James D Meacham, 3rd

Dad. Soccer fanatic. Business ethicist and consultant at SAI Global. Technology futurist. Aspirational humanist. Doctoral student at University of Southampton's School of Management. Author of forthcoming textbook An Introduction to Business Ethics and articles on applied compliance and ethics. Research interests center around ethical decision-making in the business context: corporate culture, organisational behaviour, cognitive bias and behavioural ethics.

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- Ethics and Compliance Applications of Open Data
  
  Apr 22, 13
  Although my skills as a data analyst are nascent, it occurred to me very early on that the emerging trend toward Open Data would be transformative in ways we couldn't anticipate. This isn't a novel idea, as a look at any of the following TED talks will show:
  
  The Year Open Data Went Worldwide
  How Open Data is Changing International Aid
  Demand a More Open Source Government
  
  What hadn't occurred to me, however, was how revelatory even cursory looks at data might be for an ethicist. As part of my ongoing project to learn the R programming language (R is a statistical and data analysis application, freely available), I decided on an exploratory mission to find out something ethically interesting with the tool. Armed with only my intermediate (at best) knowledge of statistics and my introductory level of expertise with R, I wanted to see if I could find out something I didn't already know.
  
  After spending a few minutes looking for relevant data sets, I found the Wage and Hour Enforcement database at theU.S. Department of Labor. It seemed to me that we might be able to learn something about the way businesses are treating their workers. This dataset includes all enforcement actions, both successful and unsuccessful, since 2007.
  
  Though there is a near-infinity of ways you could these data, I decided to look at two questions: which are the worst industries to work in from a wage and hour perspective and which companies are worst to work at from the same perspective. I expected that these enforcement actions would be relatively normally distributed and proportional to worker population. They turned out to be neither. A few R commands (which I'll preserve for anyone interested in learning R) and I was able to see that some industries and some companies are far worse than others.
  
  The dataset has a separate record for every enforcement action and every record has an industry code. To see which industries were the worst, I just had to count the number of times each industry was mentioned. There are over 1500 industry classifications, so sorted the list by number of appearances and took the top 15:
  
  ncaisclasscount <- as.data.frame(table(whd$naics_code_description)) sortedncaisclass <- ncaisclasscount[order(-ncaisclasscount$Freq),] topfifteen <- sortedncaisclass[1:15,] barplot(topfifteen$Freq, names.arg=topfifteen$Var1, las = 2, cex.lab=.1, horiz=TRUE)
  For ease of interpretation, I then put it into a horizontal barchart
  
  barplot(topfifteen$Freq, names.arg=topfifteen$Var1, las = 2, cex.lab=.1, horiz=TRUE)
  
  which looks like this (click through for PDF version that you can zoom into: because of the size of the labels, it wasn't possible to capture this in a graphic that fit in the blog format, ditto below)
  
  So it turns out that restaurants are a terrible business if you're an employee (if you use Wage and Hour enforcements as a proxy for bad behaviour by employers). They hold the top 2 places which, combined, are 5 times worse than the next industry.
  
  How about individual companies, then? Is the revelation that restaurants are not particularly good employers borne out in the company data? For this, I essentially repeated the previous process, only I counted employer frequencies rather than industries.
  
  df2 <- as.data.frame(table(whd$trade_nm)) big2 <- subset(df2, Freq > 10) sorted2 <- big2[order(-big2$Freq), ] topten <- sorted2[1:10 , ] barplot(topten$Freq, names.arg=topten$Var1)
  which resulted in (click here for PDF version):
  So the industry data is definitely proven out by the company data, but there are some surprises. Subway looks to be a really terrible company to work for, followed by MacDonald's (there were some data quality issues I didn't take the time to correct but the combined MacDonald's plots would equal about 500 enforcements.) To really get an idea of how relatively bad each company was, you'd have to combine these data with how many employees are employed by each company, but this at least gives you a high level view.
  
  I can't emphasise enough how cursory and incomplete this look at this data is. The point is to demonstrate how useful open data can be for pointing out practical issues in ethics. This could be the starting point for a lot more analysis, like investigating why the restaurant industry has so many enforcements and if anything could be done about it.
- May 30, 12
  
  Citizen's United and Strategic Corporate Governance
  
  A recent blog post I did for my employer, SAI Global: http://compliance.saiglobal.com/community/blogs/item/3435-citizens-united-dilemma
  With the news that the U.S. Supreme Court will likely hear an appeal of Montana's rejection of the Citizen’s United decision, firms are once again evaluating their participation in political electioneering. While many business ethics questions focus on the individual, Citizens United moves ethical decision-making into the competitive realm and needs to be considered as both a strategic problem and an ethical dilemma.
  Ethically, the solution to the dilemma would be straightforward if it were not for the expectations of the capital markets. Using political power to accomplish corporate goals is the very definition of crony capitalism and can have high negative social costs. However, public firms are expected to, and in fact have a fiduciary duty to, maximise returns to shareholders. If a company doesn’t get involved in lobbying, it gives its competitors an advantage that may result in diminished cash flows. In turn, the capital markets are apt to depress the value of that firm’s securities, resulting in a double punishment. To make things worse, the firm acting ethically would then be danger of being an acquisition target due to lower equity values.
  On the other hand, some recent research suggests that political activity is negatively correlated with firm value. A 2010 paper by Harvard Law professor John Coats concluded that “[I]n the period 1998-2004 shareholder-friendly governance was consistently and strongly negatively related to observable political activity…Political activity, in turn, was found to be strongly negatively related to firm value.” So, while it seems on its face that corporations should take advantage of the opportunity to involve themselves in the political process, the payoffs for shareholders, at least in one study, are not as forthcoming.
  Currently, firms are dealing with the post-Citizens United regime in a variety of ways. Some, such asGoldman Sachs, IBM, and Colgate prohibit use of corporate funds for political candidates. This is a minority strategy but it could become more prevalent as the costs (both financial and reputational) of corporate political involvement grow. At the opposite end of the spectrum, many firms, particularly in thepharmaceutical and energy industries, have funnelled large sums of anonymous donations into Political Action Committees (PACs) and Super PACs through 527 shell corporations. In the middle are corporations that have pledged transparency regarding their political contributions, such as Amgen,Merck, and Verizon. This last group has been growing rapidly and represents an emerging best practice.
  From a strategic perspective, each firm needs to weigh the costs and benefits to shareholders and, as we can see from the current research, they are not at all clear. From an ethical perspective, however, each firm will need to do a similar cost/benefit analysis – not only related to their own firms, but also to our political system and society at large. At the very least, the principle of transparency dictates that openness to both shareholders and stakeholders regarding political donations should be a standard policy, allowing all parties affected by corporate political activity to evaluate it in light of their own (and society’s) interests.
- Corporate Governance and Behavioural Ethics
  
  Feb 01, 12
  
  There are two ideas that underlie most theories about corporate governance, and those reflect the assumptions of the classical economic theory of homo economicus, or economic man (or, more politically correctly, economic person). Economic man encapsulates two assumptions about human behaviour, i.e., that human beings always act in ways that are both rational and self-interested. While these assumptions are the bedrock of most classical and liberal economics, they have only recently begun to be tested empirically in the fields of behavioral economics and behavioral ethics. As I wrote in my 2011 article in Compliance and Ethics Professional, the empirical examination of rational self-interest has exposed some substantial faults in these assumptions. What has not yet happened, as far as I can see, is for these insights about human behaviour to be propogated to the study of corporate governance.
  
  There are two primary theories of corporate governance, the shareholder/agency theory and the stakeholder theory. Each makes different moral assumptions about the purpose of the corporation and the ethical and practical responsibilities of the senior-most decision makers in the corporate structure, the board of directors. The agency theory is more representative of the Friedmanite view that the sole responsibility of the corporation is to maximise legal returns to shareholders. Stakeholder theory holds that society gives the corporation its license to operate and therefore there are other groups, or stakeholders, to whom are owed consideration in addition to shareholders. Examples of these stakeholders are customers, workers, suppliers, communities, and society at large as representative of common/societal goods, such as the environment.
  
  What both both these theories have in common, however, is that they both view the actors within the corporate system as self-interested and rational. In fact, agency theory is a direct expression of the assumption of selfishness. It suggests that because management and ownership are separated, the agent (the manager) will be motivated to behave in his or her best interest, not in the best interest of the principle (the shareholders/owners). Without the assumption of selfishness, the principle/agent problem disappears (or is at least diluted). This in turn calls into question many of the incentives used to align shareholder interests with those of the management (stock options, restricted stock, and contingent bonus plans). Much of the research done into employee motivation suggests that, beyond a certain minimal level, compensation is one of the least effective motivators of employee performance. This thus provides an ex post facto indictment of the belief in the centrality of selfishness for corporate governance.
  
  While stakeholder theory demotes the importance of self-consideration, it places a greater emphasis on rationality. In fact, it requires an assumption quite the reverse of selfishness, in that assumes that managers and/or corporate boards can place their own self-interest in abeyance and, without bias, consider the interest of other actors. Prominent researchers (Kahneman, Tenbrunesel, Messick) have empirically demonstrated several varieties of self-interested decision-making bias. Perhaps even more consequentially, these biases are usually unconscious and/or self-deceptive, so the decision-maker doesn’t know he or she acting in a self-interested way, even when the entire project of stakeholder consideration is to combat narrow self-interest.
  
  The practical implication of the outdated assumptions of both agency and stakeholder theories is that there can be a substantial mismatch between the intentions of corporate board, the decisions that boards make, and subsequent behaviour of management. At the very least, new systems of remuneration and incentives need to be developed to align corporate direction with management activity. Additionally, when incorporating a stakeholder approach to corporate governance, it is important to verify the interests of other stakeholders with those stakeholders themselves as self-interest biases can yield incorrect assessments in this regard. There are considerable opportunities in both academic and practitioner realms for the development of new, comprehensive theories of corporate governance and practical frameworks to control for bias and diverse motivations.
- The transparent exchange of value
  
  Jan 17, 12
  Business ethics professor and blogger Chris MacDonald posted an insightful entry yesterday regarding whether it is ethical to depend on your customers not understanding your business model for your success. You can read his initial post here. I've given a lot of thought to what might count as the most important business ethics principle and, while my reflections are by no means complete, I've come to the interim conclusion that full disclosure and comprehension of value is the essential requirement for ethical business transactions. Here's the comment I left Professor MacDonald and his response to it, and below that some further commentary from me.
  
  I think you are on to something very central here, Professor MacDonald. The most important justification for capitalism is that the people who exchange goods and services do so for a net gain in utility/value. I give you my money for your widget because the widget is worth more to me than the money (or the other things I could buy with it) and you sell me the widget because the money (or the other things you could buy with) is worth more to you than the widget. Without this rationale for the market system, its moral basis quickly falls apart. An unstated assumption is that both parties have complete knowledge (or reasonably complete knowledge) about the utility of the goods or services exchanged. Thus I think that *the* ethical question one has to ask of any transaction is: “if the partner in this exchange knew everything that I do about the exchange, would s/he still think this is an equitable exchange”. If the answer is no, then you are treading ethically questionable territory. As you point out, there are firms (some credit card companies, many of the lenders in the run-up to the subprime crisis, e.g.) that depend upon their customers not understanding the terms and conditions of the exchange. Or, in some cases (many pre-Dodd-Frank banks) firms assume that customers don’t understand the way the product works (e.g. overdraft charges that were manipulated by selecting which transactions were processed first). I think the basic idea here is correct, but I think it is a specific instance of a more general principle about information, utility, and ethics in the market system. While I can imagine limited counterexamples, as rule any firm that benefits from hiding information or, more subtly, relies on predictable cognitive bias (see your recent blog posting re: same) in order to trick an exchange partner into participating in an exchange is very likely an ethically bad actor.
  Reply
  Chris MacDonald on January 17, 2012
  Thanks for your comment. This sounds right, but I’ll just make two clarifications:
  a) The information assumption isn’t really unstated, at least to economists — it’s an important precondition for ideal markets;
  b) Seeking “equitable exchange” is hard; but the information requirement is needed for something even more basic than that, though, namely mutual advantage. Guaranteeing equitable benefit is a much tougher requirement.
  Professor MacDonald is absolutely right about a) in that much of the theoretical underpinning for market economies is that information is freely available to the market. I'd add that, as an assumption, it's a dodgy one. While auditors, accountants, risk managers and compliance managers are employed, in one way or another to make this assumption true, we've seen rather a lot of examples of where it has not been. There's also the issue regarding the difference between the availability of information and its comprehensibility. If one makes data available but similarly depends on your exchange partner not understanding its import, the same damning ethical judgement obtains, I think.
  
  Point b) is also salient, though I may not have been entirely unambiguous in my original comment. I don't think that the requirement for equitability is a strict one. In fact, the only requirement is that both parties judge the transaction as equitable. I'm not sure there would be a non-relative way of showing equitability, in any case.
  
  Extending the idea a little further, take for instance the examples of monopolies or cartels. There's a general view that monopolies and cartels (except in some limited instances) are pragmatically and ethically suspect. The reason for this comes back to the judgement of equitability. If a monopolist charges an above-market rate for his product because there are, by definition, no other sources of that product, his exchange partners may be driven by need to purchase that product with full information. They won't, however, consider it an equitable trade. In this case, the requirement for full, comprehensible information disclosure is met but there is still a lack of equity and, therefore, ethical good.
  
  As always, my ideas on the subject are open to discussion and further refinement, but I think there is something vital about both conditions for ethical exchange, full information and the mutual judgement of equitability. I'd be interested to hear from anyone who has a different view on the matter.
- Governance and Organisational Size
  
  Apr 20, 11
  
  This chart, in The Economist about how the UK has fewer constituents per representative than any other developed country, got me thinking about governance and how organisational size impacts productivity:
  
  Research suggests that once an organisation grows beyond 150 people, the scale is too large for traditional mechanisms of trust and reciprocity to function. Anonymity and free-riding become problems and the incentives to work together begin to disappear. It's no wonder there's so little accountability in many of these legislative bodies, which is compounded by the influence of money, crony capitalism, too many people represented per candidate, and (in the case of the U.S.) an electoral process that ensures radicalised candidates. Without any of the reputational incentives of a smaller organization or the accountability that comes with a small constituency, the influence of large corporate, labour, and wealthy donors will continue to be the prime motivating factor in U.S. congressional legislation.
- My Philosophy regarding Business Ethics, the short version
  
  Mar 18, 11
  
  As part of a job application process, I was recently asked to put some thoughts to paper about the basic truths about capitalism, business ethics, and how we go about helping companies do the right thing. What follows is an edited version of my response and I wanted to post it because I think it nicely encapsulates my views on why business ethics is so important for corporations to take seriously and why I'm trying to make a career doing just that.
  
  The Essential Challenge of Ethical Business
  Being ethical in today’s world isn’t easy. There are a host of systemic, structural, political, and cognitive factors in the business context that make discerning the right thing to do and then acting on it more challenging than ever before. Despite this, another set of developments has created a world where acting ethically in all areas of business is perhaps the most imperative driver of business success. Business ethics has undergone a change from regulatory requirement or inconvenient distraction to a necessity for the global marketplace and source of competitive advantage.
  
  We humans are meaning-making beings. More than reason, the ability to use tools, or the ability to create complex social systems, what sets us apart from other species is the ability to ask ourselves “why?” and consider the answer important. Philosophers from Aristotle in the 4^th century BC to 20^th century philosophers like Paul Tillich and Jean-Paul Sartre have pointed out that it is the ability, in fact the indispensability, of answering questions of existential import that defines humanity. Our responses to the questions of “why” and “how” go a long way to defining who we are. How we spend our lives, whom we choose to love and why, and what we find ourselves called to do in our careers are the central questions of value that make us who we are.
  
  Paradoxically, the economic system we live under has no such values. Capitalism, in its pure form, is amoral. Although many libertarians argue that there is an implicit moral code to capitalism, it is inchoate and partial at best. Whereas we human beings choose what we will do based a variety of existential and practical factors, capital responds only to cash flows. Notwithstanding recent trends toward socially responsible investing, the vast majority of investment decisions are made not in terms of what makes the world a better place but strictly on the basis of risk-adjusted net present value. Milton Friedman, in his famous 1970 New York Times Magazine article, argued that the only responsibility of a firm is to increase profits and to consider any social impacts was in fact unethical.
  
  Beyond lacking a moral compass, there are several factors within modern market-oriented capitalism that actually militate against ethical and socially responsible decision-making. Friedman felt that as long as something was legal, it was permissible. However, the structure of western democracies allow large corporations a voice in making the laws, thereby encouraging all sorts of externalities and, in some cases, outright fraud. The recent “Citizens United” decision by the U.S. Supreme Court has given corporations an even greater role in governmental policy, and the quarterly reporting structure of the capital markets encourages short-term thinking without consideration for the long-term impacts of meeting each period’s earnings estimates.
  
  Beyond these structural and political factors, there are also cognitive and social factors that make consistently good ethical decision-making challenging. Recent academic and popular works by authors Dan Ariely, Max Bazerman, Zoe Chance, and Francesca Gino (among others) have focused on the ways our minds and our social situations influence our ethical decision-making, usually without our even knowing it. A successor to behavioural economics, this nascent field of “behavioural business ethics” was the sole topic of the most recent British Journal of Management, one of the most respected academic journals in study of business. What Ariely, et al, have done is shown how even people with the best intentions and motivations can be led astray in their decision-making by mental blind spots and distortions like anchoring, overestimating the ethical behaviour of both ourselves and those in our social group, and underestimating the creative and technical contributions of others. Whereas ethical behaviour has historically been considered a simple issue of character and will, these scholars have shown it to be the result of a complex interplay of factors that make context and corporate culture almost as important as moral fibre.
  The New World of Consumer and Employee Power
  Even if the combination of the amorality of capitalism, the systemic challenges of capital-driven corporate performance, and the emerging understanding of the complexity of ethical decision-making were the totality of why principled business performance was important, it would still be one of the most important aspects of business one could study and, hopefully, effect. These factors are, however, only half the story. In spite of all these challenges to effective ethical decision-making, a series of cultural, social, and technological innovations in recent past have elevated the significance of business ethics to what should be the highest place among the concerns of management.
  
  Corporations were previously able to craft their image to control information and perceptions of themselves and used command-and-control, hierarchical governance structures to insure employee performance. These methods no longer function. Customers and employees now demand that the firms they buy from and work for are in alignment with their values and the ways they make meaning in their lives. Even though many of the factors discussed in the first section traced from the dawn of industrial capitalism, both employees and consumers couldn’t do (and, in many cases, didn’t want to do) anything to change them. There was a dearth of information about the ways companies did business and what information was available was carefully managed. Companies had extensive marketing operations that were aimed at instilling a specific set of ideas, associations, and feelings about the firms. Very little was left to chance and what customers knew about a company and operations was what the company wanted them to know.
  
  With the advent of the collaborative Internet, where anyone can express any opinion and share any information, this way of doing business is rapidly going the way of the buggy-whip. Blogs, forums, easy to set-up protest web sites like bankofamericasucks.com, and, most recently, Wikileaks, are creating a totally transparent (if not always accurate) world where nothing about a firm can be hidden from the public. The corporate communications department is no longer primarily a shaper of perceptions but is instead focused on engaging the public in co-developing brands. Due to this information chaos, whatever a company does will eventually come to light. No longer can a firm engage in ethically suspect behaviour presuming it is the manager of public perception. With this new transparency, and with the increasing engagement of customers as intentional consumers, the need for proactive transparency has become paramount.
  
  It’s not just consumers who require that companies align with their values, but employees, as well. In the past two decades, we’ve seen a wholesale shift from industrial work to knowledge work and consequentially a shift in how employees see themselves and their relationship to their employers. As Peter Drucker noted, knowledge workers don’t exist thrive within the traditional industrial command-and-control framework but instead are co-creators of value and, as such, are responsible for managing themselves. They therefore have come to demand more meaningful work, more meaningful participation in governance, and closer alignment of their work to their values. And, as with consumers, they are increasingly able to determine whether the work they do indeed matches their higher aspirations. Nothing will cause an exodus of the very knowledge workers who are essential for business success faster than internal politics and hierarchical governance systems, except for perhaps outright unethical business practices.
  
  Principled Business Culture = Winning Competitive Strategy
  The shift from marketing and branding to transparency for consumers and the shift from command-and-control industrial governance to participative knowledge work for employees have combined to exponentially magnify the importance of ethical and sustainable business practices. Business ethics is no longer something limited to the compliance department so that it can check the appropriate boxes to stay out of trouble with regulators and enforcement agencies. It’s a critical aspect of competitive advantage. And as such it’s something that has to be part of everything a company does, in its DNA, its corporate culture.
  
  This, I think, is the crux of the matter regarding ethical business and principled performance. It goes far beyond training and risk management where it’s traditionally lived and is instead a vital part of a company’s strategy. A principled corporate culture can’t be duplicated easily, if at all. In a business world where innovation and continuous improvement are the necessary conditions for success, the value of an engaged and passionate workforce can’t be overstated.
  
  Unanimity is rare in academic literature, but the closest I’ve ever seen is the consensus that corporate culture is the primary determinant of ethical behaviour. My own experience bears this out, as well. When I worked for Washington Mutual’s corporate technology group, the ethical standards were very high and it was assumed that one owed a primary allegiance to the truth. In the rare cases when ethical dilemmas presented themselves (such as accepting gifts from vendors), there was, once acculturated, no question of what the right thing to do was, nor was there really any question of not doing it. Conversely, when I worked for Long Beach Mortgage Company (the sub-prime business unit of the same corporation), a business unit that had been acquired and which had an entirely different culture, it was very difficult to raise these ethical issues. It was, in fact, the realisation of how easy it is for good people to make bad decisions when influenced by corporate culture that inspired me to change careers back to one that was more aligned with my ultimate values. There were times when I should have spoken up, to question the investment bankers and the corporate leadership, but because I was new in my position and the culture inhibited that sort of dialogue, I remained silent. Though I’m not so self-centred as to believe that I could have averted the sub-prime crisis (see the fantastic The Big Short http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231, Michael Lewis's newest book, for more reasons why) , I might have at least cushioned the blow for WaMu and left with a clear conscience.
  
  Since then I’ve done quite a bit of time reflecting on these issues, and I’ve concluded that, for the reasons above and given my experience as a consultant, teacher, and researcher, helping businesses achieve principled performance is the best possible path for my career. There are many people who can do business strategy consulting, many others that can do technology strategy consulting. In trying to figure out my unique value in the world of business, I realised that there are very few people with the business and technology background I have who are also deeply committed, interested, and sophisticated about business ethics. As a strategist, you help companies determine what their unique capabilities are and how they can bring those to the market. In the past two years, I’ve turned my strategist lens on myself and realised that working for a company whose mission is helping companies deliver principled performance would be the best use of not only my skills and experience, but my passion and my sense of what’s ultimately important. It’s this pursuit of significance, of existential as well as commercial success, that has driven me to explore the possibility of working with try to find a position with a firm that specialises in ethics and compliance.
- Bullying and the Case for Horizontal Governance
  
  Feb 17, 11
  
  This morning's New York Times featured a fascinating article on a number of yet unpublished studies on high school bullying called "Web of Popularity, Achieved by Bullying". Whereas most studies of bullying have previously focused on out-group members, social outliers, and pathological bullies, these studies have tried to determine the extent of bullying within the primary social groups of high school. So, instead of looking at the nerds, geeks, and dweebs, (and the badly adjusted kids who are assumed to victimise them) these studies look at everyone, including popular and moderately popular kids.
  
  What they found seemed to surprise the researchers but shouldn't really come as a surprise to anyone with a vivid memory of high school (or parents of teenagers, for that matter). Instead of bullying being focused on out-group members, it seemed to be used primarily as a means gaining and solidifying status in the social hierarchy. Interactions between rivals, kids who were close to each other on the social ladder and who were jockeying for position, were most likely to be aggressive or bullying. When students reached the "top" of the social ladder, they stopped aggressive behaviour not because they were nice people, the researchers hypothesise, but instead because they no longer needed to be agressive to gain position.
  
  While there are a lot of questions still to be answered in the final version of the research, I think there are some substantial implications for the business world. A plurality of the comments under the Times article reflected my first thought: high school actually mirrors much of the business world. Although I've had the privilege to work in some very enlightened, very non-aggressive environments, that has by no means been the case everywhere I've worked. What's most interesting in the high school study is the motivation for such aggression and it's less obvious manifestations (sarcasm, unconstructive criticism, gossip): movement up the social hierarchy. In my experience, that motivation extends into the business world, as well. Workers use these negative tools as ways of climbing or solidifying their places in the often very hierarchical world of business. In a world where your title is a proxy for your value to the company, it's natural that people would use whatever tools at their disposal to claim those titles, even if the net effect is less trust, less productivity, and less value to the company.
  
  Recent research and case studies suggest that by taking away multiple layers of management and flattening the hierarchy, the incentives for agressive and near-aggressive behaviour are eliminated. Horizontal governance structures, while counter to the corporate tradition of command and control governance, seem to enable trust, productivity, and value creation. While I'm afraid (especially given my own kids' social struggles in middle school) that there's not much we can do to eliminate the social hierarchy that kids seem to create all on their own (though I could be/hope I am wrong about that), corporate governance structures are something that are within a firm's control. More than that, by developing the sort of work environments which foster trust, collaboration, and the development of powerful networks by the elimination of unproductive (or, indeed, counterproductive) hierarchies, firms can become more effective competitors in a world where these are the very qualities that will determine the winners.
- Rules, Risk, and the Dodd-Frank: They Earned It
  
  Feb 08, 11
  
  Whenever I see a parent who has a toddler at the end of a leash, my first reaction is one of horror. But my girlfriend always reminds me that nobody just gets the leash. No parent arbitrarily decides putting their kid at the end of a tether would be a good idea; they do it because, at least once, their toddler tried to run out into the street. Though the Chamber of Commerce seems to be horrified by the proliferation of regulation under the Dodd-Frank Act, it's precisely the same situation. The financial services industry earned the leash.
  
  I try to steer away from political topics on the blog. They tend to divide people more than they bring them together and often provide more heat than light. A post by the formerly mainstream, now free-market-fundamentalist Chamber of Commerce has inspired me to break that proscription, however, because it goes directly to the issues of ethic, risk, and compliance.
  
  The page, http://www.chamberpost.com/2011/01/dodd-frank-unleashes-a-tsunami-of-regulation-a-visual.html, features a very well-done graphic on the number and scope of rules and regulations mandated by the Dodd-Frank act. The contention is clearly that the overwhelming profusion of regulatory activity is going to damage U.S. competitiveness as a provider of capital market services.
  
  What it missing from the discussion is a review of why Dodd-Frank was enacted in the first place; the capital markets have proved, over and over, utterly incapable of regulating themselves. The fact is that there were trillions of dollars of real value lost in the financial meltdown of 2007/2008, and no one has gone to jail, and almost no one lost their job, and all the bankers and bond traders and rating agency executives got to keep the billions of dollars in bonuses they made in the run up to 2007. So the scoreline reads Wall Street 3-0 Main Street.
  
  We have laws for a reason. In a world with both limited resources that must be competed for and the unlimited right to stockpile those resources, some people will do things that may not be illegal but that are unethical. In some spheres of life the social pressure against doing the unethical countervails the reward. Additionally, some people are just decent and won't exploit others on principal. But as the rewards grow into the millions and billions, like they do in the capital markets, internal and external non-legal pressures fail and we get collusion, insider-dealing, and revolving-door quid-pro-quo deals.
  
  Furthermore, risk is hard. All the academic research suggests that people are not wired to understand risk well, especially when it occurs at the far ends of the bell curve (we tend to overestimate rare risks and underestimate common risks). Without incentives to understand it correctly (i.e. that the companies themselves will be left holding the bag in case of failure), it gets ignored and/or externalised.
  
  And that's precisely what happened in the subprime, derivatives, and insurance scandals of the last half of the decade. And, as above, what essentially resulted was a huge wealth transfer from the investors and taxpayers to the financial services companies. Through both the bonuses that happened in the run-up and the the bail-out in the aftermath, the capital markets firms internalised return but externalised risk.
  
  So while the infographic on the COC website might make Dodd-Frank seem like an overreaction, remember what it is reacting to. There is absolutely no reason, given the evidence of recent and/or past history, to think that the capital markets can overcome the human tendencies for greed and risk ignorance. In the long run, prudent regulation makes the capital markets more competitive by increasing stability and transparency. And that's what really want out of Wall Street, not seven figure bonuses.
- The efficacy and/or necessity of Codes of Ethics
  
  Aug 25, 10
  
  I've got a long-ish consulting engagement that's taking a lot of my time right now, so blog posts will be a little thin on the ground for while. What I do find time for is the occasional LinkedIn group debate, this one on the Ethics Professionals group, debating the original poster's view that Codes of Ethics do nothing to stop unethical behaviour. I, and others, jump in.
  
  http://www.linkedin.com/news?viewArticle=&articleID=171308110&gid=61769&type=member&item=27674474&articleURL=http%3A%2F%2Fcharactercounts%2Eorg%2Fmichael%2F2010%2F08%2Fethics_codes_dont_make_people_3%2Ehtml&urlhash=1eFq&goback=%2Enmp_*1_*1_*1%2Egde_61769_member_27674474
  You see, there are two aspects to ethics: discernment – knowing right from wrong – and discipline – having the moral will power to do what's right. A code can help define what's right and acceptable and provide a basis for imposing sanctions on those who don't follow it. But unless it reinforces an established ethical culture, it won't do much to assure that people do what's right
  James Meacham • Saying that Codes of Ethics don't make people ethical is about the same as saying laws don't make people law-abiding. Kind of obvious, really. Having a Code of Ethics is perhaps a necessary, though clearly not a sufficient, condition for ethical behaviour. They are helpful in a couple of ways. First, they make it clear what the ethical aspirations of your organization are, they set the tone for ethical engagement. While it's true that they can be empty words, mere shelf-ware if they are not reinforced and modeled at the top of the organization, they can act as a rallying point for what the the leadership decide they want to aim for, ethically speaking. Second, they can help disambiguate and/or clarify questions that are not obvious, especially issue where "the right thing" for the organization might be a sort of dilemma (e.g., bribery).
  
  No one who wants to be evil (or ethically non-compliant) is going to be persuaded to do so by a Code of Ethics. There are very few of those people, though. Most employees want to do the right thing, they just need to be reminded of the importance of doing it and given some guidance in how to. That's why we need Codes of Ethics.
  
  Leslie Levy • The 10 Commandments is an ethics code. How much do you think people understand it, much less comply?
  
  Think back. Ethics codes were introduced in corporate governance by active shareholders who thought an ethics code would be useful, in court or otherwise, in proving that executives had been sinning. Next thing we knew, half the corporate world had ethics codes, only no one was sure what to put in them. Directors and senior managements, on the whole, figured ethics codes were harmless and gladly created them as a no-cost concession to activists. Only a few companies (probably mostly the Minnesota contingent) took ethics codes seriously.
  
  I listened to debates on ethics and ethics codes ad nauseam in the days when a session on ethics preceded (but wasn't fully part of) the national conference of the then American Society of Corporate Secretaries. At the time, "corporate ethics" was an oxymoron. The term literally lacked meaning. Lots of discussion since is beginning to create some consensus on ordinary usage. As I keep pointing out, we need to be schooled in Wittgenstein to make sense of this topic (admittedly a difficult challenge). Wittgenstein said, if people apply a term in ordinary usage in the same way or at least in ways that can be linked to one another, then the term gains meaning, and its meaning or meanings solidify over time.
  
  What really interests me, however, aside from question of how all this fits with Milton Friedman's theories of economics, is this: How about thinking about ethics codes, not in terms of what action they DETER, but in terms of what action they INSPIRE.
  James Meacham • I'm not sure what your point about Wittgenstein's theory of language is, Leslie. Maybe you can say a little more about that? Are you arguing that because of the tension between Friedman's idea that the *only* imperative for management is to maximise shareholder value and any ethical consideration that might preempt that the term "corporate ethics" was oxymoronic? I can't say I'm convinced by that because clearly everyone has always known that there's a difference between ethical and non-ethical behaviour in the corporate setting, even if it was a fairly inchoate sense. There's a difference in arguing that and, as I do, that Friedman is just wrong. All that said, I tend to agree with you that inspiration is a more interesting question than deterrance, though I think both have value. Have you read Dov Seidman's book, "How"? I underestimated it based on my first, brief read through and my recent, more careful reading changed that view. Even though it's a popular book (as opposed to a technical book of philosophy), Seidman has a background in philosophy and does a nice job of differentiating between the ethics of deterrence and the ethics of aspiration.
  Leslie Levy • Hi, James. It's almost midnight, but I'll do my best — but tackling Wittgenstein at this hour is beyond my ability. I'll find time tomorrow or the next day. For now, I'd say only that understanding Wittgenstein is, in my opinion, absolutely essential to understanding language, including the language of ethics. But enough of that for the moment. On to your other points. First, I thought (perhaps incorrectly) that Friedman said corporations were supposed to maximize profit, not shareholder value. Do you regard those as identical? Or do I have incorrect ideas about Friedman? I went through business school with a group of followers of the theory of economic man, and I don't think they believed that "...everyone has always known that there's a difference between ethical and non-ethical behaviour in the corporate setting...." Frankly, I found deplorable some of their behavior that they justified by economic-man theory; that is, they acted in what they said was their own interest, justified their behavior by reference to economic-man theory, and to me seemed motivated all too often by unadulterated selfishness. I haven't read "How," but will try to get it. I think popular books often say more or more useful things than academic tomes, so I'm glad to hear that, if I follow your suggestion, I won't be in for boredom!
  
  The one thing that troubles me after all this is that I seem to have to keep explaining Wittgenstein's impact on business theory to so many business audiences, over and over, and I wonder why we don't just make it a required part of the MBA curriculum. The closest I know to it (and a lot easier and more fun) is Fritz Roethlisberger's "The Elusive Phenomena." (It's out of print, hard to get, and costly, but worth every penny.) Roethlisberger's recitation of how he learned to think is a pretty good way to stumble one's way to Wittgenstein, though I think Roethlisberger's chapter on conceptual frameworks is slightly off, with consequences that could be more than slightly important.
  
  And finally, yes, let's think about how to "incentivize" desirable behavior. Lord knows, compensation committees would be glad to have this knowledge.
  
  James Meacham • I find Wittgenstein a challenge at 10 in the morning with a full night sleep and 2 cups of coffee, so no worries. I do think his point that language acquires meaning through use is a good place to start when talking about definitions, but beyond that, I'm not sure I've found a lot applicability of his philosophy in business. As I begin my doctoral program (focusing on business ethics) next month, I may change my mind, but until then...
  
  I guess I do considering maximising shareholder value as equivalent to maximising profit since thats where profit accrues in a corporate system. I think Friedman (and those who support the "economic man" theory) is just wrong on the evidence. There are two kinds of ethical misbehaviour (at least): actions that are clearly wrong in any context (these are the sorts of things I was talking about) and those actions and attitudes that you are referring to, things like greed, lack of empathy, etc. The economic man theory tends to justify the latter, you are right. There are a ton of problems with that theory (as behavioural economics and history have borne out) and I think it's been mostly discredited except among the libertarian zealots. One attraction to the economic man theory is how simple and consistent it is. One thing I think those of us who disagree that (selfishness + selfishness == good for everyone) is to come up with a compelling alternative theory. That's why aspirational business ethics is so important, I think.
  
  I hope that made some sense...now it's late here, too. :-)
  
  Leslie Levy • So, what you learn in school doesn't affect your practice? Hmmm. If not, there certainly is a disconnect that should not exist. Good teaching should clearly connect the two.
  
  I like some of what LaDon Berndt-Kuncewicz said. I think it's especially important, when a senior manager is fired for ethical misconduct, whether or not the company has a code, that what he or she did wrong should be crystal clear to employees and also to the outside world. I don't think that's the case at HP. I suspect there's still a lot more to that story.
  
  I also like James Meacham's attack on economic man. When I took my MBA and doctorate, economic man was still almost universally respected. People like me who said, "Whoa, lots of people don't act like economic man," were considered dim. I'm delighted that current research seems to have debunked economic man. However, note that the only rewards doled out by Compensation Committees (with rare exceptions) are dollars. That suggests that those attracted to the top of our corporations will be the ones who most love dollars, and these people are as close as you can get to economic man. Peter Goldman tells us that managers in "the real world" must produce "'hard' results." Well, what about producing soft results? Doesn't that also matter.
  
  And so we turn back to ethics. Is ethics concerned exclusively with producing hard results, or do soft ones matter, too? And if soft ones also matter, precisely how are they to be taken into account in evaluating behavior? Should (and do) we evaluate differently within corporations?
  
  Roy Snell • I agree that a code alone is of little help. A code of ethics can be a very helpful tool, but there is a catch. It's all about enforcement to me. Having a code is easy, but finding someone with the ability to enforce it is tough. Few people who are really into ethics like to talk about the stick; they feel the carrot is more effective. Ironically, all talk and no action might hurt your efforts to create an ethical environment. If you have a code that no one enforces, some will not follow it. If people don't see it being enforced, some will follow the lead of those who don't follow it. Some will become bitter. The culture could be negatively impacted. If you enforce the code equally amongst all employees, more people will follow it, few will become bitter, and the culture will be more positive. It may be possible that an unenforced code does more damage than no code at all.
  
  James Meacham • I'm currently doing some research for a client on specific topic (cross-sell in financial services companies). The funny thing is, I've done this same research for other companies in the past because *all* financial services companies want to do this well. But very few do, in spite of saying they want to. There are a couple that do actually do cross-sell well, but they make a point of mentioning it in every meeting, every investor call, ever piece of internal collateral. For at least a decade, the companies that are good at it have been making it a priority. The reason I bring it up is because it the same is true in the ethics context. All the companies that said they wanted to do cross-sell but didn't are like the companies that did a code of ethics and stuck it on a shelf--they are no closer to being ethical than they were before and, as Roy suggested, not following through may engender some unintended consequences.
  
  To be an ethical company in a system (market capitalism) that militates against ethical behaviour takes an extended, concerted effort that doesn't stop. It has to be top of mind, or close to it, for it to be something your company is known for excelling at (like cross-sell). Clearly, as we've seen in the discussion above, there are levels of effort which will correspond roughly with the outcome. There's a continuum, I think, that goes something like this, one's place on the continuum is suggested but what paradigm of ethical behaviour you follow:
  
  1) Ethical Leader Paradigm: Where there is a code of ethics that is talked about, kept at top of mind, reinforced through both aspirational statements and enforcement. A supererogatory view of ethics.
  
  2) Evil Avoidance Paradigm: Where there's a code of ethics but it is not at top of mind. It is reinforced primarily through enforcement and compliance, but the efforts in this area are universal, consistent, and well-understood. A deontological view of ethics.
  
  3) Legal Avoidance Paradigm: There's a code of ethics but it mostly shelf-ware.You might have to do your "yearly compliance training" but the language is always in terms of compliance and compliance is seen as something that is imposed from without. A pragmatic view of ethics.
  
  4) Compliance-only Paradigm (I need a better more descriptive name for this one). This is the company that probably doesn't have a code of ethics because they are silly, fluffy, and add no value. If it does it's only because they have to. It's never talked about again. Compliance is seen as a burden and this company wouldn't think about it if it weren't for the Sentencing Guidelines. In the marketplace, it views whatever it can get away with as ok. A lassiez-faire, relativist or Nietzschean view of ethics.
  
  My point is that while you can get into trouble with a code of ethics, I don't imagine a company that falls on the exemplary end of the spectrum without one. Indeed, you can even be an evil- or law-breaking-avoidant company without one. Again, I think it's necessary but not sufficient. Enforcement, to Roy and others' point, is necessary but not sufficient either. And to really be an ethically great company, you need both, while if you want to be an ethically mediocre company, you can try it with enforcement alone.
- A Yellow Card for the "In-Group Regarding Instinct"
  
  Jul 21, 10
  
  I’m a big fan of game theory, especially when looking at strategic or ethical questions. By stripping away extraneous information and formalizing interactions among actors, interesting and sometimes surprising consequences emerge. I find this particularly interesting when looking a possible responses by competitors to my clients’ strategic initiatives. Lately, though, I’ve been thinking about what actual games can tell us about how people view themselves, others, and third parties in the context of business ethics. My experience of refereeing soccer matches has led me to conclude that there are some substantial barriers to effective ethical decision making that need to be taken into account when designing systems to increase the likelihood of ethical behaviour.
  
  For the past several years, in addition to coaching my kids’ teams and playing the occasional match myself, my son and I have traveled throughout our area as hired referees for leagues and tournaments. Since my son is young we usually work with younger players (U12 and under) but I’ve occasionally worked up through the adult leagues. It’s a difficult job that requires a knowledge of the game as well as quick reflexes, a degree of fitness, and a thick skin. Over the years, I noticed what can only be called a failure in perception on the part of coaches, parents, and players. It is simply this: no one ever thinks the referee is biased toward their team. Of the 100+ matches I’ve been the centre ref for, in perhaps half of them I’ve been accused by both sides of being biased against them. Now this might be just a thing that soccer parents and coaches say, but if it is something these people believe (and I think they do) I think it tells us something important about human nature which has important consequences for how we teach people about business ethics.
  
  If you look at this issue formally, we’d say that for every match, there are three possible cases regarding the referee’s bias: he/she is unbiased, biased for the home team, or biased toward the away team. Leaving aside the fact that no referee I know cares at all who wins the matches they officiate, if we allow for the possibility of referee bias we have only those possibilities. To be biased against both teams would be nonsensical. Therefore, if the perception of the fans is accurate (and assuming a random, symmetrical distribution of bias), on average you would find that of the times when fans thought the referee was biased, half the time it would be against your team, half the time against the other team. And yet anyone who spends any time around soccer (and I’m assuming other sports) knows that this is not true. As above, almost no one ever says “boy, that referee was certainly biased in favour of our team”.
  
  It might be tempting to write this off as something that is purely the domain of recreational supporters of sports teams, but I don’t believe it is. I think it tells us something very important about the way people view the members of their in-groups (in this case, members of the team they support) and how they privilege those members with an assumption of moral superiority. People imagine or assume that people belonging to their in-group (whether it is a sports team, company, church, etc.) have good intentions and that any transgressions are the result of a mistake, a misinterpretation, or ignorance. Instead of judging the actions by both in-group and out-group members by the same ethical/behavioral yardstick, we adjudge the wayward actions of the other team or the other company to be the result of malice or intentional wrongdoing.
  
  The philosopher and theologian Reinhold Niebuhr wrote about this same tendency in individuals calling it the “self-regarding instinct.” He thought it was universal and believed that it was the basis for much of what passes for institutional evil in the world. What I’m suggesting is that we often do the same thing in terms of groups we belong to and that much of what we allow in our companies that is clearly not ethical to an outsider falls under this same distortion of perception. When a fellow employee bends the rules or falls a little short in their compliance duties, because he or she is a member of our team, we are likely to see it as unintentional, unavoidable, or not his or her fault. There is a sort of “reality distortion field” around members of our own team/group/company.
  
  I’m not suggesting that we should never understand the context of our own and other’s actions as a mitigating factor in ethical judgments. I’m actually suggesting two things: that we design systems that take this perceptual distortion into account when we are looking at our own firms and that we keep try to contextualise the behaviour of people in other firms.
  
  I’m not naive enough to think soccer moms and dads are going to take time to reflect about how they favour their own kids’ teams and therefor give me a break when I’m officiating their matches on Saturday mornings. I do hope one day they, as a group, will become a little more balanced in their expectations (see http://www.youtube.com/watch?v=r0qGeADPzAs for more), but part of the fun is really in rooting for your team. In the business world, however, the “in-group regarding instinct” can lead to the excusing of clearly unethical behaviour in one’s firm and the assumption of guilt in others. While clearly more research needs to be done in this area (and please, if you have any references on similar research, I’d really appreciate them), just the knowledge of this perceptual shift may be enough to mitigate some of the worst of the resulting transgressions.
- Why (or When) Do People Comply? Ethics v. Compliance part I
  
  Jul 02, 10
  On the Society for Corporate Compliance and Ethics web site forum, I came across this post. Though personally I'm very distressed (perhaps overly so) by people who cut lines, don't use their turn signals, etc., I don't think that the original author's point (whose name I've omitted) is supported by his argument. People, by and large, only follow rules if:
  
  (a) They are rules against something morally wrong and/or
  (b) The overal negative consequences of the act are high.
  My response is a bit roundabout, but I do think it makes the point:
  ------------------------------------------
  Original Message:
  Sent: 06-28-2010 11:41
  Subject: Ethics Without Compliance
  
  This message has been cross posted to the following eGroups: Ethics Forum and Chief Compliance Ethics Officer Network .
  -------------------------------------------
  On Friday I saw some behavior that made me wonder if a faith in ethics is worth having, absent a strong compliance regime.
  
  I was on a plane and, after the doors closed, the flight attendants made the usual announcement about turning off all electronic devices until ten minutes after take off. It's a rule that is announced on every flight, but as every frequent flyer knows, it is poorly enforced. The flight attendants often don't notice people breaking it, and many hide their use of the devices. Plus, some people honestly forget and leave their phones on the entire flight.
  Such was the case on the flight I took on Friday. After the announcement was made many people pretended not to hear it and went on tapping away at keyboards. When the flight attendant spotted them and told them to turn their devices off immediately, some did, but my seatmate only pretended to. As we were taxiing out to the runway, I saw her checking Facebook statuses on her iPhone. All I could think was "I know your iPhone is highly unlikely to cause the plane to crash, but is it really worth taking a risk on the safety of a couple of hundred passengers just to read that Cindy is psyched for the weekend?"
  Bottom line is, she didn't believe in the rule, knew no one would be monitoring it effectively, and chucked any ethical considerations.
  She wasn't alone. Within seconds of the plane's liftoff I was amazed at the number of iPads, iPods and other devices that were up and running. I seemed to be the only one waiting to hear the double chimes indicating it was now safe to use approved electronic devices.
  Why did they do it? There was a rule that they didn't believe was worth following, it got in the way of what they wanted to do, and there was no real effort at compliance. And what about the ethical considerations about potentially putting others at risk? They made a calculus and, not surprisingly, found in their own interest.
  It's no different, as I've written before, at the ten item or less line at the supermarket, another weak compliance environment. It's exceedingly rare for a clerk to turn anyone away for having too many items. So, a significant percentage of the population will try and sneak in with as many items as they can.
  All this makes me wonder: can we talk seriously about business ethics without their first being regular and strict compliance? To be fair, not everyone cheats on the 10 item or less line or turns on their phone when they shouldn't, but the numbers are high enough to make me wonder about the potential mayhem it would create in a business setting.
  Ethics is often discussed as being useful for navigating the gray areas, but that assumes someone is policing the line between black and white.
  There are many who argue that we should put ethics first and compliance second. I'm starting to think it would be a disaster.
  Am I onto something or should I stop flying so much?
  My response:
  
  It coincidental that I've just been working on a blog post on this very topic, that is the way the terms "ethics", "compliance", "social responsibility", etc., get used. And beyond that, like you I sometimes despair at the fact that people so flagrantly ignore rules which are based solely on the fact that their universal compliance would mean a safer and/or more convenient world for everyone. However, Steve, I think your analysis of the situation goes in the wrong direction because you assume that people only follow rules because they are explicit and, therefore, what chance do ethical strictures, which are not, have? Especially since, as you point out, people often do not follow the explicit rules.
  
  I think there are several different categories of judgement for of rules of behaviour. On one hand, we have the purely utilitarian view: does this behaviour affect people (myself included) in a positive or negative way. On the other, we have the purely ethical/moral dimension, which philosophers call deontological judgement and which is usually segregated from the utilitarian judgement. I actually think that people use a calculus in which they weigh the two against each other before deciding just how permissible an act is. You see, I think that, beyond the utilitarian aspect of compliance (I'll have a negative effect if I get caught), compliance is actually not a significant motivating factor in the examples you suggested.
  
  I think of it like an x/y graph, with ethics on one axis and utility on the other. We judge each other, and ourselves, by the combination of these factors. If we think something (even if it is against certain rules or regulations) has no negative effect on anyone else and there is no moral prohibition against doing it, rules will not stop many people from doing it. Cell phone usage on the plane is the best example I can think of. No one believes that there is any chance that their 3G iPad is going to bring a plane down so, crew member instructions or not, people will do it if they can get away with it.
  
  Move up the utility scale a bit to the grocery 10 items and under line and more people start to judge others badly. There is a real (if minor) effect on other people if you get into the 10 items line and count your 6 gallons of milk as one item (it's the same item!): they have to wait longer to get their items checked out. And while there is not a universal moral code against getting in the wrong line at the supermarket, we do tend to think badly of people who don't care enough about others to follow these kinds of rules.
  
  Further still up the utility scale is a particular peeve of mine: people that don't use their turn signals at intersections. I'm not sure why, but the neighborhood I live in (Belmont Shore in Long Beach, CA) has an incredibly high ratio of people who think using their turn signal at intersections is optional. On one hand, it inconveniences people in the same way supermarket line libertine does: by not signaling, others have to wait before making their turns, thereby delaying them. Even more seriously, though, it creates a real danger for intersection vehicle accidents. I have to admit a certain sense of schadenfreude when I see the daily non-injury accidents on 2nd Street, assuming as I do that at least one of the people involved didn't use his or her turn signal. But I think we would rate the lack of turn signals as more morally suspect than the people in the supermarket lines because it does put real people in real danger, in addition to being a time-wasting nuisance.
  
  On the other axis, most people rate dishonesty, especially when in pursuit of money, as being ethically indefensible. We know that the entire edifice of enterprise depends on a certain amount of veracity so we can do business. Without a degree of trust, no one would ever buy or sell anything. Additionally (perhaps more importantly for this post), lying is something that is fairly universally considered wrong. There are certain exceptions to that, of course (when a greater evil would be prevented by lying, for example), but that's not the case in sales, however. On the other hand, since the total effect of a salesman's dishonest tends to be pretty limited, although we judge him as having done the wrong thing, the severity of the judgement isn't as great as it might be. In a sense, as well, we expect a certain amount of, shall we say, imaginative truth-construction among sales people, so the fact we anticipate the dishonesty of the used car salesman lessens our judgement of him/her.
  
  The people we reserve the most severe judgement are those who both do the wrong thing (from an ethical perspective) and whose actions have a large effect on people's well-being (utility). People who have perpetrated large accounting frauds or who have gamed the capital markets are two particularly relevant recent examples. Those who brought down Enron, WorldCom, etc., both lied and destroyed peoples lives. Similarly, the investment bankers who both created secondary mortgage instruments that they knew were bad, sold them to their customers, and then bet against them, causing the global financial meltdown and bringing on the worst depression since the 30s, are generally judged very harshly.
  
  This may seem like a long way around to my point, but it's important. I don't think you can draw any conclusions about whether ethics in the absence of a compliance motive would result in chaos based on your examples. If a rule is neither useful nor ethically motivated, many people will ignore it as officious, and why not? The supermarket example is more interesting, but not much because it is still pretty low on both axes. I contend that if we educated people on both the ethical dimension *and* the utility of their actions, the compliance motive would far less necessary. The compliance aspect is a part of utility (I'll lose my job if I get caught) but that is quite a low bar to hit. What we want is people acting better than just barely compliant and if you focus on compliance, I think, you only get the bar minimum. Ultimately I think compliance is a necessary but not sufficient condition for ethical behaviour in most companies. It's necessary to keep people out of the very worst behaviour but I think you need ethics training and/or motivation to inspire them to their best.
- Follow-up to book review
  
  Jun 23, 10
  
  The author of The Failure of Risk Management, Donald Hubbard, wrote me a very kind note with regards to my recent review of his book. He rightly pointed out that his view of unproven or failed risk management methods didn't necessarily amount "virtiol". Just because he asserts (and persuasively argues) that these methods are wrong doesn't imply any motive beyond discerning the truth. I considered this when I wrote the article, that merely because one doesn't follow the "he said, she said, on the one hand this, on the other hand the other" format of many academics and journalists doesn't mean that one is being unfair. Beyond the compelling content, I actually think this break from a stale, purely dispassionate writing style is what makes this book a fun read (Taleb is good reading for the same reason). I'm sorry if that didn't come through in the original review.
- Book Review: The Failure of Risk Management by Douglas Hubbard
  
  Jun 22, 10
  Douglass Hubbard, in The Failure of Risk Management: Why It’s Broken and How to Fix It, presents a strongly worded critique of qualitative risk management methodologies. For something that might be perceived as dry as risk management, Hubbard’s disdain for most of those who practice non-mathematical risk analysis keeps this ultimately persuasive book entertaining. While his vitriol sometimes detracts from the rhetorical effectiveness of his argument, one comes to understand his frustration at those who pedal unproven, possibly worse-than-useless risk analysis techniques. This is a field, as we’ve seen recently with both the global financial meltdown and the BP Gulf of Mexico oil spill, where failures have the potential of having effects far beyond individual firms. With all his focus on debunking common qualitative methods, though, Hubbard doesn’t stop there. He ultimately mounts a defence of quantitative modelling (so excoriated by many in the wake of the sub-prime debacle) and makes some very useful, practical suggestions on how to use qualitative models (such as Monte Carlo and Bayesian analysis) effectively.
  
  In order to examine how successful risk management has been, Hubbard divides the approaches to risk management into four categories based on who originally devised them:
  
  * Actuaries
  * War Quants
  * Economists
  * Management Consultants
  
  Hubbard sees the first three as comprising progressively more sophisticated methods of analysis. From the actuarial tables of insurance companies, to Probabilistic Risk Analysis (PRA) devised to predict failures in complex war logistics (and which lead ultimately to Monte Carlo analysis, of which Hubbard is a devotee), to the MPT (Modern Portfolio Theory) of Harry Markowitz and options theory of Black, Scholes and Merton, Hubbard sees the increasingly probabilistic yet thoroughly quantitative views of risk as being all to the good. The problem with these methods, however, is that they are not always intuitive and can be difficult to perform (anyone who has ever tried to do Monte Carlo analysis without the aid of a computer will attest to this).
  
  This difficulty leads to what Hubbard really thinks is the real problem with risk management: management consultants. As a consultant myself, I try not to take this personally, but Hubbard’s analysis is spot-on. The ability to make people believe there is a real analysis happening, yet distilling it into easy, Powerpoint-ready chunks, is the real talent of many consultants. Drawing from his own experience as an MBA consultant with Coopers & Lybrand in 80s, he points how “structured methodologies,” which have all the appearance on being based on proven theories and which are easily graspable by non-technical senior managers, are not only doing no good for their clients but mask serious risk issues. An example of this is the typical matrix chart, such as this:
  
  He argues that there is no evidence that these sorts of analytical tools do anything constructive, beyond giving management the feeling that something is being done about risk. He ironically offers a set of suggestions on how consultants should sell their useless wares:
  Sell what feels right. Clients will not be able to differentiate a placebo effect from real value in most risk management methods. The following tricks seem to work to produce the sense of value:
  Convert everything to a number, no matter how arbitrary. Numbers sound better to management. If you call it a score, it will sound more like golf, and it will be more fun for them.
  
  As long as you have at least one testimonial from one person, you are free to use the word proven as much as you like.
  
  Use lots of “facilitated workshops” to “build consensus.”
  
  Build a giant matrix to “map” your procedure to other processes and standards. It doesn’t really matter what the map is for. The effort will be noticed.
  
  Optional: Develop a software application for it. If you can carry on some calculation behind the scenes that they don’t quite understand, it will seem much more like magic and, therefore, more legitimate.
  
  Optional: If you go the software route, generate a “spider diagram” or “bubble chart.” It will seem more like serious analysis.
  The net result of this has been that the most popular risk management methodologies today are developed in complete isolation from more sophisticated risk management methods known to actuaries, engineers, and financial analysts. Whatever the flaws of some of these quantitative methods, the methods developed by the management consultants are the least supported by any theoretical or empirical analysis.
  (You see what I mean about how his presentation lacks even the appearance of impartiality).
  
  Hubbard traces the difficulty with risk management, and the ability of people to imagine that non-quantitative methods are in any way useful, to the lack of consistent definitions of the terms uncertainty, ignorance, unknowability and risk. While this might seem like an esoteric discussion for what aims to be a practical book on how to fix risk, it really does get to the heart of the matter. I have to admit that it’s refreshing to see someone take on the specialist definitions of risk because, as someone who studies risk, I’ve been confounded by the various definitions from finance, project management, general line management, and others. I remember first encountering the finance definition of risk as being equivalent with volatility when dealing with the Capital Asset Pricing Model (CAPM) doing M&A consulting and thinking, “ok, that’s a stipulative definition that I’m not familiar with but it doesn’t seem really to mean the same thing normal people mean when they use the word ‘risk’”. Hubbard eventual argues for a definition that:
  includes some probability of a loss
  involves only losses, not gains
  is not synonymous with volatility (outside finance)
  The eventual and ultimate aim of this book is to argue in favour of quantitative and probabilistic methods of describing and analysing risk. The early parts of the book, which debunk qualitative methods and clarify the confused (and confusing) terminology in the field, are necessary to clear the way for him to advocate for methods like Monte Carlo modelling and Bayesian analysis. Along the way, however, I think he makes a very good point about the usefulness of quantitative models and their defensibility with regards to the financial crisis that sprung from the subprime debacle of 2007-2008. Since I was VP of strategy for one of the banks that was most effected by the meltdown and a direct customer of those models, I’ve spent a lot of time thinking about the models that the investment bankers used to predict the viability of certain kinds of loans. I specifically remember sitting in a meeting with one such group of bankers who were explicitly asking us for zero down, no-documentation loans, thinking “that’s crazy…there’s no reason for a no-documentation loan except to lie about something. If you’ve got income, you’ve got documentation”. When I inquired about how such a loan could possibly work, they assured me that they had mathematical models that showed that, if packaged together in a certain way that spread the risk throughout a securitised pool of loans, it ended up being safe as houses. As it were. I was new in my job so I kept quiet and figured there was just something I wasn’t getting.
  
  But when the subprime market imploded and took the world economy with it (after I’d moved on to consulting), a great deal of criticism was pointed the way of the investment bankers and their mathematical models. People like Nassim Nicholas Taleb, (author of The Black Swan and Fooled by Randomness) and Michael Lewis (author of The Big Short and Liar’s Poker) argued that the models themselves were flawed because, among other things, they didn’t/couldn’t take into account uncertainty and randomness. In fact, Taleb argues, the models can’t possibly adequately describe risk and therefor should be scrapped in favour of more intuitive approaches that take into consideration extremely unlikely events. The blind adherence to complex mathematical models with little correlation to the real world, many people argued, is what caused the sub-prime meltdown, as it had caused the crash-and-burn of Long Term Capital Management a decade before.
  
  It turns out that it wasn’t the models themselves that were wrong, Hubbard and others have argued persuasively. If used properly and with the right data, quantitative risk models would have been able to predict that the sub-prime market would fail. The problem was that they were using models with short-term inputs (data from the previous decade, when the real estate market did nothing but rise) and unwarranted assumptions (if there is a correction, it will be minor). As I’ve pointed out in my blog before, the chief mistake of the those investment bankers was assuming that the market would always go up. Without that assumption (which was authenticated by the data of the late 90s and early 00s), the models would have shown that there was a good chance that the sub-prime securities would go very bad, indeed.
  
  Hubbard understands that even the most sophisticated and structurally correct risk models are susceptible to bad inputs, which is why he spends much of the later portions of the book describing how to avoid the errors in judgment and estimation that lead to such inputs. In doing so, he significantly strengthens his case for building these complex model. He even takes on some of the issue raised by behavioural economists, because if people do not act rationally, it is hard to build models suggesting that they do. While they might not act rationally, the act predictably, which is all one really needs to build models.
  
  The conclusion of The Failure of Risk Management: Why It’s Broken and How to Fix It deals with several practical matters that help people build accurate, complete models for risk, including creating cultural and management incentives for accuracy. This is a must-read for risk professionals, especially those of us for whom Hubbard reserves his special disdain. I have already found myself returning to some of the tools I used in the past (Monte Carlo simulations) and exploring new ones (Bayesian analysis). Given the stakes we sometimes deal with, my hope is that other strategy and risk analysts will be similarly convinced to adhere to the proven methods outlined by Hubbard.
- Ethics, Metaphysics, and Religion
  
  Jun 12, 10
  
  Any discussion of ethics, whether in the business domain or elsewhere, runs the risk of devolving into an argument over religious beliefs. This is at least partially because the distinction between the two isn't well appreciated by many. A recent exchange on a LinkedIn Business Ethics group illustrates this, and my response was meant to somewhat gently point out that ethics and religion, though related, can't be identical if civil discussions of ethical matters are to succeed.
  
  Sheila wrote:
  
  My thoughts are that I feel I am subjected to tolerate and forced to watch all sorts of lifestyles and belief systems that are very different from mine both on TV and in public but yet when I speak up and share my lifestyle of Christian faith and the biblical ethics I struggle to uphold, I am made to feel like I am doing something socially wrong...??? I can't understand where that is acceptance? I feel that if a school system can have events that discuss alternate beliefs and lifestyles that are not biblical in nature and expose our children to things that we do not feel are the way God wants us to live, why can they not also hold youth bible studies as well.. And the funniest part is that all the things that society feels are good character and leadership traits, are all taught and displayed in the bible as well. So why would we not want our future generations to be exposed to that as well? It seems to me that Christians are now the ones being persecuted and segregated to me. But what is there to do, just be silent and not share the good news out of fear? Is that what God wants us to do? Hasn't it always been this way and God tells us to not be silent no matter the cost?
  
  -Just trying to find my real purpose and determine what example I need to be setting for my children and others....
  
  My response to her:
  
  Sheila,
  
  As a former pastor (though of a pretty progressive bent), I understand how you might feel that your views are dismissed, but I suspect this is a mis-perception. You should try to understand the dismissal of your views in terms of what Bellah, et. al., called "civil religion". Nearly everyone is happy to discuss any ethical proposition based on shared beliefs, but not so much a religious one. For example:
  
  Person a: I think that the only ethical thing to do is to protect children from violent imagery because it desensitizes them to real violence, and that leads to a society in which violence is more likely to be tolerated.
  
  Notice that this person is making an argument based on a shared set of values (violence is not a good thing). According to Bellah, there's a relatively limited set of propositions that the vast majority of people in the west agree on regardless (and this is the important bit) of what the underlying religious, spiritual, or metaphysical basis for those beliefs might be. You can hold any religious or spiritual beliefs that you want, but the basis of our ability to discuss ethical principles in public is the fact that we agree on this set of ethical principles (e.g., theft is wrong, violence is bad, using people for your own gains is wrong, altruism is, generally, good, etc.) regardless of our religious (or lack thereof) commitments.
  
  My guess is that two issues factor into your feeling of discomfort. First, rather than sticking to that abstracted "civil religion", you advocate for your ethical beliefs based on their religious and metaphysical underpinnings. This immediately puts people off because they feel that if they don't share your religion, they can't/shouldn't agree with your ethical view. If you think about it, instead of making your argument stronger, relying on your Christianity actually weakens it by restricting the number of people who are going to be sympathetic to it. The best you can hope for from non-Christians is indifference to that line of reasoning, which you'll agree is not really a strong rhetorical position.
  
  The second issue is that often when religious people (Christians and Muslims, particularly) feel they are not being treated respectfully is when they are arguing ethical propositions that are outside that set of civil religious propositions. I notice these frequently being in the realm of sexual morality or economic justice. These are ethical positions that are not at all universally held, and often, as above, the people advocating for these positions use their religious beliefs as justification, e.g. "we shouldn't allow pornography to be available because it isn't in keeping with Biblical values" or "the Christian tradition of marriage is of one man and one woman, etc.". Again, rhetorically, that's just going to alienate people who don't share your view of the Bible.
  
  I guess I'm saying that if you want to make ethical arguments about how people should conduct themselves, it's most likely to be effective and least likely to offend people if you don't couch it in religious terms and if you express your positions in terms that don't alienate people. The sense that you are "doing something wrong" is probably just people who have different religious views from you objecting to the use of religious language in an ethical discussion.
  
  (N.B. I know there is an argument that you can't divorce the religious from the ethical but I myself, having held various, evolving metaphysical/religious beliefs throughout my life with more or less constant ethical/moral views, find that argument unconvincing).
  
  Finally, and as an example of what I'm saying, I don't think the fact that other people live their lives as they wish equates to you being "subjected to tolerate and forced to watch all sorts of lifestyles that are different from mine". Right there you've made those who differ from you seem as if they are intentionally trying to offend you. Again, you that's where you might want to look for for the social pressure against your views that you are feeling.
- Strategic Value of Ethics and Compliance
  
  May 25, 10
  
  Like most consulting and audit firms' white papers, this report from KPMG Advisory, The evolution of risk and controls: From score-keeper to business partner is long on sales and short on specifics. There is enough meat to make it worth reading, however, and it addresses an important question: are audit, compliance and/or corporate ethics programs ever more than a cost of doing business or can they add strategic value? I think the latter can be the case, but because most businesses see compliance and ethics as constraints and not as enablers, they lack the imagination to see where ethical business practices can give them an advantage in the marketplace. Clearly, since this is close to the central question I'm looking at these days from a research standpoint, more will come on this topic.
- Powerful People Are Better Liars
  
  May 19, 10
  
  A recent article in Harvard Business Review looks at a study by Professor Dana Carney that concludes that Powerful People are Better Liars. This is one more nail in the coffin of the idea of the charismatic CEO (I'll post other references to this problem when I get a chance to look them up). Relying on a single charismatic leader, combined with several social cognitive biases, can add up to very dodgy ethical behaviour. If anyone has any contrary opinions on this, I'd be interested to hear it because all the evidence seems to be pointing in one direction. On the other hand, a charismatic leader is sometimes what's needed to really motivate people to sacrifice for a cause, so it's a bit of a catch-22. Comments?
- Required Reading on Decision Making
  
  May 19, 10
  
  Part of my hypothesis about risk and ethical decision making is that many of the problems faced in the business context are not consequences of bad character but of cognitive bias. I came across this fantastic illustrated guide to cognitive bias that was released by the Royal Society of Account Planning: A Visual Study Guide to Cognitive Bias
- The Ethics Of, and Response To, "Strategic Default" (part 3 of 3)
  
  May 17, 10
  
  Part 3: How lenders should handle the situation
  
  So, if strategic default is clearly unethical, financially irresponsible and certainly legally questionable, how are the banks to respond? In the days before the sub-prime meltdown, this would have been an easy question. Since banks were assumed to have the superior ethical standing, they could afford to take a hard-line approach to defaulters and quickly use whatever legal and financial means at their disposal. Now, however, the ethical presumption lies with the borrowers, so the lenders have to be very careful about how they respond.
  
  We will need to approach this issue sensitively and creatively. I have to admit that my first reaction upon hearing about this trend was neither sensitive nor particularly creative. Given the ethical in-defensibility and dire consequences of strategic default, it's an understandable reaction. Lenders are going to have to resist the urge to play hardball with these borrowers, however. For one thing, it probably won't work. Since debtors prison hasn't existed for two hundred years, the borrowers already know that the worst that can happen is that their credit will be ruined; they've already worked that into the cost benefit analysis.
  
  The first step will be to draw a profile of who the strategic defaulters are. Since no one bank is likely to have enough data to draw solid conclusions from, there will need to be inter-bank or, preferably, industry-wide cooperation. I'm assuming, since I don't have access to that sort of data, that a statistical picture of the strategic defaulter is possible and that a predictive model could be constructed. Again, this would have to be an industry effort to aggregate enough data to make meaningful predictions.
  
  Once the picture of the likely defaulter is developed, banks would need to develop individual ways of dealing with them. The most effective way will be to proactively approach the borrowers that fit the profile and offer them some kind of pre-emptive workout plan. It will be harder for the borrowers to default if they feel they’ve been treated fairly by their banks. It would be a way of building brand loyalty and it would skew the cost benefit analysis toward keeping their homes. While it will cost the lenders in the short run, given the fall in value in some real estate markets, the cost of foreclosure and disposition of the defaulted properties will likely even out. Beyond that, should the effects of strategic default become systemic, the losses would be far greater. Dealing with this problem is going to require foresight and a long-term view of these assets and the market as a whole.
  
  Once these proactive workout plans are offered, there will be several further practical steps required to adequately address this problem. First, so that strategic defaulters do not get lumped into the category of those who merely borrowed beyond their means or were victims of the economic downturn, additional means testing would have to be added to work-out planning by the banks. This adds a further burden to non-strategic defaulters, but this is one further consequence of the strategic defaulters' actions (in other words, the banks can't be blamed for this...blame the people walking away from their homes).
  
  Second, government regulators and legislators should be brought into the conversation. This sort of activity by individuals borders on fraud and theft and while it may not be universally popular, the systemic danger of strategic default becoming widespread and having a serious impact on the functioning of the lending ecosystem transcends short-term popularity.
  
  Finally, a coordinated publicity campaign about the dangers of strategic default to the society at large and its ethical indefensibility should be undertaken. If the presumption of ethical activity could be more neutral (i.e., neither with the banks nor with individuals), the peer pressure that used to exist that kept people from walking away from their homes could be revived. While it'd require careful execution, I think the intuitive reaction of most people to strategic default is negative, so merely pointing out the possible dire consequences of such defaults might be enough to turn public option strongly against it.
  
  It goes without saying that all three responses would have to be cautious, careful, and sensitively planned and executed. Banks and other mortgage lenders have fallen into the same category as lawyers and politicians in terms of public esteem and ethical estimation. Because of the possibility of systemic consequences such as the possible disruption of the entire mortgage ecosystem (which would have ripple effects in real estate, building, tax revenues, and ever other system that depends on a functioning lending system), I don't think it should be ignored. The challenge will be convincing the public, regulators, and government officials that the concern of the banks isn't merely with coughing short-term gains out of already struggling homeowners. By offering proactive help to borrowers who could fall into strategic default, lenders could demonstrate that they are working in the best interest of not only their customers but the economic wellbeing of the entire home owning ecosystem.
- Good Reads on Strategy and Ethics
  
  May 17, 10
  
  Though they tend to be a bit short on data and long on supposition, two recent reports by the Institute of Business Ethics (IBE) and Chartered Institute of Management Accountants (CIMA) tackle the issue of the link between ethics and strategy head-on. "Managing Responsible Business," the more comprehensive of the two reports, is written jointly by the IBE and CIMA. It suggests that in future, an ethical and/or sustainable business model (it seems to conflate the two at times) will be a universal necessity for doing business in the long term. The other report, which is a discussion paper really, is titled "Incorporating ethics into strategy: developing sustainable business models." They are both well worth reading and I'm interested in feedback from anyone on these papers. I'll have some further comments once I've finished the series on strategic default.
- The Ethics Of, and Response To, "Strategic Default" (part 2)
  
  May 17, 10
  
  Part 2: The Ethical and Systemic Consequences of Strategic Default
  
  For this reason, mortgage lenders should be very cautious in their approach to dealing with this trend. Additionally, there is reason to think that there could be systemic effects should this trend become widespread. If strategic default were to go to 2 million, the risk profile of mortgage lending in the US would change so significantly that it could result in much higher interest rates for all borrowers or, in an extreme case, could see lenders exiting the business for lower-risk places for their capital.
  
  To see why I think there could be systemic effects from strategic default, it's necessary to understand the risk sharing profile of home lending. There are several kinds of risk involved in making a loan, market, default, and financial. Market risk is the possibility that the property being bought by the homeowner will decrease, rather than increase in value (or, perhaps, even just fall short of the cost of capital, in this case the interest rate of the home loan). Default risk is possibility that the borrower might not repay the loan. Finally, financial risk is the possibility that money the bank uses to lend to the homeowner will become more expensive than loan itself (i.e. the bank's cost of capital exceeds the interest rate on the loan.)
  
  As in most financial transactions, the holder of the risk gets the rewards for that risk. In the case of mortgage lending, if the house goes up in value, the homeowner gets to keep difference (minus taxes, etc.). If the loan gets repaid, the bank (or holder of the loan in the secondary market) gets compensated for the default risk by interest payments. The same goes for financial risk. If the opportunity cost of the loan was lower than that of other investments, it's a good investment.
  
  The major problem with strategic defaults, from both ethical and financial perspectives, is that they transfer the market risk from the party who gets the benefit if the risk comes good (the homeowner) to a party who gets gets no benefit and in fact sees nothing but downside risk (the lender). Since the lender isn't expecting the downside market risk when making the loan, that risk isn't priced into the loan. The lenders would want either to share in the upside risk (by sharing in the profits of a sale if the market went up) or price the market risk into the into the interest rate (by raising it considerably). But since neither of these scenarios was taken into account went the loans were made, I'd argue that transferring risk to a party that isn't compensated for it is unethical.
  
  Even more concerning than the losses to banks is the possibility of strategic defaults becoming widespread. While I'm not one to prophesy doom for the worlds most resilient financial system, strategic defaults could have a severely destabilizing effect on the mortgage lending market if their prevalence rises. Without structural changes in the way home loans apportion risk and reward, mortgage lending would become a very unattractive business indeed.
  
  This could play out in a number of ways. Risk-averse investors/lenders could leave the market. The process and qualifications for the getting a home loan could be much more stringent, pushing housing prices down. The most likely scenario would be a wholesale rise in interest rates to account for increased default risk. Here's where the strategic defaulters would be forcing us into a “tragedy of the common” situation, thereby doubling their ethical . The short-term individual gains of the defaulters would cause a structural change in the way interest rates are calculated. This would result in everyone paying higher interest rates for their loans.
  
  In short, from an ethical perspective, the strategic defaulter is a triple loser. First, they break a contract made in good faith. Second, they cause others to become unable to get home loans as banks tighten their lending standards. Third, as the price of strategic defaults gets priced into the interest rates charged on home loans, they cause many people who are ethically untainted pay the price of their default.
  
  This raises the question, of course, if there are ethically defensible reasons for breaking a contract like a home loan. While this may controversial in some cases, it's pretty clear that there are situations when a borrower shouldn't be held ethically (or financially, for that matter) liable for walking away from a loan. If the loan was made under fradulent pretenses (by the lender, that is), for example, a borrower shouldn't be held to the contract. Similalry, if undue or inappropriate pressure or misinformation was used to get a borrower to take out the loan, I think we'd say they should be released from responsibility. Also, the ethical approbrium we would level at someone who has lost a job or has seen their ability to pay a loan decreased through either macro- or micro-economic circumstances would be diminished. Thus, there are clearly cases when it's not ethically questionable to default on a home loan and banks should be clear about dilineating the different classes of borrowers when dealing with the default.
  
  That said, under no traditional ethical framework would strategic default be approved of. Clearly, all foundational ethical systems have “no stealing” and “no lying” dicta which preclude strategic default. Virtue ethics, in which one asks if this is something a virtuous person would do, is (as always) a little less definite on this question, but it's hard to imagine a person walking away from a contract for purely economic gain being considered a paragon of virtue. A deontological approach, especisally that of Kant's Categorical Imperitive, would clearly make strategic default unethical. In Kant's approach, we try to imagine a world in which everyone acted in the way we are examining. If it becomes impossible, than Kant would say it's unethical. Obviously, if everyone defaulted on a loan that lost value, no one would make loans any more, which would make taking out loans impossible. Finally, under a pragmatic/utilitarian ethical framework, which looks at the action in terms of how well it works out for the everyone, strategic default would be considered unethical because, due to the “tragedy of the commons” effect, far more finanical pain is caused by the defaulters than is gained by them.
  
  Tomorrow, part 3: Playing Heavy and/or Creative Solutions: What Should the Banks Do?
- The Ethics Of, and Response To, "Strategic Default" (part I)
  
  May 17, 10
  
  My reflections on this topic ended up being far too long for a single blog post, so I've divided it into three for easier reading. I'll post them over the next three days).
  
  Part I: Strategic Default: What is it, and why would anyone consider doing it?
  
  Banks, once the paradigm case of fiduciary responsibility, have taken quite a reputational hit in the past half-decade. Where once the banker was the very stereotype of responsible, conservative financial management, whom you'd trust with your money more than you'd trust yourself, many people now see banks as just one more institution interested in nothing more than taking your money from you. While this is a broad generalization, it's not without some basis in fact. Mortgage lenders and mortgage brokers, particularly, played a substantial role in the current financial crisis. However, an emerging trend called “strategic default,” where homeowners who are capable of repaying loans walk away from their homes because of a drop in investment value, takes unfair advantage of this perception and could possibly endanger the entire home loan ecosystem. Because of the recent reputation of dirty-dealing in lending, though, banks need to very careful in how they analyze and respond to this trend.
  
  Strategic default, as it has come to be known, is when a homeowner who has the means to pay his or her mortgage stops paying their mortgage and allows the bank to foreclose. For example, let's say a family took out a $400,000 loan in 2005 to buy a house at the peak of the market. They were able to pay the loan at the time and it is still within their means to do so. But let's further assume that the value of the house, should they sell it today, would be $250,000 (a drop that would be entirely likely in some parts of California). The “strategic” defaulter, seeing that they have $-150,000 in equity, decides that letting the bank have the house and taking the 7 to 10 year hit on his or her credit is worth the $150,000. They know it would probably be 7 to 10 years before they recover the original value of the house, to say nothing of the thousands payed in interest.
  
  Looked at from a purely financial point of view, it's easy to see their point. Let's look at the math. In May 2005, the average interest rate for a 30 year fixed rate mortgage was 5.75. Let's use the following assumptions:
  
  House price: $420,000
  Down payment (5%): $20,000
  PMI: .5%
  Taxes: 1.25%
  Current value: $250,000
  Rate of return for the next 10 years: 4%
  
  A homeowner would be likely to analyse his or her cost benefit analysis as follows:
  
  The value of the house at the end of the period: $370,000
  Total payments: $418,000
  Investment value $-48,000
  
  It should be pointed out that this isn't a very sophisticated way of doing a cost benefit analysis, but I think it is pretty close to the intuitive way people think about their housing investment. A good CBA would consider the pre-2010 payments sunk costs, take into consideration the value of housing for that period, and would include transaction and opportunity costs, etc. But still, I suspect it's this sort of analysis that leads people to walk away from their homes. They think that for the $418,000 of payments they will have made, a $48,000 loss is a pretty bad return. And who could blame them for thinking that? But a mortgage is not just a financial, but a legal and ethical transaction, as well.
  
  While there has likely always been a small percentage of homeowners who default on their loans for investment reasons, this number has remained small for few reasons. First, since the early 90s, the real estate market has almost always been a good investment. Over that period, there was never a period where the overall market dropped ( see graph for illustration of this phenomenon). Second, homeownership has traditionally held an exalted place in the American psyche and there has always been a good deal of social pressure to own a home among the middle and upper classes. Finally, in a another manifestation of social pressure, anyone who walked away from a home for purely financial reasons would be ostracized as a thief or, at the very least, a deadbeat.
  
  The 20-40% market drop, in some places more, removed the investment incentive. While this has happened before, however, and there was not a wholesale abandonment of homes. The primary difference is that the fallen reputation of banks has provided a sort of excuse for people who would otherwise have been ashamed to walk away from their homes. The assumption of superior ethical standing has moved from the lenders to the borrowers. Now a person who is foreclosed upon is seen as a victim rather than a perpetrator, regardless of the actual circumstances of th default.
  
  (Tomorrow: Risk and Consequences)
- The relationship between compliance, risk, and ethics
  
  May 17, 10
  
  Although he claims not to like the word "ethics" because he feels it denotes too firm a demarcation between permissible and impermissible activities, David Chillders does nice job of linking ethics, risk, and compliance in this 50 minute talk. While I disagree with some of his intermediate conclusions, the founder of EthicsPoint is right track and this is well worth a listen if this topic interests you.
  
  http://www.youtube.com/watch?v=n45W60zxiGk
  
  I'm finding the issue of strategic default to be a rich one for reflection, so the blog post on it will be posted later today.
- Introduction to Financial Crisis
  
  May 13, 10
  
  In doing some research on the emerging trend of "strategic default" from an ethical perspective, I came across two programs, one audio, one video, on the banking crisis. While not strictly concerned with business ethics, these programs do a nice job in explaining the mistakes of human cognition/decision making that led to the crisis. Ultimately, I think, these perceptual shortcomings, combined with or magnified by unreflective profit-seeking, were to blame for the crisis, not a wholesale breakdown in ethics (or even a one-sided breakdown, which side you blame depending on your political/economic commitments).
  
  For a very fun, non-technical introduction, you can't do better than This American Life's episode, co-produced by the people responsible for the Planet Money blog, "The Giant Pool of Money". It looks at the crisis from the perspectives of several players in the mortgage production chain (borrower, mortgage broker, banker) and describes how an excess of global capital helped drive the market frenzy for securitized mortgage obligations of various sorts. There is a follow-up program that is worth listening to, as well, "The Return to the Giant Pool of Money".
  
  For a more technical, yet still very accessible, introduction to the crisis, I suggest watching a brief talk given by Andrew Lo, who is the Director of the MIT Sloane School's Laboratory for Financial Engineering. Titled Are Mathematical Models the Cause for Financial Crisis in the Global Economy?, he spends most of the talk providing the best introduction to the actual process of securitization that I've seen (and I'm someone who spent a good deal of my time actually working with the rating agencies, investment banks, and capital markets experts in putting these securities together). While I don't think Lo actually answers the question adequately (the answer, in my opinion, is "no, the models didn't cause the crisis, but the use of dodgy, short-term data and blind reliance on the models did"), the entire 50 minute talk is well worth your time if you want to get a high-level technical introduction to how securitization works and how it magnified the housing bubble and debt crisis.
  
  I'm interested to hear from anyone who has other sources to help people understand the financial crisis. Part of what caused the bubble was that actors all along the mortgage production chain didn't look carefully enough at the parts of the process they weren't involved in. This led to a blind faith that "if the investment banks say the bonds are good, they must be good" and "if Countrywide thought this was a good loan, it must be a good loan", etc. (I was actually guilty of the first one, looking back). If everyone had understood what other parts of the chain were doing, we might have seen the developing crisis much earlier than we did and been able to mitigate some of the worst effects.
  
  Also, as I mentioned above, I'm working on an ethical analysis of "strategic default" and if anyone has any perspectives they'd like to share on it (pro, con, or otherwise), I'd be really interested to hear them.
- The Persistent Use of Useless Tools: The losing end of history
  
  Jul 29, 09
  An article released today in the New York Times on a controversy regarding Wikipedia and the Rorschach test, which made reference to another article in Scientific American Mind, What's Wrong With This Picture, brought to mind several interesting (to me, anyway) questions. The Mind article discusses the use, abuse, and general un-supportibility of the famous Rorschach test as a diagnostic instrument. Because there is no single way to interpret the test, and because there is tremendous variability in the interpretations by various practitioners, the article claims, its usefulness as a test of anything is doubtful. The authors argue that the test, as well as other “projective” tests, should be abandoned until tests can be developed that are both standardized and predictable.
  
  Yet, they go on to say, there has been substantial resistance from many practitioners to discontinuing its use. And this is the really interesting part to me. Why would you continue to use a tool, no matter what your line of work, that was shown to be of questionable value? This is not an isolated instance. If you look at the history of thought, science, business, and many others, you see people clinging to tools and ideas long after they have been shown to be either less useful than other tools, at best, or downright useless or damaging. A few examples:
  
  It took nearly a hundred years after the Copernican heliocentric view of the universe was introduced for it to become widely accepted. This was in spite of the fact that it explained the solar system in a much more elegant way than the Ptolemaic view did.
  Georges-Louis Leclerc, Comte de Buffon suggested in the early 18th century that the world was far older than the biblically-deduced 6000 years. It wasn’t until the early 20th century that this view gained currency.
  In business, the failure of the diversified corporation strategy was apparent soon after its adoption, but many companies, particularly automobile companies, held to it until their recent demise.
  Freudian analysis, in spite of a dearth of experimental evidence in its support (Webster, Tallis) and some evidence against it, remains to this day one of the primary modes of psychotherapy.
  So, why this resistance to new tools and new ideas? After all, evolutionary biology tells us that it is not the fittest who survive in a rapidly changing environment but those quickest able to adapt to those changes in the environment. In any field, whether it is theoretical, like science, or practical, like business or psychotherapy, it seems like we would have every reason to embrace new ideas since they improve our chances of thriving (in whatever endeavor). I believe that this remains one of the major risks to countries, businesses, and individuals alike, and that those who have elastic, open minds, and who are willing to jettison non-working tools and ideas as soon as a better idea, will be the ones who survive and thrive as the rate of change in our world increases. Those who cling to outmoded ways of thinking and doing will become the dinosaurs of the twenty-first century. I think we need to better understand this phenomenon of resistance to new ideas so we can counter it in the business organizations, political entities, and people that we aim to help.
- Timelines, Risk, and Right: The ethical danger of short-term rewards
  
  Jul 28, 09
  
  An editorial in yesterday’s New York Times addresses a deservedly sensitive issue in the world of business ethics: compensation. Of specific interest to me, this editorial homes in on most important question: the relationship between risk and reward with regard to pay. While the Times editorial focuses primarily on the legislative approach to this problem (which is some time in the future) the more basic ethical/decision-making issue is how well we judge risk in the short term vs. the long term and how we are likely to behave when we are rewarded for one kind of risk when the ethical thing to do is focus on the other. In short, are these traders going to make better or worse ethical decisions when they are rewarded for short-term risk taking?
  
  First, the practical considerations. It’s been widely and accurately claimed that much of the market behaviour that led to the debt-based asset bubble was driven by short-term rewards. In fact, if you examine the mortgage value chain, each of the players received rewards and passed the longer-term risk on to the next player. The borrower passed it to the broker, the broker to the bank, the bank to the investment bankers, the investment bankers to the investors. Ultimately, when the risk aggregated with the investors in the longer-term, the system melted down and the effect has been, in large part, the global financial crises.
  
  What the current bankers and traders are doing is much the same. They are paid quarterly or annually for returns on their investments from that period. The previous quarter or year’s transactions aren’t tracked from a compensation perspective. Since most people, lacking a compelling reason, practical, ethical, or otherwise, will act in a way that rewards them, the bankers and traders will continue to focus on short-term gains.
  
  This wouldn’t be a problem if these short-term gains added up to long-terms gains but frequently they don’t. The bailout of the financial system, which has cost the taxpayers of the United States more than a trillion dollars, is the paradigm case of this. What ends up happening, therefore, is that the short-term rewards are expressed privately in the huge (by any measure) bonuses in the financial services industry while the long-term risks are socialized and/or passed on to the investors. Thus we, as an investor nation, end up paying twice: once for the bailout, and again as our 401ks bite the dust. The traders and bankers only get paid.
  
  And herein lies the fundamental ethical question. Is it right to transfer risk from the people who stand to gain from it to people who can only lose? In other words, it’s a question of upside, downside, and time horizon. What the current system does is reward the long-term upside rewards to those who only have short-term risk, the traders and investment bankers. It also places this downside risk mostly with the long-term investors/tax-payers. So, contrary to the mythology of free-market fundamentalists, the risk-takers aren’t truly rewarded, and those who are rewarded aren’t truly taking on risk. I think this could be unpacked much further, but I think what I’m trying to say is clear: by transferring downside risk from those who get for it (Wall Street) to others (investors and taxpayers), the system encourages the traders to act unethically because it rewards them for doing so. Because people are so bad at estimating long-term risk, they end up acting unethically without even knowing it.
  
  I know that there’s a lot more to be explored here. In fact, probably a book’s worth. For example, what about the upside rewards for investors? If the traders are acting in a way that they are supposed to (at least institutionally), how can they be said to be acting unethically. These questions can be answered but they’re out of scope here. The point I’m trying to make is that the system is currently broken, from the perspective of risk, reward, and ethics. The Times is therefore right in thinking it needs to be reformed, probably through legislation and regulation. But it’s also important to understand how it’s broken in order to fix it correctly and this is what I don’t see much discussed in the current debate. I hope my little blog post adds something positive to the discussion.
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- Business Idea: Cosmetic Medical Services Rollup/Franchise
  
  Jan 10, 07
  A Business Idea
  
  This off my usual track of IT-related topics but relates in a general way to business strategy. Driving down the main street of my neighborhood in Long Beach, I noticed the proliferation of cosmetic services outlets, e.g., botox, laser hair removal, chemical peels, microdermabrasion. Now, Belmont Shore is a pretty posh area so it is not surprising that it can support several clinics that have a focus on personal service. It got me thinking, however, about the possibility of doing a roll-up and/or chain/franchise business focusing on economies of scale and marketing to previously un- or under-served markets in the middle-class suburbs.
  
  The idea is that many middle class people are priced out of the cosmetic services market. The high prices of these services are dictated mostly by supply-side economics. Currently these establishments are congregated in affluent neighborhoods and downtown business-heavy locations, both of which have very high fixed costs with regards to real estate. Additionally, due to these high prices most of these clinics are quite small so their customer throughput is limited. This increases the unit cost because one of the other fixed costs, the cost of the supervising physician, is spread out over fewer patients. Finally, since these clinics are mostly stand-alone businesses, they have little or no bargaining power with their suppliers, particularly for capital purchases (e.g. laser hair removal machines). Thus, even though variable costs are fairly low, fixed costs are so high that these services remain out of reach, financially and geographically, to many people.
  
  Even with its currently limited market, the market for these services in quite large and growing. Based on my research , the total market for non-surgical cosmetic procedures in 2005 approached $5B. The market size research is summarized below.
  
  I haven't figured out an elegant (or even inelegant non-labor-intensive) way to post tables with blogger, so you can find the figures at:
  
  jamesdmeacham.dyndns.org/blog/skin.pdf
  
  To tap into both the un- and under-served markets, I suggest a business based on the following:
  
  • Location: Base stores in suburban areas of major cities and urban and suburban areas of smaller cities. This would keep price per square foot low and allow for larger stores, thereby increasing capacity.
  • Market Segment: The mass market of suburban women for whom price is still a factor and that are currently priced out of the market. This would grow the overall market.
  • Economies of scale: Increase scale in several ways.
  By opening larger stores, capital purchases even on a local level would be greater, thereby offering a degree of bargaining power that is now absent.
  By opening up a chain or using a franchise model, the corporate center could negotiate large price concessions from suppliers. This could decrease both capital purchases and variable costs.
  Increasing the ratio of nurses to doctors would decrease labor overhead. I’m uncertain about the legal or regulatory requirements here, but my guess is that they are minimal as long as there is a supervising physician.
  • Positioning/Marketing: Because these stores would be located in less affluent (though by no means impoverished) areas, a concept that emphasizes the modern, hygienic, and medically supervised aspects of the business would put customers at ease. I picture stores done in modernist furniture with nurses in clinical white.
  • Efficiency: Process efficiency, both in the opening of stores and in the delivery of services, would further increase the yield on investment. As knowledge among staff increased, training costs for new staff would decrease as training could be insourced.
  • Possible Strategic Alliances:
  Hair care chains (Toni & Guy, etc.)
  Spa chains
  
  I’d be interested to hear whether this might be a workable business plan. I’m going to reach out to some people I know in this space and see if I can turn up some numbers regarding capital investment, payback timelines, cost to serve, and labor efficiency and capacity. Clearly these would be required for a real business plan, but I wanted to present my nascent idea should anyone with the means to use it might be able to.
- I Stand Corrected
  
  Dec 29, 06
  
  A recent article in Wired, YouTube vs. BoobTube clarifies the questions I was considering below. In short, the advertising dollars that used to go to TV have to go somewhere because that model is broken and is in no danger of being fixed. Additionally, a friend sent me the following rebuttal, of sorts, all of which is right on the money and is similarly focused on advertising rather than content. My mistake was looking at YouTube through the lens of iTunes rather than looking at it from an ad revenue perspective. Which, considering that Google's business model is based on advertising, was kind of a huge oversight.
  
  What I don’t get is that Google didn’t pay cash, they paid with Google stock which is selling at more than 55 time earnings. That’s better than paying with cash, right?
  
  What if instead of charging for content, youtube charges for advertising? How much ad revenue can you get from 3 billion videos per month? I think they have a 60% market share, which is good, right? It’s kind of like another TV network, sort of like Fox with a little bit more porn. Do the numbers work from the ad side?
  
  But what if Google was thinking more in competitive terms? Their 60% share compares to 3-5% share for everyone else like Google, msn,… Now, I may be talking out of my ass here, but it seems to me that with Google dominating the search business, their biggest competitive risk is from someone like youtube tying up with someone decent in mainstream search to form a new alternative to Google. Just like we all migrated from Webcrawler to AltaVista to Google, the nightmare to Sergey & Co. is that a new generation Yahoo or god forbid MSN could take it away from them. Youtube could have provided that critical something for someone else to take that leap. Google’s move might make as much defensive sense as it does on pure synergy. Right?
  
  Look at it this way, Google’s market cap is over $117 billion give or take. If they were to lose 1.5% of their market share to a competitor, that’s the cost of youtube.
  
  Thanks, Lynn and Claude, for putting me straight.
- Quantifying the Value of IT Security: A Method Based on the Cost of Capital
  
  Dec 29, 06
  
  One of the major issues facing business and IT leaders is determining how much to invest in IT security. Some industries, like financial services and healthcare, have regulatory floors on how little they spend, due to Sarbanes Oxley, Basel II, and HIPPA. But with the ongoing threats of hackers, spammers, Internet terrorists, and identity thieves across all industries, how much to spend is an open question subject to considerable debate. How much is enough?
  
  To answer this question, we must determine the optimal amount of investment, which requires an ROI calculation. Most answers constellate around operational and reputational risk. The usual way of quantifying the return on these risks is with a discounted cash flow where the value of a project is equal to the future cash flows of a project discounted to the present. The formula for NPV, for example, is:
  
  Where C= n the total time of the project, r the discount rate and C is the cash flow at that point in time.
  
  The problem with this approach for IT security is that it doesn’t have any explicit cash flows associated with it. Unless a firm markets its resistance to IT threats as a competitive differentiator (which in turn raises reputational risk further), there is not a measurable marginal difference in cash flows when it invests in IT Security projects.
  
  The ROI of IT Security is therefore usually explained in the negative terms of cost avoidance: by reducing the number of successful attacks, a given project will reduce operational and reputational losses. This would in fact be a great method if there were any way of quantifying what these losses are worth from an operational and reputational perspective. All methods I’ve encountered in my work with clients and employers have been based far more on guesswork than on solid facts. This is nobody’s fault; this is a very hard nut to crack. (More on the several difficulties of these methods in a later entry).
  
  What I suggest is research on a new approach, one that is based on a different part of the NPV calculation: the cost of capital. Instead of focusing on the cash flows, we could look at how operational and reputational risk impact market/financial risk. Since the cost of capital is based on financial risk (measured in beta), we could investigate if there is a correlation between IT security incidents and market beta. The higher the market risk, the higher the coast of capital, and the higher the cost of capital, the more that goes to investors to compensate for risk. Therefore if you could reduce the market risk by reducing the operational and reputational risk through increased IT security spending, your cost of capital would decrease and all your other cash flows would become more valuable.
  
  A firm’s cost of capital is calculated thus:
  
  WACC (Weighted Average Cost of Capital) = (Cost of Equity * % of Equity) + (Cost of
  
  While it is possible for operational risk to have an effect on the cost of debt, for the purposes of this discussion I’m going to limit myself to the cost of equity. There are several ways of calculating the cost of equity, but in this example I’ll use the Capital Asset Pricing Model (CAPM). The formula for CAPM is:
  
  The idea behind CAPM is that the β is a measure of systematic financial risk. What I’m suggesting is that we could develop an analogue of β that measures the relationship of financial risk to operational and reputational risk. If this relationship bears out, the greater the incidence of publicly released security compromises would increase the volatility of the equity, thereby increasing β and in turn, increasing the cost of capital.
  
  There are some obvious obstacles to this method. First, there is likely to be a correlation between the size of quantifiable losses and unquantifiable losses. For example, if a bank were to disclose a $1M loss due to hacking, there would probably be a smaller swing in its stock price than if it disclosed a $10M loss. The problem is that while companies sometimes disclose the incidence of attacks, attaching a value or seriousness to the attacks is far less frequent.
  
  The second issue is that there would have to be a large enough data set about incidents and losses to draw statistically significant conclusions. For obvious reasons (i.e. the whole reason that this method might work), companies are loathe to release information about their operational problems. The only ones they are likely to divulge are those that are large enough to give their investors cash-flow related worries. This would naturally skew the data set even if it was large enough to support significant conclusions.
  
  So while there are some hurdles to making this method work, it would make the lives of CISOs and other InfoSec managers a lot easier when it comes to capital and operational budgeting time. I believe that the potential exists for this to be a valuable tool for showing the value of Information Security and needs further research.
- The Value of Strategic IT Consultants
  
  Nov 08, 06
  After giving Ade McCormack a hard way to go in my previous post, I need to point out that his current analysis piece in the Financial Times is much more to my liking. And not just because he answers "yes" to the question "Is there value in using strategic IT consultants". His most recent article, which can be found at
  http://www.ft.com/cms/s/756ef782-6e51-11db-b5c4-0000779e2340,dwp_uuid=4dce8136-4a24-11da-b8b1-0000779e2340.html
  is a mostly complimentary review of when and why a firm would want to use strategic IT consultants, a question near and dear to my heart. He is right in some of his criticisms of consultants (more likely to offer justification for what you already believe than challenging ideas, creating recommendations based on the consultants needs or related offerings, illogical billing schemes), as well.
  
  The essence of his recommendation boils down to this:
  
  Good reasons for using consultants include:
  Where a culture change is required and an independent catalyst is necessary;
  Where the expertise does not exist inhouse;
  Where their use will save you time;
  Where you might benefit from the consultant’s wider experience by way of cross-pollination.
  
  All good recommendations, though I'd amplify these by adding the following additional reasons for hiring consultants:
  Through repeated engagements, consultancies have built up significant knowledge capital in the form of methodologies, repeatable processes, and proven practices that can dramatically speed the development of strategic decision-making and increase the likelihood of a neutral, objective set of recommendations.
  If the client has an idea about where it wants to go (outsourcing, offshoring, new markets), the larger consultancies have experience with these areas since they also offer these services. A firm like Accenture, for example, with significant BPO and IT outsourcing businesses, knows from experience the success factors and risks for these kinds of initiatives and can advise clients as to the best way forward.
  Perhaps the most important value a consultant adds is by advising clients in a way that removes decision-making from the tactical, political, day-to-day concerns of running a business. I recently advised a client whose business was founded on the technical and creative expertise that gave his firm significant competitive advantage. The firm's rapid growth presented it with a host of operational and tactical challenges. I was called in to help resolve these issues. Upon closer inspection, however, it was a lack of strategic planning that had resulted in poor resource allocation and unprofitable pricing that drove the operational problems. Only when when the client was able to see above those issues could the processes be put into place that distributed management time and other resources to better advantage. The strategic IT consultant can help the client see a new, more business-aligned context that is removed from the technical issues that comprise the day-to-day operations of most corporate IT departments.
  As I've mentioned in other posts, corporate IT can bog down, like any corporate cost center, in politically motivated stagnation and systemic, vestigial processes and cultures. A strategic consultant can add significant value by bringing a new view that sees IT as an enabler not of IT, but of the firm's competitive strategy. That is a winning scenario for most IT shops, and indeed, most firms.
- Should We “Set IT Free”?
  
  Oct 27, 06
  In a recent article in the Financial Times, Ade McCormick, consultant and author, presents a provocative argument for “setting IT free” (Financial Times, “Preparing the IT department for life in the wild”, 18 October 2006. http://www.ft.com/cms/s/2529b45a-5e85-11db-afac-0000779e2340.html. Full text follows below). He draws an analogy between lazy, sedentary zoo animals and IT departments which, while a bit pejorative toward those that are fortunate to have the remaining, non-offshored IT jobs, has more than a little truth in it. As someone who has worked in his share of Fortune 500 IT shops, I’ve seen what can happen to IT shops that aren’t held responsible, on a constant basis, for what their customers need and want. But is his suggested cure as helpful as his diagnosis? While many IT departments deliver sub-optimal value to their customers, is throwing them to a Darwinist lion’s den the best way to encourage value creation in corporate IT departments?
  
  The essence of McCormick’s argument is that by cutting the financial ties by which a firm funds IT, basically making it an independent service provider, it will provide more value:
  But why should the IT department “bust a gut” to finish something today if there are actually no consequences for failure? And why should the helpdesk improve its bedside manner? What are your alternatives?
  
  Well perhaps it is time to release the IT staff into the wild.
  Step one – cease to have an IT budget.
  Step two – invite the IT department to bid for the contract to run the company’s infrastructure.
  Step three – announce that in respect of applications, the IT department will have to convince the heads of sales, marketing, logistics and so on that they should spend some of their budget on IT.
  There is an instinctive logic to this argument. Why not, in fact, make IT act like an independent firm, forcing it to provide value and proper customer service or abandon the effort to service providers that can? There are definitely pros to the argument.
  IT would be forced to deliver value on a short-term, project-by-project basis. The customer satisfaction of the individual project- and business-owners would increase.
  Non-core competencies and non-strategic functions will be outsourced if IT can’t keep up. And it won’t be able to, especially the further down the IT stack you go. The IT infrastructure would almost always be outsourced to the firm’s benefit.
  Customer orientation would be necessary to keep the upper layers of the stack out of the hands of outsourcers, consultancies, and system integrators, all of who excel at customer service, particularly when dealing with business people.
  In spite of these upside factors, the cons to McCormick’s argument far outweigh them.
  IT outsourcing companies deliver repeatable, generalizable utility services, e.g. those processes that can be shared among several customers. Upper level, strategic processes are far less likely to be deliverable from outside the company.
  To deliver strategic value to it’s company, IT needs to be integrated into the strategic planning and decision-making process in a way that no outside agency could be. IT can be a co-creator of value. Strategic functions, like IT strategic planning and Enterprise Architecture, are overhead functions. They are the first things cut when IT has to start reducing costs. Without them, the company is at a competitive disadvantage because it can only use IT as a utility, an infrastructure element, not as a strategic asset.
  Because the locus of customer satisfaction would lie with project owners and business owners, this arrangement would encourage short-termism and business-unit provincialism. Long-term, firm-wide strategic imperatives would fall by the wayside as individual cost-center managers made buying decisions based on their own, more tactical and immediate interests.
  While I’ve heard the idea of an IT department becoming an independent service provider before, I don’t know any cases where it has been done successfully. Occasionally, bits of companies have been spun off as they become service providers to other firms, but it has not been proven as a business model for an IT shop of a Fortune 500 company to become a separate operation.
  The main problem with McCormick’s analysis is that it takes a worst-case scenario (lazy, unresponsive IT departments) and prescribes the most radical, laissez-faire solution. Although the problems he points out are certainly present in many corporate IT departments I’ve worked with, they are rarely as bad as he suggests. Furthermore, there are less extreme solutions in the IT manager’s toolkit that would be both less disruptive and more likely to provide strategic value to the company. If I were CIO of a company with IT service issues like the ones he mentions, I would take a different course of action.
  
  First, the firm’s infrastructure would need to be outsourced. There is no reason for a company in any business but the infrastructure business to spend money and effort on the building and maintenance of an enterprise infrastructure. There are occasional exceptions to this (mostly related to risk management and regulatory issues), but as a general rule, IT infrastructure is not a competitive differentiator and should be outsourced like any non-core business process.
  
  Second, the integration between business strategy and IT strategy would need to be strengthened. If an IT department is not delivering value and service, it is likely that there is a mismatch between IT’s priorities and those of the business. Enterprise Architecture, the link between strategy and technology implementation, would also need to be strengthened and integrated to insure that actual technology standards and governance were aligned with the firm’s strategic imperatives.
  
  Third, enabled by a robust IT strategy function, metrics driven from the IT strategy would need to be the primary yardstick for performance in IT. This would insure that departmental and individual behavior would match the firm’s needs. Addition, there would also need to be a balancing set of metrics driven from the project level that would be customer focused. In this way, both the long-term, strategic needs of the firm would be met while preserving short-term, tactical customer satisfaction.
  
  Anyone who has worked with a large corporate IT department has seen some of the problems that McCormick presents. His article, though thought provoking, doesn’t really take into consideration the primary way in which IT departments add value: by being proactive, long-term strategic partners with their firms. A more measured, multi-disciplinary, and strategically thoughtful approach would be much more successful.
  
  -----------
  Ade McCormack: Preparing the IT department for life in the wild
  By Ade McCormack
  Published: October 18 2006 11:34 | Last updated: October 18 2006 11:34
  You have an item in your to-do list to spend some time with your (grand-)children. With fond memories of your own childhood, you decide to take them to the zoo.
  But as you walk around the animal enclosures, the kids complain, somewhat disappointingly, that it is cruel to keep the animals in captivity and that this is the cause of the beasts’ apparent listlessness.
  You note that the lions just lie there. Their only movement being to check the zoo clock to establish how soon lunch will be served. You similarly notice that most of the animals seem to have lost their edge and have probably lost all need to rely on their natural instincts.
  But surely they enjoy a better quality of life by living in a safe environment enjoying the charity of mankind. Why, even their romantic liaisons are prearranged.
  As usual, and particularly as you get older, every second thought is business-oriented. You look for parallels. The IT department comes to mind.
  The IT staff live in an enclosed environment, or so it seems, protected by perimeter security (aka the help desk).
  They tend to remain fairly motionless unless prodded into action. Most of the time they appear happy tinkering with technology toys regardless of what is happening outside the ivory tower.
  You take the thought further and conclude that they receive a budget more or less regardless of their performance. OK, the CFO may exert some downward pressure on the figure, but in essence they are receiving a periodic charitable donation.
  And for that you receive a variable quality service that is characterised by a “mañana” mentality.
  But why should the IT department “bust a gut” to finish something today if there are actually no consequences for failure? And why should the helpdesk improve its bedside manner? What are your alternatives?
  Well perhaps it is time to release the IT staff into the wild.
  ■ Step one – cease to have an IT budget.
  ■ Step two – invite the IT department to bid for the contract to run the company’s infrastructure.
  ■ Step three – announce that in respect of applications, the IT department will have to convince the heads of sales, marketing, logistics and so on that they should spend some of their budget on IT.
  This will perhaps be something of a shock to the CIO and might well induce “startled rabbit” syndrome. To ameliorate the situation, the IT department can be told it will have the IT infrastructure business for three years, once the financials and service levels are agreed. And that the heads of department will be able to look for alternative IT services in the wider market after one year.
  But here is the good news: the IT department will be able to bid for work beyond the business. In other words, they are going to become a genuine service provider.
  What a great career-developing opportunity for a CIO. A stint running an IT service company will smooth the transition to board member and perhaps one day to CEO.
  The net effect of this budgetary upheaval will be to tear the hermetically sealed fabric that has protected the IT department from the commercial world. Darwinism becomes the latest IT methodology.
  With an “eat what you kill” mantra, the IT department now has to win business and deliver successfully. No time now for pet projects. If nobody is paying, it does not get done. Amazingly, this will also trigger the IT department into being more innovative. Survival (aka, winning business) tends to bring out one’s creative side.
  This might seem cruel. But then so is cosseting your children. Not preparing them for the real world will make them vulnerable to those more streetwise.
  Similarly, mollycoddling IT staff will make them prey to more streetwise operators such as the IT service companies. Some tough love now will give them a fighting chance when the organisation is faced with making outsourcing-related decisions.
  Everyone benefits. Users get what they need, when they need it. The CIO is no longer at the mercy of the CFO in respect of budget.
  And as mentioned, the IT staff acquire some life skills.
  So now it is time to turn your IT zoo into a safari park. Go on, be a tiger.
  Ade McCormack (ade@auridian.com) is founder of Auridian (www.auridian.com), which helps organisations get best value from their IT investment. He is also author of ‘IT Demystified – The IT handbook for business professionals’, available via www.auridian.com/book.
  Copyright The Financial Times Limited 2006
- YouTube and Google: A Return to the Bubble?
  
  Oct 24, 06
  Yesterday's news that Google would be acquiring YouTube appears to have come as a surprise to nearly no-one.
  
  http://www.nytimes.com/2006/10/09/business/09cnd-deal.html?em&ex=1160625600&en=ed0019bf33333b8d&ei=5087%0A
  
  What surprised me, however, was the $1.65B valuation Google placed on the business-model-less YouTube. Even more shocking still was Wall Street's positive reaction to the deal, driving up Google's stock price over $8 after the announcement. This made me reflect: what do these guys know that I don't know, and what are the possible justifications for such a high valuation for a business that has never had a positive cash flow? And does this deal represent, even in a small way, a return to the bubble years of the late 90's, as it was then we saw stratospheric valuations on companies with non-existent or dubious business models.
  
  The usual way of doing a merger valuation are based on marginal discounted cash flows based on various kinds of synergies. Some of the possible value drivers for these cash flows are:
  Scale synergies
  Customer acquisition
  Market entry
  Technology/product assets
  It seems that the first two are unlikely. Scale is much less likely to be a factor in a business like Google's and, seriously, in the case of either eyeballs or advertisers, YouTube is not likely to bring them a much bigger footprint.
  There is an argument for market entry being a driver for the acquisition, though it's not a strong argument. Google is already a player in the video distribution business.
  So it seems, by an large, a technology/product assets play. What they've bought is a technology platform that can be integrated into their pre-existing video search capabilities. The question is: how will they monitize it?
  A good part of YouTube's attractiveness is that it is free. You can spend hours searching through forgotten 80's bands to find that one Adam and the Ants video you remember from your junior year in high school (or so I've heard). Would a person be willing then to spend $2 for it? Perhaps. More to the point, would you be willing to pay anything to watch a break dancing midget or other stupid human tricks.
  This has been tried before. Remember Napster? They too had a huge user base but, once it was no longer free, it was no longer attractive. There are some things that are only compelling when they are free, and I suspect videos of dancing midgets are among those things.
  But lets assume, for the sake of argument, that people would be willing to pay good money to watch old episodes of Dynasty and sophomoric videos. How much would Google need to bring in to make this worth $1.65B. Here's a look at my quick, back of the envelope calculations:
  Assumptions:
  Starting unit volume: 15,000,000. Assumption
  Price per view: $1.99. Current video price at itunes and google
  Google share: 30%. Google press release
  SGA: 20%. Software industry average
  Net per view: $0.60 Figured
  Tax Rate: 35%. US Corporate tax rate
  Variable Costs, per vid: $0.10 Assumption
  Cost of Capital: 12.50%. GOOG's WACC, Bear Stearns, http://battellemedia.com/archives/GOOG_012606.pdf#search=%22google%20WACC%22
  Growth Rate: 400%. Assumption, approximately itunes store's 2004-2006 growth
  Based on these assumptions, Google's NPV for 5 years (with no terminal value assumed), would be $1.64B. I played around with a number of scenarios to get this figure, but this is the most reasonable one, it seems to me. This would mean that over the course of 5 years Google would need to sell 11,750,000,000 (11.75B) videos.
  The two most sensitive assumptions are the initial volume and the growth rate. The initial volume is a mostly a guess, though it is supported by Apple's early video sales, selling a little over a million videos a month. The growth rate is really the more critical assumption. When Apple entered the song market in 2004, it was the only player and continues to have hegemony over the entire digital music value chain. I just can't see, with Apple's dominance in this market, along with video industry incumbents like TiVo, Blockbuster, DirectTV and the like also entering the market, that Google will be able to generate anything like a 400% CAGR.
  So do I think this is a return to the days of the $1B vaporware valuation? No. This valuation is not totally out of the range of possibility. I do, however, think that it is based on such incredibly optimistic assumptions about the potential market and growth rate that Google's shareholders will not look back on this acquisition fondly.
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- Sermon from 1994: Thingification
  
  Apr 17, 12
  
  [This sermon was delivered to the First and Second Unitarian Church in Boston, MA in 1994. Like all of my old sermons, it was written in an old word processing format that hasn't converted consistently. Try to ignore weird characters and extraneous diacriticals.]
  
  Every life has its high moments and low moments,
  and mine has been no different. I've had a string of
  high moments in the last few years: getting
  married, graduating from college, starting my
  teaching career. I've been thinking lately, though,
  of one of the low moments on its ten year
  anniversary. Actually, to say it was a low moment
  is a bit inaccurate. The word moment implies that
  it was a quickly passing point of time, where in fact
  this low moment of mine lasted about six weeks. It
  was: Boot Camp.
  
  Having run out of money for school, and having
  seen "An Officer and A Gentleman" a few too
  many times, I enlisted in the Navy to "find myself."
  I'm still not sure why I thought I'd find myself in
  the Navy if I couldn't in my home town, but, as the
  saying goes, everywhere you go and, well, there I
  was. And I hated it. It took me a while to figure
  out what made it so awful, and it's only recently
  that I've understood it. Coming from my relatively
  comfortable background, I had always been treated
  like a person in the fullest sense, but in boot camp,
  for the first time, this wasn't the case. I was no
  longer James Meacham, lover of cats, motorcycles
  and late night philosophy debates, I was merely
  "recruit." NOt "recruit meacham" or "Mr.
  Meacham," just "recruit. I was 040-34-6540,
  company 909, recruit. It seems obvious now that,
  in addition to the sleep deprivation, the reason I
  was so unhappy was that I was no longer a person,
  I was a number. I had been "thingified."
  
  Thingification is what happens when one person
  regards another person as a sort of thing, not fully
  a person in the sense he or she is. When someone is
  reduced in another's mind to a set of labels, of
  statistical generalizations, to the things one doesÔ
  rather than who one is, that person has been
  thingified. And in this thingification, I believe,
  comes one of the central challenges of liberal
  religion: to un-thingify people, to hold others in our
  minds in their fullness as human beings. This
  morning I invite you to explore with me some of the
  ways this tendency to objectify people manifests
  itself, and to explore how damaging socially,
  politically, and spiritually it can be. Furthermore,
  I'll suggest, with the help of some philosophical and
  religious leaders, how we might respond to this
  challenge. Ultimately, if we come to a place where
  we can respond fully to others and ourselves as
  people and not as things, we will grow closer to
  each other, closer to our true selves, and closer to
  God.
  
  Reading a computer magazine the other day, I
  came across an article about the falling fortunes of
  IBM, the world's largest computer manufacturer.
  In the past five years the company, which has
  always been considered the ultimate in blue chip
  stability, has fallen on tough times. Makers of
  clone computers, workstations, the elimination of
  mainframes and the falling prices of hardware, has
  driven the profits of IBM way down. Its stocks,
  which were always reliable, have halved in price
  recently. Then, for the first time in the companies
  history, a substantial number of workers was laid
  off. Thousands of workers. An unfortunate but
  necessary step, the company said. And we might be
  inclined to agree, times being what they are.
  Serious times, after all, require serious measures.
  
  We might agree until we find out that IBM's Chief
  Executive officer, Louis Gerstener, earned 8.5
  million dollars last year. This is just the top man
  on the totem pole, too. I wonder what figures weÔ
  could come up with if we added up all the top
  management?
  
  It's unfair to point a sole finger at IBM for this
  practice. It is problem that is widespread in this
  country. In a recent newsletter, the Franklin
  Research Group stated that the chief executive
  officer in companies in Japan earned 17 times as
  much as the average worker, in Great Britain that
  number jumps to 33 times. And the United States,
  well, in the U.S. the average Chief Executive of a
  multinational corporation earns 87 times as much
  as the average worker. What is the problem here?
  The workers have been thingified.
  
  Unfortunately, our economic system encourages the
  thingification of workers. They are just one more
  'thing' that goes into producing a product. They
  are 'labor,' a thing, to be used to make money for
  the shareholders and the management. Not seen in
  their full humanity by the management of many
  firms, they are expendable when times get tough,
  more expendable apparently, than a million dollar
  bonus. Even the word we use to refer to workers
  "human resources,' puts them on the level of
  bricks, mortar and factory building. When a
  company no longer needs bricks they stop buying
  them, when they no longer need labor, they lay
  them off. Thus is only possible when the workers
  have been thingified.
  
  Another effect of thingification is that we no longer
  have to take responsibility for those we have
  objectified. We are distant from those who are not
  fully human in our eyes, and we get to stand back
  and not feel so bad about their plight. I first heard
  this term "thingification" from a member of the
  Ten Point Coalition, an association of African
  American churches that has drafted a plan to stopÔ
  inner-city violence. HE said that we, all of us, tend
  to thingify the youth in the inner city. We label
  them "hoodlums" "gangsters" "drug addicts"
  "drug pushers". We think of them as so different
  from ourselves in our quiet suburban
  neighborhoods that we can't do anything with
  them, and we absolve ourselves of responsibility to
  and for them. When we do this, we deepen the
  chasm between us and them, between the haves and
  the have-nots, and reinforce the very structures
  that separate us.
  
  Until this point, I've mentioned primarily the
  effects of thingification on others, but it just as
  easily applies it ourselves. When we start to think
  of ourselves as things, as labels, as what we do
  rather than who we are, we get thingified. And this
  keeps us from attaining the full capacity of who we
  really can be.
  
  Think about how you answered the last time
  someone asked you "what do you do?" If you
  answered the way I usually do, you gave your
  profession, a label to describe yourself. "I'm a
  minister," I say, or "A student" or "a teacher"
  depending on how I'm making my money that
  week. But even though I am these things, these
  labels just scratch the surface. A more accurate
  answer to that question might go something like
  this: "what do I do? Well, I read quite a bit. I
  spend time with my wife, I play with the cats, I go
  surfing, I play with my computer, I preach, I teach,
  I kvetch with Lee and Vanessa." See, much more
  fully explanatory than "oh, I'm a student
  minister". What do you do?
  
  This is, I'll admit, a somewhat artificial example.
  When people ask us what we do, they mean what
  do we do for employment. This does, however,Ô
  belie a tendency to think of people in terms of how
  they earn their money. This is bad enough, but
  when we ourselves see ourselves primarily in terms
  of our profession, this can be quite damaging to our
  sense of self. If I think of myself only as a minister,
  what happens if the bottom falls out of the minister
  market? And how does that effect the rest of my
  life. There so many stories about people like H. L.
  Menken who were at the top of their fields but had
  unfulfilling personal lives. Our sense that we are
  out jobs can come between us and the attainment of
  wholeness, richness and fullness in our lives. If we
  objectify ourselves to ourselves, if we are not who
  we are but what we do, we're like a row boat on the
  stream of life without a paddle, half-crippled and
  dependant on the the fickle currents to take us to
  fulfillment
  
  There is a part of the children's story "The Little
  Prince" that comes to mind in this regard.:
  
  If I have told you these details about the asteroid,
  and made a note of its number for you, it is on
  account of the grown-ups and their ways.
  Grown-ups love figures. When you tell them you
  have made a new friend, they never ask you any
  questions about essential matters. They never say
  to you "What does his voice sound like? What
  games does he love best? Does he collect
  butterflies?" Instead, they demand: "How old is
  he? How many brothers has he? How much does
  he weigh? How much money does his father
  make?" Only from these figures do they think they
  have learned anything about him.
  
  If you were to say to the grown ups: "I saw a
  beautiful house made of rosy brick, with geraniums
  in the windows and doves on the roof," they wouldÔ
  not be able to get an idea of the house at all. You
  would have to say to them "I saw a house that cost
  250,000 dollars." Then they would exclaim: "Oh,
  what a pretty house that is!"
  
  They are like that. One should not hold it against
  them. Children should always show great
  forbearance toward grown-up people."
  
  We should heed St. Exupery's advice and show
  great forbearance toward grown ups on this
  account. But we should also try to avoid turning
  ourselves or others into collections of numbers or
  salaries, vocations or styles of dress.
  
  In all three examples of thingification, in
  companies, oppressed people, and our selves, we
  widen the gap between ourselves and others, and
  between our selves and our best selves. This is not
  a merely psychological, sociological, or political
  problem. It is, I think, at root a religious problem.
  The aim of religion is to heal the brokenness that
  we humans have to contend with as part of the
  human condition, a brokenness that consists mostly
  in a sense of separation. The story of the fall to me
  is a story about the fall from completeness,
  wholeness togetherness. And this separateness
  manifests itself in our society, in our sense of self,
  and in our relationship to the divine. We are alone
  though surrounded by people, not quite
  comfortable in spite of the material comforts, still
  looking for more answers than science alone gives
  us. We try to bridge the separateness, become our
  highest selves, and grow closer to God, and we find
  that God is in the encounter with each other when
  we are fully present, fully human, beholding each
  other in sacred space. Thus, thingification is
  antithetical to religion. As much as I'd like to
  claim this as my own idea. This is not a new idea,Ô
  and I'd like to point toward some of the great
  thinkers that have expressed this thought.
  
  Imaanuael Kant, the 18th century philosopher
  from Konigsberg, considered by many to be the
  greatest philosopher of the modern period,
  struggled with the question "what is morality?"
  and "what is right" throughout much of his
  writing. He examined many answers, but none
  stood up to his rigid specifications. Finally, he
  came upon a moral maxim which passed the test.
  An example of his famous categorical imperative,
  his primarily moral law was that one should never
  treat others as means to an end, but always an end
  in themselves. One should never treat others as
  means to an end, but always an end in themselves.
  HE was talking about thingification. People
  shouldn't be used, like machines, for the
  attainment of our own goals, no matter how benign
  those goals might be. They are to be encountered
  fully as human beings, as we encounter ourselves.
  Kant, who was not a very religious man, saw that
  even without reference to God, this maxim still
  holds.
  
  Think about what this would mean to business.
  Instead of viewing money and profit as the sole
  mission, part of the mission of companies would be
  to employ people fairly and equitably. The very
  goals of the company would include steady,
  equitable employment, not as an afterthought or a
  byproduct of doing business. There are several
  companies already treating employees as ends
  rather than means, like Ben and Jerry's and Tom's
  of Maine. At Ben and Jerry's, there is a sense that
  employing people is one of the main reason that
  they are in business. The highest paid employee,
  for example, can make no more than 7 times theÔ
  amount of the lowest paid employee. The workers
  are no longer means to an end, tools with which to
  make a profit, but the purpose of the business itself.
  The workers have been unthingified.
  
  Martin Buber, a Jewish theologian of early this
  century talks in this mornings first reading about
  the I-Thou relationship. "When I confront a
  human being as my Thou, and speak the basic
  word I-Thou, that person is no longer a thing
  among things.
  " The I-Thou relationship is the
  "Un-thingified" relationship, one in which we
  bring ourselves wholly into the encounter with
  another, in which we encounter the other person
  wholly. Outside of the world of labels, of
  experience that generalizes people and sticks them
  in conceptual boxes, the I-Thou relationship
  transforms both the I and the Thou.
  
  The Members of the Ten Point Coalition have tried
  to do just this. By going to the streets, by talking
  with the youth that have been objectified by our
  society, by experiencing them as human beings,
  they have learned something. These are people.
  Kids. Just like the kids they have at home, worried
  about the same things, just in a different
  environment. And by being listened to, by being
  seen as people rather than the labels society has
  affixed to them, the kids began to change. Not all
  of them, not quickly, but they began to have more
  confidence in themselves, in their own personhood,
  and began to move into ways of being that were
  more in line with their newfound self-respect. They
  closed the gap. By having an I-Thou relationship,
  they too were un-thingified.
  
  Maybe the greatest un-thingifyer we can point to is
  Jesus. In the selections from the new testament
  from this mornings readings, Jesus acts in a typicalÔ
  fashion. It's a familiar scene throughout the
  gospels. Someone comes to Jesus to be healed or
  blessed, and the disciples, who never seem really to
  get the message, say "hey you, your just a
  (whatever that person is) get away from the master".
  This mornings readings have the children
  coming to Jesus for a blessing but the disciples try
  to shoo them away. In the Matthew reading, the
  pharisees condemn Jesus for eating with
  tax-collectors and sinners. Throughout the
  Christian Scriptures, the pharisees and the
  disciples day to Jesus, why do you concern yourself
  with children, foreigners, prostitutes, tax collectors
  and other sinners? Jesus responds, through both
  his words and his actions, these are not just
  children, but children of God, not just foreigners,
  but children of God, not just prostitutes, or
  tax-collectors, or sinners, but children of God. All
  God's children are worth of grace, according to our
  tradition, the spiritual gifts of God. He believed in
  the inherent worth and dignity of all human beings.
  He saw them as people and not by their labels,
  titles, professions, or backgrounds. This is one of
  the most important messages to be gleaned from
  the bible. We all have worth, regardless of where
  we come from, what we've done in the past or what
  we do for a living. I member of the church said in
  conversation recently was that one of the things he
  liked about First and Second is that people have
  gone years without knowing he's a lawyer. That
  says something about who we are and what we try
  to do here. We're judged not by what we do but by
  who we are. Jesus teaches us this, as do Buber and
  Kant. We should not thingify ourselves or others.
  
  As hard as this is to do, and it is hard, make no
  mistake about it, or we'd all be doing it, there areÔ
  places all around us where this healing of holding
  ourselves and others fully as human beings is
  happening. Not only with Ben and Jerry's and the
  Ten Point Coalition, but in South Africa, where
  black and colored have legally become people for
  the first time in over three hundred years. The
  former communist countries are struggling their
  ways, however haltingly, toward democracy, where
  everyone is, ideally, fully a person under the law.
  There is still much, much to be done. The tragedy
  in Rwanda could only be due to the different
  factions seeing each other as less than human, to
  commit the atrocities they have. But it is possible
  to move in the humanizing direction, but it takes a
  tremendous, sustained, frustrating effort.
  
  Three thinkers, a humanist, a jew and the first
  Christian agree on this: the way to God, no matter
  how you define God, the way to a moral life,
  consists in large part in the whole encounter with
  other people, sacred in their own right. Our
  society, our economy, and our deepest selves come
  closer to healing and wholeness when we are able to
  do this.
  
  I know this from my days in Boot Camp. And I
  know of the redemption of being un-thingified.
  After almost a month of boot camp, after a month
  of being "recruit" rather than "James" I was
  almost broken, I had never been so lonely and
  depressed in my life. Then, grace. I made a friend,
  someone who didn't see me as someone to help him
  get to a new position or get extra points on an
  exam, but someone who just treated me like a
  person. To this day, although I knew him for only
  two weeks, I remember the fellow recruit who
  unthingified me. We traded Monty Python lines
  and scrubbed toilets together. I've often thoughtÔ
  that Mike Morris saved my life, through just a few
  kind words and seeing me, encountering me, as a
  person. Just as this had a redemptive effect on me,
  we can redeem our world and ourselves by
  bringing ourselves authentically to the experience
  of others, by encountering them and ourselves fully
  as human beings. Redemption of this sort comes in
  small steps, not all at once. If we can bring
  ourselves, more and more, little by little to the full
  unthingified experience of each other, we can grow,
  more and more, little by little, toward societal and
  personal wholeness.
- Apr 17, 12
  
  I recently found a digital cache of my old sermons and papers from my days as a Unitarian Universalist minister. Because I left the ministry after only a few years, I always imagine myself an untalented homilist. While on the whole, that might be true, I did have some occasionally inspired moments. I'm going to post some of my papers, sermons, and prayers here for posterity.
- James and Tina watch Damien Duff score a cracker
  
  Mar 05, 11
  
  James and Tina watch Damien Duff score a cracker a photo by drjamesincandenza on Flickr.
- A Very Close Race
  
  Jan 04, 11
  
  This afternoon when Fulham Football Club, the west London team I support, scored a convincing 3-0 victory over Midlands team West Bromwich Albion, they climbed 5 places and out of the relegation zone. Having your team in relegation trouble, even in the middle of the season, is never a good feeling, so I was looking over the EPL league table and I noticed some statistical, or at least historical, oddities. Just one more win would bring Fulham into the top half of the table, and two wins (assuming none of the other other teams won) would put them back into contention for a Europa League spot (they reached, and lost, the Final of the Europa League last year, the highest position in any competition they've every reached...we're just hoping they don't follow the example of the last English team to reach and lose. Middlesbrough were relegated the next year and went down a further league the year after-where they languish today).
  
  This closeness in the table got me wondering just how this measures up to previous years. As you can see in the chart I created, above, many of the teams are either on identical on near-identical points totals. A little statistical analysis shows that after today's results, the standard deviation (a measure of spread) of the bottom half of the EPL table is 2.34, whereas at the same time last year was 9.1. So while there is definitely a split in the table (league leaders Manchester United are currently on 41 points, as are 2nd place Manchester City, with 3rd place Arsenal on 39), the low relative standard deviations at both ends of the table, along with the traditions of relegation and European football (wherein the top 6 or 7 finishers get to play in lucrative continental tournaments), mean that this will be the most exciting finish to a season in while.
- Isabel's TV Debut, courtesy of Aunt Christie
  
  Jul 26, 10
  
  Isabel's TV Debut, courtesy of Aunt Christie
  Originally uploaded by drjamesincandenza
  The full URL, which provides soccer-playing-monkey contextualization, is: http://www.qvc.com/qic/qvcapp.aspx/view.2/app.detail/params.item.T30600.desc.FisherPrice-iXL-Handheld-Electronic-Learning-System
- The plane ride home
  
  Jun 07, 10
  
  The plane ride home
  Originally uploaded by tinaliz28
  Tina took this photo as we were getting ready for takeoff on our way home from Vancouver. In spite of her rough-and-tumble bona fides (she is a ninja, afterall), Pink Ninja is well taken care of by Isabel.
- Why Matt Taibbi Sucks
  
  Sep 08, 11
  
  A letter to the editors at Men's Journal that I just sent in:
  
  To the editors:
  
  Re: Matt Taibbi's article "Why the World Cup Sucks"
  
  Sure, soccer (football to the rest of the world because, well, it's played with the feet) has its idiosyncrasies. But, while seeing a 6' 3" brute like Didier Drogba writhe on the ground as if shot when checked
  lightly from behind can be irritating, we have a game where style and skill trump size and pure aggression every day. And while we do have to put up with Christiano Ronaldo taking off his shirt after every goal
  (and at least 55% of the population have no problem with that at all), the list of what we don't have to put up with is far more substantial: hyper-gonadal, steroid-fed freaks whose only skill is their size,
  beer-gutted "athletes" who are even exempted from having to run the bases, interminable sporting events where there are only 15 minutes of action in return for a 4 hour time commitment, and television
  commentators who talk about everything *but* the game at hand and wear their ignorance like a badge. Soccer is a more subtle game than most U.S. favorites, it's true, which is perhaps why its beauty sailed right over Matt Taibbi's head.
  
  Cordially,
  James Meacham
- Prohibited but Legal?
  
  Jul 17, 09
  I’ve been wanting to learn photography pretty much forever. Since seeing some shots of Katherine Hepburn and Jimmy Stewart when I was in high school, I remember thinking that the talent of the photographer is a special one, a special way of seeing the world. It is much like that of an artist but it works within greater constraints. This, I’ve always thought, makes photography a special art and I’m always willing to drive for photographic art shows and my prize artistic possession is a fantastic photo of some ruins taken in the bahamas and printed with a platinum process.
  
  It’s taken me thirty years, but I’ve just got round to buying some camera equipment and taking a class. My first tripod arrived today and it took some restraint not to blow off work and head out. See, I’ve had my eye on this one particular subject for a while. It’s sort of Fritz Lang meets David Cronenberg with a bit of the Louvre thrown in. It also happens to be our local combination steam generation and wastewater treatment plant. I’ve searched on the web and was in fact able to come up with some photos of the plant, though in fact there are far fewer than I would have expected:
  
  http://www.flickr.com/photos/buttertwang/3059126607/
  Long Beach Water Reclamation Plant 8 on Flickr - Photo Sharing!
  Even a schematic that gives you an idea of where each of the chemicals are: http://www.lacsd.org/images/LCwrpSch.jpg
  It turns out that most of the photos available are either quite old or taken at night. I didn’t actually find one decent shot of the plant. The is strange because I think if I stood on any building in my neighborhood with a good telephoto lens, I could take some very good photos indeed. The plant is huge, hulking, and I’m certain absolutely impossible to keep from being photographed.
  
  As I climbed the hill from the parking area, I looked at myself with my camera and
  tripod and realized it was probably only a matter of time. (Later on that day I had another experience of people being spooked by the tripod as I was taking pictures off a bridge (e.g.). I had just finished setting my up my tripod just outside the entrance of the plan (non-trivial since it was my first time outside of my office) and took a couple of shots before Officer Hernandez pulled up in his not-terribly-official-looking Ford Focus. Here’s how the conversation went:
  
  Me: Hello Officer. I was half expecting you.
  Officer Hernandez: You’re going to need to stop taking pictures.
  M: You got it. I’m taking a class and I think this is a really cool building.
  OH: You are going to need to delete the pictures you’ve taken.
  M: Really? Good thing I’ve only taken a few (or so I thought).
  OH: Why are you taking pictures out here?
  M: Well, I’m taking this class, and I think this is a really cool building. It’s kind of David Chronenberg meets Fritz Lang with a little bit of the Louvre thrown in. Know what I mean. in Paris.
  OH: In Paris?
  M: See, you know what I’m talking about.
  OH: You’re going to need to delete the pictures you’ve taken.
  M: No problem.
  
  Actually, it turned out it was a problem because, in spite of having pressed the button to take pictures, I’d apparently not done it in the right way. Have I mentioned I’m new at this? Needless to say, this caused Officer Hernandez (what kind of officer is still not clear to me) to think I was trying to hide something from him. So it took a little while of passing the camera back and forth to determine that no shots had been taken and that I was not trying to hide anything from him. While we were doing that, this conversation was happening in parallel:
  
  Me: So, I didn’t know it’s illegal to take pictures here.
  Officer Hernandez: It’s not.
  M: It’s not? So why are we deleting pictures, or trying to delete pictures, from my camera if I’m allowed to take pictures here.
  OH: You’re not allowed to take pictures here.
  M: I’m not trying to be difficult, officer, as you can tell by the fact I’m doing whatever you ask of me, but I’m a little confused. If it’s not illegal, it must be allowed, I would think.
  OH: You need a permit.
  M: A permit?
  OH: Yes, you need to go down to the security office downtown and get a permit.
  M: There’s a permit for taking pictures at the plant. What’s it called so I know what to ask for?
  OH: Talk to Lieutenant Rodriguez. All the films and still photo shoots and have to go through him.
  M: As flattering as that is, Officer, I’m taking a photo class at Santa Monica College. Do you really think this is the same as Marty Scorcese wanting to do a picture here?
  
  I know he was just trying to do his job and I didn’t want to be a jerk (nor did I want to give up the rest of my afternoon making a point of this at that local Water and Power Police station). So, with officer Hernandez satisfied that I didn’t have any forbidden images in the flash memory, I took my tripod and camera and headed home.
  
  This got me thinking, of course, about rights. What is my right to photograph things and what is the state (or, in this case, the Los Angeles Department of Water and Power) to prohibit me from taking pictures. I have some further thoughts that I’ll flesh out tomorrow, but here are some of the questions that occurred to me:
  
  If there is a threat of terrorism, does that threat outweigh whatever rights I might have?
  How important could a “right to photograph” be said to be?
  Or is it a more basic right to live in a transparent world where we can document our surroundings in a variety of ways?
  Does it become merely a cost/benefit analysis? Given that it’s impossible to keep a plant like that from being completely photographed (more or less), is it right that we are spending tax dollars to keep a photography student from taking pictures that a terrorist would be far more stealthy taking?
  So far, I don’t have answers to these questions and they may not even be the most important questions. I’ll go into it more in a subsequent entry. So, in the end, I only got a few shots whilst driving away, shots that I am hoping will not now invite a visit by the LADWPPD:
- The 2008 Footie Trip
  
  Dec 26, 07
  
  Gabe and I had originally planned to forgo our yearly soccer excursion to England to go watch England win the European Championship in Switzerland. Problem was, England choked and didn't even make the final 32. So we needed a new plan. Thus was born the pan-Europe football 2008 trip, the plane tickets for which we bought last week: 21 Days, 9 cities, and as many football matches as we can fit in.
  
  If you have Google Earth you can see the trip interactively at:
  
  Google Map Link
  
  We're doing a counter-clockwise circuit of the major footballing cities of Europe: Munich, Amsterdam, London (had to!), Paris, Madrid, Barcelona, Milan, and Rome. I thought we should go to Lisbon, as well, but Gabe hasn't forgiven Portugal for beating England in the quarter-finals of the World Cup last year.
  
  We are naturally looking for cheap places to stay, and the trip is going from 14 August to 4 Sept.
- Jan 17, 07
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- James Meacham, CCEP, CRISC
  
  Ethics, Compliance, Governance, and Risk Consultant at SAI Global and Doctoral Candidate
  
  Management Consulting | London, United Kingdom, GB
  
  Summary
  
  Ethics and Compliance consultant with specialisations in governance, risk, and behavioural ethics.
  
  Extensive background in strategy (business and technology), Enterprise Architecture, and management consulting.
  
  Certification in Corporate Compliance and Ethics (CCEP, awarded)
  Certification in Risk Management (CRISC, awarded)
  
  Specialties: • Ethics and Compliance
  o Code of Ethics/Conduct development
  o Ethics/Compliance audit
  o Reporting/ombudsman
  • Business Strategy
  o Strategic planning
  o Competitive assessments
  o Industry structure/trend analysis
  • Information Security
  • Technology Strategy
  o Technology research and strategic planning
  o IT governance/organizational design
  • Enterprise Architecture
  o Business/IT alignment
  o Standards development
  
  Experience
  - Mar 2012 - Present
    Ethics and Compliance Consultant / SAI Global Compliance
    
    Advised Fortune 1000 clients over a variety of industry verticals on ethics, compliance, risk, and governance. Projects included:
    * Cultural Risk Assessments
    --Surveys
    --Focus Groups
    * Codes of Conduct
    --Rewrites
    --Benchmarking
    * Risk Assessments
    * Corporate Policies
    --Rewrite
    --Benchmarking
    * Engagement Management
  - May 2011 - Feb 2012
    Director, Banking Practice / iGATE Patni
  - Mar 2007 - May 2011
    Managing Consultant / Magister Consulting
    
    http://www.magister-consulting.com
  - Sept 2004 - Mar 2007
    Manager / Accenture
    
    IT Strategy and Performance
    
    .IT Effectiveness Diagnostic
    .Strategy Process Development
    .Spot “Pain Point” Strategy Diagnostic
    .IT Metrics Development
    .Project Portfolio Evaluation
    .Project/Program Approval Process Design
    .Organizational Design
    .Asset Allocation Analysis
    
    Enterprise Architecture
    
    .Architecture Planning
    .IT and Architecture Governance
    .Application Portfolio Rationalization
    .Reference Architecture
    .Standards, Models, Principles, and Policies
    .Architecture Metrics, Performance Management and Communications
    .Demand Management
    .Vendor Relationship Management
    
    Competitive Technology Strategy
    
    .Customer Needs Research
    .Market Size and Dynamics Analysis
    .Technology Assets Evaluation
    .IP Portfolio Analysis
    .R&D Investment Evaluation
  - Jan 2004 - Dec 2004
    First Vice President-Business Strategy and Analysis / Washington Mutual
    
    Vice President, Business Strategy and Analysis, Long Beach Mortgage Company (2004)
    • Reporting to President and CFO, built business strategy capability for sub-prime mortgage lending business unit with $15B revenue.
    • Created and facilitated strategic planning process to develop 2004-2007 plan.
    • Conducted analyses focused on industry and competitive dynamics, competitive positioning, market sizing and attractiveness, and company strengths and weaknesses.
  - Jun 2001 - Jan 2004
    Vice President-Technology Strategy / Washington Mutual
    
    Vice President, Technology Research Group and Emerging Technologies Department
    • Reporting to SVP of Research, Planning, and Architecture, created and led technology research and strategy group to align enterprise architecture and emerging technologies with business objectives and strategies.
    • Created technology competitive intelligence group.
    • Developed emerging technologies framework to iteratively track new technologies and architectures with respect to business priorities and technology industry trends.
    • Researched, developed, and sold projects internally including Consumer Smart Card, Enterprise Linux, Web Services and Service Oriented Architectures.
    • Partnered with WM Venture Capital Fund to invest in companies with synergistic technologies.
  - Sept 2000 - Jun 2001
    Senior Technology Strategist/Enterprise Architect / Washington Mutual
    
    Collaborated with Business Units and technical groups in creating technical architecture and technology strategy with particular emphasis on developing technical standards based on business drivers.
    Developed Enterprise Architecture Framework.
    Authored technical strategy on Bluetooth, Public Key Infrastructure, Single Sign On, and Password Management.
    Wrote white papers on Customer Relationship Management, Enterprise Architecture, and Wireless technologies.
  - Jan 2001 - May 2001
    Adjunct Professor / Seattle Community College
    
    Created and taught the course Unix System Design and Administration focusing on scalable, extensible, and secure architectures and the administration of enterprise grade systems.
    Taught all levels of the OSI model and appropriate use of hardware, software, and security measures.
  - Jun 1997 - Sept 2000
    Manager / Johns Hopkins School of Public Health
    
    Led technical team in all aspects of developing, maintaining, and administering an international website, network, and associated technologies.
    Designed distributed VPN system to allow thirty international field offices secure access to network.
    Developed n-tier architecture and created standards for infrastructure and development.
    Managed technical operations and oversaw team of system administrators and web developers.
    Performed development and system administration duties through entire development life cycle.
    Had operational responsibility for network and platform services
    Developed internal intranet as well as public website in a multi-tiered, object-oriented system.
  - Jun 1991 - Aug 1998
    Instructor: Philosophy and Symbolic Logic / Johns Hopkins Center for Talented Youth
  - May 1992 - May 1997
    Consultant /
    
    Unix System Administration
    Web Development
    Network Design and Administration
  - Sept 1988 - Aug 1992
    System Administrator/Help Desk / University of MD
    
    Unix, Macintosh, and Network System Administrator, Help Desk Representative
  Education
  - 2010 - 2015
    
    University of Southampton
  - 1992 - 1995
    
    Harvard Divinity School/Andover Newton Theological School
  - 1988 - 1992
    
    University of Maryland Baltimore County
  - 1985 - 1986
    
    Fordham University
  - 1983 - 1985
    
    New England College
  - 1979 - 1983
    
    Bacon Academy
  Additional Information
  - Websites:
    
    Blog, Blog, Blog
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- 177 U16B Fulham soccer's latest score. http://t.co/EfjFTBocCh
  
  May 13, 13 from Facebook Reply, Retweet, Favorite
- 177 U16B Fulham soccer's latest score. http://t.co/KpruWUJ063
  
  May 13, 13 from Facebook Reply, Retweet, Favorite
- What a match! They're going down, but they're going to play in Europe...Nice to see City beat again. Well done, Wigan!
  
  May 11, 13 from Facebook Reply, Retweet, Favorite
- Why oh why is Gus Johnson commentating the FA Cup? If any game ever screamed for an English announcer, it's the... http://t.co/bbJjUnGeT1
  
  May 11, 13 from Facebook Reply, Retweet, Favorite
- Why oh why is Gus Johnson commentating the FA Cup. If any game ever screamed for an English announcer, it's the... http://t.co/4iz5ly26Ti
  
  May 11, 13 from Facebook Reply, Retweet, Favorite
- You know the other team are good when losing 5-1 is a good scoreline. Fulham LB played well under difficult... http://t.co/CzN2CNjS6U
  
  May 11, 13 from Facebook Reply, Retweet, Favorite
- 24 hours till takeoff to London!
  
  May 10, 13 from Facebook Reply, Retweet, Favorite
- 177 U16B Fulham soccer wins! http://t.co/V24hz5IvGe
  
  May 10, 13 from Facebook Reply, Retweet, Favorite
- As if there weren't enough reasons to be glad I'm a vegetarian. http://t.co/YtYAFSKH5Z
  
  May 08, 13 from Facebook Reply, Retweet, Favorite
- Up is down, day is night. I can't imagine anyone else as manager of Manchester Utd. Thanks for your service to the game, Sir Alex!
  
  May 08, 13 from Facebook Reply, Retweet, Favorite
- Australia Is An Example Of Effective Gun Control. America Is An Example Of Ignoring Australia. http://t.co/GZHKMWBrBO
  
  May 07, 13 from Facebook Reply, Retweet, Favorite
- Daily Kos: Threat assessment http://t.co/gFhUvwodZ4
  
  May 07, 13 from Facebook Reply, Retweet, Favorite
- Gabe Meacham has made some progress in his fundraising but still has quite a ways to go. Help Gabe get to... http://t.co/WUMe8i5bq9
  
  May 06, 13 from Facebook Reply, Retweet, Favorite
- Update: we have 4 tickets to give away. C'mon, take them off our hands. It's a rematch of last years final.
  
  May 05, 13 from Facebook Reply, Retweet, Favorite
- We have 2 extra tickets for tonights Galaxy match for anyone who wants them. Just let me know and I'll email them to you. They are free.
  
  May 05, 13 from Facebook Reply, Retweet, Favorite
- On my way home to my kids, my GF, and my Moof.
  
  May 03, 13 from Facebook Reply, Retweet, Favorite
- Big day today. Interviewing CEO, 8 other top execs of Fortune 500 company. Expect to be non compis mentis by 6PM when we're done.
  
  May 02, 13 from Facebook Reply, Retweet, Favorite
- Off to DC. Big week of client meetings.
  
  Apr 29, 13 from Facebook Reply, Retweet, Favorite
- Sunday Family Soccer a blast again today: a full 20 people playing at one point. Great fun. Note to everyone:... http://t.co/D8KXqPEIOD
  
  Apr 28, 13 from Facebook Reply, Retweet, Favorite
- The Long Con | Rick Perlstein | The Baffler http://t.co/8nynMkOPDY
  
  Apr 28, 13 from Facebook Reply, Retweet, Favorite
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Past

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- Your trip
  
  -
- Oxnard, CA, February 2013
  
  2013-02-02 - 2013-02-03
- Casablanca, Morocco, January 2013
  
  2013-01-10 - 2013-01-25
- San Diego, CA, December 2012
  
  2012-12-31 - 2013-01-01
Reading

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To Read

Profile

Harvard Business Review on Corporate Governance

Demystifying Dissertation Writing: A Streamlined Process from Choice of Topic to Final Text

Corporate Governance

Thinking, Fast and Slow

Confronting Managerialism: How the Business Elite and Their Schools Threw Our Lives Out of Balance

Management Research

Drive: The Surprising Truth About What Motivates Us

Corporate Governance

London Orbital

Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing

Payment In Blood (Inspector Lynley, #2)

Rescuing Evil: What We Lose

How to Measure Anything: Finding the Value of "Intangibles" in Business

Risk

Against the Gods: The Remarkable Story of Risk

Amusing Ourselves to Death: Public Discourse in the Age of Show Business

Social Decision Making: Social Dilemmas, Social Values, and Ethical Judgments

On Being Certain: Believing You Are Right Even When You're Not

How We Decide

The Price Of Butcher's Meat (Dalziel & Pascoe, #23)

The Big Sort: Why the Clustering of Like-Minded America is Tearing Us Apart

Blind Spots: Why Smart People Do Dumb Things

Traffic: Why We Drive the Way We Do

Outliers: The Story of Success

The 4-Hour Workweek

The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash

Killing Hitler: The Plots, The Assassins, and the Dictator Who Cheated Death

The Drunkard's Walk: How Randomness Rules Our Lives

Musicophilia: Tales of Music and the Brain

Predictably Irrational: The Hidden Forces That Shape Our Decisions

The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom

The Long Tail: Why the Future of Business Is Selling Less of More

Chic Ironic Bitterness

The Best American Essays 2006

The Best American Essays 2005

The Tin Roof Blowdown (Dave Robicheaux, #16)

Hit Man (Keller, #1)

Crusader's Cross (Dave Robicheaux, #14)

The King of Torts

Developing Feeds with Rss and Atom

The Best American Essays 2007

Brave New War: The Next Stage of Terrorism and the End of Globalization

The Last Juror

The Curious Incident of the Dog in the Night-Time

Special Topics in Calamity Physics

Getting Things Done: The Art of Stress-Free Productivity

A Generous Or+hodoxy

The Poe Shadow

This Is Water

Infinite Jest

Atlas Shrugged

1984

Snow Crash

Jean Prouve: Taschen Basic Architecture

Cryptonomicon

The Babes in the Wood (Inspector Wexford, #19)

Valuing Intangible Assets

Charles & Ray Eames: 1907-1978, 1912-1988 Pioneers of Mid-Century Modernism

Breakfast of Champions

Richard Neutra, 1892-1970

Louis I. Kahn: 1901-1974: Enlightened Space

Quicksilver (The Baroque Cycle, #1)

The Name of the Rose

Breuer (Taschen Basic Architecture Series)

Conspiracy of Fools: A True Story

Foucault's Pendulum

Case Study Houses: 1945-1966: The California Impetus

Guide to Enterprise It Architecture

The Handbook of Business Valuation and Intellectual Property Analysis

The Island of the Day Before

Chasing Darkness (Elvis Cole, #11)

International Style: Modernist Architecture from 1925 to 1965

The Screwtape Letters

Apex Hides the Hurt

Koenig (Taschen Basic Genre Series)

Wharton On Managing Emerging Technologies

Applied Mergers and Acquisitions

Soccer in Sun and Shadow

The Children of Men

Death In Holy Orders (Adam Dalgliesh, #11)

A Practical Guide to Information Systems Strategic Planning

The Crying of Lot 49

Last Car To Elysian Fields (Dave Robicheaux, #13)

The Murder Room (Adam Dalgliesh, #12)

The Wire In The Blood (Tony Hill & Carol Jordan, #2)

The Lighthouse (Adam Dalgliesh, #13)

Case Studies in Business Ethics

White Noise

The Courage to Be

Theory's Empire: An Anthology of Dissent

Dynamics of Faith

How Soccer Explains the World: An Unlikely Theory of Globalization

Underworld

The Body Artist

Devices And Desires (Adam Dalgliesh, #8)

A History of Christian Thought

Absurdistan

Service-Oriented Architecture: A Planning and Implementation Guide for Business and Technology

A Supposedly Fun Thing I'll Never Do Again

Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity

Harvard Business Review on Knowledge Management

The Authoritarians

Mother Night

Systematic Theology 1

Stakeholder Theory and Organizational Ethics

God Bless You, Mr. Rosewater

Term Sheets & Valuations: An Inside Look at the Intricacies of Term Sheets & Valuations

Brief Interviews With Hideous Men

Original Sin (Adam Dalgliesh, #9)

An Introduction to Enterprise Architecture

Consider the Lobster and Other Essays

The New Being

The Alienist (Dr. Laszlo Kreizler, #1)

A Taste For Death (Adam Dalgliesh, #7)

An Unsuitable Job For A Woman (Cordelia Gray #1)

Girl With Curious Hair

A Certain Justice (Adam Dalgliesh, #10)

Slapstick or Lonesome No More!

Fulham: The Premiership Diary

The Broom of the System

Cover Her Face (Adam Dalgliesh, #1)

Corpocracy: How CEOs and the Business Roundtable Hijacked the World's Greatest Wealth Machine - And How to Get It Back

DNS and BIND

The Shaking of the Foundations (Shaking of Foundations SL 30)

V for Vendetta

The Knowledge Management Toolkit: Orchestrating It, Strategy, and Knowledge Platforms [With CDROM]

Corporate Ethics: How to Update or Develop Your Ethics Code so That it is in Compliance With the New Laws of Corporate Responsibility

Jolie Blon's Bounce (Dave Robicheaux, #12)

The Cider House Rules

The Black Tower (Adam Dalgliesh, #5)

Leveraging Communities of Practice for Strategic Advantage

Oblivion

Mortgage Banking and Residential Real Estate Finance

Theology of Culture

Competitive Strategy: Techniques for Analyzing Industries and Competitors

The Handbook Of Mortgage Banking: A Guide To The Secondary Mortgage Market

Player Piano

Everything and More: A Compact History of Infinity

Harvard Business Review on Corporate Responsibility

A Mind To Murder (Adam Dalgliesh, #2)

The Shambhala Guide to Taoism

Shroud for a Nightingale (Adam Dalgliesh, #4)

Bluebeard

Business Research: A Practical Guide for Undergraduate and Postgraduate Students

Stumbling on Happiness

The Black Swan: The Impact of the Highly Improbable

Unnatural Causes (Adam Dalgliesh, #3)

Deadeye Dick

Moral Man and Immoral Society

Building A Career In Compliance And Ethics

Maryland: A Middle Temperament 1634-1980

Ethics at Work: Creating Virtue at an American Corporation

Harvard Business Review on Corporate Ethics

Football Against The Enemy

Extraordinary Popular Delusions And The Madness Of Crowds

Death Of An Expert Witness (Adam Dalgliesh, #6)

Hocus Pocus

Innocent Blood

Case Studies in Business, Society, and Ethics

Essentials of Enterprise Compliance

Systems Thinking: Managing Chaos and Complexity: A Platform for Designing Business Architecture

Organizational Ethics in the Compliance Context

Moral Politics: How Liberals and Conservatives Think

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

Jailbird

Corporate Integrity: A Toolkit for Managing Beyond Compliance

Rain Gods (Hackberry Holland, #2)

Inverting the Pyramid: The History of Football Tactics

Mapping Strategic Knowledge

Essentials of Business Ethics: Creating an Organization of High Integrity and Superior Performance

Knowledge Management Foundations

The Sri Advantage: Why Socially Responsible Investing Has Outperformed Financially

Mergers and Acquistions

The Decision Tree: Taking Control of Your Health in the New Era of Personalized Medicine

Mason & Dixon

The Code Book: The Science of Secrecy from Ancient Egypt to Quantum Cryptography

Trinity: A Novel of Ireland

Down and Out in Paris and London

Moneyball: The Art of Winning an Unfair Game

Silent Scream (Anna Travis Mystery, #5)

Fiasco: The American Military Adventure in Iraq, 2003 to 2005

Death Comes For The Fat Man (Dalziel & Pascoe, #22)

Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History

Teach Us to Sit Still: A Skeptic's Search for Health and Healing

My Favorite Year: A Collection of Football Writing

Death Comes to Pemberley

Advice from a Risk Detective

High Fidelity

Lincoln

The World According to Garp

American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21stCentury

God Bless You, Dr. Kevorkian

1876

Cultivating Communities of Practice: A Guide to Managing Knowledge

A Widow for One Year

Homicide: A Year on the Killing Streets

About a Boy

Competitive Advantage: Creating and Sustaining Superior Performance

Ethical Theory and Business

Essentials of Licensing Intellectual Property

Fever Pitch

The Hotel New Hampshire

Cat's Cradle

Welcome to the Monkey House

Valuation for Mergers, Buyouts, and Restructuring

The Sirens of Titan

Galápagos

Siddhartha

London's Underworld: Three Centuries of Vice and Crime

Unknown Book 9676302

The Essentials of Risk Management

Bloody Confused!: A Clueless American Sportswriter Seeks Solace in English Soccer

General Principles of English Law

Modeling Risk: Applying Monte Carlo Simulation, Real Options Analysis, Forecasting, and Optimization Techniques [With CDROM]

The Checklist Manifesto: How to Get Things Right

Soccernomics: Why England Loses, Why Germany and Brazil Win, and Why the U.S., Japan, Australia, Turkey--and Even Iraq--Are Destined to Become the Kings of the World's Most Popular Sport

Cisa Certified Information System Auditor Study Guide

Risk Management and Value Creation in Financial Institutions

Monte Carlo Methods in Finance

Bayesian Computation with R

Inverting the Pyramid: The History of Football Tactics

The Torment Of Others (Tony Hill & Carol Jordan, #4)

Judgment Under Uncertainty: Heuristics and Biases

Choices, Values, and Frames

Beneath The Bleeding (Tony Hill & Carol Jordan, #5)

Sway: The Irresistible Pull of Irrational Behavior

Experiments in Ethics

What the Dog Saw and Other Adventures

The Night of the Gun

The Falls (Inspector Rebus, #12)

Inefficient Markets: An Introduction to Behavioral Finance

Elegant Complexity: A Study of David Foster Wallace's Infinite Jest

The Torment Of Others (Tony Hill & Carol Jordan, #4)

A Medicine for Melancholy and Other Stories

The Digital Photography Book: The Step-By-Step Secrets for How to Make Your Photos Look Like the Pros

Fahrenheit 451

Writing Magic: Creating Stories that Fly

The Distant Echo

The Trigger Point Therapy Workbook: Your Self-Treatment Guide for Pain Relief

Information Dashboard Design: The Effective Visual Communication of Data

At Home: A Short History of Private Life

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis — and Themselves

Stoked: A History of Surf Culture

An American Demon: A Memoir

India Calling: An Intimate Portrait of a Nation's Remaking

The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty

The Mermaids Singing (Tony Hill & Carol Jordan, #1)

Theory of Culture Change: THE METHODOLOGY OF MULTILINEAR EVOLUTION

An Ethical Compass: Coming of Age in the 21st Century

101 Bass Tips: Stuff All the Pros Know and Use [With CD]

Fate, Time, and Language: An Essay on Free Will

The Book of Dead Philosophers

Somebody Else's Daughter

Soccer: The Ultimate Guide to the Beautiful Game

The Back of the Napkin: Solving Problems and Selling Ideas with Pictures

Soccer Stars

A Secular Age

Public Enemies: Dueling Writers Take On Each Other and the World

Making Sense of Emotional Intelligence

Although Of Course You End Up Becoming Yourself: A Road Trip with David Foster Wallace

The Mortgage Encyclopedia

Rising Up and Rising Down: Some Thoughts on Violence, Freedom and Urgent Means

Pink Flamingos

Anathem

Terror and Wonder: Architecture in a Tumultuous Age

The Book Thief

Food Rules: An Eater's Manual

On Being Certain: Believing You Are Right Even When You're Not

Residential Mortgage Lending: Principles and Practices

Linchpin: Are You Indispensable?

Managing Business Ethics: Straight Talk about How to Do It Right

Gravity's Rainbow

Judgment in Managerial Decision Making

Soccer Strategies: Defensive and Attacking Tactics

Assassination Vacation

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff

The Cave

IT Governance: How Top Performers Manage IT Decision Rights for Superior Results

The Pale King

The Big Short: Inside the Doomsday Machine

Rationality Gone Awry?: Decision Making Inconsistent with Economic and Financial Theory

Last Night in Twisted River

Nudge: Improving Decisions About Health, Wealth, and Happiness

Thinking in Systems: A Primer

A Place Of Execution

Business and Professional Ethics for Directors, Executives and Accountants

Countdown to Valkyrie: The July Plot to Assassinate Hitler

SuperFreakonomics: Global Cooling, Patriotic Prostitutes And Why Suicide Bombers Should Buy Life Insurance

Dhalgren

A Most Wanted Man

Cosmopolitanism: Ethics in a World of Strangers

Netherland

Lolita

Cisa Review Manual 2006

The Winner's Curse: Paradoxes and Anomalies of Economic Life

Among the Thugs

Descartes' Bones: A Skeletal History of the Conflict Between Faith and Reason

The Private Patient (Adam Dalgliesh, #14)

Web 2.0: A Strategy Guide

Extremely Loud and Incredibly Close

CISA Certified Information Systems Auditor Study Guide [With CDROM]

Intuition: Its Powers and Perils

Terror and Consent : The Battle for the Twenty-first Century

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

Dumb Money

Primer on Decision Making: How Decisions Happen

One World: The Ethics of Globalization

Scorecasting: The Hidden Influences Behind Sports and How Games Are Won

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers

The Gold Bug Variations

The Great Derangement: A Terrifying True Story Of War, Politics, And Religion At The Twilight Of The American Empire

Moral Clarity: A Guide for Grown-up Idealists

Defining Moments: When Managers Must Choose Between Right and Right

Brave New World
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Sunday Family Soccer
- Our weekly, all-ages, co-ed family-oriented pickup soccer match
  For more information, go to our web site:
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- SiebZehN@Chilleben.De - A Chilled Out Love Story by Chilleben.de
  
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  5 plays
- Blow It Out by The Features
  
  4 plays
- Don't Drop the Baby by The Judybats
  
  4 plays
- Elevation (Single) [Tomb Raider Mix] by U2
  
  4 plays
- Dirty Epic by Underworld
  
  4 plays
- Trahison by Vitalic
  
  4 plays
- Ohm Suaa (remixed by Martin Morales) by Sainkho Namtchylak
  
  4 plays
- Dil Mera by Sam Popat & Alexandre Scheffer
  
  4 plays
- Tron Legacy (End Titles) by Daft Punk
  
  4 plays
- Unbank by Plaid
  
  4 plays
- Heliosphan by Aphex Twin
  
  3 plays
- Alsatian Cousin by Morrissey
  
  3 plays
- Needle in the Hay by Elliott Smith
  
  3 plays
- St. Vitus Dance by Bauhaus
  
  3 plays
- The Girl With the Sun in Her Head by Orbital
  
  3 plays
- Quino - phec by Polygon Window
  
  3 plays
- Draft Dodger Rag by Phil Ochs
  
  3 plays
- Chair Girl by Mu
  
  3 plays
- Mouth To Mouth by The Glove
  
  3 plays
- Untitled by Amon Tobin
  
  3 plays
- Emerge (Dave Clark Mix) by Fischerspooner
  
  3 plays
- Magma Mama by Ramasutra
  
  3 plays
- Ownage by Amon Tobin
  
  3 plays

James D Meacham, 3rd

The Essential Challenge of Ethical Business

The New World of Consumer and Employee Power

Principled Business Culture = Winning Competitive Strategy

Ade McCormack: Preparing the IT department for life in the wild