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One of the reasons why Houston will never get a shot at hosting the Olympics (not that we want it, at this point) is because we don’t have a world-class transportation system. So while Houston is the fourth-largest metropolitan area in the US, we’re not even close when it comes to public transportation (can you believe we’re behind Dallas?). According to the 2010 U.S. Census, we have a population of over 2.1 million people and a land area of 599.6 square miles (and that’s not counting the suburbs).
Houston is second only to New York when it comes to resident Fortune 500 companies.
So what’s the problem? Why doesn’t Houston have a world class transit system at this point in its history? And what can be done?
The traditional finger-pointing is political. Suburban taxpayers who supported referendums in 2003 and 2012 have demonstrated a desire for development, only to have officials shortchange them. The latest in line is John Culberson, but to be fair, past opposition has come from both sides of the political aisle.
And who is behind these politicians? You don’t have to look very far to see that Houston is an energy town - in fact it’s the “energy capital” of the world. Our energy companies are not interested in a world class transit system; for them, seems like widening the freeways is the only solution. This lack of civic leadership reflects poorly on our city and is going to be a burden going forward. Those Fortune 500 companies that call Houston home will find a better place to live.
To be clear: between the lack of leadership from business and the misleadership of our elected officials, Houston has a third rate transit system, used by less than 3% of the population.
There is no long-term plan in place. That, in itself, speaks to the magnitude of the problem. Furthermore, any plan we do get is probably going to be a constrained plan that does nothing to address the real challenge.
What can be done?
How can we bring our politicians and business leaders together? Or is Houston doomed to remain a third-class city when it comes to mass transit?
The reason I wrote this blog post was to highlight a third way. Let’s look at an example from a country and place where things are a lot harder than Houston. Delhi - the capital of India - is a city with 9.9 million, with horrible infrastructure problems. Over the years, like Houston, no real attempt was made to build an infrastructure equal to the needs of the citizens.
Then, in October 1998, ground was broken on a comprehensive metro system that had been talked about for over three decades. Today, the Delhi Metro is the world’s thirteenth largest metro system in terms of length. The network consists of six lines with a total length of 189.63 kilometres (117.83 mi) with 142 stations, of which 35 are underground, five are at-grade, and the rest are elevated. All stations have escalators, elevators, and tactile tiles to guide the visually impaired from station entrances to trains. It has a combination of elevated, at-grade, and underground lines, and uses both broad gauge and standard gauge rolling stock.
What can Houston learn from Delhi? At least three things:
1) build a METRO system worth having: don’t build a system that just clogs up already busy lanes to shuttle folks from one business hub to another. Focus on the real issue: mass transit, specially the mass part. We should aim for getting around 20-30% of our citizens on the METRO during rush hour, and that will only happen if we focus on real solutions.
2) use the right-of-way on existing freeways: the genius of the Delhi rail line is that it is elevated and runs along the main highways already in place. In Houston, this would mean our HOV lanes would be turned into METRO lines - elevated, above the traffic. Even the stations are elevated; which sounds weird, but actually it works very well. The image below is a METROstop along the line - well above the freeway:
3) mass transit is too important to be left to METRO alone: in Delhi, and you have to appreciate the extent of corruption in public office to understand this, a special purpose organization was formed called the DMRC. This cross-agency team was vested with great autonomy and powers to execute the gigantic project. In Calcutta where they did not have such a cross-agency team, the Kolkata Metro was badly delayed and 12 times over budget due to “political meddling, technical problems and bureaucratic delays.” The first phase of the Delhi Metro project was completed in 2006, on budget and almost three years ahead of schedule, an achievement described by Business Week as “nothing short of a miracle”.
So can miracles happen in Houston? They can, if only our politicians and METRO folks would actually share some values - like putting aside their petty interests for the good of the city. I’m not holding my breath. Hey, maybe we can build some more public funded sports arenas; those projects seem to have no problem getting funded!
Here's an interesting classification or segmentation of change makers (from Deloitte) along with some advice on how to make a difference via collaboration >>
Steady Supplier: Combine your contextual knowledge with the Public Value Innovators to create new value
Multirational Multinational: Engage with Citizen Changemakers to gain local insights and ideas
Investors: Connect Wavemakers to amplify impact
Public Value Innovator: Leverage the reach of the Multinationals to reach more communities
Citizen Changemaker: provide feedback to all in order to get to root issues
This is going to be a central theme in business going forward: what is our purpose?
Here’s William Cohen talking about Peter Drucker’s perspective:
“…until Drucker came along most everyone believed the basic “fact” that the purpose of a business was to make money. That is, to make a profit. This belief leads to a corollary, another myth, believed by all—that is, that the goal of any business is profit maximization. Another words, whatever your business, your goal should be to make as much profit as possible. If you accept making a profit as a business’s purpose, the second part just follows naturally. This might even seem worthy to many. To quote Michael Douglas’s famous (or infamous) statement in his role as Gordon Gekko in the 1987 movieWall Street: “Greed is good.” Even today many “know” greed, or profit maximization to be the correct prescription for business success, even if it is amoral or shouldn’t be “good” from a moral perspective. Not so fast, Gordon. As Drucker so often said, whatever everyone knows is usually wrong, Hollywood films not excepted. Drucker told us first that profit is not the purpose of business and that the concept of profit maximization is not only meaningless, but dangerous.”
Now Ratan Tata and gang (myself included) have a similar message:
The problem with industrial capitalism today is not the profit motive; the problem is how the profit motive is usually framed. There is a persistent myth in the contemporary business world that the ultimate purpose of a business is to maximize profit for the company’s investors. However, the maximization of profit is not a purpose; instead, it is an outcome. We argue that the best way to maximize profits over the long term is to not make them the primary goal.
So what is to be done?
What is your company doing to create purpose beyond profits? The future of our planet depends on your answer.
The legendary reggae band releases the 2012 version of the Barack Obama Song >>
The 2008 video version is here >>
I know what some of you are thinking - "Well, did America have a soul to begin with?" I happen to think it did. For me the soul of America is "We, the people..."
Furthermore, I'm quite sure that people, as defined by our founders, did not mean corporations. (See what Charles Handy has to say >>)
But to get back to the topic of inclusivity, I'd like to make a shameless plug for our new book, co-authored with University of Michigan's Professor Michael Gordon, called Inclusivity: Will America Find Its Soul Again?
BUY now >>
- How can companies take better care of their employees--and thrive?
- Why don't they see the opportunities in creating social value?
- Do Americans think we have a fair distribution of wealth?
- What are new means of putting our collective talents to work?
- How can communities take the lead in creating opportunity?
- How can public education prepare all students for the future?
- How can better health care be made available without doctors?
- How can communities do something about global warming?
- How can you make a difference?
- Why should you care?
Inclusivity: Will America Find Its Soul Again is a book of questions, hints, and suggestions about creating more opportunity for more people--starting with the USA, but looking at and learning from the rest of the world.
The very idea of the "United" States is based on the principles of inclusivity--all men and women are created equal under the law. But we seem to have lost our conviction that inclusivity is possible or even to be desired. The current divisive political climate, along with economic uncertainty, has fostered an atmosphere of fear and narrow-mindedness across the country.
What can we do in the face of this reality? The choice is not easy, but it is clear. Either we will decide to be more inclusive, or we will turn against each other - finding reasons to divide ourselves, not just from each other as citizens, but also from a shared future.
The USA, unless we decide otherwise, will become simply the SA.
This book is dedicated to an inclusive future for all our children, including my daughters M and K, and the idea that the United States is still the last best hope for democracy and inclusivity. We won't have one without the other.
The book includes the following sections:
- What Is INCLUSIVITY?
- Inclusive World
- Inclusive Entrepreneur
- Inclusive Economy
- Inclusive Cities
- Inclusive Education
- Inclusive Health
- Inclusive Leadership
- Inclusive Future
P.S. - We don't want this, do we?
Michael Gordon's book, Design Your Life, Change the World: Your Path as a Social Entrepreneur [A GUIDE for CHANGEMAKERS] is for changemakers - the people and organizations that want to make a difference in the world.
The book tries to answer two questions, says Professor Gordon:
1) How can organizations best address important societal problems such as poverty, inadequate health care, sub-par education, and an unhealthy planet?
2) What's the best advice for students who want to address these issues and still live lives of relative comfort?
The reason I'm helping the professor is because now, more than ever, we need the brightest students to tackle the world's biggest problems. And the oil-coal-nuclear lobby isn't making things any easier...
Are you a changemaker? Go find out >>
P.S. - you can download the PDF version here >>
Sometimes not knowing what you’re doing can help you do it.
Here I make a fool of myself at the Guardian’s Activate2011 conference in London:
The final Harvard Business Review post in the series, and hopefully the start of some real change at the bottom of the pyramid.
Our goal is to go social for social business. Can social co-creation help the poor?
Thanks also to Scott Berinato at HBR and of course - VG, my partner in crime.
For the past two years I have been conducting some extensive testing with a number of my clients in various fields - software, consulting services, academics, non-profits, entertainment, and self improvement - and here's what I came up with at the end of the study. I'm interested in one metric - conversion to sales.
Conversion to Sales
Website: 29.5% of sales
Facebook: 4% of sales
Twitter: 1.5% of sales
Print: 2% of sales
Book: 9% of sales
E-book: 7% of sales
Email newsletter and blog combined: 42% of sales
The old rules of online marketing beat social media by a mile, period.
See you later, FB and Twitter...
I was recently going through this report by Altimeter’s Jeremiah Owyang when a “Deja-Vu all-over-again” wave came over me: this is exactly what happened with corporate community managers - back in the heady days of “community” (see JH3’s Net Gain).
Except that there was a third career path: striking off on your own.
Seth Godin posts a very insightful blog entry on the HBR site. He's talking about the challenges of marketing at the bottom of the pyramid:
When someone in poverty buys a device that improves productivity, the
device pays for itself (if it didn't, they wouldn't buy it.) So a drip
irrigation system, for example, may pay off by creating two or three
harvests a year instead of one.
Read all about it >>
The Solar Electric Light Fund's Bob Freling has posted an entry in Harvard Business Review about his Solar Integrated Development (SID) Maturity Model and how it fits into our concept of the $300 House.
Here's Bob waxing eloquent:
Together with potable water, nutritious food, accessible health care, educational opportunity, and economic empowerment, the $300 House completes this virtuous ecosystem in which individual households and their communities can march hand in hand towards a bright and sustainable future.
Read the whole post The $300 House: The Energy Challenge >>
The Gap screws up with their logo redesign. A giant failure of imagination in the boardroom.
But Umair Haque asks the right questions:
- Do designers have a seat in the boardroom -- or just in the basement? How often does your CEO ever talk to a designer?
- Are designers empowered to overrule beancounters -- or vice versa?
- Is the input of designers considered to be peripheral to "real" business decisions -- or does it play a vital role in shaping them? Is design treated as a function or a competence?
- Are designers seen just as mechanics of mere stuff -- or as vital contributors to the art of igniting new industries, markets, and catgeories, sparking more enduring demand, building trust, providing empathy, and seeding tomorrow's big ideas?
- How much weight does senior management give to right-brained ideas, like delight, amazement, intuition, and joy? Just a little, a lot -- or, as for most companies, almost none?
We all need to wake up. The Chamber of Commerce approach to design isn't going to work anymore.
Cracking the challenge of slums is the world's biggest problem of the next quarter-century, because the ecology of slums and the ecology of cities are linked. We cannot have a healthy global economy without healthy cities, and we cannot have healthy cities without tackling slums.
Join us >>
We're building a "creationspace" (JSB's word) for the $300 House-for-the-Poor at 300house.com >>
Please sign up, and tell your friends!
Ever since the Haiti earthquake, I’ve been thinking about why we don’t have a quick-build house made of sustainable materials at a price point that the poor can afford (with micro-credit if needed).
The $300 House-for-the-Poor is an extension of the concept of “reverse innovation” (inspired by my client and friend VG) in which innovations developed in poor countries are then brought back for use in developed countries and other parts of the world. Housing impacts health, energy, education, and security.
What if we could build sustainably designed houses for the world’s poor at an affordable cost? What if these same designs could provide relief to refugees and victims of natural disasters? The we I’m referring to is a collaborative of companies, governments, and NGOs.
This type of a structure will be engineered in the same way the TATA Nano was engineered - without the traditional assumptions.
Once built, the $300 house should be used across the globe - from Haiti, to Africa, India, and yes, even in this country, to help the homeless.
So what are we waiting for? It’s time to get busy designing the $300 House!
The political intentions of our GOP friends would leave the US with a hollowed-out economy.
Here is an example of how Obama’s unpopular bail-out for the auto-industry led to the creation of a new and critical cleantech industry - electric batteries - in this country. What say you, FOX News?
In the past year, the lines have crossed in North Carolina. Electricity from new solar installations is now cheaper than electricity from proposed new nuclear plants.
Take away government nuclear subsidies, and the case is closed!
Read the report >>
The book that tells the story is Born to Run: A Hidden Tribe, Superathletes, and the Greatest Race the World Has Never Seen. It's truly inspirational, as is the story told by Will Harlan - he's in the video - about his encounter with the Raramuri, the Running People.
Now, where's my Iskiate?
Just a few days ago I praised Forrester’s decision to create individual blogs for all their analysts. So they finally get it, I thought. Boy, was I wrong!
Yesterday I noticed how their migration to the new blogging platform was executed:
Yes, that’s the dreaded “The requested page could not be found” message.
Apparently, for Forrester, moving to a new platform means all old URLs die.
This is just so wrong. Linkrot is a common mistake that companies and institutions make all too often. For this to happen at an institution like Forrester shows me they don’t understand web basics. Don’t get me wrong, a lot of big companies have made this mistake, but for Forrester it’s inexcusable!
Maybe Forrester should have a chat with Jakob Nielsen. Check this:
Any URL that has ever been exposed to the Internet should live forever: never let any URL die since doing so means that other sites that link to you will experience linkrot. If these sites are conscientious, they will eventually update the link, but not all sites do so. Thus, many potential new users will be met by an error message the first time they visit your site instead of getting the valuable content they were expecting. Remember, people follow links because they want something on your site: the best possible introduction and more valuable than any advertising for attracting new customers.and
At other times, it becomes necessary to re-architect a site and impose a new structure. Even then, the rule continues to be: you are not allowed to break any old links. The solution is to set up a set of redirects: a scheme whereby the server tells the browser that the requested page is to be found at a new URL. All decent browsers will automatically take the user to the new URL, and really good browsers will even update their bookmark database to use the new URL in the future if the user had bookmarked the old URL.
I remember when the same stupid mistake was made by Harvard Business Review back when they switched domains from hbswk.hbs.edu to harvardbusiness.org. Overnight, they destroyed their online ecosystem, as Forrester has just done.
What’s the big deal, you ask? In today’s connected world, this is brand destruction plain and simple. Not the way to build an attention platform.
In 2000, back when I was working at a large software company, I was responsible for building their online communities. And part of the challenge was trying to explain to executives that “marketing is a conversation” and that conversations occur between people - opinionated, passionate people - not PR departments.
I’d make everyone read the cluetrain manifesto.
People are brands. And like brands, they can be fake or real. The real dilemma is this - is there a line, a demarcation between the voice of the company and the voice of the individual?
My point has always been this: when companies allow their employees to blog, they are strengthening their brand by making connections, building relationships, improving the quality of the conversation with the market, etc. etc.
And yes, there are times when people go off the deep end and act unprofessional. So you’ve got to have an employee blogging policy; and these days that means you’ve got to have a social media policy which covers Twitter, Facebook, and god-forbid, MySpace, along with the rest of the social stuff.
But all of this boils down to common sense; see
Sun’s, Oracle’s blogging policy, for example. The older version spelled it out like this:
1. Do not disclose or speculate on non-public financial or operational information. The legal consequences could be swift and severe for you and Sun.
2. Do not disclose non-public technical information (for example, code) without approval. Sun could instantly lose its right to export its products and technology to most of the world or to protect its intellectual property.
3. Do not disclose personal information about other individuals.
4. Do not disclose confidential information, Sun’s or anyone else’s.
5. Do not discuss work-related legal proceedings or controversies, including communications with Sun attorneys.
6. Always refer to Sun’s trademarked names properly. For example, never use a trademark as a noun, since this could result in a loss of our trademark rights.
7. Do not post others’ material, for example photographs, articles, or music, without ensuring they’ve granted appropriate permission to do this.
8. Follow Sun’s Standards of Business Conduct and uphold Sun’s reputation for integrity. In particular, ensure that your comments about companies and products are truthful, accurate, and fair and can be substantiated, and avoid disparaging comments about individuals.
When it comes to thought-leadership or a CEO blog, the voice of the individual is even more important.
Forrester gets this, finally. In a recent blog post, Cliff Condon, Forrester’s VP in charge of their social media efforts, explains the company’s official position on the topic of analyst blogging:
1. Forrester wants more analysts using social tools because it makes for better research. The research we write for clients has always depended on a rich two-way conversation with experts and practitioners in the marketplace. The rise of social tools like blogs and Twitter allows analysts to extend that conversation with more people in the marketplace. The more smart people our analysts interact with, the better our research will be. That’s the basis of the Groundswell. Therefore, Forrester is investing in building social tools and associated best-practice training for our analysts so that more of them get involved.
2. We are building a new blog platform to provide each analyst with a personal blog. Our platform today supports team blogs based on the professional roles we serve - such as the Forrester Consumer Product Strategy blog. The new platform we are building will allow our analysts to also maintain an individual blog on their coverage area. We are doing this so that our analysts can have direct conversations with key players in the marketplace and so clients have the flexibility to engage at an individual analyst level or a team level.
3. We want to make it easy for our clients. Our clients rely on us to help make them successful. They have told us that they are starved for time - they subscribe to our services in part because they conveniently get the insight they need from us and others who join in the Forrester conversation. Therefore, we can best serve client needs by placing all of our blog content in one place (at blogs.forrester.com), and put it in context alongside the rest of our data and analysis.
I hope that adds some clarity to what we are working on - I’ll share more as we move closer to roll-out later in the quarter. However, I felt it necessary to add to the conversation now since there has been discussion about analysts’ brands and the Forrester brand. The fact is we want to do everything possible to give analysts a high degree of visibility. Giving every analyst a personal blog is a step toward that goal. Our analysts’ reputation and our own are tied together. Our new blog platform is being designed to boost them both.
Definitely a step in the right direction for Forrester.
This is what we are fed daily... small wonder we don't watch the news!
First Tylenol, now Toyota. Same old story. Silence is not damage control.
Now the NHTSA is looking at the pedal maker. There must be a way to check the electronics - some way to look at the log files, perhaps?
Note that both companies are blaming their suppliers.
Is this the result of in-house PR?
Looks like God is playing dice with the Universe.
Researchers from the Helmholtz-Zentrum Berlin für Materialien und Energie (HZB), in cooperation with colleagues from Oxford and Bristol Universities, as well as the Rutherford Appleton Laboratory, UK, have for the first time observed a nanoscale symmetry hidden in solid state matter. They have measured the signatures of a symmetry showing the same attributes as the golden ratio famous from art and architecture.
And the winning number is:
The proper response to this should go something like "OMG!"
According to MIT and the Internet, this is who I am (click to enlarge):
Find out who you are here >>
Step one: Know who you are...
borrowed from Alina Wheeler's Designing Brand Identity: An Essential Guide for the Whole Branding Team
Townsend makes a good point:
So why can't a company like GE follow down this path with "open reverse innovation" - inviting small companies in India and China to submit their products, services and ideas to be evaluated by GE for global distribution. Of course, the open model would require an environment of trust - but what better way to create goodwill in new markets than to be seen as a development partner in the China, India, and resource-starved Africa? A.G. Lafley sits on GE's board; surely he could help them get started.Townsend also proposes the formation of innovation collaboratives funded by companies like GE to create a pipeline of new products for GE.
Not a bad idea, if you consider that a recent McKinsey survey found that 20% of companies have opened up their innovation processes to employees and customers and they report a 20% rise in the number of innovations, on average.
Edo Segal has an interesting guest blog at TechCrunch describing the “Future of Media.”
He points to Apple’s App Store as an example of what the rest need to learn:
The only way to block the incredible ease of pirating any content a media company can generate is to couple said experiences with extensions that live in the cloud and enhance that experience for consumers. Not just for some fancy DRM but for real value creation. They must begin to create a product that is not simply a static digital file that can be easily copied and distributed, but rather view media as a dynamic “application” with extensions via the web. This howl is the future evolution of the media industry. It has arrived from a company that is delivering the goods. Apple has made it painless for consumers to spend money and get the media they want where they want it, proving that consumers are happy to pay for media if delivered in ways that make it easy and blissful to consume.
He also states, rather matter of factly, that “he premise of extending the media experience to the cloud is a core necessity for the survival and growth of the media industry.” I agree. The media industry needs to “sell access and experiences, not media files.”
So how does an artist or a media company build these experiences?
I’ve been doing some thinking along these lines for a band I’ve followed for many years - Steel Pulse. What’s interesting is that while the band has a huge, global, cross-generational following built over the past 35 years - the media companies that were responsible for promoting them have done absolutely nothing to tap into this enthusiasm. Not one thing.
The same goes for most of my business thought-leader clients as well. The publishing houses do nothing to create a conversation with the passionate fans.
Engagement is the key. How does a musician or an author engage with their audience, their fan-base? It starts with the quality of the conversation. And let me tell you, it’s far easier for an individual thought-leader or musician to do this than companies, largely because companies are too formal, too corporate, and don’t usually communicate with a human voice.
What’s needed is a way to go direct.
Let the celebrity or thought-leader engage with their fans directly to build an attention platform, unique to the celebrity. The company that empowers this attention platform, and builds new services for the fans, will build the next media empire with the “lock-in” that comes with authentic engagement.
Of course, none of this works without authenticity. The celebrity must remain true to themselves. In Steel Pulse’s case, this means they need to stick to their core brand dimensions. So each successive album, each song, each product, each statement, builds on the Steel Pulse Experience.
They could even track the core messages of a successful album - in this case “True Democracy” - and extend their meaning in new songs and releases:
Phase One: PUSHSo what does the celebrity do today? In Britney Spears’ case, she’s tweeting her launch of a new song. To me that’s not much of anything. Yes, she’s reaching out through social media -Twitter, Facebook, and MySpace - but these are all still one way marketing pitches - push media.
The artist pushes their songs, their products, their newsletter, their tweets, etc. etc. No discussion, no give and take. Products are created and sold. One market, one size fits all. Core fans are treated the same as newbies. Nothing special except the show and the products - media files: audio or video. See what I’m getting at?
All of this is still just pushing product.
Phase Two: PULL
What happens if the fans come to you - with their suggestions, requests, and insights? What happens when they want to participate? Is it possible to co-create products and services based on insights from yoru fans? Of course it is.
Start the conversation. Go 80/20: focus on the 20% of fans that will get you 80% of your profits. Start talking (and listening) to your biggest supporters.
Engage: physically meet the 20%. Create special events for them. In soccer for example, fans pay $30-50 dollars just to watch Cristiano Ronaldo practice. What’s wrong with doing a 30 minute sound check for your fans? Invite them to the sound check - and have exclusive “sound check products” available only for these fans - available at the event, and online as well. You could even have a question and answer session that they get to download later that evening.
Then of course you sell the live version of the show - for a “limited time only.” Vary the show slightly with the song set, so every night is a different.
Let your fans download the raw tracks and make their own mixes. Have a contest for the best mixes. Sell the mixes to other fans. Use them in your album.
And when you create a new album, it’s version-time. Reggae music has a long history of selling versions. What’s sad is they’ve stopped this traditional practice when really they need to be exploiting it. (See Hal Varian on versioning.) So every song should have the following versions: album version, extended version, dub version, accapella version, acoustic version, dance version, Nyabinghi version, etc. etc.
Talk to the fans about the songs through webcasts, band-calls. Let then know where and what’s next. Let them vote on what you should do next.
For legacy songs, make sure you sell versions-in-time. The 1983 version of Chant a Psalm a Day is quite different from the 2000 version, which again is totally different from the 2009 version. Real fans want them all.
All of this is do-able today. It’s not about technology, it’s about attitude, and the ability to communicate, to lead. For a cause-driven band like Steel Pulse, this is their opportunity to shine.
And let your fans share in creating and spreading your experience.
Now let’s take a quick look at the business world.
VG, as he’s called affectionately, is an author and well known strategist. His latest article in the Harvard Business Review, co-authored with Jeffery Immelt and Chris Trimble, has been a huge success - introducing the world to a concept called reverse innovation.
What we’re doing now is building his engagement strategy - through his innovation newsletter. The idea is to start a conversation about innovation with the people most interested in this topic.
A small step to start, but I know from experience that a “simple” newsletter can drive over 50% of monthly sales online.
The great news is anyone can build an attention platform like this. And if you have something important to say, your platform will bring you the attention you deserve.
It may even elect you President!
As I was finishing up on this, I just saw a tweet from John Hagel on author platforms (read here). Again, if Apple can help an author or musician build that platform, then Apple will “lock-in” that artist for life. Same goes for Amazon.com. The distribution model for media is changed forever, period.
This is a digital reprint of an interview I did about ten years ago with UC Berkeley’s Hal Varian. At the time Varian was co-author of a bestseller: Information Rules: A Strategic Guide to the Network Economy; it’s still worth reading today. Today he’s the Chief Economist at Google. There are still a number of good things in this interview that the media companies could learn from… (I’m a bit embarrassed by the silliness of my questions, but hey.)
I suppose we should begin by asking you for your definition of “information” and what you call “information goods”.
When we talk about information goods, we mean anything that can be digitized. Text, pictures, moving images, sound, all the media that can be delivered over a digital connection. Some people call them digital goods.
Information goods have some interesting properties. On the supply side there’s normally a big fixed cost to create the first copy, of say a movie, and then a negligible cost to create additional copies. On the demand side, the interesting feature is that you don’t really know what information is until after you’ve consumed it. So you have to experience it to know what it is.
When you’re selling information, you’re dealing with how do you give free samples, how do you give part of it away, how do you establish a reputation so people will purchase the information you’re providing, etc. etc.
I read about a travel publishing company that put its contents on-line, and their book sales went up, because people wanted the books with them when they traveled…
Yes. Another example is the National Academy of Sciences. They found when they put all their content on line and people could actually look at what the content was, they were more likely to buy.
What are some of the techniques you find companies use to create and sell information products? How do you sell an information product to different customers at different prices? How do you find out what the different customers will pay? Can you do this on a website?
The trick is to “version” your information product: construct a product line of your information goods that will appeal to different market segments. A common way to do this is to use delay: issue a book first in hardback, then, a few months later issue a cheaper edition in paperback. The people who are really interested will get the hardback, whereas people who are only casually interested will wait.
We see financial sites on the Web that sell real-time stock quotes, but give away quotes that are 20-minutes delayed. A movie first comes out first in the theater then six months later in video.
Then there are other things, user-interface, for example. If you look at Dialog, which is a search company, they have two types of search engines- one is a professional search engine, with Boolean searches and all sorts of options, and then they have an “ordinary-person” search engine, with a stripped down interface. It’s nice because the ordinary person wants to use the simpler interface, while the paying professional uses the professional interface. So there isn’t any cross-market cannibalization.
Other dimensions on which to version your product are user convenience, image resolution, capability, features, tech support, etc.
You mention Gresham’s Law of Information in your book. What is it?
Gresham’s law said “bad money crowds out good”. We coined “Gresham’s Law of Information” which says “bad information crowds out good”. Low-quality, cheap information can displace high-quality, authoritative information: look what happened with Encarta and Britannica. However, Britannica is now fighting back and has come out with products that are much better suited to computer use. Smart consumers will look for quality information.
Your example of the struggle between Encarta and Britannica, how Britannica lost out to the upstart $49 Encarta…
Right, although they’re coming back. They’re doing some clever things now. What happens there is the incumbent in the industry has a very low marginal cost, so they should be able to beat the entrant but they can’t quite change their business model. It’s hard. Telephone companies are having this problem, the print/publishing media is having this problem, TV networks have this problem vis-a-vis cable.
(This was before Wikipedia!)
Since there’s a high cost of innovation and a low cost of imitation on the web, isn’t it harder to keep “first-mover” advantages?
You’re right, we talk about this — the competition is only a click away. But the clever company, which has that first-mover advantage, will try its best to create “lock-in” for their customer base. For example, look at what Amazon has done- one click ordering, keeping information on what you purchase so they can recommend books to you. If Amazon is recommending good books to me and I want to switch to say Barnes & Noble, I have to start all over.
Another good example of that is e-toys. You put in the birthday of your nephew, your neice, and your cousins, whatever, and they send you a reminder that your nephew’s birthday is coming up and here’s a nice stuffed rabbit that’s very popular with children in his age group.
Can you tell us a little more about your lock-in strategies?
Since the competition is just a click away on the Web, it pays companies to invest in building customer loyalty. The best way to do this is to produce a product that is so much better than the competition that they don’t want to switch! But there are other ways too, such as loyalty programs, like frequent flyer programs that reward frequent purchasers.
What about lock-in strategies for suppliers and partners?
What we were thinking about there was that if you have a group of loyal customers that are purchasing your products, and there may be other complementary products that they would also purchase, but you may not be the best firm to supply that. So then what you do is sell access to your customers.
The portal companies are doing this. For example, I go to Yahoo, and Yahoo charges other companies to have access to me. Let’s say e-toys wants to move into baby or children’s clothes. They might not do that themselves, but they could partner with other companies that do that.
So once you have a loyal customer base, then you can sell access to that customer base for other products that complement what you are selling.
What about the dangers in this, with privacy issues?
It’s certainly convenient for me to be reminded when my anniversary is or my nephew’s birthday or something. That’s a service, a good thing. Of course they can use the information about me in ways that could be detrimental- they could sell it to mailing lists and I get deluged by email. So the trick is to make sure that consumers give their consent; you want to know exactly how the information is going to be used by the company in question. There are companies like e-trust which meet a very important need.
I was looking at ANX, the auto-industry supplier network, and I found out that Chrysler, despite its enthusiasm during the pilot, isn’t part of the production version of ANX. And if you go to the Chrysler supplier website, you find they’ve created tons of business applications. So when does it make sense to join a standards organization and when does it make sense to go it alone?
There’s this fundamental equation that says that the value to you is your share of the market value times the size of the total market. So some of your actions, like standardization, can increase the total size of the market, but it can decrease your market share because it creates more competition. So you have to trade-off these two effects.
So you’re saying if the total size of the market gets bigger, and you make a bigger profit despite a lower market share, then you are on to something… How do you protect intellectual property on the web? Will the current move of providing patent protection to internet business models help or hurt the future of e-commerce?
The point is to maximize the value of your intellectual property, not maximize its protection. You can charge a lot lower price for content on the Web because you can reach a much larger audience.
I’m quite unenthusiastic about patent protection for Internet business models and feel that it will retard progress in this area.
(Like I said, my questions are quite stupid, but the versioning of information goods - that’s still something the media companies can learn about! This cartoon was also done about the same time…)
Finally, to get you up to speed, here’s a decent interview with Prof. Varian with the global-warming deniers at Superfreakonomics >>
His latest book, The Idea of Justice, is a serious re-examination of the foundations of justice from a global perspective. He speaks of the two definitions of justice in Sanskrit - niti (institutional justice) and nyaya (realized justice) - and how we are too often misled by the utopian vision of ideal justice, only to allow societal injustice all around us in our everyday lives. For Sen, justice must alleviate suffering.
Here's his lecture to the folks at The Carnegie Council (video here):
AMARTYA SEN: It is always an absolute delight for me to be back here at the Carnegie Council. I am very grateful to Joanne for being so kind and so welcoming. It's very nice to meet some old friends, familiar faces, and some new ones--Joel [Rosenthal] and other old friends, but a lot of new ones too. I am very grateful.
I am not going to go into the distinctions in the Indian epistemic and ethical literature so much, and will concentrate more on the European Enlightenment, but I will be very happy to go into those issues, which are discussed in the book, if it were to come up.
Ludwig Wittgenstein, the great philosopher, wrote in the preface to his first major book in philosophy, Tractatus Logico Philosophicus, published in 1921: "What can be said at all can be said clearly, and whereof one cannot speak thereof one must be silent."
Wittgenstein would reexamine this austere view on speech in his later work. But it is really wonderful that, even as he was writing the Tractatus, the great philosopher was marvelously inconsistent and did not always follow his own exacting commandments.
In a remarkably enigmatic letter to Paul Engelmann, written in 1917, Wittgenstein said: "I work quite diligently and wish that I were better and smarter, and those both are one and the same." Really, one and the same thing, being a better person and a smarter guy? I couldn't help asking, "Who is Wittgenstein kidding?"
I am, of course, aware that modern American usage has drowned the distinction between being good as a moral quality, and being well as a comment on a person's health--no aches and pains, fine blood pressure, and such--and I have long ceased worrying about the apparent immodesty of those of my friends who, when asked about how they are, reply with manifest self-praise, "I am very good."
But Wittgenstein was not American, and 1917 was well before the conquest of the world by vibrant American usage. So what was this pronouncement about?
Underlying Wittgenstein's claim may be the recognition in some form that many acts of nastiness are committed by people who are deluded in one way or another on the subject. It has been argued that some children carry out odd acts of brutality to others, other children or animals, precisely because of their inability to appreciate and understand adequately the nature and intensity of the pains of others. There is, perhaps, a strong connection between being antisocial and the inability to think clearly.
We cannot, of course, be really sure about what Wittgenstein meant. But if that is what Wittgenstein meant, he was in the powerful tradition of the European Enlightenment that saw clearheaded reasoning as the major ally of making societies decent and acceptable.
The leaders of thought in the Enlightenment did not, however, speak in one voice. In fact, there is a substantial dichotomy, which has not received sufficient attention, between two different lines of reasoning about justice, that can be seen among two groups of leading philosophers associated with the radical thought of the Enlightenment period.
One approach concentrated on identifying perfectly just social arrangements and took the characterization of "just" institutions to be the principal, and often the only, identified task of the theory of justice. This way of seeing justice is woven in different ways around the idea of a hypothetical "social contract," a hypothetical contract that the populations of a sovereign state are supposed to be party to.
Major contributions were made in this line of thinking, first by Thomas Hobbes in the 17th century, and later by John Locke, Jean-Jacques Rousseau, and Immanuel Kant, among others.
The contractarian approach has become the dominant influence in contemporary political philosophy, led by the most prominent political philosopher of our time, John Rawls, whose classic book, A Theory of Justice, published in 1971, presented a definitive statement on the social contract approach to justice.
The principal theories of justice in contemporary political philosophy--not just Rawls, also other friends of mine, Ronald Dworkin, Robert Nozick, David Gauthier, and many others I can think of--draw in one way or another on the social contract approach and concentrate on the search for ideal social institutions.
In contrast, a number of other Enlightenment theorists--Adam Smith, Marquis de Condorcet, Mary Wollstonecraft, Karl Marx, John Stuart Mill, for example, taking the Enlightenment to go into the 19th century too--took a variety of approaches that shared a common interest in making comparisons between different ways in which people's lives may go, jointly influenced by the working of institutions and people's actual behavior and their social interaction and other factors that significantly impact on what actually happens.
The analytical--and rather mathematical--discipline of "social choice theory," which has been actually my primary field of technical economic engagement, a theory which can be traced to the works of Condorcet in the 18th century, around the 1780s, but which has been developed in their present form under the leadership of Kenneth Arrow in the last century, belongs to this second line of investigation, in which I must admit I have been very involved. That approach, suitably adapted, can make a substantial contribution, I argue in this book, The Idea of Justice, to addressing questions about the enhancement of justice and the removal of injustice in the world today.
In this alternative approach we don't begin by asking what would a perfectly just society look like but asking, what remedial injustices could be seen on the removal of which there could be a reasoned agreement.
One of the limitations of the social-contract approach to justice--and there are many such limitations, but one of them--is the unjustified conviction that there could only be one precise combination of principles which forms the contract and, despite the implausibility of this assumption, this is needed for the social-contract approach to justice because it takes on the job of identifying uniquely a combination of ideal social institutions based on those principles.
In contrast with this rigid insistence in most contemporary theories of justice, the alternative of the social choice approach allows the possibility of a plurality of competing principles, each of which is given a status, after subjecting them all to critical examination. It is, of course, important--and I emphasize that point--to scrutinize critically all principles that are presented for our attention. Some principles may indeed get rejected after a searching probe, but more than one competing principle may actually survive on the basis of their reasoned justification.
For example, in my book I discuss a case in which three children compete for a flute--one demanding it on the ground that she alone can play the flute (the others had no clue how to play properly), another on the ground that she has no other toys to play with (while others are well supplied with amenities), and the third on the basis of the fact, which others don't dispute, that she had actually made the flute with her own labor. None of the claims are immediately dismissible, and a just arbritration has to weigh the claims of all these competing grounds. No mechanical priority of one ground, one principle, over the others may be convincing, and sometimes even at the end of the debate an element of arbitrariness may be left in the decision process.
Thanks to this plurality of surviving principles, we may not be able to resolve on grounds of justice alone all the questions about public policy that may be asked, for example, whether a 40 percent top tax rate is more just--or less just--than a 41 percent top rate. And yet, we have every reason to try to see whether we can get reasoned agreement on removing what can be identified as clear injustice in the world, such as slavery or the subjugation of women; or extreme exploitation of vulnerable labor, which so engaged Adam Smith, Condorcet, Mary Wollstonecraft, and later John Stuart Mill and Karl Marx; or gross medical neglect of the bulk of the population today through the absence of medical facilities in parts of Africa or Asia, or the lack of universal health coverage in most countries in the world, including, alas, the United States of America; or the prevalence of torture, which continues to be used with remarkable frequency in the contemporary world, sometimes practiced by the pillars of the global establishment; or the quiet tolerance of chronic hunger, for example in India, despite the successful abolition of famine.
I have so far been discussing the subject matter of public deliberation and justice. There is also an important question about participation. Whose voices should count in interacting public discourse on the demands of justice?
In the social contract tradition, the views that must receive attention, and only those, have to come from those who can be seen as parties to the social contract. Given the country-by-country and nation-by-nation structure of social contract, powerfully identified by Thomas Hobbes and pursued in mainstream contemporary political philosophy, the contractarian tradition tends to confine the discussion to members of a country or a polity or a state, in particular the citizens of each country who are engaged in deciding on the ideal institutions and corresponding values for that particular sovereign state. The need for impartiality in the treatment of different citizens within the country is accepted and celebrated, but there is no secure place in this formulation of deliberations of justice to go beyond the citizens of a particular state. This is called "closed impartiality," as I do in my book, where impartial consideration is confined and closed to the citizens only.
We can contrast this with Adam Smith's powerful insistence in his Theory of Moral Sentiments, but also in The Wealth of Nations and his Lectures on Jurisprudence, on the necessity to pay attention to the views of people from far as well as near. This can be called "open impartiality."
I should perhaps mention here that Penguin Books is publishing a 250th-year edition of The Theory of Moral Sentiments, in which I wrote a long introduction. This should come out, I think, in November. We will discuss that. The book was published in 1759. I argue why it remains immensely contemporary.
Smith saw that impartial consideration, which must be essential for justice, must demand going beyond the boundaries of each state.
There are two principal grounds for requiring that the encounter of public reasoning about justice should go beyond boundaries of a state or a region: (1) the relevance of other people's interests which may be affected by our actions, by what we do; and (2) the pertinence of other people's perspectives, their understanding, to broaden our own investigation of relevant principles, for the sake of avoiding our own parochialism based on the values and presumptions in the local community.
The first ground, related to the interdependence of interest, motivated Adam Smith to chastise the injustice of early British rule in India in the 18th century, describing the East India Company as being altogether unfit to govern its territory. In today's interdependent world, it is easy to appreciate the need to consider the interdependence of interests, whether we consider the challenges posed by terrorism or by global warming or by the world economic crisis that we are currently experiencing. Confining our attention to national interest only cannot be the basis of understanding the demands of justice. Also, AIDS and other epidemics move from country to country and from continent to continent. And, on the other side, the medicines developed and produced in some parts of the world are extremely important for the lives and freedom of people far away if they can afford to buy these medicines.
In addition to the global features of interdependent interest, there is a second ground I must emphasize, that of avoidance of the trap of parochialism to which Smith referred. This is accepting the necessity of taking an open approach to examining the demands of impartiality.
If the discussion of the demand for justice is confined to a particular locality--a country, or even a larger region than that--there is a possible danger of ignoring or neglecting many challenging counterexamples that might not have come up in local political debates or been accommodated in the discourses confined to the local culture but which are eminently worth considering in an impartial perspective.
Smith was particularly concerned about avoiding the grip of parochialism in jurisprudence and in moral and political reasoning. In the chapter properly entitled, "On the Influence of Custom and Fashion upon the Sentiment of Moral Approbation and Disapprobation" in The Theory of Moral Sentiments, Smith gives various examples of how discussions confined within a given society can be fatally limited by parochial understanding.
I quote from Adam Smith, and it's a longish quote:
....the murder of new-born infants, was a practice allowed of in almost all the states of Greece, even among the polite and civilized Athenians... . Uninterrupted custom had by this time so thoroughly authorized the practice, that not only the loose maxims of the world tolerated this barbarous prerogative, but even the doctrine of philosophers, which ought to have been more just and accurate, was led away by the established custom, and upon this, as upon many other occasions, instead of censuring, supported the horrible abuse, by far-fetched considerations of public utility. Aristotle talks of it as of what the magistrate ought upon many occasions to encourage.... The humane Plato is of the same opinion, and, with all that love of mankind which seems to animate all his writings, no where marks this practice with disapprobation.
While Smith's example of infanticide remains sadly contemporary even today, though only in a few countries, in a few societies, some of his other concerns have relevance to many other contemporary societies as well. For example, it applies to Smith's general insistence: "The eyes of the rest of mankind must be invoked to understand whether a punishment appears equitable."
Scrutiny from a "distance" may be useful for practices as different as the stoning of adulterous women in Taliban Afghanistan; selective abortion of female fetuses in China, Korea, and parts of India; and plentiful use of capital punishment in China, or for that matter the United States, which by the way is the fourth country in terms of frequency of capital punishment, following China, Iran, and Saudi Arabia.
The relevance of distant perspectives has a clear bearing on some current debates in the United States; for example, that in the U.S. Supreme Court not long ago on the appropriateness of death sentence for crimes committed by a person in his juvenile years, whether such a person could be executed for a crime committed when you were a minor, but the moment you become major, whether you could be executed then.
The demands of justice being seen to be done, even in a country like the United States, cannot entirely neglect the understanding that may be generated by asking questions about how the problem is assessed in other countries in the world, all the way from Europe and Brazil to India and Japan.
The majority judgment of the U.S. Supreme Court, as it happened at that time, ruled by a 5-4 majority against the use of death sentence for a crime that was committed in juvenile years, even though the execution occurs after the person reaches adulthood--though the judgment would almost certainly have been different today, as we know from the newly elected, when I was writing the book, Chief Justice Roberts' opinion on the subject, who made it absolutely clear that American judges should not be influenced by judgments and legal debates occurring elsewhere.
In denying the appropriateness of capital punishment in this case, the majority of the Supreme Court did not simply--I quote from Justice Scalia, who wrote a then-minority report--they did not simply "defer to like-minded foreigners."
Scrutiny from "a distance" can be very useful for reasons that Adam Smith analyzed in order to arrive at grounded but non-parochial justice, taking note of questions and arguments that consideration of non-local perspectives can help to focus on.
It is important, however, to recognize that to listen to distant voices, which is part of Adam Smith's exercise of invoking the "impartial spectator" in The Theory of Moral Sentiments, does not require us to be respectful of every argument that may come from abroad. That would be absurd. We may reject a great many of the proposed arguments, sometimes even all of them, and yet there would remain particular cases of reasoning that could make us reconsider our own understandings and views linked with the experiences and conventions entrenched in a given country or culture.
The interdependence of reasoning is part of the ground on which Martin Luther King Jr. said in "The Letter from Birmingham Jail" in April 1963: "Injustice anywhere is a threat to justice everywhere."
Acts of public agitation, news commentary, open discussion, are among the ways in which global democracy can be pursued, even without waiting for the global state. The challenge today is the strengthening of this already-functioning participatory process on which the pursuit of global justice will, I argue, to a great extent depend. It is not a negligible cause, nor, I would argue, is it beyond our reach.
Questions and Answers
QUESTION: I have two questions, if you will allow.
One is in international law there is the concept of jus ad bellum and just war. That, of course, is a very, very old concept. How would you talk about this in the 21st century? Some people will argue that with the current methods of warfare there is no more just war possible. And of course, the opposite point has also been made in several contexts.
My second question is: In the case of criminal justice, how would you see in a way the balance, because of course one dimension is the very strict application of rules that are laid down in legislation and in laws, and another dimension is the public perception that justice is done. I was born in Switzerland, in Zurich, where Roman Polanski was arrested last weekend. I think that the debate that is going on there is along those lines. What is justice in his particular case?
AMARTYA SEN: Difficult questions.
Let me give a general concept first. I think in each of these cases--for example, whether there is such a thing of just war--the approach I am trying to suggest is not whether in fact you accept certain things as just war and certain other things as not, but to say that if it is to be determined, it has to be determined on the basis of a reasoning as to whether it has reason enough to be counted to be a war that is just. Whether there will be any such war, given the nature of technology today, remains an open question. My guess would be probably not.
On the other hand, I am not closing this. It is not a public pronouncement book; it is a method book, to say there is something to discuss.
But it is not just today. One of the examples which I do discuss, a clearly just war, a long time ago, in the Indian epic Mahabharata, where a kingdom had been wrongly usurped by cousins who were quite naughty, and the just, those who can rightly rule the kingdom, the Pandavas, were trying to regain it. Arjun is the great warrior, the third brother, who would actually lead the forces, ready to fight and defeat the army on the other side. It was clearly a just war. The document called Bhagavad Gita is about that. Arjun says, "Is this right for me? Is this really a just war? Because, after all, it's true that they shouldn't have the kingdom, it's true we will win the war, it's true we will have the better rule; but how many people would actually die in this? Is it worth doing it? [inaudible]--this is a document from about 3rd century B.C.--and is this really just? Now, Krishna argues against, saying that you ought to do your duty. And as far as the religious document goes, it ends with Arjun saying that he accepts Krishna's argument, he would fight. He fights, wins, and the war is over.
On the other hand, if you look at the first part of the Gita--that is not part of the Mahabharata, it's a little bit of a very big epic, seven times the size of the Iliad and Odyssey put together--you find that there are strong arguments given by Arjun which are not fully rebutted by Krishna, as to why there is no such thing as a just war which involves a lot of killing, and your point is an extension of that.
And Mahabharata itself remains ambiguous, even the last scene. The right side has won, but there is a sense of pathos everywhere and as the brothers walk through the Indo-European valley they notice funeral pyres burning everywhere, women weeping for the men who have died in the battle, the bloody war. It doesn't end in a sense of triumph. It ends in a sense of profound confusion. So that it's not clear, even though from the religious point of view people have tended to say, including Mahatma Gandhi, that Krishna was completely the victim.
But it isn't clear that, in terms of argument, that argument is actually closed. I'm not saying that Arjun shouldn't have fought the war, but I am saying that the argument that you are presenting, of technology and brutality and death, is an extension. It remained valid then and it remains extremely valid now.
Now, whether at the end of it you come to the conclusion there is no such thing as just war, whether what is being waged in Afghanistan could be called a just war, given the likely consequence of what will happen if suddenly the war is ended and the Taliban comes back in power in Afghanistan, is a complex question.
But these arguments matter. That is what I am trying to argue. And it has to be global reasoning--not the coalition of the willing, but a general public discussion. As you know, many countries in Europe were opposed, many other countries in Asia and Africa were opposed, and there was something to discuss, which was not discussed in this form. This was a declaratory war. That is what I am arguing against.
The second thing, on the criminal justice system, I think there are two things: One is whether the rules are just; and the other is what the perception of justice is in the population.
Now, Switzerland, of course, the perception of justice is very strong. I remember being very frustrated when I was trying to go to a restaurant rather late and the only place I could park my rented car had "no parking" in it. As I often do in England and in America, I thought I would leave it and pay the fine. But then as I was getting out somebody came and told me, "No, no, this is no parking." So I said, "I am parking." He said, "No, you don't understand, it's no parking." I said, "I'll pay the fine." He said, "No, no, but it's no parking, no parking."
So I think the perception of rule is very strong in Switzerland, which is a very positive thing. In this particular case, it had some negative things. I was hopelessly late to my dinner. I would much have preferred to have paid my $125, or whatever it is I would have been charged. But it didn't happen.
So I think we have to look at the perception of rules as well as the acceptability of the rules, and the same method, the argumentative method, in dealing with this issue.
QUESTION: Professor Sen, that was tremendously enlightening. I thought the distinction that you made between these two different lines of Enlightenment thinking was really illuminating. But of course, one of the appeals of the first line is that they provide you with a kind of machine for moral reasoning. So you take the categorical imperative or you take the veil of ignorance and you apply it to welfare reform and you have an answer.
So when you talked about the things that we can say are obviously unjust, from slavery to some people not having healthcare, given that you said these machines are much too blunt instruments, what is the means whereby you can come to the conclusion that these obviously morally unacceptable things are in fact obviously morally unacceptable?
AMARTYA SEN: A very good question.
I think what is interesting about the categorical imperative--as I discuss in my introduction to The Theory of Moral Sentiments, Adam Smith was discussing that about 20 years earlier than Kant. In fact, Kant refers to Smith's work in his book on anthropology as well as in letters. One of them is to Markus Herz, about ten years before Kant wrote The Critique. Herz wrote to him, saying, "This guy, this Englishman Smith," as he described this proud Scotsman, "whose work you admire so much, et cetera."
This is really the argument about the impartial spectator. What happens in the case of Kant, he then uses this device, but uses it with a sophistication that is breathtaking, but then arrives at a strong conclusion, like the way people have tended to do in philosophy earlier, like Aristotle--there are different kinds of life and there is a gradation; the life of contemplation is the highest, and then the others.
Whereas Smith ends in each of these cases with there is something to discuss, something to argue about in these cases: "I am quite convinced, sitting in Kirkcaldy, on the shore of the North Sea in Scotland, of this, but is this the way it would look to the Chinese, to the Indians, and to the Africans, et cetera?" Adam Smith was actually one of the persons who took a great interest in Africa, which people often forget. I have something on that in the book.
I think what he is arguing there is that you would not really expect to get a complete agreement on these things, but--and this is the point--you will get agreement on many of these issues which are extremely important to us, like abolition of slavery, like the tremendous neglect of the education of the working classes. He was very concerned about that.
People often forget that Smith was--his science was extraordinary. He took the view, which was completely naïve, of course, that there is no difference between one human being and another; everything is due to nurture, 100 percent nurture. Whether or not that is correct, what he was certainly right in is that nurture makes a big difference, which is really the point.
So he said there are huge things to be agreed on on these subjects, but despite the fact that we have many different arguments to present, we will have such arguments. Now, he was not a mathematician. What he was dealing with is what in social choice theory we call a partial ordering. You will agree on a partial ordering, not on a complete ordering.
Now, Kant and Locke and Rawls, and Dworkin today and Nozick, they all have complete ordering, and Smith does not. So that's the point.
So I think, yes indeed, the blunt device of categorical imperative, ignoring all argument, will deliver those things. But you don't need such a blunt instrument. Even with a finer instrument, you will be able to agree on some things, and those things on which you cannot agree you have to leave behind because there is not yet any agreement on that. That is roughly the position that Smith took and it is roughly the position that I believe is correct.
QUESTION: I jotted down the phrase you just offered about global reasoning and general public discourse and your assumption that that would lead to a positive outcome, sort of what the previous questioner just raised with you. Could you explain further what you mean by global reasoning? Is this some institution that you expect to have come into the world or some institutions that exist now? How is this to proceed? That's my broad question to you.
AMARTYA SEN: It's a very good question, too.
I think if you are looking for the institution to be set up first and then public discussion to take place, I don't think we will get anywhere. I think there is a kind of interdependence between them. Institutions come into being on the basis of public discussion, and then sometimes public discussions are useful even without the institution.
Let me give you an example. The Human Rights Commissions of India and South Africa, which carry a lot of the public discussion--they were, for example, at the lead of indicting the Hindu extremists in Gujarat. The Human Rights Commission played a big part. They are recognized legally in India. They are legal bodies.
In Pakistan there is a Human Rights Commission which is just an NGO. So institutionally it is not there yet. And yet, because of the fact that they can skillfully use public discourse, they could make a huge impact on public policy. And indeed, it has played a big role under the really visionary leadership of Asma Jahangir and Raman. It played that part.
One of the latest examples was that it is through them that some person in Swat Valley, when under the Taliban, this young woman was being caned for having done something that went against the Shariah, he managed very courageously to videotape it while pretending to make a telephone call. This is where modern technology came into it--not an institution, but the technology. It's only when that was put on the Pakistani television, GEO first and then all the others, and the Pakistani newspapers, that this sudden groundswell of opinion happened, which ultimately made the military move against the Taliban and against the conflict in Swat Valley.
So that happened through what I would describe as public reasoning--namely, presenting facts and argument to the public in a situation where the institution is utterly underdeveloped. There is no protection. Actually, my friend Asma Jahangir is under a death sentence from the Taliban, that anyone who kills her will be blessed.
So in this enormously courageous way people carry on dialogue. I am not looking for--you know, obviously it would be good to have a better system, and I prefer the Indian system whereby the Human Rights Commission can move even the Supreme Court. On the other hand, even if it doesn't exist, it is not a question of saying, "We are not there, give up." I mean in every situation, we try to do what we can to make a change.
And similarly in Iran, I think if you take the approach that I am doing, that the big way of thinking about how things might change in Iran would be to see how you could bring out the dissent that is already expressing itself in a bigger way, engaging that. And then there is always the fact that any intervention, even though American, has a dual effect: on one side it might frighten the government; on the other side it strengthens them by making the protestors look like American stooges.
So I think one has to look at all that picture and give public reasoning the recognition that is needed both in foreign policy as well as in our day-to-day activity.
When you talk with some of these people, when I used to be with Oxfam--I didn't do very much for them; actually they still say I am with them but I am not; I was for three years--I was really impressed by the way people in very adverse circumstances courageously were continuing.
When the American forces went into Afghanistan, we had 18 people of Oxfam operating within Afghanistan, at great risk to themselves. I remember the next morning--I am very active in the Nuclear Threat Initiative set up by Sam Nunn; it's a big group now, but he is the president of it--I remember being very impressed. Normally, I just listen to what Lugar or Sam Nunn has to say. But there was one occasion when suddenly I had more information because there were 18 of our kids in Afghanistan. I just had a morning call. I remember telling Ted Turner, who is actually the financer of that organization, "I know something which none of you know. Why? Because I happen to be connected with an NGO that's active and playing a hugely important role."
So that's the way, the amorphous way, in which public reasoning takes place across the world.
QUESTION: My question is about means and ends. It seems to me the conversation, both globally and in countries like this, is often about means. Globally we talk about aid or free markets to end poverty. Here in America we talk about the role of government or insurance to deal with healthcare. This emphasis seems to de-emphasize ends--namely, the necessity of just outcomes, the necessity of the quality, the necessity of dealing with poverty.
First of all, do you agree with that observation? Secondly, how do we promote an emphasis on ends, on the moral necessity of justice, and indeed the practical necessity of justice, because inequality and unjust outcomes in all kinds of political and economic ways promote instability?
AMARTYA SEN: Well, first of all, I agree very much that the focus on ends--not just in terms of health outcomes, but also the health freedom, namely whether you have the freedom to go and seek medical help when you need it; you're not obliged to seek it, but you have the freedom to do it. If you take freedom as the central concept of what capabilities you have, then you would like to look at how does the world work, what happens in the world, and what happens in the world are exactly the things that you want to emphasize and judge.
I would add to it the fact that the public discourse also sometimes misses out means in a big way. I mean of course here, as you know, the debate, the vilification of the European system, describing it as that no one has any choice of doctors, et cetera, was of course completely mistaken. But that is mistaken at a very simple level.
But at a more sophisticated level I think the American public discussion on healthcare has suffered far too much--I did try to write something in the New York Review of Books on that [see Capitalism Beyond the Crisis (March 2009)and Health Care, Elsewhere: An Exchange (July 2009)]--by concentrating on Canada rather than Europe, because the big difference is that in Canada you cannot have private insurance for other than some very limited purpose--dentistry, optometry, prescription medicines, and a private room--that's it.
Whereas in Europe you can buy private insurance. Now, you may debate whether it is good that people with money could buy private insurance. That is something to be discussed. On the other hand, (a) I don't think any system is going to be acceptable in America unless you allow that option; and (b) there is an ethical issue. If a rich person is absolutely free to spend his or her money in buying a yacht and going to Acapulco and blowing the entire world with expenditure, why is it that a person can't buy insurance which covers him for optional surgery and so on?
So, bearing all that in mind, the natural thing would have been to look for a European alternative, which--the debate seems to always miss it--which is not the case. It is single payer, but it doesn't exclude private insurance. Everyone has the right to go and have that insurance, which has that feature, and at the same time you could buy private insurance. Many of the universities and many of the employers do it. I have private insurance, in fact, despite the fact that I am also entitled to the National Health Service.
There is no contradiction in that. There may be a general contradiction as to whether the rich should have a great advantage. We could have a debate on that. But I think this is just the kind of Smith territory--you may not agree on that, but you could agree on everyone being covered by a system like the National Health Service, which gives everyone entitlement. Whether on top of that you allow, like in Britain, private insurance or, like in Canada, no such private insurance except for optometry and dentistry, that is a further debate. But we need not resolve that debate in order to outline the importance of having healthcare guaranteed for all that you are referring to.
I'm glad you asked the question because I have been very frustrated by the way the public debate has gone. When I wrote the New York Review piece, the attacks came mostly from people who are so besotted with the Canadian system. A couple of my Canadian friends in Toronto wrote to me, "Are you turning anti-Canadian?" My point is that there is something that is not quite acceptable.
By the way, in Canada too it would be a very different situation if the United States went like Canada, because the options that are open--Canadians can buy American insurance, Blue Cross and so on, if they want to--those options will go.
So there are a whole lot of things to discuss. But that doesn't cloud the point that you were making, that ends are extremely important to discuss. But then again, we need also clarity and more information on the means.
QUESTION: You have mentioned and you cited the U.S. Supreme Court in your excellent remarks. I wonder if you think that the general system of high courts is a model that comes close to your ideal of a social contract, this ultimate dispenser of justice. For example, we have a court that is thoroughly governed by legal and constitutional mandates, it would seem. The British, on the other hand, not having had a constitution, have no high court other than the Lords of Justice.
AMARTYA SEN: But they are setting up one now.
QUESTIONER: They seem to get along rather well with their Crown judges. How has this general system of high courts, that model, in your view carried out justice?
AMARTYA SEN: I believe--this is just my personal view--that I think having a high court like the Supreme Court serves a purpose which the United Kingdom does miss out on.
It occurred to me, for example, many years ago actually, a friend of mine, a colleague at All Souls College, Lord Wilberforce, gave a big judgment that if the immigration officer thinks or suspects that you have been trying to illegally enter the country, he can on the basis of that suspicion detain you, and then you will be taken to the remand center, and you cannot move a court, because, although you are on British soil you have not been admitted, and therefore you cannot move British law to protest against this. So you could be held, incarcerated.
This was ultimately changed. But for two or three years the Wilberforce ruling--actually his ancestor did a lot to free the slaves, but his own position was rather conservative on this kind of issue. It seems to me that it's a subject, that if it had been the United States, could have moved the court. Anyone could say that there is a Supreme Court in this country. If a guy is here, it would be for the Supreme Court to decide can we hear this.
But I think the United Kingdom recognized this. You have probably been reading about this in the papers. They have been setting up something rather similar. We have to see how it goes. So there are these methods.
But the other point to note is that the Supreme Court alone is never going to do it, as this example indicates. The Supreme Court has to listen to the argument that is going on.
On the point that Scalia made and Roberts made and Thomas made, namely that there is no argument for listening to foreigners, that is not the position of the American public. That was not the position of Jefferson. He was ready to listen to many of the Enlightenment figures. The American public has been willing to listen to foreigners from Jesus Christ to Edmund Burke, again and again, without saying, "They're foreigners; they have nothing to offer in this case."
So I think as long as we don't regard the Supreme Court to be just supreme but as a part of the discourse, then I think we are moving into the Smithean direction I would like to push them in. That is what I would suggest.
I think it is a better structure. Personally I think it can focus argument. I think the Europeans have come to accept that now.
But on the other hand, it's not alone. The institutions never will deliver you. You have to bring in the behavioral features, and that's why The Moral Sentiments of Smith is so concerned with behavior, not just institutions. It's a dual feature.
That, by the one, is one of the parting of ways between Kant and Smith, that behavior remains extremely important. Whereas ultimately Kant says it's quite clear that you have these categorical imperatives you must follow, institutions aside--if everyone is following categorical imperatives, what will be the best institution?--Smith argues that is not the right question. A lot of people want it. What kind of institution do you need here and now, taking into account the variety of people and their precommitments?
QUESTION: How would you apply your approach to current issues of global governance, both in terms of institutions and processes, for example, to the greater voice of developing countries in various institutions like the IMF, the World Bank, the WTO, and so forth, or the arguments about greater policy space for developing countries in designing their economic, particularly macroeconomic, policies?
AMARTYA SEN: I think one of the gentlemen raised the issue of what the ends are. The end is to have a much more open public discussion. But you are not going to get it everywhere.
Along with Camdessus and others, I was one of the members of the IMF Governance Reform Committee, chaired by Trevor Manuel.
We did ask for a better representation. But it wouldn't be a representation of all countries, but rather those countries which are IMF-wise quite important. Similarly, I welcomed the move from G-8 to G-20. These are moves in the right direction. If I was a person only looking for perfect justice, then that is not there yet. But I think one has to welcome the changes going in that direction.
But then again, you have to also emphasize that is not there. For example, take G-20. It gives a much bigger voice to China, to India, to Brazil, to South Africa. But when the Doha Round was busted a little over a year ago, a year and a half ago, that was really driven by the interests of India and China. They did not want that basically. I'm sorry. Forgive me, Ambassador. I'm a very loyal Indian citizen.
I think the African countries had achieved something in that deal, if it had gone through. I think it is to the disgrace of the United States and Europe that they were not accepting the demands that were being made by the Chinese and the Indians and Brazilians. But nevertheless, I think by busting it, what these more powerful, more dynamic developing countries did has not served the interests of the less dynamic, in many ways more stuck-in-the-mud, poorer countries in Africa.
So I think one has to bear that in mind. Ultimately, whether we go to a G-100 or G-200 is not the question. The question is how can those voices come in. That is the way I would tend to look at global governance.
The wrong way to look at it, as of course is often seen even among philosophical colleagues whom I respect, is how to have a global government involving all the social contacts of the world. I think that is absolutely getting us nowhere whatsoever.
It's a question of how we can change the institutional structure. IMF will be harder to bend than the UN. The World Bank may be somewhere coming in between. So it's a question of seeing what we can do.
And a lot of things which are not institutional--the media, the public discussion. I think the media's role is enormously underestimated in the world. Even when people think about how to improve voices--and I have been seen the position of newspapers in many countries, from Uganda to India--pretty much all the dissenting voices are cash-strapped. They have very little money. And they are really trivial sums of money in comparison to the amount of aid going around. But while you can easily justify feeding the hungry, it becomes very difficult for these organizations to justify supporting the institutions.
Then it takes the form, as it did at one stage for UNESCO, you may remember, when the head of UNESCO wanted to achieve equality by simply shutting out the Western papers, like BBC, which, after all, provide about the only information that may be available in some places like Iran and Afghanistan today.
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Book reviews worth reading:
- Book Of The Week: The Idea of Justice, By Amartya Sen The Independent
- Book review: The Idea of Justice Financial Times
- The Idea of Justice by Amartya Sen Times Online
- "I Prefer To Fight Today's Battles" interview in Outlook India
American style management has been under some considerable stress these last few years. Now the nerds at Bain have some advice for the CEO. Apparently there are six dilemmas CEOs must face and - surprise! Bain has uncovered six strategies to help the CEO manage these dilemmas. Check out the cool diagram below:
I personally think the CEOs would be better off following VG's 3 box strategy and executing on it. This other stuff is fine, but it doesn't seem to be the stuff of great leadership. Nowhere do we see anything about creating great products or obsessing over your customers or sustainability. I bet Steve Jobs and Jeff Bezos do not manage their companies this way.
VG says the article has touched an "emotional" chord with readers who are saying that this approach is just what "western" multinationals should be doing - designing products for the local market at a price-point which is within reach.
Check out the advertisement for one such product:
To me, this is just the first step to being truly global (as they say at Thunderbird). With business commitments at a local level, social commitments will surely follow.
Now let's see some "ecomagination" in action and build portable solar/wind electrical generators for off-grid villages at an affordable price-point. Right, Bob?
Why do companies behave like Hyatt Hotels and Circuit City?
By treating employees as costs they minimize their investments in employee training. The result is poor employee morale, substandard performance, and customer dissatisfaction. [Once again, here's Drucker >>]
I first met this idea in an article I read in the Bechtel library in Houston. I was new to the corporate world, and I was trying to figure out what companies should be doing to be the "employer of choice" in their particular industry.
Of course, now I know this as an example of a vicious circle. The opposite of this approach, a virtuous circle - seems far more rare - in business, non-profits, and learning institutions as well.
I now see this as Management 101. In fact, it seems so obvious, you wonder why anyone would choose to destroy their company this way.