What Harm is in Not Acting?

People do not always act when we need to. We have all seen situations where people stay in a bad situation, put up with events that we would not endure, and otherwise not act to improve themselves. Businesses stay in lines of business that should have been changed or shut down long ago. Even Warren Buffet stayed with the original textile company long after it was no longer very profitable.

Why do people not take the actions they need to take? Part of the answer is that many people react based on what other people around them think. John Maynard Keynes stated that, "Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally." In other words, many people would stick to what they think other people would approve of even when they know that there is a strong likelihood of failure.

It is a natural tendency of human beings to defer too much to our past, try to keep historic buildings past when they can be maintained, and keep corporate structures, products, and endeavors past when they are profitable. This is why so many places that once were doing well have such a hard time recovering from a "fall from grace". People have a hard time walking away from places, situations, and practices that worked in the past even though they may not be working now.

Another issue is that of regret. According to Wayne Dyer, "You'll seldom experience regret for anything you've done. It is what you haven't done that will torment you." People work harder to avoid regret than to get possible rewards. Yet, we are not able to determine in advance what we will regret later. Thus, we rely on what others have done.

We wind up with disappointment, but that is often preferable. Regret is experienced far more intensely than disappointment. Regret and disappointment happen in two different parts of the brain with regret happening in the obitofrontal cortex. "The more responsibility we take for our actions, the greater the feelings of regret can be." Steve Dewitt.

In order to have the freedom to act, we have to be able to walk away from anything that has worked in the past. Being willing to change everything allows us to be open to seeing anew what might work here and what does not work. This willingness to change everything is the secret to any "turnaround specialist". It can mean a great deal to the profit margin.

Every family and every company has an unwritten history of what to let slide and what to confront and change. When things are not working, we have to break that unwritten history. This is not easy and in families, can be emotionally challenging. Yet, this process is often the most productive.

Will your company lose the cyber war?

There is a roundtable discussion in the December Communications of the ACM on the cyber war that companies are engaged in - even though they may not know it. The way companies are being attacked through the internet has changed dramatically over the last few years. Instead of the attacks simply looking for "high value data" that they could steal, the attacks are now focusing on getting business intelligence.

We have all heard about the way that crooks would skim cards and use that data. That is small time criminal efforts. Now we are facing not just "big time" criminal efforts, but also intelligence services looking to steal industrial capability. The difference is huge.

One of the examples given was how a chemical plant was electronically broken into. The intrusion did not just look for information about how to cause damage or financial data that could be used on the outside. Instead, every bit of operational data was being taken. Shortly thereafter, similar chemical plants were built in other countries and it is believed that those new plants are using that stolen data to gain a competitive advantage over the US company. By using the same operational settings as the original plant, they can skip the usual several years of experimentation to find the optimum settings while having lower other costs.

In short, the current efforts are far more about industrial espionage than about stealing financial data. "Why worry about [the target's] finances when we can put them out of business?"

The speakers recommend that the security be a top priority of any US company.

Risky World

Ojai Conference statement: "The problem that comes from engaging in high-risk behavior for which the consequences are absent, even if only temporarily, is that such high-risk behavior begins to appear normal and the entire scale of risk gets adjusted and pushed out." Thus, skateboarders (and bubbles) go higher and higher.