Month: August 2013

The most dangerous of all KPIs?

Indexes (or indices, for the bourgeoise humanists among us) are a like botox. You can use them to heal, cover up, or kill.

In case of the botulinum toxin: heal obnoxious conditions like fissura ani, cover up your probably well earned wrinkles, or use some grams of this hyper toxin to kill half a million people by poisoning their milk supply.

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Measure this and here and there!

Same goes with KPIs. You can use them to tweak your business processes by creating accountability for set goals. Because, If you can’t measure it, you can’t manage it. You can use them to cover up what’s already going wrong (Hello, Enron).
And they can have some rather impressive, probably unintended, real world consequences. And this is what the new format Berlin Debates was taking on in their first round of Cambridge Union Society style exchanges: »GDP has failed. It’s time to switch to a new measure of progress.«

Matthew Taylor, Chief Executive of the Royal Society of the Arts, debated Prof. Dr. Karl-Heinz Paqué, a politically well connected German (neo-)liberal professor of macroeconomics. Taylor preemptively summed up the two hours nicely in his blog. Not measuring the GDP, the gross domestic product, is bad. But using GDP as one of the three major yardstick to evaluate governement performance: unemployment, inflation, and economic growth.

In a nutshell, GDP is a nice tool to compare different national economies. But it doesn’t say much about the economic state of the state. As Taylor nicely explained: it’s nice to knvoting with their feet (ow that there have been five goals shot at the football game. But if you do not know who scored for which club, the information lacks a certain quality. But quantity over quality is not GDP’s only defect. GDP does not include externalities. Long term costs like pollution (which would be quality of living problems as well) are not reflected.

This does not mean GDP is bad. It’s very well defined, definitely stable (a big plus), and works on an international level. It’s just that using GDP as the main KPI to manage a national economy tends to set the wrong incentives. Says Taylor. And that’s what the audience agreed upon by voting with their feet (by choosing an exit you voted either yay, nay or whatever).

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Where’s the pulse?

So say good-bye to yer olde GDP? Most likely, not. Popular indices have a tremendous staying power. Even if they might have overlived their time for quite some time. Case in point: the Dow Jones Industrial Average. Published since the 1880ies, the Dow is still “among the most closely watched U.S. benchmark indices tracking targeted stock market activity”.

It’s not watched, because it’s so spectacularly well designed. Measuring stock market tendencies with the Dow is a bit like an MD measuring the pulse of a patient, who’s wearing a space suit. You might see something. But taking 30 industrial stocks as an indicator for the sanity of the US markets leads to a VERY blocky image. Still, it affects investment decisions on a global scale.

Here's the pulse.
Here’s the pulse.

Of course, the GDP’s problem is not granularity. But it skews governing decisions by omissions. So as a policy decision making toolset, it seems a bit out of whack. Because, honestly: as a citizen, you shouldn’t be interested in beating your neighbor in GDP growth. You’re interested in your own economic well being, the well being of your community.

Of course, now the hard work starts. What do we want to measure and for what reasons? What is sustainably measurable anyway? It’s a reconciliation process with a lot of stakeholders.

Don’t Pass Go (go directly to PRISM)?

The genie is out of the bottle, Obama is checking your email, and you can’t push toothpaste back into its blablabla. Welcome to our present defeatist state of surveillance.

The NSA is reading your email? Well, so do Mark Zuckerberg and the Google Bros. And, look at your inbox stats: most likely, they are putting in more effort into this task than you do. OK. Game over, don’t pass go, we all go directly to Prism.

Not so fast. This online world of ours is still in its very early stages. I’m dabbling around there since 1992 or such. As online years count like dog years, I should be about 170 years old (just like Ray Kurzweil, when his supply of dietary enhancements finally runs out). But what are a couple of centuries, if we put things into perspective. Between the invention of democracy (Athens, 500 BCE) and it’s fairly widespread adoption in the late 20th century you can count more than two millenia of feudalism, absolutism, and other -isms. Widespread alphabetism took even longer, took a hit with the invention of tv to finally resurge with the Internet.

Massive societal changes do not happen over night. If not induced by a catastrophy like an asteroid wiping out the dinosaurs (welcome, mammal), a massive war clearing the path for independence day, or 9/11 (good bye nail clippers on air planes, hello total surveillance for safety).

Which leads us back to our current sadly defeatist state of the webs. Let’s put one thing clear: the massive collection of individual data is not a recent bug. It’s a feature of every digital system, where processing power is constantly on the rise and the cost of storing data falling on an hourly base.

The core question is: who owns this data? Who’s allowed to toy around with it? If my baker or corner super market knows about my eating habits, it’s quite OK and helpful. If some secret entity concludes, that because I prefer Halal Döner, my travel patterns should be monitored, we’re entering a very troublesome area.

For quite some time, we mostly did choose to ignore those ramifications of our digital lifes. Or, to put it like that: some proposed a happy hippie hippo lala-land, a united nations of onliners, where the evil forces of meatspace can be safely ignored. Others preferred an Ayn Randian powerplay to achieve the status of robber baron of the virtuality. And, to be sure, military and governement didn’t fall asleep at the wheel. Let’s not forget: the early stages of the Internet was funded by the department of defense. And the global rollout of the Internet steamrolled all national online plays, like France’s Minitel or the German Btx.

In a recent blog post, Emin Gün Sirer, associate professor at Cornell, did something quite overdue: he named the three main stakeholders of our online world.
His three force vectors are Military/Political, Commerce, and the Public. And he tries to calculate a “back of th envelope” vector sum. His rough guesstimate: “the forces are aligned in the ratio 1:1:3, with an alliance of the public and commercial interests that overpowers the M/P establishment in favor of transparency and online privacy guarantees.”

So all’s wrapped up and fine? Most likely, not. Civil rights and liberties are not a product of absolute vecorizable powers, but something you have to work hard for, you have to stand up to (or sit down, as Rosa Parks and Ghandi did).
And, in this case, it’s a very complicated reconcilatory process.
– Government, law enforcement and intelligence services are national entities (except the black UN helicopters, of course, which are after tin foil hat wearing free Americans roaming through Wyoming). There are some very good reasons, why those agencies sometimes should be allowed to wiretap certain individuals or entities. As there are very good reasons why a total surveillance state, a big data GDR on digital stereoids is definitely a thing to avoid. And, let’s not forget: the western democratic idea of government and checks and balances means mostly, that the citizens of a given country are the ones form which all power derives (and that he sometimes has to check, if the balance is still OK).
– Commerce is mostly global. But still bound to national or supranational regulations. If those regulations enforce companies to share their big consumer data with national government agencies (which share their data with some partners in the international intelligence community, because, you know, sharing is caring and NSA and BND do take care for you), they should, in their very own interest, work against this pressure. Because loosing trust means, sooner or later, loosing market share.
– And, finally: we, the people, we are everywhere. We are the one, who have to take care of our governments and our corporations. It took some millenia to gain some liberties. And it’s fairly easy to loose them all. Either against rogue (united) states, or by ceasing to much ground to nicely colored companies.