To improve non-profits, mandate disclosure of their results

All non-profits should be required to disclose the results of their efforts to impact social systems. Let me explain why. CONTEXT

I firmly believe that social impact business models (whether or not they are for profit) will only take off once the sector knows how to measure impact. Moreover, I firmly believe that we won't really make headway on solving social problems until we start measuring social impact.

Why? Because we can't work smarter or efficiently without measurement. Measurement provides two critical benefits to any organization in any sector, whether it's for social impact or in a traditional for-profit company.

1) Measurement provides Managers objective feedback about their performance. Without measurement, Managers can't tell (with much clarity or precision) whether the plans they enact are actually improving how their organization operates or whether they are achieving results.

2) Measurement provides investors data about whether their capital is being used efficiently. Can you imagine capital markets working without public companies releasing reliable, accurate financial statements? We're surely not allocating capital efficiently in the social impact sector if we can't objectively compare one organization against another.

I've been zeroing in on this idea of social impact measurement (and that it's crucial for moving the needle on social issues) for some time and I've come to a stark conclusion. We should mandate that non-profits disclose their results rigorously and uniformly.

THE ARGUMENT

Put yourself in the shoes of a non-profit CEO. Fundraising is your organization's lifeblood. You're constantly stressed about staying solvent and carrying out your mission. Say you're evaluating whether or not to rigorously disclose your organization's impact through a uniform set of audited social impact measures.

As a non-profit CEO I would never voluntarily disclose my organization's impact results in a rigorous way because the downsides (the costs of data collection /reporting, the risk of looking bad compared to someone else) far outweigh the upsides (the potential for increased funding because my results are good). In other words, as a non-profit CEO I would never voluntarily disclose results because it's not in my organization's individual interest.

Moreover, even though it's the right thing to do, I think it's unlikely that a movement from within the non-profit community will compel non-profits to rigorously and uniformly report their results. Even though uniformly reported metrics are good for the sector and for the public, it's not in the interest of individual organizations. Moreover, the sector is incredibly decentralized, making it operationally difficult for a movement within the sector for impact reporting to actually come to fruition.

This leaves us with one simple option: create a uniform set of impact metrics and mandate that all non-profits disclose their results on a regular basis. (I do see one unlikely way of creating a movement inside the non-profit community, which I'll discuss a bit further down).

Here's the summary of the argument:

1) Rigorous, uniformly reported disclosures of impact metrics would help solve social problems faster 2) It's not in the interest of individual non-profits to rigorously disclose their own results, so they will not 3) It's unlikely that a movement within the non-profit community will compel rigorous disclosure of a uniform set of impact metrics

Therefore, we should create a standard set of impact metrics and mandate rigorous disclosure on a regular basis

I don't think the mandate I'm suggesting is unreasonable. Non-profits are allowed to operate without paying taxes or having their donations be taxed. This is an enormous operating benefit. Non-profits are given their tax status because it's presumed they are operating to provide social welfare. We (whether as a regulator or as a funder of non-profits) currently have no way of screening whether they are actually providing social welfare. If they're getting such a big benefit, why not ask non-profits to justify it so that funders can make good decisions about how they allocate capital?

Moreover, business have to disclose audited financial statements all the time which demonstrates that uniform disclosure is possible with the right set of reports.

Many people I know would argue that "it's too hard and/or not fair to measure social impact" and I don't think that's a reasonable counter argument. Here's why:

•  Existing efforts to create social impact metrics are not impressive, nor do they seem like earnest attempts. We haven't even really tried to do this yet (as a sector and society) so how can we say that it's too hard?
• A lot has changed in the world, with the proliferation of digital infrastructures and technologies. One of the biggest challenges to measuring social impact (data collection) becomes more and more feasible every day
• If every non-profit starts at the same time and is held to the same standard, it'll even the playing field between different non-profits. In other words, no organization gets punished for disclosing first

AN ALTERNATIVE

If not mandated by the federal government, I think funders and mayors can play a big role in pushing for a standard set of impact metrics. Foundations for example, are a narrower set of players in this ecosystem which means its easier to coordinate their actions. For example, if a group of the 25 largest foundation funders in the country came together, created a system, and required their grantees to publicly disclose reports, they'd be able to compel a substantial amount of non-profits to disclose results.

Similarly, a mayor of a major city wanting to improve the performance of local social sector organizations (whom governments often partner with) could be a convener to get this to happen. If a lot of the big players started after such an intervention, the littler non-profits would have to follow-suit to compete for dollars.

CONCLUSION

To conclude, I think rigorous, uniformly reported impact metrics are crucial for performance improvement in the social sector. I can't even believe non-profit CEOs have gone so long without such data to manage operations.

I don't think that will ever happen without a mandate, despite being good for the sector and good for citizens.

A Backdoor Antidote to Money In (Local) Politics

I'm currently reading Lessig's "Republic, Lost" at the recommendation of my friend Dominik (thanks buddy).  Because the book is about the influence and implications of money in politics, I've been thinking lately about how to combat this pervasive force.  Per usual, let's start at the beginning - why do people want to give money to political campaigns? This is what I was able to come up with (Lessig does have discourse about this, but, I've taken my own liberties):

Candidate Support: They want to raise their "voice" to support the candidate and do not expect personal favors in return Intrinsic Motivation: They value political engagement and want to participate in the process beyond voting Reciprocity and Access: They want to curry favor with the candidate and want the candidate to prioritize their interests when elected

If a citizen is donating to a political campaign in the first two instances they probably aren't donating a lot of money. Why? Because they don't expect anything in return, and I suspect most people wouldn't dogmatically support a political candidate enough to drain their savings without expecting something in return.

This assumption needs a bit of defense, but let's continue and assume the corollary as well - that when people donate huge sums to political candidates it's because they expect something in return. In return for donating money, they want access to power.

If that's the case, and we want to mitigate the effects of money in politics, why don't we just give people access to power for free? Isn't that how it ought to be anyway? I'm envisioning a campaign where a candidate and his/her staff talk to thousands of constituents personally over the course of a campaign and when in office. My hypothesis is that if you actually listen to people's problems on a personal level, and talk to them, you can get them to vote or even campaign for you. 

Sure, that still takes money, but potentially much less because people have a real connection to a candidate and their interests are presumably more likely to be addressed as a result.

Of course, this is much harder in non-local elections and I'd have to make many more assumptions about voter efficacy to extrapolate this idea beyond local elections. But why not adhere to this policy in a local election? Even in a city of a million or so people, you could meet with 10s of thousands of people in a few months.

It's a lot of work for candidates, but isn't political leaders working directly with the people exactly how we want our republic to function? Who actually wants to continue to have money ridiculously influence politics?

Detroiters, what do you make?

I make ideas, connections between communities, slam poems, and pancakes. Detroit, what do you make? ---

BERLIN, GERMANY - In the short time I've been here, I've come to realize that Berlin was Detroit before Detroit was Detroit. We have many lessons to learn from Berlin, but it comes down to this: Make Something.

Berlin has a distinct culture, for the same reason that any city has a culture, people have agency and create things - whether it's art, food, businesses, or ideas. As people here have gone out and just created, it's turned Berlin into a vibrant, international, hard-working, party-all-night, entrepreneurial city. It's really an amazing place.

I'm not suggesting we try to make Detroit to look and feel like Berlin. What I am suggesting though is that we focus on making and creating, because that's the only way cultures form - when passionate people go out, do what their heart desires, share their experiences, and learn from other people.

Right now, in my opinion, the culture of Detroit is more consuming than it is creating. There are a small group of people creating valuable products and experiences and many more people free-riding and consuming them. That's fine for a time, but the city will never grow if we consume more awesome things than we create.

We have no other choice by to make things. Working a 9-5 job and calling it a day doesn't count because those profits and value gets extracted by a private entity...there's ever any spillover to the community.

So my fellow Detroiters, I think it's time we stopped trying to do the next big thing and just started created something by following our hearts and sticking with it. Who cares if it'll get press or get big accolades. Let's just make something that represents who we are and what we care about.

So, I ask again, what do you make?

Time vs. Money

PRAGUE, CZECH REPUBLIC - Around this time last year, I was returning from Europe to begin my first year of Business School. I've learned many things in the past year, but this strikes me as the most important learning, by far: The essential trade-off in life is between time and money. Time, as it turns out, is more valuable.

There are really only two simple reasons which illustrate why time is more valuable:

-Time is fixed. We cannot trade for more. To make matters worse, we can't definitively predict how much time we have. -Most of the things that (truly) make life worth living require time, but only modest amounts of money.

There are many more reasons - in addition to these two - why time is more valuable than money, but these two are pretty compelling on their own, no?

In the past year, I've had to make big decisions about my life. These big decisions, really come down to one thing: what do I value more, time or money? In my own life, I've chosen time over money and I think that is the better choice.

In the US, our culture (I think) values money too highly relative to time. Money is necessary in human society, so I don't think its wise for most people to forget about it...but we could stand to forget about it a little. If we did so, we would be better off individually and collectively.

Why? Because valuing money over time makes people do crazy things and it causes them to be unhappy. Marriages, families, communities, and nations fail when people value time over money (over the long-term). It's a sustainable proposition to value time over money in the long-term. Valuing money over time, in the long-term, is not a sustainable proposition.

Here's the question I'm grappling with now: how can we start to alter societal narratives about time and money to make it a healthier balance?

Any ideas?

---

As a shoutout to my Business School friends, here's another question. When making business decisions (about our careers or when making decisions in our official duties) why don't we value time?

Observations as a Municipal Ethnographer

Mikulov, Czech Republic - Over the past week, I've been in several geographic contexts. Let me tell you where first, and then I'll share an observation. This is where I've been:

-Detroit, MI (Both the downtown areas, and the neighborhoods) -The suburbs of Detroit, MI (Rochester, MI to be exactly) -Long Island, New York -The inner suburbs of New York City in upstate New York -Vienna, Austria -Mikulov, Czech Republic -A series of towns between Vienna and Mikulov

Even beyond the places I've been in the past few weeks, I've been to many other cities and towns in my lifetime. Moreover, I've been to different pockets of communities within each of these geographies. The key observation I've made is based on this curation of cities and towns I've done throughout my life.

Upon first glance, I would've expected places to be similar based on geographic proximity (e.g., Detroit would be most similar to Rochester, Long Island would be most similar to upstate, Vienna would be most similar to Mikulov, etc.)

Geographic proximity was probably something that really mattered 50 or 100 years ago. But the funny thing is, I think that's changing. The places most similar to each other are precisely not the places which are geographically closest.

Rochester, for example, felt most similar to suburban Vienna. Vienna felt similar to London, DC, or another Capital cities. The small Austrian towns I've rode through felt more similar to Western Kentucky than they did to Vienna or Mikulov.

A theory: economic similarities trump geography and culture To cut to the chase, here's what I realized: nowadays, places have more in common with places across the world that have similar economies (industries, education, etc.) and levels of wealth to them. That is to say, they have surprisingly little in common with places that are near them but have dissimilar economies.

Of course, language and culture matter. But, I think those things are starting to matter less because language barriers are falling due to the internet and cheap global transportation give many people the opportunity to experience other cultures.

As time goes on and the world gets "flatter", those language and cultural barriers will matter less and less - economic similarities will matter more and more.

My roommate on the trek I'm on in the Czech Republic and i were just talking about it. He agreed that my theory is possible and put it this way (note that he's Korean-American, but spent the last 5 years working in Korea before coming to Ross). If he was on the subway in Korea he'd be more likely to strike up a conversation with a westerner who looked like a businessman, rathern than talking to someone who was Korean but didn't seem like a business person.

Moreover, he believes that if he were to talk to a non-businessy Korean not only he would be uncomfortble, the person he was talking to would be uncomfortable (assuming his conversation partner had a different socio-economic prfile). In his subway example, wealth and profession (i.e., economic similarity) trumps geographic and cultural commonality.

On first glance, that seems normal. But when you stop and think about it, it's terribly interesting, no?

Here's the takeaway (I'm using some of the phrasing from my very smart friend and classmate Adam): now places may have more in common with other places with similar economies and levels of wealth, whereas they used to have more in common with places which were geographically proximate to them.

Implications

If this hypothesis is true - that places in today's age share greater commonalities based on economy and wealth (note: "wealth" could just as easily mean inequality levels) - it would have far reaching effects on civil society. I don't know what would actually happen, but I think some of the following scenarios are plausible (these are scary enough, even if they're only plausible and not probable:

-Nothing will happen. Perhaps, economic affinities will trump geographic and cultural affinities enough for conflict to occur (I don't believe this, but it's a reasonable conclusion)

-Economic similarities are self-reinforcing and become more pronounced

-As economic similarities become more pronounced, now, people who are increasingly dissimilar are still living near each other. This leads to conflict and "class wars"

-Institutions (i.e., governments and large corporations) try to manipulate public opinion to distract the poor from economic dissimilarities and growing levels of inequality. For example, political parties could increase attention on issues which distract the poor's anger from issues of inequality, or, realign the poor's primary affiliation to nationalistic identities.

Here's how what I just said could look in practice: a political party fanning the flames on a volatile social issue to captivate poorer audiences (e.g., gay rights) - this is an example of diverting attention from inequality to a volatile issue. National governments pursue military action against another country to unite a country against an external threat instead of internal institutions - this is an example of institutions realigning citizens to nationalistic identities.

Both of these examples sound familiar, no?

I'm not saying this is happening, just that it's a plausible course of action for any institution if my hypothesis about geograhy and economic similarities are correct.

-Conflict across nations (inter-state conflict) could reduce, but intra-state conflict could rise. The influence of large municipalities and regional governments will rise because of their new importance in managing inequality, economic growth, and societal conflict.

---

I leave you with this: when you choose who you talk to on the subway, how would you choose? If it was 50 years ago, would you choose someone else?

I think that answer would be different today than it was 50 years ago. If so, there could be far reaching implications.

Remembering the Airplane Landed

VIENNA, AUSTRIA - I arrived in Vienna yesterday, and had the worst travel day I've ever had, starting with finding my luggage to be lost upon landing in Austria. Over the course of the day, though, I did learn a very important about placing value on the things that really matter. As a bit of context, here's why my day was so difficult:

- My luggage was lost - It took me almost 1.5 hours to find my hostel after getting off the subway - I couldn't check into my hostel until 2pm (I landed at around 10am) - I don't speak a lick of German, so It was very hard to talk with people - I found out late in the day that the following day was a holiday, so I had to make my limited amount of Euros last until I could go to the bank. (I'm trying to avoid ATMs because of the fees) - The internet connection in the hostel was crummy so it was hard to communicate back home and wrap-up the school-related things I needed to do. Beyond that, it was difficult to communicate with the airline about my lost luggage - The lobby of my hostel was smokey - I lost my map, and had to scrape it together with a poorly drawn map in a tourist magazine and maps at bus stops to get back to my hostel - Like a buffoon, I didn't pack my toiletries in my carry-on bag, so all I had was a travel toothbrush - It wasn't worth it to take a shower, because I didn't have clean clothes or a towel - After all this, for dinner I ordered a pizza with anchovies on it, without realizing it. This would've been fine, except as it turns out, I can't stand the taste of anchovies

But I learned a lesson while talking to one of my bunk-mates, an 18 year old Russian girl taking a trip before starting college. She was surprised that I was in fairly good spirits, even though I was in a less-than-ideal situation.

Losing my luggage was out of my control, I told her, so why worry? But as she asked me more questions, I realized the real reason why I wasn't too stressed:

Despite every frustration I had yesterday, my plane still landed safely, and that was the only outcome of the day that truly mattered.

It was an important lesson in life and leadership. You always have to remember to focus on what matters and put your effort toward that. It's easy to get caught up in the small stuff, but you can't let it distract you from what truly matters.

In the case of an airline, it doesn't matter if you're luggage is never lost if you're planes aren't safe. As a husband, it doesn't matter if you can provide your family the money to live lavishly if what they truly need is your love and your time.

Focusing on the outcomes that truly matter and seeing beyond the outcomes that don't is an important lesson. It's also a valuable skill that the greatest leaders I've ever met all possess.

Business and Society's Deeper Challenge

It is plain to see that the complex problems faced by business and society this century will be incredibly difficult to solve. Business, for example, is contending with the pressures of hypercompetitive markets, increasingly demanding consumers, and an accelerating pace of technological disruption. Society as a whole has even harder problems – climate change, infectious disease, terrorism, traffic, food security, and economic inequality, just to name a few – that are systemic and global in nature. These problems are too big for any institution – whether it’s a business, a government, or a non-profit – to solve alone. Take the fight against child hunger as an example. All three sectors must work in concert for the system to change: business must develop new, nutritious foods, government must set policies which bolster food access, and non-profits must work on the ground to ensure aid reaches hungry children.

Of course, child hunger is just one example of the many issues that are solvable only if the public, private, and social sectors collaborate.

Because the world’s most challenging business and social problems are too interconnected and complex to be solved by one institution alone, I believe that we are left with two choices. We can either work in siloes and struggle, or, we can learn to work collaboratively across industries and across sectors to solve the biggest problems humanity has ever seen.

Unfortunately, co-creating solutions across sectors – beyond traditional public-private partnerships that are merely funded or operated jointly – is incredibly difficult to achieve for many reasons. Legal structures for collaboration are nascent and governance structures are hard to create. It’s hard to develop effective incentives for all sectors, especially because the shareholder value model is so pervasive in global markets. To add insult to injury, many business leaders and citizens do not even see the value of cross-sector collaboration or believe it is a viable option.

Moreover, even though learning to collaborate across sectors is not a social issue or business issue on its own, it is a critically important challenge because solutions for so many difficult problems require cross-sector collaboration. For these reasons and many more, learning how to work across sectors to solve complex problems, I contend, will be the greatest challenge for the next generation of business leaders.

The Fading Corporate Dream

Over the past year, I've noticed high-talent folks I know start to rebuff the corporate dream they thought they wanted. These folks are the top performers at their firms leaving after a few years or the rockstars that avoid the corporate route altogether. "Why oh why?" sing the corporates, "why are are these talented people leaving?" Here are all the reasons that I've heard and observed:

• Co-workers / management aren't competent
• Co-workers / management don't actually care about creating value for customers, they care about their own careers
• Employees aren't recognized or given opportunities based on merit - it's about your tenure or ability to network
• They company isn't interested in being bold, innovative leaders in their markets
• The company's work-life flexibility terrible
• The organization moves too slow and/or doesn't take risks
• Employees can't chart their own path / you feel like a cog in a machine that does the same thing over and over
• Employees don't learn and grow either in formal settings or on-the-job
• Employees can't be themselves, they have to act a certain way
• Employees aren't value or recognized and/or they don't see how their work actually has an impact on customers' lives or the world

The list goes on.

The dissonance now exposed Most people in this country want to be free. We don't live in a country with an autocratic system of government, so most people have at least some glimpse of what it means to be free. Think about what being free feels like for a second. It means you're able to pursue your own dreams and assemble peacefully. It means you're able to speak freely and have your day be relatively unintruded by the influence of institutions. You are able to be yourself and express yourself. It means you have due process of law if you break the rules or are accused of wrongdoing.

Now think of what life is like in a large corporation. It's not at all free. Instead of pursuing what you want, you do exactly what your boss tells you to do for fear that you'll lose your job. You don't really have the ability to express yourself unless you have a lot of power or authority in the organization. You are constantly bombarded by doing the stuff your boss doesn't want to do. Depending on who you are or what your connections are you get preferential treatment by authority holders in the organization (you don't get due process). No, corporate life today is anything but being about freedom. On the contrary, corporate life is all about control.

This is why employees are leaving corporates in droves: they don't want to be controlled, they want to be free.

Running corporations with a controlling mindset used to fly because employees had no viable alternatives elsewhere in the job market. Small firms didn't really have as much impact on the world as they are able to now. Small firms weren't stable and they didn't provide opportunities to learn and have that learning be viewed as legitimate by other companies. It was difficult to access networks of people, resources, or customers unless you were a big firm. As you can see, even just a few decades ago, smaller firms provided much less value to employees than they now can.

That dissonance - that corporations often operate like autocracies in a society motivated by the pursuit freedom - is now exposed. Not working for a corporation is now a legitimate choice. It's easier to find smaller firms or start your own business. People now have the capability to tap into global networks of ideas and support which gives them a safety net to lean on if things go badly. People can now move (literally) across the world more freely. Potential employees are no longer stuck. That's why people with a lot of talent (and even people that aren't blessed with a lot of pedigree) are doing something different - they don't really have to work for corporations anymore.

The punch line The fact of the matter is that corporations that want to recruit talented people won't be able to operate as autocracies for much longer. Many corporations are already starting to change. But it's not just about tech sector or startup perks, that won't be an antidote for long because it's a superficial change. Corporations instead have to fundamentally change their assumptions about their employees - they're not robots you program, they are assets that you have to garden and groom to unleash their full potential. Corporations have to stop being autocracies.

If corporations don't shed their autocratic roots, the corporate dream will continue to fade. And then, things will really get interesting.

Millennials Matter Because Of Their Time, Not Their Money

There’s lots of talk about bringing young people to Detroit. To be honest, I agree with that. But there’s not a lot of talk about why it’s important to bring young people to Detroit. The story I usually hear is one of income. Young people can pay rents, go to local restaurants, patronize local businesses, and pay taxes to local governments. After all, the story goes, young people make good incomes and have few financial strings attached. Young people also have talent to work in local companies and the smarts to help them grow. In more ways than one, young people breathe life into cities and the ecosystems tied to cities.

All this is true, but I think it’s missing the point. The real value young people give to cities is their time, not their money.

As young people, we don’t really realize this, I think. I, as someone who wants to use his energy for public good for example, often become frustrated that I don’t have the money or influence to affect change in Detroit or elsewhere. What I forget about is how much time I really have compared to other people – especially compared to older people with lots of money and lots of influence.

Young People And Innovation The resource of time is not trivial, it’s absolutely core to growth in a city. Here’s what time allows young people to do:

Build Networks – developing relationships takes lots of time and energy if done right. There’s really no way around it. Young people have lots of time to cultivate relationships and they do. These networks do not only benefit the young people building them, it makes the city more efficient because thick networks move information and resources across the city more efficiently and with greater results. Young people break silos in ways that older adults cannot and don't have an incentive to do. (Power players in a network have an incentive to keep silos because it preserves their power. Young people have an incentive to break silos for the opposite reason – it allows them to break up concentrations of power.)

Try New Things – Young people have a lot of time to experiment, which is why it’s common to see innovative startups created by young people – they can blaze new trails easier because they can put in the time to figure out new, complex problems. In any company or city, young people always lead new experimental things because those young people have the time to mess around and learn. Because those learnings add up rapidly, young people can do amazingly creative things faster than people who are older.

Explore Ideas – Young people also have lots more time to “stop and smell the roses.” If they choose to, they can learn and explore and be inspired by new experiences. They can noodle on things and imagine the future because they’re closer to the mindset of children. Young people can be foolish because they don’t have families to feed. They can follow dreams because they have little to lose compared to people who are older.

You’ll notice that these three things: networks, experimentation, and inspiration are three fundamental components of innovation. I don’t think that’s a coincidence.

Intergenerational Collaboration Is The Key The way I see it is this. Older people have experience, resources, and influence. Young people have the time to build networks, try new things, and explore new ideas. To me this is the perfect match for creating innovation.

I firmly believe that intergenerational collaboration is absolutely essential if we want to innovate successfully, in Detroit. But to be honest, I don’t really see that happening today. I think both sides want to lead the other. Of course, this is my opinion, but I don’t think I’m alone in believing this.

This is also my opinion, but, I think we can do a lot more if we have intergenerational collaboration. The real kind. It'll just take both sides stepping out of the spotlight and focusing on working together.

Disclosure: I am part of the “young people” so that’s where my biases are.

How the Internet Complicates Democracy

Let me start by first reiterating that the Internet is a wonderful tool. If you are reading this, you no doubt know of its trappings and utilities. I do not mean to discredit that notion in this reflection. There are many reasons that the internet has been a force for good in the world. However, there are at least a few ways I see that the Internet appears to make democratic societies more difficult to maintain. These four categories are interconnected, but I believe their underpinnings are unique.  I’ve written all of this very casually.

Complications in Decision Making

In a democracy, groups of people have to get together to make decisions on matters affecting the polity. This group of problems outlines how the Internet makes it more difficult to make decisions.

• The problem of real-time information: Often in the public sphere, governments make plans which take years to implement, maybe even decades. The Internet, however, surfaces new information all the time. Because of the Internet, we are much more able to get a continuous flow of information. That is great when you are managing a problem, but difficult when trying to make decision because it can cause priorities to shift quickly. Pivoting priorities isn’t ideal when trying to do something that requires a long lead time. By extension, the Internet may make it more difficult for long-term projects to make it across the finish line.

• The problem of crowd validation: Sometimes “the crowd” is very good at making a decision and sometime it isn’t. The Internet makes it much easier to tap the knowledge of the crowd. What’s problematic is that because the influence of the crowd is so strong on the Internet, it could make it much easier to blindly ignore ideas that don’t immediately get traction with the crowd. Many good ideas, more than prior eras, could be left to rot in the annals of the internet instead of being incorporated into a process for making decisions…just because the crowd immaturely rejects them.

• The problem of convenience: Decisions and ideas don’t get better without tender love and care. Improving ideas takes a special kind of ardor and time, I’d say. The difficulty with the Internet is that it can make it too easy to participate in decision-making activities, which allows people to participate in a cursory way. At some parts of the political process, this is probably fine, but isn’t there some value in having an intellectual cost to participate in a discussion, because it ensures that the people participating are serious about their responsibilities?

Complications of Power

In a democracy, different people can affect the democratic process in different ways, depending on the amount of power they have. This group of problems outlines how the Internet can concentrate power (in a way that’s not desirable) more than in previous eras.

• The problem of centralized access: Currently, the internet is a centrally organized infrastructure…users connect to centralized websites and centrally managed information technology services. The problem with centralized infrastructure, of course, is that bottlenecked resources have a lot of power. Companies who control access to centralized resources (like the Internet) can charge people a lot of money, and, manipulate people by threatening to withhold access to the centralized resource. That could happen to the Internet…it could be a resource that’s used as a bargaining chip.

• The problem of signal and noise: There is lots and lots of information on the internet. And, if you’re trying to influence others it’s hard to get your message to “stick”, especially if only a few companies account for the majority of traffic on the Internet. That sort of setup is advantageous for well-resourced interests…they can buy clicks to their websites. By spending generously, they can flood their opponents out of the market for information. On the Internet today, it’s more and more important to be a well-known and influential voice; it’s hard to court a national audience otherwise. It’s easy to speak freely on the Internet, but it’s hard to get people to listen on the Internet, unless you have a lot of cachet or a lot of cash.

• The problem of anonymity and feedback: On the Internet you can say a lot and not be accountable for the costs. You can spread rumors and lies and do it anonymously. This allows for manipulation, because you could easily slander your opponents without cost (or hire someone to do it for you). In the public sphere you used to take a hit to your reputation if you acted like a bozo or were deliberately misleading. Now, you can very easily devolve conversations by trolling people or blatantly lying, without ever getting caught. This is problematic to democracy, because we may never get over our squabbling long enough to discuss complex or emotionally charged issues.

Complications of Association

In a democracy, groups of people have to associate and find common ground to make decisions. If they don’t, they spend a lot of time arguing. This group of problems outlines how the Internet makes it more difficult for people to “come together.”

• The problem of shared values: Even though the infrastructure of the Internet is centralized, how information proliferates is not centralized, especially as compared to mass media channels like TV or radio. Because there are so many media outlets, there’s no uniform message that everyone in the country really hears. This, I suspect, makes it more difficult to have shared values across a nation. The logic goes, if you’re receiving different information than the people around you, it’s more difficult to be similar to them. This isn’t wholly a bad thing, but if shared values are a boon to collective action and democracy, the Internet will make democracy more difficult.

• The problem of trust and empathy: The Internet makes it possible to isolate yourself physically from communities you don’t want to interact with. Lots of micro interactions no longer have to exist. Take getting somewhere you’ve never been before as an example. You used to have to stop and get directions (thereby interacting with a stranger you wouldn’t have otherwise interacted with). Now, on the other hand, you can just use Google Maps and never have to talk to that direction-giving person again. Because of this ability to physically isolate, I suspect it negatively affects building empathy toward people you can now choose not to interact with. In societies empathy is important so we don’t tear each other apart.

• The problem of self-selecting tribes: This is the intellectual version of the problem of trust and empathy. Basically, you never ever have to read anything you don’t agree with because of the Internet. Researchers are studying this and are finding that folks who consume news in this way tend to be more polarized. Check out this study.

There are also a whole slew of studies about the Internet’s effect on political discourse. (Note, these are really interesting, and a lot of my intuitions are confirmed by these studies).

Complications of Information

In a democracy, political actors and citizens depend on information to make their decisions. This group of problems outlines how the nature of information is changing, and making it harder to execute democratic processes.

• The problem of transparency: Now, it’s possible to access lots of political information because governments are moving toward transparency. By many accounts this is great. What’s difficult about this is that there’s now more information than any individuals can reasonably process, because the data available is overwhelming. We’re starting to have some tools to make sense of this data, but we still have far fewer tools than we need to de-complicate the volume of data that transparency creates.

• The problem of quality and veracity: This is simple; you can’t trust everything you read on the Internet. This makes it easy to pass of lies as the truth. It’s hard to trust new information because so much of it can be crap. As a result, a lot of “crap” information influences our judgment.

How can we show our commitment to Detroit's future?

Detroiters always talk about Detroit - whether that's in the city limits or an another state, like Robyn and I just did with an expat Detroiter living in New Orleans. I actually love talking about Detroit, but why don't we talk about deeper things? In fact, what makes anyone want to talk about deeper things like ideas and beliefs? Our friend Laxmi - also an expat Detroiter -  had an interesting insight into this question because of her experience living in NOLA for the past year. Her logic goes like this, roughly:

An ability to talk about deeper things <--- Trust <---- Time to get to know people <---- Demonstrated commitment to the place in which you are living

I'm paraphrasing the lovely conversation the three of us had, but the gist is that an ability to talk about deeper things with folks in your community you have to demonstrate commitment to the place you are living; deep dialogue implies demonstrated commitment. So, how do you do that? Really...what are your ideas?

----

Here's the reason why I present the question. I don't really know of many ways we demonstrate commitment as Detroiters. What are little (or big) ways we can or already do that? How does one show commitment to a place and an intent to make it better for the long haul?

If we can start to create opportunities for that, I think we'll eventually be able to have much more deeply connected community in Detroit, because we'll have more "real talk". If it'll take a village to make Detroit into a great, 21st century city, it'll take deep conversations in the public sphere. Based on the logic above, that starts with demonstrating commitment.

5 ways to look at Detroit - what speaks to you?

In the past few weeks I've thought about Detroit myself and have been intrigued by the ways others have looked at our fair city (Detroit). These lenses for learning about, exploring, and understanding the City have been very interesting me so I thought I'd share. Which ways of looking at Detroit do you find most interesting and engaging? Do you have any ideas to add about these five or any new lenses of your own? I'd love to hear about them!

How Detroit Will Save America (again)* During the second world war, with its industrial might and capacity to make war, Detroit saved America and even the world. Detroit put the world on wheels and raised millions of Americans out of poverty along the way. That legacy of bold leadership and hard work continues today.

Detroit is a reflection of America and all of its difficulties. Like America Detroit faces gravely serious challenges of economy, race, politics, and, spirituality. Americas greatest challenges all manifest in our city. And as we figure out how to deal with these challenges - swimming through and learning as we go - we will once again be able to lead America forward. That's why America is rooting for Detroit, if we can solve it here the rest of America can too.

That's how Detroit will save America (again).

Detroit: The city of -preneurship One of the great inspirations of Detroit is the ability to create something new and to chart a new path forward. Detroit's entrepreneurs today are like the cowboys and trail blazers of yesteryear, writing their own destiny as they go.

But it's not just entrepreneurship, it's intrapreneurship and social innovation. It's civic leadership and urban development. It's tech nerds and corporate juggernauts and community organizers. Detroit is a city of "-preneurship" whether it's happening at the M@dison building, the neighborhoods, city hall, or at the Big 3. In Detroit, -preneurship is everywhere.

Detroit's Identity is it's People* When you ask a lot of people what they love about Detroit (myself included), they say "the people." But what is the character of a Detroiter? Detroiters are hard working and gritty. They get things done and do it well. They go hard. They hustle.

At they same time, they are passionate and caring. Detroiters pull together and support each other. They are honest and respectful of others. They are loyal and friendly in the fiercest way possible.

In a way, that's what Detroit is, a composition of stories about a set of hard nosed, tough, and wonderful group of people. What defines Detroit is its people.

Detroit vs. Everybody, Detroit vs. Detroit Though it is not polite conversation, one of the ways to understand Detroit is through its interactions with groups outside its borders.

These groups are far ranging and far reaching. It could be Detroit vs. the suburbs, the west side of the state, or Chicago. It could be vs. the federal government or vs. a foreign land. Filling in the phrase "Detroit vs. _________" can lead to any number of opponents or allies.

At the same time Detroit has its own diversity in its many communities. Racially, socially, intellectually, geographically, politically, or religiously, Detroit's diversity is remarkable and complex. To prosper in the future, Detroit must understand what implications Detroit vs. Detroit could have within its borders as well.

Detroit has conflict and collaboration with all the groups I've listed here and more. How Detroit continues to interact with different networks and communities inside and outside its borders will define its future.

We are what's next Detroit, as has been widely reported, is the largest municipal bankruptcy in US history. The next chapter in Detroit's story is being written by as we speak. Post-bankruptcy is Detroit's next era, because the bankruptcy has left an indelible mark on our course in history.

But the future is not being written for us. We can and we will have to write our own history. How we choose to rebound and how we choose to press forward will be our generation's unavoidable legacy. We are what's next and we must, or somebody else will be.

---

* - These are two ideas that I can't take much credit for. Two friends (and colleagues and classmates), Nydia and Tiffani, opened my mind to thinking about Detroit this way, phrasing my own thoughts this way, or both. Shoutout to them!

Talent is Detroit's X-Factor (for entrepreneurship)

For the startup community to succeed in Detroit, our primary goal should be getting the best community of talent that we can. Talented people, not cash, will make or break the startup community in Detroit. --------

PART I - TALENT IS ENTREPRENEURIAL DETROIT'S X-FACTOR*

I think of Detroit's startup community as a school because how both work is similar. In both cases - startups and schools - the fundamental ingredient is the talent of the people in the ecosystem. Here's an explanation of the analogy:

In a school students take resources (books, stimuli, computers, etc.) and convert those resources into something valuable (knowledge: papers, grades, test scores, projects, etc.) with the help of talented peers (other students) and talented mentors (a teacher).

Startup communities are similar.

In a startup community, entrepreneurs take resources (information, money, space, labs, etc.) and convert those resources into something valuable (products and services: software, hardware, media, algorithms, etc.) with the help of talented peers (other entrepreneurs) and talented mentors (successful entrepreneurs, VCs, consultants, etc.)

The structure of both is the same - In any learning community, like schools or startup ecosystems, agents take resources and convert those resources into something valuable with the help of talented peers and talented mentors.

Notice that people are the critical ingredient. Talented people with few resources produce things that are much more valuable than great resources with people who lack ability. Resources don't become valuable on their own, people make resources valuable.

In a startup community, talent seems to matter for a few main reasons (I tip my hat to my entrepreneur friends - Stu, Scott, Max, Erik, Reid, Al etc. for helping me understand this over time.)

• Getting a team - starting a company is really, really hard. You need a good team to do it, and if you don't have smart people around you, you're sunk. Moreover, once you get started, you need talented people to work for you. It's really hard to hire people from across the country, compared to getting good referrals from some friends nearby
• Getting help - Like I said, starting a company is really, really hard. You need good people outside your company for when you need to solve a problem that nobody inside your company can figure out
• Getting inspiration - Even getting to the point of a good idea isn't easy. People get inspired by talking to other smart people and learning things they never knew before

Talent will make the difference for entrepreneurship in Detroit. Indeed, it is our most precious asset.

For what it's worth, I'm not suggesting that the people here are dumb. There are actually a lot of smart folks, and I'm not so sure about the not so smart people. What I am suggesting is that there aren't enough smart folks here; we don't have a critical mass of really talented people.

I'm also suggesting that VC financing, incubators, and the like are NOT our most important assets.

PART II - BUY IT OR BUILD IT

There are only two ways to get talent - buy it, or build it. Detroit should probably do both.

Buying It

The idea here is offering incentives to get stars to come to you. Think of the New York Yankees. Stereotypically, this is what they do. The pay good players insane amounts of money to come to a team of stars. Their salary costs are unreal, but you can expect the Yankees to win games...and they do.

As you can guess, this approach is expensive. The startup community is no different.

To get stars (people with a lot of talent that have a higher chance of success) here, investors would have to take crummy valuations (i.e., take an equity stake in the company at a higher rate than an investor in another geography would have to) on those deals. If they don't take crummy valuations (or overpay in some other way), those star entrepreneurs will never come, because the talent in our ecosystem isn't yet as rich as those in SF, NYC, etc.

Here's the kicker though.

You have to overpay like crazy to get really good people, because kind of good people don't make a huge difference. If you don't get really good people into your ecosystem, you might as well have not "bought" that talent in the first place, because those almost-stars don't make the ecosystem better.

The idea behind buying talent is this: overpay to get star talent -> connect them to other people in the ecosystem -> others in the ecosystem benefit from their talent and get better.

Building it

The idea here is helping average people learn and grow at a hyper accelerated rate. Think of a boot camp exercise class at a gym. You come into it in poor shape and you do lots of reps of lots of different exercises. You, and the group you're in, get better faster because you learn from each other and push each other harder. Not everyone get better at the same rate, and not everyone gets more fit. But with a sufficiently large sample size and a lot of reps, some people will become beastly fit.

As you can guess, this approach takes a lot of discipline to commit to. There's a lot of failure and learning that happens. If you're applying this analogy to a startup community, you can't expect every company to make it and "get fit." You have to tolerate a lot of failure in hopes that some people will learn really quickly and become strong pillars for the rest of the community.

Here's the kicker though.

If you take this approach, you can't expect results right way. You have to invest in people learning (which means they won't make money right away, and they may never). And, you also have to stay committed to investing in this learning - even if it takes awhile - otherwise the results will never come.

The idea behind building talent is this: invest in failure and other things that help people learn quickly -> People get better a lot faster -> some people make it and some people don't -> the ones that do make it will make the rest of the ecosystem better

CONCLUDING THOUGHTS

Here are a few observations and hypotheses for the Detroit entrepreneurial community:

• Connected Networks Make It Possible - Either approach doesn't work unless there are connections across the entrepreneurship community and even beyond. These networks don't form effectively if they're not open. Which is why incubators kind of throw me for a loop - they're semi-private communities, and semi-private communities easily become elitist and siloed (if they're not actively managed not to be). Siloed communities, as we know, are really hard places to learn. I'm a much bigger fan of open meetups a la meetup.com or Detroit Startup Drinks (full disclosure: a lot of the Detroit Startup Drinks folks are friends of mine). Semi-private and open communities are both important for different reasons. I just don't see as many open communities as I do semi-private ones and that's kind of unsettling.

• You can't have your cake and eat it too - When trying to build talent, I see people falling fool to a fallacy. The people (particularly in the social sector) want to back winners, and fund people who will be successful. That would be sensible, if we already had a robust community of talent in Detroit. We don't. People investing in the entrepreneurial community here have to encourage failure and reflection, because failure is when the most learning happens. You can't build talent without failure. We don't have people who invest in failure (and the learning that comes with it). That's something we desperately need.

• Buying talent - We haven't really tried this, have we? Stik was brought in from SF, and the guy who started D:hive was brought in from Chattanooga. I can't think of any other examples (please correct me). Why haven't we tried to buy more stars? Starting VCs and social investment funds are useless for us in Detroit if the capital isn't being used to buy talent or to build talent. We're don't have enough depth of talent to just expect results from our investments. I think we're wasting our time (and money) if we aren't investing in the best learning / talent development opportunities. Moreover, I get this feeling that Detroiters think that everything here has to be home grown and that the city can "go it alone" without help from the outside. I think that getting some interesting folks here from other places would be smart, and also pretty cool.

Especially because I've taken some strong stances, I welcome your pushback!

*Note - In this post I'm talking about the tech / high growth entrepreneurial community. Fort the most part, I'm not talking about social entrepreneurship / innovation or small service firms like restaurants, coffee shops, yoga studios, dry cleaners, etc.

I'd also like to shoutout to my friend Stu who explained a lot of these points in a way that congealed them in my head. The good ideas in this post are mostly because of him.

The Market and the Middle Class

With regard to the changing winds of the American middle class, I don't know how we got here (I'm not an economist) or how to get us out of it. What I do understand is how "the market" of businesses creating goods and services will respond. It's not pretty, and the writing is already on the wall. My prediction: businesses will chase dollars and more new products and services will serve the upper classes, especially as the size of the middle class shrinks. This will accelerate income inequality as the lower and middle classes have less access to the products and services that they need to maintain or increase their income and productivity.

Here's an example of what I mean. Imagine all the new products and services launched in recent years. Since apps are a very visible product for readers of this blog, let's use those as an example. I will make two points, first that entire categories of products are less accessible to the middle class and second that the selection of products in categories accessible to the middle class will wane.

The mobile app market is booming, with revenues that will reach $25 billion this year. The point of category accessibility is a simple one. Unless you can afford mobile devices and data, you can't afford apps. So, if you are not wealthy enough to have a smartphone / tablet / etc. you can't take part in a new and very important echelon of the economy. If you can't pay up front, you can't play.

I don't think this is unique to apps, this problem exists in pharmaceuticals, cleantech, or any innovative industry. If you don't have a certain level of wealth / income to pay the up-front cost of entry to use a new product or service, you can't even begin to reap the benefits of that new and emerging industry.

Another problem is that the middle class shrinks, less and less versions of a product will be made for them. In apps, what this means is that fewer and fewer quality apps will be at an affordable price for middle class buyers. If you were a businesses wouldn't you cater your product (and your prices) to customers who could pay more, especially if the amount of middle class people you could potentially sell too was shrinking? In the app world, I think this will mean more and more apps worth downloading will need higher and higher levels of payment.

In the app world, this may seem trivial (even though I'd contend it's not because apps can increase productivity and therefore affect learning and income). But extend this effect across the economy to clothes, consumable goods, cars, education, healthcare, and others. In aggregate, middle class people will have less and less products they can use to be more productive, educated, or otherwise attractive as employees, putting them at a disadvantage for maintaining or increasing their income. The wealthy will have more and more products developed for them which will allow them to be healthier, happier, and more productive - begetting them more wealth.

But wait, another reason the market effect of product and service selection will perpetuate inequality is because of cultural distance. As income inequality increases, those developing products (who are presumably wealthy and educated, especially in innovation industries) will have less contact with those of lower classes. This means they'll have less awareness of the product needs (and potential business opportunities) of the lower classes. Because you can't make a product without knowing what the customer's need is, the lower and middle classes will have less products made for them which make their life better.

The writing of this happening is already on the wall. Think of all the new businesses you've seen get big in the past few years (either from friends, the news, or even kickstarter). How many of those products could a lower or middle class person afford? How many of those products were even catered to the needs of a lower or middle class person? Most of the new stuff I've heard about definitely does NOT cater to a lower or middle class person. (I'm not giving examples, because I don't want to be mean to friends who are launching businesses. I support them wholeheartedly).

I'm a big proponent of entrepreneurship, so I'm not trying to trash entrepreneurs who don't serve the lower or middle class. And, all of what I'm saying is fair and legal by the law of our land.

What I am pointing out is one, often unrecognized, way that the market will perpetuate and increase income inequality if left to its own devices. I point it out because it doesn't sit well with me. Because it doesn't seem right. Because it doesn't leave our world in a better place then we found it, it seems like it leads to a world with more suffering.

I also point this out because income inequality shouldn't just be a concern of "poor people" anymore. It's a very real issue for many more Americans these days and in ways they may have never considered, such as the products and services that are even available to them. As a child of a middle class family, I never thought that income inequality would be such an applicable issue to me. And now it does.

---

Another interesting tidbit about the middle class from The Brookings Institution. Also, here's a decent summary. Has anyone heard of a study examining how levels of inequality affect the types of products and services that launch? I can't find one.

The Foundation of Innovation Is Empathy

How innovators approach their work is a choice, and this choice boils down to how you prioritize two things: serving customers and making money. Surely, every successful innovator has to balance these two priorities, but sometimes these two priorities conflict, especially in day-to-day operations. Every entrepreneur, every non-profit, every company, every organization, every innovator has some version of this tradeoff. At the end of the day either your customers or making money take priority. When these interests conflict, which will you choose over the other?

For companies that want to innovate, I think they have to prioritize serving customers over making money because innovation is fruitless without the identification of a real, clear, customer need (which you can't find out if you don't prioritize it). In all the innovation work I've done, it's very easy to delude yourself into trying to force a solution on customers which they don't need because it's more profitable.

Choosing to prioritize customers over profits is a huge commitment to make, though. What I find interesting is why anyone would choose to prioritize their customers' needs over making money. I think what's at the core of it is empathy because empathy gives you reasons to forego short-term profits for long-term value creation.

It's easy to commit to serving someone if you feel for them and understand what they need. It's easy if you care about their experiences and what happens to them in life. It's easy if you value and respect them and constantly put yourself in their shoes. Committing to serving someone - like a customer - is really, really hard to stick with if you don't empathize with them.

Again, I'm not suggesting that businesses should ignore the need to make money, in fact they must do quite the opposite. But I am suggesting that innovation requires prioritizing your customers' needs over profits and going to the mat for them sometimes. And that critical ingredient for innovation - commitment to serving your customers' needs - requires empathy. Empathy is a foundational attribute, I think, for individual innovators and innovative companies.

Innovation cannot exist without empathy. And, I'd say that these days innovation is pretty important.

So, the real quandary is, if innovation is important and innovation requires empathy - how do you develop empathy for customers within companies who believe the shareholder value thesis?

Serving The Long Tail

If you're working for a company, chances are that your company falls into one of two categories: Business-to-Business (B2B) or Business-to-Consumer (B2C). In the past, the way this normally has worked is similar to the auto industry. The Original Equipment Manufacturers (OEMs) - think GM, Ford, and Toyota - are the B2C companies selling their product to end consumers. These companies do the final assembly of the car and build consumer brands. The OEMs are supplied by several tiers of B2B companies - businesses that serve other businesses.

Generally speaking, Tier 1 suppliers are big and the companies who supply the Tier 1 suppliers (these are called "Tier 2" suppliers) are smaller than Tier 1 suppliers. Tier 2 companies are supplied by Tier 3 suppliers who are even smaller then them. You can think of it this way: the OEMs are the biggest fish and they use stuff supplied by smaller fish, who are supplied by smaller fish, and so on. That's just the way it was back then.

In today's sort of world, it's hard to go out on your own (and say, be an independent car maker) because when you're a big fish you have the benefits of scale. When you're a little guy you have to do all your own hiring, all your own sourcing, all your own marketing, and so on. In a nutshell, when you're a little fish, it's hard to compete because you can't spread fixed costs out across a big, big business.

This is all changing, now, though. It's becoming easier and easier to make it as a "little fish", if you're in an industry with a long tail.

Serving the Long Tail

There are lots of industries that have a handful of big companies and thousands of small players. In this sort of industry, the thousands of little players are called the "long tail." As I've mentioned above, the companies in the long tail don't have the benefit of scale to spread out fixed costs. In theory, someone could make a ton of money by providing a service to all the little fish in a long tail industry. This opportunity has existed for centuries.

This is hard however, because it's not trivial and is often expensive to serve thousands of customers simultaneously if you're a small company.  Coordination costs make it difficult to serve the long tail.

But all that is changing. Digital technology is making it possible to dramatically cut coordination costs. Thus, it is now more possible than ever to serve the long tail. Lots of companies are now serving the long tail, here are a few examples:

Kickstarter - The market for creative goods (e.g., video games, movies, gadgets, etc.) are often dominated by big players. One obstacle to being an independent player in the creative goods market is the difficulty of finding funds and the difficulty of attracting a customer base. Kickstarter helps independent people making creative products do both.

Amazon Web Services - If you're a software developer, you need server space and computing power to run an app. This stuff, historically, was only accessible to big companies with deep pockets. Now, Amazon Web Services and other cloud storage and cloud computing providers make it affordable for independent developers and small software companies to get their prototypes off the ground.

Elance - Large companies gobble up talent and do many things in-house. It was hard to be a freelancer (whether it be in writing, publishing, marketing, consulting, etc.) because you couldn't find clients. Now, Elance is one of the many services that allows talented professionals to find clients, and avoid selling out to big firms (or even small ones). At the same time, small companies now have unprecedented access to skilled professionals, often for short-term jobs.

Castle - There are a few big property management companies. But most landlords aren't big, and there are LOTS of small property managers who own and manage real estate. The cool dudes at Castle are working on a product to serve these folks. Oh, and, even more awesome...they're Detroiters!

The Opportunity Of Serving The Long Tail

For a long time independent companies / freelancers have been woefully underserved, because the costs of serving can't sustain profitability. But now, because of digital technology, it's suddenly becoming possible. If you're a clever entrepreneur, one way to be very successful (and feel great because you get to serve an underserved market) is to do the following. I'm focusing on B2B companies in this post. But, the same logic could be applied to B2C companies. Also, if you're interested in serving underserved companies through business, check out the Base of the Pyramid Strategies work being done at the Ross School of Business. (I'm taking a class on this next term, I'm stoked).

Anyway, follow these steps:

1. Find a market that has a few large players (because this indicates that there's money to be made there) but that is also highly fragmented by loads of small or independent players.
2. Understand the needs of the independent players. How are they being underserved?
3. Of the needs you've identified, pick one that can be addressed with a solution that mitigates coordination or other transaction costs. This is likely a cost that larger players can afford to do in-house and is solvable using digital technology*
4. Build the product / service
5. Take it to market

If you start thinking about it, you'll likely think of many, many, industries which have a long tail AND which have a long tail that can be served via digital technology. Let me know if you make it big.

* - If you're looking at a solution (like Kickstarter or Elance) you have to consider the needs of anyone interacting with the independent players. In the case of Kickstarter, for example, you can't just make sure the people making the creative projects are having their needs met, you also have to incorporate the needs of the crowd funders when building the solution.

Has anyone really thought about what Detroit needs?

One way to simplify business school, is to know that to succeed in business you have to do this. Seriously, this is all you've gotta do:

1. Define who your customer is.
2. Find out what they need.
3. Imagine something that will fill your customer's need.
4. Make it.
5. Give it to them.

That's it, that's all you've gotta do. Of course, there's a lot of  sophistication with how to make this happen.

The beauty of this 5 step process is that it's broadly applicable. You could apply it to lots of different organizations across sectors, whether it is a foundation, a family, a government, a neighborhood, a non-profit...anything. What I can't fathom is what Detroit needs. I have my own opinion on what Detroit needs, but I can't find anyone articulating it clearly across the city. In my observation, everyone is prescribing solutions and not understanding real needs. Here's what I mean:

Breaking it down for Detroit to succeed

1. Define who your customer is. - This is easy, sort of, let's assume citizens of the City of Detroit.
2. Find out what they need. - This is what I don't see being articulated. Do people need agency? Do they need to feel safe? Do they need distraction and entertainment? Do they need opportunity? What does Detroit need, really?
3. Imagine something that will fill your customer's need. - Street Lights, No Blight, Public Transportation, Good Schools (notice that these are solutions, not descriptions of need.)
4. Make it. - Self explanatory.
5. Give it to them. - Self explanatory.

Here's why it matters. For every need that exists, there's hundreds of ways to solve that need. Take "bring light to darkness in your home" as an example of a need. You could solve that need with a fire, a lantern, a fluorescent light, an incandescent light, a flashlight, etc. People don't need lamps, they need light in dark places. There's a difference.

The problem is, when you don't define what someone needs really well, it's hard to give them a solution that really works for them. Providing solutions to problems is aided greatly by defining the right need. Solutions without real needs don't last and aren't useful.

So for real, if anyone has found good articulations of what Detroit needs (or what subgroups of Detroiters need) please point me to it. If nobody has found anything, we're in a bad spot because it means people are prescribing solutions without understanding needs. That leads to bad solutions or solutions that work only because of luck.

Two Higher-Ed Fallacies (which are near to my heart)

Let me break down two fallacies I see in higher education: The MBA Recruiting Myth Here's how the story goes. One thing to know about MBAs is that we obsess over finding a job.

Right now, the cost of higher education - an MBA is not excluded from this - is appalling. I will have close to $150k in debt by the time I graduate from the Ross School of Business, for example. This creates intense pressure to find a job, because if you don't have a job you can't pay off your massive amount of debt. Moreover, this amount of debt makes it difficult for anyone that doesn't have at least some cash saved up (which normally is the case for people who already have high-paying jobs or have a well-to-do family) from taking the risk of applying to business school - which by the way is costly...over $200 per application plus the cost of interview travel and GMAT prep.

Even worse, because of all the debt, most people are pressured to take low-risk, high-paying corporate jobs. A lot of folks I know don't see themselves making a career where they get a job out of school, because they don't want to work for a corporation or have higher aspirations, etc. The debt, however, handcuffs your to work for a larger company with a lot of prestige for awhile unless you're extremely risk tolerant and can fend off the social proof of your classmates who opt to work for Fortune 500 companies or prestigious professional services firms.

The people who benefit from the high tuition rates are the business schools (who are now justified in raising prices higher) and large corporations (who now have a captive pool of talent to pluck from that has less freedom of choice because of their debt).

Here's the fallacy though. What business schools do is bolster efforts to help students find high-paying corporate jobs. What would be a more elegant solution (which is difficult, of course) is to lower the cost of attending business school. This would allow people more freedom and bring in a more diverse group of people into business school anyway.

The Cut-and-Run From Liberal Arts Myth This one is more simple.

Lots of liberal arts majors (apparently) are having trouble finding jobs. The logic goes, that liberal arts majors don't have the same skills as their peers coming out of professional backgrounds (like business and engineering). As a result, the pundits say, we should have less funding go toward liberal arts programs and should instead funnel students toward STEM educations.

Let me first counter the notion that liberal arts students are less skilled than their professionally-oriented peers. It's false.

In my own experience I consistently find that liberal arts majors are more imaginative and are better communicators. They think more critically and better understand ambiguity (and customer needs). It's not that liberal arts majors have less skills they have different skills which are less tailored to entry level jobs. The skills that liberal arts majors have serve them well when they are leading organizations, not starting out in them.

Here's the fallacy. If liberal arts majors have valuable skills, we should not push people away from the liberal arts. Rather, we should help them build the brick-and-mortar skills (MS Excel, basic business writing, meeting management etc.) that their business and engineering counterparts have. This could be done through classroom training, co-curricular activities, career-prep training, or internship support.

I'm proud to say that my alma mater, the College of Literature, Science, and the Arts at the University of Michigan is following this path of helping liberal artists bolster their professional skills. The school realizes both that the liberal arts are valuable AND that liberal arts majors need to supplement their skillsets. The school is working to do so in a number of ways. The method I support regularly is the LSA Fund for Student Internships, check it out.

The Point Often, institutions solving problems make interesting choices when choosing solutions. In this case, I think conventional practices are rooted in counterintuitive conclusions. Instead of helping cash-strapped MBAs find corporate jobs easier and pushing liberal artists to other fields, why don't we lower the cost of getting an MBA and implement programs which help liberal arts majors develop the so-called "practical" skills they are missing.

Those seem like much more sensible solutions that have higher long-term payoffs.

The Fallacy of Building Social Capital Efficiently

This thought should have probably occurred to me many months ago, but it did not. I was hanging out with two of my friends (and fellow Ross classmates) Ina and Janelle this past Friday. We did, roughly, the quintessential day one does with people who haven't really spent time in Detroit. First we brunched at Hudson Cafe, then went for a walk on the Riverfront via Downtown, toured the Detroit Institute of Arts, and wrapped up with cocktails at the Ghost Bar.

It was a lovely day.

Later that evening, I was able to grab dinner with another friend, Wayne, and we stumbled upon the topic of what it takes to build efficacy and strong relationships to the city and across the city.

We agreed that there's some role for formal institutions and programs: like panels put on by the Gilbert family of companies or tour groups.

But I realized that the real, enduring experiences are not the mass-produced, highly efficient, forays into the community sponsored by anything ranging from a corporate conglomerate to a tech incubator. No, what really builds Detroit loyalists is when newcomers are introduced to the city, personally.

That's how I was indoctrinated, and every "success story" I've ever seen of people engaging with Detroit has been the same. It takes a personal touch and more than an hour-long panel discussion or walking tour.

This is a lesson, I think, that applies more broadly when building social capital of any sort. Efficient, "at-scale" programs may be perceived as being cost-effective or "more bang" for our collective buck, but the TLC of an intimate introduction to a community is what lasts.

And that's what I think we need in our city, connections that last - between people and the city itself and interpersonally between people across the city's niche communities.

Of course, this sort of approach is hard to make a business case for because things that are time-consuming are also expensive. This sort of approach also precludes the organizer of a scalable connection-building program, from becoming a rainmaker that holds power because of his / her place as the gatekeeper in the center of the network. Power comes from holding the keys to the castle and being the person that makes an introduction.

When building social capital, however, aren't lasting relationships that take a lot of work more important than shallower relationships that are manufactured efficiently?

How Cultures Form, Part II - Forming Culture In Detroit

A friend and colleague who I've never had the privilege to meet in person, framed up my last post on how cultures form very clearly in a tweet. I'd to like to use his simple framing as the foundation of evaluating how culture forms in Detroit and thinking of solutions:

.@ntambe on how cultures form. The ideas (& actions) that get reinforced the most become part of the culture. http://t.co/TpUe26TuH6

— Matt Frost (@mattgfrost) March 5, 2014

I agree, the ideas (and actions) that are the most reinforced become part of the culture. If that's true, there is a two step process for evaluating and improving cultural formation in Detroit, via two questions.

1. Do cultural ideas and actions becomes reinforced (or not reinforced) effectively?
2. If answering no to the first question, what should we do about it?

I'll now consider these questions in turn. In my last post, I broke down cultural formation into two categories with three components each. I'll use this framework as the basis of analysis:

• Culture forming behaviors must be present and effective:
  • Are individuals and groups effectively expressing cultural ideas?
  • Are cultural ideas being shared amongst to all Detroiters?
  • Are individuals and groups combining cultural ideas with other information and forming new cultural ideas?
• The interaction channels which enable culture forming behaviors must be present and effective:
  • Are there mechanisms which are enabling the original transmission of cultural ideas
  • Are there mechanisms which are enabling wider dissemination of cultural ideas
  • Are there mechanisms enabling the evaluation of and reflection on cultural ideas?

Do cultural ideas and actions become reinforced (or not reinforced) effectively in Detroit? First, a look at culture forming behaviors:

Expressing cultural ideas in Detroit Something I find interesting about the people who express cultural ideas with their thoughts and actions in Detroit is that attention is focused on a limited number of voices and stories. Individuals and media alike reinforce the same class of social entrepreneurs, the same foundations, and the same business leaders. As a result, I think the only people who express ideas about the culture are in the same group of people. Everyday Detroiters don't have a means of asserting their spin on what Detroit means to them, and probably don't feel like it's valued.

We certainly have a strong, clear, and confident group of people expressing cultural ideas in Detroit, the group just isn't very diverse. The poster children of the city are the ones that are vaulted into the public spotlight because of their position, wealth, or the timeliness of their work. If there is a voice for everyday Detroiters, I can't think of one.

Sharing cultural ideas in Detroit I think it's pretty common for ideas to be shared in Detroit. Detroit feels like a small town for a city its size and word travels fast here. What's problematic is that information doesn't travel across different types of communities. What the artists are talking about and learning doesn't really get co-mingled with what business leaders are talking about and learning, for example. Our city exists in social silos. If you want a deep and thoughtful explanation of how the siloed-ness matters, talk to Chad.

Forming new cultural ideas in Detroit In my observation, Detroit is mixed when it comes to forming new cultural ideas. Most Detroiters seem to be resistant to the notion of engaging in the realm of ideas, and aren't good at it anyway. (Go to panel discussions with public Q&A to witness the difficult Detroiters have with asking deep questions.)

Instead, the focus of most Detroiters I come across - not that it's a bad thing, necessarily - is how to get something done. It's about executing and not exchanging at a deeper, more reflective level. There are a few exceptions to this, there are a few groups of people who seem to step back and reflect: artists / writers and the people in Venture for America or other cohorts like VFA. It's funny, a lot of the more reflective people I've come across weren't brought up in Michigan.

In addition to all this, public figures don't seem to be reflecting much and communicating  narratives that give social permission to reflect and "ask why." More to come on this in a few weeks. If leadership in the city is razor-focused on execution (with little room for reflection) why would individuals give it a go?

Next, a look at interaction channels.

Enabling the original transmission of cultural ideas From my observation, it seems like there are plenty of ways to originally transmit cultural ideas, although, lots of these mechanisms are through digital channels or through a job (e.g., twitter, kickstarter, a company initiative, artist galleries, etc.) It seems as though there aren't really many physical spaces or social settings to express cultural ideas that are broadly accessible. This is somewhat problematic because Detroit is a city that is not extremely digitally savvy.

Moreover, using digital mechanisms to express a cultural ideas is self-selecting process because it's very public. Because digital channels are very public, it makes it difficult to express provocative ideas without sterilizing them for broader consumption...there's some lost intimacy and nuance.

Enabling the dissemination of cultural ideas There aren't many mechanisms to share ideas broadly, mechanisms for broad sharing are fractured. First, media channels have very pointed audiences. Everything from Crain's Detroit Business to Hell Yeah! Detroit) has a niche audience. We even have two local papers which prevent multiple points of view from being expressed on a single opinion page. Having niche mass media channels prevents ideas from being shared widely across different communities in Detroit and prevents those ideas from bumping up against each other.

Second, social networks don't exist across communities. This prevents ideas from percolating both in the physical and digital worlds. Ideas can't get legs across communities, so they stay within sub-groups which limits Detroit to only having sub-cultures.

Enabling the evaluation and reflection of cultural ideas Just as people don't seem to be reflective on their own, there aren't really formal mechanisms for evaluation and reflection either. We don't have ways to give feedback to city institutions, nor do we have many things like Fail Fest or Nerd Nite. There also aren't a ton of third spaces (public, semi-private, or private) which foster reflection. Moreover, the third spaces that do exist require reliable transportation to reach...something many Detroiters don't have.

What should we do about it?

This post is already rather long, and recommendations are supposed to be short and sweet, so I'll keep it that way. I'll publish some more specific proposals soon. For now, here are some things we can do (broadly speaking) to improve the possibility of forming culture in Detroit, given all this analysis:

• Model and highlight behavior which give individuals the social proof to express cultural ideas
• Bridge the digital divide so a wider group of Detroiters can engage in the sharing of cultural ideas
• Take pauses in the execution of projects for the public to weigh-in on implementation plans, allowing the new cultural ideas to bubble up
• Create public opportunities (forums) for everyday Detroiters to express themselves and transmit cultural ideas
• Bridge social circles through a consistent series of accessible public events, creating the networks which could broadly disseminate cultural ideas, eventually
• Create opportunities for individuals and organizations to share learnings , focusing on reflections and not strategic planning - this will compel presenters and listeners to evaluate and reflect on cultural ideas