Russia’s web community is preparing for the 2011-2012 political season.

Lenta.ru: Интернет: "Живой журнал" интегрировался с Twitter и Facebook.





"Живой журнал" (LiveJournal, the most popular blog platform is Russia) now is integrated with Twitter and Facebook. LiveJournal has 26 million users, one quarter of which belong to the Russian-speaking blog-sphere.  In comparison, Facebook has auditory of 500 million people world-wide. FB's market segment among Russia's social network sites is expected to grow from 2% in 2009 to 10% by the end of 2010. For now Russia's most popular social network is Vkontakte, a mock-up version of russified Facebook with similar user-interface, that keeps 45% of the market (14 million users).

LiveJournal is one-dimensional platform with primary focus on blogposts, whereas Facebook allows to integrate diverse range of visual and audio media on its platform.  Today Facebook's major problem is limited broadband access beyond Russia's megalopolises.  This is where Twitter gets its niche by allowing faster and more reliable micro-blog interaction via omnipresent 2G and emerging 3G networks.

In sum, the migration of Russia's most active bloggers from XX century LiveJournal to XXI century Facebook is underway. It will takes several months before we see the spillover effect. By the end of this year Russian-speaking Facebook and Twitter will be as much politicized as "Живой журнал" (LiveJournal).

It seems that both sides are getting ready for the incoming web-storm. However, President Medvedev's fascination with social media and particular with Twitter (http://bit.ly/dxov70) may backfire if Russian officials underestimate the latest developments.

Russia. August. 2010. Part 2: Wildfires.

(cont. from Russia. August. 2010. Part 1: Grain. )

The surge of wildfires this summer has shown two important developments in today’s Russia: deteriorating regional/local  government system and growing importance of Russia's blogosphere.

Ever since 2000, when then President Putin started to rebuild centralized federal government system, regional governments were gradually giving up political power. In some respect such reconstruction was aimed at limiting the power of regional political elite, rather than actual power of Russia’s regions, which never were strong. Establishment of the seven (and later the eighth in the Northern Caucasus) super-regional administrations or Federal Districts was meant to bring systematic order and constitutional synchrony to diverse forms of regional entities of new Russia. Political centralization process, coincided with decade long surge in the commodities market, allowed Russia’s Federal Government to gather low-hanging fruits of administrative reforms and economic development. Modernized federal system permitted relatively efficient federal intervention on political, economic and security matters on a case-by-case basis.

This summer, however, the system has encountered its biggest challenge so far. Wildfires in more than 40 different regions (7 with the state of emergency) of Russia have stretched its Federal government and its most effective agency - EMERCOM.

Of course record heat wave and drought throughout Russia were key systemic factors that significantly impacted the scale of the disaster. However, if we measure the apathy and ineffectiveness of the regional/local governments not in "hectares of forest burned", but in “lives lost” or “days it took for some of the regional governor to interrupt their vacation” the picture gets clear. In the system where accountability and resource allocation has only upward dynamics, regional elite is more likely to respond to the criticism from the federal center (i.e. Putin or Medvedev) rather than people on the ground.

In any event, when you watch President Medvedev meeting with Russian oligarchs who pledge money to rebuild villages of Central Russia or Prime Minister Putin responding to remarks of an unknown before blogger, whose comments on government’s handling of fire gone viral, the question you may ask is "what is regional/local governments' response of  to the fire or at least the discussion on the web?"

This brings us to the second point of this post - growing importance of Russia's blogosphere. The backbone of Russia’s civil society is not community services, local churches, PTAs or rotary clubs. The backbone of Russia’s civil society is truth seeking and straight talking “lonely hero”, the one who dares to speak to the authorities.  If previous Russian regimes have sent such loners to Siberia and psychiatric hospitals, the current landscape is significantly different. The internet connects such "lonely hero" to like-minded persons all over the nation. Russia’s blogosphere gives such "lonely heroes" opportunity to express themselves and to be heard by ordinary people.  Twitter makes the dissemination speed supersonic, and mainstream media’s fascination with new means of communication results in media spillovers.

The blogger named “top_lap” with his “Put my f___n village bell back” is yet another example of Russian blogosphere’s growing influence and its interesting manner of communicating with the authorities (in Russian http://top-lap.livejournal.com/2010/08/01/, YouTube - "Рында как символ русской демократии" - Эхо Москвы 1/5).

Here is English language summary of the discussion:

In a scathing attack posted on LiveJournal, a blogger writing under the name top_lap vented his frustration at the authorities’ chaotic efforts to contain the fires. He said the ponds his village had previously used as reservoirs for fighting fires had been filled in and sold to developers, the local fire engine had vanished and the fire bell had been removed.

Such is the sensitivity surrounding public anger over the government’s response that Vladimir Putin himself was forced to go online and answer top_lap’s claims. This in itself is noteworthy as the prime minister claimed in 2007 that he had never even written an email.

***

Top_lap, who says he has a holiday home in a village in Tver province, 153km (95 miles) from Moscow, asked why there were no more forest wardens, who in Soviet times would have raised fire alerts. The fire bell had been replaced by a telephone which did not work, he said in his blog entry, which is punctuated by obscene swear-words. "Where is our [tax] money being spent?" he asked. "Why with every passing year are we hurtling towards a primitive social order?"

***

Top_lap questioned the need for Medvedev’s pet project of building a Russian “Silicon Valley” when the country doesn’t have enough fire engines. “We have no hope in you,” he wrote, addressing Russian officialdom. “We all understand that your one principle in life is that everybody owes you. But you’re mistaken, you owe us and you owe us a lot.”

Putin penned his answer after a Moscow radio station forwarded him a blog that railed against the decline of rural fire protection and self-serving bureaucrats. Dmitry Peskov, Putin’s spokesman, confirmed the authenticity of the response posted on the website of broadcaster Ekho Moskvy.

“On the whole I agree with your observations,” Putin wrote in a letter mixing flattery with irony... Putin, 57, told Time magazine in 2007 that he’d never sent an e-mail... Putin, who began his letter with the words “dear user,” said he read the blog “with great interest and pleasure.” While conceding the government’s responsibility to fight natural disasters, he explained that Russia was facing its worst heat wave in 140 years and that western countries also suffered frequent wildfires. “You’re definitely a gifted writer,” Putin wrote. “If you made a living by writing, you could live in Capri, just like Vladimir Lenin’s favorite writer, Maxim Gorky.” “If we had your address, you’d immediately get a ship’s bell from the governor,” he wrote.

Russia. August. 2010. Part 1: Grain.

(cont. in Russia. August. 2010. Part 2: Wildfires. )

It seems that August continues to be most intense month in Russia's political life. The heat wave followed by massive wildfires in the central Russia and Siberia add to the long list of events that took place in Russia's most contemporary history: August Putsch (August 19-21, 1991), Financial crisis (August 17, 1998), Kursk Submarine Accident (August 12, 2000), Russian-Gerogian Conflict (August 8, 2008), Sayano-Shushenskaya hydro accident (August 17, 2009).

This summer the heat wave in Russia reached absolute record temperatures. There were 21st temperature record registered in Moscow this summer. Two records were broken in June, ten in July and ten in the first half of August.

Low rainfall and hot temperatures damaged 32 percent of the country’s grain crops, said Russian Agriculture Minister, Yelena Skrynnik on July 23. This satellite vegetation index image, made from data collected by the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite, shows the damage done to plants throughout southern Russia.

Hot and dry summer resulted in massive drought, which led the government ban its grain export. Agricultural analysts are estimating that grain output will suffer a 40% loss this year, cutting previous forecasts of 70-75 million tons to 59.5-63.5 million.

Prime Minister Vladimir Putin suggested the ban could remain in place until well into 2011. Mr Putin said that this year's crop could be as low as 60 million tonnes, well below last year's 97 million, and Russia needs almost 80 million tonnes to cover domestic consumption, so even with this ban, there might be a shortfall of nearly 20 million tonnes for the Russian consumer.

President Medvedev's verified Twitter account (KremlinRussia) posted a link to presidential memo, which assigned responsibilities to different cabinet members.   The two biggest concerns so far are (1) monitoring internal dynamics of food prices (and if necessary intervention) and (2) mitigating the possibility of grain reserve imbalance between different regions of Russia.

It is too early to say if Russia's neighbors may follow suit. A senior Ukrainian Farm Ministry official said this year's wheat harvest could fall to about 17 million tons, below the consensus in a Reuters poll last week of 18.1 million and down from 20.9 million in 2009. However, the decision to ban Ukraine's export has not been made.

Analysts already expect the London-listed Russia's deep-water Novorossiysk commercial sea port on the Black Sea may lose up to $40 million over a ban on grain exports imposed by the Russian government.  Novorossiysk port also serves as a transportation hub for Russia's landlock neighbors.

Now let us zoom out from Russia's map and look at big picture.  The total drop of Russia grain production (plus its closest neighbors) is going to be 20-25 million tons lower that previous forecasts. Fortunately such amount will not significant impact world's grain output.  Take a look at data provided by UN's Food and Agriculture Organization. World grain production fluctuates between 670-685 million tons per year, in which  25 million ton or even 30 million tons shortage makes less than half of a percent of global food production.

Moreover, the reaction of other food commodities suggest us that there is no upward reaction to the expected drop of grain output in Eurasia.



Then the question is What's All The Fuss About? And here I can give you two different explanations.  First, the ban is Russia's internally driven policy directed toward domestic audience. Unfortunately, its domestic media machine works so efficiently that it spins its internal message into global media.

This leads us to the second and more important point: Russia's domestic policy is unintentionally helping international food commodity traders.  I am concluding this post with SPIEGEL magazine article  Speculators Rediscover Agricultural Commodities. The article was published on July 29, 2010 before the Russian ban on grain, nevertheless it captures the trend:

Driving the price explosion was the growing use of agricultural commodities to produce biofuel. But 2008 was also the year in which, for the first time, the public realized that grain merchants were no longer the only ones trading on the exchanges (in their case, by buying grain futures to hedge against poor harvests), but that the major players in the financial markets had discovered the lucrative trade in agricultural commodities.

Last year, Goldman Sachs earned $5 billion in profits with commodities alone. Other major players include the Bank of America, Citigroup, Deutsche Bank, Morgan Stanley and J.P. Morgan.

They are no longer merely offering classic funds, but are now trading in financial instruments that function similarly to the subprime mortgage loans on the now-collapsed US real estate market. With these instruments, known as collateralized commodities obligations, or CCOs, profits are based on market prices. The higher the trading prices of wheat, rice and soybeans, the bigger the profits. The market's behavior reminds one of the Internet bubble at the beginning of last decade and the fluctuations just prior to the financial crisis, then-Merrill Lynch President Gregory Fleming said in May 2008.

CRISIS-MANAGEMENT CROWDSOURCING PLATFORM WAS LAUNCHED IN KYRGYZSTAN TO MAP AND SHARE RELIABLE INFORMATION

On June 21, 2010 crisis-management crowdsourcing platform was launched at http://www.aikol.kg . The website allows people on the ground to map and share information in nine different categories (events, infrastructure, epidemics, people gathering, etc) using text massages or internet. The site is in its early days of operations, but it quickly began to pick up posts from all over the nation.  It may not take much time before the platform accumulates significant amount of information. Two major problems that the initiative could face in near future are accessibility to the platform and reliability/verifiability of information.



The platform that is being used by the website seems to come from open source non-profit initiative called ushahidi. User named <altyni> initially posted that "We are supported by crisis managers of Chile, Haiti, Dushanbe, Ukraine, USA, Kenya #savekg" and several hours later "I officially announce that we have launched @ushahidi platform in #freekg", "#thanks: Mark Belinsky, Nona Lambert, Patrick Meier, David Kobia, Alana Shaikh, Anaha Ayala, Max Froumentin, Juliana, Sanjana and others."

“The open-source project Ushahidi, which takes its name from the Swahili word for “testimony,” ...  The software allows text messages to be mapped by time and location. It was developed to track reports of ethnic violence in Kenya in 2008. Suddenly mere words can create a moving picture of where violence started and where it intensified.” http://www.nytimes.com/2009/11/09/business/09link.html?_r=1

The Ushahidi platform was most recently used in helping earthquake effort in Chile and Haiti; tracking extreme weather (snowstorm, etc) and wildfire; monitoring elections in India, Mexico and Sudan; covering activities in Gaza during the war; recording reconciliation effort in Kenya, etc. Here is descriptive video http://ushahidi.com/embeds/what_is_ushahidi.html



If you would like to share information, you can send text message to 0779069805, email to savekg@gmail.com or use #savekg on twitter. You can also contact the developers to offer your help via webpage http://www.aikol.kg/contact .

Kiplinger missed Boston and/or Cambridge, MA in its "10 Best Cities for the Next Decade"

Kiplinger's editor argues that the innovation factor has three elements: (1) smart people, (2) great ideas and (3) collaboration. Based on these criteria, Kiplinger presents its top ten ranking for "places to start a business or find a job" (http://alturl.com/vn88):

1. Austin, Tex.

2. Seattle, Wash.

3. Washington, D.C.

4. Boulder, Colo.

5. Salt Lake City, Utah

6. Rochester, Minn.

7. Des Moines, Iowa

8. Burlington, Vt.

9. West Hartford, Conn.

10. Topeka, Kan.

What Kiplinger misses in its criteria, is strength and density of new technology companies. According to MIT Professor Michael Davies, there are "two regions-four institutions" (Harvard-MIT, Berkeley-Stanford) where innovation is concentrated, and Kendal-MIT area by far surpasses all other cities.

NYTimes discusses "nuking the well", studies were done decades ago

I just read NYTimes article about the discussion to use underground nuclear explosion to seal the oil leak in the Gulf of Mexico http://www.nytimes.com/2010/06/03/us/03nuke.html?hp. The idea may sound crazy, but experiments were conducted in 1970s in the USSR. The places are called Lira and Azgir nuclear testing sites in Western Kazakhstan, you can read more on  http://www.nnc.kz/en/about/activity/radioecology.html .

Kazakhstan's National Nuclear Center continues environmental monitoring of the sites.  I am not an expert in this field, but from what I understand an underground nuclear explosion creates a sealed cavity that serves as a container, which keeps natural gas and condensate form leaking into the ground. I have thought about this project when InnoCentive announced its  "Emergency Response 2.0 : Solutions to Respond to Oil Spill in the Gulf of Mexico" on https://gw.innocentive.com/ar/challenge/overview/9383447 .

At that time I thought it could be nearly impossible to place a nuclear device 1 km deep into the water and further into the seabed. But I guess, some of the scientists that were involved with the project decided to give the idea a shot, literally. I knew that both underwater and underground tests were routinely done in the past (see http://alturl.com/v7x6 ), but combining two in one could be a real challenge.

I agree with NYTimes that such risky idea is cannot be seriously considered.  However, as crazy as the idea sounds, the fact that it got front page coverage in NYTimes (!!!"...What about nuking the well?") suggests that both BP and the Federal government are running out of serious options. Or perhaps, public opinion is being prepared for an option that includes conventional explosion to stop the spill, which looks much more acceptable vis-a-vie a nuclear option.

Here is an abstract from the paper called Reduction of Risks from Lira Underground Nuclear Facilities at Karachaganak Oil-and-Gas Complex published by National Nuclear Center researchers in 2008:

"T. I. Ageyeva2, A. Zh. Tuleushev2 and V. V. Podenezhko2
(2) Institute of Nuclear Physics, Almaty, Kazakhstan
The theme of this article is the investigations of radioactive contamination within and around underground cavities created by underground nuclear detonations performed in connection with the operation of oil and gas condensate fields. Underground storages of gas condensate are not maintained for a long time. The results from the large-scale complex indicate the absence of a real threat from nuclear objects on the environment. However, there is a potential danger connected with possible changes in the geological environment containing the underground storages of condensates. The pressure created in the cavities is the controlling parameter of the conditions in the cavities. Laboratory investigations of a condensate from the underground cavities confirm the absence of caesium-137 and strontium-90 and the presence of tritium. The strategy of closing off the cavities with the application of filling the cavity space with loose or helium materials is designed. The basic objective of the subsequent works is to decrease the environmental risks associated with oil-and-gas operations and underground storage of condensates.

Keywords  cavities - underground nuclear detonations - condensate storage - LIRA - Kazakhstan"

Source: http://www.springerlink.com/content/r3w0jgvmx87tv332/

Realpolitik of the Blame Game

After BP’s numerous failed attempts to stop oil contamination in the Gulf of Mexico its corporate image is in ruins.  As BP’s public image reached its saturation limits for criticism, the political debate redirects public attention from the oil company to the Federal government.  With the accident rolling into its sixth week, the Obama administration is forced to answer  “Who is to blame?” and “What to do?” In short, political pressure and public anger demand swift satisfaction.

In this respect, Obama's decision to begin criminal investigations into the Deepwater Horizon explosion and the oil spill may give such satisfaction. Unfortunately, it is short-lived and may prove counterproductive in the long-run. Criminal inquiries into the cause of the oil spill is likely to narrow down the scope of post-mortem analysis to near physical and temporal proximity of the accident. In other words, the investigation will focus on people who made decisions as the accident emerged.

After the Exxon Valdes accident, the public was given a scapegoat, Capitan Hazelwood, who was singlehandedly blamed to cause the accident. Although, he was later cleared of the charge being drunk at the time of the accident, he had never cleared his name from the stigma of causing of the biggest oil spill in US history (until current accident).   There were more systemic problems such as functional and interoperable navigation systems on board the ship and on the shore of Alaska, the culture of tolerance to safety problems among the oil executives and public official, etc. However,  systemic factors tend to “spread the blame” and lack the luxury of targeted blame, thus satisfaction of punishment.  Simple and straightforward causes are always easier to describe and accept. I hope to be wrong, but it is likely that we can expect several Capitan Hazelwoods from BP and its subcontractors who could be “scarified” to satisfy public outcry.  However, it is unlikely that such narrow view can help us understand the complexity of the accident.

It is in our human nature to go back in time and look for a single event, which could have prevented to the catastrophe from happening.  The bigger the accident, the stronger is our temptation to reverse time. Inability to reverse the situation results in anger, dissatisfaction and need for revenge. These emotions have to be channeled one way or the other. What make the case with the oil spill unique is the fact that the public is given a rare opportunity to be part of the accident as it emerges.  The public feels helpless to reverse time and to contain the accident. Old and new media channels enables people to get first-hand accounts of the environmental impact on the ocean's seabed, the coast and wildlife. As the result, it is natural for people to ask who is in charge and who is to blame. If those who are in charge do not act swiftly and find those who are to blame, the public could blame those who are in charge.  If those who were in charge yesterday do not blame those who are in charge today, then those who were in charge yesterday are to get blamed themselves and vice versa. The same is true with BP and its numerous subcontractors.

Unfortunately realpolitik of the blame game creates an environment in which each player is concerned with own political and legal liabilities. Criminal inquiry adds more gasoline to the flame.  Starting the investigation before accident’s containment is almost like investigating causes of an air crash with airplane still in the air. Perhaps, such approach could give unique perspective, but more likely it will downgrade itself to simplified description of immediate events with operators and decision makers who were unfortunate enough to be in close proximity as the accident emerged.

MITRE Prediction Market Pilot

Couple of days ago I’ve signed up for the MITRE Prediction Markets Pilot. Prediction market(s) is one of the most controversial and recent means of organizational tools. It is in such early development stage, that few organizations have ever made an attempt to formally integrate the method into its organizational design.

In short prediction markets create common and usually electronic platform that allow participants to put their bets on certain prediction, which has asset price and where this price is tide to the probability of this event. Most famous and successful example of prediction market is Iowa Electronic Markets, a non-profit academic exchange, which conducts US Presidential Elections prediction markets and claims to have more accurate results than the election pools.

Here are some basics: let us assume that in the Winner-Takes-All Market one-dollar value is assigned if the prediction that candidate A wins the election and zero dollars if the same candidate looses the election. The price of the contract that fluctuates between the staring point and the end-point of the bet (for example between 0.2 dollars and 0.4 dollars) means that the chances of candidate A winning the election fluctuates between 0.2 and 0.4 probability. Let us assume that the probability of the bet at a certain day is 0.33. This means that one can buy the contact for 0.33 dollar at that day and if the candidate A wins the election at some point in the future, the gain is equal to 0.77 dollar (or loose 0.33 dollar if the candidate fails).

Basic requirements for Prediction market are:

• Clear rules. Event should have definite outcome and ending date. Preferably known market participants.


• Clear incentives (monetary or other) to make accurate predictions and bet against other participants.


• Stable market size.


• Adequate rewards for risk taking.


• Mix of participants, which includes experts and non-experts like me.


• Clearly defined, exhaustive and engaging predictions.

In the case of MITRE pilot, there are predictions such as “When will the oil spill in the Gulf of TX be contained (i.e. no longer allowed to contaminate the water?)”, “Will Greece default on all or part of its sovereign debt by December 31, 2011?”, “Will the iPhone be available on the Verizon Network on Oct 1, 2010?” and many more. Each player has 5,000 units of virtual currency (which for some reason are called dollars, perhaps because organizers would like to honor the currency in which the pilot is funded :) ).

In 2005 Google made an attempt to introduce prediction markets to evaluate its internal performance (such as product launch dates or quarterly figures) and assess external competitive environment (such as actions and products made by its competitors). One key distinction from the Iowa Electronic Markets and MITRE’s pilot was that Google employees/traders were trading in pseudo currency called Goobles.  The authors of the project created indirect reward system, so that monetary benefits would not distort the prediction outcomes. After all, the value generated by the prediction markets was participants’ perception of future development and events. This shift in motivation made traders focus on their reputation, credibility and ability to influence the market.  It is not clear if the prediction market is operational at Google these days. It seems that long-term sustainability of such initiative require strong commitment form both management and market participants. One interesting and unexpected conclusion that can be taken from Google’s initiative is the fact that prediction market can map the flow of information within particular organization. There was a study done by Google and Wharton scholars to prove this point (Using Prediction Markets to Track Information Flows: Evidence from Google, 2009).  One more important detail, in Google’s case the prediction market techniques fit company’s innovative culture with its etiquette of internal communication, as well as diverse, tech-savvy and self-motivated employees.

It is too early to say, but it seems that MITRE’s pilot is also moving into the direction of using non-monetary incentives such as honor badges, surveys, rankings, etc. The main question here is whether the performance of the players will eventually be measured by virtual monetary gains or accuracy of predictions.

So what is the justification for prediction markets? I tried to dig some articles in Google Scholar.  Here is a good summary of justifications that comes from Joyce E. Berg and Thomas A. Rietz; and their 2003 Prediction Markets as Decision Support Systems, Information Systems Frontiers Market paper: “(1) the markets give continuously updated dynamic forecasts; (2) through the price formation process, the markets aggregate information across traders, solving what would otherwise be complex (at best) aggregation problems; (3) markets give unbiased, relatively accurate forecasts well in advance of outcomes; (4) these forecasts can outperform existing; (5) the evidence suggests that market dynamics can overcome biases that individual traders may have, effectively eliminating them from forecasts; (6) the markets can be designed to forecast a variety of issues and provide a variety of types of information” (Joyce E. Berg, Thomas A. Rietz, 2003).



Cass R. Sunstein, Administrator of the White House Office of Information and Regulatory Affairs, former University of Chicago Law School and current Harvard Law School professor, argues that predictions market (information market) tend operate more accurately than exit pools and expert panels due to the dynamic and aggregate nature of the market. In prediction markets (information markets) participants are given the right incentives to disclose information they hold. “Groups often hold a great deal of information, and an important task is to elicit and use the information of their members… Much of the time, informational influences and social pressures lead members not to say what they know. As a consequence, groups tend to propagate and even amplify cognitive errors. They emphasize shared information at the expense of unshared information, resulting in hidden profiles… [Information] markets tend to correct rather than amplify individual error, above all because they allow shrewd investors to take advantage of the mistakes made by others. By providing economic rewards for correct individual answers, they encourage investors to disclose the information they have. As the result, they are more often more accurate than the judgment of deliberating groups”(Sunstein, 2006).

It seems that prediction markets have value, but I will have to try it on my own to be convinced.  So currently I am in the "learning by doing" mode: taking careful strategies and aiming to get into upper quartile rank of market traders. I will keep readers posted on my success.

As for the trading platform of MITRE’s pilot, I should say that it is user-friendly. It has Dashboard and Stats that engage you into the trading process. It also gives you an option to ask clarifying questions and make comments before or after particular trade is made.  So the system is evolving and I am interested to see where it will takes us in the end (the pilot will last for 6 months as far as I know).

You can visit the site https://mitre.inklingmarkets.com/ to be the judge.

Congress, Goldman Sachs and the Hindsight Bias

Being a student of System safety I could not ignore the public hearing that is taking place in the US Senate on Goldman’s handling of high-risk mortgage business in 2007.

The bigger is the failure or the devastation caused by an accident the more difficult it is to reconstruct the preceding events, processes and systematic factors.  In the case of Goldman, its handling of highly securitized mortgage deal called Abacus, is overshadowed by even larger devastation of the financial crisis that went far beyond the Wall Street.  The public outrage with the economic crisis that has been boiling for the last two years has suddenly found actual addressee, Goldman Sachs Group, thanks to the SEC’s investigation and the independent inquire by the Senate’s Permanent Subcommittee on Investigations.

Goldman’s interaction during the hearing fuels the outrage even further as it treats testimonies of its executives as part of the group’s upcoming legal battle with the SEC.  By fighting against possible legal litigations and denying any wrongdoing, Goldman gets deeper into the trap of becoming the villain, who in public’s eyes is blamed for the financial crisis.  On top of that, the tug of war between two parties in the Congress makes the Goldman’s hearing major strategic battle that will allow the ruling party push its bill on financial regulations.

The goal of this essay is not to defend Goldman, but to explain the phenomena of hindsight bias. As people try to make sense in such confusing environment, it is easier to focus one’s attention on specific individuals and become bias towards the end result.  Sidney Dekker, the Swedish system safety expert, describes the hindsight bias in form of four different, but interrelated reactions: (1) Retrospective, (2) Counterfactual, (3) Judgmental and (4) Proximal (The Field Guide to Understanding Human Error, 2006).

People tend to react post factum and backwardly reconstruct sequence of events in a linear manner.  In the aftermath of an accident, one can easily list logical arguments how and why people should have foreseen and prevented the upcoming events. We easily judge people, who failed to take proper actions. We focus on their personal shortcomings such as absence of proper training and experience, health conditions and hours of proper sleep, etc.  We usually tend to focus our attention on people who happened to be closest to the accident in term of time and space.  In the case of Goldman Sachs, Fabrice Tourre was designated as the sacrificial lamb, who will be slaughtered to satisfy the crowd.

Hindsight gives the investigators better and more complete information in comparison to people who made the decision prior to the failure.  It provides with facts that become midpoints in the linear logic flow that the investigator reconstructs. As we walk backwards, each facts is perceive not as an “intersection point” with a list of equally valid choices, but rather as point of the process when/where incorrect decision was recorded. Hindsight bias exaggerates the importance of the recorded facts versus other events that are not directly related to the specific accident.

Specific sequence of events shapes its post-factum interpretation. It connects events in specific post factual manner. What Sidney Dekker calls tunnel vs. zigzag.  The tunnel vision that the bias creates, oversimplify the history of the accident, with linear logical flow and binary (right and wrong) choices.  As part of the oversimplification process, causality of events are oversimplified as well. As the result, the hindsight prevents us from differentiating between what is know after the accident and what was known by people prior and during the accidents.

What are the objectives of the Congress and the SEC? Get more popularity with the public; re-direct public dissatisfaction toward the Wall Street; take down Goldman Sachs; push for new regulations; etc? As in any other accident investigation, the public, the Congress and the SEC will focus on assigning blame on particular individual instead of focusing on learning the root causes, especially if the objectives of the blame are so vague.

Current Trends in Operational Environment

Organization is a form of human interaction within specific temporal and spatial domain. As part of their day-to-day activity humans have to interact within and with variety of organizations, which differ in terms of goals, complexity, decision-making process, hierarchy and performance.

We would like to focus on two general trends, which may not present holistic foresight, but rather state central to our discussion questions. First trend is the changing nature of interrelation between human and communication. Second trend is dynamic interaction process between organization and operational environment.

Individualization of communication and its affect on human behavior

New means of communication increase personal connectivity to the existing technological and social networks. As the amount of exchanging data increases, humans demand faster, more reliable and more capable channels of communication. Such channels allow humans absorb information in print, audio and visual format at much faster pace than ever before.

Individualization of communication affect human learning pattern, which shifted form printed books and formal learning to wide range of new learning methods and informal education processes. Move over, the monopoly of formal institutions to generate knowledge and to confirm facts changes human behavior dramatically. Such behavior is vivid in current ability to respond instantaneously to news, events, communication messages, personal or collective moods, political opinions, etc. Each human today can be considered not only consumer, but also a possible generator of information and knowledge.

Interrelation between organization and operational environment

Standardization of operational procedures such as international financial and accounting standards, currency exchange, financial planning and economic forecasting led to common themes of operational environment in different countries. Different benchmarking in terms of competitiveness, business-friendliness, corruption, penetration of information and communication technologies create certain expectations from national states to progress towards commonly acceptable standards.

Organizations do play significant role in persuading nation states to remove certain barriers and create favorable operational environment.  On the other hand, key characteristics of favorable operational environment over time become embedded in organization’s structure and behavior. For example, state’s requirement for certain transparency may not benefit particular organization in the short term, but over time becomes unquestionable part of organizational behavior. In sum, organizations push for more acceptable standards of operational environment, as well as adapt to the changing operational environment.

Decision making process

Keeping these two trends in mind, we need to step back to get clear picture of the evolution of decision-making processes. Let us evaluate such decisions in terms of frequency, proximity, magnitude and immediacy.

In terms of frequency, today’s decision makers are equipped with complex analytical tools that can measure uncertainty and allow exercising options as frequently as it may require. New means of communication allow individuals within organizations to calibrate their decisions in a continuous mode.  More over, new facts and consequences of a certain decision take much less time to communicate and could be shared with wider audience. Outside party of specific organization such as stakeholders, consumers, client, watchdogs, etc. may have as much influence on the frequency of such decisions as any internal party with the organization. In sum, constant flow of information and analysis makes the decision making a truly continuous process with numerous calibrating interferences.

New means of communication and human behavioral patterns change human perception of proximity.  Our perception of distance and time changes with the ability to communicate with different parts of the globe at lower cost and faster pace. Virtual collaborative projects are erasing physical borders.  Decreasing cost of physical shipment and steady decline in the cost of travel narrows the gap between physical and virtual domains of human collaboration.  Popular culture, common perception of standards of living, shared goal and ability to communicate frequently helps to narrow most important cognitive gap – trust between individuals.

Favorable operational conditions and new means of communication do affect the magnitude and immediacy of decisions.  One may assume that the power of top management would increase with increased magnitude and immediacy of decisions.  However, in such environment the top management does not posses the monopoly of knowledge and facts. The same constant flow of information that was described above could paralyze the top management with multiple decision options, which presumably are subject to immediate and frequent revision.

In addition, middle management may have as much power to generate equally significant or insignificant decisions in terms of magnitude and immediacy. Availability of information, facts and knowledge give middle management a perception of complete picture in which this particular organization has to operate.  In other words, information is not longer collected and decisions are no longer disseminated from the top of organization’s paradigm. How can top management expect to keep its house in order if its directives become irrelevant before they reach their addressees?

SHADOWS OF THE INTENET AGE

The initial purpose of this essay was to write about anonymity and human conflict in the internet age. In my opinion it is important at least to raise the question why people who behave in civilized manners during the daylight become aggressive, impulsive, antisocial individuals in the digital realm? How anonymity influences such behavior? This led to deeper analysis, which I am afraid will not be covered in such short essay. My confidence emerges for the clarity of thought, rather than deep knowledge of the subject.

Internet age finally circuited what the Russian philosopher Vladimir Vernadsky called Noosphere (1944), or the sphere of human thought. According to Vernadsky, the Noosphere is the highest form of human society, where the human mind becomes its most powerful source of energy. High speed and low cost of communication, digital sound, quality of static and dynamics images become key elements that make such sphere a reality.

Where Vernadsky seem to be wrong is in his view of Noosphere being the highest manifestation of human as the social creature. By social creature I assume a responsible member of the society, who complies with socially acceptable rules and who benefits from cooperation among members of that society. Vernadsky looks at human being as an atom of new society that outwardly interacts with the social, technological and natural environments (what I will call N+1, N+2, etc).

As Vernadsky was developing his outward-focused theory, Carl Jung was developing his inward-focused theory called analytical physiology, which in my opinion presents alternative view of the internet age (what I will call N-1, N-2, etc). Intenet today is as much about information as about “dreams” and “images”. My main hypothesis is that, as human becomes part of the sphere of human thought he or she does not act solely as atomic social creature.

However, first we need to understand where the domain of the sphere of human though is. I argue that such sphere is built neither from hardware infrastructure (cables, satellites, servers), nor from software (web, algorithms, protocols). Both hardware and software are just instruments that are constantly replaced and updated as the amount of the total human knowledge demands new capacities. The capacity of such sphere can be limited only by the collective human ability to generate new thoughts, idea and knowledge.  Additional differentiation has to be made between thoughts (which could be simply perceptions of the world that surrounds us), ideas (new reaction that results from interactions with the world) and knowledge (some subjective verification or closing a gap between previous perceptions and new interaction experience).

If the sphere of human thought is the product of human mind (both rational and irrational, intelligent and unintelligent), then the domain of this sphere is both collective human consciousness and unconsciousness.

As person becomes part of the sphere of human thought, he or she takes multiple context-dependent roles and behaviors, or what Jung identifies as archetypes – Self, Ego, Persona and Shadow.  Self, or the God Within, is the constant driver of truth and self-purpose.  According to Jung, the Self develops in the second half of individual’s life as it encounters and struggles with Ego for mutually beneficial balance.  Self struggles to generate new knowledge that could be beneficial to the collective consciousness, its timeless footprint in the history of the humanity. The Ego, is individual’s temptation to be important, famous, recognizable in the sphere of human thought.  Ego searches for its citation index, google search results, number of “friends”, statistics of the “twitter posts” and “blog hits”.  To achieve that Ego generates ideas. Ego demands recognition and respect, it also develops an identity of the given individual with which such recognition has to be matched (nick, user name, email and web address). This leads us to Persona, or the public profile of the individual – his/her Facebook, Linkedin, Myspace, Ebay, etc.  Persona is social Façade, for social acceptance within different communities (university alum, professional association, interest/fan/solidarity groups, etc).  As any object, humans have both façades and shadows. Shadow is the instinctive, irrational, repressed part of the unconscious mind.  It is the dark side of each individual, which does not recognize socially acceptable and enforced norms of behavior.

All archetypes generate thoughts, but the Shadow brings its thoughts from the deepest and darkest “corners”, which could be both most creative and most destructive. Internet releases the Shadow from the dark corners of individual unconsciousness into collective unconsciousness of the sphere of human thought.  Thus billions of conflicts that take place over the net are surged by this dark and simultaneously creative energy matter. What makes many virtual conflicts so irrational is the fact that they involve conflicts within specific individuals, conflicts among different individuals, and conflicts between different archetypes of different individuals.  Intuitively many of us recognize such complexity and whenever we decide to reply to offensive comment, we often try to analyze who that person is and what made him/her write such thoughts.

Anonymity erases the social norms and fuels rage.  This topic deserves separate discussion.  As Shadow gets its own unique nick and/or username, it starts a separate and often destructive life in the virtual domain. As individual unconsciousness becomes part of the collective unconsciousness, it also becomes more vulnerable to collective manipulation based on prejudice, fear, dogmatic beliefs, anger, etc.  The key difference of the internet and its social media communities is that it provides more customized/individualized approach to such manipulation. Unlike radio, TV, newspapers and other old media instruments, internet and its social media communities allow to target each individual and his/her unconsciousness based on his/her digital footprints.

Whether it is Persona, Ego or Shadow, their creative and often unfulfilled energy can be directed towards destroying the individual (suicide clubs) or actual communities in which the individual live (extremist groups). In the same manner, destructive energy could be projected from an external source, in which community or its particular leading members may destroy the individual (cyber bulling).

In short, the sphere of human thought takes the millennium old internal conflict into a new level. It connects to the broadband the “caveman” that lives in each individual. Moreover, it gives an opportunity for each “caveman” to connect to the rest of the “savages” of the virtual world.

I think of myself as an informed optimist. So I believe that human society is be able to cope with such complexity as long as we purposely understand new vulnerabilities and the fact that collective unconsciousness is as much part of the sphere of human thought as the collective consciousness.

How Safe Is Safe Enough?

Safety is a public good because the “consumption” or enjoyment of safety by one individual does not diminish the “availability” of safety for other individuals (assuming that the value of each human life is equal to the value of any other human life).  Government is elected by citizens of the society and is given official authority to enforce rules and regulations. Thus the government is given official power through enforcement of laws and regulations to maintain safety for the benefit of all citizens within its jurisdiction.  Magnitude of an accident (and its consequences) may affect each and every individual in the society or a random group of individuals. Theoretically, it is in general interest of all citizens to oblige with the rules and maintain safety.  In reality, “the picture” has many conflicting nuances.

As individuals we react to immediate pain.  Pain simplifies our point of view and helps us to survive (Minsky, 1985). Pain is build-in alarm system that informs human brain about immediate threats to its body’s existence.  As humans we tend to react to most immediate threats. When threats (and/or health hazards) are remote in terms of time and impact – such as smoking, breathing poisonous air, eating trans-fat food, etc – our reaction is not as swift or as rational.

A societal equivalent of human pain is loss of human life.  As a community or a society, people tend to react to accidents that involve loss of human lives with great attention.  The risks that are not visible or well understood do not get public attention until fatal accident actually takes place. As individuals, human society in general does not have high attention to threats and problems that are far in time and space.

Nothing can be valued more than human life. However, there is a distinction between the value of an exiting human life and the value of a deceased human being.  The later case was a substitute for blood feud or what is called vendetta, where attaching price to diseased life was the way to avoid further bloodshed. In fact this approach has been considered as more civilized conflict resolution for centuries (what is know as blood money). The moral line is drawn between the world of alive and the world of deceased. Those who attempt to take “the price tag” from the world of deceased and use it in our world make rational analysis, which is immoral at the same time.

In my point of view, there are two important trends worth noticing:

(1) As human society become more dependent on complex systems, there seems to be slow convergence of system safety and public health. It is clear that the fundamental of two fields is the same – the value of human life. However, it is not clear whether such oversimplified approach can be beneficial to either system safety or public health. This is just an intuitive feeling which I hope to understand during the course.

(2) Availability of information and its widespread and fast dissemination leads to greater public awareness. Easily available instruments and tools (email, matlab, google earth, skype, youtube, simple chemical tests and pH strips, individual radioactivity sensors, etc) lead to increased role of individuals in dealing with safety, which in turn influence behavior of governments and corporations. Availability of information also builds much richer postmortem picture of an accident and different accident scenarios, where ordinary citizens are able to question and challenge official reports and causes of an accident.

The simplest answer to the question “who should be responsibility for risk management?” is government and its regulatory agencies.  However, we know that the government agencies are managed and run by individuals. These individuals, as many of us, can manage only a certain level of complexity. There is no guarantee that they can integrate all the pieces together and maintain public safety all the time.

I think (“which implies that I do not as yet know so”), since safety is a public good, it has to be collective responsibility of each and every citizen in the society to think in cohesive and responsible when it comes to safety.

The role of the legal system depends on the end–result that society expects from its courts.  There must be a reason why the US legal system adopted the civil (tort) approach towards safety hazards (besides obvious corporate interests). It is my understanding that such approach was in part chosen to shift attention from responsibility of individuals to corporate responsibility, and eventually to accidents/hazards causes. It is difficult to judge if the system is functioning effectively or not since we have no information how many accidents/hazards were prevented just by potential possibility and danger of civil litigation.  We can only see the cases that are floating on the surface, in which corporations are using complex legal procedures to avoid, mitigate or postpone expensive settlements.

Criminal charges, on the other hand shift the focus from the accident to particular individual responsibility. It is often the case where both the government (which could be under public pressure) and the public itself are eager to “teach a lesson”. The expectation is shifted from understanding wholesale list of accident’s causes to finding specific “target” or “villain”.  Other potential “targets” are giving limited information about the accident reinforcing the initial bias, redirecting the blame and sacrificing the least protected “target.”

In the case of tainted milk, the Chinese government decided to teach a lesson. Three individuals were sentenced to death and 21 others, “mostly dairy producers and middlemen, were given terms ranging from two years to life in prison” (http://www.nytimes.com/2009/01/22/world/asia/22iht-milk.3.19601372.html).  Such lesson is likely to influence behavior of Chinese businessmen and even prevent potential food poisoning. One can argue that the trial may bring limited benefits to the society, even if it does not address the structural problem of food safety.

Here I would like to address the issue of Human error and Learning from Mistakes described (Flatch et al.). I think that we need to decouple <understanding the accident> from <learning from the accident>. I argue that it could be possible to learn from an accident even if complete description of an accident is not determined and vice versa. In any of the four options, the end result of the accident is the same.

	Learning form an accident	Failing to learn from an accident
Understanding the accident	X	X
Failing to understand the accident	X	X

So in the case of tainted milk, even if full picture of the food safety hazard has not been found or at least publicly recognized (i.e. export of the poisoned food products), there is still a possibility that appropriate lessons are learned. In the case of uncontrolled acceleration (Audi, Toyota, GM), even if the cause(s) of the fault(s) was known, the management has not learned the lesson.

This takes us back to individual reaction to physical pain.  Perhaps criminal prosecution of individual executives (in this case imprisonment) could be more effective approach in achieving public safety at the cost of objective accident investigation.

The biggest doubt here is that by focusing on individual responsibility we do not solve the challenges of potential accidents, which could be greater in power and magnitude as our society becomes more complex and interdependent.

On the relation between technology and decentralization

Recent technological developments and low cost of communication do play limited role in increased de-centralization of organizations and processes. However, I think there is an important factor that has been influencing organizational design long before rapid advancements in technology.

The environment in which human organizations have to operate dictate the design of the organization. If we assume that the organization managed by humans takes rational action, then we can expect the organization to adapt to the environment within which it had to survive, exist, operate, create value and benefits. One may argue that a clear distinction had to be made between natural and business environments, where the latter can be easier to influence and change. I do not discount a possibility of dynamic interaction between the organization and its outside environment.  Nevertheless, if we assume that there are many different companies operating within specific business environment, it is more likely for the business environment to change the shape of the organization than the opposite.

In theory, the very same organization can operate as centralized organization in one environment and de-centralized under different “environmental” conditions. In reality,  organizational culture, business model, structure, procedures and practices do not allow such dynamic to take place rapidly.  However, my key point is that technological development and low cost of communication do not solve this problem either.  Cheap and low cost communication can actually enforce centralization process and prevent much needed evolution (i.e. General Motors operations in Europe). In the same way, availability of new communication tools may not necessarily push meshed organizations to higher level of coordination, which could be beneficial, sustainable and competitive decision in the long term (i.e. Air-traffic control system in the US, independent sustainable energy generators in China or crab fishing in the Pacific).

Decentralization may also not necessarily bring freedom to a particular individual. Human societies are much more complex than we actually perceive. Such complexity is embedded by blood, physiological, religious, regional, ethnic, cultural, hierarchical, professional, and many other relations and interconnections, which often create multilayer structure of the particular society (what some call “the fabric”). Greater in size, cheaper, faster and interactive communication may change some of the interconnections, but not necessarily all of them. As in organization, such interconnection can actually strengthen old forms of interconnection (religious broadcasting, ethnic global-reach media, etc).

Moreover, better communication does make an individual more aware (or misinformed), but not necessarily lead to more independent decision or action. As the result, it does not directly make the individual more or less free.

Of course we need to define common understanding the meaning of freedom. Let us simply limit the understanding of freedom as “as freedom of choice and decision in an open market.”  But even in this limited context, there are number of barriers that new means of communications are not yet able to solve (difference in trade regimes, currency exchanges, environmental and labor regulations, etc).  As for an ideal global citizen, his/her consumer choices are even more standardized within a list of corporate products (Procter and Gamble, Gillette, Nestle, Coca Cola, McDonalds, etc), whereas individual entrepreneurship opportunities are narrowed down to marginal and meaningless service providing.

In sum, technology and innovation brings illusion of freedom and decentralization on both on global and national scales. Such illusion definitely helps to manipulate and control most informed and active groups of consumers by restraining them in a virtual sand box.  As in American Idolä, the public is just given an illusion of contributing to the decision-making, which in reality has already been made by the producers and “the corporate”.  At the end of the day the food has to be harvested and served, the electricity and nuclear plans have to be run, the planes and air traffic have to operate safely, cargo ships from China have to be navigated to ports and uploaded to Wal-mart trucks.

Thoughts about Thinking-Intentions Profile (TIP)

Last Saturday I was introduced to Thinking-Intentions Profile, a powerful coaching technique. The process is conducted in a group of 3-5 people and is divided into five stages:

1. The coached person clearly states his or her problem statement or some other issue.

2. Group coaches start asking direct questions.

3. The coached person steps out from the the discussion and the coaches discuss impressions as if the coached person is not in the room.

4. The coached person is re-invited into the discussion and is offered a list of solutions

5. The coached person is given an opportunity to select appropriate recommendation and commit to them.

Prime deliverable of the coaching session: validation or invalidation of the problem statement. If the coached person is able to validate or invalidate of her/his problem statement by the end of the coaching session, then the minimal goal of the session was achieved.  In other word, it is important for the coached person to verify her/his perception in the actual context. By context I mean the social environment of the given individuals. Collective coaching represents a micro-model of such environment.

Thrust and objectivity of the coaches. Trust established between the coaches and the couched person helps the questions to be asked and answered as clear as possible. In other words, distrust between two parties creates distraction for the cognitive process. Such process should not tolerate any elusive statements and unspecified assumptions. Limited experience with this method does not allow me to say if the coached person should be taken out from his/her comfort zone. Perhaps such techniques can be useful when the group reaches a preliminary conclusion that the initial problem statement is invalid.

Discussion requires self-discipline form the coaches and tolerance from the coached person. The “out of the room”/ “behind back” simulation opens door for initial discussion. However, the substance of the discussion has to be sustained within or near acceptable border of the coached person. Otherwise, sharp criticism or insensitive comments may easily turn defensive mechanisms of the coached person ruining the purpose of the session.  It is important that the coaches are able to skillfully balance on the border of acceptable and unacceptable criticism/comment/etc.  Defining such borders by trail and error (forward and backward, expansion vs. contraction) is key in shaping physiological portrait of the coached person.

Solutions. This stage allows infinite number of possibilities and solutions. The level and degree of the relationship between the coaches and the coached person dictates the dynamics of this stage.  Difference or similarities in age, gender, race, religion, language, culture, etc will define acceptable limits of this stage.

Commitment can be the most sensitive stage of the coaching. It is only a temporary or formal closure of the process.  Once the process of coaching is started, it has a life of its own. Afterthoughts and reevaluations may take numerous iterations, time, effort and emotional energy.  It is an important detail that some amateur coaches are not ready for.  It is the biggest warning that should keep away such amateur coaches from taking this responsibility from the beginning. Another important detail is that the coached person may or may not commit to the suggested solutions. Depending on the situation, the coached person may not openly commit to some suggestions and tacitly reject other suggestions.

Lessons learned. I call it an emotional cycle. Thrust creates clarity. Trust also builds connection/bond. Clarity helps to identify problem and give suggestions. Commitment to some of the suggestions reinforces the bond. The bond cannot be broken if you want to maintain the thrust. The art of coaching is an ability to understand this dynamic and stay outside of it at the same time.  It is similar to the skills of the successful doctor, who is able to remain empathetic and professional at the same time.

Thoughts on STAMP (Systems-Theoretic Accident Model and Processes)

New Accident Model for Engineering Safer Systems (Leveson, http://sunnyday.mit.edu/16.355/)

Symptom – “something that indicates the existence of something else”, Webster dictionary http://www.merriam-webster.com/dictionary/Symptom



It is my understanding that STAMP focuses on “constraints necessary to limit system behavior to safe changes and adaptations” (p.12). The model briefly touches upon a symptom as “the process leading to an accident (loss event)... described in terms of an adaptive feedback function that fails to maintain safety as performance changes over time to meet a complex set of goals and values” (p.26).

Reading this article I kept asking myself if complex systems are just “complex and often imperfect human artifact”, could one characterize symptoms of upcoming accidents? In other words, if we can classify accident factors (p.21), can we characterize accident symptoms?

The article briefly mentions that “proximity” to systems has changed over time (p. 14). In the past, operators had direct access to their systems and were able to get “direct physical feedback” from the system. More experienced operators could have indentified changes in the system’s behavior or “feel” erroneous symptoms (or what is called “detect maladaptive changes” p.26).  Such ability usually came from “gut feeling” or intuition, which in reality was based on previous experience and undocumented assumptions.

Modern complex systems do not give us luxury of “feeling” the system. Moreover, post-mortem accident investigation may not reveal the symptoms that operators failed to recognize before that accident. Available factual data may not necessarily lead us to the correct interpretation of that data (p.26). But we may assume that such symptoms are usually non-linear, dynamics (with feedback loops) and adaptive to the environment.

It might sound as gross generalization, but I argue that STAMP should not only help to control the “beast”, but also explain “why and when the beast wants to get out from the cage”.  I will take a risk of classifying such symptoms into three categories:

(1) external symptoms: symptoms that emerge as the result of external socio-technical environment (including change and adaptation of new safety constrains) that forces the system to adapt and lead to maladaptive changes. This can be categorized as expected and inevitable results if and when erroneous processes influence the system and its environment.

(2) interface symptoms: symptoms that emerge as the result of interaction between the system and its operator, the system and other systems. This is the closest we can get to the old way “feeling the vibration” the system and being able to get feedback from it.

(3) internal behavioral symptoms: unintended or unforeseen symptoms that can be best identified by the designer or peer-reviewers of the system. My intuition, tells me that this is the most difficult symptom to indentify and categorize (and decompose), which can be done only through extensive testing of the system.

Social Processes and Proofs of Theorem and Programs (Lipton, Perlis, DeMillo)

I have to admit that I included this article into my top ten list of articles read at MIT this semester.

“If mathematical process were really one of strict, logical progression, we would still be counting on our fingers.”

The article opened me a small window into the world of mathematicians. Our distorted understanding of the their world lead us to erroneous perception of how software programming “world” operate.  In both of these worlds, social processes, which are not necessarily obvious to an outsider, are major driver in test and acceptance of new ideas, theorems, products and systems.

The authors argue that "A program is a human artifact, a real-life program is a complex human artifact; and any human artifact of sufficient size and complexity is imperfect.” Thus people are not able to “create perfect mechanisms and   verification process is nothing but a model of believability”.  As the result, software programs have to be reliable but not necessarily perfect.

A conclusion that can be drawn from the article is that in software engineering social processes have to more visible and acceptable form of test and acceptance. By social processes I mean per-reviews, beta-user reviews and end-user reviews. These processes may not completely verify the system, but encounter the system with the real-world environment and force the designers of the system to adopt it.