Exploring Alternative Futures

Q: Is there a core question that has guided you through your career?

Curiosity about how big, complex systems work, both in the worlds of defense and international business, has shaped my career.

Over the last few years, it struck me that in both business and war, technology was looming larger and larger, measured by how much money is spent on it, the consequences if you get it wrong, and the effort required to understand it. Where a few decades ago you might’ve left technology out of an operations study, that would be inconceivable today, either in defense or a multinational. We think of Walmart as a big box retailer, but it’s also a technology organization; they’re trying to bash in Amazon’s head online.

I think technology leadership is a big gap in MBA programs. If you went back to 1965 and looked at how finance was taught, it was not very sophisticated; it got much better because of research by economists and business school professors. Today, there’s a need for more sophisticated technology management and leadership. There’s demand for people to develop and implement new technologies not just for the sake of innovation but with a deep understanding of strategic need and an ability to focus on developing technologies and combinations of technologies that deliver on that need.

There are so many pitfalls in technology spending. I’ve done consulting projects for large banks. What you won’t read about in the Wall Street Journal or the Financial Times is how much money is wasted on technology. Once one department gets permission to spend on a new platform, all the other divisions want it too, out of jealousy. They’re only beginning to realize they’ll go broke if they keep making investments on that basis.

They somehow think if they hire more people who know Python, Ruby on Rails, or JavaScript, their technology concerns will be solved. But the broader question is—whether it’s the Pentagon, a large bank, or a consumer products company—how do they make sure the spending fits into and delivers on strategy?

Q: What are the other key strategic issues facing business leaders?

Roughly from the 1990s to 2015, the name of the game in big companies was to build an efficient cross-border supply chain. Then governments started to see the implications. Global companies have been getting away with murder on the tax front through all kinds of tricks, like booking profits through Ireland. Governments were really upset about that. In the same timeframe, people were looking at the military implications of the U.S. becoming reliant on Chinese telecommunications equipment—for example, 5G, which is an industry sector that Huawei dominated. More recently, we’ve seen antitrust being used against the chip industry, really for national security reasons more than market monopoly reasons.

So, global business leaders, people who knew how to build a cross-border value chain, were suddenly attracting a great deal of regulatory, antitrust, and political interest. They’re being attacked by Republicans and Democrats. Both Donald Trump and many Democrats are extremely negative on Facebook, Apple, and Google. Those companies don’t know what to do. They’re being sued in 15 or 20 countries all the time. They’d like to turn it all over to the legal department, but with the political issues that would be a big mistake because the legal department will treat it as a legal issue.

I’ve been talking to these people; I find their views of this moment naive. The companies have a very narrow view that comes out of electrical engineering, networks, and computer science, which is how they got to where they are. I think that the rise of populism in the United States was in response to the excesses of big business over the past 25 years. Big business is never all that popular in the United States, but its power probably reached an all-time high in recent years.

The power of big businesses is an enormous issue in the European Union. It’s what drove Brexit. Most people think that was a crazy decision, but you can’t win this on a logical basis.

It’s so important for democracies to address these issues. But it’s also important in China. In many ways China models its economy on Japan. Business runs Japan. I can see a scenario where big business supplants the Chinese Communist Party over the next few years.

Business leaders need to recognize the implications arising from populism and an increasingly alienated workforce. If managers pull back and don’t work as hard because they don’t align with the company anymore, it’s going to be very damaging.

Q: Do you see that happening?

At one time GE and IBM were among the most admired companies in the world. People were really proud to work at either one. They were companies with high morale and charisma. That’s an extremely powerful resource, and erosions in that area are quite significant. I do think we’re seeing the erosion in today’s high-morale, charismatic companies—Facebook, Apple, Google, Netflix.

The questions of power, politics, and values are important for companies and countries. Yale SOM is a natural locus for working on understanding this whole raft of fascinating issues.

Q: How far back have these questions interested you?

When I was 12 and 13, my hobby was electronics and ham radio. I’d take the back off a radio or television and switch around the tubes to find out what would happen—I’m lucky I didn’t kill myself. I liked both the technical side of it and the political part of listening to international shortwave broadcasts, where each country puts out its own set of lies about what’s going on.

I also talked to hams overseas. Today, it’s so easy to imagine having a friend in another country that you send emails to. But in that era, it was revolutionary that you could talk to somebody overseas by radio.

Q: Where was this?

I grew up in the suburbs west of Philadelphia. My family was an upper middle-class family partaking of the success that generation had after World War II. It was a very stable and safe environment with lots of opportunities for those who were curious and willing to work. My Baby Boom generation was the first that went to college in such large numbers. We didn’t have the term “first-generation student” because almost everyone was including me.

Q: I imagine going from safe and stable suburban Philadelphia to college in New York in the late ’60s and early ’70s was something of a change.

Yes, there was an upheaval in the United States in the late 1960s and early 1970s, and Columbia was very much on the extreme cutting edge. For me it was energizing and empowering because we forced the United States government out of the Vietnam War, which was a major accomplishment. What I’m saying is controversial in all kinds of ways, but that was my sense of the time.

The other thing for me was that I loved the academic parts of college. I had great teachers. It was exciting. I studied operations research, which uses a lot of statistics and mathematical models to study big, complex systems. I was very fortunate to pick that as a major. Like many decisions when you’re 19, it was somewhat random.

Q: Coming out of college, what did you do?

Well, I had to earn money. It wasn’t hard to get busboy jobs, so I was, briefly, a damn good busboy. But I also had a girlfriend I wanted to marry. To get that life started, I applied for and got a job with a consulting company that did work for the Pentagon and for the military. And, in 1974, Nanette and I were married. Forty-seven years later, we’re still happily married.

Again, there was a fortuitous element; the job opened up a world to me I never knew existed. We were doing extremely interesting projects. I would wake up in the morning eager to get to work.

Q: Eventually you sought out a job at the Hudson Institute.

Herman Kahn, a larger-than-life strategist, left the RAND Corporation to found the Hudson Institute in 1961. It became one of the most prominent and respected think tanks for the era. He had several books. I read him even in high school. I thought he was one of the most interesting people I’d ever come across. In 1971, as I was graduating, the New York Times Magazine ran a long interview with him. I thought, “Geez, I couldn’t imagine getting paid to do what this guy does.”

After about three years at the consulting firm, I sent a résumé to the Hudson Institute. One day the phone rang. Herman Khan was on the line. He said he was at National Airport—could I come over for an interview? I was in Rosslyn, Virginia, near the Pentagon, so I got there in about three minutes. One thing led to another, and he offered me a job.

At first, I did military studies. Herman knew everyone. We looked at U.S. arms control and negotiating strategies for Henry Kissinger. Then we were doing much more sensitive work on nuclear war plans for the Pentagon

Gradually we got into working on global strategies for big, multinational companies. A U.S. steel company wanted to know, should we build a steel mill in South Korea, Thailand, or Indonesia? We would look at the future political and economic environment of these countries as well as industry structure, then work with the company on making decisions.

The best work on scenarios, alternative futures, and environmental scanning was more or less created at the management consulting arm of the Hudson Institute. We would apply these ideas to insurance, accounting, advertising, or state economic development. I gained a lot of practical experience, not just in describing what organizations did but how they actually work.

Q: How did the projects compare to academic work?

In academia, professors usually work either alone or with one or two others who are within the same specialty. We worked horizontally to construct a big picture to inform our judgments of the major scenarios of what could happen. The other difference was that academic work appears in a journal; usually it doesn’t lead to a company building a steel mill in South Korea.

They made a fortune for a decade and a half while they were ahead of the curve. Businesses really had a need for our future studies then. I think they still do. Similar studies now are much too disciplinary specialized.

Some organizations do ask the question, where should we be in two years or three years? But most just go through the theater of strategic planning. It would be more accurate to call it budgetary planning. Most organizations have an administrative headquarters, but they don’t really have a strategic headquarters.

The company that built the steel mill in Korea was looking 20 to 25 years down the road. China today is looking long-term for the obvious reason that people are moving to the coast, and they need the infrastructure to make that possible.

Q: What led you back to academia?

I had always thought I’d eventually return to Columbia for a doctorate in operations research. My wife and I had a new sports car. We realized we’d never seen Yale, so we drove up and parked on Hillhouse Avenue. Lo and behold, the department of administrative sciences, which is what Yale called operations research, was located there. I walked in and got a brochure.

I got my PhD in 1982. Once I had it, I went back to Hudson. A year and a half later, Herman Kahn died. Without Herman, Hudson wasn’t the same. And Yale had an assistant professorship open.

Q: You turned your dissertation into a book, The Command and Control of Nuclear Forces, which got more attention than most academic books.

Yale University Press doesn’t get many front-page reviews in the New York Times Book Review. McGeorge Bundy, who was the national security adviser to Presidents Kennedy and Johnson, reviewed it very favorably.

I knew a lot about how the command and control of nuclear forces worked from Pentagon studies. It was a topic most academics knew nothing about, so I was able to write the first book on the subject. When your first publication has a huge impact, it’s very gratifying.

I later learned it was immediately translated into Hebrew. The Israelis were extremely interested in the subject for obvious reasons.

Q: Another of your books, The Second Nuclear Age, put forward the idea that while during the Cold War the faceoff of two superpowers allowed for comparative stability, the multi-polarity of a world with nine nuclear powers and potentially more to come is dangerously uncertain.

When the book came out in 2012, President Obama had declared that the world should get rid of nuclear weapons. Every academic and think tank in the country tried to climb on to that bandwagon. I made the argument that that’s not going to happen when Israel, India, China, and even France and Britain were accelerating their nuclear weapon programs. It was controversial but quite surprisingly, the military looked at it and agreed. They knew what was going on in Pakistan and North Korea. Now we all know.

I think it contributed to the U.S. waking up to the need to modernize our nuclear forces, which President Obama started in his second term and Presidents Trump and Biden have continued.

I’m in no way pro-nuclear weapons. The mix of multi-polarity and dynamic, powerful technology is really scary. I know people at the Pentagon are quite worried about it. I don’t know why more people are not worried about it.

If five, six, or seven countries start to pursue advanced technologies at the same time that they build up their nuclear forces, it will become clear that it’s an accident-waiting-to-happen world.

Q: These are issues that have showed up in your teaching, too. You taught your Strategy, Technology, and War Course for 20 years.

In 2001, I started teaching a joint-listed SOM and Political Science course looking at the inter-relationship of strategy, technology, and war. Enrollment grew to where it had 300 students.

Most political sciences courses looked at war from a foreign policy point of view. But we’re spending so much money on technology; you just can’t talk about strategy without getting into technology. Technology makes certain strategies feasible.

A lot of veterans took the course and loved it. There were also quite a few students who saw it as a kind of technology bootcamp. “What is facial recognition technology? What is AI? What is cyber security?” It was a way to learn how things really work.

Q: Your teaching always straddled theory and practice.

My courses went over extremely well because they reflect actual practice as well as the theory. Most business school courses are really giant cost-benefit courses, working your way through a decision tree with very little emphasis on opportunity cost. They don’t deal with how to look at the world so you see things that others don’t. There are very few courses on scenarios and alternative futures, but that’s exactly how senior executives in business and the defense department think.

I developed a problem-framing course at Yale SOM around environmental scanning, scenarios, and alternative futures. It really caught on. It put the question to students, are you working on the right problem? Or are you working on a problem that’s less important, even if you’re doing it very well? It was built around the distinction between doing things right and doing the right things.

Q: You’ve used war games as a tool throughout your career. What purpose do they serve?

War games are role-playing simulations of potentially real situations. You don’t use them to predict the future; you use them to ask, “What are the things that we haven’t thought about?” In a simulation of conflict or competition, where your opponents are trying to corner you, people get involved and invested. Scenarios and issues that had never occurred to anyone come up during games.

Militaries have used war games since time immemorial. In the last few decades business has started to use them to play out scenarios that might arise with competitors or regulators. Unlike game theory, which is icy, rational, and mathematical, war games tend to be unpredictable, irrational, and emotional. People get angry. They do things for revenge. Or they’re just in a bad mood. In other words, it’s realistic.

In my first job I started playing war games for the Army. As my career advanced, I continued to use war games to look at questions of policy, politics, and higher-level strategy.

In the early ’80s, I was part of a war game where Secretary of Defense Caspar Weinberger played as himself. At the time, we had to keep it secret because if a story hit the New York Times or the Washington Post that the secretary of defense played war games with nuclear strikes on Moscow, it was potentially destabilizing.

In 1997, Vice-President Gore wanted to know whether the internet made us more or less vulnerable to a terrorist attack on Wall Street. His people asked me to set up a game that brought together people from the relevant organizations. It took about four months to develop the scenarios. There were 75 people, including Vice President Gore, [Representative] Chuck Schumer, and people from the Department of Defense, CIA, the State Department, Treasury, and about a dozen Wall Street firms, including Goldman Sachs, JP Morgan, Merrill, and Citi.

Theoretically, the government could do this internally, but the CIA doesn’t really understand how Wall Street works. And vice versa. Bringing them together creates better insights. Someone from Cantor Fitzgerald was able to arrange for us to use a banquet room on top of the Windows on the World restaurant at the World Trade Center for the three days it took to play out.

Q: What did you learn from that war game?

What we didn’t figure out was the actual attack. We didn’t think of driving an airplane into a building. Four years later, 15 people who played in the game from Cantor Fitzgerald were killed on 9/11.

But one of the conclusions was that it was smart to move data storage away from Manhattan. The Wall Street firms accelerated the movement of data storage to New Jersey and Long Island, where the rent was cheaper and they had offsite backup.

The 9/11 attack occurred on a Tuesday. The stock market reopened the following Monday. One of the reasons was that firms had backup data. Given what happened, it really was extraordinary that the stock market was closed for less than a week.

Q: What are the questions that interest you right now?

I’m writing a book that looks at the impact of advanced technologies like AI, cyber war, drones, hypersonic missiles, and quantum computing on the military. One of the questions I’m examining is what models the Pentagon uses to manage and lead their investments in these areas.

To date, it has been Silicon Valley. In other words, they’re looking to insert a small entrepreneurial startup into the Army, Navy, or DARPA [Defense Advanced Research Projects Agency]. For R&D, Silicon Valley is clearly the better model. But when we’re talking about an R&D project fighting its way into deployment throughout a large organization, companies like Walmart, Amazon, GE, IBM are better models for the Pentagon to look at. How do they do it? How do they succeed? How do they fail?

The transition from R&D to full deployment is a huge issue in the Pentagon, and it’s very different than what Silicon Valley does.