In collaboration folks come together, give something up, and get something back that’s even better. They achieve something together that none can alone, and are better off for it.
A good platform makes collaboration easier, but only if people want to collaborate. “The availability of Lotus Notes,” Thomas Davenport and Laurence Prusak write in Working Knowledge, “does not change a knowledge-hoarding culture into a knowledge-sharing one.”
In other words, to be successful, you have to make collaboration pay. There’s always an “ask” and a “get.”
Sometimes the negotiating is best done machine to machine and takes milliseconds once the infrastructure and rules are set. That’s what a credit card authorization swipe is all about. But figuring out the architecture for that platform so that when the time comes the execution is flawless—that’s the work of humans collaborating. Everyone on the authorization platform has to want to be part of the deal—the customer, the merchant, and their banks. For agreement to happen, collaboration must pay—and pay better than the status quo.
Sometimes the negotiating is best done face-to-face, such as at CompStat crime reviews, for example, which tracked progress and shared innovations at One Police Plaza in New York. Figuring out how to scale innovation, assure uptake and adoption, and improve performance on the streets is the work of humans, too. For shared discovery to translate from lab to the field, collaboration must pay across the entire platform—not just for commanders at meetings, but for patrol officers on the beat who deliver innovation on the street. Change has to pay better than doing nothing—the status quo.
A blue-sky vision offers others something better. But as deep blue as that sky may appear to you, it’s still your vision. People will weigh the give and the get of making it theirs. They will always ask, “What’s in it for me?”
The fact is every collaboration has its own currency. It might be money or job advancement and prestige; it might be the deep satisfaction of a mission accomplished, a job well done, a world made better. Often it can be all of those at once.
Whatever currency matters, collaboration has to make sense in that currency. It has to pay. The costs and benefits of collaboration may well start with hard dollars and cents—and end there, too. But often the currency of “yes” goes right past the world of reason into the world of emotions. Once there, collaboration has to make sense to the head and the heart.
A few years back hospital administrators in Cambridge, Massachusetts, thought they had a sure winner—a new system that would save lives, money, and reputations. Harvard researchers had just added up the shocking numbers on “medical errors,” everything from wrong diagnoses to surgical mistakes to medication missteps. In the United States alone, they found, medical errors injured 900,000 patients and killed nearly 200,000 each year—more than all the people killed by car crashes, breast cancer, and AIDS combined.
If you wanted to change this dynamic fast—and who wouldn’t?—one right-sized piece of the problem looked especially ripe for action: adverse drug events, or ADEs. It turns out that ADEs from allergic reactions, bad cocktailing of drugs, or overdose caused the most patient injuries. Right-sizing further, one might tackle ADEs that were caused by prescription error, which accounted for half of all ADEs.
Researchers touted a solution: computerized prescription order entry systems, or POEs. POEs, they said, promised to prevent nearly 100 percent of prescription errors. A test at Boston’s famed Brigham and Women’s Hospital had proved it: a POE had virtually eliminated prescription errors and reduced serious ADEs by half.
Coalitions of employers and health professionals endorsed POEs as “breakthrough” essentials. The economics of POEs suggested that a hospital like Brigham and Women’s might reap annual net savings of $5 million to $10 million. Also, there was ample motivation to get this problem fixed; years earlier but still fresh in memory, a prescription error killed the Boston Globe’s own health beat reporter when doctors wrote up her four-day course of chemotherapy as a single-day dose.
A POE system could mean fewer injuries and deaths, lower costs, and enhanced reputations. If ever an investment screamed “Just Do It!,” this was it.
In 2002, administrators at the hospital in Cambridge moved into action. The vision was clear, the problem right-sized, the platform understood. It seemed to be a perfect storm of collaboration.
Except it failed.
Physicians complained that the POE system that replaced their handwritten prescriptions with online orders was slow. That it was inconvenient. That the built-in error checking didn’t work. They resisted mightily, slowed adoption, and limited its rollout to a few departments. Most doctors wanted to keep writing prescriptions by hand and faxing them to the hospital pharmacy.
Habits aren’t broken easily.
Presumably, everyone had shared the vision: sound medicine, reduced risk, improved performance, and cost savings. But not everyone experienced the loss of the pad-and-fax system, or the gain from computerizing, in the same way. Not everyone added up the switch to be an unalloyed good.
It turned out that the collaboration “ask” of the physicians, in particular, was high compared to the physicians’ “get.” The hospital was taking something away from the doctors they already had and held dearly. Handwritten prescriptions were time honored, steeped in tradition, under doctors’ direct control, and called upon their judgment as physicians just as doctors’ judgment had been called upon for hundreds of years. The loss of the pad-and-fax method would be painful—signifying, perhaps, all sorts of negative things about the old, familiar, comfortable way of practicing medicine, a changing of the guard, the new digital world.
The ask of physicians—that they give up the pad-and-fax and accept and use the POE—turns out to have had unexpected costs. The doctors’ get—in terms of benefits that the hospital promised them—could not begin to match up. None really dropped to the doctors’ bottom line—not financially, emotionally, or professionally. With a lot of ask and little get, the prospect for collaboration plummeted from “easy sell” to “sure fail.”
By assuming everyone was aligned on a shared rational goal, and not recognizing the hidden but deeply felt costs to doctors, administrators turned physicians from potential supporters into opponents.
How could administrators have made that mistake?
It happens all the time.
When we ask others to collaborate, we step into a vortex of potentially powerful headwinds. Too often we underestimate how much change we’re asking for, and what that change means emotionally.
Professor John Gourville at Harvard Business School has stranded together research by leading economists and psychologists to give new insight into these headwinds—and why innovations that should be home runs sometimes turn into game-ending strikeouts.
HEADWIND #1: The “status quo bias.” People like to do exactly what they did yesterday. Ask for something different and they resist. They’d rather stick with what they have, even if a better alternative exists. People’s status quo bias makes them reflexively unhappy about change.
HEADWIND #2: The “endowment effect.” People overvalue what they already own—typically, researchers find, by a factor of three. That means for you to give something up that you already own you’d need to get back something that was three times better. Even then, it’s a draw.
Why? Because psychologically, researchers have found, losses loom larger than gains. Psychologists refer to this as loss aversion. Try it for yourself. Would you make an even-money bet on the flip of a coin—heads you win $1,000, but tails you lose $1,000? Most people would refuse. Most people would want to know that they stood to make $2,000 or even $3,000 before they’d risk $1,000 on a coin toss.
That’s the endowment effect at work. People endow things they have with all sorts of emotional attachment—three times more value than things are actually worth. Because of the endowment effect, giving up the old for the new is hard, even when it makes “sense.”
Companies behave the same way. They are often reluctant to unload a division, for example, even though they would not now create it from scratch, nor buy it from someone else.
They also overlook planning for the endowment effect when introducing new products. Electric cars and satellite radio are just two of many innovations that ran into the endowment effect headwinds. With gas stations everywhere, for example, car owners view unlimited driving range as part of their endowment. Radio listeners view free radio as part of their endowment. Electric cars with limited driving range and XM radio at $10 per month both felt like losses and initially failed.
When the consumers of change overvalue the status quo by about three to one, that’s a serious headwind. Whatever you’re offering has to be a lot better, from the perspective of the “getters” than what they are giving up.
HEADWIND #3: The developer’s curse. Most inventors think of their innovation as a godsend. They know it, they’ve lived it, they love it.
Developers—like the administrators and the IT staff in the prescription order entry account—can fall too much in love with the promise of new products. Research shows they overvalue the invention by a factor of three.
What does all this mean for collaboration?
It means there are always headwinds to start, as folks who are asked to buy into collaboration exaggerate their losses—and those selling collaboration overestimate the gains. The gap between the two groups may be huge. If your potential partners underweight the value of change by a factor of three, and you as a developer overweight it by the same amount, there’s a potential mismatch of nine to one in your assessments.
That means that if you’re selling a better mousetrap, it has to be ten times better. It’s what Professor Andrew McAfee of MIT has called the “10X” factor.
Now, maybe the degree your better mousetrap has to be better is really 12X or 6X or even just 3X. Every time out, and for every new product, service, or collaboration, that factor will be different. The point is this: answering the question “What’s in it for me?” sends you into a stiff headwind where the seller of the benefit might be far ahead of the buyer who, looking at what he is giving up, is just saying or at least thinking, “No way.”
When you run smack into strong headwinds, Gourville and others suggest workaround techniques that can keep you moving forward:
SHRINK THE “ASK”: In other words, reduce what you’re asking for—in terms of money, time, emotional investment. Make the risks seem lower than the potential gain.
Right-sizing a problem almost inevitably shrinks the ask. The smaller the problem, the smaller the ask, and the less risk. But you may need to reduce it even further.
A modest ask made Vice Admiral Nancy Brown an enthusiastic sponsor for Mike Krieger’s Maritime Domain Awareness initiative. “It would be a huge cost saving to me, plus it was a faster way to get the information; it was a much more effective way to deliver capability to my commander. So there was no risk to me at all: even if it failed we’d just fall back to the way we always did things and bring in a contractor, try to get money, and build it on our own,” Admiral Brown said.
“But it didn’t fail, because everybody saw the benefit and that they stood to gain much more than it was going to cost them to be a participant.”
BACKWARDS COMPATIBILITY. Make collaboration seem less risky by aligning what you’re asking for as closely as possible to what exists now, while still achieving the needed change. That’s what Toyota did for its Prius hybrid. By using gasoline as well as batteries, the Prius fit into car buyers’ habits while delivering all the “green” benefits they were looking for.
Backward compatibility helped bring John Shea into Mike Krieger’s collaboration. By using a new system that would fit well into Shea’s existing platform, Krieger promised to deliver great value to Shea without making him move too far out of his comfort zone or invest in a whole new infrastructure.
SKIP THE ENDOWED. Court the people who aren’t imbued with the endowment bias. Sports equipment manufacturer Burton did this for snowboards. Why bother trying to convert older folks away from skis? Go after younger consumers who’ve not yet been “endowed” with skis, then position snowboarding as supercool. The result: Burton now has dominant market share, and in the United States there are now more snow-boarders than skiers.
As we’ll see later in this chapter, that’s what the state of Massachusetts did when it launched its experiments using electronic medical records. Just as doctors at the Cambridge hospital did with POE, older physicians pushed back against using electronic medical records—there was too much uncertainty, too little gain. But the younger docs who had no such endowment pressured their colleagues to buy into the digital system—helped along by payments the state made to cover the cash costs of enrolling. The new generation of physicians prevailed.
REFRAME THE STATUS QUO. Redefine the status quo to make it seem like change is giving something back, not taking it away. When gas stations first accepted credit cards, many tacked a surcharge onto card purchases. Consumers and card companies revolted. Why punish the cardholder? Fine. Instead, stations eased prices upward overall and then gave a discount for cash. Oil companies, gas stations, and card companies made more money. Consumers thought they were getting a good deal. All because the status quo at the pump was redefined from gasoline at $0.89 per gallon with a $0.04 surcharge for cards, to gasoline at $0.93 per gallon with a $0.04 discount for cash.
When a crisis hits, the status quo abruptly reframes on its own. The balance of risk and reward shifts. The cost of doing nothing can skyrocket; options that folks might not otherwise consider—including collaboration—look newly attractive. With that shift, a crisis is a good time to move the organization and the issues forward.
That’s what Dee Hock did. He made standing still seem expensive for his would-be Visa collaborators, and framed taking first steps together as the lower-cost choice. First he accentuated the negative of the status quo: his collaborators all agreed the current arrangement with Bank of America was bad and needed fixing. Then he created a blue-sky vision that seemed both limitless and within reach: here was a promising way forward. Finally, he lowered the risk of taking that first step together. At worst, Bank of America would turn the insurgents down, and they’d be no worse off than where they started: the status quo.
BETTER THAN GOOD. Press the right buttons and you can have the home team squarely behind you. The collaboration around maritime domain awareness saved John Shea time, attention, and staff—for something he’d have to do anyway. It was like “found money.” The Navy’s own master chiefs helped design the ARCI displays. They took pride in ownership and felt valued as contributors. The chiefs became ARCI’s ardent supporters.
SHOCK AND AWE. Make the benefits so great that people switch despite their bias. MRIs were huge compared to X-rays, for example; calculators were huge compared to slide rules. Mike Krieger’s maritime domain awareness gains and Bill Johnson’s ARCI-based sonar performance were so astounding that the admirals clamored for them. The support of users like John Shea and the subs’ master chiefs only added to the innovations’ value.
BRUTE FORCE. Coerce the switch—eliminate the old or legislate the new. For example, laws force car drivers and passengers to wear seat belts and motorcyclists to wear helmets. Plenty of organizations have simply pulled the plug on old systems and switched over to new ones.
Many collaborations that stretch out over time require some combination of all these methods, from “shrink the ask” and backward compatibility, to “shock and awe” and brute force. How and when and where to use which approach is a matter of time and circumstance, judgment and decision making, leadership and courage.
In the 1980s, US Customs commissioner William von Raab was driving hard to move shippers and customs brokers onto his agency’s new automated system for clearing imports into American markets fast. He was fighting quite a headwind: with the exception of a few big players, the world of customs brokers was still all “green eyeshades and pencils”—hundreds of mom-and-pop shops doing manual entry the same way they’d done it for … was it two centuries now? Little had changed in basic customs processing since Customs collected the fledgling nation’s first revenues in 1787.
President Ronald Reagan had tasked von Raab with waging the war on drugs, and doing it with less staff. It was an inconvenient moment to declare a new war. Commercial imports were surging, US docks were jammed, and industry was growling. Now von Raab had to siphon his inspectors off to the high seas to fight drug smugglers. Something had to give.
Customs rolled out the Automated Commercial Environment (ACE), a new electronic cargo-processing system that would make all invoicing electronic, reusing the same data at every step from ship to warehouse to truck to store. It would speed clearances, reduce rework, and decrease the amount of staff needed.
To be part of this new system—this global platform for trade processing—shippers and brokers had to buy gear, build programs, cast off the processes they’d used for a hundred or more years, reinvent new ones, and hitch their systems onto the main ACE backbone.
They looked at von Raab’s blue-sky vision of a vastly more efficient system and saw little proof, all cost, and nothing in return but heartburn.
The industry balked and hoped to wait out von Raab. Many commissioners had come before, and many had gone; surely he would, too. Employee unions appealed to Congress to fight the job cuts. No firm would move—no one was going to make that initial investment in terminals, servers, training, and new processes, the equivalent of becoming the first fax machine owner ever.
The status quo bias headwind was blowing hard.
But von Raab battled back. His unequivocal message blared across the trade dailies: “Automate or perish.”
He backed up his command as only a US Customs commissioner could. US Customs controls whose freight moves off the docks first. That move-to-market gives a huge competitive advantage to brokers waiting to get paid and stores needing to stock up with the latest fashions, appliances, and toys. It doesn’t do anyone much good to get a shipment of Christmas tree-toppers from China in January.
More than that, delays cost money: goods sitting on docks slowed payments from merchants to importers, who had to deliver goods before they could send a bill. They often paid hefty penalties for each day of delay.
“The more we get better information about shipments, the more we are prepared to let apparently legitimate shipments go,” von Raab told a reporter. “If an importer comes in and he’s always clean, his entries will gravitate towards getting a general inspection; if he’s always off, he’s probably going to be inspected every time.”
Von Raab’s executives were even more blunt. Customs would process the electronic entries first. “We no longer are promising to treat everybody the same,” one Customs official told the trade in 1985. “If you invest in automation, you have the right to expect quicker service than somebody who didn’t. And you’ll get it.”
Von Raab had shifted the status quo. He moved from low-cost cargo clearance where everyone suffered delays (and he had no authority to charge a premium for expedited service) to squeezing all costs higher with the threat of fewer inspectors on the docks and more delays, and then promising a discount for those who went the all-electronic route.
Von Raab knew that if he gave competitive advantage to one firm, the holdouts would crumble. Those who broke ranks and adopted ACE would see their cargo move off the docks first. Their competitors would see it, too, and would want to get in line fast.
The trade soon caught on—either comply with the Customs Service’s automation initiatives or lose business to competitors who would. The price of not collaborating now seemed much higher than the cost of change. Those who were slow to automate might never recover.
In 1985, 20 percent of entries were filed electronically with Customs. By 1988, 57 percent of American brokers were online with Automated Broker Interface, and 40 percent of all entries were filed electronically. Customs reported that its cost per entry had fallen from $28 in 1984 to $3.
Over the next five years, brokers spent more than $600 million to automate and keep pace with the Customs Service. By 1990, American Shipper reported that 90 percent of all brokers’ entries were handled electronically. Imports had increased by 50 percent, and revenues from duties and fees climbed to $20 billion annually.
ACE had become the electronic backbone of global trade, and it remains so today,
Who moves first? Economists liken this to the dilemma facing hungry penguins on an iceberg. There are plenty of fish in the dark sea, but also some hungry orcas. All the penguins want to feed, but nobody wants to become a whale’s dinner. Who dives, and who waits?
That’s what the Customs brokers confronted. Everyone faced steep investments. Who would move first?
Von Raab was pressed for time. Foot-dragging by the trade and by the unions working their connections on Capitol Hill could undermine his strategy. He had a war on drugs to fight, and freight backing up on the docks to clear. Von Raab couldn’t wait for natural market forces to work to pull this network together. He needed to get those penguins diving.
Von Raab helped the penguins solve their dilemma by making it safer to dive than to linger on the iceberg. He championed what economists call “penetration pricing” for his first adopters, and “aggressive promotion” to get his network going. The key was shifting the cost of the status quo upward so that the benefit he offered—streamlined processing—looked like an advantage.
Sometimes the steward of a platform has incentives to hand out: he doesn’t have to wait for collaboration to come about in due course. He can help those first penguins take the leap, get that innovation going, and forge the collaboration that will return benefits to all.
In 2006, the nation’s move to electronic health records was under way. Dr. John Halamka, Harvard Medical School’s chief information officer, had been working on the effort for years. Starting in 2004, Halamka had helped create the first electronic records in Massachusetts. It took years of innovation, invention, and collaboration, and a staggering sum of money. A $50 million grant from Massachusetts Blue Cross, for example, had paid for installing electronic health records (EHR) systems in the offices of every physician in three Massachusetts communities and networking them together, at a cost of about $35,000 per office. The effort wired three communities, with four hospitals, 597 physicians in 142 practices, and 500,000 patients.
Halamka learned a number of lessons from the Massachusetts experience. “Free is not cheap enough,” he said. Just handing the docs the technology wouldn’t convince them to adopt it. A private-care physician practice (average size: three doctors) needed hand-holding, training, and equipment installation—about $35,000 worth.
The investment was well worth it. Massachusetts eventually went all-electronic on 90 percent of claims and dropped the per-claim cost from $2.50 to $0.25.
But most of the nation was still back in the last century when it came to medical records. In 2004, President George W. Bush began pushing EHRs from the top down. “On the research side, we’re the best,” President Bush said. “But when you think about the provider’s side, we’re kind of still in the buggy era.”
Getting physicians, administrators, and the rest of the medical establishment on an EHR platform would reduce some of the billions of dollars the nation was losing every year to error, wasteful practices, and redundant care.
To move out of the “buggy era,” labs, offices, and hospitals all had to speak the same data language. Each had to deal with complex legal, operating, and technical issues, such as addressing the privacy and security of patient and corporate data to the others’ satisfaction. And moving to the new platform, each would have to reinvent long-established, well-tuned, and quite comfortable business practices.
Those were stiff headwinds. Even though communicating by paper was bad for business, bad for medicine, and bad for patients, hardly anyone outside of a handful of closed systems like Kaiser Permanente had made the move to EHR. Society paid for the waste and errors created by paper records, but individual physicians and hospitals saved money by sticking with paper. None of these penguins was about to jump.
President Bush asked Halamka and a core group of colleagues to help jump start a national move to EHR. In 2006, bringing all these players, their data, and their individual platforms into any kind of collaborative alignment looked impossible. A typical medical record contained on average sixty-five thousand different elements. Some seven hundred different standards, many backed by different vendors, fractured the industry. Meetings on the issue were spectacles involving upward of eight hundred stakeholder organizations.
Yet, by 2009, Halamka was able to claim that both standards and security problems—the rules and infrastructure of the platform—were essentially solved.
Halamka’s group began its work with priorities set by a presidential board: “Go find and create standards of harmony around a critical set of use cases”—exemplars of information sharing everyone might agree to.
Halamka began by right-sizing the problem. Which use cases? Best would be those that involved data that providers now shared millions of times each year on paper. Common as these were, everyone would see the value of getting them right; everyone knew how to do them; and they might give everyone early wins and prove the whole process. With success, all would have confidence to tackle more complex matters sure to arise down the road.
“Labs? Okay, we all need that,” Halamka said, going down the checklist of capabilities. “Radiology images? We need that. Personal health records? That sounds good.”
With a list of capabilities in hand, Halamka chaired the process of finding data standards for each. That meant whittling down the chaos of seven hundred standards to a few they’d recommend the industry adopt for each use case.
Some calls were easy. “If somebody has a standard that’s a million dollars a copy to use and is only available under a non-disclosure agreement—bad!” Halamka explained. “If someone else has a standard that’s a hundred dollars to use, is freely available and the world can consume it, modify it and enhance it—good!”
As steward of this restive collaboration and its emerging EHR platform, Halamka saw that getting to “perfect” would be hugely expensive and time-consuming. He calculated that creating a single uniform data stream for every primary care physician and every hospital would cost on the order of $100,000 per user. Instead his group settled for “good enough”—not a single standard per use case, but two or three. That dropped the cost of standards adoption from $100,000 per user to $1,000.
It was good enough for starters and supported the goal, a standard designed not just for deep-pocketed players but for the little guy—and for mass adoption. Getting down to two or three standards for data exchange over the EHR platform would take much of the friction out of their collaboration.
“Good enough” was good enough for privacy and security, too. There was no way to get to a uniform national policy. Every state controlled the policies within their own boundaries, governing “the final mile” of any national network. Halamka’s team decided that some national requirements would ensure “good enough” uniformity; the rest would be left to the states. No sense tangling with fifty state regulators. Was it perfect? No. Was it adequate? Yes.
The same was true for the technology architecture. A general description would suffice to make sure differing computer systems could talk. As long as vendors could then build to the architecture and be compliant, they would support new rules—anything that clarified requirements and ensured the future. With vendors on board, the move to EHR could assure basic interoperability across all users.
“You’re not going to not drive a car because you’re better off waiting for Scotty’s transporter (from Star Trek) to beam you aboard some day,” Halamka mused in his blog. “The same can be said of EHRs and health information exchange. Why wait?”
Halamka and colleagues hadn’t completely solved the challenge of establishing a fully coordinated, national EHR system. But step by step they were taking the vision and right-sizing. Soon, they hoped, they would get a partial—and meaningful—capability into users’ hands fast.
But the costly switch from paper to EHRs made sense only if it was done en masse. It made no sense to be the only EHR-ready provider on the network. How to get those penguins jumping?
The Bush administration refused to require that health providers make the move. Instead the government’s strategy relied purely on market pull: they would endorse and certify the products and wait for doctors and hospitals to buy them, gradually expanding the network.
Halamka estimated that would happen around the time Scotty’s transporter beam was ready for mass production.
He needed a way to make collaboration pay fast.
The Massachusetts experiment was one of several that showed that getting small-practice physicians—about 80 percent of American doctors—to adopt new standards, new gear, and new processes was an uphill slog. Many were already in financial difficulties, and the cost per practicing unaffiliated clinician had by then risen from $35,000 to $50,000. Then as now, there were good public interest reasons for doctors to hop on the bus, but few compelling personal business reasons.
There had to be a “first mover advantage”; someone had to jump first.
Halamka advocated for a new package of incentives and penalties. Given the clear public benefit that would flow from the move that private care physicians would have to make, he argued to the Obama administration that taxpayers should fund that move, in the form of direct payments, low interest loans, tax credits, or pay-for-performance incentives. Those who lagged behind, he argued, should face penalties.
At Halamka’s and others’ urging, the Department of Health and Human Services secured $27 billion in federal “stimulus funds” to reward EHR first movers. Any doctor’s office or hospital that could demonstrate “meaningful use” of electronic health records could claim its payment. Each would have to prove it could handle twenty different EHR exchanges—the best practice “use cases” Halamka and colleagues had identified, comprising standardized records on everything from a patient’s smoking history to clinical lab tests.
That $27 billion got providers’ attention. On April 18, 2011, the Beth Israel Deaconess Medical Center, Halamka’s own hospital, became the first hospital in the country to achieve “meaningful use.”
The lead penguin had jumped, proving the waters safe for all. The move to a national system of electronic health records was on.
Prizes, stature, career advancement … helping others, solving problems, saving the world—collaboration can offer many means of payment.
IBM INNOVATIONJAM: What happens when 150,000 people from 104 countries and 67 client companies accept an invitation to a “massively parallel conference” online? Answer: the IBM InnovationJam. In its first InnovationJam, which lasted more than seventy-two hours, and with a promise of $100 million in funding from IBM’s chairman for “best in show” ideas, forty-six thousand suggestions were posted around thirty-one core ideas for bringing IBM’s new technologies to market faster, better, cheaper.
The result? Ten big ideas that represented first-of-a-kind new businesses for IBM. Pilot programs offered by the bushel. Ultimately, IBM made a $1 billion investment hoping to change the fundamentals of how IBM and its customers used energy for computing.
What else happens? You get a proven method for bringing the wisdom of the crowd, wherever it might be, on whatever topic, to a platform. You find one another, exchange visions, collaborate on problems, and make plans that translate ideas into actions.
If you’re IBM, you market a generic version of the platform to other corporations like Eli Lilly. Their C-level executives connected on “VisionJam” with half their global employees and devised new strategy for the company. NATO used IBM’s platform to launch SecurityJam, addressing twenty-first-century security threats. The World Urban Forum created HabitatJam for global brainstorming on urban sustainability.
There seems to be something in the Jam platform for practically everyone. Innovators connect to an audience of peers and with executives whose pocketbooks can turn ideas into reality. Executives, for their part, find thousands of creative minds pushing ideas that range from the outlandish to the complementary to the transformative. The CEO gets new ideas, improved corporate performance, worldwide engagement for his troops, and a high-visibility demonstration of his vision and leadership.
“Nothing coordinates like cash,” policy analysts like to say. But collaboration can pay in many currencies.
COMPANYCOMMAND: Collaboration is what happens when US Army captains just coming off deployment have an insight about the latest convoy tactics to share with captains coming into theater.
CompanyCommand started when US Army Captains Nate Allen and Tony Burgess were preparing for deployment to Iraq, talked with many seasoned officers just back, and compared notes at day’s end over beers on their front porch. They’d picked up hard-won knowledge. Invaluable stuff. Unlike the dogma of training manuals, these were the “just in time” insights of men and women fresh from the battlespace, where move-countermove is rapid; where innovation doesn’t wait for bureaucrats; and where “asymmetric advantage” is everything. This is innovation at its best: innovation that defeats even the adversary’s most potent new capabilities.
In Iraq and Afghanistan, for example, senior commanders estimated a thirty-day innovation cycle for improvised explosive devices. “You figure out how they’re doing it, defeat it,” said General James Cartwright, vice chairman of the Joint Chiefs of Staff, “and they’re quickly going to figure out how to build a new fuse.”
These were insights way too important to leave to the chance encounters of a couple of captains in front-porch conversation. If they could share the latest knowledge from the battlefield with army captains everywhere and refresh it continuously with updates from the field, they’d transfer hard-gained knowledge fast, accelerate adaptation and innovation, and make a life-or-death difference.
CompanyCommand.com came to life in 2000. Its aim: create a dynamic repository of living knowledge from the men and women who’d gained it. Source it straight from the battlespace, continuously refresh it, and pass it on to the next waves of commanders.
Within the year, ten thousand captains and peers were logging on for ten or fifteen minutes every day from forward operating bases, command posts, West Point, the beach—wherever there was a connection to the web. Eight thousand lieutenants did the same on Platoonleader.com, trading insights on the latest in weapons and tactics, training and readiness, families and friends.
The websites generated 427 page views in the first month—and 400,000 within a few months. Here are a few of the snippets from this online conversation, recounted by The New Yorker in a recent profile:
Never travel in a convoy of less than four vehicles. Do not let a casualty take your focus away from a combat engagement. Give your driver your 9mm, and carry their M16/M4.
Tootsie Rolls are quite nice; Jolly Ranchers will get all nasty and sticky.
Soldiers need reflexive and quick-fire training, using burst fire. If they’re shooting five to seven mortar rounds into your forward operating base, whatever you’re doing needs to be readjusted. It’s not always easy to reach the pistol when in the thigh holster, especially in an up-armored Humvee.
If they accept you into the tent, by custom they are accepting responsibility for your safety and by keeping on the body armor, you are sending a signal that you do not trust them. Do not look at your watch when in the tent.
Supply each soldier with one tourniquet; we use a mini-ratchet strap that is one inch wide and long enough to wrap around the thigh of a soldier.
You’re more likely to be injured by not wearing a seatbelt than from enemy activity.
You need to train your soldiers to aim, fire, and kill.
Burgess, Allen, and two other captains who stewarded CompanyCommand.com from a “pickup game” to widespread acceptance risked censure from their higher-ups and conflict with the established training organizations. But the payback was unparalleled, and fast.
“Great leaders tend to journal. This is a low-barrier way to capture thoughts, share them, get validation from others,” said Pete Kilner, one of the captains. Together, they witnessed a community of officers explode in conversation—all eager to prepare the next wave.
For the army’s trainers at Fort Leavenworth, Kansas, the innovation—now on a military server and called MilSpace—meant cautiously embracing a competitive platform where commanders were gathering not just for vetted talk-at-you one-way delivery, but for spontaneous multiparty posts. That was risky.
For the US Military Academy at West Point, it meant a new way to engage the younger command corps—“a virtual apprenticeship”—so that freshly minted leaders can get advice from seasoned ones.
To preserve the innovation West Point gave the captains safe harbor. They were brought into PhD programs, promoted, and tenured.
CompanyCommand.com’s collaboration offered officers the wisdom of the battlefield. There was something in it for everyone. It was paying dividends to all.
INNOCENTIVE. What do you do if you’re a commercial R&D lab with a problem you can’t solve, but are willing to pay to see if others have the answer—even if they’re from another industry, company, or sector?
If you’re Procter & Gamble, Eli Lilly, Janssen, or one of eighty other firms that have posted their industrial and research challenges on the InnoCentive.com platform, you’ll get a community of 180,000 “solvers” from 175 countries putting eyeballs on your problem. On average you’ll get seventeen responses per challenge, and a usable solution 45 percent of the time. One-third of your problem solvers will have doctorates. Many will come from disciplines far distant from your own.
The cost to you? Fifteen thousand dollars to post on InnoCentive, and if you are satisfied with a solution, prize money of $10,000 to $25,000 to the solver.
What’s in it for the solvers? A chance to be noticed by professional peers. Opportunities to be seen by other industries, and to have your wisdom pay dividends in unexpected ways across those boundaries. A chance to make a difference—and to pick up some cash.
What’s in it for InnoCentive? Making a market: InnoCentive brings together “seekers” and “solvers” who would otherwise never find each other. Making a difference: InnoCentive helps many clients conquer big, intractable problems. Making a living: as the platform steward Inno Centive provides the infrastructure and makes sure everyone plays by the rules of intellectual property. It has shepherded about a thousand challenges, half leading to solutions.
THE APP STORE. What’s in it for you if you run an App Store platform? At Apple, you get customers flocking to your site, downloading about 225,000 apps for the iPhone five billion times over two years, collecting about $1.4 billion in revenue. Apple keeps 30 percent—that was $420 million over the first two years—while the app developers keep 70 percent of the revenue from the sales of their apps.
The App Store drives iPhone sales. That was the idea. Apple practically gives away the apps (about 80 percent of apps are distributed for free), but charges a hefty fee for the iPhones. When Apple opened its App Store in July 2008, there were 6.1 million iPhone 2Gs in use. By June 2010, 100 million Apple iPhones had been sold.
What’s in it for the app developer? The exalted few make millions. But half of all Apple developers make less than $700 over the first two years.
It costs, on average, somewhere between $10,000 and $50,000 to develop an iPhone app. That means it will take the average Apple app developer fifty years to break even. But many developers are paid in another way.
Government agencies like Washington, DC’s Apps for Democracy, for example, run contests for apps that “mash up” city data, combining old data sets to create new and useful apps. Cities boast huge gains for very little investment. DC, for example, received $2.3 million in software value from forty-seven apps developed by prize seekers and paid out a total of just $50,000 in prizes. First prize in 2009 was $10,000 split across a three-man team.
The Apps for Democracy contest helped DC exploit information in its computers and archives. Best of all, all that data was already gathered and paid for. By opening its data to developers, DC was able to create new value in ways never thought of or tried before. Some developers mashed up the DC crime data with bus stop locations, for example, to show the safest walking routes to and from public transit.
What’s in it for the developers? Washington, DC, touts the benefits as “community building efforts,” “self-actualization,” “feeling valued by city/government/peers,” and moving from “obscurity to recognition.” These benefits seem to work for the developer and the sponsor.
Only time will tell whether the App Store business model is sustain-able—where “what’s in it for me” is answered so favorably for the store owner, while the apps developers receive only crumbs and glory. Apple’s competitors are already giving developers a bigger piece of the pie, reducing their own take to a competitive 20 percent.
But there are clear lessons to be learned here about collaboration. By making the platform available and encouraging apps development, you can get tens of thousands of solutions faster, better, cheaper than you would by waiting to create the same apps in-house. Instead of a few major developers, you invite an unlimited number of creative minds to solve the problem.
The ask is worth the get.
BILL BRATTON
Throughout my career, I’ve found that a crisis often creates the best opportunity for collaboration. It brings the payoff from change into sharp relief.
When I was brought on as chief of the New York City Transit Police Department in 1990, fare evasion was bleeding the system dry; crime and disorder were making people fearful. Both were symptoms of a system in crisis.
The Transit Police force was demoralized and badly equipped. Many cops hated the job. Their station houses and cars were broken down; their weapons and radios worked poorly. There were too few of them standing by barricaded token booths to make much difference. Protecting the transit system’s money was not what they signed up for. Turnstile jumpers—170,000 of them every day—ignored their presence. And cops would ignore them: for $1.15 theft in service a single arrest might take a cop out of service for the rest of the tour.
Transit cops were the poor stepchild of a system focused on getting people to and from work that was itself strapped for cash: fare evasion alone cost the system $80 million per year. The cops looked bedraggled in their rumpled uniforms, which was understandable, as subway stations in the summer could easily reach temperatures of one hundred degrees.
There was no pride of appearance—just another sign cops were suffering a crisis in confidence, in morale, and in sense of purpose.
We turned that around by getting the cops reinvolved in policing—doing what they had joined the force to do—creating decoy units, new patrol plans, and new tactics.
Our data showed that one in seven turnstile jumpers was wanted on a warrant or probation or parole violations, and one in twenty-one was carrying an illegal weapon. We persuaded the Transit Authority to outfit a couple of buses as mobile arrest processing centers—we called them “bust buses”—and put them near the stations that had the most turnstile jumping. Now, when cops made collars for fare jumping, those arrests could quickly turn into felony arrests for outstanding warrants or weapons. All of a sudden, transit policing became real policing, not just “protecting the money.” With cops now in the game again, not only did fare beating decline, but so did the number of bad guys on the subways.
There was something in it for everyone: the riding public concerned about safety, the Transit Authority that worried about revenue, and the cops who wanted to be cops.
When it comes to making change happen, a crisis speeds up the process. It allows for the forceful breaking down of barriers; it gets people off the old tried-and-true methods. A crisis means they have less time to get into their bunkers and resist. Instead, you build up momentum that keeps things moving.
One of the things you’re looking for is a trigger to get people to question their existing beliefs, the way things have always been done. To weaken the bias toward the status quo.
You also want to loosen the grip of the “endowment effect,” as we described it earlier. Even people who are willing to do things differently can be pulled backward by a feeling of loyalty to the organization, to the people they’ve grown up with in the organization, to the old way of doing things.
To counter that, you have to get as much buy-in as possible for your vision and your change strategy. People need to see “What’s in it for me?” That’s what people are always asking, whether they express that or not. It’s human nature. Most people are not natural risk takers.
A crisis reframes the status quo. It can make standing still seem dicier than moving forward. It can make change seem desirable.
When you want to spark organizational change, sometimes you need a crisis. If you don’t have one, create one.
In the New York City Police Department the change that CompStat brought started at the top. Before CompStat, the three police departments in New York—Housing, Transit, and the NYPD—each reported to different chiefs. Residents in public housing—there were six hundred thousand—phoned in complaints about drug dealing to the city’s joint 911 line, or to the NYPD precincts. But stove-piped and unaccountable, the precincts often failed to forward them to the Housing Police. I learned from Jack Maple this practice was so standard that these reports were called “kites.” They’d just fly away out of sight.
In 1995 the three New York City police departments merged so that all city cops, Housing and Transit included, reported to the NYPD commissioner. The Housing Police, now under my command, continued their practice of regular drug sweeps into the housing projects. They’d come back all pumped up because they’d made a hundred drug arrests. The problem was that these sweeps didn’t have any effect. The next week they’d be back making a hundred new arrests at the same location.
CompStat mapping made it very clear that there were two worlds out there: the world where complaints were coming from (inside the public housing high-rises) and the world where the arrests were occurring (outside on the street). The cops were going to the old reliable fishing hole instead of where the real problem was. “That’s the outdoor drug markets,” the commanders said. “We can get a lot of arrests over there. Isn’t that the measure of success?”
Our goal was to change the quality of life—that meant making arrests where the worst problems were, not just where they were easiest.
Well, along comes Jack Maple, my deputy police commissioner at the NYPD and the inventor of CompStat. Maple, an outsider who’d been with me at the Transit Police, wasn’t bashful about speaking the truth. He told the New York cops: there are little seventy-five-year-old ladies living in these housing projects. Are you telling me that you’re a New York police officer and you’re afraid to go into those hallways that are basically controlled by drug dealers? But you expect someone’s mother with her shopping bags to walk through them every day on her way home? Is that what the NYPD is about?
Maple created a crisis of embarrassment, a crisis of confidence about the old way of measuring success by the number of arrests rather than by impact on the real problem. He focused on the crisis of confidence in the police culture itself.
That began the process of buy-in from the top of the department. I already had a kitchen cabinet of trusted advisers, many from outside the NYPD. Now it was growing to include insiders—a new collaboration. Chief of Department John Timoney, Chief of Patrol Louis Anemone, and others began to get on board. Timoney went public to the department with a mea culpa: he took responsibility for his part, for what he called twenty-five years of failed policing in New York. “A lot of arrests … but I wasn’t doing my job. And I’m doing it from now on.”
From there it snowballed. The expanded kitchen cabinet helped create the vision and the goals—to save lives as fast as we could in New York. There was no time for academic study. Our goal was to reduce crime, fear, and disorder. Disorder was critical because it was so prevalent in the city. Eight million New Yorkers saw disorder day in and day out, but it had not been targeted by the department for thirty years.
The expanded kitchen cabinet also framed eight strategies that would focus those three goals for maximum impact. From there we created a concept called “re-engineering teams,” ultimately with five or six hundred people working on all the elements of what needed to change in the NYPD to reach the vision of a safer New York City.
That’s where you get maximum buy-in, just by being very transparent about what you are trying to do. At each level, you attract more people who appreciate the vision, who appreciate how this is going to impact them, individually and as a group. That’s very important. The idea is to get as many people as possible into the game, as quickly as possible, and involve them in every aspect. That creates multiple benefits, so that out of every action many groups benefit.
The vision quickly spreads out like a Christmas tree. The overall goals are the trunk. You have people who have been frustrated by the status quo and are now seeing that these goals are going to meet some of their needs. Their efforts become the tree’s branches.
As you bring more and more people in, you have more branches and the branches get fuller. Then you push the process down even further as you get down into the rank and file. They contribute the tactics in each case, and that’s like the ornaments going onto the tree.
That is where you get buy-in. You don’t need to have huge amounts of money if you have other capital to spend. People want to have some degree of creativity. So give everybody their own piece of the Christmas tree. Give them the ability to personalize their part of it, so long as what they add doesn’t end up taking away from achieving the overall mission.
For CompStat, we created the vision and goals. A larger group—farther down the Christmas tree—created the strategies and best practices. We left it up to the precinct to create tactics because each was so different. We pushed responsibility as far down in the organization as we could go and demanded accountability in return. We gave discretion to precinct commanders, who passed it down to the cops riding around in radio cars, for what was expected of them in their area. That got more and more people engaged not only in understanding the vision, the goals, and the strategies but in developing the tactics.
In the submarine saga described earlier, Bill Johnson was riding the US Navy’s crisis in sonar. The fleet came back with reports of collisions. Johnson was able to make his first moves because the data showed the sub sonar wasn’t working; as in CompStat, the data revealed all.
Johnson wanted to open up the design and get more people involved. Sonar design had been closed to a few for many years. So, too, had policing. Innovation and collaboration benefit from inclusion. The more people that you have talking about an issue, the more ideas you’re going to generate, the more feedback you’re going to get, and the more you will accelerate the process of change.
So start with a crisis. Then empower others to innovate new ways to move beyond the crisis. Make people feel included and comfortable enough to put forward ideas and take risks. My job as the leader was to make it safe to take risks—so the “penguins on the iceberg” will take that first leap with you. Instead of a risk-averse culture, where people are punished because they took a chance and it didn’t work, you want to create the experience of people taking initiative and being rewarded.
That’s how “What’s in it for me?” makes collaboration pay for all. Like a Christmas tree, it’s a beautiful thing to behold.
On Tuesday, September 11, 2001, when the World Trade Center in New York was destroyed by a terrorist attack, the New York Stock Exchange closed. This massive, proven, beautifully architected platform stayed dark for four straight trading days, longer than at any time since the Great Depression.
The attack exposed a hidden risk—not from terrorists, but from beneath the platform itself: telecommunications. Although ready to trade, no traders could buy or sell via the NYSE’s platform. Telecom service to and from the platform had been destroyed underneath the collapsing Twin Towers. The crisis made collaborating to fix it not only attractive but imperative.
The 9/11 attacks had decimated lower Manhattan. Even so, by Wednesday, September 12, most traders were ready to get the financial markets up and running. Like the New York Stock Exchange (NYSE) itself, their primary trading floors were mostly unscathed, even those just blocks away from Ground Zero. Others, more directly affected, had quickly switched to backup sites.
By Thursday, September 13, the Federal Reserve was eager to get trading going, to pump liquidity into the markets and keep the global economy humming.
“If the market can trade,” Jill Considine, the head of the Depository Trust & Clearing Corporation (DTCC), told the Fed, “we will clear and settle.” Before the attack, DTCC processed more than twelve million trades daily for all the major exchanges—trades valued at $105 trillion each year. In New York and London, DTCC staff had been hard at work through Wednesday night clearing and settling the backlog from Tuesday. By Thursday DTCC, like many in the business, was good to go.
There was only one problem: 90 percent of the lines running from traders to the major exchange floors ran over Verizon. And most of them were down. Telecom was out.
On that clear September morning when the world changed, giant concrete slabs tumbled from the disintegrating Twin Towers of the World Trade Center and slammed into the Verizon Central Office exchange (CO) at 140 West Street, crushing cables running from the CO into and out of Wall Street. Steel girders free-falling dozens of stories sliced five stories deep into Verizon’s basement vaults, shattering water mains and flooding the CO’s basement. Power was lost. No one could even find the manholes, let alone start repairs: the concrete slabs and steel girders had jammed against the building, creating an impassable set of ruins.
The NYSE lost a thousand lines instantly. Throughout Lower Manhattan, the toll to telecom was huge: two hundred thousand voice lines, one hundred thousand business lines, and 4.5 million data circuits. Ten cellular towers had been destroyed.
Without their telecom, traders from firms like Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley, and Salomon Smith Barney couldn’t connect to the NYSE, and via the NYSE, buy and sell securities. Wall Street was disconnected and the global economy was on hold.
The New York Stock Exchange is a giant among platforms, supporting collaborations among its members since 1792. In 2001 (as today), it seamlessly transacted billions of trades and exchanged trillions of dollars with astonishing speed and accuracy.
Until 9/11, calls to make the NYSE’s telecom infrastructure more resilient fell on deaf ears. Long before the attack there had been just such a proposal from the Securities Industry Automation Corporation (SIAC), NYSE’s engineering arm, for a secure fiber-optic network that would loop around and out of Manhattan.
At the time, SIAC’s costly proposal ran straight into the headwinds of the status quo bias. It felt like expensive insurance that NYSE members neither needed nor wanted to buy. Against what risk, they asked? Airplanes flying into the Twin Towers and collapsing them onto the Verizon CO below? We’ll take our chances, thanks just the same.
By Monday, September 17, after four dark trading days, Verizon had restored enough telecom that trading could resume. But Wall Street grasped now for the first time the true extent of its reliance on telecom providers, and the risk that created. Good as the NYSE platform was, its global prowess was utterly dependent upon—hostage to—a network literally under its feet, but one it neither controlled, understood well, nor ever again could afford to lose.
Part of the problem lay in the “last mile” with the trading firms themselves. Over the years, firms had continuously upgraded their telecom, buying hundreds of the latest communications services (all of which hooked onto carriers like Verizon and AT&T). As firms accumulated new services, they rarely got rid of the old. They didn’t have to: every new system was backward compatible. (That had made the sale easier, of course!) But this “last mile” clutter was loaded up with risk.
And there was a “first mile” problem. Each was wired point-to-point to the NYSE’s data centers. Every upgrade required unique customization where it touched the SIAC data center. That made upgrades expensive, cumbersome, and time-consuming.
All this accumulated “crud” in the “last mile” and each firm separately hardwired to the exchanges in the first made getting back to business after the 9/11 outages harder. Some of the telecom service was so old that the only people who knew how to restore it were dead or retired. For the future, that crud was going to have to go, as would point-to-point connections to the exchanges.
That still left the problems with Verizon.
Verizon’s practices, such as concentrating its switches and services at the 140 West Street CO and other downtown Manhattan locations, created massive unseen risk for the trading platforms. On September 11, 2011, that risk finally revealed itself, hit Wall Street hard, and occasioned a new look at Wall Street’s telecom provider. Wall Street didn’t like what it saw.
Verizon, Wall Street learned, had had the securities industry’s circuits running underground through PVC piping. The piping was easy to handle and cheap, but it proved poor at withstanding the impact of steel girders raining down like scalpels from one hundred stories up.
Carriers guarantee their customers a certain level of “diversity assurance.” “Diversity” in this case means that carriers run identical traffic via different routes so that if one circuit goes down, the duplicate survives, and business goes on.
In the aftermath of 9/11, Wall Street discovered that it was practically impossible to determine whether it had true diversity—although its telecom outages that day indicated strongly it had little.
Such obscurity worked to the carriers’ business advantage: they made a lot of money off of it. Carriers are always looking for opportunities to move traffic to more efficient pathways—and make higher profits. Key to that was a practice called “groom and fill”: as new contracts came in, perhaps with better prices, or as carriers bought and leased communications and fiber from each other, carriers switched older customers’ paths around—doubling up circuits and reducing diversity below what was required in the older contracts.
Carriers’ “groom and fill” practices created so much risk of a telecommunications failure that at the time the Federal Aviation Administration required an audit of its circuit diversity once a month. As the guardian of the nation’s skies—the steward of the civil aviation platform—FAA had to discover anywhere that a carrier’s groom and fill operations reduced that platform’s operational resilience. If a telecom carrier somehow “erred” and reduced FAA circuit diversity, a thirty-day audit meant it wouldn’t last longer than thirty days.
For Wall Street, after 9/11, thirty days wasn’t good enough. The exchange platforms supported trades whizzing by in milliseconds. Wall Street wanted real-time diversity audits. And as proof, it wanted to see its carrier’s network maps.
But no carrier, Verizon or anyone elese, was about to give out maps of its network architecture to NYSE or anyone else. Carriers held these close, treating them as highly competitive industrial secrets. Furious, Wall Street was now pretty sure that its telecom providers were putting its trading platform at grave risk. Someone was going to have to pour money into the telecom infrastructure to ensure the trading platform’s resilience—ground zero for America’s global financial prowess and the heartbeat of the world’s economy.
To which the carriers, in a joint-industry report to the president of the United States on improving financial services resiliency, basically said “Tough.”
“The demand for such services,” the report read, “is insufficient to allow the marketplace to support the specialized requirements of national security and emergency preparedness functions on a wide-scale basis.”
To carriers, it just wasn’t worth spending their money to make Wall Street’s platform more resilient.
The crisis brought home just how shaky the stewards of the NYSE’s platform had allowed its infrastructure to become. They resolved to break from Verizon, achieve communications independence, strengthen the platform, and control their own destiny.
Right after Labor Day 2002, SIAC announced it would provide a new telecom network for NYSE members called the Secure Financial Transaction Infrastructure, or SFTI. SIAC would lay fiber-optic cable in rings around New York. Members would hook onto the cable and connect to SIAC’s exchange servers that way—no more direct point-to-point connections to the data centers. There would be real-time diversity assurance. The network would be owned and operated by SIAC.
SIAC would switch conduit providers from Verizon, which owned the telecom conduit franchise in New York City, to ConEd, which had conduit rights for the city’s electrical grid. ConEd ran its high-voltage lines all around New York, wrapped in long concrete boxes. ConEd assured SIAC it would run its fiber at the lowest rung in the box—meaning if a missile, girder, or backhoe broke through several layers of concrete it would cut through ConEd’s high-voltage lines before it even touched SIAC’s fiber.
NYSE members would connect to SFTI at a few SIAC-controlled points in Manhattan, eliminating their dependency on the downtown Verizon facilities. The fiber would help standardize the ways members hooked onto the ring, helping to clear out all the legacy telecom crud. And only SIAC’s fiber would touch SIAC’s servers: good for control, safety, and security.
There were huge upfront costs to making the change. Even major players like Merrill Lynch couldn’t afford to build a network that was truly independent of the carrier infrastructure. Only by pooling resources could the industry make the move to SFTI.
Prior to 9/11, SIAC’s proposal for SFTI had gained no traction. It all made good tech sense, good continuity sense. But it never made bottom-line sense. It was like buying insurance. No one really thinks the risk is real until the tree comes down on the roof or the hurricane floods the basement. Or concrete slabs and steel girders slice and dice telecom and leave Wall Street dark.
After 9/11, SFTI didn’t make just business sense, it made emotional sense. NYSE owned the infrastructure and made the rules: anyone who wanted to trade on NYSE had to be on SFTI. No outliers or weak links. Everyone on the platform. Costs would be shared equitably throughout the industry—and with everyone participating, costs would be kept down.
Wall Street swallowed hard and reached deep. The first NYSE members came online in 2003. By 2004, eighty-five percent of the securities industry was on the network.
The collaboration’s biggest potential payoff is something no one ever hopes to collect on: a global trading platform that rights itself quickly after a devastating attack by nature or man. One day, we now know, it might have to, and it can.
Collaboration trades in many currencies. But collaboration must make sense to the head and the heart. For Claudia Costin and her teachers in Rio de Janeiro, the payoff is knowing they are changing kids’ lives. For Bill Johnson and the submarine fleet’s master chiefs, it was the urgency of moving to reclaim underwater superiority for the nation. For Dee Hock, it was the satisfaction of freeing the bankcard from the shackles of its old forms and letting it soar unconstrained into the future.
A platform makes it possible. People make it happen.