Disaster Politics and Operations Research

We are surrounded by politics and no organization is immune from politics.

The definition of the word politics I take from the Merriam-Webster dictionary and it includes:

1. the art or science of government;

2. the total complex of relations between people living in society.

My research group does a lot of work on disaster planning, emergency preparedness, and humanitarian operations with coverage of our most recent study being featured on newswire.com in an article entitled, Team Designs Optimal Supply Chains for Disaster Relief.

With the number of disasters growing as well as the number of people affected by disasters, the question arises as to what role politics play in disasters when it comes to the survival of citizens after disasters strike.

In a fascinating article, Disaster Politics: Why Earthquakes Rock Democracies Less, published in Foreign Affairs, Alistair Smith and Alejandro Quiroz Flores present documentation regarding earthquakes in different countries, the political structure in the countries, and the number of deaths attributed to recent disasters, and write:

In a democracy, leaders must maintain the confidence of large portions of the population in order to stay in power. To do so, they need to protect the people from natural disasters by enforcing building codes and ensuring that bureaucracies are run by competent administrators. When politicians fail to deliver -- by, for example, letting too many die in disasters -- they lose their jobs. On average, 39 percent of democracies experience anti-government protests within any two-year period. The rate almost doubles after a major earthquake (defined as one that results in more than 200 casualties). And whereas 40 percent of democratic nations replace their leader in any two-year period, between 1976 and 2007, 91 percent of them did so following a major earthquake.

The article also highlights the difference in outcomes in countries post disasters: On January 12, 2010, Haiti’s capital, Port-au-Prince, was struck by a 7.0-magnitude earthquake that caused widespread destruction and killed approximately 222,000 people. The next month, Chile was hit by an 8.8-magnitude earthquake -- approximately 500 times stronger than that in Haiti -- but only 500 people died. The difference in losses (both in terms of lives lost and infrastructure destruction, which in the case of Haiti propagates to this day) was attributed to several factors: the difference in the building codes in these two countries and the government response to the earthquakes. The difference is also in the preparation: Chile, Japan, and the United States have implemented policies that keep acts of nature from becoming massive human tragedies, while others have not (and some of the most notable ones of the latter have been non-democratic countries).

I recall when I was at the Rockefeller Foundation's Bellagio Center on Lake Como, Italy, as organizer of the Humanitarian Logistics: Networks for Africa conference, which was "sandwiched" between (obviously, not planned) Cyclone Nargis that hit Myanmar (Burma) and the Sichuan Earthquake that hit China. There were several conferees in attendance who are well-known to the operations research community. While at Bellagio, we were told by Dr. Cosmas Zavazava of the International Telecommunications Union (whose UN-based organization also played an important role in restoring communications in Haiti after the earthquake) the difficulties that ITU had in getting its equipment to where it was needed in Myanmar because of the political situation (and he was in regular communication providing assistance while at the conference, which he deemed so important that he had to attend it).

George Fenton of the World Food Program, another invited conferee, managed to send us his presentation but was en route to Myanmar. The death toll following Cyclone Nargis was 138,000. As highlighted in Disaster Politics: Not only did the military regime do virtually nothing to help the communities worst affected it also blocked the arrival of international aid. The casualties were two orders of magnitude greater than those from Hurricane Katrina, but Myanmar’s military regime remains firmly entrenched.

We have a responsibility to educate and to inform citizens living under different political regimes that their governments must be prepared for disasters and must invest in resilient infrastructure to minimize the potential devastation. We have the knowledge to identify where to build (and how) so as to minimize risk; where to position necessary supplies in case of emergencies so that life-saving products can be delivered in a timely manner to population centers, and how to prioritize. We have the tools and techniques that can identify how organizations can team up during disasters in order to identify potential synergies so that lives are saved through cooperation rather than competition. Equally importantly, we must work to ensure that the actions of humans do not add to the potential devastation whether through climate change or inappropriate and inadequate resource allocation.

A Vision for the Nation Drawn from a Brilliant University Model

My suitcase is packed and I will soon be leaving for Washington DC where I will be speaking on an invited panel tomorrow morning at the Transportation Research Board meeting.

Tonight I will be watching President Obama's State of the Union speech in DC.

There is great anticipation surrounding his speech and newspapers and bloggers are writing about what they believe that the citizens need to hear -- clearly the country is starving for energizing, positive leadership that will coalesce the strengths and work ethic of its people and that will build upon collaboration and creativity. Competitiveness is being highlighted as well but with an entirely different slant.

David Brooks, in his OpEd piece, "A Talent Magnet," in today's New York Times, presents a brilliant analogy between government and a university and gives guidance to the leadership of our country. In his OpEd, he writes: In this century, economic competition between countries is less like the competition between armies or sports teams (with hermetically sealed units bashing or racing against each other). It’s more like the competition between elite universities, who vie for prestige in a networked search for knowledge. It’s less: “We will crush you with our efficiency and might.” It’s more: “We have the best talent and the best values, so if you want to make the most of your own capacities, you’ll come join us.”

The new sort of competition is all about charisma. It’s about gathering talent in one spot (in the information economy, geography matters more than ever because people are most creative when they collaborate face to face). This concentration of talent then attracts more talent, which creates more collaboration, which multiplies everybody’s skills, which attracts more talent and so on.

The nation with the most diverse creative hot spots will dominate the century.

He then argues that the President of our nation is like the President of a University (coincidentally, UMass just named its new President, Dr. Robert L. Caret) and although the President lives in the "big house" it is the professors, the researchers, the tutors, the coaches and the students that are the real guts of a university. They handle the substance of what gets done. The administrators play vital but secondary roles. They build the settings. They raise money. They recruit and do marketing. They help students who are stumbling.

The administrators couldn’t possibly understand or control the work in the physics or history departments. They just try to gather talent, set guidelines and create an atmosphere where brilliance can happen.

This is what outstanding administrators do, I might add, and we certainly need such talented individuals since incompetent, negative ones can seriously damage, impair, and even destroy an organization. Leaders are desperately needed who can create an environment in which talent is nurtured, supported, and in which laudatory efforts and successes are rewarded and recognized (sometimes a public compliment is worth more than a few dollars in one's paycheck and why is it difficult for some managers to do this?!).

So it is with government in an innovation economy. Entrepreneurs, corporate executives, line workers and store managers handle the substance of the economy. Government tries to nurture settings where brilliance can happen.

Yesterday, a female undergraduate student, who is an Operations Management major, came to my office to chat and we spoke for about an hour and a half. She and I concurred that the time just flew by (but she had to go to a class and I had to go teach a class). We spoke about her family, her courses, her major and dreams, and about the course that she took from me last semester. She told me how she is looking at the world in a different way because of my course (Transportation & Logistics). This was such a compliment and I couldn't be prouder of my students -- from the projects that they do to the jobs that they aspire to obtain to the positive role models that they are for the younger students.

The United States, like our universities, will succeed through administration in which collaboration in a supportive environment takes place so that everyone can be appreciated, can thrive, and can achieve one's potential. The output will then exceed the sum of its parts through knowledge creation. (Interestingly, last year, one of my former doctoral students, who is now a Professor, Dr. Patrick Qiang, and I presented a paper on knowledge collaboration networks across disciplines at the SBP 2010 conference, which was published in its Proceedings volume!)

Leading by Incentives

Why do some institutions, corporations, and organizations thrive and succeed while others fail?

How do you make such systems at least as great as the sum of their parts?

These are questions that I have been captivated by and struggling with this past year and two major conferences signaled to me that more research and analytics are needed to identify the right incentives to make organizations succeed.

First, I attended John Birge's OMEGA RHO DISTINGUISHED LECTURE, ORMS and Risk Management Failures: What Are We Doing Wrong? that took place at the INFORMS Annual Meeting in Austin in November.

Second, I was an invited panelist on Financial Networks at the Measuring Systemic Risk Conference hosted by the University of Chicago and the Federal Reserve Bank of Chicago in December that was organized by Andrew Lo of the Sloan School of MIT, Lars Hansen of the University of Chicago, and David Marshall of the Chicago Fed. Joining me on the financial networks panel were: my colleague Mila Getmansky Sherman, Sujit Kapadia of the Bank of England, and Kimmo Soramaki of Financial Network Analyttics. (And John Birge was in the audience.)

As was vividly brought out in these and accompanying presentations and ensuing discussions: events contributing to the global financial crisis and the Gulf of Mexico oil spill appear to represent cataclysmic failures of risk management within some of the most technologically capable organizations. In retrospect, even the most basic analysis should have avoided these disasters and their enduring consequences. Why then did these catastrophes occur and what can be done to prevent such (and other) disasters?

Clearly, these are system issues.

As someone who researches and teaches about network systems, there is a striking difference in the outcomes under user-optimization, when individuals seek to determine their best allocation of resources subject to their own desires and goals, and those under system-optimization, in which the best allocation of resources so as to achieve the system's goals are determined.

In transportation, we know that we can identify the proper policies, in the form of prices, as in the form of tolls, so that when assigned, individuals will behave in a way that is now optimal from a system (or societal) perspective.

When we look back on financial disasters and institutional failures (or underachievement) there is often a misalignment between the stated goals of the organization and those of individuals who work for the organization. So, shadow systems evolve, in which individuals, think stockbrokers, and even professors, maximize their own utility and, as a consequence, the system is driven to states unreflective of its goals.

Indeed, stockbrokers were rewarded/paid for not maximizing either shareholders' wealth or their firm's profits, but rather their own wealth, thus precipitating the financial collapse (and as Paul Krugman said because of malign neglect).

Similarly, faculty at some universities are rewarded through additional financial compensation for teaching online courses over and above their regular teaching loads; in some cases, doubling or tripling their salaries. What then happens to the research output of such faculty?

There are only so many hours in a day and a week and faculty may choose the risk-free option of teaching extra online. The stature of the school then suffers as research declines.

Without the right incentives, or regulatory controls, shadow banks and shadow schools are operating, rewarding those who have the personal and political connections internally, and sacrificing the integrity and sustainability of the system.

As a graduate student who is very observant recently said to me, "Why is the personal becoming professional? Shouldn't professional accomplishments merit the promotions and rewards instead?"

Leaders of corporations and universities must identify the right incentives or face failure.