Banning TikTok Will Blow Up in US Politicians’ Faces

Leaving aside the various reasons why Trump would want to ban TikTok, which are almost entirely self serving, we need to take a step back and look at how banning an app from China could negatively impact US companies and if that’s a good thing or a bad thing.

First, TikTok is a short video app that allows people to make both simple and sophisticated videos. Some are edited to present an entire scene others are just short videos of live action. They can be used for political commentary or just for humor. This isn’t the first App like this, Vine was the original TikTok and was widely popular, but Twitter was unable to monetize it, so they shut it down. Instagram has Instagram Live, Facebook has an app like this too.

However, the big difference between those apps and TikTok is that TikTok may have influenced the Tulsa rally and made Tump look back. The OTHER difference is that it’s owned by a Chinese company. There some fears that this means it will be used by China to collect information on American citizens and shared with the Chinese Government to do something back to our citizens. There’s “fear” that TikTok will influence the election in some fashion and will be, ultimately, influenced by the Chinese government.

To be clear, just about every social media company has to share information with their government. There’s currently an ongoing law suit in the EU about US social media companies and if they properly shield EU data. With that ruling, there are serious question if social media companies can send any data back to the US, since the US government routinely gets access to the data. That the US Government is a huge problem when it comes to social media companies.

Given that the US is looking to ban TikTok for something very much like what the EU just ruled that the US is doing, should give lawmakers pause before banning any other country’s social media platforms. If the US does something like this unilaterally, without going through any third party organization, like the WTO, then other countries may take that the opportunity to do the same for any company from a country they don’t like. If it’s good enough for the US, it’s good enough for us!

Furthermore, this flies in the face of the Neo-liberal economic framework the conservative movement in the US purports to support. Rather than government regulation, they should be pushing for Facebook, Twitter, and other platforms, to compete against TikTok and defeat it in the market place. Given that they are instead resorting to regulations, indicates the fact that they are being opportunist here and simply doing this for political reasons. As it is something of a political platform for young people.

Additionally, since there are at least two known cases of Facebook actually influencing elections through external meddling, the US 2016 election and Brexit vote, it is likely that Facebook represents more of a threat to any given government than TikTok. Though, all platforms can be turned into a disinformation platform if enough actors decide it should be turned into a disinformation platform.

It should be viewed as likely that other governments would move to ban US based social media companies and services, like Google and Amazon because of their closeness with the US government. Amazon provides an AWS platform for the CIA and other three letter organizations.

Of course, this might all be moot, because it’s not obvious that the US government can even ban TikTok, as it IS such a huge platform for free speech. Regardless, keep an eye out for other countries taking a lead from the US government after TikTok is banned. It is likely that dictatorships will leap at this chance.

We should not ban TikTok. We should create laws and a framework that requires businesses to strongly protect user data on any social media platform regardless of if it is US based or foreign. We should expect to see more innovation from othe countries over the next few years and that Facebook, Amazon, Google, Twitter, and Microsoft will all experience strong competition.

A Post Crisis, Economic Recovery and Crisis Mitigation Proposal

In my last post, I argued that Supply Chains increased the spread of the COVID-19 Pandemic. I proposed the idea of regional centers for manufacturing to minimize sprawling supply chains and to encourage local innovation to meet different needs based on those regions. I think I need to take this to the next step. Localizing ability to respond to crises. Obviously there are huge benefits to scaling manufacturing capability during times of stability and crisis alike. The cost of making a single N95 mask is much lower whenever you know you’re going to crank out another 100,000 masks over the next few weeks. Because the cost of all that capital equipment is spread across all the masks.

However, because of the centralization of these manufacturing centers, in many cases in China or South East Asia, this creates a supply issue if the entire world needs the exact same thing. This requires a strong central buyer to compete on the market to buy additional supplies. In the US that should be the Federal Government. Sadly, this hasn’t happened and in fact, the President is playing favorites with states and providing medical supplies. This is hugely problematic. However, there’s an opportunity here to protect states in the future from an outbreak and to rebuild the economy.

I propose that states, let’s go with Oregon, cause I live there, creates regional innovation and manufacturing centers (OIMC – Oregon Innovation and Manufacturing Center). These OIMC should be positioned at least one per country, but carefully to ensure that if there’s a critical event, such as a Cascade Subduction Event, the region will have an OIMC on each side of the event. In the Portland Metro Area we’d want one in Easter Portland and one in Beaverton or Hillsboro. Furthermore, these should be located in such a way that if a tsunami hits the coast, an OIMC can double as a shelter and emergency production center.

The goal of the OIMC at the surface would be to manufacture critical items during a crisis. For example an OIMC would have the inventory to build ventilators, N95 masks, disease test kits, materials to stop flooding, fight fires, or whatever major crisis emergency items that might impact that specific region. For example, Roseburg might have more items to fight forest fires than the Portland region, because of the types of crises that impact that region. The list of items should be defined by a combination of FEMA and that state’s emergency and health agency.

However, we can’t just have an OIMC doing this sort of work. There aren’t enough crises (thankfully), to warrant establishing a dozen or more of these locations. That’s why these aren’t just Crisis Manufacturing Centers, these are innovation centers. They become a low cost rental space for businesses to start. For example, you want to open a welding shop but can’t afford the cost of equipment, hiring people, managing books, and the cost of a place to rent? No problem, the OIMC will offer business loans and services to manage HR, your books, sales, and provide a no cost then low cost rental location. You have trouble hiring people with the right skills? No problem the OIMC will offer year round training sessions on a variety of tools. It will have to because it will need to have all the skills to make those critical items.

Wait a minute, won’t the OIMC be competing with other companies? Yes. However, whenever we are not in crisis the OIMC can become flex capacity that companies can rent out until they have the capital they need to expand their business. So, during normal time the State of Oregon is not competing with medical suppliers. They are place that offers services instead. This will allow the OIMC to essentially pay for itself.

Furthermore, these centers offer an opportunity for the region to develop and build technologies they need to support themselves. Given the cost of some farming equipment, the OIMC could elect to manufacture some lower cost farming equipment in really hard hit regions. There are some blueprints at Open Source Ecology which can provide an idea of what we could build, if we need these OIMC to provide a lot of capability during a short time.

Holistically, I think this approach can provide flexible manufacturing capability during a major crisis that will allow states and counties to meet their need when the entire country is stressed at once. It will provide regional support during times of emergencies, which seem to occur more and more frequently, and it can provide an opportunity to rebuild communities by offering skills and spaces to start new businesses. Everyone is going to be hit hard by this pandemic. We need a serious plan for addressing this.

Supply Chains Increase the Likelihood of Pandemics

I think in general the way we respond to this COVID-19 (Coronavirus) pandemic will position us to manage the next pandemic. I know that isn’t something anyone wants to be thinking about as we’re barely into this pandemic. Deaths are rising. We have political leaders making choices around managing the stock market which isn’t the economy. If you want proof of that look at the stock markets response to 3.3 million unemployed in a single week in the US. The Dow Jones Industrial Average increase by 17%.

By having ample supply for treating patients and building strong robust processes we can manage the current pandemic. We can minimize the impact to the overall economy and come back stronger than before. Especially if we make some structural changes that make the direct impact of getting sick survivable. This article isn’t about what those should be.

Instead I’m looking at the forces that increased the likelihood of spreading this disease. Shareholder Value, or more precisely the impact that focusing on shareholder value had on business decisions. Since the Friedman Doctrine was introduced in 1970, we have a steady movement for outsourcing and offshoring. Both of these helped reduce the direct labor costs and environmental regulatory burden on manufacturing companies. It’s helped economies like South Korea, China, Taiwan, portions of Eastern Europe, and most of South East Asia move dramatically from a more agrarian and textile economy – similar to what we see in Africa today – to a modern economy. We can see this through trade, Cesar Hidalgo has dome some amazing research on this and I highly recommend reading his book Why Information Grows, because he outlines some of the reasons why economies mature over time from agrarian to producing semiconductors.

To summarize it, it all starts with trade patterns. You are able to see the knowledge gain in specific sectors in how the trade patterns evolve over time. For example dye making eventually leads into manufacturing pharmaceuticals and other chemical businesses. Eventually this leads to the capability to manufacture semiconductors as all of these use the same sort of fundamental sciences. Hidalgo argues this capability has to mature over time and local expertise must mature. Through the types of items a given country exports we can see how that knowledge is growing and changing over time. Eventually, these countries will create their own businesses to compete with mature companies.

This last part isn’t much of a surprise for anyone that’s read any of the Innovator’s Dilemma books. This is a common practices of dropping “value” functions to lower cost countries and companies from those countries. AsusTEK is an example of this. They started as a supplier to Dell and eventually pushed Dell (for a time) out of a number of markets. In some markets Dell hasn’t been able to reestablish itself and likely never will.

So what does all this have to do with a pandemic? Well as we increase the amount of trade with countries outside of our own region we increase the amount of connections between our country and that country. Those connections must be maintained by people. Since China is a significant trade partner and has manufacturing capability spread out all over the country, it was inevitable that a virus in one part of the country spread quickly through out. In fact the highspeed rail made it incredibly likely. Furthermore, with all the manufacturing in Wuhan, that increase the likelihood of people outside of China coming in contact with the disease.

Since our business leaders have decided to invest so heavily in China, we have something of a weakspot in our supply chain for any future pandemic that starts there. However, for other countries the US or portions of Europe would equally be as likely as source of pandemic source. There’s just a lot of business being done in these countries.

The larger problem will be that because there are zones of high concentration for specific industries in specific countries, that people will be traveling very frequently to those areas. How do we address this, since this is basically what trade is all about.

Well, I think that there’s a solution in the idea of regional production capability. For example, Zara has a lot of regional locations for manufacturing. This can help with supply across both that region and other regions for when there’s a crisis. This minimize the economic impact on Zara as the the crisis moves across the world. Furthermore, this is a good business strategy because regionally disparate countries have different fashion tastes and desires for a given time of the year.

In other cases, the idea of Reverse Innovation can play a key role in this. Reverse innovation is where creating a product that’s profitable in, say, rural India, could be brought back to a place like the United States and sold for an even larger profit. This allows for continually lowering costs, as the product itself would naturally be cheaper, and probably lower total cost of ownership, as the Indians using the equipment may have different skills or tools available and may not be able repair the high tech stuff we can in the US.

An example of where this approach would be highly beneficial to the entire world is with Ventilators. In the US a new one can cost upwards of $25,000, which is obviously out the of the price range of most hospitals in Rural India. If you make on cost effectively in India (which MIT just released plans for a $100 ventilator) you could make it very affordable and would easily allow governments to create stockpiles. It would also allow businesses to quickly tool up and make them, since it looks like they use off the shelf parts.

If business leaders and governments focus on regionalizing supply chains and encouraging reverse innovation, we can work to slow the effects of the next Pandemic. We’d be more positioned to flex supply to meet the increase of demand during the crisis. We’d reduce the amount of travel to potential hotspots, as fewer people would need to travel internationally to meet with suppliers. No more long haul trips to Asia for most people.

In the end, we’d end up creating more share holder value doing this, because we’re meeting customer demand while continually improving products and responsiveness to changes. We will have another pandemic. We will have other market crashes. Planning for them during this one will reduce the impact of the next one.

Disaster Reveals Values

During the past few weeks, we’ve had the unfortunate chance to strip back our society and see our society’s values. We can see the conflicts between what we know we need to do, what people are willing to do, and what people in society expect. As a protective measure many governments have force people to stay home. This creates massive conflicts between what we need to do and what society demands of us. For example, I saw a twitter thread discussing the tension between watching children and working. Our government is expecting that people are 100% homeschooling their children while the kids are at home. However, almost all those people also have to continue working. In the case of one of my friends, both he and his wife have to work while trying to figure out how to entertain their toddler. In the case of the twitter thread, someone responded saying “My boss emailed me to make sure I was working, because they heard my kid on a call.” This represents the values of the people in charge of most of our lives.

Our President represents some of the worst of this. He’s pushing to have $150 Billion slush fund of bailout money for whatever he wants. Given that he plans to bailout Las Vegas, where he has a hotel, we can conclude it’s likely that he’ll bail himself out as much as he can. With the fed lowering rates down to 0% it’s likely going to be helping his bottom line as he is well known to have mountains of debt.

Furthermore, at least 4 US Senators have been identified as selling off stock when they were briefed the scope of the coronavirus, in late January. However, none of them clearly told the public the risks and most of them were publicly support Trump’s position. One of them sold off about $1.5 million in stock and invested in teleconference companies.

On the other hand, Bernie converted his presidential fundraising platform into raising money for people suffering under the coronavirus and raised over $2 Million in just a few days. We should require those US Senators to donate their ill gotten gains to charity and throw them in prison. Millions of people have been impacted by the sharp sell-off of the stock market but our government leaders are profiting off the chaos.

While we’re going through all these changes, we need to seriously look at what we value. What sort of people we want in leadership. How we want companies to manage their employees, how we want companies to manage their profits, especially if it leads them to be vulnerable to shocks to the system. It’s been well reported that airlines have spent 96% of their profits on stock by backs. Over the past three years one airline made more than $50 billion in profits but spent most of it on buy backs. The organization didn’t invest in its people. Didn’t save money to plan for a downturn. Didn’t put itself in a position to survive crisis. Instead, the company is asking for a bailout. Private profits and public loss.

To combat this, we need to ensure that these companies that have had to ask for money more than once (This is the second time in 20 years – 9/11 and all). Large companies should be prevented to buy back stocks. Instead, the companies should use that money to reinvest in their business, keep cash on hand for crises, and to lower prices to increase sales. If one of the draws of your brand is scarcity as a luxury item, like an Apple, then buying companies or investing in other technologies is a very valid use of the money. For airlines, getting rid of fees that your customers hate, is a pretty easy way to lower profits that you clearly don’t know how to responsibly handle.

Overall, we need to decide what values we want enforced coming out of this crisis. We don’t know what’s going to happen or how long this is going to last. The only thing we can really control is who we are and whose values come out on top. Maybe we’ve let the current values reign supreme for too long and we need to have a serious change in how we treat other people.

On the Efficiencies of Business

So, I’ve been going to therapy for a few months now to deal with depression. One of thing that has come up is how I don’t really release a lot of the emotions that I am feeling and one of them is anger. I typically swallow that to stay diplomatic and deal with whatever situation as well as I can. I think that I’ve been stewing about this for a while and mentioning it to my friends periodically. I don’t feel that business leaders respect my career path and don’t understand how to actually make their businesses more efficient.

Excluding the past two years, the majority of my career has been focused on Lean, Six Sigma, or Lean Six Sigma (yes all of them are different in terms of how you approach continuous improvement). I have run projects, developed courses, facilitated strategic planning events for companies like AMD, but the entire time, I never truly felt secure in my role. At Samsung, we had lay-offs and last some employees, at AMD, we definitely lost some and my Director actually decided to be let go to save a number of my coworkers. This is in spite of the fact that our group had saved the company measurably millions of dollars over the 1.5 years I worked at AMD. We were always on the chopping block. Then while working at Cambia (Regence Blue Cross Blue Shield) I was laid off, even though the result of my training program included winning a national Blues award and saved the company a lot of time and money. My team easily paid for itself more than once over while we were there (my team was me and my employee Phil).

As we all know Insurance companies are always raising premiums. The underlying assumption is that these businesses are actually working to continually drive down their financial overhead, but those damn regulations keep getting in the way to drive up cost. This is just flat out wrong. These businesses don’t actually know how to drive improvement in their organizations. The only way they can even imaging improving their business is to hire an organization like McKinsey or BCG which costs millions and gets little to no result. The results they do provide are typically brought about by recommendations internally to the organization that leadership is unwilling to implement unless told about them by an expensive consulting group.

This is problematic because it doesn’t actually change the culture of the organization to drive continual improvement and innovation. As I’ve written in the past Innovation and Improvement are positively correlated. Furthermore, these training classes help expand people’s networks, which also significantly improve innovation as well.

So, first of all, I’m pissed off at corporate leaderships for not understanding the value of continuous improvement. Second, I’m pissed off that it’s just accepted that businesses always figure out ways to be more efficient. This isn’t true. If it was true there wouldn’t be a large number of people in their mid-50’s looking for work after a very successful career in continuous improvement. If these businesses didn’t think that the best way to improve efficiencies was to cut costs and then have someone else do two people’s work, this wouldn’t be a problem.

You can reduce headcount and drive up efficiencies, but only if you provide your people with the right tools and the requires true investment in the business. Although, all continuous improvement efforts pay for themselves if you aren’t just looking at how much a few people cost that are part of the team. You need to weight that against the positive gains they are making for the organization.

I’m pissed off about this because I feel like Michael Bolton from Office Space “I shouldn’t have to change, he’s the one who sucks.” I have had to completely change my career, which I was really passionate about because I don’t trust corporate leaders to try invest and buy in to continuous improvement. Maybe this is short sighted and I just need to find the right company. But I’ve looked I’ve been at a number of them and I’ve heard stories from other people that have been laid off (while i was interviewing for the position Phil filled) for exactly what I’m talking about here. So as a response I’ve tried to protect myself from that by avoiding applying for those jobs.

I loved doing that work because I knew at the end of each day and each project, I made someone’s work life better. Which is awesome. You listen to their problems, which helps them, but then you provide them with the tools to make change and to fix their current situation. When they look at how that aspect of their job is going to work after you finish the project, you can just see how much happier they are. You can see that it allows them to focus on the thing they were hired to do, not deal with some bullshit that was there because it’s always been there.

Businesses need more of this. The culture needs to change from top to bottom. It’s the role of the Lean Manager to change the culture so that people want to do continuous improvement. It’s the role of the business leader to provide the right incentives to do this as well.