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Why the Large Don’t Lead

Thoughts about how the supposed leaders seldom live up to that title.

Big companies in the technology sector have apparently decided to stand against the N.S.A.’s overreach. Once it began to harm or threaten their profits and reputations, that is. They could have moved years ago, though. Why not?

Hollywood calls out against social problems of various sorts, such as the soon-to-screen The Wolf of Wall Street, but they stand fast as ever to their antiquated distribution model.

The big companies don’t take big risks. They fear losing their primacy. This reflects, once again, the exceptionalism bug. The notion that we are the ones, the only ones who can do what we do, we do it better, we do it right. Or else why would we be here? Why aren’t cockroaches the dominant species?

That seems to be at least one explanation for the U.S.’s decline in certain areas. Why we are playing catch-up in healthcare (again, the health insurance industry could have spearheaded reform efforts decades ago, but failed to bother), haven’t upgraded our train systems, and, yes, why our credit cards (see recent news on the Target store breaches) still use half-century-old technology (magnetic strips instead of smart cards).

When things seem to be going so well, we are awfully reluctant to change. What if it makes things worse? What if that worsening leads to systemic decline? What if we have to eat the grandkids just to stay afloat?

Worse, a dominant force may suppress up-and-coming competitors through anti-capitalist activities. It may prevent competitors from gaining a foothold long enough to displace the dominant institutions.

It took Mozilla to change the browser marketplace for the better. Internet Explorer might as well have been the tombstone of the web, and look at the relative vibrancy of the web today! We need these disruptive forces, at least so long as market leaders cannot lead.

We see the same trends in politics. The head of the party, as in O Brother, Where Art Thou?, “How we gonna run reform when we’re the damn incumbent?” We’ve seen a shift in House Majority Leader John Boehner of late. But only because he is facing his political future. He is not sitting pretty, but must make some waves to stay afloat.

We saw the same thing with Microsoft’s browser. Only after they were behind could they actually move ahead. Much of Apple’s innovation comes because of their market position (strong, but not the lead). They have a loyal customer base (not every iThing owner, of course) that supports their vision. But even Apple follows on things where they are leaders, such as removing anti-consumer locks from music.

It’s amazing how twisted our language is. Leader seldom means that. It mostly means the king of the hill, too large to easily be pushed off. But the leaders remain. They go find new hills, they carry scars and blisters.

The renewable energy sector today leads us to a better tomorrow, while the entrenched energy interests (who could make major investments, both speeding the process along and positioning themselves for the next generation) sit atop the hill. Sure, they might buy some wind or solar on their way down. But they seem too scared to lead, just like the rest of the “leaders.”

Big Data Needs Variables

We should find ways to use more variables in our daily lives.

Many concepts from Mathematics, Computer Science, and programming should be leveraged to improve our social/market interactions. One such concept is the variable.

You may know one from algebra as x. x = 3; x + y = 7; y = 4. But now x = 11, which means x + y = 7; y = -4.

A sensible, successful information society depends on proper segregation and apportionment of data. But you wouldn’t know it based on the governments’ and corporations’ attitudes towards our data.

What do I mean by segregation of data? I mean that certain information is need-to-know. For example, a corporation does not necessarily need to know my physical address, my e-mail address, my phone number, my date-of-birth, et cetera.

Why do they ask for these things, then? Because they don’t have an alternative choice.

Why should they want an alternative? Look at my examples above and you will notice that except for date-of-birth, they can and will all change from time to time.

What they should want, in lieu of an e-mail address or credit card or other billing data: a variable.

A credit card’s processing information is sort of like a variable. You can pay it off with cash (if the issuing bank is local to you), check, other credit, et cetera. But in its use, it has become largely become a value in itself. It expires, and knowledge of it is treated as authorization to charge to it.

A variable names a piece of ephemeral data. You can e-mail me at variable@variable.invalid (which might as well be programmatically generated for our purposes), and that can then point to my current e-mail.

A strong variable system can mean that I control the value on an ongoing basis, while depending parties don’t have to worry about me updating their copy of my data when it changes.

Have you ever changed e-mail addresses and had to go to umpteen different online accounts to change it? Maybe not if you’re young enough to always have only had one account, but if you’re old enough to have seen your primary e-mail change from, say, hotmail, to gmail, and maybe something else in the future (eg, an employer-based mail or some secure alternative, at least for some uses), you know that pain.

That needless pain, which harms the corporation just as much. Because they see some value in knowing how to contact you, but not enough to recognize the real and profound risk they are placing on themselves by not looking toward a variable-based solution.

Okay, but I mentioned something about apportionment of data. What’s that? The data should have a home, and maybe a vacation place or safe house. But it should not live everywhere. A thousand copies of data that do not follow ACID (Atomicity, Consistency, Isolation, Durability) — in this case the C-as-in-Consistency, is begging for pain.

You want data to be properly allocated across the world for security and privacy, too. If you let the data seep all over, that’s a lot of targets to get your information from.

Other benefits include being able to seamlessly transition between services. The next gmail will have a harder time making a dent in the market, when everyone has to change their services to point to their new shinymail address.

The benefits of variables currently get ignored by big businesses, because they think that their database values outweigh the costs. But my guess is if you look at aging databases, like MySpace or Hotmail, they lost opportunities more than they ever monetized their databases.

Risk Management These Days

A look at risk mismanagement circa 2013.

It seems like companies and governments can’t effectively manage risk. From a nuclear disaster apparently made out of a radioactive Pinocchio’s nose (it keeps growing every time the management lies), to badly bungled warzones, to banks that can’t pay for their mistakes, to the spill in the Gulf of Mexico…it’s like a thousand points of light, each representing some mismanaged risk that’s turned into a fire leaving people worse than they came.

Often it is the government that first requires an industry to manage its risk, then decides to help by assuming the risk (and in some cases even paying for the privilege). But you and I help, too.

In every contract of adhesion with major businesses, the language is replete with the customer holding the risk. And if that risk materializes, you can challenge in binding arbitration.

Systemic risk mismanagement is what we see, from the congress failing to do their jobs, to businesses going scot-free (or maybe they pay a modest tribute to the gods the judge favors) no matter how egregious their crimes.

But combating the problem seems difficult. For one, the governments that are supposed to enforce risk management seem ill-equipped and reluctant. For another, while much of the internet passes around image memes of one sort, the corporations pass around their own image memes detailing how to deflect, understate, or otherwise mismanage their risk. [Use your imagination, “destroy all the things,” or “why don’t we take our risk, and move it to the children of the earth,” etc.]

Lots of solutions come to mind, but most of them rely on functional government. And unless we solve the problem of functional government soon, that’s just not a viable option to force the proper management of risk.

Why do companies insist on being risk-addled so-and-sos? The naive belief that not paying for risk will make them more money? Their corporate brothers bragging up how they just built a new virulence research facility on the roof of a preschool? Do regulations contribute to a false sense that risk is overmanaged? Is it overmanaged in some places which gives the illusion of safety?

These questions, this post, tends to overstate the problem. There are problematic industries, yes. But in all likelihood many industries are doing a great job of managing their risks. Statistically we’re pretty safe these days. It’s easy to overstate some risks, due to their visibility, magnitude, impact.

Yes, government is currently mismanaging some risks due to their inaction. The banking industry has it as an endemic problem (and it even seems somewhat proud of the fact). And a few other bad industries can be lumped in with these.

But most business doesn’t seem to like the risk. We should expect them to tire of helping prop up or cover the risk loving industries. That leverage they hold should be key, if they ever wake up to what the bad bets and deflected risks are costing them. Indeed, in many cases they may be required to take action, as they are otherwise not maximizing their shareholders’ value.