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.

Recorded Future goes beyond Search

"The company is called Recorded Future, and it scours tens of thousands of websites, blogs and Twitter accounts to find the relationships between people, organizations, actions and incidents — both present and still-to-come. In a white paper, the company says its temporal analytics engine “goes beyond search” by “looking at the ‘invisible links’ between documents that talk about the same, or related, entities and events.”

Read More http://www.wired.com/dangerroom/2010/07/exclusive-google-cia/#ixzz0vAkbmxXy

"I Write Like" filter-like algorithm compares and categorizes your writing style

Have you heard about "I Write Like"? Go to http://iwl.me and insert couple of paragraphs of your writing. In few seconds the algorithm will tell you "which famous writer you write like by analyzing your word choice and writing style and comparing them with those of the famous writers".

The idea belongs to Dmitry Chestnykh, a 27-year-old Russian software programmer. "Chestnykh modeled the site on software for e-mail spam filters. This means that the site's text analysis is largely keyword based. Even if you write in short, declarative, Hemingwayesque sentences, its your word choice that may determine your comparison" (NPR: http://alturl.com/8qurx).

The Russian blog-sphere is surprisingly quiet about both the author, Dmitry Chestnykh, and the site.  As for Dmitry himself, he twitted "I write like Douglas Adams. Proof:" on July 8. One week later he is Internet's newest superstart,  busy giving away interviews. Here is one of them from THEAWL.COM (http://alturl.com/4h8tx):

"...How many authors are currently in the database? How did you decide which authors to include?
The current version includes 50 writers. First versions included authors from the bestsellers list on Wikipedia, top downloaded books from The Gutenberg Project (a public library of out-of-copyright books), and the ones I could remember. Later versions included authors suggested by users.

When are you going to add explanations for the algorithm for each author? Why haven't you included this already — why keep it secret?
I wanted to write a blog post about it, and to open-source the code, but haven't had time for it yet, because I've been busy updating the program and handling all the traffic, emails and comments I received. Also, it's really interesting to read how people try to explain the results they got.

Actually, the algorithm is not a rocket science, and you can find it on every computer today. It's a Bayesian classifier, which is widely used to fight spam on the Internet. Take for example the "Mark as spam" button in Gmail or Outlook. When you receive a message that you think is spam, you click this button, and the internal database gets trained to recognize future messages similar to this one as spam. This is basically how "I Write Like" works on my side: I feed it with "Frankenstein" and tell it, "This is Mary Shelley. Recognize works similar to this as Mary Shelley." Of course, the algorithm is slightly different from the one used to detect spam, because it takes into account more stylistic features of the text, such as the number of words in sentences, the number of commas, semicolons, and whether the sentence is a direct speech or a quotation..."

Well, I inserted three sample essays from my blog.  Twice it came out as David Foster Wallace (http://alturl.com/w2quj) and once as Arthur C. Clarke (http://alturl.com/rmixh).

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 .

John Sterman's Summary on Principles for Successful Use of System Dynamics.

My favorite is #11.

"...

1. Develop a model to solve a particular problem, not to model the system. A model must have a clear purpose and that purpose must be to solve the problem of concern to the client. Modelers must exclude all factors not relevant to the problem. The goal is to improve the performance of the system as defined by the client. Focus on results.

2. Modeling should be integrated into a project from the beginning. The value of the modeling process begins early on, in the problem definition phase. The modeling process helps focus diagnostics on the structure of the system rather than blaming problems on the people making decisions in that structure.

3. Be skeptical about the value of modeling and force the “why do we need“ discussion at the start of the project. There are many problems for which system dynamics is not useful. Carefully consider whether the system dynamics is the right technique for the problem. Modelers should welcome difficult questions from the clients about how the process works and how it might help them with their problem. The earlier these issues are discussed, the better.

4. System dynamics does not stand alone. Use other tools and methods as appropriate. Most modeling projects are part of a larger effort involving traditional strategic and operational analysis, including benchmarking, statistical work, market research, etc. Effective modeling rest on a strong base of data and understanding of the issues. Modeling work best as a complement to other tools, not as a substitute.

5. Focus on implementation form the start of the project. Implementation must start on the first day of the project. Constantly ask, How will the model help the client make decisions? Use the model to set priorities and determine the sequence of policy implementation. Use the model to answer the question, How do we get there form here? Carefully consider the real world issues involved in pulling various policy levers. Quantify the full range of costs and benefits of policies, not only those already reported by existing accounting systems.

6. Modeling work best as an interactive process of joint inquiry between client and consultant. Modeling is a process of discovery. The goal is to reach new understanding of how the problem arises and then use that understanding to design high leverage policies for improvement. Modeling should not be used as a tool for advocacy. Don’t build a client’s prior opinion about what should be done into a model. Use workshops where the clients can test the model themselves, in the real time.

7. Avoid black box modeling. Models build out of the sight of the client will never lead to change in deeply held mental models and therefore will not change client behavior. Involve the clients as early as possible. Show the model. Encourage them to suggest and run their own tests and to criticize the model. Work with them to resolve their criticism to satisfaction.

8. Validation is a continuous process of testing and building confidence in the model. Models are not validated after they are completed nor by any one test such as their ability to fit historical data. Clients build confidence in the utility of a model gradually, by constantly confronting the model with data and expert opinion – their own and other’. Through this process both model and expert opinions will change and deepen. Seek out opportunities to challenge the model’s ability to replicate a diverse range of historical experience.

9. Get a preliminary model working as soon as possible. Add detail only as necessary. Develop a working simulation model as soon as possible. Don’t try to develop a comprehensive conceptual model prior to the development of a simulation model. Conceptual models are only hypotheses and must be tested. Formalization and simulation often uncover flaws in conceptual maps and lead to improved understanding. The result of experiments inform conceptual understanding and help build confidence in the results. Early results provide immediate value to clients and justify continued investment in their time.

10. A broad model boundary is more important than a great deal of detail. Models must strike a balance between a useful, operational representation of the structure and policy levers available to the clients while capturing the feedbacks generally unaccounted for in mental models. In general, the dynamics of a system emerge from the interactions of the components in the system – capturing those feedbacks is more important than a lot of detail in representing the components themselves.

11. Use expert modelers, not novices. Modeling requires a discipline approach and an understanding of business, skills developed through study and experience. Get the expert assistance you need. Use the project as an opportunity to develop the skills of others on the team and in the client organization.

12. Implementation does not end with a single project. In all three cases the modeling work continued to have impact long after the initial project is over. Models and management flight simulators were applied to similar issues on other settings. The modelers developed expertise they applied to related problems and clients move into new positions and new organizations, taking the insights they gained and, sometimes, a new way of thinking, with them. Implementation is a long-term process of personal, organizational, and social change.

..."

John Sterman, Systems Thinking and Modeling for a Complex World (2000): Summary of Chapter 1.

"...

1.Yesterday's solution becomes today's problem...

2. Policy resistance arises because we often do not understand the full range of feedbacks operating in the system. Our actions alter the state of the system, other people react to restore the balance we have upset... Side effects are not the feature of the reality but a sign that our understanding of the system is narrow and flawed.

3. Our decisions alter our environment, leading to new decisions. But also triggering the side effects, delayed reactions, changes in goals and interventions by others. These feedbacks may lead to unanticipated results and ineffective policies.

4. All dynamics arises from the interaction of just two types of feedback loops, positive (self-reinforcing) and negative (self-correcting) loops. The positive loops are all processes that generate their own growth. Negative loops counteract and oppose change. These loops all describe processes that tend to be self-limiting, processes that seek balance and equilibrium.

5. Active modeling occurs well before sensory information reaches the areas of brain responsible for processing visual information.  Our survival depends so completely on the ability to rapidly interpret our environment that we long ago evolve structures to build these models automatically.

6. The act of measurement introduces distortions, delays, biases, errors, and other imperfections, some known, other unknown and unknowable. Measurement is an act of selection.

7. People generally adopt an event-based, open-loop view of causality, ignore feedback processes, fail to appreciate time delays between action and response and in the reporting of information, do not understand stocks and flows and are insensitive to nonlinearities that may alter the strength of different feedback loops as a system evolves.

8. When we attribute behavior to personality we lose sight of how the structure of the system shaped our choices.

..."

101 Things I Learned in the System Design and Management Program #101SDM

Dear SDM Fellows,

Congratulations to those of you who just graduated.  On behalf of SDM10 cohort we wish you all the best in your future career and life endeavors.

I am sure many of us at least once had difficulties explaining what SDM is all about, and I think that “an elevator pitch” does not reflect all aspects of our unique program.

So I am trying to put together “101 Things I Learned in System Design and Management Program.”  I think it could be a good summary of SDM program for perspective students (and sponsors?), as well as current, graduating and alum members of the SDM community.

It will take some time and several drafts, but I am eager to finish it before the Annual Systems Thinking Conference at MIT in October this year.

I am sure everyone has at least one idea and one experience to share with the rest of us. If you have time, please email directly to me abdimom@mit.edu (or twit at #101SDM), because spam can easily kill this idea. I will share with everyone drafts along the way (eventually I will put together a wiki or some other sharing tool). If the project proves to be successful, we can leave it for future SDM fellows to come up with updated editions.

Looking forward to hear from you,
Azamat Abdymomunov, SDM10

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.

"The Logic Of Failure: Recognizing And Avoiding Error In Complex Situations"

Great book written in 1989 by West German Professor Dorner. This is a good introduction into System dynamics and System thinking. The book gives several mental models of how people "attack" complex problems and why they often fail. Dorner describes several psychological experiments that help to differentiate "bad decision maker" from "good decision makers," as well as mental traps that lead to failures. Based on this analysis he presents his model of decomposition and planning. At the end of the book Dorner quotes Clausewitz that "...War is not an infinite mass of minor events... War consists rather of single, great, decisive actions, each of which needs to be handled individually." Such "strategic thinking" requires far greater expenditure of mental energy argues Dorner.

Dorner ends his book with the thought that "...If we cannot form a picture of a temporal configuration, we cannot adjust our thinking and actions to take that temporal pattern into account... We human being are creature of the present. But the world today must learn to think in temporal configuration."

The book is easy to read and comprehend. I gave it to my 15 years old son to read it. Hopefully he will use my advise to read it earlier in his life.

Tim Brown on Change by Design

I've got the book after Tim Brown's video lecture at Sloan MIT at the end of spring semester. The book is full of so many great and original design ideas. It was hard to concentrate while reading this book, because you want to close it in mid-sentence and try to change the world around you.  Here are some marvelous quotes from the book:

"Design has the power to enrich our lives by engaging our emotions through image, form, texture, color, sound, and smell. ... design thinking points to the next step: we can use our empathy and understanding of people to design experience that create opportunities for active engagement and participation."

"Unlike a prepared script or an operational manual, [blueprint] connects the customer experience and the business opportunity. Every detail holds the potential to sour a relationship... but only few offer possibilities for an experience that is distinctive, emotionally gratifying, and memorable. The blue-print is at one and the same time a high-level strategy document and a fine-grained analysis of the details that matter."

"Design can help to improve our lives in the present. Design thinking can help us chart a path into the future."

"Instead of an inflexible, hierarchical process that is designed once and executed many times, we must imagine how we might create highly flexible, constantly evolving system in which each exchanges between participants is an opportunity for empathy, insight, innovation and implementation."

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.