The crisis shows that while networks can substantially improve organizations' efficiency and performance, they can also leave them vulnerable to an unpredictable cascade of failures. The network-centric approach promises to allow commanders to understand battlefields with unprecedented clarity and fidelity. The financial crisis, however, shows that these tools can mislead as well as illuminate due to their simplification of a far-more complicated underlying reality.
The fog and friction of war push today's force, as they pushed all of its predecessors, toward generalization. The force deals with the unexpected, so its individual components retain the ability to succeed at a variety of tasks, rather than focusing on performing a single mission with the highest degree of effectiveness. Leverage for a financial institution is, in two crucial ways, akin to specialization for a military unit. The more specialized any organization is, however, the less slack capacity it will have to deal with unanticipated contingencies, and the more it will have to transform itself when unpredicted events occur.
Nassim Nicholas Taleb:
Many hedge fund managers ... are just picking up pennies in front of a steamroller. And sometimes the steamroller accelerates.
The economics of 'information-rich' environments inherently inspire perverse incentives that frequently generate unhappy outcomes. The military must rigorously guard against the threat of 'diminishing returns' on its net-centric investments. Drawing on the author's private sector experiences with net-centric transformations, several approaches for reassessing the military value of information transparency are suggested.
Information insecurity is at least as much due to perverse incentives. Many of the problems can be explained more clearly and convincingly using the language of microeconomics: network externalities, asymmetric information, moral hazard, adverse selection, liability dumping and the tragedy of the commons.
The "fallacy of misplaced concreteness", first articulated by the influential philosopher and mathematician Alfred North Whitehead, played a key role in the financial crisis and poses a threat to the network-centric military of the future. The fallacy is captured by the phrase "the map is not the territory." A map is a simplified representation of the territory it describes. A more detailed map is not necessarily a more useful one. More detail provides a closer reflection of reality, but it can also confuse those who do not need such complete information. The fallacy of misplaced concreteness is important because human beings have a powerful tendency to reify symbols by attributing accuracy and power to them that they do not truly possess.
Even the most sophisticated investors from the most successful firms fell prey to the fallacy of misplaced concreteness, with disastrous consequences. It is unlikely that commanders in combat, operating under far more chaotic and stressful conditions, will be immune to its temptations unless the builders and users of the network pay careful attention to the risk it poses.
Worthersee, Rattle, and Decius on No Maps for These Territories:
Gibson provides profound commentary on the state of mankind and technology.
He is really quite insightful.
I had never heard of this before!
The designers and users of the future network will require extraordinary levels of intellectual humility if they are to succeed. They have to appreciate that they probably do not understand all they think they do regarding how people and the network interact, and they may not be able to control even those things which they do understand.
Caution and humility are not virtues routinely urged upon leaders selected, trained, and promoted for their ability to remain confident and resolute in the face of extreme uncertainty. Yet such behavior will be indispensable.
Science makes me feel stupid too. It's just that I've gotten used to it.
Caught in the Net: Lessons from the Financial Crisis for a Networked Future