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GP19Jan05: Doubletakes

Shock of Recognition.  Who would have thought a fellow from Fiji, in his forties to boot, would become the top golf player in the world?  The amazing Vijay Singh, always a winner but late to the top winner’s circle, one-time bouncer in a Scottish bar when it was hard to make the rent, did it again Sunday on the 18th hole of the last day of the Sony Open, coming in just ahead of  high-powered, low-key Ernie Els from South Africa.  But then, since 2000, the world constantly delivers news that blows away all our preconceptions.  Golf, more than any other sport, delivers surprises and upsets that delight the heart.  

Sales Up, Sales Down.  As you will remember, we regaled you last week with retail tales of woe in “Wal-Low Versus The Waterfall Hotel,” finding that the big stores generally had a hard time grinding out some gains last year.  After all, this was also the year when a hallmark name in retailing, Sears Roebuck, lost its identity and was sandwiched together with K-Mart by a financial engineer, one sign of consolidation in a troubled industry. Imagine our surprise on Friday when we learned that “the Commerce Department reported December retail sales rose a hefty 8.7% over the same month a year ago, marking … one of the strongest holiday sales since 1999.”  (See The Wall Street Journal, January 14, 2005, p. B1-2.)  We were ready to blush with chagrin until we read a little further. 

Consumers “are buying less apparel and personal merchandise … and more home goods and intangible experiences.”  And, by the by, they are spending a lot more at the pump:  gas station sales were up more than any other category, spiraling up a whopping 21.8%.  Building materials/gardening outlays were also up a spritely 13.2% as Americans worked on their castles.  The “bottom line,” says the Journal, is that “for stock analysts and others concerned primarily with individual retail companies, Christmas was a mixed bag at best.  But for economists, Christmas was just dandy.”  We are not only buying different things but we are buying them through different channels.   Sales were up and down at the same time—an example of the confusing data produced by an economy that is recreating itself. 

We always knew economists looked at the big picture and missed what’s happening on the ground, since they, too, are avid defenders of the status quo, using rearview mirrors to measure the future.  For about 3 years they have been telling us that the economy is better than we think, but that has not cheered businesspeople who see implosion at every turn.  Really the latest numbers only further underscore the need for retailers of all stripes to overhaul the way they do business. 

Similarly, but more tragically, we have learned that armchair warriors at the Pentagon, including the so-called civilian reformers pushing 5th-generation mobile warfare, have a interplanetary view of war and no sense for the equipage and tactics that can put our infantry soldiers on a level playing field in the 21st.  Here, too, facts defy the theoreticians.  Warriors doing battle in Iraq, Afghanistan, and elsewhere are now using websites, instant messaging, and other devices to cook up instant wisdom on how to deal with car-bomb urban guerillas and cave-dwelling Taliban because they are so poorly supported by their superiors who have handed them the wrong strategy, tactics, systems, and armaments.  See http://companycommand.army.mil/ev_en.php?ID=1_201&ID2=DO_ROOT and http://platoonleader.army.mil/user.php.  Also see several books offered at http://www.ausa.org/www/armymag.nsf/(reviews)/20024?OpenDocument.  The nature of every kind of battle, in the retail marketplace or on the field of armed conflict, is changed beyond recognition. 

Drugs High, Drugs Low.  We’re not only buying a bit less at the department store, but we’re also reining in our addiction to drugs.  Americans, as you know, take far too many drugs for far too little effect, both legal and illegal.  While healthcare spending—our worst national problem—consumed over 15% of gross domestic expenditures in 2003 (first time over 15%), the rate of prescription growth dramatically slowed to 10.7% a year from its previous 14.9%.  (See The New York Times, “Nation’s Health Spending Slows, But It Still Hits a Record,” January 11, 2005.)  Consumers pay 30% of prescription drug costs, and their pocketbooks cannot keep up with the bills, so they’re getting a little tight fisted, even when they need the drugs.  Drugs are just one more consumer product category that is  having a little difficulty at retail. 

That said, we are startled to learn that America does not have the highest drug prices in the world, even if the pols and the patients bitterly complain that we pay so much more to the drug companies than other citizens around the globe.  “As the economists Patricia Danzon and Michael Furukawa recently pointed out in the journal Health Affairs, drugs still under patent protection are anywhere from twenty-five to forty per cent more expensive in the United States than in places like England, France, and Canada.  Generic drugs are another story … generic drugs here are among the cheapest in the world.”  (See Malcolm Gladwell, “High Prices,” New Yorker, October 25, 2004, pp. 86-90.  Also see Danzon and Furukawa on “Prices and Availability of Pharmaceuticals: Evidence from Nine Countries,” www.healthaffairs.org, a study which was supported by Merck).  “So many important drugs have gone off-patent recently that the rate of increase in drug spending in the United States has fallen sharply for the past four years.  …  The core problem in bringing drug spending under control, in other words, is persuading the users and buyers and prescribers of drugs to behave rationally, and the reason we’re in the mess we’re in is that, so far, we simply haven’t done a very good job of that.”  

“There is a second book out this fall on the prescriptive-drug crisis, called Overdosed America … by John Abramson, who teaches at Harvard Medical School.”  In general, one may ask whether the medical system and marketing machines of the drug companies don’t have us taking too many drugs and the wrong ones (i.e., not enough generics).  Despite the assertions in an impassioned book from Marcia Angell, former editor-in-chief of the renowned New England Journal of Medicine, called The Truth about the Drug Companies:  How They Deceive Us and What to Do About It, it also seems clear that doctors, patients, insurance companies, government—indeed, the whole of society—are at least very compliant co-conspirators in runaway drug expenditures and a health system in which, some authorities think, about a third of all the expenditures are of no value to the patient or society.  The fault lines here have become so visible that we can be certain the tectonic plates are about to shift.  This is an “addictive society”; drugs and healthcare just happen to be two of the things we are hooked on. 

As we have said before in Best of Class and “Making Ideas Big,” Gladwell, whose keen eye spotted what’s really happening on drug prices and to whom we owe the quotes above, is one of those handful of journalists who is worth reading at every turn, since he’s liable to come up with an insight that will destroy your fixed view of things.  He’s just out with a new book called Blink: The Power of Thinking without Thinking.  Timely enough, it’s really an ode in praise of intuition, which is in high demand in an age where the world is being turned upside down.  We need to radically change the way we do things.  For this, intuition and creativity are quintessential, and yet our store of them has atrophied and withered.  Son of a mathematician, Gladwell comes equipped to discover principles and laws beneath complexity, while the rest of us see confusion. 

Input-Output.  Last week we stumbled onto a first-class online magazine put out by none other than the Association for Computing Machinery.  It will rattle some of your preconceptions.  Who would think this society of computer apparatchiks would be the sponsor of a wide-angle publication that looks at the goals of computing; the evolution, progress, and future of the field; and, to a limited extent, its reason for being?  We find a number of articles there, too many to mention, to be provocative for anybody who wants to think about how any of society’s systems evolve.  Its title, Ubiquity, reminds one of the role God enjoyed in the metaphysics of the medieval philosophers when he was pictured as all-seeing, all-knowing, and all-present.  Since computing has become so pervasive in the life of the world, it is fair to think of it as everywhere.  Ubiquity blows aside our own preconceptions about computer engineers, making them seem much less linear. 

We would particularly recommend to you an interview there with consultant Fran Johansson related to his book The Medici Effect.  “The book talks about the fact that we have the greatest chance of coming up with groundbreaking insights at the intersection of different disciplines or cultures.” (See www.acm.org/ubiquity/interviews/v5i31_johansson.html.)  He cites, for instance, “swarm intelligence, which essentially came out of the intersection of the study of social insects and computer search algorithms.”  He calls it “the Medici Effect,” inspired by the powerful creative effects the Medici had in Florence of the 1500s by bringing together talented people from so many disciplines. 

Just as an oyster creates a pearl out of sand that filters into its system, we and Johansson are discovering that big creative leaps occur when dissimilar intelligences intersect.  One has to go outside one’s discipline, country, and framework to achieve a creative breakthrough.  Why is it that we like to think that castles in the sky get constructed by like-minded members of a team acting in “creative harmony,” when it is likely that earth-shattering achievements spring from an uneasy duel between alien forces?  This mating of different species is not something organization experts know anything about.  For something different to happen, you must brush up against the stranger.  You must strive to be ubiquitous, even if it’s hard to be everywhere at once.  Now that Fiji rules the world (in golf, anyway), we must be prepared for meteors that come out of left field and distant galaxies that upset our fixed ideas and enthrone a new deus ex machina who pulls the string differently in human affairs.  It is time to prick through the protective cocoon in which we tend to wrap ourselves to experience the world as it is becoming. 

If, in fact, we can resurrect and celebrate our capacity for truly creative acts, we will have a decent chance of surmounting the very unfamiliar challenges posed by the end of the Cold War, the coming of Y2K, the Decline of the West anticipated by Oswald Spengler, and the onset of a new Ice Age predicted by some climatologists.

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