Endless Knots

A tale of two Pauls

Something's been going on around the country--and in other countries too--where instead of people behaving in predictable ways as the economy has worsened, they're choosing to use their creativity in service of humanity. The media loves this and there are segments on nearly all the news programs about people stepping outside the bounds and "making a difference," as the NBC Nightly News calls its now-regular segment.

My friend Paul Levy, who's shown up a time or two before here, has found himself in the limelight as a result of the choices he's made as head of Beth Israel Deaconess Medical Center, where revenues are off $20 million this year, which translates into 600 jobs. Paul's written plenty about this on his blog; if you click over there, you'll be able to follow the whole story.

Because of his approach to "running a hospital," he took the problem to the people and naturally they responded. After a series of town meetings where Paul laid out the problem, the hospital opened an online forum where people could anonymously post suggestions. They got tons (detailed data on his blog about all of this).

Long/short, through voluntary salary reductions from the top to deep in the organization and some other cuts, like suspension of 401(k) matches and removing payments for people's beloved Blackberrys, they've whittled down the number of jobs at risk to about 140, maybe fewer (I'm losing track a bit).

Enough of the story. Point is that the national press caught on and last night, the hospital was featured on that very NBC segment, Making a Difference, and tonight, it was featured on PBS's Newshour with Jim Lehrer as part of a longer piece reported by Paul Solman. Afterward, Paul S. asked Paul L. to record a bit more, a six or so minute piece where the hospital guy tells the TV guy how the whole wonderful thing came down and how anyone else could replicate what he'd done in four easy moves: be transparent; provide a forum for participation; be respectful; and explain decisions logically, in plain, straightforward language that people can understand.

Every bit of this is worth your seeing and reading, every bit. Please spread the word.

[Special note to those who know my strange life on trains where I meet all manner of people: A couple of years ago, I was getting off the train in New York when I realized Paul Solman was right behind me. Although we hadn't crossed paths since we both had written for the long-gone Boston After Dark in the deep dark past, I cheerily introduced myself. One thing led to another and next I knew, we were sharing a cab, Paul on his way to visit his 93-year-old father still living in the apartment where Paul had grown up on the Lower East Side, just a few blocks from where my grandfather had lived, and me on my way to my jewels in Brooklyn, aka daughters and son-in-law.]

Mapping the recovery - "follow the money" - part 2

Lost in the firestorm over AIG bonuses yesterday was a quiet announcement by Attorney General Eric Holder that laid another solid plank in the government's structure of transparency and accountability. Michael J. Sniffen's AP story, "AG overturns strict Bush-era information disclosure rules," has a cutline summarizing the change underway in Washington: "Agencies urged to release records unless law forbids," i.e. there's an a priori bent toward openness. The AG was way ahead of schedule with this, acting earlier even than the May 21st deadline for policy directives implementing President Obama's Open Government initiative, established by the very first acts of his administration (see "Obama's Midnight Memos).

With the presumption of release of government information, transparency and trust take a big step forward. Which brings us to the second part of "Mapping the Recovery" (see part 1) in our NetAge Reports series. Here, we address the specifics of the data that will be used to provide transparency and accountability for the chunks (block grants) of spending, particularly of the $787 billion passed by Congress in February.

It is especially important that tracking the expenditures be done correctly and that it truly makes responsibility and accountability clear. Renewed public trust rides so heavily on how this money is spent. While AIG's shenanigans show how difficult it can be to engender trust at the recipient end of spending, particularly in the private sector, the government has an opportunity to increase trust in itself, in how it is handling this money, and making sure responsibilities are clear. Done properly, this builds social capital, quite literally, that will make other parts of the multiple critical agendas possible.

Geek (or wonk) warning: this part of the story, below the break, is more than a little geeky (and plenty wonky--a bit of each). We discuss the data that is required for reporting the recovery funds, then what's missing. Specifically, what's missing is the organizational chart of responsibilities--which is not so hard to fix.

We've created a prototype map of the network of relationships called for in OMB's recovery reporting requirements. We illustrate our example with a dummy grant at the end of a real recovery program, which we show in four views: the government agency responsible for the grant, the grant recipient (whom we're inventing in this example) who will be held accountable, the physical location of the grantee, and and the overall purpose of the grant program. You can see the recovery network model live in your browser (wait a moment for the Java to load), and trace the grant along four axis as described below.

-- Jeff Stamps

What’s in the Recovery Picture?

Accountability starts with transparency of details. What, exactly, will we know about each block of money? How will we find it, track it, and understand it?

In network lingo, the recovery data model laid out in the OMB memo specifies six nodes, including the grant node. Each node has a unique ID situated in a defined classification system, and it has a line of text that describes it, a memo field, if you will, providing a name or title. The six nodes are:

• Grant block, a chunk of money with its record ID;

• Responsible agency, with a Treasury Account Symbol (TAS) code;
• Program vehicle, identified by a code in the Catalog of Federal Domestic Assistance (CFDA) which provides a wealth of purpose-related categories to sort grants by;
• Agency account, the extension of Treasury’s TAS code;
• Recipient of the funds, identified by a Dun & Bradstreet number (DUNS), which, like the program’s CFDA code, provides entry to an array of associated details and purpose-related classification systems (e.g., sector, industry); and
• Place, the physical location of the recipient, completely defined in the data model by an address with a zip code and a city, county, and state Federal Information Processing Standard (FIPS) code, which enable easy association with political districts benefiting from the funds.

The grant block record laid out in the initial guidance (see Figure 2) means, for example, we can follow a grant to a zip code, which puts this chunk of money in the context of a nested set of legal and political jurisdictions capped by states. Simultaneously, the same record can be represented in a variety of other classification systems, such as one organized by purpose (CFDA, the Catalog of Federal Domestic Assistance) or by a chart of accounts (TAS).

Links between nodes are either contained in the data record for each grant block (e.g., all the levels of address are specified) or are implied by an external classification system (e.g., the program code is part of the CFDA and nestled in tree structures there).

The grant block record laid out in the initial guidance (see Figure 2) means, for example, we can follow a grant to a zip code, which puts this chunk of money in the context of a nested set of legal and political jurisdictions capped by states. Simultaneously, the same record can be represented in a variety of other classification systems, such as one organized by purpose (CFDA, the Catalog of Federal Domestic Assistance) or by a chart of accounts (TAS).

Links between nodes are either contained in the data record for each grant block (e.g., all the levels of address are specified) or are implied by an external classification system (e.g., the program code is part of the CFDA and nestled in tree structures there).

What’s Missing? Responsibility

The OMB model for “following the money” is missing the organization itself, the codes that place the grant within a chart of responsibilities.

There are two pieces of data missing.

• First is the position responsible for each grant; and

• Second, where appropriate, the name of the person serving in the authorizing position.

Thus, for completeness and transparency on the input side—not just the output side–two more fields (with both a unique ID and a name/title) need adding to the recovery data model (see Figure 3).

Making the Recovery Map

The network logic of responsibility-accountability—a directed link between two nodes—provides a simple way to connect the key elements associated with each chunk of money. To illustrate, we connected four trees into a prototype network map of the recovery spending, including the missing organizational hierarchy. Each chunk, each block grant, shows up in four ways: by granting organization, recipient of the grant, the program and purpose for which it is used, and the recipient location.

As recovery dollars flow, so will the data stream start, and the mapping will be easiest. We have created an OrgScope model to demonstrate what a cross-linked network model might look like using an actual grant program by the NIH for external research facilities and an illustrative grant to a hospital in our city of Newton, MA (see org chart strip in Figure 1 in part 1).

• For the organizational side, we used our network map of the top levels of the US Government (click to see this map live). To the existing org chart, which included NIH, we added the string of positions ending in a specific (dummy) grant block to Newton-Wellesley Hospital;

• Program category and type is modeled with a simplified outline of the Catalog of Federal Domestic Assistance (see CFDA.gov);
• Recipient type is illustrated through general categories of sector and industry; and
• Place is represented by a location map of Massachusetts organized by county (Middlesex), city (Newton), and zip code (02462, Newton Lower Falls).

Relationship chains relating a grant to the four major spokes of the recovery-spending wheel can be seen in the Figure 4 overview and the strings of connection shown in Figure 5 (see the live OrgScope map of these relationships). Of these, three have well-established classification systems (zips, DUNS numbers, CFDA). For the fourth, the government chart of responsibility for the funds, our digital org chart is a start to locating the program within the government structure. However, the government’s map of itself could and should extend to reach at least the program, if not the program officer levels.

It would not be too difficult to create an open government network map. At the top of departments and agencies, a few thousand positions in total are detailed in org charts that can be easily connected together, as we have shown in our publicly available USGov OrgScope map of many of these positions. For the two million or so civil service jobs, much of the information needed to assemble them almost automatically into org charts is just sitting there in federal financial systems. OMB may have much of it. The rest is in the many government human resource and information technology systems. Hooking the whole thing together is mostly a one-time expense of time and IT resources, and a process can easily be set up to refresh the basic data.

Transparency of organizational structure enables people both inside and outside the government to understand better the bureaucratic whole. By connecting the many bits of information into a coherent, shareable picture of our common government, we develop trust, hold one another accountable, and think through solutions with many minds.

Figure 5: Illustrative Grant in Four Interrelated Contexts

 

Mapping the recovery - "follow the money" - part 1

AIG. Again. Let us add our voices to the outcry over the bonus scam. Outrageous. Worse than outrageous is the damage it does to the Obama agenda, particularly the still critical moves to come on the economic rescue plan, as Tom Friedman pointed out in a March 18 opinion column in the New York Times.

What to do? On the recipient side of bailout funds, it will always be difficult to get real transparency and build trust. However, on the input side, the government itself, there is a lot that can be done.

But there's something even more disturbing than the AIG bonuses themselves.

It has to do with an aspect of transparency that is getting a bit of short shrift, in our opinion. There's a lack of visibility into the clear responsibility within government for overseeing the use of so many billions, this oversight, so to speak, from no less an authority than President Obama. Jennifer Loven and Martin Crutsinger's AP story reported in today's Boston Globe quotes the president: "Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in. We are responsible, though. The buck stops with me. And my goal is to make sure that we never put ourselves in this kind of position again."

Responsibility is the flip side of accountability, two roles in one relationship. While AIG is accountable, the government is responsible. Clarifying--making transparent--the structure of responsibility, aka the org chart (see our dynamic map of the top levels of the US Government in your browser, which takes a moment to load), is one way the government can directly increase the public's trust and govern more effectively. This is a much more direct route to developing trust, and will apply much more broadly across the multiple complex agendas of this administration.

To this point, we've written "Mapping the Recovery," another NetAge Report, this one on transparency, accountability, and responsibility particularly as they apply to tracking the recovery spending as laid out by the Office of Management and Budget (OMB). We are posting Part 1 today (after the break below). In this first part, we describe the network of accountability and responsibility, and how the accounting system IS NOT the organizational system, although it sort of looks like it. In the second part, which we'll post tomorrow, we  look specifically at how OMB has set up the data to track the recovery funds, how its multiple elements can be mapped, and, most important, what's missing (hint--responsibility).

-- Jeff Stamps

Accounting for trillions through OMB

When President Obama receives his first report on "open government" this coming May, we're wondering what it will include. As we reported a couple of days ago, the president's first five actions at the moment of taking office included ordering the Open Government Directive, due by May 21, four months from its issue.

This directive "...instructs executive departments and agencies to take specific actions implementing the principles set forth in this memorandum." What principles? Transparency, participation, and collaboration.

Three senior government folks have this deliverable on their to-do lists: Office of Management and Budget (OMB) Director Peter Orszag, the General Services Administration head (Paul Prouty is acting administrator), and the still-to-be appointed Chief Technology Officer, whose reporting structure remains unclear. (We're speculating, based on OMB's organization chart, that the CTO will be in that agency and likely report to Orszag and the president through the "Deputy Director for Management." But we can't really tell, especially since the president said during the campaign that the CTO would report directly to him. The deputy position, by the way, which is to include the new title of Chief Performance Officer, is vacant due to the original nominee's tax problems.)

We've added these OMB positions and other top spots in the newest edition of our OrgScope chart of the accountability structure, as portrayed in our US Gov Map (click, patiently wait a moment for Java to load, click on the Executive Office of the President at about 1 o'clock on the map, then follow the chain down through OMB).

"Transparency for accountability" is the starting point, the critical role for organizational transparency as the precondition for "open government through participation and collaboration." Transparency, accountability, and open government are really OMB's core responsibilities. In essence, OMB is the working hub of the new "open government."

By law, OMB is the place where the executive branch of the US Government comes to "get a whole of itself" (sorry, we couldn't pass up the pun). Its mission is to assist the president with budgeting and  administration of executive branch agencies. Responsible for management and budget, this agency also collects data, measures effectiveness, and helps set priorities. It is a major information pipeline between the administration and Congress. Itself a small agency, OMB's job performance contributes to the effectiveness and efficiency of all the rest of government.

So how OMB does its job is particularly critical at this critical time. Kind of "critical-squared."

Why is mapping the hierarchy, in the way that we've been doing with our US Gov Maps, so important? The maps reveal the clear structure of accountability, the interdependent set of "end-of-the-day" responsibilities that includes every person-in-a-job in the organization. An org chart is the foundation for transparency, and provides context for all the specifics around both organizations that disburse funds and organizations where those funds are headed.

In our FDIC post earlier this week on ballooning rescue organizations, we reported that the budget for just one division was going from $75 million to $1 billion--not in funds to distribute or guarantee (those will likely be many billions, if not trillions) but funds allocated directly for the organization and management.

Three-quarters of that $1 billion will go to contractors. In our view, all organizations--government and otherwise--should map their accountability structures. Those maps should include the jobs of everyone working in the organization, whether full-time employees or contractors, i.e., the only org charts that make sense are the ones that account for everyone. Again, "account for," as in accountability.

The next step for the government agencies involved in the rescue/economic turnaround is to hang the specific details of dollars and deals off the boxes of the agencies and teams responsible for making decisions and awarding funds for rescue spending, investments, loans, and guarantees.

Tracking the transparency trail is already part of at least the stimulus package. While the president graciously took the suggestion of a Republican congressman to include a web site to track the stimulus funds, he has been laying the foundation for real transparency in spending since he entered the Senate--and laying it at the feet of OMB even when it was run by the Bush administration. Obama's early and deep interest is indicated by his co-authorship of the “Google for Government” law.

This bipartisan Coburn-Obama Bill, officially the “Federal Funding Accountability and Transparency Act of 2006,” directed OMB to create a searchable database of almost $3 trillion (in 2007 dollars) in federal grants. It was the first law the new senator introduced when he came to Washington.

The legislation called for tracking contracts, earmarks, direct payments, and loans by January 1, 2008. What happened? OMB made its deadline (see www.USAspending.gov for the result of this useful piece of 21st-century legislation). This is doubtless the platform that will be used to track the stimulus spending (see some of the back story here). For the moment, Recovery.gov is a nascent site in the whitehouse.gov style that shows great promise, offering both tabular views and visual displays of the information, although now only in a few gross chunks adding up to $789 billion.

We believe real transparency connects the details of spending to the the configuration of accountability, aka the org charts. Make both context (the map) and detail (the dollars) visible.

-- Jeff Stamps

Transparency for accountability as the funds roll out

Transparency was a keyword in Obama's run for the office and it's been a critical tenet of everything that he and his administration have spoken about since. The first presidential directives out of the gate for the new administration were focused on transparency and open government. And, it is central to the bailout-stimulus-rescue plans now underway and soon to come.

There are many potential traps in promoting transparency, of course, and each time something seems a little untransparent, the commentators are quick to wave the hypocrisy flag. Putting aside the media's lack of transparency, we want to focus on another aspect of transparency which is this: its ability to keep a clear focus on accountability. If we know what ends are sought and who's responsible for reaching them, then we have a clear roadmap of accountability.

But how do you have a clear roadmap when the thing itself is far more huge than anything has ever been before?

We talked a bit here about the need for clear maps during reorganization where enterprises are shrinking, but we haven't talked at all about the need for clear maps when organizations are growing, or exploding in size.

Take the Federal Deposit Insurance Corporation, whose head, Sheila Bair, has been one of those voices for greater transparency. Yay, Ms. Bair. We've spent a bit of time putting the top levels of FDIC into our US Government Map (go to Federal Agencies, at about 2 o'clock).

Thanks to the careful reporting of Eric Lipton in a NY Times Valentine Day post ("Failed Banks Pose Test for Regulators"), we learn that the work--and the budget--of FDIC increased astronomically from 2007 to 2008. FDIC, which has the thankless task of toxic clean-up of failed banks (and the businesses that led to their failures), had just three failed banks to scrub-rinse-repeat in '07. Number in '08? Twenty-five, or, arithmetic fans, eight times the number it had to launder, so to speak, just a year earlier. Given that, as of last week, thirteen more banks already have failed in '09 (and we're only halfway through February), a whole lot more are landing in FDIC's dirty laundry basket even as we write.

To provide some perspective, Lipton examines just one part of FDIC, its Division of Resolutions and Receiverships, whose 2008 budget was $75 million. The budget for 2009? $1 billion. Let's keep following this through. How does FDIC manage to negotiate the deals that allow billions of dollars in assets to move to higher ground?

It hires people. As of right now (or maybe a few weeks ago), FDIC employs 4800 people, according to Lipton's article. When it was last responsible for the prior big bank horror show in the '90s, it employed as many as 15,000. Given that the mess we're dealing with now is HUMUNGUSLY BIGGER than what transpired in the '90s, shall we speculate that perhaps FDIC may need to do more than triple its size? Will the FDIC grow to 30,000? 45,000?

To meet this challenge, it is only hiring 1500 new people. Lipton reports that $700 million (!) will be spent hiring contractors to provide the warm bodies to do the work. So like so much of the rest of corporate America, FDIC is outsourcing the work to avoid the painful ballooning up followed by the excruciating shrinking that always follows windfalls.

How will FDIC manage accountability across such a fast and vast ramp-up of its capabilities? Accountability is all the more important because of the "army of contractors."

Like the dozens of other agencies whose budgets are about to swell--at the national, state, and local levels, FDIC desperately needs to upgrade its accountability mechanisms. One fundamental way to do that is by establishing and maintaining org charts of the whole organization, which are literally the structure of accountability. We're putting in some time as a start to that process and we encourage FDIC and the other agencies and departments charged with implementing the stimulus and other spending to do the same.

With transparency you can see accountability which (re)builds trust.

Revolution in networks: applying the new science to organizations

As we posted earlier, the Discovery Network's Science Channel (thank you, Joe Wehr) premieres "Connected: The Real Matrix" tonight, Sunday, February 15, at 9pm EST (and PST). As our friends at Future of Work note in their cross-post, "the program will also be repeated on Monday, February 16, at 12:00 AM, and on Tuesday, February 17 at4 AM (again, EST and PST). Maybe not the greatest times, but you can always set your trusty DVR to pick it up for you."

The TV show emphasizes the general applicability of the new network science to complex systems. We here at NetAge have applied this same science to organizations. As we've written, OrgScope is the tool we developed to visualize and analyze organizations as networks. So the show is the perfect lead-in to the next installment of our NetAge Working Papers series on management science for networked organizations:

"Revolution in Networks: Applying the New Science of Networks to Organizations." (Download Revolution in Networks)

We present the concept of “organization network science” as an application of the new network science, as described in the "Connected" show. As described in this working paper, the new science includes the concept of “scale-free networks” and their signature pattern of hubs developed by Albert-László Barabási and others. A second stream of new network thinking, personified by Duncan Watts, reveals how a few “shortcuts” dramatically reduce path lengths to form “small-world networks.” We reframe generic network principles of growth and “preferential attachment” for use in understanding and managing organizations as networks. At the paper’s end, we retrace in organizational terms a Barabási simulation of how a network grows, and address the development of hierarchical networks.

Here are a few paragraphs from the paper:

Background on the Network Revolution

Over the past few years, a new “science of networks” has rapidly woven across the physical, biological, and social domains, bringing the simplicity of common characteristics to diverse complex systems.

Our field work at the leading edge of global organizational development confirms that this new “linked” science applies directly and immediately to highly-complex organizations. It is our hope that a true theory-based, data-driven, testable science of “organizational networks” will enable an historic step-change increase in human organizational capabilities. Great ambition, but even modest improvements in collaboration could have widespread application and deep impact. We believe this new knowledge can substantially improve our collective ability to work together better, a clear imperative imposed by the era’s economic interdependence, digital information technologies, accelerating globalization, and deepening human power to modify ourselves and the world around us.

So what’s new about networks according to the latest research? In a phrase, they are organic, scale-free, small worlds. The new network science grasps complex networks by their nodes and maps their links, generating useful metrics related to configurations that help identify hubs, shortcuts, and all manner of characteristics that are directly applicable to organizations.

Download Revolution in Networks

-- Jeff Stamps

Transparency and open government - Obama's midnight memos

At the stroke of midnight on January 21, 2009. five "Presidential Actions" went into force (see White House press statement), establishing a clear foundation of organizing values and principles for the new Obama Administration. The "Midnight Five," with their links, are:

Presidential Memorandum on Transparency and Open Government

Presidential Memorandum on Freedom of Information Act

Executive Order on Presidential Records

Executive Order on Ethics Commitments by Executive Branch Personnel

Presidential Memorandum Regarding Pay Freeze

The capstone action is the one we list first, the memo on "Transparency and Open Government," a remarkable document that lays out the fundamental reason we need openness and how to achieve it. This understanding of the central role of transparency is vital at this extraordinarily critical moment in the still-accelerating economic crisis. Transparency is both necessary and beneficial. To paraphrase Judge Brandeis again, things get better with sunlight.

The president doesn't mince words in his preamble to the memo:

"My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government."

How are these open government benefits of efficiency, effectiveness, and a stronger democracy to be achieved? The memo outlines three imperatives ("shoulds"):

• Government should be transparent.
• Government should be participatory.
• Government should be collaborative.

Lest you think transparency and openness apply just to government, listen up all you leaders in organizations of every size in every sector who are feeling and dealing with desperate challenges. We can only get out of this mess by all of us being smarter and contributing to the overall solution.

We are posting the whole transparency memo after the break below, inserting in brackets words that indicate its applicability to all organizations, thus, the revised title and what follows. Please take a read and see if you might be able to endorse the same statement in your organization.

-- Jeff Stamps

Transparency and Open Governments [Organizations]

Transparency at Treasury - The case of the missing org chart

Following yesterday's post on how the Geithner bailout plan did not provide the transparency required to fill the enormous trust gap, I checked out the Treasury page on the "Emergency Economic Stabilization Act" (EESA) which is where "details" about the TARP program hang out. First thing to notice is that it looks broken, i.e., the entire left hand column is blank. Strange. It's been this way since this section of the Treasury site was launched in October, 2008. Otherwise, since the new administration has come in, nothing has changed. A few press releases have been added. This stands in stark contrast to the White House site, which is, shall we say, nothing like what was there before January 20.

Then I looked for the Treasury org chart. Not to be found. A review of the site map confirmed that none was listed.

Curious, I checked out the other departments. Most have the Bush-administration org charts still posted. Notably, Steven Chu, the Nobelist Secretary of Energy, has already posted an updated DOE chart. And, Arne Duncan's Dept of Education site has the most interesting interactive chart, which, because of its design, is naturallly up to date. The Treasury Department is the only agency that has no org chart at all. Curious.

When I was assembling our OrgScope map of the US Gov, Treasury's org chart was the first one I keyed in, necessary because I was mapping the network of consultants, contracts, and bailout recipients associated with EESA (which you can see in our Rescue Map). I eventually collected and keyed in all the departmental org charts, posting them together here. As a good archivist, I had the url to the (old) Treasury map here. You can click to see for yourself where that takes you now: "We're sorry...file cannot be found..."

Surely an oversight, so as a public service we offer a link from our site to what is in all likelihood exactly the same Treasury org chart today. Moreover, we have added the organizational structure of EESA to the Treasury chart in our US Gov map. (Treasury is at 11 o'clock, then go to the Deputy, then Office of Domestic Finance, from which hangs the Office of Financial Stability.)

Treasury needs to set an example of transparency itself. Remarkably, they have become less transparent than their Bush administration predecessors. Unintentionally, I'm sure. I hope.

-- Jeff Stamps

Bailout plan fails to instill trust

Where is the new thinking?

With all due respect, I (Jeff speaking) don't think Tim Geithner gets it. Nor, apparently does the market think he gets it, as the Dow began to tank (losing almost 400 points) as soon as the new Treasury Secretary started outlining his plan for economic recovery today. 

According to Stephen Labaton and Edmund Andrews's page-one piece in today's NY Times ("Geithner Said to Have Prevailed on the Bailout"), Geithner opposed placing tighter curbs on executive pay, didn't endorse directing how the banks would use the bailout money, and refused to challenge the retention of current management -- the brilliant folks who brought us this mess.

The Times article also said Geithner "expressed concern that too many government controls would discourage private investors from participating." And, the Times piece indicates that not everyone in the President's office agreed with Geithner's approach, specifically David Axelrod, who "did not deny that there were differences of opinion as the policy was being crafted or that he had taken a harder line on issues such as executive pay restrictions, as other participants to the discussions recalled."

Obviously, we are not privy to conversations in the White House but, along with millions of other Americans, we too experience the effect of every decision made regarding the economy--and thus care deeply about the choices Geithner is making.

In announcing the plan today, Geithner said he would restore "lost faith" in the bailout. Instead, he apparently did the opposite. His plan unsettled precisely the group he didn't want to offend, private investors. No thank you, said the market.

In a word, what Geithner doesn't get is trust.

We have been following the TARP (Troubled Assets Recovery Program) saga on our site and here on the blog since the program began in October, 2008. Likewise, we've created an OrgScope overlay of the Act I TARP and related programs on our map of the US Government. From the beginning, we said it was all about "transparency for trust," which we titled our online essay about this subject. We have written numerous posts on the subject.

Trust is not a nice to have. It's a need to have. The Obama plan needs to restore trust for private investors, for the American public, and for a Congress that will be asked to come up with billions and probably trillions more before this is over.

And the only route to trust is transparency. Sunlight. Geithner's plan thus far offers little in this regard.

-- Jeff Stamps

NetAge Report #4: Organizing at the edge of chaos

There's an obvious subtitle for this post: "Stop before you chop." Fourth in our series of NetAge Reports on virtual reorganization, we address the hidden forces that sit behind how we shape our organizations. Since so many organizations are undertaking reorganization right now, we feel compelled to contribute what we know. And, we're concerned about mindless reorganization that doesn't take into account unintended consequences.

Driven by twin needs--to optimize communication while enhancing decision-making--organizations are in constant flux between centralization and its opposite, decentralization. But as we've said before, mindless flattening of organizations will be disastrous because it reduces the ability to respond intelligently to change.

In our post yesterday, we pointed out that Obama is "complexifying" government by creating more layers, adding cross-links, and multiplying leadership. At the end of the NYT article we referenced there, Karl Rove is quoted as saying that Obama's moves are likely to "create a more centralized and possibly incoherent policy process." Not surprisingly, Rove has it exactly wrong, calling Obama's reorganization centralizing moves. But Rove is hardly alone in this common misconception, even among our network-tuned friends. However, he does have it right that such rearrangements indeed may cause incoherence. This is why we have promoted the idea of visualizing and analyzing our organizations, so we can manage more complexity with less effort.

Here's NetAge Report #4:

Organizing at the Edge of Chaos

Early in the presidential contest between the newly-presumptive Democratic nominee Barack Obama and already named Republican John McCain, Elisabeth Bumiller published “Cast of 300 Advises Obama on Foreign Policy” to which the New York Times gave page-one real estate. Largely an insightful “who’s-who” of his advisers for this delicate area of national concern, the article also offers remarkable portraits of the stark contrast between the organizing styles of two the candidates. One was simple, the other complex. Guess who won.

Bumiller describes Obama’s apparatus as a “huge 300-person foreign policy campaign bureaucracy organized like a mini State Department to assist a candidate whose limited national security experience remains a concern to many voters.” The article goes on to describe an “infrastructure” of twenty teams that focus on regions (e.g., Asia and China) and issues (e.g., nuclear proliferation). By contrast, Bumiller describes John McCain’s approach as “a far smaller and looser foreign policy advisory operation, about 75 people in all, and none are organized into teams.”

So there you have it. McCain had direct input from 75 people, an incredibly large “span” of “direct reports” by any organizational measure and an extremely flat organization. No “middle” men or women. Perfect for simplicity and direct communication. McCain, the ostensibly more experienced of the two men in foreign policy, didn’t think he needed nuanced views regarding foreign policy, and he didn’t get many.

Obama organized differently, with a core team of six people managing twenty separate pipelines of progressively synthesized input from advisors with great depth of expertise. Larger teams had their own sub-teams, such as the forty-person nuclear proliferation team organized into eight working groups by Brookings Institution and National Security Council veteran Ivo Daalder.