THE INESCAPABLE REALIGNMENT: REENGINEERING DEVELOPMENT (IN-A-BOX™)
In this section I want to explain how I think America needs to improve its overall approach regarding postconflict, postdisaster and—best of all—prefailure, prebankruptcy situations inside the Gap. While I think the U.S. government has a big role to play in this, I don’t think governments build economies or markets, but rather that businesses do. I also don’t think we can expect to create sustainable economies inside the Gap using a combination of military personnel plus aid/relief workers, neither of whom know, quite frankly, much of anything about enabling entrepreneurship. They’re both supply-push public-sector providers, and globalization has entered an age of demand-pull private-sector builders, so if I’m going to describe the missing link in America’s “second half” equation, I’m naturally going to address private-sector contributors first and foremost.
The small company I work for, Enterra Solutions, has done significant work figuring out how to make America better at rapidly reconnecting Gap economies to globalization after a crisis. Since early 2007, Enterra has been doing work in Kurdish northern Iraq that is qualitatively different from reconstruction work attempted before: We don’t focus on getting old businesses up and running. We expect the Iraqis to do that on their own, or to start up new ones based on what they want to produce and sell. Instead, we focus on generating the baseline network connectivity required for Iraqis to actually conduct business transactions with the outside world, meaning a focus on telecoms, banking, business and investment exchanges, utilities, and border security. Enterra’s initial work in Iraq is a proof of concept for something we call Development-in-a-Box, meaning, once templated here (e.g., how do you bring a local telecom immediately up to global connectivity standards?), we plan to sell such upgrades as a repeatable solution throughout the Gap, partnering with some of the world’s largest systems integrators, utilities providers, dealer-brokers, logistical firms, and the like.
First, some background on how this came about.
In late 2004, when I decided to write a sequel to The Pentagon’s New Map, it basically cost me my job at the Naval War College. Not a bad move for either side, as it was time for me to move on to bigger and better opportunities. I simply felt that more of the answers regarding the things I care most about would be found in the private sector than in the public sector, so I was open to moving in that direction. Luckily for me, I was immediately approached by a serial entrepreneur named Stephen DeAngelis. DeAngelis, a China scholar in college at the same time I was studying Russia in the early 1980s, took a far different route following his undergraduate degree. While I went on to grad school and then the national security community, DeAngelis bypassed further education to jump right into the business world, cutting his teeth in mergers and acquisitions at a major retail bank in the late 1980s. Over time, that led him to a variety of opportunities, including working for economic development in the U.S Virgin Islands after Hurricane Hugo, acquiring and operating a specialty paint company in the Caribbean for an institutional investor, conducting a lot of foreign direct investment reconnaissance efforts in China long before the crowds showed up, and eventually starting his own Internet-based technology firm (exiting before the 2000 tech crash). After 9/11, DeAngelis, a native New Yorker, decided he was going to take his own time and money to think through the following problem set: If 9/11 could happen because America couldn’t adequately “connect the dots,” or spot the emerging pattern of events in time to foil the plot, then what would a private-sector company have to create to fill this void in terms of a new class of products, technology, or services? In other words, how would it make America more resilient? His vision eventually grew to include how to make businesses more resilient in the age of globalization.
When we met in the spring of 2005, I wanted to lead a revolution in thinking within the national security community regarding war and peace, spreading my personal vision that “shrinking the Gap” should be America’s grand strategy of the future, and DeAngelis merely wanted to fix America’s public-sector connect-the-dots problem while forging a new enterprise management philosophy for its private sector, making our companies more competitive and resilient. I viewed globalization’s spread primarily in terms of rules—as in, connectivity drives code, and code enables peace. DeAngelis saw things similarly but from a different angle: He believed the complexity involved in running companies and governments was skyrocketing, thanks to globalization’s mix of ballooning transaction rates, new regulatory requirements, and increased security threats, and so the only way companies and governments could master that rising complexity was to create and spread the technological means by which rules can be dynamically managed.
Let me unpack that notion a bit.
In a simpler world, when your company or government bumped into some new phenomenon, you simply took out your three-ring binder of rules and looked up the steps you were supposed to take in this situation. If it was completely unprecedented, you called up the chain of command until you reached some level where responsible parties could articulate new rules. Upon receiving them, you’d insert them into your three-ring binder and proceed as instructed, and over time those new rules would be extended throughout the rest of your company or government agency as required. It was a relatively slow process that could be automated in some places, but the new rule sets tended to come in bunches and at best sporadically, with the “man in the loop” driving the process.
Add modern information technology and network connectivity to this dynamic and everything speeds up dramatically, including a lot more automation of rules and far more rapid responses to new phenomena. A good example of this involves computer viruses spreading across the Internet. That’s a collective problem not feasibly solved company by company, so we collectively outsource that function to specialized companies that provide rapid-fire “patches” as soon as viruses are diagnosed. Symantec’s Norton antivirus line of products provides this sort of service.
But here’s the code that DeAngelis started cracking with his new start-up, Enterra Solutions, back in the summer of 2003: Because the operations of private firms and government agencies were becoming so IT-intensive, it was getting harder to segregate what were becoming increasingly overlapping universes of rules. The systems-integration rules (i.e., How do these databases talk to one another?) were overlapping with the performance-metric rules (i.e., How do we define our company’s preferred operational standards?), and they in turn were collectively overlapping with security rules (both physical and cyber) and compliance rules (i.e., Is everything we’re doing in compliance with all the relevant local, state, federal, and international laws?). Historically, a company would have four sets of outside contractors help with these issue areas: systems integrators, management consultancies, security companies, and accounting firms. The problem was, whenever a rule was changed in one domain, it usually had significant impact on other domains, but those interrelationships weren’t being properly addressed by the traditional stovepiped approach. As DeAngelis foresaw, companies and governments would need to move beyond mere automation of rules to something better: new technologies and architectural approaches by which rules are “baked” into information systems and made updatable on a real-time basis, allowing the system of rules as a whole to be rerendered on the fly as circumstances warranted. This is the first practical step toward integrating—in a systemic fashion—dynamically rendered logic with technology to create autonomic computing. Think about that for a second. Any complex organism, like a human for example, runs on countless rules that must be autonomically applied in response to outside stimuli, leaving the leadership (like your brain) to focus on the big decisions. So say one night as you’re walking along a street, something pops up in the dark and scares you. Your body will make thousands of decisions on its own to respond to that perceived threat (e.g., speeding blood flow, tensing muscles, widening eyes, breathing faster), leaving your brain with only the big question: Fight or flig
ht? Well, Enterra’s goal of dynamically managing rules for complex organizations is basically the same: making autonomic all the basic decisions (e.g., which streetlights to turn green to evacuate the city) so that top decision-makers can focus on the big calls.
The key technology DeAngelis invented involved taking written rules and turning them into living, breathing code that could act intelligently within your company’s or government agency’s information systems to sense, think, and respond to changing circumstances—in other words, rules smart enough to rule themselves.
What Enterra does is take large bundles of rules, like the USA Patriot Act or a major metropolitan area’s contingency plans for a disaster, and turn them into software code and mathematical algorithms.
Enterra’s code and algorithms take the process a step further by making them “genetic,” meaning they can respond to outside stimuli and re-render—or basically rewrite—themselves in reply. So if I’m following the genetic algorithm for “bake a cake,” and I decide to substitute margarine for butter in the middle of the process, Enterra’s “recipe” would sense that change and recalibrate the rest of the ingredients to account for it. But it wouldn’t stop there, for if I’m baking that cake within a resilient architecture, my “bake a cake” genetic algorithm would know enough to contact all of the other relevant algorithms in the process to negotiate further changes. For example, my recipe might talk with the stove, deciding on a different temperature and cooking time. If I’m a commercial baker, it would contact the wrapping machinery, negotiating slight differences in packaging and labeling, including a change in price. My genetic recipe could also contact the shipping segment, mandating changes in schedules and refrigeration on the trucks. Farther down the line, my recipe would contact retailers themselves, instructing them to plan on different delivery timing, different shelf prices and shelf life, and God only knows what else.
That all sounds great, but how does that vision link to national security?
Well, say I’m a saboteur targeting this baking company and my real goal today is to insert poison into thousands of loaves of bread, creating terror and panic in the community and destroying the company’s reputation. This is where my genetic algorithms really come in handy, because if they’re set to sense for bad ingredients (as well as good), they can alert the rest of the process to perform a variety of relevant responses. Perhaps the system lets me, the terrorist infiltrator, believe I’m actually succeeding when all my actions are being thwarted elsewhere in the system, meaning the system is spoofing me. Perhaps that allows the system to track my further activities, automatically linking its investigation to other security measures throughout the company, including alerting law-enforcement agencies. You get the idea. The same basic approach could apply to a nuclear power plant or the information systems of a global bank.
This approach toward dynamically managing rules in complex rule-set environments has virtually unlimited applications: It can be used within the intelligence community to foster effective information-sharing, managing the need-to-know rule sets on a case-by-case, minute-by-minute basis; it can be used to manage the complex traffic patterns of a major port, allowing the scanning of cargo on a real-time, sense-think-respond basis, not just flipping on a red light when a sensor picks up something but also deciding the next several thousand simultaneous steps that need to be taken with regard to that container, the port, the surrounding region, and so forth; and it can be used to help emerging economies upgrade their connectivity interfaces with the outside world, making their links more transparent and trusted to both themselves and the higher-trust environments to which they’re connecting.
Which leads us back to Development-in-a-Box.
I joined Enterra Solutions in the summer of 2005, and while Steve DeAngelis and I spent much of our time spreading our ideas of how all companies and government agencies need to embrace this next-generation capacity to dynamically manage complex rule-set environments, both of us became intrigued with the notion that if we could make, say, a major U.S. port truly resilient in this fashion, as Enterra is doing today with the port of Philadelphia, why couldn’t we market a slightly simplified version of our approach for similar entities in emerging and developing economies that would allow them to connect to ours in a fashion that America would find acceptable while extending our networks of transparency and boosting local development as a by-product? Well, that’s one of the ideas we started calling Development-in-a-Box. Instead of trying to fix a broken economy from the bottom up, why not let the immediate focus be on “external improvements” that dramatically upgrade that economy’s connectivity with the global economy and on that basis make the local situation more attractive to foreign direct investors?
Imagine that I, the United States, am a developer of a housing subdivision called the global economy. You, a developing country, want to build a home in my subdivision and I want you in there as well. So what do I provide you with to make that happen? I give you an entire slew of connectivity, prepackaged and preapproved to global standards: I tell you how you’re going to build your house in rough outline: things like “Your windows need to be this size” and “Your electrical wiring must be installed according to that standard.” I’m going to tell you about all the pipes that will go into your house, like the telephone “pipe,” or the cable TV “pipe,” or the electrical and water and sewer connections. I won’t give any options on these standards, because they’ve all already been decided upon by the global community. If you want to connect to the Internet, it’s called TCP/IP—no negotiation. My goal as a subdivision developer is to combine all this connectivity and regulations in as simple a package as possible, providing it to you at the lowest cost possible, because, over time, my global economy will make more money by selling you all those services year-in and year-out than I would make by keeping you off the grid. So yes, it’s a package deal that’s designed to get you hooked up to the world as quickly and comprehensively as possible.
As the subdivision developer, what I shouldn’t be in the business of doing is this: I shouldn’t be telling you which draperies to buy, or what food to cook, or what God to worship, or which TV channels to watch, or—in general—how to run your family. What goes on inside your house should be largely yours to decide. Of course, if you and your family want to be successful in this subdivision over time, I’m pretty sure you’ll pick up on the clues regarding how best to do that, but I won’t be in the business of mandating the particulars.
Development-in-a-Box is globalization connectivity with the rules baked in. It’s no good to raise an economy or a working population to international standards unless you supply the basic connectivity necessary to act on those global standards. Otherwise, as Paul Collier notes, all you trigger is a brain drain. But it’s equally useless to provide the connectivity without the accompanying global standards or rules, because that just means you’re trying to link low-trust environments with higher-trust ones without realistically accounting for the differences. For example, many sub-Saharan economies do not adhere to the International Standards Organization’s best-practices regimes, such as the ISO 9000 series governing production and manufacturing industries. Development-in-a-Box is, in many ways, a starter kit for moving an economy toward ISO 9000 accreditation or for achieving C. K. Prahalad’s goal of “transaction governance capacity.” In a growing worldwide market for “sovereignty services,” Development-in-a-Box allows governments in developing economies to outsource the creation of their civilian infrastructure.
Let me explain that concept of sovereignty services, because it’s a key one.
With American combat troops now slated to depart Iraq by 2011, our intervention moves into its final phase, with the crucial goal being the expansion of economic opportunity for ordinary citizens. Our—and Iraq’s—success here will determine the likelihood of our military’s return down the road under less favorable circumstances. Much is made of Iraq’s seeming unwillingness to spend its oil profits on infrastru
cture, the assumption being that Baghdad is milking American taxpayers. Let me offer another explanation: Iraq lacks sufficient “counterparty” capacity to negotiate, conclude, and manage the necessary deals with the outside world. Any market for services or goods requires counterparties of roughly equal capacity: Player A wants to sell and B wants to buy, and both possess all the necessary skills to pull off that transaction. It takes two to tango—and sign a contract.
When international business looks at oil-rich Iraq today, it sees plenty of opportunity. What it doesn’t see in many instances, despite rising security, are sufficient local counterparties—both private and public—to make the necessary deals happen. Such skills were hoarded under Saddam Hussein by the top political leadership to maintain state control of the economy. Iraq is hardly unique in this deficit. It characterizes a lot of poor economies struggling to connect to the global economic grid. They just don’t have sufficient personnel, venues, and associated rule sets for striking deals and then executing them. It generally takes a generation to grow such “soft” infrastructure because it’s a people-driven process in which experience is accumulated and best practices are identified.
Americans take this capacity for granted, because it’s so woven into our communities: the chamber of commerce, the local land-titling office, and the realtors and lawyers eager to deal. Drop a businessperson armed with ambition and vision into your average American community, and he or she will soon be approached by a small network of locals ready to facilitate the identification of appropriate counterparties. All economically vibrant communities possess this informal network.
Great Powers Page 41
