7 lessons for managing groups in the exponential economy learned from the elections

monster waveby Jeff Rowley Big Wave Surfer

How Team Obama’s tech efficiency left Romney IT in dust
[Via Ars Technica]

Despite running a campaign with about twice the money and twice the staff of Governor Mitt Romney’s presidential bid, President Barack Obama’s campaign under-spent Romney’s on IT products and services by $14.5 million, putting the money instead into building an internal tech team. Based on an Ars analysis of Federal Election Commission filings, the Obama campaign, all-inclusive, spent $9.3 million on technology services and consulting and under $2 million on internal technology-related payroll.

The bottom line is that the Obama campaign’s emphasis on people over capital and use of open-source tools to develop and operate its sophisticated cloud-based infrastructure ended up actually saving the campaign money. As Scott VanDenPlas, lead DevOps for Obama for America put it in an e-mail interview with Ars, “A lesson which we took to heart from 2008 [was that] operational efficiency is an enormous strategic advantage.”

The Romney campaign spent $23.6 million on outside technology services—most of it on outside “digital media” consulting and data management. It outsourced most of its basic IT operations, while the Obama campaign did the opposite—buying hardware and software licenses, and hiring its own IT department. Just how much emphasis the Obama campaign put on IT is demonstrated by the fact that the campaign’s most highly paid staff member was its CIO, Michael Slaby, with an annualized salary of about $130,000.


Failures can be as important as successes in an exponential economy. A useful failure can inform more than some successes. The lower barriers that an exponential economy produces means that failure only presents short term costs that can be rapidly dealt with by longer term successes.

That is, a failure does not necessarily doom an effort, if that failure can be rapidly leveraged to get to success. If you wipe out, but learn from it, then when the next wave comes along, you’ll stay on top of it.

In an exponential economy, there is always another wave to successfully surf.

If, that is, the organization can understand how to manage and utilize the advantages that an exponential economy produces. Here are 7 points to consider.

Interestingly, the Obama campaign hired its IT people internally and used external infrastructure. The Romney campaign hired its IT people externally but created internal infrastructure. That seems to have made a big difference.

The Obama group attracted people interested in  a start-up environment that was also a short-term commitment – it would all be over the day after the election. Romney contracted with data consultants and such in organizations that would live on afterwards.

To one, the election was a one-shot attempt at success while for the others it was just one more notch in their consulting gun.

The former really seemed to attract a disrupter mentality much more, one who really liked finding ways around the limitations that were placed in their way, rather than a type that could just find billable hours.

“Campaigns are serious tests of your creativity and foresight,” VanDenPlas explained. “They are unpredictable, agile, and short—an 18 month, $1 billion, essentially disposable organization. Hackers can thrive in an environment like that, to a point where I’m not sure anyone else really can. Everything is over far too quickly to get boring.”

1) Hire the right type of employees. Do not hire doers when disruptors are needed. And vice versa.

Using Amazon Web Services, instead of building their own servers, allowed the Obama for America group to pay for just the amount of server space they needed, when they needed it. They could expand into servers in different regions of the US in order to reduce loads and latency. Romney had everything route to one location, which crashed.

2) Leverage the exponential economy for services and infrastructure. Better to be smart rather than perfect. Better to seek adaptability over control.

Obama for America put their money into people, not into hardware. They spent twice as much money as Romney but also had twice the staff. They actually underspent Romney on IT services and hardware.

This is what the exponential economy does  – the cost for things becomes cheaper. A smart organization puts the savings into people, which cannot be easily replaced by digital processes.

By finding the right people and paying them for being the right people, Obama for America produced over 200 apps in an 18 month period, using just about every Open Source approach that is around.

3) Use the savings from the exponential economy to pay for the best people, not for the cheapest. 

And they used their community for help:

The human factor in monitoring is huge. There are countless incidents where (OFA User Support Director) Brady Kriss notified us of pending problems derived from community help tickets.”

Romney’s group kept ORCA a secret  – such a secret that no one wants to claim they even worked on it – and did only small amounts of testing  before it was needed. They completely lost the advantage of having crowds to help perfect the apps.

Crowd feedback is important. Lots of testing and resilience is needed to create large numbers of solid apps. The fundraising segment, for example,  was “a multi-region, geolocated, three facility processor capable of a per second transaction count sufficiently high enough that we failed to be able to reach it in load testing. It could also operate if every other dependent service had failed, including its own database and every vendor.”

This complexity can only be reached after actual testing by users.

4) Get your products into the actual hands of actual people as soon as possible. They are best able to find problems.

Redundancy and adaptability go hand in hand. For example, the Obama crew created an app whose only job was to take ‘snaphots’ of the Obama for America website. If a server failed, and the site could no longer dynamically create web pages, the static ‘pictures’ could be used in the interim.

Or, more amazingly, they dealt with Hurricane Sandy, which had severe impacts with people using East Coast server farms, by replicating a complete and functional copy of their whole infrastructure on West Coast servers in 24 hours!

5) Use the benefits of the exponential economy to create resilient and redundant systems. If the price has dropped 5-fold, then you can build two systems and still save money.

The Obama campaign spent over $1 million hosting the website  that was accessible to the world. It gave a quarter of that to Amazon for hosting its own internally developed IT.

Romney’s campaign gave a single IT consulting company over $17 million  and another $16.6 million to another,  Obama for America spent $3.6 million on IT consulting to 36 different  companies.

The Innovator’s Dilemma describes how a $50,000 contract to a small group can produce much more focussed work and innovative solutions than even a $500,000 contract to a large group. They care about it more because it matters more to their bottom line.

6) Spread the work around. It is more likely to produce successful solutions than one big contract. It certainly can cost less.

And finally, 

“This is the difference,” VanDenPlas said, “between a well run professional machine and a gaggle of amateurs, posing in true Rumsfeldian fashion, who ‘don’t know what they don’t know.’ I would be shocked if such a chasm exists next cycle between the parties—these aren’t mistakes to be repeated if you want to do things like win elections.”

Because of the lower barriers to entry, and the rapidity by which successful processes can disseminate throughout society, everyone catches up quickly. You cannot expect that coming up with something first will provide much of a long term advantage.

The way to stay ahead is to have the right mixture of people cranking the DIKW cycle as fast as possible. As long as your organization can move that cycle faster and smarter than others, you will stay on top of the wave.

7)  Continuing rapid cycle development is crucial. Any advantage to accrues to disruptive innovators rapidly disappears, as others follow the path to success.

It is impossible to successfully ride every wave of change. But, creating and managing for the exponential economy can produce an organization scores well when the monster waves arrive.

Epistemic closure is a human condition

nixonby tonynetone

‘Epistemic Closure?’ Those Are Fighting Words for Conservatives 
[Via – NYTimes.com ]

It is hard to believe that a phrase as dry as “epistemic closure” could get anyone excited, but the term has sparked a heated argument among conservatives in recent weeks about their movement’s intellectual health.


Epistemic closure is a human problem. As Feynman said, “The first principle is that you must not fool yourself–and you are the easiest person to fool.” Forty years ago it was the liberals who suffered most from epistemic closure. 

Just one example. Ted Kennedy wanted to have a single payer healthcare system using taxes to pay for it. Essentially Medicare for everyone. NIxon actually proposed a different solution – a market-based insurance plan requiring employers to buy health insurance for all their employees and provide subsidies for those who needed it. (Sound familiar? Obama actually hired NIxon’s health advisor to help him craft his plan).

Kennedy walked away from Nixon’s deal, living in a Cargo Cult World sure that he could get a better one after the next election. The same one that allowed him to think he could primary a sitting President. He was brutally wrong, watching for almost 40 years and dying before Nixon’s own ideas became a reality.

Conservatives have been discussing epistemic closure for two years  along with its impact on the GOP. Some were worried about the hermetically-sealed bubble that was forming around the Republican party. 

That bubble resulted in their canddidate for President being ‘shellshocked” that he lost. His own numbers guys were feeding him the information everyone wanted to see, not the information that matched reality. They listened to each other’s anecdotes rather than gathering accurate data. They developed software that they were so sure would be wonderful that they never actually stress-tested it until election day, when it failed spectacularly. He had supporters wo wrote that the data ‘nerds’ were wrong because lots of people had Romney yard signs. 

They had completely fooled themselves.

Efforts from two years ago to prevent such a bubble failed. This is not surprising. One of the hallmarks of epistemic closure is an almost impenetrable barrier  with true believers held inside and any apostates thrown outside. It becomes filled with all those who refuse all efforts to pierce the bubble.

It happens all the time with human beings and their social communities. People feel more comfortable around others who think like they do. Without positive support for alternative views, almost any community eventually becomes filled with monotonic views, supporting a Cargo Cult World which repels any conflicting information.

Since these Cargo Cult Worlds are only distorted reflections of reality, eventually they come crashing down, like some sort of funhouse mirror.

As I wrote around the same time this article came out, when the narrative is more important than facts, we get a Cargo Cult World.

The initial response of the liberals to the failure of  their ideas in the 70s was to retreat further into their own Cargo Cult Worlds. They failed to recognize the changing circumstances around them until the election of Reagan  hit them between the eyes like a two-by-four.,rendering their world view mostly irrelevant for over a generation, reducing them to a minority party. Even though Clinton was elected to two terms, in neither of them did he get a majority of Americans to vote for him.

Most of America did not like or endorse the ‘reality’ the Democrats inhabited.

It took a long time for most of the liberals to break out of the Cargo Cult Worlds they had created, to alter their views and listen more closely to the views of others. It was not perfect. Nothing human ever is. But something very unusual has just happened.

We all know that the Democrats – the original party of the Dixiecrats and Southern Segregation – put up an African-American as their candidate and that the US elected him twice.

Amazingly only 2 of the last 10 Presidents of either party have been elected to a second term after receiving the majority of the popular votes both times. One was Reagan and the other is Obama. The other 8 either failed to get re-elected or failed to win over 50% of the popular vote twice. This suggests something important has happened with the ability of the Democrats to connect with most Americans.

They finally accomplished something quite rare for them – getting most of America to vote for their Presidential candidate.

But even more amazing is that Obama becomes only the second Democrat since Andrew Jackson – the first President from the Democratic party – to get the majority of the votes in two elections. FDR was the other one.

Only two times in 180 years have Democrats succeeded in getting a majority of America to support their Presidential candidate twice. It is usually Republicans who accomplish this. 

For the first time in almost anybody’s memory, the Democrats have gotten most of America to elect their President candidate twice. That is, in my opinion, actually more amazing than the fact he is a minority. It suggests that for the first time iin a very long time they have moved outside their Cargo Cult Worlds  enough to embrace most of America, to actually listen to others.

To actually take the health insurance plan first proposed by a Republican, modify it with other ideas from other conservatives, and get it passed. Forty years after their Cargo Cult Worlds prevented them from doing it the first time.

Epistemic closure is a failing of the recent GOP and, just as the liberals did 40 years ago, they have two choices. Retreat further into their Cargo Cult Worlds, pulling epistemic closure tighter around them or create new paths that break up the lure of epistemic closure, reconnecting again with a majority of America.

I’m really hoping it does not take 40 years, that they break through the walls surrounding them. Because we have too many really hard problems to solve and we need their best ideas right now. It will take all our efforts, not just the ones represented by one party.

And because, it they retreat more, it simply allows the liberals to start creating new Cargo Cult Worlds – it is what humans do – allowing them to eventually ignore facts, one that will eventually fail to connect with reality and we begin the cycle again.