Sometimes half of the equation is all the equation – again, see example of eating with only your top teeth.
Social media is changing business is many ways; some obvious, and some less obvious. The less obvious way is that social media is increasing complexity. Social media is creating the data for artificial intelligence to diminish the human value of complicated thinking and analysis by doing it quicker and more accurately. (This would be a great discussion for a future blog – so stay tuned).
Regulators, in large part, miss both of these important consequences of social media and thus appear as out of touch as characters from Downton Abby showing up to the latest university Cuban spring break beach party. Regulations operate on the assumption that the world is complicated; that the world works by a command and control mechanism. The reality is that increasingly business and governmental affairs are complex. (Editor’s Note: We highly recommend Dr. Nason’s book, It’s Not Complicated: The Art and Science of Complexity in Business, which discusses the difference between complicated and complex systems.)
Social media increases the connectedness of individuals and groups. Furthermore, developing technologies are focused on expanding the momentum of that connectedness. This, in turn, leads to increased speed and magnitude of adaptiveness. Both effects increase complexity.
Complex systems cannot be solved; they at best can be managed. Regulation is set up with the implicit assumption that it will solve or prevent problems. Orgel’s Law, which argues that evolution is smarter than you are, is a fundamental consequence of complexity and its resultant emergence that illustrates the folly of much regulation.
This is not to say that regulation is worthless or not required. Unfortunately, the nature of humanity and markets is that we need regulation for the collective good. However, prescriptive regulation is only effective for complicated systems. Too much regulation is based on “letter of the law”, while “spirit of the law” is a much sounder principle, especially so in the presence of complexity. Regulation based on spirit of the law, which also applies context specific judgment, helps in the implementation of “manage; not solve”.
Regrettably, the legal system, particularly in the United States, will prevent this from being the mode of operation for at least as long as I am taking up space and oxygen on this planet. So, the answer of whether regulation is keeping up with the increasing complexity caused by social media is an emphatic “No!”.
Before concluding however, I would like to point out that it is incumbent upon each of us to also realize and react appropriately to the increasing complexity in society. Ironically, the increasing complexity is escalating the expectations that we, individually and collectively, seem to have of government; and by extension, regulation. As we have higher expectations for governmental solutions, we need to appreciate the paradox that complexity in society is diminishing the ability of government, and regulators, to “command and control”.
Trying to control a complex system with complicated thinking leads to many unintended consequences. One of the unintended consequences is frustration. I believe in part this mismatch between complicated thinking / complex reality, and ineffective governmental and regulatory control is leading to increasing voter frustration which manifests itself as increased partisan politics, and potentially a more fractured society. Social media brings us together, but the complexity is entails may be also ripping us apart.
Business measures performance and overall success based on benchmarks that have a financial outcome. Embedded within a corporation’s financial statements, are the results of customer satisfaction, employment engagement, risk management, R&D investments, and corporate responsibility. Compensation and bonuses are calculated using the profitability and sustainability of a business entity. Recently, Allison Rockwell MBA(FS) Class of 2015 and I conversed on how we may inadvertently find ourselves measuring personal success using business metrics.
In the second installment of striving for success in 2019, Dr. Rick Nason discusses the question: What benchmarks, besides financial, should be used to measure a successful career?
Dr. Rick Nason:
Two knee jerk reactions to this question. First is that a financial benchmark for a successful career (implied in the question) is a horrifically awful benchmark. The second knee-jerk reaction is that whatever I, or anyone else provides as an answer for this question will be both misleading and sad for anyone who mindlessly takes our answer(s) as the truth.
To the first point: I believe the goal of life, and of a career, is to maximize utility. Merriam-Webster online dictionary defines utility as “fitness for some purpose or worth to some end”. Happiness is an end of worth to me. In fact, I generally equate utility with happiness, but I see the linguists starting to compose angry tweets against me, so I will move forward quickly. Love and friendship are also ends of worth to me. Laughter is an end of great worth to me. Having good food (which may or may not be fancy and expensive) with friends is an end of great worth to me. Having shelter, clothing, food and financial flexibility is also of worth to me, but not great worth. Being able to provide shelter, clothing, food and financial flexibility for my family is of much greater worth and utility to me than those things are to me personally.
To continue with this thought you need to realize one fact: economists (and by extension finance profs) are extremely lazy intellectually. We build our theories on maximization of “utility”, but immediately take an intellectual shortcut to state the aim is to maximize “utility of wealth”. We then go to second order laziness and shorten “maximize utility of wealth” and think we are becoming efficient by simply eliminating two words: “of wealth”. To those students, lay people, media, and political pundits who are lazy and do not bother to actually read and understand the concept of utility it is all the same. (Sadly, to most economists and finance profs it is also all the same.)
The important point is that “utility” is not fungible with “utility of wealth”. If you give me $20MM dollars but take away my ability to see and hear my children laugh, then I will have “utility of wealth”, but I will be bankrupt of “utility”. Trading $20MM for never seeing and hearing my girls laugh again is a trade I will never make (and neither should anyone else although I am afraid that a lot of people implicitly and unconsciously do make that sad trade).
Success, like utility, is a function of the individual. You should celebrate the fact that what gives you utility (happiness) is as unique to you as your thumbprint or your DNA. This unnerves economists as the uniqueness of everyone’s utility function means that economists cannot create a general theory of economic maximization (and thus formulaically answer your question). This uniqueness, and inability to mathematically deal with this uniqueness, is one of the excuses that economists give for focusing on “utility of wealth” rather than the more appropriate “utility”.
Unfortunately, we spend a lot of time focusing on some arbitrary (and sometimes downright silly) relative measures of success as we have been trained to think in terms of objective scorecards. If only the world was so simply complicated, instead of having all of this wonderful complexity that we humans bring to it, then we would have a giant formula we could operate by, and soon, some company would be offering us a personal robot and algorithm and there would be no need for us to individually exist at all.
The benchmarks for success are what you as an individual determine them to be. They should not be my benchmarks, nor should they be anyone else’s. They should not be adapted from a tweeted blog titled something like “9 Factors of Success”, nor should they be based on subliminal elements from advertising. They should be developed by you though careful and thoughtful consideration. By the way, it is quite likely that your benchmarks for success will change dramatically through time and through your experience.
I believe that success is a journey. Sadly (or fortunately) we can never consider ourselves a success and then call it a day. If we do, then entropy will quickly kick in. We will be unable to recognize the many opportunities that are available to those who continue to strive in a complex environment.
Whatever measure(s) of success you come up with you, comparison should not be part of the process. Regardless of the measure (unless it is laughably low), you may fall short compared to someone else. However, success is not a zero-sum game; or a game at all for that matter. Success is relative, and you need to make the difficult calculations of the most useful level of relativeness to you.
As for me, every day when I set off into the world, I say a little prayer that the world will be a “little better place because I existed”. Some days I clearly fail in that goal. I may say something politically incorrect, my hair gets in someone’s face, my exam questions are too long or too difficult etc. etc. etc. However, success for me is in the trying. Failure is still success if you are trying to increase your utility (and for me, the utility of others).
Are you still actually reading this!? Get out there and be successful!