Emerging Organizations – Let’s Start with YOU !


So, the emergent organizations movement is not about the company, the entity, or the person who writes your paycheck.  But there is a key element here that involves creating a TEAM (sorry, no I). IAI spent the weekend investigating partnerships in Asia, the Middle East and Latin America. Frankly, there are entrepreneurs eagerly seeking to partner with American entrepreneurs. And, all you hear in these conversations is “Sir”, “thanks”, “next call”, “let’s move forward”. The naysayers, second-guessers, the can’t do people are not on the line. Some actually celebrate the U.S., still, and know that we are a nation of loving parents, creators, innovators and often hold the line by ourselves. but proudly and stoutly.

During this holiday season, when you see a person struggling, give. When you see a fellow entrepreneur asking for your advice, offer it freely. When you see an opportunity to partner, find out what your potential partner needs.


Picture Credit: Pinterest – Solar Storm

When you think you have an idea, share it. If you think it is stupid, get over it. If you respect someone among your friends or co-workers, then offer the idea. Find the right time, don’t be shy but know your audience and pick your right time. On occasion, your friend may be facing a deadline or even a crisis – not a good time to pitch your idea. That’s a time to offer to help him or her get through it. Believe me, I just went through it.A brilliant inventor I know had his laptop stolen and he can’t afford a new one. So I am sending him mine, fully loaded with app software but not the engineering tools he uses, I will learn where to find them but he simply needs a toolket. The rest is magic from his incredible brain and his passionate, creative soul. That spirit I will support in every regard.

Mentors change your life as they impart experience. There is a fascinating Chain Reaction Innovations program at Argonne National Labs located here:

A key component of the Chain Reaction Innovations (CRI) program is business mentorship. In addition to the world-class scientific and technical support CRI will provide innovators, participants will also get assistance developing business strategies, conducting market research, and finding long-term financing and potential commercial partners.

If you interact with a sales or service rep and they are helpful or nice, then ask to speak with their supervisor or boss and give that person credit. If you walk down the street and pick up trash, then do it without seeking recognition. Change EVERYTHING you do in a shift away from selfishness. And the rewards you reap will be meaningful. Just for you, and your family. and your circle of friends. AND a few others…


Emergent Organizations- An Impressive Model for Adaptive Business Culture


Picture Credit: Doug Priebe, Shutterstock

This is the first article in an ongoing series on the Emergent Era. Learn how to write for Quartz Ideas. We welcome your comments at ideas@qz.com. (Comment: IAI believe that this is one of the most important insights I’ve read about business innovation in years. What’s compelling to IAI is that this presents a workable model for the Adaptive Business Culture).

In the wake of Brexit and the election of US president Donald Trump, it’s clear that big global changes are afoot. But before we can begin to explain how these unexpected, tumultuous events will impact our lives, we have more fundamental questions to answer. How has our widely accepted picture of reality fallen so far behind the true scope and pace of change? How can the systems we use to synthesize our collective opinions and motivations keep pace? What other major, near-term events might be in our blind spot?

The answer is so large that it has become difficult to see, yet it has urgent implications for everything we do. It’s this: as our planet-wide, instantaneous digital nervous system grows, it is causing a mass reorganization of people, money, information, and things. Our digital information flow has become the main driver of change—and we need new frameworks to understand and anticipate what’s coming next.

One of those frameworks is known as emergence. Up until recently, it’s been used primarily to explain natural systems. Basically, the term describes how, when individual agents interact en masse according to a set of simple rules, highly complex structures and behaviors emerge. The billions of neurons that join together in a brain, the multitude of birds in a flock, and the individual ants in a colony are all examples of emergent systems in nature

We’re seeing this same dynamic everywhere today—but in human systems. Emergent properties are what allow the ranks of individual circuits, weak on their own, to join together into a powerful computer. And because of computers, and especially their continuing extension into the physical world via the Internet of Things, emergence has become one of the key forces reshaping our institutions and essential systems.

One characteristic of emergent change is that it seems impossible until it happens, at which point it feels overwhelming, sudden, and inevitable. The moment when water droplets and wind combine into a hurricane is one example. Another example is the moment when, at about 11:00pm Eastern Time in the United States, election predictions made a wild and irrevocable swing in favor of Trump.

In business, emergence explains the huge leaps in value and expansions in functionality that have punctuated the lives of successful start-ups. When a network of people, linked by a new information stream in the form of an app or connected device passes a certain threshold in size, emergence kicks in, and the network doesn’t just get bigger, it transforms.
As of 2016, for example, Facebook has grown so populous that it is no longer just a social network. Through changes in the atomic content contributions of its two-billion plus users, it has become a de facto political organizer, advertiser, news company, video company, and a marketplace for goods and even jobs. By the time you are reading this, it is likely to have acquired or evolved even more functions. Similar things are happening across the world as other networks, like Tencent’s WeChat in China, continue to expand rapidly. Together, these platforms link together 2.55 billion people, just a little over a third of the world’s population.
For business, the environment created by this massive shift toward connectivity means that the most valuable companies for some time to come will continue to be those presiding over the reorganization of assets and experiences around the digital information flow.


Picture Credit: IAI – Modified picture of the October 2016 Supermoon

Two of Silicon Valley’s most celebrated and studied start-ups, Uber (worth $62 billion as of this writing) and AirBnB (worth $25 billion), are precisely these types of companies. Neither invented or makes the key asset they trade in (transportation in the case of Uber and lodging in the case of AirBnB). But both provided a new stream of information that equipped individual agents (people with smartphones) to respond in new but consistent ways to the real time location of those assets. The interaction of Uber and AirBnB users as a network lead to the emergence of new behaviors and new markets built on them.

It’s as if ants were given a new set of rules by which to respond to their immediate environment, or brain cells a new set of commands to relay signals. In any system with the potential for emergence, a small change in what economist Thomas Schelling calls micromotives can lead to radically different macrostructures. And in The Emergent Era, with its profusion of new, ambient information streams, human micromotives are changing all the time.

To get a sense of the sheer scale of our new information streams, consider that in the next 18-24 months, a full one-third of the global population will be going online for the first time. By 2020, there will be over 50 billion machines connected to the internet. This presents a unique challenge to those who have to shepherd organizations through this period of change. All the rules and subsequent benefits that have come with command-and-control style bureaucracies no longer apply. The word bureaucracy itself is an artifact of old information technology. A bureau is a writing desk, a physical enclosure for information, fixed in one place, around which power and people tend to accumulate like fat around a cell. Bureaucracies were necessary when information was scarce. But in The Emergent Era, bureaucratic structures act as bottlenecks for information and inevitably throttle change. Organizations should instead use these six concepts to adapt to life in The Emergent Era.
 1. Organize around information flows; ditch hierarchy and bureaucracy.

An adaptive business culture begins with a radically open communication system. It’s only when people have access to real-time data and believe they have permission to both pass it on and act on it, that you get the speed and resiliency that characterize emergent structures.

Emergent systems in nature are a good reminder of what the stakes are. If you erase the pheromone trails left by ants, the colony loses direction. Disrupt the human nervous system, and the result is confusion or paralysis. Unlike natural systems, there is no automatic mechanism in human institutions to keep the lines of communication open. That job falls to everyone who is responsible for shaping a company’s culture and core beliefs, at every level, and often at every moment of the day.
Picture Credit: Pinterest
 2. Empower individuals

Really empower them. No matter what our official title in an organization may be, everybody needs to get over the illusion that by controlling others, we can control outcomes. Because of accelerated change, we are all, by necessity, becoming collaborators rather than merely managers and employees. In the Emergent Era, it’s best for organizations to mimic emergent systems in nature by distributing the decision making process as widely across the network as possible. In effect, to empower individual “cells” to relay signals and respond to their local conditions as they see fit, when they see fit.

 3. Replace long lists of rules with a good M.O.

By M.O. I don’t just mean modus operandi, a characteristic way of doing things. I also mean “mission objective” and “mindset orientation.” A good M.O. is an intuitive habit of mind that connects the larger vision of an organization with the immediate, tactical objectives of a person or team. It is part habit and part intuition, somewhere between mission and mindset. Leaders provide a vision while allowing their teams to find their own route to achieving it, with room to experiment along the way.

An M.O. can be a powerful tool for unleashing creativity within an organization, because it combines skilled perception with speed and fluidity of execution. An employee with a well-developed M.O. will have a knack for recombining the skills and assets of their organization in new ways in the same way that a jazz improviser recombines notes. Both make decisions partly according to a kind of muscle memory of the established rules and partly according to the unique possibilities and requirements of the moment.
 4. Establish feedback loops. They are critical.

Don’t be afraid of feedback—seek it, give it, use it—but make sure it’s the right feedback. Healthy, adaptive systems tend to be highly feedback tolerant. That doesn’t mean they merely amplify the signals that flow through them; they sometimes dampen those signals by incorporating “negative” feedback. Despite the negative connotation of the phrase, the results of negative feedback are actually positive. It’s the mechanism our bodies use to maintain the right temperature and blood sugar levels, and it’s the way people and processes in organizations stay in accord with larger strategies and goals.

In a company where the information flow is obstructed by bureaucracy, or by managers who create a culture which disproportionately rewards people who confirm existing beliefs, healthy feedback is impossible. For a system to be adaptive, it needs to create regular conditions tolerant of both positive and negative feedback.

5. Learn to Live in the “In-Between”

Learning to live in the In Between is a mindset change—perhaps the defining mindset change—of The Emergent Era. It means abandoning the idea that we can operate with total knowledge, or even with the certainty that the tools we have are sufficient to address the possibilities and problems that face us.

As these new digitally-shaped structure formed, what’s emerging is also disrupting. It isn’t fully clear, and it hasn’t scaled. But emerge it will. There will be many new things that emerge, even if they aren’t fully formed, or we dismiss them as too insignificant, or worse, too crazy. More data faster is creating more options, but not absolute certainty. We must be creative how we deal with constant change, track early signals int he noise, create multiple options and most importantly, keep moving forward.
 6. Tap into the power of minds and machines together.

The work of the future won’t be dominated by people or technology. It will emerge from the collaboration between people and technology.

 As tools, the progress of AI and machine learning in all industries is starting to follow a pattern. Repetitive work is being obviated, freeing up humans to provide the finesse, creativity, or strategic thinking needed to finish the job.

For companies and individual employees, the combination of a good M.O. and a powerful A.I. will seem at first impossible, then inevitable, and finally invincible. In the Emergent Era, companies that combine a transparent, reliable information flow, a sound feedback system, and meaningful intelligence will see solutions to their problems consistently and spontaneously emerge—before they become a catastrophe or emergency to confront. Emergence-ready organizations need to adopt an agile, adaptive decision-making formula optimized for our accelerating world—with its unprecedented levels of speed and unpredictability.

But even in this new era, some things will remain the same. Emergent organizations will still need leaders to hire the right people, define goals, values, and beliefs, and provide and point to sources of inspiration and renewal. Ant colonies and brain cells don’t need visionaries—but human institutions always will.


Looking for Leaders? Look First to your coach, then your Captains !


Picture Credit: Yale University

As an Eli, IAI admires the 22 year tenure of a true gentleman, Thomas A. Beckett, Athletic Director at Yale University. Tom has been consistent in his Boola Boola career: “Athletics at Yale builds on a great competitive tradition as well as the outstanding talents of our coaches and student athletes.” What IAI really likes about Tom is that he updated the Yale Athletic Department mission statement a couple of years ago: “WIN, AND OFTEN” right? Not quite, the focus is on leadership:

The mission of Yale varsity athletics is to attract outstanding student athletes, who aspire to undertake the challenge of a high-level education while proudly representing Yale University in the pursuit of championships. Through exceptional facilities and coaches, Yale Athletics ensures that our students learn the important values of leadership, integrity, discipline and teamwork.  The aspiration is that in the course of preparation and competition, students enter a co-curricular laboratory for learning that will fit them to lead in all of their future endeavors.

Make winning a TEAM Habit: When he was reappointed to a second five year term in 1997, President Levin lauded him, “Tom has worked tirelessly and effectively to revitalize Yale’s athletic facilities and to develop community outreach programs that link us with the young people of New Haven.” He set as his goal then, the New York Times reported, “to be champion of champions.” One of the greatest football coaches of all time, Vince Lombardi declared, “Winning is an all-time thing; winning is a habit. Unfortunately, so is losing.”


Picture Credit: Quotesgram

Seek out mentors, and define your vision: From his own foundation site, Vince is acknowledged for “his ability to teach, motivate and inspire players helped turn the Green Bay Packers into the most dominating NFL team in the 1960s. A tireless worker, Vince ” started his coaching career at West Point in 1949, while learning under the direction of the great Red Blaik. (Under his mentor Blaik), Lombardi identified and developed what became the hallmark of his great teams……simplicity and execution.”

Inspire your family of scholar-athletes and always be ready to play: Hanover High School Girls Ice Hockey Coach John Dodds was inducted into the New Hampshire Hockey Hall of Fame in 2016. John’s teams have won seven straight New Hampshire state titles (NHIAA Division 1) and explained in the Valley News, “It’s like any game: We emphasized being focused and ready to go right off the bat.” The Hanover High School Girls’ Ice Hockey program is likely the oldest girls’ public high school ice hockey programs in the country, playing competitively against secondary and preparatory schools in New England since 1987. The team’s web site makes the mission clear: “Excellence on the ice and in the classroom are team expectations and traditions, as are community service, and a team vibe and morale based on a family-like culture.”


Picture Credit: HNIB-news.com -John in the middle

Put your best foot forward: Recently, Yale opted to outfit all sports teams with new equipment from UnderArmour under a full departmental partnership which now encompasses 20 schools (Maryland, Notre Dame, Auburn, the Naval Academy and others) – a phenomenon that Ideas About Innovation showcased on September 29th, 2016 here.

There is no “I” in team: Part of the culture of TEAM is the uniform, the cheers, the competitive spirit and, yes, the mascot. Yale Athletics conducted a national search for the next mascot after the passing of Sherman (Handsome Dan XVII) until it located an Olde English Bulldogge who was born on Sept. 23, 2016, and is a true New Englander, coming from a breeder in Maine and delivered for “mascot training” two weeks ago. Yale was the first American university to embrace a mascot way back in 1890.

Alternative Blockchain Uses Deepen Individuals’ Privacy and Ownership Losses

Social media connection concept with mobile, notebook and server technology illustration.EPS10 vector file organized in layers for easy editing.
Social media connection concept with mobile, notebook and server technology illustration.

Picture Credit: Cienpies Design & Communication

The system behind cryptocurrencies like Bitcoin, known as blockchain, is now being explored for other potential applications, according to NASDAQ. A blog post in the Wall Street Journal offered a basic definition of blockchain:

 A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority.
 ZDNET explains that “preparing an enterprise to embrace the Internet of Things means more than simply linking with remote devices or sensors. The IoT means rethinking an organization’s relationship with technology, and the possibilities that are opening up. These possibilities go far beyond what anyone could have even imagined a couple of years ago.” Of course, the myriad of applications from these efficiency gains are all very promising but, as 1,200 lawyer international firm Taylor Wessing points out, you don’t own this data that is being collected! This truly must change or you are going to be paying Mark Zuckerberg of Facebook for the use of your own eye scan… ABSURD! Waay back in 2008, Facebook issued its new and improved (for them) “terms of service (TOS)” asserting that “anything you upload to Facebook can be used by Facebook in any way they deem fit, forever, no matter what you do later.*Consumerist shared their TOS confirmation. A 2015 Atlantic cover story details how utterly creepy it is that Internet users have suffered a total loss of privacy and ownership (Google assigns to term to vehicles, wonder why…):
Picture Credit: Atlantic Monthly
“Facebook has also been thinking about faces. Last summer, the company’s artificial intelligence team announced that its facial-recognition software passed key tests with near human-level accuracy. (In June 2015), it presented a further development:”
‘Facebook’s Yann LeCun, the AI team’s director, boasted that a different algorithm could identify people 83 percent of the time even if their faces were not in the picture. The program instead works from a person’s hairdo, posture, and body type.’
Alternative Uses for Blockchain that NASDAQ Flags: Fortune applauded recently the ascendancy of ex-Caryle Group finance exec Adena Friedman to the role of NASDAQ chief executive, “making her the first woman to run a major U.S. exchange and catapulting her into the top ranks of women in finance.”
  • A blog on Bytecoin noted numerous alternative uses for blockchain, starting with Namecoin’s pioneering application of distributed DNA in which its goal is to allow registering standard DNS records, performing updates on them, and gaining access to these records. Others like Datacoin and Storj have suggested that blockchain could be used for cloud storage (peer to peer file sharing networks) or Satoshi Nakamoto’s suggestion that it could serve as a “distributed timestamp server” to protect data from being changed or deleted. Bitmessage and Twister both suggest that blockchain might be useful for communication platforms.
  • Startups like MyPowers is using blockchain technology as the basis to create a marketplace for digital content or any digital asset that can be traded online. It is pushing for the idea that the mass consumer audience can enjoy a decentralized marketplace for all types of products, merchandise, subscriptions and even influencers’ time.
  • Since blockchain has been used to authenticate transactions, an interesting application is to extend this to other applications like voting or any situation that needs authorization, such as for political parties or even proxy voting used by shareholders.
  • Identity management is another application in which tamper-proof digital identities can be created like those being developed by Onename. This is similar to Bitnation’s creation of digital identities both of which are now viewed as a potential replacement for the use of usernames and passwords in the online environment.
  • Records for businesses can be kept in a much more organized and succinct fashion through the use of blockchain technology, according to companies like Factom. At the same time, it addresses security and compliance issues based on the precedent set by blockchain’s original financial-based use.


 Picture Credit: Shutterstock
  • An infographic created by Let’s Talk Payments offers these applications and other alternatives for blockchain technology. These other options include smart contracts, reviews and endorsements, real estate, precious metals and diamonds, Internet of Things (IoT) applications, app development, patient medical records, network infrastructure, gaming, ride sharing and numerous financial uses.

The New Agricultural Revolution: B2B, Nano-drones and Organics


Picture Credit: DroneOmega

As an Upper (Connecticut River) Valley denizen, IAI admires the courage, toughness and resiliency of farmers who are entrepreneurs who start their days early and end them late. Stop some time to talk with an organic farmer- they are focused, overburdened by regulations, but committed to the Farm to Plate movement. What also may be surprising to city folk is that they are not uninformed, they are committed to pride in their production, and they are indefatigable. Now, there are a lot of new technological developments that are breaking in their favor.

So here are examples of some new tools to support farmer-entrepreneurs:

I. Commodities Exchanges: Wikipedia provides a 50,000 foot view: A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals, etc.) and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts.


Equal Exchange- Pioneer in Championing Small Scale Farming: In 1986, EE founders Rink Dickinson, Jonathan Rosenthal and Michael Rozyne embraced the mission to build long-term trade cooperative partnerships in Nicaraguan coffee that were economically just and environmentally sound, to foster mutually beneficial relationships between farmers and consumers and to demonstrate, through our success, the contribution of worker co-operatives and Fair Trade to a more equitable, democratic and sustainable world.

II. Farm Management Software: Capterra lists a diverse group of FMS suppliers including these top six web-based offerings rated over 4 stars and 1000+ users:

  • Cropio: a satellite farm monitoring system that supplies real-time data on crop conditions in the fields (View Profile here).
  • Agrimap: simple, power farm software to make farmer’s lives easier. (View Profile here)
  • Agrinavia: helps reduce costs, increase efficiency, and promote exchange of data for precision agriculture. (View Profile here)
  • Agroptima: easy-to-use App & Farm Management Software that allows farmers to record their tasks and have an overview of the farm. (View Profile here)
  • FarmLogics: a full fledged web based on-premise or cloud installable agriculture ERP including contract farming module. (View Profile here)
  • FarmLogs – Data Science Tools to Farmers:  Jesse Vollmar and Brad Koch created web and mobile software that gives farmers instant access to soil maps, rainfall statistics and heat mapping and growth analyses to help make farming more efficient and profitable. After participating in the Y Combinator tech accelerator, FarmLogs raised $15 million in venture capital, including a $10 million Series B round funded late in 2015. (View Profile here)


Picture Credit: FarmLogs

III. B2BMarketplaces: Business-to-business (B2B) exchanges or marketplaces provide dramatic opportunities to automate collaborative business processes with customers and suppliers, generate internal efficiencies, and reach new markets at minimal cost. B2B Ag marketplaces have been undergoing rapid adoption over the past fifteen years and improved dramatically in the last three due to big data aggregation, cloud computing and early adoption of distributed ledgers or blockchain. The Chinese Agricultural University analyzed the benefits and critical factors of B2B e-marketplace in agriculture product marketing case study by Shandong Shouguang Vegetable Trading Market Online (SSVTMO) in this 2009 paper here.

F4F Exchange: Here’s an example of the B2B ag revolution that is focused on integrated “supply-centric” grain, seed, crop protection and fertilizer sectors. The F4F vision is to create a transparent, open farmer and consumer centric integrated agri-food supply chain. But the mission is much broader: to work with all parts of the agri-food market in providing business solutions aimed at helping their customers meet the challenges of:

  • Legislation on assurance and compliance with rules and standards
  • Supply chain consolidation – across every sector
  • Need to increase – productivity
  • Intensifying competition – on price, service, quality, green factors, and value
  • Challenges in data management – volume, types, web enabled devices, speed of change, real time
  • Sustainability – the need for our industry to rise to the global challenge of creating more from less
  • Food safety – provenance and assurance on food origin and treatment is high on the list of matters concerning consumers
  • Rapid evolution of technology – allowing changes to be made to business processes that were previously not possible

IV. Drones and Other Reporting Technologies:  DroneOmega explains that “the advancement of drone technology has seen many emerging use cases including the expanding use of drones in agriculture. The availability of imaging sensors provide farmers with new opportunities to increase crop yields, minimize crop losses, and thereby maximize their profits. Farmers are now using technology that was once reserved for the military to monitor their crops from the air, instead of visually inspecting their crops on foot. The information gained from drone crop imaging provides a larger, and more accurate view of crop health.” Canadian farmers have been aggressive in adopting both B2B exchanges and ag drones as shown below and they focus on these key “in-field” farmer concerns:

  • Confirmation: Frequently checking that plants are growing at the rate expected
  • Early Detection: This is key to addressing plant health issues in order to limit the impacts, and provide time to implement a solution
  • Fertilizer Planning: Crops seldom grow evenly, and distrusting fertilizer based on plant health, instead of spreading evenly and reduce costs.


Picture Credit: Canadian drone adoption from VisionGain.com

For further reading, Equal Exchange offers this list of resources here.


US Trade Policy Should be a US Enterprise


Picture Credit: Two track bicycle & pedestrian bridge at Melkwegbridge, Purmerend, Netherlands

As the Trans-Pacific Partnership (TPP) has now died finally after a decade-long push, a sincere effort should be made by the new Trump Administration to engage bilaterally with our trading partners, incorporate elements of trade pacts that are in our national interest, and look to incorporate trade policies that will allow the U.S. capital, education and knowledge infrastructures to get a much needed upgrade. A two track strategy will allow these objectives to be accomplished. Rather than conducting trade negotiations through media fear-mongering, Professor Larry Crump of Brisbane University explored ways to enhance the two-track trade process by harmonizing multilateral negotiations sponsored by GATT/WTO based on evolving rules grounded in non-discrimination and bilateral and regional negotiations between nations that reduce trade barriers on a reciprocal and preferential basis.

Harness the Best Lessons of the Past Multilateral Agreements

In October, President Obama hailed the proposed Trans-Pacific Partnership (TPP) as “the most progressive trade deal in history.” Yet, under TTP, foreign corporations would be empowered to drag the U.S. government in front of investor-state dispute settlement (ISDS) tribunals composed of three private arbitrators. Many ISDS arbitrators are lawyers who rotate between suing governments for corporations and acting as the “judges.” In a November 2016 Policy Brief, the Council of Economic Advisers lobbied that, in 2015, the United States shipped $680 billion dollars of goods and $184 billion in services exports to the 11 other countries who participated in negotiating the TPP which President Obama just abandoned. And only three Republicans, Senators Session, Lee and Lankford, admitted to even reading it! Senator Sessions wrote about the TPP “Living Agreement” provision in his “critical alert” to Capitol Hill members warning about the sovereign state abdication it embodies- “the ‘living agreement’ provision means that participating nations could both add countries to the TPP without Congress’ approval (like China), and could also change any of the terms of the agreement, including in controversial areas such as the entry of foreign workers and foreign employees. Again: these changes would not be subject to congressional approval.”

Just before Thanksgiving, in presenting his agenda for his first 100 days in office, President-elect Trump declared his intention to withdraw the U.S. from the TPP, a step already taken by a number of Asian nations. And China, which rejected the TPP, quickly filled the void by promoting its Regional Comprehensive Economic Partnership (RCEP) trade pact., Originally promoted by Japan, RCEP sought to form the world’s biggest free trade agreement and China has dominated the nine rounds already conducted: the scope includes 46% of global population, a combined GDP of $17 trillion, and 40% of world trade encompassing the ten ASEAN nations plus China, Japan, South Korea, India, Australia and New Zealand. U.S. trade interests were just undermined in the Asian-Pacific Economic Cooperation (APEC) summit in Lima, Peru where Peru, Chile and Japan signed on publicly! Pepe Escobar at Asia Times Online and the Financial Times explains that, “RCEP is also the fulcrum of the Free Trade Area of the Asia-Pacific (FTAAP) – a concept that was introduced at an APEC meeting in Beijing by, who else, China, with the aim of seducing nations whose top trade partner is China away from entertaining TPP notions.”


Free or Fair Trade?

Where, in fact, has been anyone advocating for American business or workers? The TTP epitaph is thus:

Like most recent international economic agreements, the TPP only glancingly resembles a classic trade deal, concerned mainly with tariffs and quotas. Rather, like the WTO agreements or NAFTA, it is an attempt to set the rules of the global economy to favor multinational corporations over everything else, trampling on democracy, national sovereignty and the public good. The more than 600 corporate lobbyists who had access to the draft texts used their insider status to shape the deal, while labor unions, environmentalists and others offered testimony from outside, with little impact. Like most post-World War II trade deals, the TPP also has a strategic political goal: tying as many countries as possible to the United States as trade partners—often under terms unfavorable to the average American worker—in order to win political support against anyone seen as a rival to the American economic model.

NATO member Turkey is now seeking to join the Shanghai Cooperation Organization (SCO), consisting of China, Russia and four Central Asia nations (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan), and Escobar explains how sweeping the trade alignment against the West has become. “Over the years, the SCO has evolved much further – into an Asia integration/cooperation mechanism. India, Pakistan, Iran, Afghanistan and Mongolia are observers, with India and Pakistan to be admitted as full members arguably by 2017. The SCO is progressively interlocked with OBOR, EEU, China’s Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB) and even the BRICS’s New Development Bank (NDB).”

So, a Trumpian Washington is better served by engaging Asian nations in bilateral trade pacts which could, in fact, be a better means of resetting the agreements that have left the U.S. with a staggering $4T trade deficit over the eight years of the Obama Administrations. Professor Larry Qiu, of Hong Kong University’s School of Economics and Finance, explained that globalism has created myriad distortions;  he exclaimed to Fortune that “what the world needs is not more trade and investment … but higher quality and better ordered trade and investment.”

Opportunities for Fair Trade and Enhanced Relationships Exist

Now, Canada, the United Kingdom and China itself see a trade shift by the U.S. as a potentially positive development.

  • Derek Burney, Canada’s former ambassador to the US, and global security expert Fen Osler Hampson argued that Trump’s stance on free trade could present itself as an opportunity for Canada.
  • Deanne Julius from the Bank of England Monetary Committee suggests a two trade approach is entirely reasonable in the wake of Brexit.
  • Zhang Yansheng, chief researcher for the Institute for International Economics Research at China’s National Development and Reform Commission told Fortune, “Maybe under the new economic policies issued by Trump, more Chinese companies will enter American market.”

The incoming Trump Administration needs to look a trade promotion realistically – 45% tariffs will not work- but a trade rebalancing on a bilateral basis is critical now. With the overt currency manipulation of the yuan by China and panic devaluations and OPEC deals by Mexico and Venezuela, the efforts to precipitate a trade war are not acceptable. A NAFTA rewrite is overdue and Mexico already is conducting “stress tests” on what happens to its banking system when black money flows across borders are sharply curtailed…

Canada Opts-Out of Buying the F-35, Upgrades to F/A-18s For Now…


Picture Credit: An F/A-18F Super Hornet deployed as part of Operation Inherent Resolve taxis across the flight deck the aircraft carrier USS Dwight D. Eisenhower

Following up on a pledge during his election campaign, Prime Minister Trudeau is now confirming steps by Canada to undertake a major shift in defense policy with the election in October of a new Liberal Party government.

DefenseOne reports that “after an initial buy of F/A-18s, Justin Trudeau’s government will hold a competition to replace the rest of its CF-18 Hornets,” such that, after involvement in the $1.3 Trillion Joint Strike Fighter program since 2002, Canada is opting for a continuity-oriented “defensive” option rather than the F-35. Canada intends to begin replacing its aging CF-18 Hornet fighter jets with a batch of Boeing F/A-18 Super Hornets — while Lockheed Martin’s F-35 Joint Strike Fighter, once slated to replace the entire CF-18 fleet, will have to win a new competition to get any contracts at all.

Air Force Magazine elaborated, citing Canada’s overdue upgrade of its fighter fleet due to mission requirements. The ministry will “immediately explore” buying the Super Hornets while simultaneously launching a competition for a fleetwide replacement for its CF-18s, which have been service-extended already and are more than a decade past their planned retirement. The competition could take five years to conclude. Defense Minister Harjit Sajjan said Canada will remain part of the JSF program as a partner, but won’t necessarily buy the jets. He also said it would be “imprudent” to delay action in starting to replace Canada’s CF-18s any longer, because of Canada’s NATO and NORAD responsibilities.


Picture Credit: JSF.mil schematic of the Boeing X-32B

But, one asks, will Boeing revive the X-32 Program as a competitor again to the Lockheed-Martin X-35 Program? Studies supporting JAST/JSF started in 1993 and led to STOVL submissions to the DOD by McDonnell Douglas, Northrop Grumman, Lockheed Martin and Boeing. Wikipedia recalls the history here: Boeing decided against thrust augmentation. They proposed an aircraft powered by a reheated turbofan that could be reconfigured (in the STOVL mode) into a direct lift engine with a pair of thrust-vectoring nozzles located near the aircraft centre-of-gravity. This led to the F119-PW-614S which powered the X-32B JSF demonstrator. Two contracts to develop prototypes were awarded on November 16, 1996, one each to Lockheed Martin and Boeing. Each firm would produce two aircraft to demonstrate conventional takeoff and landing (CTOL), carrier takeoff and landing (CV version), and short takeoff and vertical landing (STOVL).

Boeing’s strategy for a competitive advantage was to offer substantially lower manufacturing and life-cycle costs by minimizing variations between the different JSF versions. The X-32 therefore was designed around a large one piece carbon fiber composite delta wing. The wing had a span of 9.15 meters, with a 55-degree leading edge sweep and could hold up to 20,000 pounds of fuel. The purpose of the high sweep angle was to allow for a thick wing section to be used while still providing limited transonic aerodynamic drag, and to provide a good angle for wing-installed conformal antenna equipment. The compete-on-cost strategy also led Boeing to pick a direct-lift thrust vectoring system. Michael Porter’s advocacy of cost leadership (see Slideshare overview here) is vindicated once again !

Based on Canada’s 2.1% share of the JSF Program, its cost of withdrawal will amount to $300M, according to industry sources. In earlier Capital Hill hearings, JSF’s Lt. Gen. Chris Bogdan, JPO chief, said the remaining international partners would face an increased cost per plane but this was before the recent GAO report suggesting that the development program will not conclude in 2017 (see IAI’s 18 November post here) and an earlier post about “Old Platforms” as ‘technology in use’ (see IAIA’s 2 November post here). Remember, the Senate Armed Services Committee voted to disband the F-35 JPO this past June as its size was “disturbing”- now what? And, clearly, Turkey’s future in the JSF Program is at risk and, more broadly, its future as part of NATO is in question (as Newsbud flagged in August here, with links) also now as Turkey’s NATO staff has been targeted by the Erdogan purge.

DARPA – Replacement Satellites on Demand, XS-1, Cybersecurity and EMP


Picture Credit: DARPA (artist rendition)

DARPA is building “a completely new architecture for space.” In order to protect these vital military space systems, this research agency spawned by the launch of Sputnik in 1958 is now focused on developing a “whole portfolio” of capabilities. Before the release of British Interplanetary Society member and Futurist Arthur C. Clarke‘s seminal 1945 paper describing the launch of satellites, he first referenced geostationary satellites in his February 1945 letter to the editor of  Wireless World (page 58) titled Peacetime Uses for V2 for Ionosphere Research.

The U.S. Military must instead have been paying attention to D.A. Bell’s adjacent letter regarding ” FM Protection Against High Amplitude Interference Pulse” which was a precursor of signal disruption in FM broadcasting and now a core broadcasting consideration. (D)ARPA established the IPTO in 1962 with a mandate to build a survivable computer network to interconnect the DoD’s main computers at the Pentagon, Cheyenne Mountain, and SAC HQ. As described in the following pages, this initiative led to the development of the ARPANET seven years later, and then to the NSFNET and the Internet.

In 2010, Oak Ridge National Labs (FERC – META- R-320 here) warned of U.S. power grid vulnerability from the threat of “early-time (E1) high-altitude electromagnetic pulse (HEMP) produced by nuclear detonations above an altitude of ~30 km.” Not only are HEMP (EMP) and cybersecurity prominent national security risks today, but so is the militarization of space. Two authors writing in the SAIS Journal of International Affairs last winter claimed the need for electric grid modernization was prompted by the threat from “Mother Nature” (SAIS, Vol 35, No.1) – sorry, unlike Slate, neither Oak Ridge National Labs (see EIS report here) and DARPA (to name two experts among many) do not see climate change as the real risk to critical infrastructure.

The DOD reported this week that “national security critically depends on space, and the Defense Advanced Research Projects Agency (DARPA’s Project List is detailed here) is focused today on creating the capabilities needed to help make that environment a real-time operational domain, DARPA Director Dr. Arati Prabhakar said recently at the 2016 DefenseOne Summit as reported in Air Force Magazine:

Because there “is more and more a real possibility” of conflict in space, “there is nothing that we need either from an intelligence perspective or a military perspective that we can do effectively without space.”

DARPA Director Arati Prabhakar

 Its Airborne Launch Assist Space Access program (ALASA) plans to create a low cost alternative for small satellite launches and Space.com has the DARPA simulation here. They explain: “ALASA seeks to propel 100-pound satellites into low Earth orbit (LEO) within 24 hours of call-up, all for less than $1 million per launch.” The $10K/pound payload cost does not reflect total program cost but is a third of the current cost DARPA estimates but it is certainly not an all-in programmatic cost estimate. Right now, ramp times for unexpected launch operations number in the months.


A critical  part of the portfolio will be DARPA reliance on its experimental spaceplane, XS-1 which entered phase 2 of its development this past spring. The Experimental Spaceplane (XS-1) program  aims to help overcome cost, deployment and positioning challenges and create a “new paradigm” for more routine, responsive and affordable space operations. Jess Sponable, DARPA program manager. “We intend to leverage those advances along with our Phase 1 progress to break the cycle of escalating DoD space system launch costs, catalyze lower-cost satellite architectures, and prove that routine and responsive access to space can be achieved at costs an order of magnitude lower than with today’s systems.” DARPA has a history of being responsive to challenges:

DARPA’s ability to adapt rapidly to changing environments and to seek and embrace opportunities in both technology and in processes, while maintaining the historically proven principles of the Agency, makes DARPA the crown jewel in Defense R&D and a unique R&D organization in the world.

DARPA Over the Years, August 1997.

So, how does DARPA frame the goal of making space a real-time operating domain (RTOD)? DARPA’s OpenCatalog actually labels these mixed-criticality real-time threats. Their Iron Curtain Active Protection System has an amazing video here of how it operates. Partnering with non-profit strategic venture investor In-Q-Tel, DARPA is going to have to rely on trusted national partners and allies. IQT Labs are exploring new ideas, technology, and approaches in select sectors that are anticipated to significantly impact national security.  Under the Space 3.0 Program, a number of initiatives are underway.


Picture Credit: IQT Labs

Unlike Government exquisite systems (Space 1.0) or commercial exquisite systems (Space 2.0), Space 3.0 is being driven by venture-backed startups that are leveraging a variety of converging factors to produce a new wave of affordable products and services. From reliable space access to new analytics for remote sensory data, startups are disrupting current processes and establishing a new space ecosystem.

One particularly relevant IQT Labs effort is centered at CosmiQ Works which brings together the U.S. Intelligence Community, industry, and academia “to explore the art of the possible in the new space ecosystem.”

Inside the Next Startup Garage

Space is hard. Luckily, there are several converging advances that are helping startups launch, sometimes literally, entirely new product lines.

rocket-blueAccess to Space

Low-Earth Orbit (LEO) to be specific. New launch vehicles and rideshare options are increasing access and decreasing costs.

Cheap(er) Hardwaresatellite-blue

Adoption of commodity hardware coupled with the use of agile development methods.

Rapid Innovationcycle-blue

Lower costs and fast development allow startups to accept greater risks.

New Consumersastronaut-blue

Affordability and tailored services are opening the space market to new customers.

Investment in a Commercial Ecosysteminvestment-blue

Venture firms are investing in the new ecosystem ranging from launch systems to data analytics.


“Great Surge” Theory and Techno-Economic Paradigm Shifts (hint, we’re in one…)


Picture Credit: Getty Images

Futurist Carlota Perez’s “Beyond the Technological Revolution” research offers wise guidance to policymakers as Wiki describes it as “a further development of Joseph Schumpeter‘s work on Kondratieff waves earning her the 2012 the Silver Kondratieff Medal by the International N. D. Kondratieff Foundation. In Capitalism, Socialism and Democracy (1942), the “Prophet of Innovation” Professor Schumpeter characterized “industrial mutation” as a process that “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)” MIT elaborates that over half of productivity gains come this way:

“The process of Schumpeterian creative destruction (restructuring) permeates major aspects of macroeconomic performance, not only long-run growth but also economic fluctuations, structural adjustment and the functioning of factor markets.”

Austrian School scion Schumpeter presciently warned that the collapse of capitalism would lead to global socialism as entrepreneurship is undermined and the ownership of the means of production becomes divorced from the producers themselves (essentially what we have now as Sutirtha Bagchi extracted in his Amazon review in 2008). Neo-Schumpeterian Carlota Perez who wrote Technological Revolutions and Financial Capital, was mentored by Christopher Freeman, and both elucidated the relationship between basic innovations, technical and institutional change, and economic development. Right to work states are defended by Mark Thornton, Senior Fellow at the Mises Institute, here in a recent preview of the Trump Administration’s economic policy outlook. What he prescribes is akin to the Hippocratic Oath, typically presented to physicians as “First, Do No Harm.” But Medicine.Net explains it is much deeper and more complex:

One of the oldest binding documents in history, the Oath written by Hippocrates is still held sacred by physicians: to treat the ill to the best of one’s ability, to preserve a patient’s privacy, and to teach the secrets of medicine to the next generation.

IAI believes that a successful long-term policy framework to promote economic growth should operate with some basic widely-agreed, fact-based principles. Neo-Schumpeterian political economists explain that policy needs to help entrepreneurs to success: fewer taxes, less regulation and minimal interference with the market’s price signaling mechanism. Perez laid out a history of five technological revolutions that follow a similar pattern of bang, bust and renewal. In The Other Canon Foundation, Perez and a dozen other economic historians celebrate “man the producer” (and not “man the consumer”) and highlight the critical  the link between innovation and financial dynamics. In short, they are champions of the Learning Economy and DRUID’s Bengt-Åke Lundvall and colleagues developed the idea of innovation as an interactive process and celebrated the concept of National System of Innovation. The key here is being shown in how the technology surge has been creating knowledge worker jobs.


Picture Credit: CBRE Research

Just as in natural science, errors of commission or omission can be catastrophic, disastrous economic policy failures result when they:

  1. are made in secret;
  2. fail to account for industry operating conditions; and
  3. ignore history (the sine qua non)

Policymaking in Secret: The Council of Economic Advisors issued a report detailing the costs of withdrawing from the Trans-Pacific Partnership (TPP) right before President Obama announced the withdrawal from the TPP ! One year earlier, President Obama had hailed the proposed TPP (which no one had read) as “the most progressive trade deal in history.”

Failure to Make Any Policy: For example, product and liability insurance policy reforms are needed for Commercial Spaceports in new Trump administration as a recent GAO report pointed out and NASA somehow got stuck with a $5M bill for the 2014 Antares explosion which contractor insurance should cover, not taxpayers ! The GAO decried, ““FAA has not issued guidance to spaceport operators to clarify when it considers them third parties and when it considers them involved parties,” adding that agency officials told them that such guidance “has not been a high priority” for them.


Picture credit: Choice.com.au

Ignoring History: Bertrand, Schoar and Thesmar (2004-7) drive home the point that problems in the banking sector can have grave consequences for the health of the restructuring process.  Economic historian Thornton at Mises Institute warned in 2005 (just after the FBI and Professor William Black!) that a housing bubble was building in 2005.  Deloitte has a great study here pointing out that Hong Kong benefits from a low tax structure, a “fair trade” approach distinct from mainland China, and a free movement of capital and skilled labor.  Maybe, before the policy gets codified, the tax holiday repatriation of (at least) $2.1 TRILLION should get favorable tax treatment if it is invested in productive capital and infrastructure rather than used for share buybacks which are just another distortion of equity markets and a signal that corporations have no higher return alternatives. Let’s advocate for an infrastructure stimulus from these repatriations NOW !