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SwarmMind Capturing insights on collective intelligence Edition 1/2012 Cover charge EUR 7.40 First Editio n You are here ... Leadership 2.0 Democracy 2.0 Globalisation 2.0 Leadership 1.0 Democracy 1.0 Globalisation 1.0
2/3 Contents Editorial Completely new approaches are what humankind, our country, the world needs. Many people feel that way, and don't mind saying it. But where are we going to find them? lbert Einstein reputedly once said: 'Insanity is doing the same thing over and over again and expecting different results.' So which path do we follow to get out of this blind alley? Nature and evolution provide the clues. They can be a great help to us, particularly when it comes to dealing with the complex systems that still reward us humans all too frequently with failure. With our magazine 'SwarmMind', we intend to shed some light on the subject of collective intelligence. Our motivation - we want to give interested readers an idea of the rapid developments in this field, and of the great potential for hands-on application. We are pleased and proud of the fact that we have been able to recruit some of the most experienced researchers, pioneers and 'crusaders' in this field as contributing authors for this first edition, including Eric Bonabeau, the guru of international swarm intelligence research; Gerd Gigerenzer, internationally renowned expert for human decision making under uncertainty; and Betsy Myers, former Chief Operating Officer to Barack Obama's presidential campaign. And there is much more: news, first-hand experiences, trends and, last but not least, some shrewd observations by by known German newpaper columnist Hans Zippert. 'SwarmMind' will report on the latest developments twice a year. Welcome aboard! Join us in our musings, such as 'Imagine we could ... apply collective intelligence to highly controversial issues like the "Stuttgart 21" urban development project in order to find a satisfactory solution?' or 'Imagine if ... managers and executives really did put people first?' In the right conditions, people are more intelligent collectively than they could ever be as individuals. And there is growing pressure for change. That much is certain. With this in mind, we hope that you will find what you read exciting. Eric Bonabeau, expert on swarm intelligence and its usefulness for solving complex problems, on new forms of collective decision making. Betsy Myers, former Chief Operating Officer to Obama's presidential campaign, reflects on the success of the 2007/08 campaign and the importance of participation in leadership. Gerd Gigerenzer and Hansjörg Neth from the Max Planck Institute for Human Development in Berlin on strategies in dealing with uncertainty. Photos: Nathalie Dampmann, Eric Bonabeau, Musterbrecher, Betsy Myers, Max-Planck-Institut Berlin The 'Musterbrecher' ('pattern-breakers') on approaches for escaping restrictive traditional leadership patterns. Eliza Manolagas, ING-DiBa's Head of Internal Communications, on swarm-inspired internal corporate communications. Your SwarmMind Editorial Office firstname.lastname@example.org
SwarmMind 1/2012 News 4 Swarm regards 26 Decision making heuristics The latest scientific insights and swarm intelligence applications. Background Ecological rationality and strategies in dealing with uncertainty. A sense of purpose - develop organisational identification Heiner Koppermann (l.), Klaus Pampuch (r.) Interview with Klaus Pampuch and Heiner Koppermann: On the urgent need for new corporate cultures. 13 Everything counts in large amounts 30 People want a chance to have their say Over 200 designers from around the world came up with a new company logo in record time. Intelligence Giving the public and individuals a voice: Insights regarding the prerequisites for leading-edge leadership. Expertise 14 Collectively 16 The stupid? 36 Spirited leadership the rut The basics of collective intelligence: You need to observe a few rules when tapping into crowd wisdom. Impressions from a different kind of conference. power of collective intelligence we can change 40 Escaping When efficiency turns into a ball and chain - realisation and sensible alternatives. Decision 2.0: when collectives decide. Strategy Recommended reading 20 Yes 44 Good Afterword reads alarm Recommended by the SwarmMind Editorial Office. ING-DiBa on being motivated by the desire to offer something new, and the vision of breaking up corporate in-house 'silos'. Zeitgeist 46 Swarming Hans Zippert's column & more. 24 You are here ... Visit us on: www.swarm-mind.com ... and this is not the way forward! On productive efficiency S-curves and the migration to '2.0'.
4/5 News Playing hare & hounds on the World Wide Web Fukushima campaign The first donations were collected via the crowdfunding portal 'Kickstarter'. Today, around 150 volunteers measure radiation levels, mainly in the areas closest to the Fukushima nuclear reactor. Six months into the project, over a million records may be downloaded free of charge. The 'Safecast' initiative therefore reflects the actual situation in far more detail than the official measurements. 'La ola' in a flock of birds Find ten bright-red weather balloons placed in random locations all over the continental United States: a challenge that cannot possibly be mastered by one person on their own. Or can it? team of four researchers from the Massachusetts Institute of Technology (MIT) completed the task in just eight hours and 32 minutes, thus winning the $ 40,000 Network Challenge held by the US Defense Advanced Research Projects Agency (DARPA) by mobilising 4,400 helpers in just under two days via the World Wide Web. A snowball effect ensured that the challenge soon involved all manner of friends and acquaintances. The winners published details of their strategy in the US magazine 'Science' (vol. 334, p. 509). The trick: a recursive incentive mechanism. The finder was promised half of the $ 4,000 reward for each weather balloon, and $ 1,000 were to go to the person who had alerted the finder to the challenge. The person who had roped in this person in turn received $ 500 dollars, and so on and so forth - all finders of finders of finders of finders etc. stood to gain, so even the last links in the chain ended up with a couple of dollars. Alex Pentland from the MIT's media laboratory believes that this model of time-critical mobilisation via the social media could also be transferred to genuine emergency situations, as people are social animals. If you want to get them to coordinate their behaviour, you must focus on their social relationship networks first, rather than just treating them as isolated individuals. Video: http://youtu.be/6Ga_EJWLzHA trength lies in numbers: the collective reacts when a falcon attacks individual members in a flock of starlings. Physicists and biologists from Italy and the Netherlands have analysed the undulating flight patterns adopted within seconds by flocks consisting of tens of thousands of individual birds in the event of such an attack with the aid of videos and computer simulations. The researchers believe that the instantaneous changes in flock density confuse the falcon's visual perception; this increases the odds of escaping attack for each individual star- ling (Animal Behaviour vol. 82, p. 759). Swarms of insects or schools of fish and large herds of mammals are believed to display similarly complex behaviours involving defensive synchronised 'wavepatterned' manoeuvres. Photos: Michael Göken, Shutterstock
SwarmMind 1/2012 Of children and chimpanzees umans and chimpanzees have many things in common; however, there are some important differences after all. Working together with Dutch colleagues, researchers at the Max Planck Institute for Evolutionary Anthropology found that young children are much more likely to cooperate with each other than monkeys. If the task on hand was pulling the ends of a rope in order to secure a reward in the form of food, for example, the three-year-old children were far more likely to opt for a cooperative method. Collective altruism Swarm regards Imitating fish: new wind farm design t's best to let the people themselves decide - that is the advice given by economists from the Massachusetts Institute of Technology (MIT) in Cambridge to developing countries wanting to distribute funds to the poorest of the poor without actually knowing who exactly this group consists of. A field experiment conducted in 640 Indonesian villages in collaboration with the World Bank showed that the inhabitants were able to provide very detailed assessments of the economic situation of their neighbours. The village communities that were allowed to decide for themselves, guided by their village elders, who should benefit tended to be more satisfied with the ultimate outcome than the villages where attempts had been made to determine those in need on the basis of objective data, so-called 'Proxy Means Tests' (PMT). Abhijit Banerjee, one of the authors of the study to be published in the American Economic Review, concluded that it seems to be easier to carry out the whole process at community-level than previously thought. Adopting this method would raise the government's credibility level. In 2005, Indonesia launched on of the most substantial direct cash programmes in the Third World in order to support the population in times of economic crisis. huge blades, they could collectively generate almost ten times the output in the same space. In the meantime, Dabiri is already taking matters one step further, as he believes that this principle of energy generation could also be applied to underwater turbines. ngineers from the California Institute of Technology (Caltech) in Pasadena took their inspiration from schools of fish to make more efficient use of wind energy. Their new wind turbines have vertical axes. They are arranged in closely-spaced pairs with counter-rotating axes - somewhat like an egg beater. This allows them to use the turbulence created by their neighbour, normally considered undesirable as it reduces the power output - more or less in the same way that fish let themselves be pulled forward in the vortices created by the swimming movements of the other fish in their school. Caltech's Professor John O. Dabiri, who presented the results obtained with a test array, said that '... the connection between fish schooling and wind farms ... is in fact a logical inference from the underlying flow physics'. (Journal of Renewable and Sustainable Energy 3, 043104, 2011). And here's the clever part: although each of these new turbines is smaller and less efficient than a conventional turbine with Video: www.youtube.com/ watch?v=cZu-4Plk_5A
6/7 Background A sense of purpose - develop organisational identification Heiner Koppermann and Klaus Pampuch, managing directors of SwarmWorks, explain why we urgently need new corporate cultures. The pipelines will soon run dry without the creativity of empowered employees. warmMind: How would you define 'swarm intelligence'? Heiner Koppermann: The term is used to describe the collective behaviour of a group of animals. It basically describes the phenomenon that in a school of fish, a flock of birds, or a colony of bats or ants, a large number of individuals create a movement or form of organization that is very orderly without a higher-rankling animal in command. In a school of fish, a flock of birds, or a colony of bats or ants, a large number of individuals creates a movement or a form of organisation that is very orderly without a higher-ranking animal in command. There is no lead animal, it is totally self-organised behaviour. So what is intelligent about that? Klaus Pampuch: The intelligence lies in the fact that the complexity of the solution goes beyond the cognitive skills of the individual. By Jürgen Ponath Photographs: Nathalie Dampmann
SwarmMind 1/2012 SwarmMind met with the two managing directors of SwarmWorks, Heiner Koppermann (left) and Klaus Pampuch (right), in a suitably swarm-themed environment. Background for the photo shooting was the 'Ornithoport' created by the Swiss concept artist Res Ingold (Ingold Airlines) and the director of the 'Bundeskunsthalle Forum' in Bonn, Stephan Andreae. The artists' realisation of this unusual piece of flock-oriented infrastructure on the landscaped roof of the Art and Exhibition Hall of the Federal Republic of Germany in Bonn continues their 'avian airports' concept, the first one having been established at Hasenbüchel in the Bergisches Land region. In August 2010, a further installation took shape in a prominent location at the Jäckering-Group food processing works in Hamm, where it may be viewed.
8/9 Background In a swarm-like collective, an overriding intelligence emerges that is beyond the respective capabilities of the collective's individual members. And the individuals benefit from this? Koppermann: Yes, swarming behaviour can confuse predators or improve the chances of locating food, even though the individual animal has no real understanding of the whole picture, it only follows some few, simple The mystery of swarm rules. That is precisely intelligence: It does not need what is so fascinating: sound solutions emerge a leader to turn simple indifrom this interaction bevidual actions into complex tween animals and their environment. Without group behaviour. any kind of a master plan. And this principle could also work for human beings? Koppermann: Of course people aren't birds, or fish, or ants. For that reason, it doesn't translate without modification. But take 'corporate culture'. It is nothing but a perceived safety net made up of rules. If they are sound, employees will use them for guidance. This behaviour resembles swarm intelligence. People perform better and are more reliable if they have a sense of purpose. Ants, fish or birds do not look for a deeper meaning. They are instinctdriven, they are a different species. But if I involve a larger group of people, i.e. a swarm, in essence, in a decision-making process and give this group the chance to voice their opinion, then these people will feel appreciated, they will feel that their knowledge is valued. I am more than a soldier expected to just follow the orders being given from above. But in reality, things look different? Koppermann: Well, the established approach goes like this, doesn't it: problems are analysed by the management - usually with the aid of consultants - and solved cognitively. Then this solution is passed down within the organisation for implementation. With the consequence that the employees frequently do not support it because they were not involved. Why don't we allow organisations to experiment. 'That which is not good for the beehive cannot be good for the bees.' Marcus Aurelius, Roman Emperor and philosopher, 121-180 AD, Meditations VI, 54. And what happens if you don't experiment? Koppermann: At some point, creativity dies. That is the frightening aspect - ideas will simply die out. Any first, tender shoots will wither at an early stage. In these kind of businesses, the pipelines run dry. They just do 'more of the same'. Maybe even cheaper; although of course we must have more than just discounters. Work to rule The Gallup study 'Engagement Index 2010' revealed that Germany is clearly not one of the more advanced nations when it comes to organisational identification and employee loyalty. Only 13% of the workforce feel a strong emotional commitment to their job, feel motivated, and are prepared to engage themselves voluntarily for their employer and their employer's goals. Every fifth member of the workforce (21%) has 'mentally resigned', thereby essentially behaving in a destructive manner. The vast majority of 66% shows little engagement and works to rule only. In world-class organisations, the ratio of engaged to actively disengaged employees is 9.57:1 (67% highly engaged, 7% actively disengaged). In average organisations, this ratio is 1.83:1. With a ratio of 0.6:1, Germany lies below mid-range. However, according to Gallup, employee engagement is a particularly important strategic factor in terms of competitiveness: a higher level of engagement leads to a higher level of commitment to achieving the company goals. And the higher the number of engaged employees, the better the company's overall performance. The lack in employee motivation costs the German economy approx. EUR 125 billion a year. Companies clearly suffer from the low engagement level: little organisational identification increases the absenteeism level by 27.8%, and greatly reduces the company's overall performance in key areas such as innovation, customer-focus, implementation and flexibility. Gallup cites managerial behaviour as the underlying cause for these unresolved shortcomings. Line managers should employ a more people-focused management style in order to meet employee expectations and needs. Gallup Engagement Index for Germany 2001-2010 Basis: Workforce aged 18+ 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 16% 15% 12% 13% 13% 13% 12% 13% 11% 13% 69% 69% 69% 68% 67% 66% High Level Low Level No engagement 18% 18% 20% 20%
SwarmMind 1/2012 Swarm success: To collect enough honey to fill a standard-sized honey jar, bees tot up around 13,000 'air kilometres'. Taking a bite out of a slice of bread with honey on it is therefore a journey no airline can even begin to match in terms of value for money! The so-called Apidrom serves to demonstrate one of the development stages of the 'avian airport'. Also located on the roof of the Art and Exhibition Hall of the Federal Republic of Germany in Bonn (see p. 7), it is home to twelve beehives with approx. 600,000 inhabitants, and served as the background for our interview. The 'Bundesbienen' ('federal bees') and their landmark city pad are by no means a novel idea, they are part of an ongoing international trend: the grounds of the White House in Washington, the Vatican Gardens and even the roof of the Paris opera all provide bees with urban homes. So how does this fit in with the success of Google or Apple, both of which are extremely hierarchic companies? Koppermann: Yes, they are. They are not likely to change, either, even after Steve Jobs' death. Apple, however, also provides plenty of scope for creativity. In this country, the reality is mostly ruled by set operating procedures, obscure regulations, system requirements or corporate governance ... So there is no room in the German system for movers and shakers like Gates or Jobs? Koppermann: The kind of dynamics that break paradigms or change the world do generally not emerge from our culture. However, let us be honest in order to avoid any misconceptions. Of course we need leadership. It is just that we believe the trend has gone too far. During the financial crisis, even major corporations introduced policies whereby any decisions involving more than EUR 100 had to be approved by the board. There is no less effective way of disempowering employees than spelling it out to them like this: you cannot be trusted to spend EUR 100 sensibly. Common sense tells you straight away: this is just not a good idea in the long run as it is hugely demotivating. A high level of stability and rigidity is useful in ordinary circumstances, but if there are rapid changes, it has a debilitating effect, it does not leave enough scope for creativity. So with your swarm intelligence events, you encourage people to participate more? Pampuch: We introduce meaningful elements, thereby developing organisational identification, either in a playful way or through content. Whichever method the clients prefer. In terms of organisational identification, there is an enormous, untapped potential. In Germany, according to a recent Gallup study (see box p. 8), only
10/11 Background 13 percent of employees have close emotional ties to their workplace. The rest has very little or no emotional involvement at all. That is where we come in. What is it like in other countries, then? Koppermann: In the USA, the proportion of those who identify closely with their workplace is 28 percent. Successful benchmark companies achieve 60 to 70 percent. It is obvious that a company will be able to work faster, with greater flexibility and more effectively with staff who feel this way. In Germany, we allow ourselves the luxury of lumbering ourselves with an apparatus. When push comes to shove, it is not capable of maximum output because the employees are not willing to go that last extra mile. business is not going too bad. But let's not delude ourselves here. All the signals show red alert, regardless of who you talk to: the level of absenteeism due to burnout or stress-related mental illnesses has never before been as high as it is now. Even in the post-war era, people's psyches were more well-balanced, because they had to face challenges and had clearly defined goals. At the same time, people are under enormous pressure because companies employ less people overall. We are convinced that this dilemma can be solved if people are given a sense of purpose again - rather than to continue this latent disempowerment. Pampuch: The systems work to the detriment of the employees. A change in the markets soon shows just how flexible the system is in terms of spotting new opportunities and using them. How do you start a change management process? Koppermann: The first thing you can do is to change the signals you are setting. Typical example: executive conferences. The established format decrees that the executives take their seats and the leading lights and their respective power point presentations take centre stage. Everything is carefully scripted from beginning to end to ensure that nothing unforeseen happens. If you do that for hours on end, you lose the audience. One approach is enlivening presentation marathons such as these, for example by breaking them up with less serious interludes.If this means to do things that at first glimpse appear 'not serious enough for business', so be it. It still improves the overall experience for the audience. Don't you also get people to participate through interactive platforms? Koppermann: Yes, that is much more exciting. Of course we also have clients who actually want a culture change. In companies like that, the executives no longer simply announce solutions; instead, they ask the ap- Today's systems work to the detriment of the employees. So are you saying that German workers are lazy? Koppermann: No. You cannot blame the employees. There are various reasons for this lack of emotional commitment. Employees having been disappointed by those in charge, their engagement not being recognised; or maybe even that the line manager sold a good idea of theirs as his own. At best, this breeds a 'work-torule' attitude. This cannot be news to human resource departments! Koppermann: It is tolerated, or accepted, for as long as Interesting links: www.bundesbienen.info www.bundeskunsthalle.de/index_e.htm www.vogelflughafen-hamm.de The roof garden of the almost ten metre high Art and Exhibition Hall in Bonn measures 9.216 square metres. The three turquoise, lighted towers are 16, 20 and 25 metres tall (measured from the bare roof).
SwarmMind 1/2012 Dipl.-Ing. Klaus Pampuch (l.) and Heiner Koppermann (r.), Dipl. Phys., MBA (INSEAD), are the founders and managing directors of SwarmWorks Ltd., as well as the managing directors of ChangeWorks GmbH & Co. KG. Klaus Pampuch (l.) has over 20 years of experience in the field of information technologies. The chartered engineer's work focuses on the points of interface between human being, machine and method. He is a pioneer in the field of utilising the collective intelligence and energy of large groups in live-communication. Heiner Koppermann's (r.) work focuses on change consultancy - particularly on modern management and organisation approaches which exploit employee engagement and collective intelligence. His professional history includes a research position at Stanford University (USA), working for the German branch of management consultants McKinsey & Co., Inc., and in business development in the telecommunications industry in the UK. He has a degree in physics and business administration. propriate questions. And then they realise in the course of an event run along those lines: it works! Nothing bad happens, every single contribution is constructive. Do the top executives share this realisation? Koppermann: That depends very much on what the team at the top is like. Or sometimes even just on what the CEO is like. If their concept of people as such does not allow involvement, then they are not likely to pursue the issue for any length of time. Pampuch: If, on the other hand, they believe that everyone is capable of excellence, those in charge will immediately realise it and seize this chance. Can you involve the whole swarm in every decision? Pampuch: No, certainly not. If there are pressing problems, they should be addressed at executive level in collaboration with experts. If the issue on hand is to develop a strategy or to analyse trends, however, the methods work in groups with as little as 30 participants. After that, the sky's the limit in terms of numbers. Our largest event so far had 6,500 participants interactively involved in what was going on. Koppermann: At the end of the day, people are proud of the fact that they work for a company that stages such 'alternative' events. Some companies pursue this train of thought quite persistently and rather elegantly in order to motivate their people. Others go even further and say: well, seeing that you are all here now, anyway, we would also like to ask you certain things ... That takes courage, because you never know where it might lead. A few years ago, I was at a conference with a few hundred participants. They decided to ask: what do you think your work-life balance is like? The result was devastating. During the lunch break, the top executives had decided: if 85% of our managers say that their work-life balance is out of control, that they neglect their families, spend too much time at work yet still feel dissatisfied because they have nothing much to show for the long hours chalked up - well, then we need to address that. Which, in consequence, they did in a number of projects designed to change things. The feedback was resoundingly positive. It was the most open, most productive, most credible and therefore best executive conference they'd had for years.
12/13 Background What are the anxieties or prejudices you have come across? Pampuch: Well naturally, they are not openly discussed. But I believe people are anxious about losing control, they are worried that everything will end up in chaos. Koppermann: Starting with the often subconscious prejudice that the masses are dumb. And in Germany, people think of the national socialist era, of course, a time where the masses were manipulated to such an extent that they condoned completely unethical behaviour and blindly followed a dictator down the road to ruin. So it rings that bell with people sometimes. And then they do not see the difference, that what happened there was more akin to herd behaviour, with everyone following one lead animal. A swarm is made up of independent individuals. The difference lies in the communication structures applied - manipulation versus independent information. Or people are afraid of anarchy. This fear culminates in the sentence: but we do not run our company by way of grass roots democracy! However, you succeed in overcoming these fears? Koppermann: Well it stands to reason that people are afraid. Jumping in at the deep end always takes courage. There is no getting around that. However, we have never ever - cross my heart and hope to die - made the experience that this openness backfires. And we well and truly believe this: adults are quite, quite capable of dealing with bad news. Particularly if they know exactly why they are, for example, being asked to tighten their belts, then they do not mind doing it. And what do you think the future will bring? Koppermann: We really believe that the world we now live in is so fast moving - yet also so incredibly complex - that it is a world where change has become so greatly accelerated that the these old, in part still almost military models, i.e. the orders are given at the top and carried out at the bottom, have reached their limits. We need other models. It simply takes too long for problems to be communicated to those at the top in order for them to (hopefully) find a solutions which are then communicated back down the chain. In the meantime, you have been overtaken by your competitors left, right and centre. Thank you very much for the interview. The old models have reached the limits of their usefulness. Interesting link: http://en.swarmworks.com
SwarmMind 1/2012 Everything counts in large amounts The new logo should be round, rather than square. That much was certain. Not a lot else was, though. By Jürgen Ponath Crowdsourcing - a kind of swarm-based outsourcing process - is based on the principle of utilising the intelligence, creativity and collective manpower of an external 'crowd' for problem solving. The internet frequently serves as the respective communication platform. A great number of contributors generates content, solves problems, or participates in design development. nyone who has had a logo designed for them will be familiar with this problem', says Heiner Koppermann, one of SwarmWorks' two managing directors: 'The first draft merely serves as a basis for deciding what you like and don't like. However, once you try to describe to the designer in more detail what you are looking for, it becomes more difficult. That is why the whole process, from the first vague idea to the finished logo, can be pretty time-consuming and also frustrating.' SwarmWorks therefore decided to utilise a collective intelligence method for their company logo redesign process: 'crowdsourcing'. They used the online portals crowdspring. com and designenlassen.de to invite designers to put forward their ideas, and offered $ 2,500 for the best design. Creative designers from all over the world took up the challenge. It took only a fortnight for around 600 designs to be handed in. After a rough pre-selection process, the whole team became involved in making the final choice. 'It was important to us that preferably, everyone in the company should identify with the new logo,' explains Klaus Pampuch, the other managing director. 'We did not want compromises. This logo will hopefully be with us for some years to come, after all.' Twelve designs made it to the recall stage, three into the final selection. Although there was no clear favourite amongst these, a designer incorporated various elements from all three designs into the logo's final design. 'We were confronted with a number of very different creative perspectives', says Pampuch. And: 'The democratic process is not necessarily the easier route, but it is definitely worth it, whichever way you look at it'.
14/15 Intelligence Collectively stupid? Observing a few rules when tapping into crowd wisdom, or: utilising collective intelligence - the basics. By Klaus Pampuch You only have to ask a group the right questions. ll of us could presumably think of numerous examples from corporate life, the political arena and society for many clever people getting together in committees and meetings in order to jointly reach totally imbecile decisions. However, in contrast, there is also the phenomenon of collective intelligence, which renders a social formation capable of recognising the bigger picture and collective problem solving. So collective intelligence can considerably outshine the sum total of the respective group members' individual intellectual performance capabilities and lead to some excellent results. How come? What are the conditions that determine whether the outcome speaks of collective imbecility or collective intelligence? Collective intelligence has long caught the interest of researchers from various different disciplines. As early as the 1920s, the American sociologist Kate Gordon carried out a simple experiment involving 200 students. The respondents were asked to put a few items in order according to their supposed weight. The average of all estimated values equalled the correct value almost exactly. The experiment was repeated many times over with slight alterations, and the result was always the same: the average gets it right. During many of our live events, we have asked hundreds of participants to estimate the number of fruit gums contained in a glass jar, for example. It is really impressive when the median returns a value of 3,114, and there are actually 3,120 fruit gums in the jar. However, the accuracy of the outcome depends on the question. Is it a multiple-choice question? Or is the question about a more complex problem such as: 'What do we have to do in order to increase our competitiveness?' In the case of simple questions, the following conditions must be adhered to in order for collective intelligence to work: No communication There must only be one pair relationship, the dyad between individual and question. Discussion of the issue or an opinion leader starting to speak on it have an adverse effect on the outcome. Once a contestant on the popular quiz On 'Who wants show 'Who wants to be a Millionaire' to be a Millionstarts to think out aloud, thereby shar- aire?', the audiing their reasoning for why they be- ence usually gets lieve a certain answer to be the correct it right. one, or even just says to the moderator 'I am pretty sure that answer A is the right one because ...', he or she should no longer bother to play their 'ask the audience' joker, as the audience has already been influenced to such an extent that it is no longer capable of venturing an unbiased opinion. A high number of participants The more, the better. At 200+ participants, however, the increase in quality declines. Familiarity with the subject matter Most people are capable of hazarding a guess at the number of fruit gums. If, however, the task set was to estimate the number of text messages sent in Germany in 2010, and the respondents knew neither what a text message is, nor where or what Germany is, the group result will with a probability bordering on certainty not be any more accurate than the result arrived at by one single telecommunications expert. By the way, one reason for the amazingly accurate results (93 percent correct over all shows) delivered by the 'ask the audience' joker in 'Who wants to be a Millionaire?' is the fact that the studio audience is
SwarmMind 1/2012 instructed beforehand to participate in the voting only if they think they really do know the correct answer. Votes on simple questions can easily be realised online. Google, for example, determines the launch date for new products in this way. More complex questions, however, are dependent on group size (at least 30 people). And again, the members must be familiar with the subject matter. So a workshop that intends to utilise collective intelligence must also achieve the following: Dispense with the hierarchy The hierarchy must be ignored. It can lead to misleading group behaviour. An opinion voiced by a boss carries far more weight than an opinion voiced by a 'mere' employee. It influences the subordinates' voting behaviour. A prime example for a hierarchyrelated collective human error with dire consequences was the Columbia disaster in 2003. The head of the mission management team made up her mind far too early; she was sure that the damaged thermal protection system was not a serious issue; and she convinced anyone who begged to differ, one by one. The Columbia disintegrated as it re-entered the Earth's atmosphere. No room for opinion leaders Each group always features charismatic, extrovert and eloquent members to whom we subconsciously ascribe competency; any statements they make influence the group. Eliminate peer pressure An experiment carried out by the psychologist Solomon Asch in many different variants illustrates the power of peer pressure. He asked ten groups consisting of ten students each to determine which of two drawn lines was the longer. He told nine students in each group the right answer, but asked them to defend a wrong opinion. In all cases, the 'naive' respondent went with the majority's wrong opinion. Even the most determined doubters managed to somehow find a viewing angle that made the shorter line appear to be the longer one. No group discussion Discussion as the enemy of collective intelligence? Yes, actually! Cass R. Sunstein analysed some group discussion results in his book 'Infotopia' (see p. 44). The surprising conclusion: discussions are only useful for cross-linking information to a certain, very limited extent; polarisation has an adverse effect on the result. High cross-linking rate This aspect harbours great potential. Let us assume the best case scenario of every participant sharing their information with all other participants. So if there were 150 participants, for example, they could in theory form 22,350 relationships. Getting the right people to work on the right (sub-) issues. Networking potential 70000 Sounds easy, doesn't it. In practice, however, such perfect matches can be achieved only by applying the latest findings numerical mathe22350 matics has to offer. On the basis of individual preferences, special algorithms compute the 150 Participants ideal topic-participant framework: as soon as even just one criterion is not met, the group's performance is at best on par with the performance of its best members. This does not necessarily have an adverse effect on the result, but it is way below the potentially possible. For a company, the difference between a good and a very good idea or solution to a problem can easily add up to a few hundred thousand or, depending on company size, even millions of euro. Experience, gained for instance in the course of technology company Infineon's executive conference, has shown just how valuable yet another aspect besides the achievement of best-possible results is: a transparent process and the involvement of many create a high level of acceptance - resulting in the accelerated realisation of innovations. Relationships
16/17 Intelligence A growing number of applications have shown that a group of diverse, Eric Bonabeau, independent and reasonably holds a Ph.D. in informed people might theoretical physics and is one of the leading outperform even the experts in the area of complex best individual systems and adaptive problem solving. He has authored numerous sciestimate or entific articles and books, among which the science bestseller 'Swarm Intelligence'. Eric has decision. worked in research & development for telecommunications and software companies in Europe and the USA and, in 2000, founded Icosystem - a consulting firm specialising in the development of tools and software for effective decision making, strategy development and reacting to change. By Eric Bonabeau Paradigm shift through social networks, wikis and groupware. he emergence of web-based tools for bringing people together in a variety of formats has made it possible to experiment with a number of different mechanisms for getting the best out of the collective. Such web-based tools as social networks, wikis and collaborative software constitute a paradigm shift for the way decisions get made and problems solved. As a firm believer in the benefits of harnessing collective intelligence in the right context, but overwhelmed with the hype surrounding the new age of collective intelligence, I set out to organize my understanding of the new ideas and explore where and how they might apply. Europe's largest hedge maze in Castlewellan, Northern Ireland.
SwarmMind 1/2012 Decisions 2.0: the power of collective intelligence How can collective intelligence be leveraged to improve the way we make decisions? I have found three very general types of strategies - which can sometimes be combined: Outreach It consists of reaching out to individuals or groups beyond traditional boundaries (which could be the walls of the organization as well as, for example, hierarchical or functional barriers inside the organization) to collect ideas (generation tasks) or assessments (evaluation tasks). The value of outreach is in numbers: broadening the decisionmaker or solver set, or broadening the consideration set. A good example for the use of Outrech is the Open Source approach in software development and improvement. Hence the famous expression: 'With many eyeballs, any bug is shallow'. Additive aggregation It consists of collecting ideas (generation tasks) or assessments (evaluation tasks) and performing some kind of averaging. Additive aggregation may be a way to aggregate information from traditional decision groups, or it may be
18/19 Intelligence combined with outreach to aggregate information from a broader set of people. Here, the whole is, by definition, the sum (or some average) of the parts. In fact, in the simplest form of additive aggregation, it can be shown mathematically that collective error = average individual error - diversity. The average individual error is a reflection of how knowledgeable individuals are, and diversity means diversity of opinions. Self-Organization It consists of mechanisms that usually involve interactions among group members so that the whole is more than the sum of the parts. While the other mechanisms improve decisionmaking, self-organization makes collective innovation possible in the decision process. The downside is that, if the mechanisms are designed improperly, the whole can end up being less than the sum of the parts. Groupthink and hijacking are two examples of interactions gone bad. Collective intelligence works better in practice than in theory. It is fair to say that until today collective intelligence works better in practice than in theory. Collective decision making has been empirically driven and for one successful Wikipedia, there are probably lots of failed attempts that the public hasn't heard of. But the fact that we can't explain the success of many Decisions 2.0 initiatives is not necessarily a bad thing. In fact, we use many tools on a daily basis that we don't fully understand - our intuitive minds, for example. That's where research and theory are needed, as well as in the area of success metrics. However, a mere survey of the possibilities leads me to make two important observations: 1. 2. I would speculate that we, as individuals, are far weaker explorers than evaluators and that, for all the flaws in our heuristics, we are darn good pattern detectors. When thinking about problem solving and decision making, you are likely to get a lot of value by tapping the collective. Another striking feature of most examples of collective decision making is that feedback loops between generation and evaluation tend to be weak or non-existent. The similarity of the generation-evaluation framework to the fundamental mechanisms of evolution, variation and selection, makes it clear what I mean: in evolution, ideas are generated and evaluated and the output of the evaluation goes into the creation of the next generation. Why can't we do the same here? Some applications take the metaphor quite literally, using collective feedback to create a solution which is then again submitted to the collec- Photos: Shutterstock, Eric Bonabeau
SwarmMind 1/2012 tive for evaluation. Such feedback loops should be a lot more common as they take the collective through an iterative decision process with improved results. The bottom line is this: For many problems that a company faces, there is potentially a solution out there in some collective, far outside of the traditional places that managers might search, within or outside the organization. The trick, though, is to develop the right tool for locating that source and then tapping into it. Interesting link: www.icosystem.com Milestones of swarm research 4th cent. BC Aristoteles, in his scripture Meta Physics, describes early observations of emergent properties of systems: 'Since that which is compounded out of something so that the whole is one, not like a heap but like a syllable-now the syllable is not its elements, ba is not the same as b and a, nor is flesh fire and earth.' 1970 The mathematician John Horton Conway develops the Game of Life, a two-dimensional cellular automaton. 1972 With his paper on the butterfly effect, the meteorologist Edward N. Lorenz lays the foundation of chaos theory. 1992 Marco Dorigo introduces ant colony optimization (ant algorithm) as a method for optimization. 1994 Mitchel Resnick develops the first version of his simulation software StarLogo. 2004 First conference on the subject of swarm robotics in Santa Monica, USA. 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1910 The ant researcher Wiliam Morton Wheeler coins the term superorganism. 1948 The mathematician Norbert Wiener, together with several other scientists, establishes the field of cybernetics. 1949 The biologist Ludwig von Bertalanffy establishes the general systems theory. 1984 - 1997 Niklas Luhmann develops the sociological systems theory. 1986 Craig Reynolds formulates three rules for the simulation of swarms: 1. Steer to move toward the average position of local flock mates (cohesion). 2. Steer to avoid crowding local flock mates (separation). 3. Steer towards the average heading of local flock mates (alignment). Source: Kronemann, Mey Lean: Swarm Robots. Wie aus einfachen Regeln emergente Systeme entstehen. Bachelor Thesis, Fachhochschule Potsdam, 2009, p. 12. © Mey Lean Kronemann, Berlin 2009
20/21 Strategy 'New communication methods change people. This has also had an effect on internal company communications', says Eliza Manolagas, Head of Internal Communications at Germany's most successful direct bank ING-DiBa. Yes we can change Eliza Manolagas, Head of Internal Communications with Germany's most successful direct bank ING-DiBa, talks about being motivated by the desire to keep on trying out new approaches, her vision of breaking up in-house 'silos', and the potentials of swarm intelligence. By Jürgen Ponath Photographs: Nathalie Dampmann
SwarmMind 1/2012 warmMind: You are an internal communications expert. So what is the secret of successful communication? Eliza Manolagas: It's easy, actually: just enter into a dialogue with each other. But that is not all that easy for a lot of people. It seems to be more difficult than you'd think. A typical example is the annual executives conference. I mean, this kind of event usually proceeds along the following lines, doesn't it: you meet up, you battle it out with PowerPoint presentations, maybe followed by a workshop, and then you go home again - with a thick folder containing printouts of all the PowerPoint presentations. Great, thank you very much! That is all there is to it, really, but should that be all there is to it? Are you saying that the ING-DiBa has done away with PowerPoint presentations? No, of course not. They can be absorbing, after all, provided they are done properly. And of course, not all of the issues that need to be discussed are equally exciting. That applies in our company as much as anywhere else. It's a common problem. Nevertheless, we asked ourselves: what could we change? What would we prefer? And the answer was? I call it 'dialogue-oriented communication'. We want events to be fun, they should motivate people to really engage with each other. We therefore intentionally designed them in such a way that executives from five different hierarchy levels meet up. Everyone should get to know everyone else. Or at least it should be possible for them to do so. Of course, that is probably not really an option, seeing that there are over 300 participants. But we have noticed that these events really do en- In my view, swarm intelligence is everyone contributing their full potential. courage internal networking - across all levels, I would like to emphasise this aspect. Internal exchange and dialogue are particularly important to us. How do you manage this dialogue? Due to the large number of participants attending these events, we like to work in groups. Presentations are then jointly developed in dialogue form, usually through role-play. So it's a more light-hearted approach. We incorporate different media, show moving images, make it exciting and varied. When we looked at the issue of corporate culture, we sent our working groups to 20 companies in Hamburg. We just tried it out. And was it successful, in hindsight? Yes, most definitely. sponse to a suggestion like this one would be to ask this manager whether it wouldn't be better to talk directly to his colleagues, rather than - well, let's go over the top, shall we - playing with electronic tools and starting a media skills battle. A true dialogue often achieves so much more. The inside flap text of the book on executive communication skills you co-authored in 2009 with your direct line manager Dr Ulrich Ott and communications coach Dr Achim Kinter reads: 'Nothing can be as damaging or as useful to a company as its management team.' Was it meant to sound so provocative? Generally speaking, this book was not written to help our CEO or the CEO of another company to improve their image. Books on the subject of 'executive conduct' usually, if they mention it at all, tend to focus on how a CEO and the various managers are perceived from outside the company. We, on the other What makes an event successful, in your opinion? For me, a perfect event consists of an entertaining mixture of lectures, voting, group work, films and music. And, very important: All the PowerPoint you have to presentations to read later captivate people, inspire their enthusiasm, get to them on an emotional level as well, because then they retain the Führungskräftekommunikation core content, i.e. the most important Grundlagen, Instrumente, Erfolgsfakpoints that you want to communicate, for much longer. And our goal is always toren. Das Umsetzungsbuch. ('Executive communication. Basics, tools, dialogue-oriented communication. Not only at conferences such as this one, but success factors. A guide to realisation.') By Dr Achim Kinter, Dr Ulrich Ott, Eliza also in our day-to-day working lives. Could you elaborate by giving an example? Say one of the managers says that they would like a newsletter. Our initial reManolagas. Publ. Frankfurter Allgemeine Buch 2009. 230 pages. ISBN 978-3-89981-192-6
22/23 Strategy hand, address their role as internal communicators. Did you draw on personal experience? This book is aimed at anyone who occupies a management position in a company. It focuses on our executive conferences and our particular approach to these events. These days, successful internal communication needs far more than certain media, such as an in-house magazine or intranet. In order to reach a company's entire workforce, all of the managers and executives from the various hierarchy levels must also become communicators themselves. That is rarely the case. We have worked with Dr Kinter on our executive conferences for the past eight years or so. During that time, we realised that we do many things well - and, above all, differently. You break the traditional mould? Yes, often it seems to boil down to just that. We keep on trying to explore new avenues. People still ask me about a hare and hounds race we organised a few years ago. In the course of the race, managers and executives established relationships which were then carried over into the day-to-day running of the business. So you do need to be keen to experiment? We do not blindly follow every new trend, but we do consider new ideas from all angles. The social media, for ing points of view. And our executives had not even considered the issue at all yet. And then? As luck would have it, the 'Frankfurter Allgemeine Zeitung' had just run an article on utilising swarm intelligence in a corporate environment. It mentioned SwarmWorks. It sounded interesting, so we made an appointment and agreed to try out their methods at one of our events. no-fun corporate culture, we would certainly have refrained from trying it out. But we know our colleagues, after all - they are game for (almost) anything and are excellent at group work. It was basically already unusual that the conference room had not been laid out theatre-style, i.e. rows of chairs with people sitting behind each other. Instead, the participants were grouped around tables, each with a laptop and buzzer in front of them. So the technology is easily mastered ... The biggest challenge was holding the paddles correctly on command Cracking horizons Did you know anything about swarm intelligence beforehand? Well, it is not like we were totally unaware of it. However, as yet, we had not really looked at it in much detail. Were you ever worried that it might be a risky idea, in view of the fact that this was such a high-profile event? No, not at all. Although to be quite honest, we couldn't really imagine how it was all going to work. But then we had a trial run, which gave us a first impression of the possibilities. If the DiBa subscribed to a (laughs). But seriously: The focus is not on the technology. It is a means to an end. The SwarmWorks tools set the scene and supported us throughout the day. Could you imagine companies increasingly resorting to swarm intelligence based methods in future? Yes, why not. However, I do believe that in a corporate environment, using the swarm potential will not always be a feasible option. And the employees cannot participate fully in all decisions, either. I do however think that it is an absolutely worthwhile method for certain areas. One aspect that comes into my mind straight away is ... well, I always call it 'breaking up the silos'. The different departments like to keep themselves to themselves, you know. As far as certain issues are concerned, however, it can be very helpful to We do not blindly follow every new trend, but we do consider new ideas from all angles. example - that was a hugely controversial issue, internally. The communication experts saw their potential for making the dialogue with customers less complicated and allowing us to respond faster. The marketing experts warned that the process was uncontrollable. A clash of two completely diverg-
SwarmMind 1/2012 expand the perspective. Joint consideration of a certain problematic issue frequently leads to a better solution, simply because of the different perspectives. And you need the right environment for this? It certainly won't work if all you have is chance meetings by the coffee machine. Above all, though, it needs an open corporate culture that explicitly encourages opinion diversity. You can build on that? Most definitely. Our aim is to keep on changing, and to sweep the staff along with us. All of us at the ING-DiBa are given a lot of scope in terms of how we organise things. That is something of a luxury. But: we also make utmost use of the scope we are given. Thank you very much for the interview. Key Data ING-DiBa The ING-DiBa AG company history goes back to 1965, when it was founded as the 'Bank für Sparanlagen und Vermögensbildung AG' (BSV), with headquarters in Frankfurt/Main. Right from the outset, the financial institution was destined to go about its business in a customer-focused way, as one of the initiators of the bank's establishment was the social democratic politician and later Federal Minister Georg Leber. He wanted to give German employees a bank that would allow them to save up the recently introduced seven Deutschmark bonus for tax-free capital ac- Executives also profit from looking around them, rather than just straight ahead. Interesting link: www.ing-diba.de cumulation purposes, or 'Vermögenswirksame Leistungen' (VL). Leber was never one to disguise his resentment of the established banks, likening their behaviour when the concept of a tax-free capital accumulation option for workers was introduced to an old dog that had eaten its fill and done barking. No matter how fat a bone it was offered, it couldn't be even be bothered to growl. He therefore wanted this bank model to focus on doing business with private customers, with products such as 'Eigenheimfinanzierung aus einer Hand' (onestop home financing, 1969), 'Konsumentenkredit' (consumer loan, 1975) or the 'Wunschgeldsparplan' (flexible savings plan, 1987). Strategic realignment was the order of the day in 1992 - the bank moved away from providing a postal banking service and became a relationship bank, introducing its 'Direktkonto' current account and 'Extra-Konto' easy access savings account at the same time. In 1998, the DiBa entered into a strategic partnership with the Dutch Allfinanzgruppe ING, which then went on to acquire the majority in the direct bank in 2002. At around the same time, the number of customers also hit the one million mark for the first time. The DiBa's upward trend is set to continue.
24/25 Zeitgeist ... it can't go n like this. Leadership by issuing commands and expert culture Leadership is characterised by the idea that everything is controllable and must only be made more efficient. Targets are set - their achievement is elaborately measured and controlled. The respective capacity has been pushed to the limit or has even been fully exhausted. Important decisions are made by experts without consultation with non-experts. The collectives concerned (staff, voters etc.) are hardly or not at all involved. If the strategy fails, the the broad masses have to bear the costs. Widespread burnout Society is becoming increasingly more stressful. Anxieties and depressive disorders have overtaken physical symptoms as reasons for employment incapacity. Stress is a never-ending issue. Lack of organisational identification Inner resignation, work to rule, 'fully comp' mentality, service desert, reform hold-ups ... are we fit for future challenges? Political apathy The credibility of policy-makers has reached a new historical low. The established parties have been loosing members for years. Citizens' engagement in local politics is declining, they tend to reserve their sympathies for organisations outside the political party arena and beyond the national state. School In Germany, educational success depends on social and ethnic origin (OECD). The performance level of German pupils lies way below that of pupils in the top countries (PISA). An increasing number of children attends private schools (Federal Statistical Office). Our cover shows two so-called S-curves. An S-curve is a graphic representation of a technology's productivity efficiency development in relation to invested effort. Efficiency Marginal gain of current approach Leadership 1.0 Democracy 1.0 Globalisation 1.0
SwarmMind 1/2012 n terms of their potential for further development, technologies will inevitably reach a limit. With their increasing maturity comes the need for ever higher investments in order to achieve modest increases in productivity efficiency (decreasing marginal gain and utility). There comes a point in time when it becomes more effective to switch to a new technology and abandon the 'old' one. This also applies to several of our present day systems. The theory: In many areas, the time has now come to forget 'business as usual'. The established leadership, policy-making and resource consumption ap- proaches ('technologies') have reached their limits. Further productivity efficiency increases would require significant effort to achieve only marginal results. Inspired by the term 'Web 2.0' - the new internet where users not merely consume content but are interactively involved and make content available themselves - we have called the left-hand side S-curve the 'Approach 1.0' and the S-curve on the right-hand side the 'Approach 2.0'. Considering the events over the past few years, it seems that the time has come - or at least it feels that way - to radically change our approach. The following gives a few practical examples of perceived reality (1.0) and potential alternatives (2.0). Leadership 2.0: Spirited leadership Leadership 2.0 Democracy 2.0 Globalisation 2.0 A leadership that is guided by people's needs and creates conditions that allow employees to develop their potential in order to achieve maximum productivity. Utilisation of collective intelligence The affected become true participants. Tapping the collective intelligence really does lead to better and more permanent solutions. The involved identify with the issue, this promotes implementation. A mind-set that utilises technological advances and the increasing global interconnectedness for the benefit of all people on this planet and solves the urgent problems affecting all of humankind collectively. Globalisation 2.0 Democracy / Policy-Making 2.0 A democracy that allows people more involvement in political events - not just at election time. Responsible policy-making in the interest of the people which actively seeks civic dialogue. Education 2.0 Character, ethic and skills development Willingness to respond to new challenges Interest in learning, discovery and design. Photos: Shutterstock, Michael Göken Effort invested over time
26/27 Zeitgeist Decision making heuristics Ecological rationality and strategies in dealing with uncertainty. By Prof. Gerd Gigerenzer und Dr Hansjörg Neth Adaptive Behavior and Cognition Max Planck Institute for Human Development, Berlin magine you have just arrived in a strange town and want to eat something. There are two restaurants nearby, both look appealing. Whilst one of them is packed with diners, the other one is absolutely deserted. In this situation, you could of course use your Smartphone, or rather the tively effortless heuristics - simple problem-solving and decisinternet, to obtain further information on the respective quali- ion making strategies that ignore information - often lead to ty of both restaurants. Instead, however, you choose the more good or even better results. The Max Planck Institute for popular one, based on the intuition that there is bound to be a Educational Research's 'Center for Adaptive Behavior and jolly good reason why so many diners prefer this one. Are you Cognition' studies when and under which circumstances that acting irrationally if you ignore easily available information is the case. and prefer to rely on your intuition instead? In the case of our The reflex of wanting to invest huge amounts of resources restaurant example, the worst case scenario is (for instance in terms of information and time) when faced simply bad food. But with uncertain, intransparent and how would you react complex decision making situaif your doctor or bank tions is triggered by a general craadvisor dispensed ving for optimisation. It is typical their advice based on for the established image of Homo gut feeling? And what economicus. It is presumed that a Gerd Gigerenzer exactly happens when human being that behaves 'ratioa corporate strategy expert forecasts the potential nally' works just like a computer - a large volume of data is sales opportunities provided by a certain market systematically processed and assimilated in such a way as to segment, or when a human resource director de- maximise the benefit resulting from a decision. The antithesis cides who is to be the new manager? to this - in reality completely unattainable - idealised image is Homo heuristicus - people who frequently sideline informaTwo perspectives tion in their quest for efficient and effective solutions. They rely on their intuition even in uncertain decision making situOne prejudice equally at home in business and ations. Homo heuristicus does not rely on an across-the-board science is that mere intuition and vague rules of method that can be applied to solving all sorts of problems. thumb can occasionally be applied to solve simp- Instead, he or she has a veritable arsenal of specialised stratele problems whilst complex and important decis- gies at their fingertips, organised in an adaptive tool box and ions require more effort, which then leads to res- selected in accordance with the specific circumstances of a propectively better results. We maintain that blem. The important aspect in terms of our counterclaim is precisely the opposite holds true: that compara- that optimisation is in reality, in view of finite resources and 'Good intuition has to ignore information.'
SwarmMind 1/2012 Further reading Gigerenzer, G. (2007). Gut Feelings. The Intelligence of the Unconscious. UK ed. Penguin/Allen Lane, 2007, German edition Bertelsmann, Munich. Gigerenzer, G. (2002). Reckoning with Risk: Learning to Live with Uncertainty. UK ed. Penguin 2002, German edition Berlin-Verlag, Berlin. Gigerenzer, G.; Gaissmaier, W. (2011). Heuristic Decision Making. Annual Review of Psychology, 62, p. 451-482. The significance of gut feeling bounded rationality, not only impossible but frequently also undesirable, as simply heuristics, despite the fact that they require far less effort, deliver results that are just as good or even better. Heuristics research must differentiate between the following questions: - Which heuristics are there or are being applied? - Which heuristics should be applied; when and how successful are they when applied? - Which heuristics do we apply? The difference between optimisation and a heuristic is best explained with the aid of some specific examples. For instance, how do you catch a ball? One option is calculating the ball's flight path based on the laws of physics and its respective specific properties (angle, speed, aerodynamic resistance etc.). Even if we did know the requisite formulas and values, it is hardly likely that we could work out this equation once the ball is already up in the air. Alternatively, you could apply a gaze heuristic by fixing your eyes on the ball and moving in such a way as to ensure that your viewing angle remains constant in relation to the horizon. If you succeeded in doing that, you would be in the right spot at the right time when the ball comes down. Unconsciously, human beings and animals apply gaze heuristics, rather than performing complex calculations. Although it does not predict the precise location where the ball is going to hit the ground, the gaze heuristic still incorporates a precise process model that not only allows us to catch the ball, but also describes how we behave in the course of the process. The authors of this article, the psychologists Gerd Gigerenzer and Hansjörg Neth, are co-researchers at the Max Planck Institute for Human Development Research 'Center for Adaptive Behavior and Cognition' (ABC) in Berlin. They study rationality, heuristics and simple decision making trees. Or, to put it less scientifically, they are researching the issue of how to make rational decisions when the timeframe and information available for making them are limited, and the future uncertain. The broad public became aware of Prof. Gigerenzer's work when his book 'Gut Feelings. Short Cuts to Better Decision Making' was published. Prof. Gigerenzer has trained judges, doctors and managers in how to deal with risks and uncertainties. In 2011, the scientist was awarded the 'Communicator' prize by the German Research Foundation (DFG), as well as winning the prize for outstanding achievements in the field of psychology awarded by the German Psychological Society (DGPs).
28/29 Zeitgeist Or imagine you were asked to decide which of these two cities had the higher population: Detroit or Milwaukee? If Homo economicus were asked this question, he or she would gather all the available knowledge about both cities, grade this knowledge in order of importance, and then select the alternative with the higher total value. If a group of Germans is asked this question, the vast majority (approx. 90 percent) quickly arrive at the right answer: Detroit. Interestingly enough, this majority is even more distinctive than the only around 60 percent that decide for Detroit when a group of Americans is asked the same question. Do Germans know more about American cities than Americans do? Of course not, many Germany have very little actual information about both cities available to them and decide for Detroit simply because they recognise the name, whilst they have never heard of Milwaukee. This fact allows the application of the recognition heuristic: if you recognise precisely one of two objects, then conclude that this has the higher value with regard to a certain criterion (for example the higher number of inhabitants). Despite the apparent naiveté of this rule, it can be applied to compiling profitable investment portfolios or successfully predicting who is going to win an election or a tennis tournament. The size of the advertising budgets of not a few companies suggests that the marketing experts are well aware of these mechanisms. Even if you are able to quickly obtain a lot of knowledge on each decision option, you do not always have to take it into account. If the two population question alternatives were When are heuristics successful? Heuristic methods do not guarantee correct answers. In the case of the two restaurants, for example, one of them may look like the more popular one simply because a large party of tourists happens to have picked that one. And if we had asked whether Stuttgart or Bonn had the bigger population before 1990, a decision based solely on Bonn's status as the capital would have supplied the wrong answer. To test the merit of heuristics under realistic conditions, researchers compared heuristic-based forecasts regarding a number of issues (for instance property prices, school dropout rates, court judgements, medical diagnoses etc.) with the prognoses provided by statistical optimisation procedures. Time and again, it turned out that heuristics, even though they require less effort and eschew the application of all available information, lead to results that are as good or even better. Analyses of the conditions required for this - for many people amazing - result to occur have highlighted two aspects: the reliability of simple forecasting models and the fact that strategy, environmental structures and the respective human skills must be wellmatched. For a start, simple rules often deliver more reliable predictions because they avoid interpreting too much into incidental data patterns. The probable temperature progression over the next year can be predicted as good or better with a simple model with only a few readings (for example the temperature at the beginning of each month) as with a complex model featuring many readings a day. We call it 'ecological reality' when chosen strategy, certain environmental structures and the respective skills developed by humans are a perfect match. The success of the gaze heuristic is due to the fact that the strategy of a constant viewing angle matches the human musculoskeletal system and the physical properties of flying balls. The recognition heuristic utilises our evolved skill of a highly developed memory Simple rules often deliver sounder predictions. Stuttgart and Berlin, you would probably recall many details about both cities. And yes, there is some evidence that a few of these details (for example whether a city has airports, universities and famous sports clubs) can be an indicator of population size. Yet most people will choose the correct answer, Berlin, simply by asking themselves 'Is one of these cities the capital?' A heuristic where the decision is made on the basis of one single reason is called take-the-best (TTB). If a choice of differentiating criteria is ranked according to relevance, it is often not necessary to go through a huge long list of possible criteria. TTB examines the relevant criteria one after the other and stops searching as soon as it hits on one differentiating criterion. Photos: Max-Planck-Institut, Berlin
SwarmMind 1/2012 recall system and relies on the fact that we also come across the relevant objects more frequently in our environment (they are, for instance, mentioned quite often in the media). The take-the-best heuristic rests on the human skill of prioritising relevant criteria and uses existing redundancies in the environment in order to make good decisions on the basis of very little information. As real decision environments are usually far more complex than the city comparisons mentioned above, the question of whether heuristics can also be relied on in practice would be a legitimate one. An impressive practical example proving their worth is found in the field of financial investments. This is the so-called 1/N heuristic, which distributes the available capital evenly on all N possible assets or asset forms. Extensive studies with the aid of historical stock exchange data have shown that the profits made by applying this apparently naive diversification strategy can hardly be bettered, even if complex optimisation processes (based on Markowitz' portfolio theory) are applied. Due to their relatively low demand level, simple heuristics often outperform more complex strategies, particularly if even just the search for further options already requires certain endeavours (for example costs in terms of time and money). respective skills, even though the usual exclusion rule applied says: if only one of N managers has doubts about an applicant, he or she will not be offered the position. Intuitive design On the basis of the social 'majority influence' heuristic, we examined various strategies for selective information integration in order to choose a satisfactory alternative with as little effort as possible. A general characteristic of heuristics is that potentially useful information is ignored as it does not change a decision or would not improve it. Although plenty points to the fact that many professional experts (such as, for example, athletes, executives or judges) regularly and quite successfully act on the basis of heuristics, we would not want to recommend their application to all decision making processes per se. Instead, the conditions under which simple rules requiring little effort lead to good results should be explored on a caseby-case basis. Potential shortfalls in terms of ecological reality can not only be made up through strategy changes. We refer to the process of facilitating ecological reality through the targeted adaptation of strategies, the further development of human skills and the active design of environments as intuitive design. As people in decision making situations would often prefer not to have to make a decision at all, offering a choice of sensible standard answers (so-called defaults) is one way of adapting the environment effectively. Important societal issues such as, for example, the willingness to donate organs, the support of religious communities or opting for ecological energy sources can all be influenced in this manner. As an alternative concept to the established notion of rationality, which assumes the unrealistic maximisation of a utility function through the use of all available information, we look at people differently and put forward Homo heuristicus, capable of cleverly choosing strategies from an adaptive tool box and able to rely on his or her intuitions, even in uncertain decision making situations, with a clear conscience. Our research and numerous practical examples demonstrate that heuristics require comparatively little effort, yet they can achieve extremely effective and efficient results. In other words: we can safely assume that Homo heuristicus is a pretty rational human being. Social heuristics Not only individual decision makers, but also groups and communities apply heuristics very successfully. The fact that we are able to copy successful behaviour, for example, saves every human the effort of having to repeat all mistakes ever made in the history of humankind. Even if the individual members of a collective have extremely diverging opinions, the median of these opinions can be the right answer to a problem. The phenomenon of the 'wisdom of the crowd' first described by Francis Galton even makes use of the fluctuations caused by guesstimates. As long as estimates under uncertainty are independent of each other, their median will be closer to the true value than the majority of the individual estimates. When parents split their time and financial resources between their children, they often apply a 1/N rule, i.e. each child receives an equal amount. In the case of three or more children, this leads to a disadvantage for the middle children, as they never get to enjoy the full attention of their parents, like the first and last born will. Recruitment by means of several rounds of interviews has shown that two interviewers do not make a better decision than only one interviewer with the better interviewing skills. Ensuring that the most suitable applicant is selected is therefore not achieved by involving several interviewers, but by equipping one interviewer with the Alternative concept to the established notion of rationality. Interesting link: www.mpib-berlin.mpg.de/en/staff/gerd-gigerenzer Gerd Gigerenzer (picture on the left) and Hansjörg Neth (picture above on the right).
30/31 Zeitgeist In this interview, Betsy Myers, former COO of US President Obama's 2008 campaign, explains why new approaches to leadership are needed to keep pace with today's world. People want By Heiner Koppermann to have a voice n your book 'Take the Lead' you mention that Barack Obama sat So it was somewhat of an experiment? down with you before his campaign saying 'I want to run a cam- Yes, one could say that. 1996 President Clinton ran for re-elecpaign that is inclusive, that makes it easy for people to participate tion and did not have a website. 2000, Al Gore and Bush, had and get involved.' How did this this grassroots approach to win a homepage. 2004, Governor Dean, Governor of Vermont, who the 2008 presidential campaign come about? ran for President, was the first one to raise money on the Internet. It was Obama's own idea to run the campaign this way and it's And in 2008, we took it to the next level and not only used the a result of his view that we are not red Ameriinternet for fundraising but also email and ca, we are not blue America ... we are one above all the social networks and text messagAmerica. At about the same time he was preing which, at the time, was becoming more senting his book 'The Audacity of Hope', durand more popular. As an example, we aning book events across the country, some nounced Obamas choice for Vice President 2,500 people showed, so the grassroots really (Joe Biden) through a text message. rose to meet him. I think that's where he saw, But much more than that was happening. It wow, there is such an interest in this philosowas a young woman who worked on the camphy. People want to get involved. People want Betsy Myers and Heiner Kopperpaign who phrased it like this: People came for to have a voice. And Obama wanted to include mann in front of Bentley College Obama but stayed for each other. Not everyone the American people who felt very voiceless near Boston, Massachusetts. could meet Obama in person. And that wasn't under President Bush. It was a reaction to what kept people there. How much do you see what was happening in our country. People felt like 'We don't the CEO? It was our being there and how we treat each other want to be in a war, but we don't have a voice about it'. and how we engage with which it's all about.
SwarmMind 1/2012 Betsy Myers has worked for two American presidents: As Chief Operating Officer for Barack Obama's presidential campaign 2007/8, she contributed to the resounding success of the campaign. And as Deputy Assistant to the President Clinton, she launched and was the first Director of the White House Office for Women's Initiatives and Outreach. Today, Betsy holds the position of Founding Director of the Center for Women & Business at Bentley University, Boston, and dedicates herself to the issue of the changing nature of leadership and women in business. The Obama campaign 2007/8 has struck a new path and broken previous records: For the first time, this campaign built on communicating to the masses via email, text messages, websites and social networks. Despite the abstinence from using public campaign funds, a record sum of $ 750 million was collected from private individuals. 90% of the donations were amounts below $ 200. If we look at the political situation today, certainly, a lot of people must feel very disappointed? A campaign is based on what you are going to do, the hope for a better future. As president, you are only as good or remembered and effective as the legislation you can get passed. President Johnson will always be remembered for the Civil Rights Legislation, which changed this country. The problem today is this inability or unwillingness to collaborate. Today, the nation got so divided by party politics. Comparing it to business, imagine you were the CEO of a company and all of your vice presidents do everything they can to make sure you can't succeed? I don't know what's going on in our country. In the past, there was a minimum level of collaboration even among opponents. President Reagan and the Speaker of the House, Tip O'Neal also had very different views on how to run the world, but they were able to come together and talk things out and solve issues together. So there is the people that, in a grassroots movement, bring in a different president and now it should all have been in vain? Yes, that's frustrating. How do we get out of this? That is a good question. The only way out is that the leadership of our country and Congress be able again to sit down together and sort out how they, together, can solve our problems. Voltaire once said: 'I do not agree with what you have to say, but I'll defend to the death your right to say it.' Today, it seems, we no longer have such a civilized society. Is this development one of the reasons why you think we need more women in leadership? Do we have too much testosterone in politics and business? (Laughing) Yes, you could phrase it that way. Today, only some 14% of the top jobs in corporate America are held by women. In Congress, only 17% of the members are women. And in only five of our 50 states do we have a female Governor. So, we have a long way to go. Companies that are more diverse and that bring different points of view to the table are more competitive and profitable.
32/33 Zeitgeist Command and control do not bring out positive feelings in people. We do know that. Hence, a lot of companies are saying, we need to make sure that we don't just have white males making all the decisions in the world, where it is no longer these white men that are customers, employees, etc. The other thing is that 'command and control' doesn't work so well anymore. People want to have a voice. It is when people have a voice and feel they are part of something bigger than themselves that they do their best work. A new model of leadership will have more feminine qualities. With that I mean collaboration, listening, less hierarchy, giving people a voice. And I think this is also what Obama brought to the table. I am not saying 'Guys, give up your male' nor 'Be something you are not'. Male qualities are important but in the new world more and more often female qualities are required. Command and control simply does not bring out positive feelings in people. In the current crisis, there is again the call for a strong hand in leadership. Some even say, Obama and his more co-operative approach failed. Does this then not bear the risk of falling back into old patterns? Absolutely, that risk is there. Sometimes in leadership command and control is necessary - for a moment. If a ship is sinking and people need someone to tell them what to do. But outside of such highly critical situations leadership should only become directive after having taken input from their people. The answers are right there in your team if you are willing to ask. This listening to your constituency isn't exactly the general rule in companies. Often there is the fear that involving people may raise expectations that one can't or doesn't want to live up to. Right, but that's an excuse. What we don't do in organizations is to communicate. Often a conversation is opened up in order to get feedback from people in the organization, the ones on the front line. These people do open up and share feedback. Leaders or managers listen to it and then make a decision ... but they don't tell anybody why they made just that decision. If that decision is then not in line with what the people one asked for feedback could expect, it alienates one's own people. If leaders would only explain why they decided the way they did and, for example, tell if there were aspects that had to be taken into account but of which the people are not aware, then the issue would come full circle. If that explaining isn't done, people make the assumption the leader didn't really listen to anything they said and took a lonely decision. An employee has to be quite persistent if s/he want to talk to the CEO in person. All too often, leaders are surrounded by a firewall one has to penetrate. That's the core problem. In the past, the boss provided all the answers, and we had this picture of a commander up on the hill and the soldiers below. Today's leaders should be down there with their people, asking questions. Modern leaders make time to talk to their people. Condoning firewalls around you will separate you from your team and sooner or later from the real leadership. Do you have a specific example in mind? Take Howard Schultz of Starbucks. The company was doing really great and he stepped away and things started no to be so great and so he came back. To get some new ideas, he went to Italy and found this product called 'Sorbetta', a combination of pink berry frappucino, a lemonade with ice-cream kind of drink. 'That's it!' he thought, called it 'Sorbetto' and put it in a third of the stores. He didn't talk to his people, didn't include his team. Soon it was clear: Sorbetto doesn't fly. And the baristas were mad because saying it took an extra hour and a half to clean the machines because it is so sticky and made such a mess. He then realized that he can no longer just make these decisions and implement them without consulting his team. And then they came up with the product 'VIA' which is an instant coffee. This time, he thought, I am
SwarmMind 1/2012 The book Take the Lead In her book 'Take the Lead', Betsy Myers reflects her career and expresses straightforward insights one can readily translate to action. A fresh and above all authentic approach to leadership among all the other books on the subject. Myers corroborates her insights with anecdotes and personal experience and emphasizes an emotion-based leadership approach. And since command and control do not bring out positive feelings in people, Betsy advocates not only a merely improved but a new leadership. Part of this is to truly involve people, giving them a voice and listen to it because only then will individuals feel part of something bigger and be prepared to give their best. Myers approach is based on seven pillars: Authenticity, connection, respect, clarity, collaboration, learning and courage. Atria Books 2011 256 pages ISBN 978-1-4391-6067-1 going to pick two stores and he sat with his people and asked them to help him figure it out. One in the team had the idea of taste tests: Customers would come in and be asked 'Try and decide: Which one is coffee, which one is instant?' And the customers were surprised how good the instant tasted and the product started to fly of the shelves. And only then did Starbucks roll it out across the country and the world in a way that the team was included. And if you seek feedback from always the same people. What happens then? If you are only getting the same people with the same feedback for years it fosters a closed-shop mentality. To avoid that, Bill Clinton always wanted a mixed team of advisors including people telling him the inconvenient things and that every single day, he tried to find something that he didn't know, and something, he was wrong about. You have rejected offers to work in the Obama administration, even though that certainly wouldn't have been a bad job. Why did you pass on it? Well, there are still some obstacles for women in the workforce that cause women to choose their family over a job. Either, you can't do both or you get to a point that it becomes very, very hard. But you are seeing a change: a lot of men are actively involved in family life and there is a shift going on where younger men want to have a decent family live, too. Now there are companies asking themselves: 'What do we need to do to stop losing all this incredible brainpower of women that after ten years with us leave to take care of their kids?' How do we create an environment where we allow flexibility, so that people don´t have to decide either job or family? A senior manager of Farmers Insurance, a big insurance company in the US, recently told that in his team they don't do meetings before 9 o'clock or after 3:30 any more to make meetings family-friendly. Or the CEO of Ernst & Young: He noticed that if men in the firm wanted to attend their kid's soccer game, they would say 'I have a meeting outside the office'. But women would say: I am going to my kid's soccer game. So he encouraged his people to tell it as is, and that if they wanted to tend to a family matter they should not be ashamed of it. And that he would do the same thing himself. It's been known for years that multi-disciplinary, multi-gender, multi-national teams have an edge on mono-cultural teams. Why then aren't there more women in leadership positions? To know is one thing, to act another. One of the structural barriers is that you see a lot of CEOs that say all the right things but they don't put money where their mouth is. I call this unfunded mandate - i.e. when Congress passes a piece a legislation but there is no money attached to it or no accountability. It is the same thing in corporate America: yes, we would like to have Many CEOs say all the right things but don't put money where their mouth is.
34/35 Zeitgeist a diverse workplace because that's the politically correct thing to say and, yes, there are studies that show ... but nobody's held accountable for it. Norway took a different stance and said: If you want to be a publically traded company, then you have to have 40% women in your board! Of course, some will say that this may lead to insufficiently qualified candidates. And it remains to be seen what will happen. Would you say it needs a quorum? People must be qualified for the job - there is no way around that. Anything else would be a disservice to the cause. But I would say, that companies need to feed the pipeline of women so that for every job that is opened there is a diverse pool of candidates. didn't believe that. If you ask a young person today, when the last time was we had a white man as Secretary of State, most won't even remember. It is almost like white men need not to apply now - so the joke goes. What is, at the deeper levels, the foundation of your beliefs when it comes to leadership? Cultural imprint, upbringing, education, ...? From the youngest age, I was always curious about people and why they do what they do. Why was it that one teacher was beloved in school others not? And after the Obama campaign, I was offered this book opportunity. The campaign success was still in the air and so was the enthusiasm of the people. The publisher asked me if this enthusiasm was transferable. And so I got the opportunity to systematically reflect my experience with leadership: when and where did it work and when not? What was the common thread? When did I feel valued and when not? When was I the most productive? And when wasn't I? What was going on? And so forth. Appreciation is a key aspect. I sometimes ask executives or managers: When was the last time you looked at your assistant's eyes. Do know even know what color they are? And 90% of the time they have no idea. What advice would you give to people who are unhappy in their job? In my book, I talk about the 'authentic self': who am I and where should I be in the world? Part of a happy life is knowing who we are and where the place is where our gifts can and should be utilized? And if we find ourselves in a situation where our gifts are not being utilized, there are only three options: Authentic self: Part of a happy life is knowing who one is. So start looking earlier? Yes. Nurturing your people up the pipeline. President Clinton wanted 40% women in his administration and this was 18 years ago. He later chose Madeleine Albright to be Secretary of State - for the first time a woman! And we got poured with White House calls and telegrams and letters and people who were so excited about it. I asked Clinton whether he was surprised about the outpouring of reactions and he said: Yes, and that he had chosen her not because she is a woman, but because she was the most qualified person for the job. From the day he chose her, we've only had women and people of color to be Secretary of State: First came Madeleine Albright and then Collin Powell (black), then Conny Rice (black female), and now Hillary Clinton (white female). And at the time, Clinton was warned by a lot of people that the Middle East wouldn't take a woman seriously, Saudi Arabia wouldn't take her seriously. But Clinton actually General infos on Betsy Myers Betsy Myers gathered her experience regarding leadership in different areas and roles - business, academia, politics. In her recent book 'Take the Lead' (see p. 33), she reflects her multitude of experiences and puts them into a context of authentic leadership. Since 2011, Myers is Founding Director of the Center for Women & Business at Bentley University in Waltham near Boston, Massachusetts. She also works as author and speaker on subjects such as changing nature of leadership, women in business, personal leadership and the fully integrated person. Betsy served as a senior adviser to Barack Obama's Presidential Campaign and, faced with the challenge to make the then little known democratic senator from Illinois known to the entire American electorate, later became the campaign COO. The campaign was geared towards an as direct as possible contact to the American people and hinged on the use of modern means of communication such as text messages, email and social networks. It became a resounding success and put Obama in the oval office. As senior official in the Clinton Administration, Betsy was the President's senior adviser on women's issues. As Deputy Assistant to the President, she launched and was the first Director of the White House Office for Women's Initiatives and Outreach. She played a critical role in Clinton's re-election effort in 1996 and figured prominently in shaping the Administration's legislative agenda on issues such as domestic violence, reproductive choice, breast cancer and women in business. A Public Service Fellow at Harvard's Kennedy School, Betsy graduated with a Masters in Public Administration, and then served as the School's Director of Alumni Programs & External Relations before her role at the Center for Public Leadership. Prior to joining the Clinton Administration, Myers spent six years building Myers Insurance & Financial Services based in Los Angeles. She specialized in the small business and the women's market providing insurance and retirement planning. Photos: Betsy Myers, Heiner Kopperman
SwarmMind 1/2012 1. I try to change the situation. Either I look for a different assignment or go to a different part in the company. If it is the boss I am not connecting with, I see if I can fix it by just being honest about it and telling him: this is what I am at, this is how I feel and what I need and that I'd like to put my talents to work. 2. If I can't fix it or I can't leave because of obligations or lack of alternative, then I decide to accept the situation and to make the best of it. Deciding yourself to stay in the company is something very different from being a victim of circumstances. 'I am not going to be here for ever but I am here for a reason.' What a lot of people do instead, is that they stay and complain and plod through their job. 3. And the third option is to leave. That takes courage. How important is courage when it comes to change? Yes, courage is part of it. But sometimes it's simply a change of attitudes. It is not just a bad situation, but it's one's bad attitude. That's when I say: 'Stop, get off the attitude!' After all, we are all leaders. We are leading our own life. We decide how we are going to show up for work, how we are going to act at work, how we are going to treat others. And if I am in a situation where I know it's not good for me but I decide to make the best of it, then I won't turn into this lump of negative energy which so many people do in their life, but focus on how to learn or build good relationships. Only when people have a voice and feel they are part of something bigger than themselves they do their best work. Probably most people in your position at the time would have accepted a job in the Obama administration. It would have been a high level, high exposure job! You decided against it. Are you a particularly courageous woman? You know it is funny because I don't feel very courageous, even though I think it does take courage to not go where everyone would think you should go. But because I had tapped into my authentic self - which is 'what makes Betsy happy' - it was an easy choice. I had listened to what was best for me. My family and in particular my daughter really needed me. Maybe getting older also played a part. When I came out of the Obama campaign, I was 48. What is next in terms of leadership development? What is your outlook? I think that leadership is changing. We still have a way to go - yes. Leadership is messy. Why is it messy? Because people are messy and complicated. You are never going to read Betsy Myers' book or Ken Blanchard's or Jim Collins' new book and go 'OK, I have figured it all out now' and then just follow on it. But what we clearly see from the studies is that an all male white workforce that works on command and control is not leadership stuff in the future! Only 6% of the world's college graduates last year were white men. Think about that! The world is changing to a globally diverse world and leadership approaches will have to adapt. Command and control worked for baby boomers or people before baby boomers. They took the job, stayed for 40 years, retired, got the gold watch, and went home. That isn't going to happen any more. And if what people find doesn't suit them, they will move companies, countries or continent. Thank you for your time. After all, we are all leaders. We are leading our own life. Interesting link: www.betsymyers.com
36/37 Expertise Spirited leadership What the participants said 'It is special, the way we are working on the issue at our tables in mixed groups, and the fact that we are given the chance to actually contribute something to the conference.' Samar Perez-Lennart (Telefónica O2) 'Organisations have to make a more conscious effort to work on the way they see people.' Stefanie Beutel (Bayerische Versorgungskammer) 'Potential development allows staff to apply all of their skills and strengths. I think the crux of the matter is to really involve the staff well and truly.' Eva Hefti (BKW FMB Energie AG) 'Leadership must take the underlying motives that actually drive people into account - I am convinced that giving them more responsibility is a key factor. Presently, there is too much control.' Maximilian Haselbach (BEKB, BCBE) Impressions from a different kind of conference. By Héctor A. Venegas, Dr Dirk Osmetz, Dr Stefan Kaduk
SwarmMind 1/2012 he results are perfectly clear. Companies need new leadership and organisational structures in order to be equipped for the future. For the time being, though, the army of tool-worshipping managers is unstoppable. With this in mind, the Swiss Association for Organization and Management (SGO) and the Musterbrecher® (the 'pattern-breakers'), extended an invitation to a dialogue of a different kind. On 25 November 2011, around 200 key personalities from a wide range of different organisations met at the Technopark Zurich for the 'Lebendige Führung - Muster überwinden - Potenziale entfalten' conference on spirited leadership, pattern breaking and potential development. On the agenda were alternative approaches and shocking impulses from the disciplines neurobiology, organisation psychology, psychology, philosophy and management studies, as well as observations by journalists. The use of interactive platforms supplied by SwarmWorks® allowed the live exchange between attendees and lecturers. Let us not beat around the bush as far as the result is concerned: tellingly, the conference clearly highlighted the fact that the problem is not too few insights, but their implementation. In a sometimes extremely light-hearted and playful atmosphere, participants were able to experience at close quarters how the transition from one-sided efficiency principle to new, solid organisation forms that allow potentials to be developed can succeed. What is needed are new, non-superficial ways in which to experience the world. 'Enthusiasm is like a mind-fertiliser. Doing something with enthusiasm releases neuroplastic chemical messengers', ... ... explained the Göttingen-based neurobiologist Gerald Hüther. He started with a fact about salmon. As they are anadromous fish, the adults migrate from the ocean back upstream to return to where they were born to spawn - and thence to die. It was once believed that this death was pre-programmed by nature, until a researcher flew a few salmon back to the Atlantic in a helicopter. The following year, the same animals turned up again in their spawning grounds. The experiment proved: the salmon's death was not fate, but the result of stress due to the scarcity of food upstream. The salmon are forced into this desperate situation by their hormones. Is there an analogy in there somewhere with regard to the behaviour of some people or entire contemporary systems? We humans are actually capable of avoiding fatal stress, and we are capable of change. Our brain has not been pre-programmed, it offers a broad range of potential 'smart grids' which can be activated at any time - and well into old age. However, it changes only if it attaches importance to something. Emotional concern must be triggered. If an 85-year-old wants to learn Chinese, his friends are going to say: 'You are insane!', if he has fallen in love with a, say 65-year-old, Chinese lady and wants to move to China with her, then all of a sudden that's fine: he will learn just about enough Chinese in six months or so. Enthusiasm is the key. Adaptation is possible if something gets you under the skin. For companies, this means that employees need jobs that make them grow and allow them to gain positive experiences. Rather than taking a biased view of people as a resource only, leaders should create the framework conditions that allow employees to develop their potential. Bird's eye view of the SGO Conference. Picture right: Gerald Hüther. Target Appreciation Clearly defined responsibilities Meaning Job security Infrastructure Autonomous responsibility Relationship Pay Actual 17.5 9.3 28.6 4.0 5.5 21.4 9.3 4.4 17.0 11.7 18.0 10.1 9.8 14.3 10.1 9.0 0% 10 % 20 % 30 % 40 % 10 % 20 % 30 % 40 % A live survey determined what the conference participants - German and Swiss executives and senior managers - wanted in terms of leadership and organisation, and how they actually experienced their environment. The biggest gap between TARGET and ACTUAL became apparent when it came to the extent to which work should be 'meaningful' and satisfying. Being given autonomous responsibility for your work was in second place. Aspects such as job security, infrastructure, motivation through pay and incentives tended to rate lower in terms of comparison with the ACTUAL situation.
38/39 Expertise The Swiss management researcher Hans A. Wüthrich addressed the preconditions for successful spirited leadership and the logic behind its failure. Organisations that cling to the efficiency primacy lose capability, meaning that they become increasingly less able to absorb disturbances intelligently. Standardisation is the antithesis of diversity and scope. Passion cannot be enforced by pressure. The hallmarks of spirited leadership are: a modest attitude, a concept of people as mature individuals, the courage to experiment. the need to compensate their unsatisfactory job situation with volunteering these days. Leadership must reclaim this value compensation for the work environment in order to improve the utilisation of potentials. A working environment must be created in which the impetus generated by voluntariness is given more weight. The organisational psychologist Klaus-Dieter Dohne believes that a sign of 'living systems' is the swaying between the desire to belong and the longing for autonomy. In companies, as in families, it leads to problems when these basic needs are not taken into account. Leadership must design the environment in such a way that they balance each other out. Key is the relationship between co-workers and colleagues. It is always also characterised by the attitude towards ourselves. There are no tools for it. Linear management tools treat human beings as machines, putting something in invariably leads to the production of the required output - wrong! Wolf Lotter, author and journalist (inc. brand eins online magazine) views leadership as a dynamic process that cannot be managed with rigid methods or hero-types. We cannot The participants made active contributions to the event. Above right: Hans A. Wüthrich. content ourselves with optimising, reforming or revolutionising existing systems - we have Organisational psychologist Theo Wehner (Zurich) believes to find new ways of thinking. Old school leadership rests on that engagement is based on voluntariness and autonomy. Vol- governance and redistribution, it is guided by maximum benuntarily engaged citizens cannot be motivated by outside in- efit for those in power. He said that in actual fact, the fundafluence, nor is it necessary to motivate them. What drives mental duty of leadership was being interested in people, to these citizens is having a sense of purpose. Volunteers look for help them to develop, to achieve their maximum productivity organisations that best match their personal values. Unlike potential, and to motivate them to maybe aim a little bit highmost of the workforce in organisations, they are characterised er than they would have thought it possible themselves. by the fact that they want to work collectively. He said that it was symptomatic that so many members of the workforce felt Rebekka Reinhard, philosopher and author, talked of the absurdity of perfectionism. As soon as we can walk, we are conditioned towards efficiency, productivity, control. Even though For a manager or executive, Hans A. Wüthrich's life is everything but theories mean that: perfect, in fact it - I focus on what I don't know. tends to be rather - I accept that complex systems cannot confusing and unprebe controlled. dictable. There is a - I focus on working on 'the system' and on completely different allowing potentials to develop. atmosphere in com- I do not have to be the one who is right. panies that have - I lead by asking questions, rather than just managed to escape Hans A. Wüthrich supplying answers. the perfection trap: - I have - and encourage - the courage to liberty has replaced experiment. anxiety, courage has replaced conformance. From a philosophical point of view, it was existential to allow periods of inactivFurther cues for spirited leadership: ity that are consciously set aside for experiments, confused - Allow maximum scope mental exploration and reflection. 'Confusion does not neces- A third efficiency, two thirds resilience sarily have to be the result of crises or failure. It is a central - Utilisation of collective intelligence skill for survival and enjoying life.' 'Leadership needs the license to experiment.' - Social control instead of system control - Experiments instead of projects Photos: Musterbrecher
SwarmMind 1/2012 Questions asked of the audience: 'Why haven't we made progress with the concept of Leadership?' 'Why aren't we seeing more of these new ideas?' 'Come up with an experiment to initiate spirited leadership.' Inspired by the lecturers, the conference participants engaged in dialogues and conceived some ideas for experimenting with spirited leadership, which included the following: 'What is stopping us?' Scope and time for reflection for managers and executives permits the integration of external points of view and image expansion through active feedback. Realtime polling. Idea: Upper secondary schoolchildren or other people not involved in the Create unrestricted room for change company accompany managers and executives in everyday situations and give them feedback on what they have noticed in order to obtain an unprejudiced external perspective that applies different assessment categories to those usually applied by those responsible for the management of the company. All in all, the participants identified over 400 inhibitive reasons. The most frequently cited were: 1. 2. 3. Short-term success is more important than long-term achievements. Too little confidence in the staff. Worried about loss of control. A department is given permission to change one thing, whatever they like, e.g. structures, staff members, organisation. The department has oneand-a-half days in which to decide what, the decision must be unanimous. The measure must be practicable and is implemented as early as the following day. Its result is subsequently reviewed and discussed by the entire team, together with the line manager. Idea: Rethink target setting and reward processes Idea: Idea: Try out different models: replace set targets with own objectives, replace rewards from someone else with rewards given to yourself, dispense with target setting process and bonus system. Managers and staff swap roles Promote mutual understanding through change of perspective and relativise current take on hierarchy. Framework conditions are changeovers between different organisational units, limiting the duration of the experiment to approx. 3 months, participant voluntariness and a compulsory reflective review. Experience swarm intelligence live. 4. 5. 6. 7. Having fun is suspect. Worried about loss of power. Failure has negative connotations in our culture, or is not perceived as an opportunity. Hedging displaces common sense. Surrender leadership Idea: The CEO/head of the department goes away for at least six months and hands over all his or her responsibilities and duties to his or her colleagues. They are fully responsible and are given the requisite authority. Potential added value: on his or her return, the executive can dedicate him- or herself to new challenges, delegate more, recognise what the others did better or differently.
40/41 Expertise Escaping the rut of bland professionalism Executives always want their companies to become even better, even more productive, even more efficient. In short - they are perfecting it. But is that really the best recipe for success? An invitation to contemplate efficiency, soundness, empowered employees and the breaking of established patterns. By Dr Stefan Kaduk and Dr Dirk Osmetz e are certified, have put up with all the requisite audits, but you know the real reason why we are so successful?' the manager of a car industry supply company asked us when we happened to meet at a conference: 'Because our staff usually don't keep to the rules!' That was probably said with a good deal of cynicism, but still, we often hear managers telling us of the 'everyday lunacy' that prevails in organisations and their upper echelons. We get to hear about strange role playing games, disempowerment by control freaks, anxieties and uncertainty. The question is obvious: do organisations still apply their energy to the things that really matter? Although corporate visions like to give houseroom to buzzwords such as 'permanence' and 'longterm', it is a sad fact that most company managers nevertheless still focus primarily on short-term efficiency, as inefficiency is equated with unprofessionalism. Of course we are not saying that this constant striving for efficiency is something fundamentally bad. Any control and any reporting system can be improved ad infinitum in order to obtain ever more detailed figures even faster. But what if these kind of figures are ultimately not actually conducive to business? What if no-one actually reads these figures with the future in mind? Work within the system? Anyone who focuses only on optimising or accelerating company structures and processes or making them more precise is working within the system. The system itself it unassailable, even if it turns out to be ineffectual. In that case, the only aim is to improve the existing. When managers think about what rules to set for customer visits or how to adapt the incentive system, all their are doing is working within the system. They do not ask the fundamental question of whether customer visits actually make sense and, even worse, whether it is a worthwhile effort to lay down rules for them. Does an incentive system
SwarmMind 1/2012 Pattern-break at Cologne Cathedral: Anyone wanting to climb the towers must first descend. Good to know The 'pattern-breakers' Dr Stefan Kaduk and Dr Dirk Osmetz are the founders and directors of management consultancy firm Musterbrecher® ('pattern-breakers), based in Taufkirchen, near Munich. They are also the co-authors of 'Musterbrecher - Führung neu leben' ('Pattern-breakers - a new approach to management', 3rd edition 2009), a book of discriminating and entertaining thoughts on management and leadership, together with Prof. Dr Hans A. Wüthrich. Dr Stefan Kaduk and Dr Dirk Osmetz advise companies on how to break the established patterns in a sensible way. They are also lecturers and researchers at the Universität der Bundeswehr, the university of the armed forces, in Munich. (f.l.t.r.) Dirk Osmetz, Hans A. Wüthrich and Stefan Kaduk. Contact: email@example.com really do lead to increased productivity on the part of the workforce? After a decade of research and consultancy work, we know that managers - independent of industry and department - invest around 80 percent of their time and energy into working within the system. Another management dimension is often completely neglected: managers dedicate only 20 percent of their efforts to working on the system. Working on the system means putting the existing system itself to the test. It is about reviewing something that has become such a given that an alternative has become inconceivable. Working on the system is tedious. And it is easy to keep on avoiding the issue due to an overwhelming lack of time and - real or imagined - practical constraints. This neglect of much-needed reflexion is usually justified with any number of set phrases: 'We have no time for navel-gazing!' - or: 'At the end of the day, the EBIT is our only benchmark.' They are both important! Modern leadership demands working within the system as well as working on the system - in equal measure. But then managers are no longer the mere guardians of professional-
42/43 Expertise ism in the traditional sense, in other words, they are questioning the established concept of professionalism. Admittedly, the whole thing sounds pretty abstract. Where should we start to 'work on the system'? Well, by taking a close look at what is at the very core of any company - its people, how they are perceived and treated. Simplified, the present maxim is this: you have to keep on motivating employees in order for them to perform to the maximum of their capabilities. They tend to be incapable of self-rule and are able to co-ordinate themselves only up to a certain extent. Their actions are primarily fuelled Anyone clinging to established patterns will be left high and dry. by opportunism. Of course, nobody would really dare to put it quite like that, but what other explanation is there for the fact that trust-based working hours are usually reserved for senior management, or that often, whole departments are kept busy with designing an efficient motivation system? And that despite the fact that there is ample proof that these endeavours miss their mark. The Göttingen-based neuroscientist Gerald Hüther, for example, has reached the conclusion that extrinsic motivation is 'total rubbish, from a brain-technical point of view'. So motivation, or what it means Photos: Michael Göken, Musterbrecher
SwarmMind 1/2011 Magazinname 1/2012 to most companies these days, is therefore a purely fictitious concept. It is also based on a very superficial image of people that allows for one angle only, the economic-rational one. Escaping the rut of bland professionalism is worth it! It is not particularly smart to respond to recurrent diagnoses of failure with an increased dose of the same inefficacious medication. In other words: instead of trying to improve the systems by following the same old 'expert logic' year in, year out, managers could also start to work on the system by first of all taking a long hard look at themselves. Or, as Götz Werner, founder of the drugstore chain DM put it so succinctly, why do we always subscribe to two different concepts of man? The way we see ourselves - and the way we see others ... The decisive benchmark for managers has so far always been whether they have proven strategic skills, and whether they have been able to give their company the competitive edge. A patternbreaking management in times of growing uncertainty, on the other hand, aims at utilising the collective intelligence of staff and colleagues for looking at a problem from a wide range of different angles and allows them active participation in shaping the company. The focus is therefore no longer on 'optimum use of resources', but on encouraging the workforce to develop their potential. The management energy is applied to creating framework conditions under which the collective's existing knowledge and the individual worker's skills can actually be incorporated to the benefit of the company. This is the ethos at W. L. Gore & Associates, for example: the well-known American company, manufacturers of the brands GORE-TEX® and Windstopper®, has stood out from the crowd ever since the late 1950s, when it introduced a back then completely new concept of corporate culture based on 'commitment'. It describes a principle whereby all Gore employees are given the chance of dedicating themselves to issues they really care about. The logic behind it: people perform better if they are also given a free reign to take on responsibilities they really feel passionate about, rather than others having to put in the effort of laboriously inspiring a passion for certain responsibilities in them by external definition. At Gore, something is revealed that can be observed in many of the companies we like to refer to as 'pattern-breakers': on the one hand, they work on the assumption that their staff are mature, responsible people who can be trusted with empowerment - in reality, not just on paper in a high-gloss corporate mission statement. And they give their workforce maximum scope. On the other hand, though, every voluntary engagement counts towards their assessment. So these 'commitments' are no inconsequential walk in the park; they are binding self-commitments. Most of the resultant energy is invested in allowing the benefits of improved co-operation to emerge through the consistent utilisation of collective intelligence, which in turn 'automatically' leads to the discovery of previously unknown advantages that give the company the competitive edge. Gore has applied this approach very successfully for over 50 years, is generally acknowledged to be one of the best employers - and, so far, the company has never been in the red. Interesting link: www.musterbrecher.de So far, the decisive benchmark for managers has always been their strategic skills, and whether these give their company the competitive edge.
44/45 Recommended Reading Recomm Thomas D. Seeley: 'Honeybee democracy' What we can learn from honeybees: For millions of years, bees have regularly had to deal with the problem of finding a suitable site for their colony. Evolution has optimised the way in which bees solve this challenge in such a way as to achieve the best possible results. What works for bees can also be helpful for groups of humans and their decisions. Here Thomas D. Seeley's five guidelines for achieving a high collective IQ: Remind group members of their shared interests and encourage mutual respect so they work together productively. Scout bees work in a team towards their common goal. There are no ego-related conflicts in a swarm of bees. Explore various solutions to the problem in order to maximise the probability of the group finding the best solution. Scout bees will cover as much ground as possible in order to get a wide choice of possible sites for the colony's new home. Consolidate group knowledge through open debate. Scout bees supporting diverging preferences with regard to the best site for the colony's future home lead fierce debates before they make their final decision. The group that gains the most supporters first wins. Minimise the influence the hierarchy (line manager) has on the group. Scout bees do not have one dominant leader, this allows them to weigh up the available options without bias. Create a balance between interdependence (information exchange) and independence (lack of peer pressure). Scout bees are allowed to share their information freely. Each makes its own, independent decision for or against a particular location. Cass R. Sunstein: 'Infotopia - how many minds produce knowledge' How should communication within groups be designed in order to allow everyone to participate, thereby making it possible for a true added value to emerge? What are the active mechanisms involved in this? An ideology-free insight into the world of wikis, blogs and open-source software. Publisher: Oxford University Press, USA (July 7, 2008) Paperback: 304 pages ISBN: 0195340671 Publisher: Princeton University Press (September 20, 2010) Hardcover: 280 pages ISBN: 0691147213
mended Reading Peter Miller: 'Smart swarm' This book is perfect for anyone wanting to find out more about the subject through stories and examples. Miller starts with ants and then gradually works his way round to explaining various misguided forms of application with stories about researchers and their work and examples from business management and the political arena. Taken on its own, this book might lead you to look no further than this anecdotic take on swarm intelligence. However, in combination with Len Fisher's book (see below), it provides a good all-round overview on theory and practice. Hardcover: 304 pages Publisher: Avery (August 5, 2010) ISBN: 1583333908 SwarmMind 1/2012 Eric Bonabeau, Marco Dorigo, Guy Theraulaz: 'Swarm intelligence: from natural to artificial systems' One of the earliest and most definitive works on the subject of swarm intelligence. The authors write about experiments with eusocial insects, the insights and inspirations gained from this research, and also about practical applications in data analysis and other complex tasks. This book assumes an educated interest in the natural sciences and some previous knowledge of the subject. It reveals how the observation of insects can suggest solution approaches to problems of immediate concern and interest to people. Paperback: 320 pages Publisher: Oxford University Press, USA; 1 edition (September 23, 1999) ISBN: 0195131592 Len Fisher: 'The perfect swarm' Our favourite 'swarm book': written by an Australian physicist who has a knack for communicating complex subjects and sound scientific facts with a dash of humour and in a way that makes them easy to understand for the general public. Some of that is lost in the German translation (the title, for example, has simply been translated as 'swarm intelligence' - not quite the same, you'll agree). nevertheless, even the German translation is in our opinion still the best 'all-rounder' on the subject: sound insights, fascinating examples, photographs, diagrams and an extensive list of sources. Everyone will find something interesting on the subject of 'swarms' in this book. Paperback: 288 pages Publisher: Basic Books; First Trade Paper Edition edition (March 8, 2011) ISBN: 0465020240 James Surowiecki: 'The wisdom of crowds - why the many are smarter than the few' The business journalist James Surowiecki cites many example for how and under which circumstances groups are smarter than individuals. This book is as profound as it is entertaining and provides much food for thought for anyone keen to find out more about the various aspects of collective intelligence. Paperback: 336 pages Publisher: Anchor (August 16, 2005) ISBN: 038572170
46/47 Swarm Alert How bees arrive at unanimous decisions swarm of bees off to establish a new colony has to consider carefully where it going to settle. Scouts swarm out to inspect the area. With a 'waggle dance', they tell the bees that stayed at home which is their preferred site. The American researcher Thomas D. Seeley already discovered some years ago (see p. 44) that the swarm ultimately goes for whichever site is supported most insistently by the respective scouts. But how does the swarm reach a consensus when two sites are equally attractive? Seeley and his colleagues put the rule to the test. They released a swarm of bees on Appledore Island, off the coast of Maine (USA). The researchers presented the swarm with two equally suitable, man-made sites. The house-hunting bees were marked with either yellow or pink to indicate whichever site they preferred. The researchers then filmed the decision making process inside the beehive, and discovered something no-one had noticed so far: whilst some bees dance to attract votes for their site, the others try to prevent them from doing so with 'stop signals'. They butt them with their heads and buzz in a certain way. The signal presumably means something like: 'Wait a minute, here's something else to consider,' says Kirk Visscher, coauthor of the study, which was published in Science magazine. After a while, the headbutting stops, a decision has been made: the swarm has agreed on a site, revealed by the fact that even the overruled party's supporters start to give out the 'stop signals'. The researchers believe that the process that goes on in our brains is not unlike the decision making process exhibited by a swarm of bees: certain neurons specialise on stopping the activities of other neurons - until our system makes the decision in favour of the option with the least resistance. Interesting link: www.youtube.com/watch?v=n4ogqyi2WIg Photos: Shutterstock, Michael Göken, Hans Zippert
SwarmMind 1/2012 Listening to whales Assistant researchers needed: Scientists are studying marine mammal dialects. Hans Zippert Swarm alarm Research into swarm intelligence is still in its infancy. Is mass really everything, the individual nothing? otorways are a perfect example of swarming behaviour. A swarm of vehicles, all moving in the same direction - and although each individual member of the swarm is convinced that it is surrounded by idiots, it still doggedly follows the others. At some point, the whole swarm comes to a halt, resulting in a traffic jam. This is a perfect example of swarm stupidity; a phenomenon which has so far been ignored by researchers, even though it is actually quite common. Masses of migrating lemmings heading cheek-by-jowl for the abyss, audiences at Mariah Carey concerts, buyers of Lehman Brothers shares or people voting for balance of power parties such as Germany's Free Democratic Party (FDP) in droves of such multitude that the individual swarm members wonder in hindsight what made them do so. What is clear is that the display of swarming behaviour is not necessarily a sign of intelligence, whilst clearly, anyone caught up in a swarm risks being stung. Many German storks join the next best flock of storks without giving it much thought, only to discover that they might end up spending the winter in a country where storks are considered a delicacy. Involuntarily, we wonder: which swarm, which flock should we join, which herd is best for me? Do I tend towards swarming behaviour? Does my chosen swarm mostly consist of undercover government agents? And why are the masses raving mindlessly about Italian aperitif 'Aperol Spritz'? What we need is a swarm licensing authority, a ministry for swarms, a swarming intelligence test. Most urgently, we must make the wearing of crash helmets compulsory for swarm-minded people. nterested in becoming a citizen scientist? The task on hand is to compare the sounds and calls of pilot or killer whales (orcas). Orcas alo- ne are known to produce over 150 different sounds, apparently an indication for the existence of a range of dialects. The team of researchers from Scotland's University of St Andrews gets people involved in this online initiative by asking them to listen to a range of pre-recorded calls, then cast a vote. Matching calls are grouped as 'similar'. If a great number of people agree many times over, the scientists will be able to produce a map on the basis of calls that sound more or less the same. This will enable them to draw up a pattern and learn how the animals communicate with each other. The project is one of the most sophisticated examples of 'citizen science'. Interesting link: http://whale.fm Impressum SwarmMind Edition 1/2012 | Published by SwarmWorks Ltd., Langbaurghstraße 17, 53842 Troisdorf, Germany | Legal responsibility Heiner Koppermann and Klaus Pampuch | Telephone +49 2241 12352-20 | Fax +49 2241 12352-30 | Email firstname.lastname@example.org | Editor-in-Chief Dr Irene Meichsner | Editors Jürgen Ponath, Heiner Koppermann, Klaus Pampuch, Héctor A. Venegas, Carola P. Venegas | Final editing Roland Reischl | Design Göken etc., Cologne | Creative Director Michael Göken | Printed by Druckpartner, Essen Your Hans Zippert
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