1. Hard Rules: A formal problem solving language and formats by which to communicate. That includes endless why questions, PDCA, common tools like process visibility rules and process standardization, and many more, some highly technical and special to an organization, and adapted to any kind of work. In addition the organization needs rules for daily use of a living system to record learning so that few wheels are reinvented, sort of an “open system lab notebook.” With such rules, systemic learning discipline begins to supplant direct discipline (command and control).

Learning to live by these rules changes behavior, but learning has to cast a wider net than perfection of current operations, and well outside organizational boundaries, and by many people, not just a few researchers. For example, few engineering designers can track of all the various codes and standards to which they must design, and from the wording, decipher the intent. Assuming that code writers and inspectors understand the intent may be misplaced too. Therefore learning behavior needs to stimulate going beyond just “knowing the code.” There has to be a better way.

2. Soft Rules: Codes of daily behavior, with systemic rules of behavior. Almost all of us begin learning manners, sportsmanship, and etiquette at a very young age, but that’s not enough to create the emotional environment for vigorous learning. Toyota’s phrase for something similar is “Respect for People,” but “respect” may imply little more than saying hello every morning. Many problems involve conflicts of interest or clashes of ideology. Such issues are sometimes called wicked problems. Relevant facts may be unknown or even unknowable; we may disagree on what’s relevant, or even whether a problem is real or imaginary. Some are ethical issues, or “Catch 22,” no win situations. Example: Suppose a nearly bankrupt customer is not paying, but trying a new life cycle business model, winning new customers slowly. If you don’t keep shipping, their bankruptcy is certain. How long do you string along? Mutually surviving this risky situation is a matter of human trust as well as ingenuity and flexibility — fast learning.

One of the most important learning behaviors as well as skills to acquire is willingness to question assumptions. That includes trying to see the assumptions that we make unconsciously. Some are about the character or capability of other people, but many technical breakthroughs also occur because somebody questioned an assumption that others didn’t. Indeed, one of the purposes of design tools like TRIZ is to open possibilities never considered before. Willingness to question assumptions opens minds during dialog too.

Soft rules are much harder to abide by. They get personal. The emotional waste of hidden agendas, distrust, rigid opinions, put-downs, and so on is at least as crippling, but harder to see than process waste, because each of us must fight instinct to avoid personally contributing to the waste. Crucial: the ability to expose ugly facts, acknowledge unknowns, and dialog productively without finger pointing when issues are emotional, complex, and have many factors from many sources — very likely when coping with Compression. Everyone is expected to take on a professional attitude, even if no certificate proclaims special knowledge. Professional attitude is concern for everyone else first, especially those you directly serve, plus developing confidence in the professional attitude of others.

Leadership for vigorous learning has to create more than its structural elements.

The first report is on lighting. LEDs use about 20% of the power of incandescent lights, but this varies by application. Although data are crude, the authors estimated that societies on average had spent 0.72% of their GNP on lighting for the past three centuries, despite all the revolutions in lighting technology. So if societies continue to do that and switch to LEDs, people will buy a lot more LEDs and try to “light up the sky.” Total power saved might be zero.

The conclusion that unit efficiency can be offset by multiplying the number of units is not affected by ongoing debates on exactly how efficient LEDs are or will become.

The second report made the same point about automobiles. If fuel economy dramatically improves, but more vehicles drive more miles, total energy savings may be nil. At least one commentary on this site makes the same point, that improved per unit efficiency is easily overwhelmed by growth in units used. In addition, to accommodate more and more vehicles, we must also put more resources into the infrastructure (roads, bridges, parking) to accommodate them. This tendency illustrates how tough the Compression challenge of reducing total energy consumption could be. If it involves shifting deep-seated behavior, not just technical substitution, it’s a tall leap indeed.

World grain prices are up sharply since June. U.S. prices rose for several days ahead of the USDA’s much awaited projection of this year’s global grain harvest, issued on August 12. Excess heat cut this year’s harvest in Central Asia. Russia and the Ukraine, which are normally grain exporters, have stopped all grain exports until December. However, harvests in the U.S., Canada, Argentina, and Australia are up and should offset the Asian shortfall. World grain stocks are apt to decline slightly, and prices will be higher, but USDA analysts expect no repeat of the price extremes and shortages of 2007-2008.

Except for farmers, few people in North America have been apprehensive about crop failure for decades, and most people spend only 13-15% of their total income on food. However, in much of the world, in places like Nigeria and Viet Nam, a family may spend more than half of its income on food. There food costs and availability are a very big deal. If people are short of food or can’t buy it, governments become edgy very fast. Little creates “social unrest” faster than food shortages.

Food analysts’ worries for 2010 have eased, but concerns remain for long-term supplies. Global grain stocks have stabilized in the past decade, and one can overreact to a crop failure in one major crop area. However, worriers ponder the effects of what some call “a confluence of unfortunate events” more widespread than the crop shortfall that appears to be materializing in 2010. Area-wide shortfalls seem unavoidable, and despite the need to shorten food transportation distances, it seems a good idea to retain the capability to rapidly ship food on a global scale just to offset this.

Optimistic projections tend to be too rosy; pessimistic ones give too much weight to the latest big-scale calamity. As some point out, if we really hit a food growth limit, market forces will likely stimulate the most popular remedy for the crisis: convert less crop into animal feed, and shift to more crops for direct human consumption. In other words, eat less meat.

Reasons for longer-term concern cover over all the issues in these environmental updates: from water shortages to honeybee die-offs. Indeed one major concern is new diseases suddenly sweeping through big mono-cropped fields before we can devise countermeasures for them.

Human development like urban sprawl keeps eating up prime crop ground close to urban centers, and erosion continues to be a problem. Forests cut in areas like the Amazon increase crop ground, but tropical soil appears to be better growing jungle than growing non-native crops, which tend to wear out the nutrients in 2-3 years. Would-be entrepreneurs wind up more destructive than productive. (Old native cultures let the jungle reclaim the land for decades before returning to it.)

The effects of the green revolution have long since passed the miracle stage. Increases in per acre crop yields have slowed. So far, genetically modified crops have not produced the same dramatic increases in per acre yields as field hybrid breeding in an earlier era. In short, we humans seem unlikely to run out of food, but we are going to have to become smarter and more adaptive to avoid problems.

• Population growth packs humans ever more tightly on a finite planet.
• All global resources have ill-defined limits, but they not infinite, which is what mainstream economic thinking de facto assumes.
• Working less and less concentrated sources of energy and ores entails more risks, more property damage, and often, unknown environmental damage. This displaces or discomfits more and more people until they push back. We want the benefits of industrial society. No one wants their back yard torn up to get them.
• Overuse and misuse of resources imperils the ecosphere in many ways. This peril does not boil down to one simple issue.
• Overconsumption isn’t good for humans either, as illustrated by obesity problems.

A perverse view of environmental issues is that we increase atmospheric CO2 every time we breathe, but few people want to stop doing it. However, our mere existence does not tax the planet very much. Our overuse of resources does. Most of us want to stay alive as long as possible, enjoying some quality time while doing it. Quality of life is subjective and a very personal thing, but profligate resource consumption can’t be part of it. To reconcile this, we need a huge shift in basic thinking.

The case for Compression is the first chapter of the book, plus most of the updates found here. Everyone has to struggle to keep up with all the threats in the case for Compression, and they keep building up. That’s one of the reasons that organizations in Compression need to develop superior learning capability. But despite the complexity, the simple case for Compression is that consuming less stuff alleviates many of the problems that we have created for ourselves, even ones we aren’t aware of.

We can reduce the scope of almost all other problems by reducing the resources extracted from the earth, and those dumped back into it by agriculture, manufacturing, services, and personal consumption. Growth in resource use keeps accumulating problems, so go for quality over quantity, always.  But to focus on this we need measureable direction based on arbitrary goals, like:

Globally improve quality of life to an industrial society equivalent using no more than half the energy and half the virgin raw materials as in the year 2000, while reducing known toxic releases to zero by the year 2040.

This is a global objective. Advanced industrial economies must cut consumption by more than half. Low consumption economies can’t cut resource use very much and attain an industrial society quality of life, and they can’t count on much “trickle down” from developed economies. All economies must learn how to increase the human benefit from resources available to them, not count on more, more, more.

Among developed economies today, the United Kingdom has one of the most aggressive goals in its Climate Change Act of 2008: By the year 2050 reduce carbon emissions to 20% of 1990 levels. That may seem radical, but it only covers carbon emissions, so broaden the scope and tighten the deadline. Let developed economies cut the use of all major resources by 80% by 2040, closer to what is really required, although 80% reduction goals and related challenges seem outrageous.

Such goals are terrifying unless we can see how to meet them. We resist leaving any status quo while it remains comfortable. Financial failure of the present system seems more immanent. We prefer to trust that technical genius will let life (and commerce) go on much as now.

If very little has been done so far, starter ideas for techniques to improvement what we do not (and learn) are the EPA Handbook and Brett Wills’ book Green Intentions. A great deal of more technical science and engineering work is in progress. But the key is apt to be something harder to do: change business models.

The present system assumes unending expansion, that more “stuff” can always be found somewhere. Screw up; get more stuff; try again. But when short of resources, there is less margin for error. Without the assumption of endless resources and unlimited expansion, business thinking flips upside down. Compound interest is a growth formula. Its inverse, net present value, strongly discounts the future, and market valuations are short term. Consequences thirty years hence factor in with great difficulty. This system is not structured to give much thought for the morrow. Any new system has to project many morrows hence.

From an expansionary financial view, efficiency is fewer people processing more and more “stuff.” But if all work processes were totally automated, and resources unlimited, you’d still only want what you want when you want it, not piles of unused “stuff.”  As nature sees it, efficiency is low resource-use, minimally disruptive processes that let us enjoy life from our view, but that it can “pay for.” Striving to bridge this gap redefines work responsibilities for both individuals and work organizations — as in an economy aboard a space ship. What sense would expansionary economic and business practices make there? Our survival would utterly depend on the ship’s systems. In effect, we would be parasites feeding on those systems. Smart parasites do not kill their hosts.

For this transformation, we must feel our way into very different patterns of thinking. Some preliminary ideas are in the last two chapters ofCompression, and in some organizational postings on this page. It’s also anticipated to be the most adventurous area of Compression Learning. One reason the expansionary market system has worked well is commonality in organizational transaction systems all around the world. But going forward, we need equally common patterns of learning systems around the world — adding learning discipline to transactional discipline.

July 28, 2010

Self-deceptive measurement was recognized in antiquity. As the New Testament notes, “they measuring themselves by themselves, and comparing themselves among themselves, are not wise” (2 Cor. 10:12). Measurements showing that we’re better than others fatten complacency, but benchmarking our betters shows us how to improve, so what’s deceptive? Perhaps that that old admonition warns us to beware of not looking deeper than cost comparisons, markets, and other people’s performance. For example, one reason for bloated executive compensation is setting it using compensation surveys as a reference. Why be critical of something everyone is doing? But measuring by nature’s yardsticks takes us outside group reference exercises.

Organizational performance systems create conundrums that beg to be address by Compression Thinking, and digging much deeper.

Can’t measure everything, or heed all measurements made. Human perception constricts our attention. We have to focus. As that management adage says, “What gets measured gets done,” so an organization’s performance measurements frame some of its priorities. However, some priorities are difficult or impossible to measure, for example: quality of life for all stakeholders, the effects of trust and distrust, or the values of tacit knowledge and contagious enthusiasm. Attempts to measure the effects of kindergarten programs stretch quantification to ridiculous limits. And yet we sense that the “culture” of a work organization will make or break it because it is the cradle for all the rest.

Compression turns priorities topsy-turvy, but priorities considered most important still overshadow the rest. A “vigorous learning enterprise” trying to contend with this will attempt to function in the interests of all stakeholders as well as nature. If it has long strings of performance measures, the complications appear hopeless. A leadership challenge is reconciling and simplifying the clashes among these responsibilities into a few measures (priorities) on which a large number of real people can focus.

To illustrate the problem, consider energy use, which affects nature, so we’re not just measuring ourselves by ourselves, and minimizing energy use is a common objective today. To go beyond turn-out-the-lights initiatives, energy use must be monitored at points where ideas to reduce use can be implemented. Doing this for processes at key points within four walls isn’t too hard. But extending this to life cycle processes covering all stakeholders makes aggregating even simple measures become complex. Today, big companies struggle to assure that measurements, supposedly of the same thing, from different locations roll up into a consistent, useful picture. But “useful” means actionable back at the many locations from which measures originate. If real people can make local, energy-conserving changes, in big cuts and small, and thus reduce aggregate usage without deceiving themselves, they will perform marvelously well.

Energy saving is a relatively simple, uniform objective to pursue. So how can a “vigorous learning organization” develop itself to do this very, very well? Beyond that, how could it deal with our other big challenges?

Around the world, a lot of gulfs are in what The National Oceanic and Atmospheric Administration classifies as one of 64 Large Marine Ecosystems (LMEs) based on ecological factors, not human ownership or political divisions. Collectively, LMEs account for about 80% of the ocean wild fish catch, most of our other wild seafood harvest, most coral reefs, and much of the plankton activity vital for the CO2-oxygen cycle. Better management of the LMEs deserves high priority, but too many gulfs take a beating with little attention paid.

The Gulf of Mexico is an LME now in the news. The BP blowout is bigger than the Exxon Valdiz’s mere 0.25 million barrels; but not yet rivalling Ixtoc 1, also in the Gulf of Mexico in 1979: 3 million barrels; almost no clean up. The biggest spill ever was from Iraqi destruction in the Persian Gulf when fleeing Kuwait at the end of the war in 1991: 3-10 million barrels, almost no clean up. Now nearly forgotten, these old spills years later show surprising recovery in some areas; almost none in others. Oil spills have occurred regularly, but people soon forgot and life went on. Oil companies have seen it all before.

Or maybe they haven’t. Sizes of big oil spills are rough estimates from point sources. Multi-point spills and slow trickles don’t make the list. The gunk coating Nigerian waters would not make this list; a barrel here, a few gallons there from many different incidents and many more perpetrators than oil companies. Degradation from slow forming, cumulative effects are hard to see, and like watching yourself age, it’s accepted as normal.

The Gulf of Mexico is rich in seafood. It’s the source of about 25% of U.S. oil production (not consumption) and 16% of natural gas, with more coming from Mexican waters. Drilling in the Gulf is sure to resume, while its marine system has to revive. Abandoned oil rigs act as artificial reefs to attract fish, but that cannot preserve the overall marine ecology. Undisputed: oil in water is bad. Less recognized: Oil deep underwater could be more damaging than that visible on the water’s surface and along shore.

The Gulf of Mexico can’t be what it was, but the mess should be “relatively easy” to deal with politically. Its fisheries are among the world’s best managed. Oil drilling there has to raise its performance discipline by several notches. But remediating Bluewater Horizon does not address a bigger issue: should we keep dumping CO2, NOx, and similar petro-molecules into the air?

Much more wicked problems lie in the South China Sea, a big island-specked body of water south of China. Biologically the South China Sea is one of the richest and most diverse of all LMEs, so sustaining it is a vital ecological goal, but it is increasingly polluted. Gunky rivers run into it. Coral reefs are threatened. Too many boats contend for the catch; it’s overfished. And its location is crucial. Half of all global merchant shipping runs through it, including 10 million barrels of oil a day, so oil spills haven’t been unusual, and piracy remains a threat.

Although rarely in U.S. news, the South China Sea is a crossroads of conflict. Nine different governments have staked conflicting claims to parts of it. Depending on who is estimating (or bluffing) oil and gas estimates range from 7 billion up to a bloated 225 billion barrels of oil equivalent – an undersea Saudi Arabia. Deposits seem heavy in coveted natural gas, but because of disputes, exploration is incomplete. Dubious Western oil companies avoid these risks. Nationalized ones may not.

The U.S. Navy and China still play cat-and-mouse surveillance games in the South China Sea. China recently revived a claim to most of the area. U.S. Navy presence dampens rivalries, but clashes between the resource contenders’ naval vessels recur sporadically. Political miscalculation could touch off hot, multi-party conflict.

China wants to negotiate bi-laterally with the other contenders, who would gang up on China to negotiate as a group if they could unite their differences. Most disputes are about marine management, not petroleum. For eight years, ASEAN has tried to forge a mutual “Declaration of the Conduct of Parties in the South China Sea,” but the last ASEAN summit in April 2010 again failed to make progress. Will the cumulative damage eventually force squabbling factions to unite to save all humanity, or will we quibble ourselves to death?

The opening chapter of the book, Compression, could only reference a few reasons why Compression appears necessary. The main objective, of course, is to drastically reduce consumption of resources. Almost any problem of the 21st century can be alleviated by simply processing and consuming less stuff. But why?

The case for Compression is hard to understand mostly because our 20th century economic systems reinforce our natural inclinations to keep using more and more stuff: the idea that expanding business brings us a better life. Besides it’s the basis of many of our status systems.

Recently The Economist had a couple of easily understood articles that summarize a couple situations that were too much to include in the book Compression. The first article was on palm oil.

Seems that Greenpeace and other protest groups have intensified

campaigns against the expansion of palm oil plantations. Tears up a lot of forest, and the planting areas have been expanding. Palm oil is used in many food products, and it has a much better per acre yield than other crops grown to make biofuels, one reason why export tonnage of palm oil has increased about 3X in the past 15 years. The energy yield is better than most other plants, so it makes sense to use it, but when grown in huge volumes, whether the carbon footprint is vastly smaller than that of fossil fuels is being questioned. But you can read the summary for yourself.

The other article is on threatened overfishing of blue fin tuna, alluded to in an earlier update. Most of the concern has been about overfishing in the Mediterranean. Most tuna in the Gulf of Mexico are yellowfin, and blue fin tuna fishing has been banned or restricted in the Gulf for 20 years or more. Almost none of the global blue fin catch is from U.S. waters. But the spring spawning ground preferred by the blue fin tuna happens to be the area impacted by the oil well blowout. If anyone knows what’s happened to the hapless tuna there, they have not reported yet.

These are just two more little chunks of evidence in an overall case to manage what we have much more carefully and simply use less of it. Much of the reason that economic expansion continues is that the assumptions underlying it remain hidden to us.

Nigeria’s muddle is more like the muddle we all face in Compression than the oil spill in the Gulf. Nigeria sits on a lot of oil, sweet crude preferred by American refineries. About 40% of Nigerian oil exports go to the the U.S., and it accounts for about 10% of all American oil imports.

A few media reported last week that the Gulf blowout is not the biggest oil spill in the world. That’s in Nigeria, but comparisons skew because Nigerian spillage accumulated over time from many, many sources. Causes are disputed, but they don’t absorb us like the technical adventure in mile-deep water in the Gulf.  Locals blame oil company incompetence. Oil companies blame oil poachers who tap wells and pipelines for resale on black markets, a practice called bunkering. (The Dunning-Kruger effect thrives here.)

The Nigerian government shares blame as a “co-conspirator.” It’s invested about 55% in Western oil ventures. Regulation mostly consists of requests that operations conform to international standards. And like many other things in Nigeria, numbers obfuscate the government’s use of its oil royalties, but too little of it has gone to develop people.

Nigeria is the most populous nation in Africa; 135 million very diverse people beset by problems, just one of which is tribal and religious conflict, which many insist is merely a cover for land and resource battles. Bunkering artists and violence by rebels against various injustices have at times trimmed oil production by up to 25%.

GNP per capita has risen recently, but it’s not much above Haiti. Maybe half of all children attend school. Nigeria is “thought” to have the lowest engineer per capita ratio of any third world country, so developing skilled people is problematic.

Between 1991 and 2009, Nigerian life expectancy dropped from 53 to 47. One of many reasons is poor practice disposing of medical waste. For instance, hypodermic needles are reused after questionable sterilization methods. Poor Nigerians are a market for used electronic gear, so they pitch a lot of electronic detritus with hazardous materials around the Nigerian landscape. A knowledgeable Nigerian has reason not to wax enthusiastic about economic growth.

Chronic problems in Nigeria seldom make world news. A dramatic blowout off the Louisiana coast does. In Compression, the Nigerian muddle better resembles that faced by all societies, but Nigeria’s muddle is so concentrated that it’s easier to see a total picture.

So suppose you wanted to establish an excellent, environmentally responsible operation in Nigeria. How would you go about it?

Figure that out and maybe we can become much more competent dealing with Compression everywhere. Or just reflect on what would happen to your business model today if energy costs went up by 4X (to about $10 a gallon gasoline).