DESIGN FOR PREVENTION -- A RESPONSE!

DESIGN FOR PREVENTION – A RESPONSE!

James R. Fisher, Jr., Ph.D.
© August 4, 2010

* * *

WILBUR L. ROSS, STEEL INDUSTRY MAGNATE

As I’ve said in my last communiqué to those in receipt of DESIGN FOR PREVENTION, I know you are busy. I know time is precious. That said you are the prototype of the engine that could make a difference.

Before I share the remarks of one respondent to DESIGN FOR PREVENTION, I'd like to share with you the comments of a guest of Charlie Rose on his PBS program yesterday. It was a conversation with Wilbur Ross, the billionaire steel magnate that wanted initially to be a creative writer when he went to Yale.

Wilbur’s comments were peripheral to DESIGN FOR PREVENTION in one sense, but right on the money in another. Permit me to explain.

* * *

Wilbur Ross, a soft-spoken balding grandfather looking man, appeared a throw back to an earlier American. It is clear as he shared his ideas with Rose that he is an entrepreneur, and by extension an economist with a sociological sense of change in American society.

Without ever mentioning, Ross has encountered institutional infallibility and found away around it. He has encountered business as usual practices and shown the wisdom to ignore them turning a modest fortune into a considerable one.

Wilbur's obsessions put him in league with those of DESIGH FOR PREVENTON. Like Livingston, he throws a warning over our bow, which we ignore only at our peril.

The strength of America, Wilbur says, is its working middle class. This segment has deteriorated for many reasons, one of which has been its earning power has not been tied to performance.

Wilbur created a $200 million bonus system for blue-collar workers in his steel mills on similar criteria to that of executive bonuses. Performance soared.

He listened to workers, and was awarded for the attention.

No great surprise, Wilbur encountered resistance from his CEOs who, while their compensation increased through the efforts of workers, the ratio of compensation of CEOs to workers declined. Livingston hits this point hard and fairly. I have hit it even harder in my published works.

Another common point between Ross and Livingston is risk management. Ross claims that business as usual practices continue because of the failure of business to understand the difference between perceived risks and actual risks.

With perception, you look at the situation, the patterns, the trends, and the history of outcomes, and act accordingly. It has been his experience with this perspective that there is practically no risk at all. Livingston would agree.


* * *

Wilbur purchased Bethlehem Steel when it was bankrupt and facing oblivion. Not a steel man by trade, he raised productivity to one man hour per ton of steel versus six man hours per ton for China, and was able to compete successfully for the Asian market. He mentioned this because he is not of the opinion that manufacturing jobs necessarily must go to foreign countries because of America’s high wages.

I smiled when he viewed himself as an outsider. Livingston is one as well. Outsiders cut through the malarkey to get things done. They have not taking residence in hindsight but are on the cutting edge of foresight thinking. DESIGN FOR PREVENTION is a foresight document.

* * *

Does American manufacturing have a future? Asked Rose.

Wilbur says, "Yes!" He points to the fact that union leadership understands perhaps as well if not better than corporate management what is at stake. He successfully negotiated in reducing job categories with the United Steel Workers Union from thirty-two (32) to six (6), and cut through many of the loopholes of "business as usual practices" that had workers show up for work and wait for work contracts to be finalized before turning to.

* * *

The United States currently graduates one-seventh as many engineers each year as China and India. But they are much bigger labor forces, quipped Rose. Wilbur said that is true. But at the current rate of engineering education in the US, in another decade or so, ninety (90) percent of all engineers will be working in Asia.

He finds the policy of the government to make it difficult for immigrants educated in the US to remain here short sighted to the extreme. Livingston would concur.

The advantage in Asia, he muses, is that the engineering population is well disciplined and well qualified, something that was once true of American engineering when the profession was dominant. Livingston wants to bring back that dominance.

Wilbur suggests – something that Livingston hits hard in DESIGN FOR PREVENTION – American education is dumbing down. The United States once had the largest percentage of college graduates to those that started college. Today, the US is twelfth (12th) in that category.

Livingston has an answer as to why in D4P. Students can’t breathe in the academic environment. It is a closed system with a hindsight-oriented curriculum, which is dedicated to the reification of what is already known.

* * *

Wilbur claims research and development are key to manufacturing success, indeed, to American private enterprise. The Bush administration, he notes, cut R&D every year of his eight years in office, and Obama has not been able to stop this bleeding. Conversely, while the US is ahead in science and technology at the moment, China and India have bigger and more aggressive R&D budgets.

To emphasize his point, he finds China owns forty (40) percent of the wind technology industry and exports 80 percent of that product to other countries.

China and India are dedicated to alternative energy sources, while the United States:

(1) Does not have an energy policy.
(2) Does not have an industrial policy.

He gave an example how this translates into waste. Railroads consume one-quarter (1/4) ton fuel mile in inter city (city-to-city) freight to one (1) ton fuel mile for trucks. The truck lobby, however, spends billions of dollars protecting its industry while railroads have no equivalent lobby.

Moreover, tobacco farmers have a substantial lobby to support their interests when they are in a business in rapid decline.

Wilbur made an interesting sociological comment. Over the last score of years, wages for middle class workers have stagnated. The American mindset expects improvement in their economic circumstance each year. When this did not come about naturally through wage increases, they borrowed to realize the expectation. He saw this as a more pragmatic reason for the sub prime meltdown than that proffered.

RESPONSE FROM A READER:

Hello Jim.

Sorry for the long silence. I have been reading your emails and D4P (more like studying) and will be ready to give you something soon.

I'm both impressed and humbled by Bill's work. It takes some time to sink in. As he likes to say, I am re-arranging my mental china. I am being cautious I suppose. I don't want to shoot my mouth off before I'm sure what the book actually says.

I do not disagree with anything you (and Bill) have written. I might simply emphasize different aspects I suppose. My process is, perhaps, dumping old programming. I might compare my experience to regaining one's sight after a long period of partial blindness. The lights are coming on. It's really very encouraging.

Yesterday I dug up my copy of "Have Fun at Work" and was amazed to see that much of what I've read in D4P was expressed a long time ago (22 years?). I thought I had read that book.

You and Bill have done us all a great service. Personally, I want to understand what I have been through and, going forward, to avoid old mistakes, starting with adopting the right attitude, identifying and having the right expectations of each organizational context to be more precise. I'm trying to figure out which organizations I know about might actually be Yang attractors. I think most are Yin attractors aren't they? The problem is, they all try to present themselves as both, confusing the troops and, in my view, seeding conflict.

Another book I have been reading, which I like, by William Wallace, is "How to Save Free Enterprise" written in 1979. Wallace condemns the hierarchy altogether and argues convincingly for replacing bureaucracies entirely with teamwork. I am now ready to say that this is an unrealistic expectation and that, as Bill says, that both Yin and Yang are inevitably going to be around, co-existing in a sort of permanent tension.

I'll be in touch again soon, within the week I hope.

Best wishes,

George

* * *

DR. FISHER RESPONDS:

George,

Thank you. In a way, and I don’t mean to be disrespectful, what William Livingston says in D4P is like being told that the foundation of your whole life has been a lie, and it is time to correct it. That is not easy to swallow.

I’ve included the remarks of Wilbur Ross here for reason. He is the twenty-sixth riches American, which might impress some, but is a quintessential outsider. That has allowed him to flourish as a foresight thinker.

He recognizes the Y (hindsight) must complement the Yang (foresight), but isn’t about to be obliterated by Yin thinking. He is not afraid to step out of the shadows of Yin and embrace Yang. I've seen this demonstrated on a more prosaic level.

* * *

Yesterday, I spent the afternoon with my granddaughter. She is five-eleven at age fourteen, a volleyball player, and the top student in her class of a top area prep school. She is the best math student, best French student (she won the class French award), and so on. But that is not why I mention her.

She said, “Papa, I’m not really very smart. I just study hard.” Then she went on to tell me about a friend of hers. “My friend said you’re just good at everything, especially math.” Then my granddaughter said, “Did you study for the math final?” Her friend said, no, I went to the movies with a friend. “Well, papa, I studied for three hours. If I hadn’t studied, I wouldn’t have done well either.”

* * *

As William Ross Ashby says, “Intelligence is what it does, not what it is.” I shared that morsel with her from DESIGN FOR PREVENTION.

Some dozen or so little vignettes were published in national magazines about my Rachel visiting with me when she was six and seven. I reminded her yesterday that she has never been afraid to fail, remembering how often she fell down on the ice learning to ice skate.

She laughed. “Students in my French class are afraid to raise their hand because they don’t want to be embarrassed mispronouncing the words. I raise my hand all the time and am greeted with laughter when I flub the pronunciation, but then I get it right.”

I sense that Wilbur was a student such as my Rachel.

* * *

My take on DESIGN FOR PREVENTION is totally empirical. It may not be yours but it is right for me because it resonates with my experience. It gets me off the dime. No one reads a book the same. I share my ideas not because they are correct but because I think they may cause others to get in touch with theirs.

* * *

Speaking of which, I am to receive a parcel of copies of FRIENDS IN HIGH PLACES from author William Livingston. I will mail a copy of the book to people in the continental United States when I am in receipt of $5 and $15 for those outside the continental United States. Livingston’s book, THE PLAGUE, now retails for $150 on the web. I would imagine the same is true of FRIENDS.

I look forward to your remarks on D4P. Whatever they are, I’m sure they will be insightful and useful to us all. I encourage all those others who have read DESIGN FOR PREVENTION to email theirs as well.

Be always well,

Jim