Adam Smith Revisited and the Emergent Disruption of Democracy in America

IK/CMH: In our years of exploring disruptive innovation with Clay Christensen, we often found ourselves applying his insights to unexpected domains. Today, we’re seeing a pattern that would have fascinated Clay: what we’re calling the “Tragedy of the Elite”—a disruptive twist on Garrett Hardin’s classic “tragedy of the commons.”

IK: As a rabbi, I’ve long observed how religious institutions can become so focused on serving their most committed members that they create barriers for others. We’re seeing something similar in American politics, but with a crucial difference: while Hardin’s tragedy stemmed from unintentional collective behavior, our political elites are making conscious choices that preserve their power while eroding our democratic commons.

CMH: Think about it through Clay’s lens of disruption theory. In business, when established companies over-serve their best customers, they create opportunities for disruptive innovators. But in our political system, the elites have created a self-reinforcing cycle that actively prevents disruption. They’re not just over-serving; they’re deliberately building barriers to maintain their position.

The Trust Deficit

IK: In Judaism, we have a concept called “machloket l’shem shamayim”—disagreement for the sake of heaven. It’s the idea that authentic debate, even strong disagreement, can be holy when it serves a higher purpose. But what we’re seeing in American politics is the opposite: disagreement for the sake of power, with trust as the casualty.

CMH: Clay always emphasized how disruptive innovation often starts by serving “non-consumers”—people overlooked by established systems. In our political landscape, we’ve created millions of “non-consumers” of democracy: citizens who feel disconnected from and distrustful of the very institutions meant to serve them.

The Polarization Machine

IK/CMH: During our work on identity-centric innovation, Clay helped us understand how people’s core identities can either accelerate or resist change. What we’re seeing in American politics is the deliberate exploitation of identity for political gain. It’s like a reverse disruption—instead of creating new access points for participation, our political elites are building walls between communities.

CMH: Remember how Clay worried about terrorism, parenting, and religion as areas needing disruption? He saw how established systems could become so rigid that they created the conditions for their own upheaval. Our political system may be heading toward a similar crisis point.

The Way Forward

IK: In our work on disruptive spiritual innovation, we learned that creating new access points to meaning doesn’t require destroying traditional structures. Similarly, reclaiming our political commons doesn’t mean dismantling our institutions—it means creating new ways for citizens to meaningfully participate in governance.

CMH: What we need is what Clay would have called a “good enough” solution—new approaches to political participation that might not be perfect but are accessible enough to engage those currently left out of the system. Think of it as creating political on-ramps for the disengaged and disillusioned.

A Call for Political Innovation

IK/CMH: The solution to the Tragedy of the Elite won’t come from within the current system. Just as Clay showed how disruptive innovation often comes from unexpected places, the renewal of American democracy might emerge from where we least expect it—from new forms of civic engagement, from technology that enhances rather than divides, from communities finding ways to bridge rather than deepen divides.

The Disruption We Need

CMH: Here’s what Clay taught us about disruption that’s crucial to understanding our current political crisis: true disruption doesn’t just replace existing systems—it transforms them by creating new patterns of access and participation. When we developed the Disruptor Awards, we specifically looked for innovations that weren’t just clever technologies but fundamentally changed how people engaged with essential services and ideas.

IK: And this is where our political system desperately needs innovation. Just as we found in our work with spiritual communities, the solution isn’t to abandon traditional structures entirely but to create new, more accessible ways for people to participate meaningfully.

The Identity Factor

IK/CMH: In our Off White Papers with Clay, we introduced the concept of identity-centric innovation—the idea that when people’s core identities are at stake, innovation behaves differently than in purely utilitarian contexts. This insight is crucial for understanding our political crisis. The elites aren’t just protecting their economic interests; they’re defending their identities as power brokers and influencers.

CMH: It’s like what we saw in the financial sector before the 2008 crisis—systems that become so focused on serving their own interests that they lose sight of their fundamental purpose. Clay would have recognized this as a classic case of an industry disrupting itself through over-serving.

Adam Smith Revisited and the Emergent Disruption of Democracy in America

Tragedy of the Elite: Overgrazing in the Pastures of the American Political commons

In 1968, Garrett Hardin introduced the metaphor of “tragedy of the commons.” His theory explains the dynamic between self-interest and the common good.  He describes how unfettered “overgrazing” by sheep in a meadow with no guard rails inevitably leads to a collapse of the meadow and in turn collapse of the entire ecosystem. Similarly, even with abundance of fish in a pond, overfishing will ultimately destroy the equilibrium meading to the the collapse of the ecosystem.

The American spirit,  freedom and liberty  versus the wellbeing of the community creates an unresolved challenge: how to best balance these two competing value vectors. In attempting such a reconciliation, it is interesting to explore how Adam Smith’s Wealth of Nations (laissez fair, greed is good) was never integrated into necessary conditions of the moral compass of empathy, compassion, humility and fellow feeling espoused in what we believe was his true magnum opus, The Theory of Moral Sentiments, and equitable distribution of public resources. Rare is the community, a collection of individuals pursuing their own interests, that can survive without some moral foundation.  A failure to reconcile will ultimately result in a breakdown of the social contract.

The late Clayton Christensen’s theory of disruptive innovation has traditionally been applied to business and technology. However, his framework offers surprising insights into America’s current political crisis. What we are witnessing is not simply political polarization or institutional dysfunction, but what we call the “Tragedy of the Elite”—a systematic erosion of democratic norms by those best positioned to protect them.

Defining the Tragedy of the Elite and Political Commons

Unlike Garrett Hardin’s classic “tragedy of the commons,” where individual actors unknowingly deplete shared resources, America’s political elites are consciously making choices that preserve their power while eroding democratic institutions. This represents a perverse form of disruption—one that prevents rather than enables broader participation in the political process.

The pattern mirrors what Christensen observed in failing companies: organizations so focused on serving their most valuable customers that they become vulnerable to disruption. In America’s political landscape, elites have created a self-reinforcing system that actively resists positive disruption, leading to decreased civic participation and eroding trust in democratic institutions.

The Identity-Centric Challenge

Our work with Christensen on what we termed “identity-centric innovation” revealed that when stakeholders’ core identities (world views, values and belief systems) are challenged, traditional patterns of innovation and adoption break down. This insight is crucial for understanding America’s political gridlock. Political elites aren’t merely protecting their economic interests; they’re defending their identities as power brokers and decision-makers.

This identity-driven behavior creates what we refer to as “threshold resistance” a term coined and implemented by Alfred Taubman, the late shopping mall pioneer. This resistance creates visual, emotional and economic barriers to political participation in the pastures of the political commons. Just as consumers might hesitate to enter an intimidating luxury store, many citizens feel blocked from meaningful political participation by both practical, economic and psychological barriers.

Paths to Democratic Renewal

The solution lies not in destroying existing institutions but in creating what Christensen called “good enough” alternatives—new forms of political participation that might not be perfect but are accessible enough to engage currently disenfranchised citizens. This could include:

1. Digital Democracy Platforms: Creating verified, secure spaces for civic engagement that bypass traditional power structures while maintaining democratic integrity.
2. Community-Based Policy Innovation: Enabling local communities to experiment with new forms of governance and participation.
3. Cross-Identity Dialogue: Developing structured ways for people with different political identities to engage in meaningful discourse.
4. Transparency Technologies: Implementing blockchain and other technologies to make political processes more accessible, visible and accountable.

The Role of Elite Leadership

Paradoxically, addressing the Tragedy of the Elite requires engagement from forward-thinking members of the elite themselves. Just as business leaders must sometimes cannibalize their own successful products to remain competitive, political leaders must be willing to transform systems that have served them well but are failing the broader population.

Looking Forward

The challenges facing American democracy are not merely political; they are systemic and structural. Christensen’s insights about disruption suggest that solutions will not come from within existing power structures but from unexpected sources and new forms of civic engagement.

As we saw in our work on religious and  spiritual innovation with Christensen, himself the Elder for New England and Canada for the Mormon Church  creating new access points to participation doesn’t require destroying traditional structures. Instead, it means developing parallel systems that serve those currently excluded from meaningful participation in democratic processes.

The urgent task facing American democracy is not just to resist authoritarian tendencies or to reform existing institutions, but to actively create new, more accessible forms of democratic participation. The future of American democracy may well depend on our ability to disrupt the very systems that have created our current crisis.

This is not just a political challenge but a design challenge: How do we create systems of governance that serve all citizens, not just elites? How do we develop political innovations that, like successful business disruptions, begin by serving the underserved and gradually transform the entire system?

The Technology Paradox

CMH: Our experience with the Tribeca Disruptive Innovation Awards taught us something crucial about technological change: the same tools that can democratize access can also consolidate power. We’re seeing this play out dramatically in our political sphere, where social media and big data have simultaneously empowered grassroots movements and enhanced elite control.

IK: It reminds me of what Clay often said about disruptive innovations starting at the bottom of the market. In our political context, we’re seeing genuine grassroots movements emerge through technology, but they’re often co-opted or neutralized by elite interests before they can achieve genuine disruption.

The Morality Market

IK/CMH: One of Clay’s most profound insights, shared during our last conversations, was his concern about the erosion of moral frameworks in modern society. He saw this as intimately connected to the crisis in both religious institutions and democratic governance. The parallel to Adam Smith’s twin works—”The Wealth of Nations” and “The Theory of Moral Sentiments”—becomes particularly relevant here.

Just as Smith recognized that market economies require a moral foundation to function properly, democratic systems need a shared ethical framework to survive. The Tragedy of the Elite isn’t just about the concentration of power; it’s about the erosion of the moral commons that makes democratic governance possible.

Practical Solutions for Democratic Renewal

Drawing from our work in disruptive innovation, we propose several concrete steps for addressing the elite crisis:

1. Institutional Innovation

• Create new forms of citizen assemblies empowered with real decision-making authority
• Develop blockchain-based voting and transparency systems
• Establish independent oversight bodies with genuine enforcement power

2. Educational Transformation

• Redesign civic education to emphasize practical participation skills
• Create “democracy labs” where citizens can experiment with new forms of governance
• Implement cross-community exchange programs to bridge political divides

3. Technological Integration

• Develop platforms for verified, meaningful political discourse
• Create tools for tracking political promises and outcomes
• Enable secure, accessible forms of direct citizen participation in policy-making

4. Cultural Intervention

• Support arts and media projects that bridge political divides
• Create spaces for cross-cultural dialogue and understanding
• Develop new narratives about political participation and citizenship

The Role of Business

CMH: One often overlooked aspect of this crisis is the role of business leadership. Clay’s work on disruption began in the business world, and business leaders may be uniquely positioned to understand and address these challenges.

IK: Yes, and just as we’ve seen with spiritual innovation, sometimes the most effective solutions come from unexpected combinations—business principles applied to civic problems, spiritual insights applied to political challenges.

Looking Ahead: The Next Disruption

The future of American democracy may depend on our ability to facilitate what Clay might have called “catalytic innovation”—changes that transform systems by creating new patterns of participation and engagement. This requires:

1. Recognition of the current crisis as systemic rather than merely political
2. Understanding that solutions must come from outside existing power structures
3. Creating multiple entry points for civic participation
4. Developing new metrics for democratic health beyond electoral outcomes
5. Building systems that reward long-term democratic stability over short-term political gains

Conclusion: Beyond the Tragedy

The Tragedy of the Elite isn’t inevitable. Just as Hardin’s tragedy of the commons led to innovative solutions for resource management, our current crisis could catalyze new forms of democratic participation and governance. The key lies in understanding that true disruption often comes from unexpected places and takes unexpected forms.

As Clay Christensen taught us, the most powerful innovations often start by serving those who are currently excluded from existing systems. The renewal of American democracy may well begin not in Washington or Wall Street, but in communities and technologies that create new ways for citizens to engage with and shape their political future.

The challenge before us isn’t just to reform our current system but to reimagine how democracy itself can work in an age of rapid technological change and global interconnection. The solution to the Tragedy of the Elite may lie not in confronting elite power directly, but in creating new forms of democratic participation that make current power structures obsolete. Hardin’s essay brought into focus the realization that adaptive resource management can help tame the unfettered self-interest of the individual in order to better balce the needs of the community. Failure to achieve this balance, in the long run, will inevitably cause a collapse of the system.   If only as matter of self-preservation of their own seat at the grown ups table table, incumbents would be well advised to seek out and listen to new ideas from the entrants who they view as sitting at the kiddie table. Otherwise the pattern of anthropological observation suggests that the kiddie table will quickly become more influential seating arrangement.

This all begs the question: Can emergent disruptive innovations  of democracy in America bring a halt to the conscious, subconscious and unconscious overgrazing in the pastures of the political commons by the elite? Stay tuned.

“Ah! Five strings, three notes, two hands and one asshole”. – Keith Richards asked to explain Open G Tuning

In the late 1960’s, as best Rolling Stone guitarist Keith Richards can remember, it happened on a break during a recording session for the album Sticky Fingers (1969). The session was attended by guitar virtuoso Ry Cooder who played slide guitar and mandolin on several Stones albums (Cooder played mandolin on Love in Vain (Let It Bleed album) and also played slide guitar on Sister Morphine (Sticky Fingers album). Cooder was warming up in a corner and Richards’ unexpectedly heard something he couldn’t identify. He suspected Cooder had tuned his guitar differently than the usual “Standard E” tuning used by almost all rock guitarists. Richards asked Cooder why it sounded so different. Cooder’s response would change Keith Richards’ life and transform the sound of the Rolling Stones. “It’s Open G tuning.” Cooder had tuned his guitar like a banjo, a tuning sometimes used to played traditional Mississippi blues used almost exclusively with a slide.

The vast majority of guitarists play in Standard E: six strings, with five notes (E-A-D-G-B-E). But there is more than one way to tune a guitar known as ” alternate tunings. ” Open G only three different notes (D-G-D-G-B-D) on the a guitar’s six strings. Richards’ had rarely used alternate tunings and had never used open G. But there was something that Richards’ heard with his discerning ear that was epiphany of biblical proportions. In short order he started to experiment using Open G to play rock and roll instead of the blues. He started to create his own chords and riffs in Open G that enabled him to play rhythm and lead guitar at the same time. This new “vocabulary” would come to define the sound of the Rolling Stones. In his epic memoir Life (2010), Richards would reflect on Open G stating that “everything you play sounds like a god damn symphony.” It was a case where less is more.

But our story really begins in the early 1960’s. It was the era of the British Invasion led by the Beatle and the Rolling Stones. When theStones first formed in 1962, they built their reputation on electrifying performances of rhythm and blues covers of the greats- Robert Johnson, Muddy Waters, Howlin’ Wolf, Chuck Berry to name a few. However, it quickly became clear that to truly succeed and endure in the music industry, they needed to create their own material. The pressure to write original material was amplified by the phenomenal success of their contemporaries and rivals, the Beatles and the magical songwriting of John Lennon and Paul McCartney.

The band’s manager, Andrew Oldham, recognized the financial and artistic importance of original compositions and pushed Richards and Mick Jagger to start writing. As Richards later recalled, “We were told, ‘You’re going to be songwriters. Because that’s where the money is.'” This directive set the stage for one of the most successful songwriting partnerships in music history arguably second only to the Lennon-McCartney juggernaut.  The songwriting partnership of John Lennon and Paul McCartney had set a new standard in pop music, producing an astonishing catalog of original songs albeit the studio direction of producer George Martin (the fifth Beatle) added a great deal to the Beatles unique sound. By the time the Beatles disbanded in 1970, Lennon and McCartney had written nearly 200 songs together, almost all of them international hits. Lennon and McCartney had a transcendent ability to create hooks—most Beatle fans can recognize their songs within the first few bars.

This prolific output from the Beatles created a highly competitive atmosphere in the British rock scene. The Rolling Stones, along with other bands of the British Invasion, were not just competing for chart positions and album sales; they were in a race to define the sound and direction of rock and roll itself. The Stones needed to prove that they could match the Beatles not just in popularity, but in creativity and musical innovation.

Initially, Richards and Jagger rose to the challenge admirably. Over a five-year period in the mid-1960s, they penned an impressive string of hits including “Satisfaction,” “Get Off of My Cloud,” “19th Nervous Breakdown,” “Paint It Black,” and “Ruby Tuesday.” These songs showcased the Stones’ distinctive blend of blues-infused rock and provocative lyrics, establishing them as worthy rivals to the Beatles. The Beatles were clean cut while the Rolling Stones seemed to capture the grunge aesthetic. They were even forced to change the lyrics of their edgy song Let’s Spend the Night Together to Let’s Send Some Time Together for their infamous performance on the Victorian-esque Ed Sullivan Show

By the end of the 1960’s the well of compositional inspiration was beginning to run dry for Richards, the man responsible for crafting the band’s iconic guitar sound. The Stone’s blues-based rock was creatively restrictive; the Stones’ sound was inspired by and generally adhered to the Mississippi blues’ standard repeating structure of 8, 12, and 16-bar blues.

This method of tuning the guitar in Open G , where the strings are tuned to form a G major chord when strummed open, was not entirely new. In fact, it had deep roots in American folk and blues music, particularly in the playing of five-string banjos. This configuration allows for easy playing of major chords with just one finger barring across the fretboard. Richards saw something more in this simple tuning – a key to unlocking a whole new world of rock and roll. HIs discovery of Open G was like a bolt of lightening. In his own words: “It transformed my life.” But Richards didn’t simply adopt the tuning as it was traditionally used. Instead, he innovated, creating a unique approach that would come to define the Rolling Stones’ sound for decades to come. Richards made a crucial modification to his guitar. Finding that the lowest string (usually tuned to D in Open G) was just getting in his way, he simply removed it. This five-string approach, mirroring the five-string banjo that inspired the tuning, created more space in the sound and allowed for a tighter interplay with the bass guitar.

Rather than using Open G primarily for slide guitar playing as was common in blues, Richards began to develop his own vocabulary of chords and riffs. He discovered that he could create complex, full-bodied triad or three-note chord voicings using just two fingers, leaving his other fingers free to add embellishments and lead lines. This led to a unique style where rhythm and lead guitar parts were seamlessly interwoven.

The result was a sound that, in Richards’ words, was like “a goddamn orchestra.” The open strings created a constant drone that filled out the sound, while the simplified fingerings allowed for greater freedom and expressiveness in his playing. Songs like “Honky Tonk Women” and “Start Me Up” showcase this new approach, with their instantly recognizable riffs that are at once simple and complex, driving and melodic.

The adoption of Open G tuning also had a profound effect on the interplay between Richards and the Stones’ other guitarists. When Mick Taylor, and later Ronnie Wood, joined the band, they typically played in standard tuning. The combination of Open G and standard tuning created a rich, layered sound with each guitarist occupying a distinct sonic space. This “weaving” of guitar parts became a hallmark of the Stones’ sound, creating a texture that was greater than the sum of its parts.

To truly appreciate the significance of Richards’ innovation, it’s worth exploring the historical context of Open G tuning. The technique has its roots in the transition from banjo to guitar in American folk and blues music. In the late 19th century, the banjo was the instrument of choice in the southern United States, particularly among African American musicians. Its distinctive sound, combining syncopated rhythms with simple melodic lines, was a crucial element in the development of blues and early jazz.

When affordable guitars became widely available through mail-order catalogs in the early 20th century, many banjo players made the switch. However, rather than learn the more complex standard tuning, many of these players simply tuned their guitars to mimic the open tuning of a banjo. This allowed them to transfer their existing skills to the new instrument and maintained the drone-like quality that was characteristic of banjo playing.

This tuning found particular favor among blues guitarists, especially those playing with a slide. The open chord allowed for easy sliding between harmonically related positions, creating the expressive, vocal-like quality that is a hallmark of delta blues. It’s this tradition that Ry Cooder was tapping into when he demonstrated the tuning to Richards.

What makes Richards’ adoption of Open G tuning so radical is the way he applied it to rock and roll. Rather than using it primarily for playing slide guitar or to mimic banjo techniques, Richards developed a whole new approach. He created a style that combined the rhythmic drive of rock with the harmonic richness of open tuning, all while maintaining the raw, bluesy edge that was the Stones’ trademark.

In many ways, Richards’ use of Open G tuning can be seen as a disruptive innovation in music. It took an existing technique and applied it in a new context, creating something that was at once simpler yet, in other ways, more complex. The simplified fingerings made it easier to play certain types of phrases, but the richness of the open strings and the new chord voicings opened a universe of new musical possibilities.

This innovation also demonstrates a crucial principle of creativity: sometimes, constraints can be liberating. By limiting himself to five strings and a specific tuning, Richards paradoxically expanded his creative palette. The restrictions forced him to think differently about how he approached the guitar, leading to new ideas and techniques.

The impact of Richards’ adoption of Open G tuning extends far beyond the Rolling Stones. Many guitarists, inspired by Richards’ distinctive sound, have incorporated the tuning into their own playing. It’s become particularly popular in various forms of roots rock and alternative country music, where its resonant, earthy quality is prized.

In the context of the Stones’ rivalry with the Beatles, Richards’ innovation came at a crucial time. While the Beatles were winding down their career, the Stones were entering a new phase of creativity. The fresh sound provided by Open G tuning helped the Stones maintain their relevance and continue producing original material long after many of their contemporaries had faded from the scene.

In the end, Keith Richards’ exploration of Open G tuning stands as a testament to the power of innovation in music. By taking a technique rooted in traditional American music and applying it to rock and roll in a new way, Richards not only revitalized his own playing but helped shape the sound of rock music for generations to come. It’s a reminder that in music, as in all creative endeavors, true innovation often comes not from inventing something entirely new, but from seeing new possibilities in the familiar. In doing so, Richards and the Stones were able to meet the challenge of continual originality, cementing their place in rock history alongside their illustrious rivals, the Beatles.

The contrast between these two legendary bands is striking and illuminating. The brilliant songwriting of Lennon and McCartney, masters of unique-sounding, groundbreaking pop music, defined the Beatles — arguably the most successful band of all time. However, it was Open G tuning that came to define the sound of the Rolling Stones, cementing their status as perhaps the world’s most enduring and successful rock and roll band. This distinction underscores how different paths of musical innovation can lead to equally monumental legacies. The Beatles revolutionized pop music through their songwriting prowess, while the Rolling Stones found their unique voice through Richards’ innovative approach to guitar playing.

In the grand tapestry of music both bands stand as giants, each leaving an indelible mark on music. The Beatles showed the world the heights that pop songwriting could reach, while the Rolling Stones, through Keith Richards’ Open G revelation/revolution, demonstrated how a seemingly simple change in approach could create a wholly new and enduring sound. Together, they exemplify the diverse ways in which musicians can push the boundaries of their art, inspiring generations of artists to find their own unique voices and innovations.

Take away: If you want to change the world, tune your guitar like a banjo

The Following is an excerpt from an Off White Paper published back on April 27, 2014. It was the final piece penned with our guiding light, the late Professor Clayton Christensen. This excerpt is part of a larger discussion of accountability that focuses on the role of religion as a set of accountability technologies. The Ten Commandment is one of the great moral technologies that probably covers 80% of the virtues needed for a just society– whether or not you are a believer or a non-believer in a higher power.

Ironically the Ten Commandments is also a great example of a disruptive religious innovation. It took the 600 plus laws (the mitzvot) of the Torah and reduced it down tot he Big Ten. Simpler and more accessible than the Old Testament, this innovation scaled magnificently particularly after Cecil B. De Mille came up with arguably the greatest marketing campaign ever– just ask Charleton Heston and Yul Brynner.

…There seems to be a more vexing problem that necessarily precedes the issue of accountability: do people clearly understand if or when they are doing something wrong?  In simpler times a good place to start learning how to behave was the Ten Commandments.  It seems we’ve gotten a little rusty on the content of those ten imperatives and prohibitions. While 62% of Americans know that pickles are one of the ingredients of a Big Mac, less than 60% know that “Thou shalt not kill” is one of the Ten Commandments.  (Then again, ten or so percent of the adults surveyed also believe that Joan of Arc was Noah’s wife.)  In fact, the majority of those surveyed could identify the seven individual ingredients in a Big Mac: two all-beef patties (80%), special sauce (66%), lettuce (76%), cheese (60%), pickles (62%), onions (54%) and sesame seed bun (75%).   “Thou shalt not kill” only beats out onions.  It’s enough to make you cry. “Two all-beef patties, special sauce, lettuce, cheese, pickles, and onions on a sesame seed bun.” In one Big Mac promotion, the company gave customers a free soda if they could repeat the jingle in less than 4 seconds.

A catchy jingle undoubtedly made The Big Mac part of pop culture. Who could forget the 1975 launch of McDonald’s Big Mac?  That jingle-laden effort takes second place for “most clever marketing campaign” in advertising history. Yet it was the unsurpassed marketing genius of film producer extraordinaire Cecil B. De Mille that surely takes the cake.  De Mille gave the Ten Commandments a special place in contemporary American culture decades before they became fodder for the “culture wars” regarding separation of church and state.

In perhaps the greatest marketing coup in American history, De Mille ingeniously tapped into the angst of Justice E. J. Ruegemer, a Minnesota juvenile court judge who was deeply concerned with the moral foundation of the younger generation. Starting in the 1940s, Ruegemer had, along with the Boy Scouts’ Fraternal Order of Eagles, initiated a program to post the Ten Commandments in courtrooms and classrooms across the country as a non-sectarian “code of conduct” for troubled youth. But De Mille took us to the next level. In 1956 De Mille seized the opportunity to plug his costly epic film, The Ten Commandments.  He proposed to Ruegemer that they collectively erect granite monuments of the actual Ten Commandments in the public squares of 150 cities across the nation.  The unveiling of each monument was a press event typically featuring one of the film’s stars. “OMG!!! Isn’t that Yul Brynner?” or  ”that’s Charleton Heston!”  Absolutely brilliant!   Things remained copacetic until the 1970s as this public expression of a code of conduct was apparently non-controversial.  Then all hell broke loose leading to a firestorm that still burns to this day on the issue of separation of church and state.

  “Ten Commandments” as an expression didn’t even exist until the middle of the 16th century when it first appeared in the Geneva Bible that preceded by half a century the King James Bible, first published in 1604.  The Ten Commandments have the attributes of a disruptive innovation. They take the hundreds of laws in the bible and boil them down to ten fundamental pearls that are more accessible and usable for the masses. Obviously not covering all the bases they were clearly good enough to get the job done: to create a simple, accessible bedrock for moral and ethical behavior.  Serious biblical scholars of the Ten Commandments view the vastly oversimplified code as a synecdoche, or visual metaphor, for the much more complex set of laws and regulations.

With or without the Ten Commandments it seems that most people have internalized “Thou shalt not kill.” Cognitive scientist Steven Pinker points out that, as recently as 10,000 years ago, a hunter-gatherer had a 60% probability of being killed by another hunter-gatherer. At some point in history, the prohibition against murder became a conscious ethical innovation.  By the eighteenth century BCE the code of Hammurabi, our earliest surviving code of law, prohibited murder yet the prescribed punishment was based on the social status of the victim.  Over a period of several centuries, our moral horizon expanded once again.  The biblical commandment “Thou shalt not kill” evolved to eliminate any class distinction— clearly an upgrade.

Ethical innovations come in fits and starts.  Yet over the long run ethical and moral horizons of civilization widen. Today, according to Pinker, murder rates are at the lowest in history.   In the U.S. there were 13,000 murders in 2010. If our math is correct, that represents less than ½ of one-thousandth of one percent assuming no multiple murders and no suicides are included; about one person in 25,000 actually kills someone. While the numbers are less clear on adultery due to methodological challenges and interpretations (single incident versus multiple incidents, it takes two to tango, etc., etc., etc.), lowball estimates are 20-25% of adults are guilty.  Assuming 150 million adults, some tens of millions of Americans have committed adultery give or take a few.   It would seem not all commandments are created equal– or at least obeyed equally.

Morality has become more complicated.  In simple situations with a “one-to-one” correlation — one person murders another or someone steals a neighbor’s horse, or someone lies in court — we know what they have done is wrong and we hold them accountable. But we live in a society comprised of perpetual power imbalances, multiple stakeholders, ambiguous situations, and complex interdependent systems.  Is releasing classified documents as a response to questionable or inappropriate government surveillance heroic or traitorous? The July 10, 2103, Quinnipiac poll, 55% of Americans consider Edward Snowden a whistleblower/hero while 34% believe he is a traitor– a 20% shift in favor of Snowden since the earliest polls. Interestingly, normalized polarized Americans are uniting against the unified view of the nation’s political establishment.  The situation has become even more murky, now that Snowden’s activities have been indirectly validated through the Pulitzer Prize.   Determining what is right and wrong gets pretty dicey especially when we don’t know what we don’t know. What we do know is: a hell of a lot of Americans really don’t want Big Brother reading their emails. But what are they afraid of?

Does a banker taking advantage of asymmetric information or the sheer complexity of regulations, accounting and tax codes let alone multi-billion dollar obtuse securities constitute unconscionable behavior that deserves punishment? Who is responsible for lung cancer deaths– the smoker, the tobacco company, the tobacco worker or the FDA? Who is accountable for obesity-related deaths– McDonalds, corn subsidies, the overweight consumer or all of the above? Who is accountable for unsafe working conditions in the developing world– Apple, the Gap, Nike, Walmart, the local politicians, the builder– or the consumer who benefits from cheaper prices? Or are these just acceptable “costs of doing business?”

Perhaps we are undergoing the atomization of morality. Has morality has become subject to the “distributed network effect” such that every action can find a morally acceptable pathway of justification? When systems, stakeholders, and situations become complexes replete with interdependencies, conditionality and incalculable unintended consequences moral responsibility gets spread like peanut butter across a chain of activities, persons, corporations, partnerships, not-for-profit organizations, and government agencies. Complicating things further is that every agent has an obligation of loyalty to their principal. Peanut butter consists of a whole lot of peanuts, so which peanut or employee do we hold accountable for screwing up a batch of peanut butter? In like manner, one bad apple spoils the bunch but hard to know which one once it becomes applesauce. How should we parse accountability when there is a complex chain of activities where this atomization of morality allows every individual to avoid taking responsibility for the whole.  Often times we have only an intuition that something is amiss or doesn’t feel right even if we can’t exactly put our finger on it. Executive compensation feels like stealing, the selling of tobacco products feels like killing as does serving unhealthy food to the masses.  Are these moral intuitions, like Pope Francis’s about wasting food, actually expansions of our moral horizons or just plain silly?

A new awareness of what constitutes moral transgressions must come before accountability can be effectively scaled to help ensure enduring peace and prosperity.  This new moral awareness cannot arise without a great deal of civil discourse and yes, even uncivil discourse.  Slavery was okay until it wasn’t. Gay marriage was not okay until it was. Smoking in public places was permitted until it wasn’t.  Corporate polluters were acceptable until they weren’t. Changing the moral baseline is always painful.  Issues of accountability at scale are somewhat premature until we can collectively agree what constitutes right and wrong in an extended or networked chain of “values.”  It’s hard to build consensus when everything is so damn complicated with multiple stakeholders, complex systems, and ambiguous situations. Until there is an inflection point– that quantum moment– where enough people can be energized by the intuitions of early moral adopters to see something is terribly wrong and to take action there can be no wide spread accountability.

All this calls for a new breed of moral innovators.  It will be these early adopters– gifted with unusual charisma, empathy, and humility– who expand our moral horizon. They might even have to resort to civil disobedience. They will invariably face criticism and grave risks– financial, reputation, and even bodily harm– as they excite a new moral majority– many of whom will not believe in Hell but will embrace the possibility of better “Heaven” on earth.

by Craig Hatkoff, Rabbi Irwin Kula with Professor Clayton M. Christensen

(This is a previously unpublished article from August 2010 being released in memory of Clay’s passing in light of the emerging COVID19 crisis.)

When Risk Goes Asymmetric Strange Things Can Happen

About the culture at his previous gold trading firm, J. Aron, subsequently purchased by Goldman Sachs, former Goldman CEO Lloyd Blankfein, notoriously quipped,  “We didn’t have the word ‘client’ or ‘customer’ at the old J. Aron. We had counterparties…” That quote in our minds serves as a crease in time. Even as a joke, this little zinger sums up one of the great issues confronting capitalism: structural, asymmetric risk where information systems are dangerously skewed against the less informed. While not illegal, there is something borderline immoral or at least a bit creepy about the unchallenged feeder system between Goldman Sachs and the rest of the world’s power regimes populated with former high ranking Goldman alums. To dispel any notions of Pollyannaism, bacteria, rarely admired for is aesthetic qualities, is admittedly an essential part of any healthy, self-correcting systems in dynamic equilibrium. Try making yogurt without bacteria! Matt Taibbi’s epic article in Rolling Stone permanently etched the moniker for Goldman Sach as a giant vampire squid, sucking the blood out of America, Americans, and any other organism living or dead, into the world’s psyche. Let’s just face it, The Goldman Gangs are the smartest and best-informed guys/gals in the room. Just the way it is. Until…

But a larger storm arises in the midst of any good ole financial crisis, where the rich get richer for being smarter and better informed creating structural asymmetry where moral hazard, personal accountability, and outright humanity. When there is no face to a crisis it is hard to foment a communal empathic response. On July 25, 1985, Rock Hudson’s press secretary publicly confirmed he was suffering from HIV/AIDS; two months later he was dead. The announcement itself shook America out of its faceless indifference to a brewing storm: “Oh no! Rock Hudson has AIDS????” fretted an awakened citizenry. The AIDs epidemic was now real.

So far while many high profile celebs have contracted the COVID19 virus none have succumbed and emerges as a fatality statistic. This too shall change at some point. The demise of Tom Hanks, Idris Elba, Prince Charles or other similarly-ranked notables would quickly put a face on this novel coronavirus. This would become a psychological tipping point. One need only look to Kobe Bryant’s demise which led to a national depression and state of mourning.

Congressional testimony can be a hellish experience for bank titans.  In the aftermath of 2008 financial crisis, Goldman’s Blankfein gave a few bucks at the office after his Abacus went awry but he could do the math in his head that $500 million was a spit in the bucket to get back to the business of trying to wipe the calamari omelet off the firm’s face.  J.P. Morgan Chase’s Jamie Diamond emerged relatively unscathed but feeling like a bride betrayed left standing at the altar as a once-presumptive Secretary of the Treasury before the bar was lower to admit minors. 

Yet another lesson should not be forgotten from the Grand Overlord of finance and eponymous founder of the House of Morgan; J. P. Morgan himself barely survived his congressional testimony on the Panic of 1907.  Perhaps apocryphal, some historians have suggested that the stress from his Pujo Committee testimony (effectively ending the “money trust”) did in the already-ailing bulbous-nosed banker just three months after his appearance.  Morgan had served as the world’s lender of last resort long enough and was replaced by a new lender of last resort: the Federal Reserve.  Morgan had financed much more than just wars—he financed just about everything including unjust wars, banks, railroads, steel mills, and yachts.  Yet throughout his illustrious career, one principle was inviolate:  character and trust matter.  Consider Morgan’s famous exchange with Congressman Untermyer at the congressional hearings:

Congressman Untermyer: Is not commercial credit based primarily upon money or property?

Morgan: No, sir. The first thing is character.

Congressman Untermyer: Before money or property?

Morgan: Before money or anything else. Money cannot buy it … a man I do not trust could not get money from me on all the bonds in Christendom.

And while character determines trust so do consequences.  To paraphrase Sam Johnson: Nothing focuses the mind like a hanging.

So what roles do character, trust and consequences (the cauldron of morality) in the amoral framework and underpinnings of capitalism purportedly guided by self-interest, rational behavior and an invisible hand?  Remove consequences, trust, and character from the traditional banking relationship between borrowers and lenders and market behavior has all the predictability of Brownian motion.  Examining what happens when borrowers and lenders become decoupled from the risk of loss of capital through financial prestidigitation (aka financial innovation) could provide a provocative clue of what might happen when traditional combatants are also decoupled from the risk of loss.  A successful suicide bomber and death go hand-in-hand.  But a predator drone neatly eliminates the honor quotient inherent in hand-to-hand combat.  The risk relationship becomes inversely asymmetric and alters the nature of warfare itself.

As well he should, William Blake had a healthy fear of tigers, whose unsurpassed predatory skills had few, if any, rivals.  He certainly had a way with words but perhaps was a bit of a closet military strategist.  Remember the famous scene in the coming-of-nuclear-age film War Games, where WOPR (War Operation Plan Response), a slightly schizophrenic military uber-computer (and close relative to HAL from Kubrick’s 2001: Space Odyssey) has a truly senior moment and calculates that any nuclear scenario is completely unwinnable.  A frustrated WOPR blows a few fuses and whistles ultimately determining the only way to win is not to play; WOPR entreaties a peach-fuzzed Matthew Broderick with the classic “how about a nice game of chess?”

The lethal weapons of yesteryears’ military-industrial complex have simply too big to succeed resulting in deterrence as the only practical value.  Prophetically, War Games serves as a cautionary tale; today our most sophisticated aerial weapons and delivery systems are also over-powered, over-designed and over budget. Yet the UAV Predator Drone and its relatives are a stunningly disruptive military innovation that is a fraction of the cost; while a $4 million Predator, clearly cheaper and inferior to the $350 million F-22 is still good enough to get the job done: taking out troublesome non-state actors and other evil-doers around the globe.  Aquinas in Summa Theologica actual coins the phrase evil-doers in his exegesis on Just Wars.   The drone, not likely contemplated by Aquinas (who was no William of Ockham), is a construct of more modern, radical thinking.  Like the zany world of quantum physics and its wave-particle duality, disruptive innovation theory creates a paradoxymoron: less is more. 

Fast forward 25 years: meet the Volker Rule 2.0 for military engagement.  Hopefully, the oversight, safeguards, and regulations are more effective than our rating agencies and oil rig regulators. Now apply a fractured corollary to the Volker Rule (affectionately recapitulated as Volker Rule 2.0) to our arsenal of high-tech military technologies and massively damaging weapon systems: by and large, they are simply “too big to succeed.”  The capabilities of these feats of engineering supremacy and modern military miracle weapon systems have far outstripped the required response and resources to combat the true twenty-first-century threats: non-state actors. 

Now from the secluded safety of CENTCOM trailers outside Las Vegas at Nellis AFB, pilots in decal-decorated flight suits sit in front of Sony Play Station-like equipment, joysticks in hand, and take-out terrorists half-way around the world with.  The drone’s function is similar to a suicide bomber yet the drone pilot’s persona is antithetical to that of a successful suicide bomber who faces asymmetrical assured personal destruction (or at least a re-arrangement of genitalia for those less successful).  A drone pilot is an exact inverse: enjoying asymmetric personal risk i.e. no risk at all—at least physically.  Yes, there is the possibility of post-traumatic stress, but bodily harm is removed from the equation unless the pilot accidentally slips on the step or acquires a nasty case of carpal tunnel syndrome.  Joysticks do create an unavoidable occupational hazard.  Who can forget the searing imagery of Slim Pickens in Dr. Strangelove personally delivering rodeo-style Fat Boy and Little Man’s ancestor to its targeted destination on a nuclear bucking bronco; now that was honorable!

The drone is a perfect, but not the only, example of the infrequent disruptive military innovation: an intentionally inferior, cheaper, less complicated product that is good enough to get the job done.

Other disruptive military innovations have distanced the combatants’ risk but not eliminated entirely.  The inspiration for the Hundred Years War was the late 13th-century disruptive innovation known as the longbow.  With the dramatically increased range of these inexpensive bronze-penetrating missiles, the personal risk goal line was moved back a couple of hundred yards as English archers could now pierce the armor of French cavalry with their sky-blackening “rain of death” putting an end to the monopoly on fear where the French cavalry could literally steamroll opposing forces who were no match. 

But shock-mounted combat itself was enabled by an earlier disruptive military innovation–the stirrup–thought to have been invented as far back as 2500 B.C.  This one little innovation —a strap of leather or forged metal that could secure the rider to his steed– created the equivalent of a modern-day tank.  The horse and armor were not disruptive innovations themselves but this single inexpensive component of innovation, the stirrup, would knit together a complex linkage of capabilities enabling France to become complacent in its need for disruptive military innovation.  Sustaining innovations—better, stronger armor, jousting tournaments, a hinge or metallic do-hickey here or there.  But the invention of the longbow by the English would transform a smaller, poorer nation into a category killer; the raw trajectory power of this simple weapon could take out a knight and a horse in one shot.  A nation one fifth its size decimated the French with this incredibly less complicated weapon during the Hundred Years War. 

The reach of the longbow doubled the efficacy and power of the conventional bow and ended the monopoly of shock-mounted combat that debatably created the need for the feudal system itself:  horses, armored knights were an expensive proposition and economic evolution was needed to feed the beast.  Yet the product and the process of implementing the longbow strategy were inextricably linked.  All able-bodied Englishmen were required to practice archery on weekends if we can believe Froissart’s account, and no child was left behind.  Perhaps our national education system can take a page on working weekends to remain competitive in the global arena of economic warrior nation-states. 

But today’s pesky, invisible non-state warriors are not likely to show up at a modern-day equivalent of the Peace of Westphalia–even if we could figure out who to invite.  Westphalia was the recognition that gunpowder and guns would result in mutually assured destruction of Protestant and Catholic alike.  After all what’s the big deal about Protestants and Catholics getting along?  It was really economics and raison d’etat, not religious ideology, that was at the root of the struggle and balance of power politics.  Cardinal Richelieu had no problem backing Protestant forces when it served the interests of France. Nor did the flip-flopping Protestant-turned Catholic Henry IV who said, “Paris is well worth a mass.”  And the religiously checker-boarded Valtellines and Grison valley may have had more to do with Pope Urban VIII throwing his friend and beneficiary Galileo to the Inquisition than a disagreement between science and religion., Most scientist today understand Galileo’s Copernican proofs were rubbish as did the Jesuits at St. Ignatius’ Collegio Romano at the time. 

Shortly after September 11^th, an Army four-star general was asked at a private lunch: how can we end terrorism?  He responded. “The military can’t end terrorism.  We can just kill terrorists.  We will track ‘em down one by one. Knock on their door.  Drag ‘em outside and kill ‘em.  Put a bullet in their head and go knock on the next door.  Ending terrorism?  That’s not our job.  That is up to you.”

In 2002 things suddenly changed by the deployment of a truly disruptive military innovation, a modern-day longbow that quietly arrived in the scene: The Predator Drone.  But unlike the longbow that pushed the combatants’ danger back a few hundred, the drone would push it back halfway around the world.  No more of that messy business of knocking on doors; we were now technically able with low-end performance to deliver colonoscopies to would-be evil-doers without them even knowing.  Drones are not visible cruising at 15,000 feet, no rattle, no hum.  Just a hellfire missile up the butt.

According to the recent U.N. Special Rapporteur’s Report, in April 2002 the Russians armed forces took out “rebel warlord” Omar bin al Khattab in Chechnya. Then in November 2002 alleged al Qaeda leader Ali Qaed Senyan al-Harithi and five other men in Yemen were vaporized reportedly by a CIA-operated Predator drone using a Hellfire missile.

The efficacy of the drone as a disruptive innovation was captured in part by Captain Terry Pierce in 2005 in his book on disruptive military technologies. Pierce offers a glimpse as to the benefits as well as the difficulties associated of implementing wrenching change by resisting stakeholders, both inside and outside of the military.  Civilians and maverick officers play a critical role in innovation but only under certain very limited circumstances.  Disruptive innovations are scary business if you are a career military man, particularly during peaceful periods. 

But September 11^th changed things dramatically.  It was a “crease in time” according to the same four-star.  Today Defense Secretary Robert Gates seems to get the need for disruptive military innovation; Gates has urged his weapons buyers to rush out “75% percent solutions over a period of months” rather than waiting for ‘gold-plated’ solutions”.  The Predator drone and its unmanned relatives seem to fill that order; it is estimated that nearly 1/3 of the drone fleet has crashed.  But at $4 million a pop you can lose a lot of drones and still beat losing one F-22.  The math is pretty straight forward. As Voltaire said: perfection is the enemy of the good. Or, as we say in the parlance of disruptive innovation: the good enough!

In an influential 1998 manifesto-styled essay-metaphor on the open source movement (The Cathedral and the Bazaar) Eric Raymond offers an off-handed second derivative yet provocative observation: “distributed problems require distributed solutions”.  Drones may be the ultimate distributed military solution for a clearly distributed problem—non-state actors.  But the risks and issues are great.  The recent U.N. report lashes out against “targeted killing” and is not amused by the joy-stick nature of the new War Games. 

When combatants are completely removed from risk of injury something very strange can happen.  Like the sub-prime crisis and related contagion where CDOs and credit default swaps decoupled bankers and mortgage brokers from owning any risk, behavior becomes very distorted.  The sanctity of the borrower-lender relationship breaks down.  Alignment and incentive as the time tested governors of free-markets also breaks down.  Amoral if not immoral behavior of the rating agencies further exacerbates the systemic failure as investors, CEOs and regulators were lulled into a sense of complacency like the French cavalry.  How can something go from AAA to a total loss overnight?  How could Alan Greenspan have been so wrong about free markets and rational behavior by market participants who had every incentive to self-regulate, certainly at the margins of three standard deviations?  But when the Volker Rule confirmed that “too big to fail” was not an option, a terrifying realization became apparent: moral hazard where  “heads I win, tails you lose”  behavior was acknowledged as truly risky business. 

Our Volker Rule 2.0 reveals a paradox: our military might be too big to succeed.  Cheaper, inferior weapons like drones that are good enough to get the job done might be the answer.  But we should proceed with great caution.  The decision to invade Iraq was subject to the Pottery Barn principle of “you break it, you own it”.  When secluded combatants no longer own the risk, like bankers who no longer own the risk, bad behavior is hard to manage. 

As a thought experiment just imagine a drone pilot securely situated in Las Vegas sees Osama Bin Laden in his sights, perhaps somewhere in Iran.  And just imagine the unspoken national interest is best served by the current containment rather than Bin Laden’s capture where we would face a lengthy trial and possible execution.  One click of the joy stick and a Hellfire Martyr-Maker hits its target and earns legendary status for the gamer who took out OBL.  Remember that the chain of command for a drone is not exactly like dropping a nuclear weapon.  Rumor has it Hollywood is feverishly working on War Games III: Attack of the Drones coming to a theater near you.  Rent before you buy. 

Oh, by the way, just wait until our non-state adversaries assemble their own fleet of predator drones operated by a stripped-down free twitter app currently under development.  The good news: the app, with full command and control features, will undoubtedly be priced at $3.99.  Thank you Steve Jobs.

http://www.csmonitor.com/CSM-Photo-Galleries/In-Pictures/Drone-jockey-New-Air-Force-poster-boys

From Black Sholes to Black Holes: Paradigm Shift-Drift-Rift

As every MBA knows or should know, there are perhaps four bedrock analytical tools of modern finance: i) Net Present Value (NPV); ii) Internal Rate of Return (IRR); iii) Black Sholes Option Pricing Model (Black-Sholes); and, iv) the Capital Asset Pricing Model (CAPM). As global interest rates, risk-free and risk-adjusted, have approached zero globally, the problem of the zero lower bound has created a vexing challenge. As more and more anomalies in the financial markets become evident, the conditions precedent for a classic Kuhnian paradigm shift are upon us. Like the center, the anomalies cannot hold.

As Thomas Kuhn pronounced in his seminal work, The Structure of Scientific Revolutions, within a given scientific field or domain, as anomalies, or deviations from the expected, are observed that are not predicted or explained by the existing paradigm a crisis begins to develop. When there is an emergent theory or model that can better explain or mitigate the anomalies this new and improved theory begins to resolve the crisis and there is a paradigm– new descriptive model– replaces the incumbent. However, a paradigm shift can only take place when a better theory is emergent. This begs the question when a plethora of anomalies present themselves but no better or alternate theory is in sight let alone on the distant horizon? We would posit that this paramount conditions precedent fails to present itself one of two descriptors will occur: i) a paradigm drift or ii) a paradigm rift.

America’s “Exorbitant Privilege”

“A professor, a rabbi and an entrepreneur walk into a bar….”  As it turns out, the professor doesn’t drink, and the “bar” is the Harvard Business School Faculty Dining Room. Otherwise, what has been a running joke for years, is a true story. The year was 2007 when we met with Professor Clay Christensen for a remarkable lunch.  The “we” is Irwin Kula (the Rabbi) and Craig Hatkoff (the Entrepreneur.) That lunch with Clay would change our lives.  We had been meeting regularly for years to discuss innovation, technology, and religion. A new player, larger than life, was about to join us in our sacred space. Enter the Professor.

The Entrepreneur and the Professor had established a relationship back in 2000 when Clay invested in Hatkoff’s start-up, Story Orbit, an online children’s publishing venture. Clay had come across the start-up reading the term paper of one of his students, and invited Craig up to Harvard to discuss what he saw as vast disruptive potential and what was one of the better examples of disruptive innovation he had come across. At the time, Craig was unfamiliar with Clay, his emerging theory and the growing influence in corporate boardrooms. Clay had appeared the year before on the cover of Forbes magazine with Intel CEO Andy Grove who is credited with turbo-charging Clay’s reputation and crediting him as the inspiration for the Celeron chip.

But in 2000, and a far cry from the stature of Andy Grove and the Celeron chip, Clay’s intellectual curiosity in this children’s publishing start-up had piqued his interest enough to invite an unknown entrepreneur to meet with him to discuss Story Orbit; it was quintessential Clay. It reflected not only his curiosity but his passion and generosity as well. Clay made a modest investment and offered to serve as senior adviser. Unfortunately, Story Orbit turned out to be too far ahead of its time: it was a broadband application when only 2 million Americans had hi-speed internet.  Though the venture never launched, considerable pre-development funds had been spent. Hatkoff returned Christensen’s investment plus a rate of return based on Christensen’s historical returns—a rather unconventional gesture but one that created an enduring relationship. “It just seemed like the right thing to do,” reflected the Entrepreneur.

Fast forward to June 2007. For some reason, inexplicable to either of them, the Entrepreneur gave the Rabbi a copy of the Professor’s magnum opus, The Innovators Dilemma, with the following inscription: “I am not sure why I am giving you this book… but you might find it interesting.”  The next morning Kula called Hatkoff and said, “OMG!  I was up all night reading the book. I finally know who I am and what I do. I am a disruptive spiritual innovator!” This led to the self-described occasionally devout atheo-agnostic Entrepreneur and the Disruptive Rabbi to develop a social enterprise initiative that applied Clay’s theory to the realm of religion and spirituality. Realizing we were taking some broad liberties with Clay’s “baby” we thought it would be both respectful and wise to at least run the idea by him. We sent the proposal to Clay.  His office confirmed receipt of the email but cautioned it might take several months to get a reply.

Twenty minutes later, Hatkoff got a surprise call from Clay. “Do you think you and your rabbi could come to meet me for lunch? Craig, I don’t know if ever told you this, but I am like an Archbishop of the Mormon Church. You and your Rabbi are onto something I’ve thought about for many years.  I’d like to be involved.”

So, there we were at lunch. It was like being at Hogwarts with Professor Dumbledore.  But Clay, with his gentleness, grace, and warmth quickly put us at ease.  Towards the end of an extraordinary conversation about disruptive innovation and religion, the likes of which had undoubtedly never happened before in the HBS dining room, or perhaps anywhere else on the planet, Irwin nonchalantly said to Clay “I assume Professor, you always viewed Mormonism itself as a disruptive innovation?”  For what seemed like an eternity, Clay was silent.  “By Golly isn’t that interesting! I never thought of it that way!”  Clay then reiterated his desire to be involved with us and help us in any way he could. 

By 2009, the three of us had formed the Disruptor Foundation dedicated to advancing disruptive innovation theory in society-critical domains. We were honored as Clay would casually refer to us as the theory’s “advance research and development arm.” We were his para-theorists exploring and thinking about applications of his theory to new frontiers.

One of Clay’s remarkable qualities was his openness and commitment to learning about any and all anomalies that his theory did not explain. As a profound theorist, he embodied the rare combination of brilliance and humility.  Clay was never defensive! Always smiling, he was intellectually curious, empathic, present, joyful, and engaged.

By 2010, the three of us launched the Tribeca Disruptive Innovation Awards, now known simply as the Disruptor Awards.  The unspoken objective of the awards was to curate and celebrate innovations that fit the theory but also to showcase those anomalies that the theory, in its original form, did not explain.  As a genuine scholar, Clay enjoyed these exceptions as much as those things that confirmed his theory.

Over a ten-year period, we identified and honored over 250 innovators—ranging from the usual suspects, (Twitter, Square, Wikipedia, Snapchat, Uber etc.) to Nobel Prize winners to Ed Snowden, from the Mayors of Hiroshima and Nagasaki to a bevy of teen and pre-teen innovators.  Largely because of Clay’s reputation and endorsement we were able to create an ecosystem of some 400 plus fellows all of whom in some way were disrupting the status quo. Every year, the night before the awards would hold our annual Spaghetti and Meet-ball Dinner for all the Honorees and Fellows.

While he rarely knew who we were honoring in advance, one of the hallmarks of the awards was Clay’s closing reflections and commentary on that which he had just witnessed. Always delivered with great joy and gratitude, he would implore all of us to continue to search for innovations that would make him rethink his theory and challenge the community to keep disrupting the status quo for the public good.

By 2013, the fourth year of the Awards, we began to see an unexpected pattern that was a departure from the original theory’s focus on the core utility of technology and business models. It was something that intrigued Clay. As there was no existing platform to encourage such kinds of discussion, we decided to launch our own publishing platform, known as the Off White Papers.  Rather than serving as an academic or scholarly peer-reviewed platform, it was a space to provoke new thinking about Disruptive Innovation Theory liberated from the rigors, and yes, the stress and biases, attendant to more serious academic undertakings.

Our inaugural Off White Paper, which included Clay as an author, introduced the concept of identity-centric innovation where identity–people’s world views, values, and belief systems– i.e. culture writ large was a “formidable variable” in the successful diffusion of innovation. The essence of identity-centric innovation suggests that “…in those domains where stakeholders’ identities are being challenged the identity function can often overwhelm the more straightforward utility of the innovation.”  Clay’s closing quote represented a quiet sea change in his thinking about his theory: “If we are to develop profound theory to solve the intractable problems in our society-critical domains…we must learn to crawl into the life of what makes people tick.”What this meant to Clay is that in society-critical areas such as education, healthcare, government, capitalism, moral and ethical development etc., disruptive innovation would behave quite differently than in domains of pure utility-centric innovation. A bit of a stretch but Clay was comfortable using the playful analogy of Newtonian physics versus quantum mechanics. Indeed, the title of our first article was Disruptive Innovation Theory Revisited: Towards Quantum Innovation.  This notion of identity-centric innovation required refocusing on the role of culture and identity with a deep dive into the cultural ramifications, resistances, obstacles and rethinking the jobs-to-be-done framework altogether.  When there are multiple stakeholders with multiple jobs to get done, innovation behaves quite differently than just assessing whether new consumers would embrace the inferior MP3 file that clearly turned out to be good enough to get the job done.In Clay’s 2013 wrap-up of the Awards, he shocked the audience by stating that in his view three areas critical to our future desperately needed disruption: terrorism, parenting, and religion itself.  His concern was that strong moral underpinnings, largely absent in Adam Smith’s Wealth of Nations, were fundamental to the success of capitalism and as institutional religion was eroding in America so was moral accountability.  This led to a more ambitious and provocative second installment of the Off White Paper penned with Clay– Disrupting Hell: Accountability for the Non-believer.

In 2016, at the last Awards he was able to attend, instead of his normal ten-minute wrap-up, a tearful Clay was particularly moved by the slate of honorees threw away his remarks and unexpectedly delivered a very ­­­­­emotional sixty-second reflection that our words can’t capture but anyone who wants to understand the man, needs to watch.

Members of the Church of Jesus Christ of Latter-day Saints believe that every individual has the opportunity to dwell with God after this life in a state of eternal joy. Clay’s untimely demise leaves us profoundly saddened.  The Entrepreneur and the Disruptive Rabbi are eternally indebted to the Professor who transformed our lives with his extraordinary mind, heart, and spirit.  We have no doubt that Clay Christensen is indeed in a state of eternal joy. Our job-to-be-done is to continue to support his legacy for the public good.

The expression paradigm shift first appeared in 1962 in Thomas Kuhn’s seminal work, The Structure of Scientific Revolutions, one of the most important and cited works in all of academia. Kuhn examined the process of how, why and when the scientific establishment embraces new models or paradigms of how the world works. Kuhn claims that in normal science when there is an increasing number of “violations of expectation” i.e. more and more anomalies or aberrations appear that can no longer be explained by the theory, a crisis starts to emerge. When there is another competing model that can better explain these anomalies, then the crisis will turn into a revolution where the establishment will embrace a new theory. It is not a gentle or gradual process according to Kuhn. It has a tectonic effect and creates instability.

Premise: If no emergent theory or model is within grasp to replace the incumbent theory to resolve the crisis then the prevailing theory will either limp along or be destroyed as a bona fide paradigm shift will not be possible. The path of the crisis will progress and tranform into into one of two directions: either

i) a paradigm drift that can be thought of as “death by a thousand paper-cuts” which entails endless modifications of and/or bandaids on the incumbent theory or;

ii) a paradigm rift which in the words of Mark Zuckerberg results from “movng fast and breaking things.” The prevaliing theory will be abandonned with nothing as a replacement wreaking further anxiety and instability.

The timeframe for resolution of a drift will be considerable leaving the mounting anomalies unexplained and further gradual undermining of the prevailing model over time.

A rift on the other hand will tend to be more sudden and violent in the absense absent a any replacement theory or model. An expectation of an ongoing inability to control the crisis will ultimately lead to a completem loss of confidence with unintended consequences that will follow. The financial crisis of 2008 would be a quite realistic example of a paradigm drift.

Since the scientific revolution, scientists have attempted to describe and explain observable phenomena in the physical world works. The process of repeatable experimentation and observation is known as the scientific method. If an “experiment” is repeated, normal science accepted by the establishment should always predict the same result. But, a theory is nothing more than a model, or paradigm, that is the best prevailing explanation or description of how the natural world works.

When an unexpected, new or different result is observed that diverges from the expectation, rather than shouting “Eureka!” scientists might be better served by in words of Isaac Asimov, “gee, isn’t that funny?” When enough of these anomalies are observed, however, it is no longer a laughing matter and a real crisis emerges. If there happens to be is an alternative or competing model or paradigm that had not been accepted to date by the science establishment, but can better explain those annoying anomalies, the crisis blossoms into a full-blown revolution that results in the establishment embracing the new theory. This process of anomaly-crisis-revolution results in what Kuhn calls a paradigm shift.

In its simplest form, a paradigm shift is a wholesale change by the scientific community to a new model or description of reality, a paradigm, that better explains observable phenomena or better predicts behaviors. Initially applied to the hard sciences, over time the theory has been expanded to cover just about everything: sociology, politics, religion, psychology, art etc.

In Gladwellian terms, there will be a tipping point at which the crisis blossoms into a full-blown revolution. If there is an alternate theory that better explains or solves some of the unsolved puzzle-solution sets, the mainstream scientists who had embraced the old theory, the normal science, abandon ship and will begin to embrace or shift to the new theory which becomes the new normal.

Embracing Mizan: From the Grand Mosque to the Burke-Paine Great Debates to the Moody Blues and Koyaanisqatsi: balance is always the right problem-solution.

The famous African proverb tells us “if you want to go fast, go alone. If you want to go far, go together.” For traditional cultures wrestling with the impact of the break-neck rate of technological change, this piece of ancient wisdom frames the dilemma: how to go far and fast at the same time?

The prevailing western narrative of technology–two guys in a garage– is fast and furious. Don’t ask for permission, ask for forgiveness. “Move fast and break things. Unless you are breaking things you are not moving fast enough,” famously said Mark Zuckerberg. From fake news to cyber terrorism to unsupportable valuations in the field of unicorns, the risks and challenges of unfettered innovation are beginning to feel existential. Life out of balance.

The limiting factors and constraints of both modern and traditional cultures (laws, norms, customs, mores, etc.) broadly-defined are frequently ignored. Build the plane as you fly. The current rate of technological change lies somewhere between geometric to exponential. But the ability of even modern culture to process the change is at best linear with fits and starts and bumps in the road. In the case of traditional cultures which will tend to be more conservative, the ability to absorb these jarring changes is even more problematic. If the technology curve is exponential and the culture curve is linear there will be an ever-widening gap: meet the techno-cultural divide. Bridging this divide will not be easy even under the best of circumstances.

Only recently is serious attention being paid to the role of culture in the successful diffusion of disruptive technologies and related innovation. To focus solely on the technology without a rigorous analysis and understanding of the cultural context can negatively impact outcomes, by missing pain points and resistances that, in hindsight, should have been relatively easy to identify. This paper examines the art of the possible. It seems neither technology that ignores culture nor culture that ignores technology end well. We are currently living in the former scenario while history amply confirms the latter. It all catches up in the end.

By techno-cultural divide, we mean the destabilizing and often messy tension between technology and culture, one might reasonably conclude that focus on one comes at the expense of the other. If technology were the only consideration, one might go fast. On the other hand, if a reactionary culture prevents or impedes technological progress, a tribe or society might be left behind. But with the proper balancing of technology and culture, as we move forward, we just might get farther faster. The proper mix is merely a question of balance. Optimization over maximization. We refer to this balancing act as bridging the techno-cultural divide.

“Thanks to our sullen resistance to innovation, thanks to the cold sluggishness of our national character, we still bear the stamp of our forefathers.” –Edmund Burke

As subsequent books by Christensen et. al. were published regarding the healthcare industry (Innovator’s Prescription 2009) and education (Disrupting Class 2008) the empirical results suggested that, in these domains, significant anomalies could be observed that were inconsistent with theory’s predictions and/or post-facto analytics. As more anomalies continue to emerge the serious question arises: what was it about these particular domains that would yield results unexplained by the core theory?

Our curiosity and subsequent anthropological investigations have led us to suggest a conjecture about something we refer to as the utility-identity function: that in domains where people’s world views, values, and belief systems- i.e. culture writ large- come into play, one should expect that the success and diffusion of innovations that impact people’s identity (identity-centric) will behave quite differently than innovations that perform more straightforward functions and tasks (utility-centric.)

It was reasonably clear that a 100% purity test would be oversimplistic and that all innovations contain both elements of identity and utility. An inexpensive Hyundai that will get from point A to point B largely exhibits utility characteristics, an electric Prius might make an environmental statement about the owner while a Ferrari suggests a different statement about economic status or stylishness. All three examples get you from A to B but exhibiting significantly different degrees of both utility and identity. A Hyundai might exhibit 90% utility, 10% identity but a Ferrari 10% utility, 90% identity.

While much work needs to be done, we have concluded that the utility-identity function could serve as a helpful lens in analyzing and predicting the likely success of innovations, particularly in identity-laden domains (such as health care, education, politics, ethics, religion, spirituality, music, fashion, etc.)

“The circumstances of the world are continually changing, and the opinions of men change also; and as government is for the living, and not for the dead, it is the living only that has any right in it. That which may be thought right and found convenient in one age may be thought wrong and found inconvenient in another. ” -Thomas Paine

 Disrupting Hell:  Accountability for the Non-believer

by Professor Clayton M. Christensen, Craig Hatkoff and Rabbi Irwin Kula  

For millennia religion has been one of civilization’s primary distribution channels for moral and ethical development that both helps us determine what is right and wrong and that creates accountability for our actions. Yet, for an increasing number of people religion is no longer getting these two critical jobs done. We argue that without a strong moral and ethical foundation civilization’s prospects for peace and prosperity will remain elusive and at some point simply founder. Perhaps we need innovation in “moral and ethical” products, services and delivery systems for non-consumers of traditional religion.

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The effective functioning of capitalism and democracy depends not only upon clear rules and mechanisms for accountability for obvious transgressions but also upon the people voluntarily obeying  “unenforceable” rules– i.e. behaviors that occur when no one is watching.  America’s market economy has worked largely because its people have chosen to obey the rules even when they can’t or are highly unlikely to be caught. Why is that?  Mid-nineteenth century de Toqueville offered one explanation:  an individual’s fear of being eternally relegated to the netherworld strongly discouraged bad behavior. He warns, “when men have once allowed themselves to think no more of what is to befall them after life, they readily lapse into that complete and brutal indifference to futurity.”   

On the Great Seal of the United States, our Founders included the Divine Seeing Eye that determined whether we would be rewarded or punished in the next life.  But what happens when more and more people stop believing in that Divine Seeing Eye? Albeit in various forms, a temporal Seeing Eye starts to emerge: Big Brother is watching. Almost all successful market economies have historically had strong religious underpinnings with the notable exceptions of Singapore and China.  Those two particular regimes have relied upon command and control societies that function very effectively even without religion.  Everyone is watched and everything is seen; justice for transgressions is meted out swiftly and severely. With limited due process, bad behavior carries serious consequences– not exactly the environment where most of Americans would want to live.  But what happens when people neither believe in the Divine Seeing Eye nor want to live under a temporal Seeing Eye?  Who or what will hold us accountable? Perhaps we need another kind of Seeing Eye– the Seeing I.”

Religion has wielded a powerful set of accountability technologies such as the promise of reward (Heaven) and the threat of punishment (Hell).  Yet today, religion’s role in fostering personal accountability is no longer getting the job done for a rapidly increasing number people; nearly one-third of the population under 35 sees no meaningful role for religion in their lives.  So what set of moral and ethical principles, codes, rules and practices will hold behavior in check?  And how will these be delivered if religion is no longer the primary distribution channel for moral and ethical conduct for a wide swath of civil society?

Disruptive innovation in religion can help find alternative products and delivery systems that cultivate moral and ethical behavior.  These new systems will emerge via widely distributed bottom-up movements and processes starting with the intuitions of a new breed of early moral adopters. These early adopters will need to reach non-consumers of our traditional moral and ethical products and services in unconventional ways.  Disrupting religion can help find alternative delivery systems for moral and ethical behavior.

Religions are facing serious product and distribution issues. Just as businesses are subject to the forces of disruptive innovation, religions’ “business models” are also subject to threats to their sustainability in addition to other challenges to their well-established business principles:  percentage utilization versus total capacity (e.g. what to do about those empty pews), marginal costs exceeding marginal revenues (where profitable activities prop up the less profitable or money losers altogether).  Like the cable companies who face cord cutting, religions are also facing pressure from product unbundling and disaggregation and an overall declining market share from changing demographics.  Their expensive bricks and mortar distribution models create exorbitantly high fixed costs of operations.

Religions have become subject to the condition we call “creeping feature-itis” (too many features, too inaccessible, too much expertise required, too complicated, too expensive for many; religions might be well advised to revisit the jobs that need to get done and to find new ways to reach the non-consumer.  Disruptive Innovation Theory can help understand the market dynamics and develop new strategies and approaches. The incumbents in religion need to disrupt themselves or, otherwise, they too will face the music and be disrupted by external forces.  The onslaught will likely be from with low-end, user-friendly products and more efficient delivery systems that are good enough get the job done: to help us create a more ethical and moral society with real personal accountability.

But even if we do devise new modes of personal accountability, another perhaps more vexing challenge is the sheer complexity itself of today’s financial, political, and cultural systems that unintentionally undermine personal accountability.  Conflicting laws and regulations, arcane accounting, and byzantine systems of taxation reward those with highly specialized expertise and the knowledge of how to circumvent clumsily cobbled together sets of best intentions of lawmakers and regulators.  In a post-industrial society with hyper-connected, highly complex webs of interactions, the chain of personal responsibility gets hidden from view, absorbed into a larger networked set of activities and players. Bad behavior (both intentional and unintentional) is easy to commit and increasingly hard to identify. Responsibility becomes like peanut butter thinly spread across a piece of toast.

As the saying goes, one bad apple spoils the bunch.  In like manner,  it’s hard to identify which bad peanut caused the batch of peanut butter to spoil. If it’s difficult to even know when we are doing something wrong, and equally hard to find the transgressor, then we are on the cusp of an accountability deficit that limits the progress of civilization. We refer to this phenomenon as the Peanut Butter Paradox: all individuals are acting morally yet the collective behavior leads to utterly immoral results.  All the individual peanuts are all doing what they are supposed to do but the entirety of the effort produces rancid peanut butter. Which peanut should be held accountable?

If you want peanut butter desperately, running out to the local supermarket to buy a jar of your favorite brand of peanut butter at the supermarket is more cost-effective than buying raw peanuts and making peanut butter at home. It’s the classic  ”make versus buy” decision that we take for granted these days. Admittedly, in a future filled with 3D printers things might change. But for now, with peanut butter, as with most necessities and conveniences of modern life, the “buy” usually beats out the “make” decision handily.  The obvious explanation is Adam Smith’s division of labor.

At first blush, Smith seemed to believe the division of labor was the greatest thing since sliced bread.  Or at least it was the best way to make sliced bread. If you have managed to get about half way through the 800-odd pages of Wealth of Nations you probably stumbled upon a harsh indictment by Smith of the societal consequences of the division of labor.  Smith warns: “The man whose whole life is spent in performing a few simple operations… loses the habit of exertion [of thought] and generally becomes as stupid and ignorant as it is possible for a human creature to become.”

In a world of mass-market consumerism, the production of almost all goods and services entails more and more specialization. The agrarian peanut farmer has yielded to the meta-corporate-military-industrial- peanut butter complex: growing, harvesting, processing, shmushing, packaging, marketing, and distributing this throat-clogging delicacy that touches all aspects of human existence.

Smith nailed down the division of labor to ten or so men with 18 distinct operations for making pins. Together in one factory, they could bang out 48,000 pins in a day versus one man trying to make the entire pin by his lonesome who could scarcely make one pin in a day.  In today’s world, it is now almost unfathomable as to the number of tasks, sub-tasks, sub-sub-tasks along with the matrix of “specialists” needed to turn peanuts into peanut butter.  So will Smith’s caveat come home to roost? Will the division of labor lead us down a parallel path where we become morally “stupid and ignorant” as well?  Through no fault of our own, this might simply be due to the collective loss of thought.

Smith’s example of making pins just isn’t what it used to be. Human activity across the spectrum has become rather more complicated. It feels like everything spews forth from global networks and systems using advanced technology that involve many parties and many processes in far-flung places. There’s a department for everything.   Our minds begin to adopt a job shop mentality departmentalizing all aspects of humanity as well– home, work, family, school, charity, taxes, religion, sports, politics etc. We move from one disconnected life department to the next rarely taking the time or the inclination for reflection. Without ongoing reflection, we begin to lose perspective of the greater whole. We deconstruct everything and tend to look at our actions in atomized pieces.

There is a real danger when behavior gets viewed as a deconstructed series of discrete actions. It’s as if we are only examining the actions and intentions of the individual peanut and missing the entire batch of rancid peanut butter.  It allows the individual peanut to escape an overall societal accountability by reassuringly whispering to himself:“ but I was only doing my job and I did nothing wrong!”   For those with even a rudimentary understanding of quantum physics, the wave-particle duality might be helpful: the peanut is the particle and peanut butter is the wave.  And yes, it’s both at the same time.

With an onslaught of globalization and modernity, we construct webs of interconnected nodes, spheres, and linkages comprised of fluid complexes of activity. These layered complexes stretch across endless processes and the entire continuum of principal-agent whether individuals, institutions, companies, or countries, each with their own cultures, languages, contexts, and stakeholders.  But as the world just keeps on making more and more peanut butter no one seems to stop to see if the end product is edible.  Everyone tends to keep their eyes only on their own silo of activity. But when things go wrong, due to bad behavior, it starts to get pretty sticky. Finding the culprit and bringing him to justice is no easy task. Usually the accusations of an early moral adopter– or whistleblower– against corporate wrong-doing results in the predictably canned response:  ”these fanciful charges are without merit and we intend to vigorously defend ourselves against them!”

Governments, businesses and civil society operate through vast webs of organizations and institutions, global delivery networks and value chains where it is increasingly difficult to pinpoint responsibility for good behavior or bad. Historically bad behavior has been held in check in part by traditional accountability technologies (the Seeing Eye, Heaven, Hell, Purgatory, etc.). While admittedly a bit quirky (hey, it’s an off-white paper), it can be helpful to think of these accountability technologies as “moral apps.”  Until recently, moral and ethical behavior has been rather effectively delivered through religions and their respective portfolios of moral apps. While a bit of a stretch, a business analogy might be that the major console video game platforms (PlayStation, Xbox and the Wii) have been disrupted by casual games available for free or almost free from an endless selection on iTunes or Facebook. Remember Angry Birds and Farmville? There was even the Confession App cautiously embraced by the Vatican (albeit non-sacramentally) as a “useful tool.”  But the numbers undeniably show that religion has seriously begun to lose its grip.   Almost 60% of all Christians believe Hell is not a place but merely a symbol of evil. America’s millennials (40%) eschew religious accountability altogether. If accountability has broken down, what new set of moral products and services and delivery systems can help foster good behavior and/or keep people in line?

New accountability technologies will be necessary to fill the gap particularly where religion has left off for non-believers or “non-consumers” in disruptive innovation parlance.   But first we must help people recognize what and when they are doing something morally wrong.  This will not be easy. It is time to introduce disruption into the domains of religion and ethics to restore Adam Smith’s notion of “moral sentiments.” This requires a new toolkit of disruptive innovations initiated by fearless early moral adopters.  

Could Pope Francis be an early moral adopter and be on to something really big?  Recently in his catechesis on World Environment Day (and reinforced in his epic Evangelii Gaudium), Pope Francis offered an ethical innovation. Wasting food is stealing: “Remember, however, that the food that is thrown away is as if we had stolen it from the table of the poor, from those who are hungry!” (June 5, 2013)    OMG!  “Thou shalt not steal” suddenly has a new, expanded meaning and one that not everyone surely will agree with. Is wasting food really theft? For most of human history, where subsistence was the norm, waste wasn’t even an issue. But in a world of abundance will “Thou shalt not waste,” emerge, as Francis suggests, as a modification or a whole new commandment altogether for which we will be accountable?  Wasting food as theft just makes the discussion about “what is moral behavior?”  a hell of a lot more serious in a culture absorbed with consumerism and materialism.  What the justifications are for this new definition of stealing, how we monitor such behavior, and what punishments will be imposed  (in this world or the next) for wasting food we cannot say.  But it will be damn interesting to find out. But do I really go to Hell for wasting food?

Taco Bell might just have an interesting take on this new definition of stealing.  Recently one of their mischievous trainees was photographed licking a stack of taco shells. The photo above was posted on the Internet and then went viral. This amused neither the management of Taco Bell nor its customers. Another version of the story is the ‘playful’ employee was simply licking leftover taco shells used for training to be thrown out afterward.  The Pope’s new missive raises the bar: Was Taco Bell was really wasting real food for training that should otherwise be shared with the hungry?  Whose moral behavior would Pope Francis be more exercised about– the employee having fun or Taco Bell using real food for training?

Once upon a time life was simple. De Tocqueville keenly observed that it was reward and punishment, augmented by a healthy fear of what would happen in the “afterlife,” that kept the moral compasses pointing north. The American entrepreneur would otherwise exhibit a “ “brutal indifference to futurity.” Being productive might help you get to heaven but you better be good or else you’ll go to Hell. The act of God-fearing was deeply infused into the American psyche. Fear of consequences and personal accountability was a gravitational force that complemented Adam Smith’s Invisible Hand.  Smith knew well the danger of liberating greed, ambition, and materialism as the necessary, animating energy of capitalism.   Smith’s Theory of Moral Sentiments was his more important book– and the one that most people haven’t read. They tend only to read the first few pages of Wealth of Nations and leave it at that.  In TMS Smith proffered a moral philosophy to hold in check personal transgressions and egregious behavior inevitably unleashed by capitalism.   In a nutshell, Smith’s moral philosophy of the “impartial observer” is that empathy for others ensures both the production of wealth and a good society.

Over time people have become less God-fearing.  The terrifying images of Hell painted by artists such as 16th-century Dutch painter Hieronymus Bosch once spoke to the imaginations, fearful souls and consciences of the masses;  today those works of art seem almost quaint.  Nearly 30% of Americans under 35 and 20% of all Americans do not believe in the traditional notion of any religious accountability– a God who sees all and rewards and punishes us accordingly. Even among Catholics in the U.S., 99% of whom believe in God, only two-thirds strongly believe in Hell (and it is more likely a symbol, not a place).  Curiously, 85% believe there is a heaven (and it’s a place).  Go figure. Apparently, moral hazard has evaporated not only for the U.S. Banking system but also for a significant percentage of U.S. Catholics.  Be it God or the Federal Reserve, bailouts are available.

This is more important than many of us imagine because a successful market-based economy requires a high degree of trust that is undermined when there is little or no accountability.  Studies show that simply hanging a picture of a pair of eyes on a wall will actually change behavior in a room.  It’s no accident that “In God We Trust” is emblazoned on our currency.  Remarkably though probably unnoticed by most, the Founders built this moral app right into the Great Seal of the United States– they plastered the Divine Seeing Eye right above an unfinished pyramid on the seal.  In 1935 FDR embedded the Great Seal on the back of the one-dollar bill.  One of those funny Latin phrases, Novus Ordo Seclorum, (trans: New Order of the Ages) possibly helped him market the new deal.  But that other funny phrase, Annuit Coeptis (trans: He approves of our undertakings), might serve as a contemporary moral app.  Next time you pull out a dollar bill, take a moment and look at the eye on top of the pyramid and ask yourself: “Am I spending this dollar wisely?”     Let us know how that works out. This little ritual might help us move from the Divine Seeing Eye into the internalized Seeing I of self-regulation for those with little or no interest in the providential.

There are few models of successful market-based economies without strong religious underpinnings. There are the Singapore and China (still a work-in-progress) models meting out justice swiftly and severely.   The Divine Seeing Eye is replaced by a Temporal Seeing Eye that sees everyone and everything conjuring up a brutal Big Brother that most Americans would find unacceptable the NSA notwithstanding.  In Singapore, the apocryphal punishment for chewing gum is caning. In reality Singapore does permit chewing gum for medical purposes by prescription only.  But caning is alive and well.

In 1994 an American student prankster Michael Fay was enjoying a semester in Singapore; he was convicted of vandalism for stealing road signs and spraying graffiti. The authorities sentenced him to 83 days in jail. More infamously he also received four strokes of a rattan cane on the buttocks. Caning, either for chewing gum or spray painting, would hardly fare well on the scales of political correctness in this country.  Fay went on to lead a fairly troubled life but has most likely stopped chewing gum altogether. But in America, it seems neither God the Father nor Government the Big Brother is enough to keep us in line.

But there seems to be a more vexing problem that necessarily precedes the issue of accountability: do people clearly understand if or when they are doing something wrong?  In simpler times a good place to start learning how to behave was the Ten Commandments.  It seems we’ve gotten a little rusty on the content of those ten imperatives and prohibitions. While 62% of Americans know that pickles are one of the ingredients of a Big Mac, less than 60% know that “Thou shalt not kill” is one of the Ten Commandments.  (Then again, ten or so percent of the adults surveyed also believe that Joan of Arc was Noah’s wife.)  In fact, the majority of those surveyed could identify the seven individual ingredients in a Big Mac: two all-beef patties (80%), special sauce (66%), lettuce (76%), cheese (60%), pickles (62%), onions (54%) and sesame seed bun (75%).   “Thou shalt not kill” only beats out onions.  It’s enough to make you cry. “Two all-beef patties, special sauce, lettuce, cheese, pickles, and onions on a sesame seed bun.” In one Big Mac promotion, the company gave customers a free soda if they could repeat the jingle in less than 4 seconds.

A catchy jingle undoubtedly made The Big Mac part of pop culture. Who could forget the 1975 launch of McDonald’s Big Mac?  That jingle-laden effort takes second place for “most clever marketing campaign” in advertising history. Yet it was the unsurpassed marketing genius of film producer extraordinaire Cecil B. De Mille that surely takes the cake.  De Mille gave the Ten Commandments a special place in contemporary American culture decades before they became fodder for the “culture wars” regarding separation of church and state.

In perhaps the greatest marketing coup in American history, De Mille ingeniously tapped into the angst of Justice E. J. Ruegemer, a Minnesota juvenile court judge who was deeply concerned with the moral foundation of the younger generation. Starting in the 1940s, Ruegemer had, along with the Boy Scouts’ Fraternal Order of Eagles, initiated a program to post the Ten Commandments in courtrooms and classrooms across the country as a non-sectarian “code of conduct” for troubled youth. But De Mille took us to the next level. In 1956 De Mille seized the opportunity to plug his costly epic film, The Ten Commandments.  He proposed to Ruegemer that they collectively erect granite monuments of the actual Ten Commandments in the public squares of 150 cities across the nation.  The unveiling of each monument was a press event typically featuring one of the film’s stars. “OMG!!! Isn’t that Yul Brynner?” or  ”that’s Charleton Heston!”  Absolutely brilliant!   Things remained copacetic until the 1970s as this public expression of a code of conduct was apparently non-controversial.  Then all hell broke loose leading to a firestorm that still burns to this day on the issue of separation of church and state.

     “Ten Commandments” as an expression didn’t even exist until the middle of the 16th century when it first appeared in the Geneva Bible that preceded by half a century the King James Bible, first published in 1604.  The Ten Commandments have the attributes of a disruptive innovation. They take the hundreds of laws in the bible and boil them down to ten fundamental pearls that are more accessible and usable for the masses. Obviously not covering all the bases they were clearly good enough to get the job done: to create a simple, accessible bedrock for moral and ethical behavior.  Serious biblical scholars of the Ten Commandments view the vastly oversimplified code as a synecdoche, or visual metaphor, for the much more complex set of laws and regulations.

With or without the Ten Commandments it seems that most people have internalized “Thou shalt not kill.” Cognitive scientist Steven Pinker points out that, as recently as 10,000 years ago, a hunter-gatherer had a 60% probability of being killed by another hunter-gatherer. At some point in history, the prohibition against murder became a conscious ethical innovation.  By the eighteenth century BCE the code of Hammurabi, our earliest surviving code of law, prohibited murder yet the prescribed punishment was based on the social status of the victim.  Over a period of several centuries, our moral horizon expanded once again.  The biblical commandment “Thou shalt not kill” evolved to eliminate any class distinction— clearly an upgrade.

Ethical innovations come in fits and starts.  Yet over the long run ethical and moral horizons of civilization widen. Today, according to Pinker, murder rates are at the lowest in history.   In the U.S. there were 13,000 murders in 2010. If our math is correct, that represents less than ½ of one-thousandth of one percent assuming no multiple murders and no suicides are included; about one person in 25,000 actually kills someone. While the numbers are less clear on adultery due to methodological challenges and interpretations (single incident versus multiple incidents, it takes two to tango, etc., etc., etc.), lowball estimates are 20-25% of adults are guilty.  Assuming 150 million adults, some tens of millions of Americans have committed adultery give or take a few.   It would seem not all commandments are created equal– or at least obeyed equally.

Morality has become more complicated.  In simple situations with a “one-to-one” correlation — one person murders another or someone steals a neighbor’s horse, or someone lies in court — we know what they have done is wrong and we hold them accountable. But we live in a society comprised of perpetual power imbalances, multiple stakeholders, ambiguous situations, and complex interdependent systems.  Is releasing classified documents as a response to questionable or inappropriate government surveillance heroic or traitorous? The July 10, 2103, Quinnipiac poll, 55% of Americans consider Edward Snowden a whistleblower/hero while 34% believe he is a traitor– a 20% shift in favor of Snowden since the earliest polls. Interestingly, normalized polarized Americans are uniting against the unified view of the nation’s political establishment.  The situation has become even more murky, now that Snowden’s activities have been indirectly validated through the Pulitzer Prize.   Determining what is right and wrong gets pretty dicey especially when we don’t know what we don’t know. What we do know is: a hell of a lot of Americans really don’t want Big Brother reading their emails. But what are they afraid of?

Does a banker taking advantage of asymmetric information or the sheer complexity of regulations, accounting and tax codes let alone multi-billion dollar obtuse securities constitute unconscionable behavior that deserves punishment? Who is responsible for lung cancer deaths– the smoker, the tobacco company, the tobacco worker or the FDA? Who is accountable for obesity-related deaths– McDonalds, corn subsidies, the overweight consumer or all of the above? Who is accountable for unsafe working conditions in the developing world– Apple, the Gap, Nike, Walmart, the local politicians, the builder– or the consumer who benefits from cheaper prices? Or are these just acceptable “costs of doing business?”

Perhaps we are undergoing the atomization of morality. Has morality has become subject to the “distributed network effect” such that every action can find a morally acceptable pathway of justification? When systems, stakeholders, and situations become complexes replete with interdependencies, conditionality and incalculable unintended consequences moral responsibility gets spread like peanut butter across a chain of activities, persons, corporations, partnerships, not-for-profit organizations, and government agencies. Complicating things further is that every agent has an obligation of loyalty to their principal. Peanut butter consists of a whole lot of peanuts, so which peanut or employee do we hold accountable for screwing up a batch of peanut butter? In like manner, one bad apple spoils the bunch but hard to know which one once it becomes applesauce. How should we parse accountability when there is a complex chain of activities where this atomization of morality allows every individual to avoid taking responsibility for the whole.  Often times we have only an intuition that something is amiss or doesn’t feel right even if we can’t exactly put our finger on it. Executive compensation feels like stealing, the selling of tobacco products feels like killing as does serving unhealthy food to the masses.  Are these moral intuitions, like Pope Francis’s about wasting food, actually expansions of our moral horizons or just plain silly?

A new awareness of what constitutes moral transgressions must come before accountability can be effectively scaled to help ensure enduring peace and prosperity.  This new moral awareness cannot arise without a great deal of civil discourse and yes, even uncivil discourse.  Slavery was okay until it wasn’t. Gay marriage was not okay until it was. Smoking in public places was permitted until it wasn’t.  Corporate polluters were acceptable until they weren’t. Changing the moral baseline is always painful.  Issues of accountability at scale are somewhat premature until we can collectively agree what constitutes right and wrong in an extended or networked chain of “values.”  It’s hard to build consensus when everything is so damn complicated with multiple stakeholders, complex systems, and ambiguous situations. Until there is an inflection point– that quantum moment– where enough people can be energized by the intuitions of early moral adopters to see something is terribly wrong and to take action there can be no wide spread accountability.

All this calls for a new breed of moral innovators.  It will be these early adopters– gifted with unusual charisma, empathy, and humility– who expand our moral horizon. They might even have to resort to civil disobedience. They will invariably face criticism and grave risks– financial, reputation, and even bodily harm– as they excite a new moral majority– many of whom will not believe in Hell but will embrace the possibility of better “Heaven” on earth.