Landscape and Extreme Events

To understand extreme events (X-events) and how they occur, we first have to understand the way events, in general, take place. A good picture for this process is to imagine that you are walking in the mountains, where the landscape consists of hills, valleys, mountain peaks, plateaus, and flat, lowland terrain. At any moment, you occupy a position in this landscape. The event of immediate concern is where you will be at the next moment. Unless you happen to be standing on the edge of a cliff or on the top of a sharp mountain peak, your next step will not change your position much. But if you are near the edge of a cliff or on a mountain peak, even the smallest step in the wrong direction will change your life dramatically and very likely not for the better. In fact, such a small step for a man (or woman) may well be the last step. So there are two kinds of locations, or points, here in this mountainous terrain: an ordinary point, from which a small step doesn’t change your situation much at all, and a critical point, where even a minor step in the wrong direction can lead to a major discontinuity in your life.


Conventional wisdom has it that political trends are a key determinant of the stock market’s gyrations. As an election approaches, commentators endlessly debate the effect the outcome of the election will have on stock prices. Investors weigh up which candidates will influence the market to move up or down. Statements like, “If Jones is elected, it will be good for the market, but Smith’s election will cause stocks to tank” are common.

Personal Resilience

The first item on the road to a measure of resilience is to remember that resilience is a context-dependent systemic property. It depends on the type of extreme event (X-event) you want to be resilient against. This point must be kept uppermost in mind, since it does no good to build resilience against a terrorist bombing when what happens is a hurricane or an Internet crash. So to set the stage for our Four As resilience measure, let’s assume we want to be resilient to an Inter- net failure. So that’s our target X-event. But even that’s not enough. We have to specify a few more details about the failure before we start measuring how well our protection is working. These details include whether it’s a purely in-house IT failure of a server or some other part of the local information-processing infrastructure or the failure goes outside your own organization. In the latter case, we then must ask if it’s local in the sense that the failure rests in your local ISP or if it’s global in the sense that the failure extends beyond simply your own provider. We can further subdivide the problem. But this is probably enough to get the general idea, which is that you have to have a very good idea of what you’re trying to be resilient against before you can even begin to put protection in place.

Planning for the Unimaginable

One of the threads running through this book is the notion that there can be no human progress without X-events. Of course, here we are speaking of the kind of “progress” that’s revolutionary in character, not evolutionary. This is progress in which visible, meaningful change happens rapidly enough that we can often see the change taking place before our very eyes. The argument we’ve given for the claim that X-events are a necessary condition for this type of progress is that revolutionary change requires that existing social, economic, and/or political structures that have outlived their usefulness be swept away. But if there is anything the power structures in modern society—mostly politicians, banks, and megacorporations— want, it is to maintain the status quo. So the only thing that can overcome that sort of power-induced stasis is an “act of god,” i.e., an X-event, some- thing that the existing power structure is powerless to prevent.

Let’s not focus on the elimination of risk

In his book The Edge of Disaster, security expert Stephen Flynn speaks of a panoply of threats to our safety and well-being: a breakdown in the power grid, stoppages in the global food supply chain, a chemical accident in a major urban area, damage to urban water supplies, and so forth. In Flynn’s world of terror, the most likely threat is a terrorist attack that pushes panicked legislators to overreact by doing something stupid, such as tearing up the Bill of Rights!

What is Resilience?

In the summer of 1973, one of us (JC) took a position as one of the first scientists at the International Institute for Applied Systems Analysis (IIASA), located at a former hunting palace of the Austrian Empress Maria Theresa, just a few miles south of Vienna in the village of Laxenburg, Austria. IIASA was a joint venture of the US National Academy of Sciences and the Soviet Academy of Sciences, with several junior partners, the countries of eastern and western Europe, along with Canada and Japan. The research structure of the Institute was set up along the lines you’d find in a university, except that the “depart- ments” had names like Energy, Urban Studies, Water Resources, Methodology, and so forth, reflecting the fact that IIASA was set up to study questions common to the industrialized countries of the world.

Over the Edge of the Technology Cliff

In the latter half of the twentieth century, two of the highest-flying tech firms were Wang Laboratories, manufacturer of word processors, and Research in Motion (RIM), a Canadian company that produced the famed Blackberry, which took the world of cell phones and electronic email by storm. It’s instructive to look at the timeline of these two companies, both in terms of technology and revenues, to see how things can go very badly very quickly for a company operating in a fast-changing environment.

Lessons From the Biggest Air Disaster

On March 27, 1977 the greatest airline disaster in history took place at Los Rodeos Airport on the island of Tenerife in the Canary Islands. Two 747 aircrafts, KLM Flight 4805 and Pan Am Flight 1736, collided in fog. The crash killed 583 people, with just 61 survivors. The accident has been analyzed in depth and the conclusion is that it was caused by a cascade of errors in both communication and human nature.

Why Companies Need to Fail

During the second half of the twentieth century, if you’d asked anyone who was the world’s leading photo-imaging company they would have looked at you like you’d just dropped in from outer space. The answer to that question was so obvious that to even ask the question marked one as a cultural illiterate. Anyone who even faintly understood the term “photo imaging” would have instantly replied, “Kodak, of course.” And indeed it was that obvious. There were no contenders within sight even for second place. Kodak was it. And almost everyone would have imagined that the Soviet Union would collapse before Kodak. But times change, both for companies and for countries. And by 2012 the USSR was but a distant memory—and Kodak was in the bankruptcy courts on its way to oblivion. Perhaps it’s not accidental that the reasons why both the USSR and Kodak collapsed are about the same. So as the story of this chapter is business, not geopolitics, let’s look at Kodak, not the Kremlin.

Business Resilience

In the mid 1860s, mining engineer Fredrik Idestam established two ground wood pulp mills on the Nokianvirta River near Tampere, Finland giving rise to the name of the firm we all know today as Nokia. How that company trans- formed itself from a wood pulp company producing paper products to what was up until a few years ago the world’s largest cell phone manufacturing firm is a circuitous tale. This story is a fascinating account of how alert management can shift the focus of an entire organization in time with changes in the outside world so as to more effectively deploy available resources. At one time or another, Nokia proceeded from the production of paper to producing rubberized cables for telephone and electrical firms, as well as bicycle tires, and rubber boots. In the mid-twentieth century, Nokia expanded its repertoire to include consumer electronics by manufacturing electricity generation machinery, personal computers, and communication equipment. In 1992, the firm decided to abandon consumer electronics and focus solely on the rapidly growing telecommunication sector. This decision sowed the seeds of Nokia’s early dominance of the cell phone business when the company used its expertise to develop the GSM technology, which was later adopted as a de facto standard for mobile telephony in the 1990s. It’s estimated that by 2008 worldwide GSM connections were growing at a rate of over one million per day.

The Strange World of Texas Politics

We oppose the teaching of Higher Order Thinking Skills . . . critical thinking skills and similar programs that are simply a relabeling of Outcome-Based Education . . . which focus on behavior modification and have the purpose of challenging the students’ fixed beliefs and undermining parental authority.

2012 Platform, Republican Party of Texas

Complexity Gaps Lead to Inequality

American political scientist Francis Fukuyama announced the “end of history” in his essay of the same name published in 1989. In that article, Fukuyama argued that communistic social and economic principles collapsed along with the Soviet Union thus leading to a victory for liberal-democratic capitalism in their decades-long battle. What many people missed in Fukuyama’s essay was the part in which he wondered whether citizens in the West would proceed to lose moral and spiritual purpose now that the Cold War had ended the East- West ideological conflict.