bhq: american resilience

I S S U E N O . 8

BUSINESS HORIZON QUARTERLY

RESILIENCE IN A RISKY WORLDpg. 4

ONE WORLDTRADE CENTERAND THE RESILIENT SKYLINE

pg. 58

PUBLISHERMARGARET SPELLINGS

EDITOR-IN-CHIEFRICH COOPER

ASSOCIATE EDITORMICHAEL HENDRIX

CONTRIBUTING ROLESANDREA BITELY SENIOR MANAGER, DIGITAL MEDIA

EDUARDO ARABURESEARCHER

RYAN SANTACROSERESEARCHER

BRIAN G. MILLERSENIOR MANAGER, PRODUCTION

DESIGN AND LAYOUT BYADFERO GROUP

A special thanks to the U.S. Chamber of Commerce Foundation and Chamber teams that made this publication possible through their creative contributions and hard work.

Letters to the editor:[email protected]

Copyright © 2013 U.S. CHAMBEROF COMMERCE FOUNDATION

For as long as there has been an America, naysayers have been predicting the end of the American experiment. In the 237 years since the signing of the Declaration of Independence, the United States has stumbled into and climbed out of more than 40 economic depressions and recessions. Each era of economic hardship brought with it claims, both at home and abroad, that the United States was finished. Yet we’re still here. America is nothing if not a resilient nation.

Yet it is not a nation with a guaranteed future.

At the end of the 1787 Constitutional Convention, which created the U.S. Constitution, a woman approached Benjamin Franklin, asking, “Well Doctor, what have we got a republic or a monarchy?” Franklin responded: “A Republic—if you can keep it.”

Franklin’s words caution us that the security and prosperity of the United States is not a given. We’ve endured terrorism, war, recession, and the sting of nature’s wrath. Our democracy, our economy, and our republic need to be tended and grown like a garden, not protected and polished like a statue. America has encountered major hurdles to keeping its republic safe and prosperous. Our brave military service members and their families, in particular, have shouldered a heavy toll on behalf of the United States.

Americans have learned from our experiences and shown unwavering capacity to encounter obstacles, overcome them, and move forward. Whether building the highest skyscraper in North America or fostering job growth for our veterans, government and business leaders are making investments and changes that address fundamental challenges. Some are working to improve education, others business competitiveness and infrastructure improvement. Still more are developing ideas to reduce debt, foster economic growth, and better position America for the 21st century.

There will always be critics who will focus on the myriad challenges facing the United States and forecast a dire future, but we’ve navigated out of treacherous waters before, whether a major economic challenge, an international threat, or political strife.

There are lessons to be learned from the past and much work lies ahead, but our resilient nature hasn’t failed us yet. That is something we, as Americans, would do well to remember. This Republic is ours to keep, and the work of rebuilding and remaking the United States is never finished.

This fall, I will depart from Washington, D.C., and from the U.S. Chamber of Commerce Foundation to take on a new role as president of The George W. Bush Foundation and Institute in Dallas, Texas. I look forward to working again with President and Mrs. Bush to promote education reform, economic growth, global health, human freedom, women’s leadership, and military service to advance freedom and expand opportunities for individuals at home and across the globe. I am gratified that this work is anchored in the very same fundamentals that drive the work of the Chamber: a belief in free enterprise and a knowledge that America’s best days truly are ahead of us.

Sincerely,

Margaret Spellings

A note from the publisher

The Emerging Issues program of

the U.S. Chamber of Commerce

Foundation provides research and

insight into the emerging issues

impacting the free enterprise

system and the business

community. Through its Scholars

& Fellows program, the Business

Horizon Quarterly, the Business

Horizon Series, and other content

platforms and programmatic

offerings, the Foundation seeks to

inform business and government

leaders as well as proactively

drive public debate in

a future-leaning manner.

The views expressed herein are those of the author and do not necessarily state or reflect those of the U.S. Chamber of Commerce Foundation, the U.S. Chamber of Commerce, or its affiliates.

1 | Letter from the Publisher BY MARGARET SPELL INGS

4 | RESILIENCE: 4 | RESILIENCE IN A RISKY WORLD BY TOM RIDGE, FORMER GOVERNOR OF PENNSYLVANIA, FORMER SECRETARY, DEPARTMENT OF HOMELAND SECURITY & HOWARD SCHMIDT, FORMER CYBERSECURITY COORDINATOR, THE WHITE HOUSE, PARTNER, R IDGE SCHMIDT CYBER LLC

10 | CHARGING FORWARD: A MARINE’S JOURNEY FROM HOME TO BATTLEFIELD—AND BACK BY SERGEANT DAKOTA MEYER , USMC CONGRESS IONAL MEDAL OF HONOR REC IP I ENT 16 | THE EVOLUTION OF THE MILITARY SPOUSE BY L AUR A DEMPSEY, D IREC TOR , M I L I TARY SPOUSE EMPLOYMENT PROGR AM, H IR ING OUR HEROES 22 | AMERICA POST 9/11: THE WILL TO OVERCOME BY JOHN RAIDT, SCHOLAR, U.S . CHAMBER OF COMMERCE FOUNDATION; SENIOR FELLOW, ATLANTIC COUNCIL , FORMER 9/11 COMMISSION STAFF MEMBER 28 | LONG LIVE THE RISK TAKERS BY BRET SWANSON, SCHOLAR, U.S . CHAMBER OF COMMERCE FOUNDATION; PRESIDENT, ENTROPY ECONOMICS

32 | LEADING THE WAY IN COMMUNITY RESILIENCE BY WARREN EDWARDS & MICHAEL LESNICK, MERIDIAN INSTITUTE

36 | Infographic: RESILIENCE

38 | SURVIVAL GUIDE FOR THE MILLENNIAL ENTREPRENEUR BY LESL IE BRADSHAW, FELLOW, U.S . CHAMBER OF COMMERCE FOUNDATION; CHIEF OPERATING OFF ICER, GUIDE

ISSUE 8 // BUsiness Horizon Quarterly

1615 H St. NWWashington, DC 20062

TABLE OF CONTENTS

FEATURERESILIENCE

re·sil·iencenoun2. an ability to recover from or adjust easily to misfortune or change

44 | AMERICAN HOUSEHOLDS: AN INSPIRATION FOR POLITICAL CHANGE BY ALEX BRILL , FELLOW, U.S . CHAMBER OF COMMERCE FOUNDATION; RESEARCH FELLOW, AMERICAN ENTERPRISE INST ITUTE (AEI)

52 | THREE WAYS TO ENHANCE AN INNOVATIVE CULTURE BY TAMAR A C ARLE TON, FEL LOW, U. S . CHAMBER OF COMMERCE FOUNDAT ION ; CH IEF E XECUT IVE OFF ICER , INNOVAT ION L E ADERSH IP BOARD, L LC 58 | ONE WORLD TRADE CENTER AND THE RESILIENT SKYLINE BY RICH COOPER, V ICE PRESIDENT OF EMERGING ISSUES & RESEARCH, U.S . CHAMBER OF COMMERCE FOUNDATION; EDITOR- IN-CHIEF, BHQ

64 | Executive Profile: RICHARD WELLS, DOW CHEMICAL COMPANY

66 | What you should know

70 | Scholars and fellows speak!

72 | FINAL WORD BY RICH COOPER

Based on the Merriam-Webster Dictionary, © 2013 Merriam-Webster, Incorporated

[email protected] image of One World Trade Center provided by the Port Authority of New York and New Jersey

4 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // F A L L 2 0 1 2 4 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // F A L L 2 0 1 2

4 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // F A L L 2 0 1 2

BY T OM RIDGE, F ORMER GOVERNOR OF PENNSYLVANIA ,F ORMER SECRETARY, DEPAR TMENT OF HOMEL AND SECURIT Y

& HOWARD SCHMID T, F ORMER CYBERSECURIT Y C OORDIN AT OR, THE WHITE HOUSE, PAR TNER, RIDGE SCHMID T CYBER LL C

RESILIENCE BUsiness Horizon Quarterly

// f e a t u r e a r t i c l e n a m e | 5

C ulture is a popular word in many organizations today. The term is often used by organizations to

define who they are and how they project themselves internally and externally. There are many variations on this theme: a culture of innovation; of customer service; of quality improvement. The list seems endless.

We would argue that in the highly complex, interconnected, interdependent digital world, the most important culture to be realized and pursued is the culture of resiliency.

If the 20th century was aligned with the principles of The Deming Cycle and a culture of quality and continuous improvement, the 21st century demands a new imperative. Today’s market is global, as are its opportunities and vulnerabilities. A company’s interdependencies are greater than ever before, which means that if resiliency is lacking, a company can be quickly overwhelmed by a variety of events.

Resilience doesn’t mean eliminating or avoiding risk. That is simply impossible. It means you create an environment and structure to mitigate damage in a way that the organization not only survives, but also keeps functioning. In our view, there is no one more important to creating and sustaining a resilient enterprise than the CEO and their leadership team.

Frankly, many leaders don’t know how to deal with this, which is understandable. Global connectedness is changing at lightning speed. Recent history makes clear that the 9/11 terrorist attacks and Hurricane Katrina are not the only examples of large-scale catastrophic and disruptive events. Events like Superstorm Sandy, the Boston Marathon bombings, cyber attacks against our defense and energy sectors, and widespread hacks into ATMs around the country remind us that the United States and its economy remains a target for terrorists and criminals. Both physical and cyber threats are trying to destroy our people, institutions, and our way of life. This raises significant concerns for American companies active in the global marketplace.

As part of our company’s work with C-suite clients conducting tabletop exercises, we are seeing a greater understanding of the gravity of poor planning. Some clients come to us because they are proactive, and as part

TRAINING

No one more important to creating and sustaining a resilient enterprise than the CEO and their leadership team.

6 | B U S I N E S S H O R I Z O N Q U A R T E R LY // I S S U E 8


of a comprehensive risk management strategy, they want to include exercises at the most senior levels of their company. Others come to us after a disaster to help fix the gaps exposed by an event.

During exercises, we put the CEO alongside the CFO, the general counsel, the chief security officer,

the chief risk officer, the chief communications officer, and those who run the company business verticals, and present them with a mock crisis. We quickly find out if they’ve ever really discussed the roles, responsibilities, and plan execution should an enterprise-wide crisis occur.

Too often, people in the business verticals think, “Emergency planning is for the security and risk management staff—not for me in my vertical.” There are many organizations that still hold to the belief that “it won’t happen to us.”

They say this despite watching the damage that catastrophic flooding in Thailand had on the global supply chain. Despite watching the cringe-worthy

response by BP to a catastrophic environmental event. Despite expansive geopolitical unrest in regions where corporate leaders are banking their future, such as the African continent. They are willing to gamble that inaction is a risk they’re willing to take or that if something bad occurs, someone else will fix it.

It’s a natural human response. We don’t like to think of ourselves as vulnerable, but we are seeing a shift in that way of thinking—particularly in light of a growing number of threats in cyberspace. For a long time, we understood physical attacks more than we understood the damage or toll of a cyber threat. We saw the virtual world as a vague world. Now, all of that has been flipped on its head.

The Growing Cyber Challenge

This entire country, including our economy, runs on a digital backbone that is under daily and growing assault. We read about denial of service attacks and cyber breaches almost every day—on our financial

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TRAINING

institutions, the alphabet agencies of our military and intelligence organizations, and our media outlets. The cyber assaults have come from nation states, lone wolf hackers and organized crime. They are getting more sophisticated, even now aiming for our infrastructure and defense systems.

The threat expands when we consider the interdependencies of a globally connected world. The largest global hubs for transnational data flow are within the United States, Western Europe, Japan, and coastal China. Consider the effects of cyber attacks on off-shoring and supply chains in those hubs or multiple hubs—on financial, transportation, and energy systems in a world where just about everything moves with electrons.

Cyber attacks are illuminating everything. They are demonstrating to many companies how they are not prepared to deal with a range of threats in real time, and not just cyber threats. They are showing how unprepared both

government and the private sector remain to deal with cyber attacks—particularly in a coordinated way that supports national resiliency. They are also showing what’s getting in their own way.

If you have to move at lightning speed in the midst of a disruption, will you discover that your

legal and procurement processes aren’t aligned with resiliency operations? In other words, if a typhoon in Asia has brought your supply chain to a screeching halt, will it be days and weeks before your lawyers and procurement folks can be aligned to secure the appropriate response and restoration services you need to stop the bleeding? If so, your culture of resilience has just bottomed out.

What we’re finding is that more and more companies are realizing that cyber attacks have a real—not virtual—impact on the bottom line. They are learning that with all threats to the enterprise, resiliency is an investment, not an expense.

8 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // F A L L 2 0 1 2 8 | B U S I N E S S H O R I Z O N Q U A R T E R LY // I S S U E 8

Some are also learning that after an attack, it would have been easier to invest in assessment and planning on the front end, rather than far-costlier remediation following an attack. Good risk management is pre-emptive. In the long run, the return on risk resiliency is high.

Resilience through Collaboration

In times of crisis, it’s important to remember that we improve our chances of recovery if government and industry work together. We’ve certainly seen during natural disasters that the private sector is often better equipped to bring in supplies quickly and distribute them efficiently. We can build in public-private sector resiliency. It can minimize the consequences in the short term and mitigate the prospect of disruption in the long term.

The same is true for cybersecurity. In order for the government to effectively deal with the country’s digital concerns, it must deal with an infrastructure that is primarily owned by private sector companies and shareholders.

There is no reason why there cannot and should not be the closest possible collaboration in this area. Unfortunately, many in government believe that the best way to work with the private sector is through regulation. There is something that too many in Congress don’t get—that the threats we face in the cyber world, even in the physical world, move faster than they can legislate and regulate. More importantly, mere compliance does not equal security.

Our frustration with this is particularly palpable when we look at the legislative debate on cybersecurity. Everyone agrees that information sharing is key, but we have become our own worst enemy. An information-sharing agreement falls short if it doesn’t have the

liability protections in place so that you can share that information without fear of giving away proprietary information.

In our view, we have to ensure that industry has a seat at the table. This means everything from loaned executives; collaboration on policies, including the private sector in regional planning and exercises; and security clearances for private sector personnel. We have had pockets of success in these areas, but we have not yet realized a national culture of resiliency. Again, regulating or mandating the private sector will not work.

We also believe that government needs to be blunt with the private sector about the consequences of inaction. That goes back to what we discussed earlier—understanding what’s at stake before a crisis occurs.

The path to resiliency in a risk-based world is not a smooth one. It can be complex. Threats continue to evolve, meaning the way we must confront them will change. Corporate resiliency will be transformational in the 21st century because threats are more complex, and we are more globally interconnected than ever before.


Good risk management is pre-emptive. In the long run, the return on risk resiliency is high.


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TRAINING

Some companies will recognize the value of resiliency and thrive. Others will fall behind or by the wayside when the catastrophic storm, terrorist incident, or cyber attack wipes out tight margins in this age of austerity and efficiency. Overall, we only need to look at events like the Boston bombings, Katrina, 9/11, Superstorm Sandy, the Oklahoma City tornadoes, and even the financial crisis to know that Americans are resilient in spirit. It’s in our nature!

A culture of resilience mirrors our spirit of resilience. We have learned from past events. Now our challenge is to continue to take those lessons learned and make sure we convert them to lessons applied. We’re confident that within our country and companies, we will do just that. n

The Honorable Tom Ridge is Chair of the U.S. Chamber’s National Security Task Force and the president and CEO of Ridge Global, leading a team of international experts that help businesses and governments address a range of needs throughout their organizations. He also serves as a partner at Ridge Schmidt

Cyber, a cybersecurity firm, founded with former White House Cybersecurity Advisor Howard A. Schmidt. Following the tragic events of September 11, 2001, Ridge became the first assistant to the President for Homeland Security and, on January 24, 2003, became the first secretary of the U.S. Department of Homeland

Security. Previously, Ridge served as Pennsylvania’s 43rd governor from 1995 to 2001. Ridge attended Harvard University on a scholarship and graduated with honors in 1967. After his first year at The Dickinson School of Law, he was drafted into the U.S. Army, where he served as an infantry staff sergeant in Vietnam, earning the Bronze Star for Valor. After returning to Pennsylvania, he earned his law degree and was in private practice before becoming assistant district attorney in Erie County. He was subsequently elected to Congress in 1982.

Howard Schmidt serves as a partner in the strategic advisory firm, Ridge Schmidt Cyber, as well as executive director of The Software Assurance Forum for Excellence in Code (SAFECode). He previously worked as special assistant to the president and the cybersecurity coordinator for the federal government. Schmidt

has held various leadership roles at the Information Security Forum, eBay, and Microsoft. He also served as chief security strategist for the US-CERT Partners Program for the Department of Homeland Security. Schmidt has over 26 years of military service, and holds a bachelor’s degree in business administration and a master’s degree in organizational management from the University of Phoenix. He also holds an Honorary Doctorate degree in Humane Letters.

We only need to look at events like the Boston bombings, Katrina, 9/11, Superstorm Sandy, the Oklahoma City tornadoes, and even the financial crisis to know that Americans are resilient in spirit.



A MARINE’S JOURNEY FROM HOMETO THE BATTLEFIELD—AND BACK


BY SERGEANT DAKOTA MEYER, USMCCONGRESSIONAL MEDAL OF HONOR RECIPIENT

W hen I joined the Marines at 17 years old, I thought I knew

exactly what I was signing up for. Like many of our men and women in uniform, I was looking for an adventure outside of the small Kentucky town that I’d grown up in. Now, after deploying to combat zones, receiving the Medal of Honor for my actions in Afghanistan, and traveling the world, those early days almost seem like a lifetime ago. Still, I remember getting on the bus in Kentucky that would take me to the Marine Corps Recruit Depot in South Carolina and thinking that a fourteen-hour bus ride would be tough. I quickly learned when I reached Parris Island that tough takes on a whole new meaning at boot camp. I’ll never forget when the bus crossed the swamp to the island and I got my first taste of the drill instructors.

“Put your head between your legs! Don’t move or blink!”

“Outside! Keep your mouths shut!”

And so began three of the most difficult months I’d experienced in the first 18 years of my life. From the beginning, boot camp aims to strip you of everything you are and everything you think you know. And man, I thought I knew a lot.

I came from the farmlands of central

Kentucky where I had taken down my first eight-point buck at eight years old. By the time I enlisted I had a decent working knowledge of numerous firearms and hunting and that had made me confident in my ability to strike a target. I started to get the hint when the Marine recruiter at my high school was less than impressed with my so-called “experience,” but my boot camp drill instructors really drove it home.

The point of boot camp, however, is to take away your overly-inflated ego and replace it with a more flexible mental toughness. You are never going to know everything, but you should be able to handle anything. What the drill instructors at Parris Island were really doing was preparing us to lead the difficult lives we had volunteered for. There is nothing easy about raising your right hand and swearing to dedicate your life to the military, especially in a time of war. The resiliency training in boot camp is as essential to doing your duty as any tactical course or physical fitness preparation. Still, when I left boot camp, I could never have imagined the direction my life would go.

After two years of training as an infantryman and later as a sniper, I began a series of deployments that

VETERAN EMPLOYMENT


would stretch me and several others to the breaking point. There were some days when we would engage the enemy and all we had was our training and each other. There were other days that would pass without incident and yet I was constantly on alert, eyes scanning ridges and valleys for any signs of danger. Situations could turn ugly in an instant. Then on September 8, 2009, the unthinkable happened and I lost four of my brothers.

The struggle to cope with that loss remains a challenge to this day, but it is not unique to me. When I returned home, I faced the same struggle with readjustment that several veterans face. I was lucky to have a home and the strong Kentucky community to go back to, but I had a hard time getting excited about football and holidays when my mind was stuck on one day in the past, thousands of miles from America.

When President Obama called me in 2011 and told me that I was being awarded the Medal of Honor for my actions on that day, I told him I didn’t want it. That day had been the worst of my life. I truly felt like I didn’t deserve the military’s highest award for valor for a mission I thought was a failure.

When I told the president this, I’ll never forget his

response. He said, “It’s bigger than you, Dakota.”

He was right. I had a choice to make: I could remain in that negative place, or I could take charge and do something positive. I decided that I had to do something to honor the memories of the men and women that hadn’t made it home. I will never fully

understand why my life was spared time and again during my deployments, but from that moment on, I was going to make sure it wasn’t all for nothing.

After I received the Medal of Honor, for better or for worse, I was placed under a spotlight. Redirecting that spotlight to help other people was how I chose to honor my brothers. I set out on a new mission to help my fellow veterans make that same difficult transition that I had made from a service member to a civilian.

Back in 2011, post-9/11 veterans were facing an unemployment rate greater than 12%. For guys like me

who were under the age of 25, that rate was closer to 30%. One of the toughest challenges a service member will ever experience is the transition process back to the civilian world. For years after I came back, I faced that same struggle. I had no idea what I was going to do next and in the back of my mind I wondered, “What employer out there is going to be looking for a sniper?”


I LOVED SERVING MY COUNTRY

AS A MARINE SNIPER, BUT I CAME

TO REALIZE THAT THIS WAS NOT

THE ONLY THING I DID IN THE

MILITARY. I ALSO SUPPORTED

AND LED TEAMS, MANAGED

HIGH-VALUE EQUIPMENT,

RECEIVED WORLD-CLASS

TECHNICAL AND MEDICAL

TRAINING, AND OBTAINED

COUNTLESS OTHER SKILLS THAT

WOULD CATCH THE ATTENTION

OF SEVERAL HR MANAGERS.

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VETERAN EMPLOYMENT

AFTER I RECEIVED THE MEDAL OF HONOR, FOR BETTER OR FOR WORSE, I WAS PLACED UNDER A SPOTLIGHT. REDIRECTING THAT SPOTLIGHT TO HELP OTHER PEOPLE WAS HOW I CHOSE TO HONOR MY BROTHERS.


I loved serving my country as a Marine sniper, but I came to realize that this was not the only thing I did in the military. I also supported and led teams, managed high-value equipment, received world-class technical and medical training, and obtained countless other skills that would catch the attention of several HR managers. Eventually, a few employers took notice and I ended up finding work in construction and later in defense contracting. It turns out the skills from my military background were highly transferable. I just needed to be able to translate them from technical military language into something a civilian recruiter could understand. In essence, I needed to learn how to effectively communicate my value and market myself to an employer–I needed to create my personal brand.

When I was presented with the opportunity to work with Toyota and the U.S. Chamber of Commerce

Foundation’s Hiring Our Heroes program, I knew that this was something I had to be involved in. Hiring Our Heroes hosts hundreds of job fairs a year exclusively for veterans and military spouses, and so far they have helped over 18,400 people get jobs. It didn’t take me long to see that this program had a potentially winning formula. However, as I began attending the fairs and taking a look at some of the résumé being presented, I could see that other veterans were having the same problem I had experienced with branding myself. In a tough economy, employers are looking for that “x factor”–that unique bit of background that can be the difference between your resume ending up in an employer’s hands or in the trash. Military service can be that “x factor” but you need to know how to properly communicate it to a civilian employer.

Less than 8% of Americans can point to military service on their resumes, yet some of the men and women I met


Sgt. Dakota Meyer with Veterans Affairs Secretary, Eric Shinseki

VETERAN EMPLOYMENT

merely added a line with their military occupational specialty (MOS) and maybe a couple of sentences about the technical aspects of their roles. A lot of them didn’t mention that they were in the top 5% of their class in a world-class military course or that they had been responsible for coordinating and executing the transfer of millions of dollars in personnel and equipment across oceans.

I began to make it a point to tell my story to the veterans I met at these fairs so that they could then turn around and tell theirs to employers, both in person and on paper. Helping veterans tell their story was exactly what we had in mind when Hiring Our Heroes, Toyota, and I launched the Personal Branding Resume Engine, an online tool that takes the entirety of a service member’s military career and turns it into an attractive and effective civilian resume and 90-second elevator pitch. A stable job can make a world of difference in the life of a veteran and for his or her family. Being a part of the effort to get these veterans hired has made a world of difference to me.

In addition to my work with Hiring Our Heroes and Toyota on the Personal Branding Initiative, I decided to start my own business–DTM Construction Inc. One of my goals with creating this construction business is to hire veterans. As owners of businesses large and small, we all have a responsibility to give veterans a fair shot at

employment. And I know firsthand that when you hire a veteran, you will not be disappointed.

From boot camp to the White House, I feel like I’ve met every type of person. A good friend of mine and fellow combat veteran, Bing West, said it best: “Under fire, some men put their faces in the dirt, most shoot back, and a very few charge forward.” Our nation’s veterans are under fire, trying to scrape out a new life in an unfamiliar environment in a difficult economy. Yet, every day I see them showing up and making a decision to charge forward. This is the kind of resilience we need in our businesses and schools and government. Charge forward with us, and let’s change the story for these veterans and for our country. n

Sgt. Dakota Meyer was born and raised in

Columbia, Kentucky and enlisted in the United

States Marine Corps in 2006. A school-trained

sniper and highly skilled Marine infantryman,

Sgt. Meyer deployed to Iraq in 2007 for

Operation Iraqi Freedom, and to Afghanistan

for Operation Enduring Freedom during 2009–10. In 2011, he was

awarded the U.S. Congressional Medal of Honor, the highest

military decoration awarded by the United States government, for

his service in the Battle of Ganjgal.

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I HAD A CHOICE TO MAKE: I COULD REMAIN IN THAT NEGATIVE PLACE, OR I COULD TAKE

CHARGE AND DO SOMETHING POSITIVE. I DECIDED THAT I HAD TO DO SOMETHING TO

HONOR THE MEMORIES OF THE MEN AND WOMEN THAT HADN’T MADE IT HOME.




L A U R A D E M P S E Y, D I R E C T O R , M I L I T A R Y S P O U S E E M P L O Y M E N T P R O G R A M , H I R I N G O U R H E R O E S


At first blush it seems fitting that military spouses should be included in an issue focused on resilience.

The military has spent countless hours and dollars studying and trying to improve the resilience of military families. The government and nonprofits have touted the resilience of our families in a time of protracted war. Nevertheless, this focus on resilience is misplaced.

After 10 years at war, military spouse resilience is an oxymoron.

Resilience is the ability of an object to return to its original shape after a protracted period of stress or compression. Perhaps this was an appropriate way to think about military families after World War II or Vietnam, when service members left, came home, and returned to their communities. This is not the current state of play. Yet with the changes that have happened in our military families, they are uniquely situated to help our country’s resilience as the economy recovers from over a decade of war.

Changing State of Military Families

One percent of the U.S. population has carried 100% of the burden of war for 10 years. The average military family has been separated by deployment for between two to three years over the last decade, often with little or no advance

notice. For operational branches like infantry and armor units, those years nearly double. This is in addition to an average of four to five permanent moves that each of these families endure during that same period of time.

I’m an Army wife of 15 years myself. In those years my husband, our children, and I have moved 9 times. The most

notice I’ve ever had about where

and when we were going to move is around eight weeks. As

a result of these moves, I’ve taken

and passed four state bar exams in the first

six years of our marriage just to try to sustain my career

as an attorney as my husband, an infantry officer, moved around

the country and left for various training missions. We’ve now endured three deployments, with the latest wrapping up around the time this article will be published.

This cycle of repeated deployment and reintegration on top of the usual mobile military lifestyle has never happened before. It’s easy to see why there is no return to normal for our community.

Evidence bears this out. America’s military families have suffered higher rates of divorce, suicide, child neglect, and DUIs. More families are starting to seek mental health services. Meanwhile, military spouse unemployment is at a stagnant 26%.

MILITARY SPOUSE

of the

U.S. population

has carried 100% of the burden of

war for 10 years. 1%


Even in families that are relatively stable, the effects of the last 10 years are more than visible. Traditionally military spouses left their jobs to follow their service member across state and even international boundaries. Spouses were also expected, but not obligated, to donate hours of volunteer time to help fellow young military families. Over the decades, this culture became ingrained, and spouses frequently abandoned their career aspirations to support their communities.

A New Kind of Spouse

This culture has begun to unwind. Many younger families now move back to their hometowns during deployments, and spouses who stay near the military installation become more independent, adding more volunteer hours off the installation and finding work to keep themselves busy and the family more financially stable.

More military spouses today are also working than ever before. As this happens, a growing number of families are choosing “voluntary separation” to preserve both spouses’ careers. As families become accustomed to living apart, spouses choose to stay in one place while

their service member takes on a new assignment. The effects of these voluntary separations are unknown, but inevitably they will be profound.

In short, the effects of these wars are permanent. There is no return to the culture as it once was. Individual lives have been changed forever. There is no such thing as resilience in our modern military families.

This is not, however, necessarily bad news. The sea change in military culture has put military spouses in an even better position to help our returning veterans contribute to the recovering economy. America’s resilience will depend on, and ultimately benefit from, all members of our military families.

According to the Department of Defense, more than One million service members will be leaving the military over the next five years. There is a national sense of urgency to employ these veterans and prevent them from slipping into financial crisis. While their bravery is unquestioned, many have spent their careers focused on the mission and not on how to market themselves in the economy after they leave. Unemployment is a real possibility, but the outlook


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MILITARY SPOUSE

for more than 50% of those who are married can be greatly improved if their spouses have stable careers.

In theory, most military spouses should have stable careers. They are some of the most employable, desirable job candidates our country has to offer.

High mobility, constant unplanned relocation, and an inability to make long-term plans (and sometimes even short-term ones) force military families to develop certain skill sets. Military spouses have always been an independent, social, and highly adaptable group. While our lifestyle makes earning a degree a challenge, more than 85% have a college degree or are working on one. We constantly seek out other military spouses

for networking and friendship and use social media at a much higher rate than the general population. At least one-third of military spouses have considered starting or have attempted to start their own business. Moreover, according to the Blue Star Families Military Families Lifestyle Survey, we volunteer at a rate more than three times the national average, often taking leadership roles in both military and community institutions.

These characteristics and trends should sound familiar. They have been used to describe the ‘Greatest Generation’ of veterans for years. The American dream has practically become synonymous with World War II veterans returning from war and building their


communities, and the country, to greatness. The current narrative surrounding our new generation of veterans frequently borrows from this theme—and it should. Our returning veterans are extremely skilled and seasoned for their age and are more than eager to continue to contribute to society.

While they have been on various deployments, their spouses have been living that narrative for the last 10 years. Even as transient members of their communities, they have become some of the most active and generous contributors to both military and civilian society. They too are eager to turn their experiences into a satisfying life for themselves and their families. The impact on our economy is profound and largely unconsidered. With the end of this conflict, America can essentially get a new generation of talent, times two.

If we take advantage of the incredible talent and drive of all of our military family members, our country’s resilience from the wars will increase exponentially.

The Way Forward

At the U.S. Chamber of Commerce Foundation’s Hiring Our Heroes, our military spouse program is poised to help the business community do just that. Conceived, designed, and run by military spouses,

the program helps spouses overcome the challenges their highly

mobile and chaotic lives pose so that they can become more productive members of their communities.

We are partnering with the U.S. Chamber of Commerce’s membership to identify real leaders in military spouse employment.

These are companies, large

and small, that know the value, skill, and talent

that reside as the family partners of our service members.

The companies on our Military Spouse Employment Advisory Council—such as La

Quinta, USAA, and Capital One—understand the assets they have in their military spouse employees. They are also coming up with innovative ways to identify, track, and hire more spouses. Our purpose is to improve these experiences and share them with the entire business community, under the leadership of the Council and our coalition of the


Real resilience comes from not just

surviving challenges, but pushing through

and letting those

challenges shape

future experiences

in a positive way.

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MILITARY SPOUSE

top military spouse nonprofits in the country, the Military Spouse Business Alliance.

Real resilience comes from not just surviving challenges, but pushing through and letting those challenges shape future experiences in a positive way. Our military spouses may not ever be the same, but that’s not necessarily a bad thing. We are more uniquely qualified than ever to help the country and the economy surge forward to a place we have not seen.

We are a vital part of the new greatest generation and we too can and will make a difference for the better. n

Laura Dempsey is director of the Military

Spouse Employment Program for the Hiring

Our Heroes Program at the U.S. Chamber

of Commerce. Since joining the Chamber,

Dempsey created and now chairs the Military

Spouse Business Alliance, a coalition of

the top 10 nonprofit subject matter experts in military spouse

employment. In addition to her role at the Chamber, Dempsey

is co-founder and chairman of Blue Star Families, a national

nonprofit network by and for military families. She also serves

as a partner in an emeritus capacity at The Marsh Law Firm, pllc

located in White Plains, New York.

22 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // F A L L 2 0 1 2 22 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // I S S U E 8

On May 9th, 2007, President George W. Bush issued National Security Presidential Directive 51. The order provided for “continuity of government” and for the country’s “effective response to and recovery from a national emergency.” It was a call to national “resilience.”

The directive recognized the reality that the Cold War’s end had ushered in a different and far more complex security environment—one featuring an expanding array of asymmetric threats, when crisis can arise with little warning and devastating effect. This reality hit home in 2001 when al Qaeda terrorists hijacked four commercial jumbo jets to attack strategically selected targets in New York City and Washington, D.C.

The nation was shocked, civil society was shaken, and the economy reeled from the assault; but as we have done throughout our history, America rallied. In keeping with our fundamental character we got back on our feet to carry on the work of freedom and in so doing deprived our adversaries of their strategic aim—which was not only to kill Americans but to inflict permanent damage on the American system and trigger national retreat.

The attack roused deep within America’s nature a source of strength we have always called upon in times of crisis: the will to overcome. This celebration of the human spirit was personified by a very special colleague with whom I served on the 9/11


B Y J O H N R A I D T

SECURITY

Commission staff. Then a young Navy Lieutenant, he was serving in the Pentagon’s Naval Operations when on the morning of September 11, 2001, American Airlines Flight 77 crashed through its walls. He suffered severe injuries. The attending EMTs lost his heartbeat several times, but he survived and recovered, and today he flourishes. He fortified us then, as he does now, by his inspirational example and with the constant exhortation: “Never Forget.”

Those words are among 9/11’s most poignant legacies. They continue to inspire the nation to remember faithfully our fallen and to honor the heroism demonstrated that day and in its aftermath. Yet the words also serve as a warning to heed the compelling lessons of this seminal chapter in our nation’s history. They yield critical insights into the nature of risk and the dynamics of resilience in the 21st century—revelations germane to preserving the well-being of our communal, business, familial, and personal systems in a complex and hazardous world. Protecting America’s national security in this way means transforming “Never Forget” into “Never Again.”

Grasping not just how the events unfolded that day and the nature of our ill-preparedness but garnering lessons learned was among the 9/11 Commission’s primary charges.

As one of the Commission’s staffers, my colleagues and I were asked to examine the facts and analyze the policy and executional flaws responsible for the many failings in evidence. The scope of the investigation underscored the complex and multi-faceted nature of risk today with elements of the commission looking at our intelligence, the national aviation security system, the national air defense system, and our emergency response capability. This required asking tough questions of what decision makers and operators did and why—retrospective

questions that are far easier to ask “what shall we do” but essential to carry away lessons learned. The Commission was asked to consider the latter question and provide its final recommendations. What we learned about ourselves prior to 9/11 was still in evidence afterward. Neither the public nor private sectors were ready for the tough, brutal reality of the post-9/11 world. Getting ready would require some tough analysis and action.

risk in the 21st centuryTo begin we needed to adjust our perception of risk. As the events of 9/11 demonstrated, risk in the 21st century is far more dynamic and variable than in the bi-polar context of the Cold War. Threats emerge more swiftly and manifest themselves more unpredictably. Small groups of people, even individuals, now have access to a growing range of tools and wider opportunity to inflict monumental damage. It was at first shocking, but eventually paradigm-shifting that such a small group of people could plan and execute so destructive an attack with such far reaching effects.

America has always been a bulwark against the haters, fanatics, and would-be dictators who conspire to impede human advancement. We know and love the value of freedom. We understand that mankind reaps tremendous rewards from the interconnectivity, freedom, transparency, and cooperation that are the moorings of today’s trade-based global economy.

Our times feature marvelous, life-changing architecture such as a worldwide transportation system, universal ICT and mobile telephone networks, fertile shared cyberspace, borderless economic engagement, and expansive new economic, social, and political interactions and interdependencies. These systems have improved the lives of millions and yielded wondrous results. Each is an essential



cog in the global economic system that is vital to America’s interests and mankind’s prospects for peace and prosperity.

Yet these transformational benefits come with bigger risks that can spread more quickly and are harder to identify and anticipate. 9/11 made clear that the fundamental openness and accessibility of our society and its systems—an interconnectedness that is expanding with economic and social globalization—is also an enormous vulnerability. The commission was chartered to explore these vulnerabilities, understand how the plot was developed and executed, and investigate why we were so ill-prepared to defend the homeland.

While we have made significant improvements in our homeland defenses and resilience in the past decade, the challenges are dynamic and many of the lessons of 9/11 still go unheeded. Malefactors still seek to exploit open transportation networks to commit atrocity. Human pathogens can spread swiftly across borders threatening millions of people. Malicious code is deployed at the speed of light to attack our critical systems from infinite points around the globe.

Moreover, increasing international economic competition can beget new commercial and competitive threats. Poor decisions made in distant board rooms, union halls, financial institutions, legislative chambers, and governmental bureaucracies can imperil our savings, our job, and our enterprise. Insecurity in remote parts of the world can disrupt global supply chains and grind operations to a halt imperiling the health of our economy. Our systems, though miracles of human ingenuity and strength, can also be exceedingly fragile.

Indeed, risks abound and as 9/11 demonstrated, modern threats are more random and unpredictable than ever.

risk assessmentA long-held security risk-assessment formula in vogue prior to 9/11 illustrates the point that times have changed. Two seemingly rational and elegant equations were intended to identify where to place our homeland security attention and direct limited resources for protecting ourselves; these were “intent plus capability equals threat” and its companion “threat plus vulnerability equals risk.”

When I first came across this calculus during the commission’s investigation, it seemed rational. Yet when matching it up against the attacks and the posture of our nation’s intelligence, aviation security, and national air defense systems that day, it was clearly a dated and deficient formula.

The primary flaw in this equation was that the identification of a threat depended on perfect knowledge of others’ intentions and abilities, something no person, business, or country in the world has, even when it possesses the finest intelligence system. Perhaps 9/11 was, at least in part, a failure of intelligence, but expectations of advanced warning whether by government or business is unrealistic in a fast-paced, multi-polar world featuring a wider array of actors and malefactors. When we excessively depend on foreknowledge, we do so at our own peril.

Others have observed that 9/11 was also a failure of “imagination.” The fact is that elements of our intelligence community had indeed imagined that people could use commercial aircraft as weapons of mass destruction on strategic targets. We simply did not believe that such an attack would occur. First, we had

WHEN WE EXCESSIVELY DEPEND ON FOREKNOWLEDGE, WE DO SO AT OUR OWN PERIL.

OLD WAYS OF EVALUATING RISK ARE NO LONGER RELEVANT.

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no intelligence that such an attack was in the offing and, second, such an attack had not occurred in just that way before. Such a “tombstone” approach to security was, as it remains—a recipe for fighting previous battles rather than preparing for those to come. It ensures that leaders are one step behind when the key to managing risk in a complex, dynamic environment is staying one step ahead.

We can’t begin to comprehend our true vulnerabilities if we assess ourselves only in terms of threats about which we are forewarned or those we determine that adversaries have in mind, rather than taking into consideration the full spectrum of imaginable threat. I’m not sure either our public or private sector has adopted this new and necessary approach.

Another major flaw in the formula became clear. It didn’t properly account for “consequences.” It brooked little consideration for guarding against a highly consequential attack in the absence of actionable intelligence or a preceding event. The lives lost, ensuing economic damage, and our subsequent involvement in two wars amply testify as to the cost and consequence of demanding precedent in order to take preventative action against the imaginable, feasible, and disastrous.

Prior to 9/11 we had not endeavored to fully consider every conceivable way that adversaries could attack our civil aviation system. We had not measured the consequences of a successful attack across the spectrum of possibilities. Nor had we honestly assessed the efficacy of our countermeasures against the feasible. Had we done so, perhaps we would have erroneously concluded that existing measures were sufficient or that the cost and unintended consequences of taking preventative steps to stop people from hijacking a commercial aircraft and using it as a weapon of mass destruction would not justify action.

Still we never had in place the procedures and framework necessary to make such a calculus–one that would

enable to us to account for the full range of possibilities and rationally decide what requirements were in order. Therein is the cautionary tale for today—to ensure we have in place the processes to assess disruptive risks that are imaginable not just imminent, evident, or probable; and to measure them against systemic vulnerability and the consequences should they manifest themselves.

Without disciplined approaches for identifying and assessing risk then government, businesses, and communities can’t hope to achieve the “resilience” necessary to survive and thrive in today’s extremely hazardous environment and competitive economy.

resilienceThe events of 9/11 and other natural disasters teach us that “resilience” is not defined merely by the quality of a response when disruption or disaster strikes. Rather, “resilience” is a proactive cycle of preparedness with a set of mutually reinforcing processes.

It begins with the prevention of emergencies by proactively deterring hazard and establishing proper defenses as far

WHEN WE EXCESSIVELY DEPEND ON FOREKNOWLEDGE, WE DO SO AT OUR OWN PERIL.

“RESILIENCE” IS A PROACTIVE CYCLE OF PREPAREDNESS WITH A SET OF MUTUALLY REINFORCING PROCESSES.


from the core of operations as possible—an imperative requiring effective early warning mechanisms. Two, it encompasses the mitigation and containment of damage and cascading ill-effects from the onset of a problem through resolution. Three, it includes fostering the ability to maintain continuity of operations and to recover swiftly and fully. Finally, it demands constantly capturing lessons learned and feeding them back into the system in a virtuous cycle of continuous improvement. Here again we ask ourselves the tough question, the answer to which is dubious. Are we applying the lessons of 9/11 to dynamic threats materializing before us such as cyberattack, bioattack, commercial espionage, state capitalism, the conditions which foster radicalism, and so forth.

Successfully performing each duty in the cycle requires checking the box on a set of common fundamentals. Obvious though they might be, they were lacking in the lead-up to the 9/11 attacks and its uncertain how well we have fully incorporated lessons learned across society:

systemic knowledge Those responsible for the “resilience” of a system (whether it’s national, governmental, commercial, or other) must intimately know each of the organization’s discrete human, infrastructural, and process elements. This entails having a keen understanding of each discrete element’s function; its significance to the whole; how it might fail, become obsolete, gamed, disrupted, or destroyed; and the systemic consequences of component failure. Gaining such insight requires rigorous systems analysis,

independent testing of vulnerability (often referred to as “red teaming”), continuous evaluation of the operating environment, and gaming internal and external threats.

planning Each aspect of the cycle must be supported by intelligent planning. This means establishing well-conceived strategic, operational, and tactical priorities, policies, procedures, and protocols that build resilience. The failure to plan whether for threat prevention, system defense, or response and recovery is a gamble with potentially existential consequences.

resourcing Of course, if planning is to bear fruit then the measures it proposes must be sufficiently resourced. In austere times proper resourcing presents an enormous challenge but as Thomas Edison tells us, “vision without resources is hallucination.” Priorities must be set. This requires risk-assessment that takes into account more than the probability and our vulnerability to a threat. Consequences must be considered. Prioritizing in times when public budgets are overstretched and private margins are thin is essential. It implies a new line in the formula previously mentioned to guide decision making—risk multiplied by consequence equals priority.

Protecting ourselves against highly probable but low consequence risks at the expense of those that are less probable but highly consequential is out of step in an environment when adversaries are more ruthless, their imaginations are more fertile, and their capabilities expand by the day.


O L D W A Y S O F E V A L U A T I N G R I S K A R E N O L O N G E R R E L E V A N T

RISK X CONSEQUENCE = PRIORITY

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networking and collaboration Finally, in building resilience against dynamic modern threats, organizations must realize that there is strength in numbers. In most cases, risk exposure is broadly shared, and the effectiveness of successful prevention, mitigation, and recovery is significantly enhanced by robust partnerships that yield efficient economies of scale. Internal and external teaming is mandatory for bridging dangerous stovepipes, ensuring the regular sharing of critical information, and collaborating to remain strong and bounce back fast when emergency strikes. This reality is very much at the heart of NSPD 51.

The attack on America’s civil aviation security system and the cascading effects of the catastrophe point not only to the strategic prerequisites above but to operational imperatives as well. Four stand out:

• Security measures must be layered so that a threat must defeat multiple lines of protection, exponentially reducing the probability it can harm.

• Critical functions must have redundancy so that single point failure of an operational element or security measure can’t induce systemic failure.

• A system’s critical components must be isolable so, where possible, damage can be firewalled.

• Resiliency plans, methodologies, and measures must be agile and adaptive so that systems can cope with a dynamic environment in which circumstances, threats, opportunities, and countermeasures are constantly changing.

conclusionEach of these strategies and requirements are necessary to our security. Every leader in the public and private sector needs to survey the checklist to see how the systems for which they are responsible match up and apply the lessons learned, lest we be required to relearn them by harsh new experience.

In doing so, our society mustn’t lose sight of the fact that we will never live in a riskless world. We wouldn’t want to, because it will mean we have lost our freedom; but there is much we can and must do to reduce the probabilities of catastrophic events and bolster our capacity to carry on no matter the circumstances. This requires we learn another lesson of 9/11—perhaps its most critical and enduring—that the heart of resilience is character. That is, the unyielding personal and communal resolve to survive and thrive regardless of the circumstance or obstacles. This indispensable element is our most potent preventative. The more adversaries and competitors perceive our resilience to threats—in our systems but most of all in our spirit—the less likely they are to challenge us or to succeed.

We have much work to do in enhancing the resilience of our country, communities, enterprises, and ourselves. The core of that capability will remain our unbreakable will. It’s the heart and soul behind the responsibility to “Never Forget.” We haven’t. We mustn’t. We won’t. n

John Raidt serves as a Scholar at the U.S. Chamber

Foundation, the Advisor to the Chairman of the

U.S. Chamber of Commerce, and as a Senior Fellow

at the Atlantic Council. Raidt has over 21 years of

public policy experience, including national and

homeland security, energy, the environment, and

natural resource management issues. He has served as a professional

staff member of three national commissions, including the National

Commission on Terrorist Attacks Upon the United States (9/11

Commission), the Commission on the National Guard and Reserves,

and the Independent Commission on the Security Forces of Iraq. In

2008, Raidt served as Deputy to General James L. Jones (USMC-Ret.),

Special Envoy for Middle East Regional Security, focusing on resolution

of the Israeli-Palestinian dispute. He has also worked as a senior staff

member in the U.S. Senate, including as the Legislative Director for U.S.

Senator John McCain and Chief of Staff of the U.S. Senate Committee on

Commerce, Science and Transportation.

SECURITY



BY BRET SWANSON, SCHOLAR, U.S. CHAMBER OF COMMERCE FOUNDATION PRESIDENT, ENTROPY ECONOMICS

RISK

For most of history, people lived day-to-day. Their goal was survival, living to see the next sunrise. Hunt, gather, hunker down, and avoid danger—

that was the only answer. One small slip, one cold winter, one encounter with infection could mean the end. Life was simple, hard, brittle, and short.

Modern life is just the opposite—complex, comfortable, and about three times as long. Our capacity to bounce back from loss or harm—one definition of resilience—has become infinitely greater.

Consider the latest Federal Reserve figures on the American balance sheet. For all the recent trouble in the U.S. economy, household assets stand at a robust $83.7 trillion, or 523% of GDP. Household liabilities are just $13.4 trillion, leaving a net worth of $70.3 trillion. Add in business and government liabilities and the total U.S. debt burden is $40.6 trillion, or 254% of GDP, which is still less than half of household assets.

These U.S. assets, despite a severe plunge in value during the financial panic, helped sustain a reasonably high standard of living for most of the country. Some would also argue that U.S. government spending and extraordinary monetary policy helped replace lots of

lost purchasing power as the private economy suffered historic unemployment and

deleveraging. China, meanwhile, fought the global

deleveraging by

encouraging much more bank lending at the very time the world’s banks were retrenching. This countercyclical policy—a form of resilience—was only possible because of China’s fast growing economy that had been building wealth for the last three decades.

Wealth, however, can be a double-edged sword. With wealth comes resilience and thus an increased capacity to take risk. More risk can lead to further riches. Yet greater wealth also increases potential losses. In other words, we have a lot more to gain and a lot more to lose.

Perhaps it is not surprising then that many modern elites and policymakers see danger around every corner—from terrorism to climate change to financial calamity. In one sense, an obsession with risk is a luxury of wealth. It is prudent to identify present shortcomings and contemplate future problems and attempt to avoid them. Preventing hunger, unemployment, bomb plots, wars, and financial panics is a good thing.

What happens, though, when we develop a hyper-focus on shortcomings and potential losses? What happens when we seek a public policy remedy for every perceived problem? This kind of obsession with risk, danger, and downside may be counterproductive. It may exacerbate known problems and unleash dangers never dreamed of.

Why would this be case? It is because true economic resilience is a bottom-up, not top-down, phenomenon. It comes from individual initiative, organic cultural capital, multipath redundancy, and widespread wealth. It depends on a few stable institutions that loosely organize

basic ideas, rules, and customs. Beyond these basics, however, resilience is a decentralized

phenomenon. Resilience cannot be commanded, it can only be

encouraged.

What happens when we seek a public policy remedy for every perceived problem?



Consider the Basel banking regulations that were meant to ensure healthy, resilient banks. The regulations were intended to cushion the downside in a financial crunch. Instead, I would argue, the rules helped cause a financial crunch. By steering all banks down the same narrow path (namely, triple-A mortgage securities), the rules reduced the diversity of investments and concentrated risk. Regulations, which encourage homogeneity, often have this effect. Insisting on conforming behavior is supposed to prevent individual failures, yet “putting all your eggs in one basket” can increase the risk of large failures.

This is ironic because individual failure is a core competency of capitalism and a key component of resilience. Wealth is about creating new ideas. New ideas can only emerge through experiments of science, technology, and enterprise, all of which must be capable of failure in order to generate newness. Failure flushes away bad ideas and points us toward good ones. The failures may at times harm individuals and waste resources—people lose jobs and investments can be lost. The larger effect, however, is to lift the economy to a higher plane of knowledge, efficiency, and resilience.

Nassim Nicholas Taleb, the financial trader turned author of books such as “The Black Swan”, argues that this process leads to something even better than resilience. He calls this higher objective “antifragility.” Resilience,

in his telling, is the ability to snap back into shape. It is resistance to damage. Antifragility is improvement with damage.

An analogy might be made to the biological process known as hormesis, in which small doses of toxins or radiation can improve function and inoculate against more severe exposures. In the same way, Taleb argues, stressors toughen people, companies, and cultures. Adversity builds character. Smallness promotes agility.

Key to this formulation is decentralized information and experience. Bureaucratic design is less likely than successful culture to promote healthy behavior. Entrepreneurship is more likely than centralized economic management to produce innovation and wealth. Imprecise heuristics are often more accurate than hyper-precise expertise.

Today, vast industries, from finance to security to politics, focus on risk management. Government seeks to insure against any hardship at all. Expert agencies attempt to design perfectly competitive industries with no waste, redundancy, or profit—or they confidently impose severe costs on today’s economy in an attempt to tune global

Entrepreneurship is more likely than centralized economic management to produce innovation and wealth.


Entrepreneurship is more likely than centralized economic management to produce innovation and wealth.

// L O N G L I V E T H E R I S K T A K E R S | 31

RISK

temperatures a hundred years from now. Yet what impact do these costs have on the wealth that is needed to provide for social safety nets, insurance, and security?

A tension exists between security and risk, efficiency and creativity, resilience and innovation. We use the fruits of risk and innovation to purchase security. This security is often a good buy. Yet when a law seeks to improve the resilience of a worker’s job by making it overly difficult to fire workers, we are not surprised when fewer workers are hired in the first place. A much better form of resilience for workers is robust economic growth, which provides opportunity and choice.

Today we see wealthy societies that, over time, arguably purchased too much security. It is not an easy switch to flip back. Their economies suffer, in part, from an atrophy of aspiration.

Europe, for example, may be less resilient today because it indulged in “too much resilience” over past decades. Trying to rectify every social shortcoming can subsidize anti-resilient behaviors and discourage risky endeavors. It can deplete human capital and a culture of enterprise, which are the chief sources of wealth and thus true resilience. Likewise, U.S. stimulus and expanded government benefits, such as seen in disability rolls and extended unemployment insurance, may have interfered with the American economy’s natural healing networks of human capital and enterprise.

Where Taleb’s stressors keep us sharp, tough, hungry, and resilient, purchased comfort can lead to just the opposite. Entrepreneurship is the driving force of growth, but also, through its orientation toward future possibilities, supports the asset values of today. It is a future orientation that not only builds the future but sustains the present.

This is the enigma of wealth. We work hard to generate wealth so we might enjoy comfort. Yet today’s comfort can be the enemy of tomorrow’s. Wealth, or resilience, is not a haven but a process of constant regeneration. n

Bret Swanson is a scholar at the U.S.

Chamber of Commerce Foundation. He is

also the president of Entropy Economics,

a research firm focused on technology and

the global economy, and of Entropy Capital,

a venture firm that invests in early-stage

technology companies. In addition to serving as a scholar

at the U.S. Chamber of Commerce Foundation, Swanson is a

“Broadband Ambassador” of the Internet Innovation Alliance

and is a trustee and investment committee member of the

Indiana Public Retirement System (INPRS). Bret Swanson writes

a column for Forbes and often contributes to the editorial page

of the Wall Street Journal.

Wealth, or resilience, is not a haven but a process of constant regeneration.


B Y W A R R E N E D W A R D S & M I C H A E L L E S N I C K , M E R I D I A N I N S T I T U T E



T he extreme weather and natural disasters of the past decade provide compelling indications of the range of catastrophes that

American communities and their embedded businesses are facing with growing frequency and intensity. Floods, fires, earthquakes, and tsunami combined to produce tremendous economic costs of natural disaster to the world’s economy. The UN Office for Disaster Risk Reduction estimated the costs of natural disasters worldwide to be $366 billion in 2011. Add to the risk of natural disaster the real potential for human-caused disaster ranging from acts of terrorism to industrial and transportation accidents, economic downturn, and the threat of large scale health events and there is much that should keep business leaders and public officials awake at night.

All of this is complicated by an accumulation of challenges that may be unique in our country’s history. As a nation we face growing social and economic complexity and political polarization. We are trying to recover from the most significant recession since the 1930s while coping with ever-accelerating rates of change and unprecedented demographic shifts. The inherent resilience of America and its communities

is severely stressed. There is an urgent need for our communities and businesses to recognize the restorative power of a vibrant economy. Businesses of all sizes must learn to better anticipate acute disruption, and through aggressive, adaptive planning, limit impacts, respond effectively, and recover rapidly and fully. In short, it is time for our business sector to lead their communities to become resilient.

Every community has its own characteristics, needs, challenges, and solutions. The complexity of risks coupled with the inherent diversity of a community means that our traditional stove-piped way of dealing with disasters and other major disruptions must change. To succeed, building resilience must be a “whole community” process and American businesses need to help lead the way. We know that in order to become a more resilient nation the entire community must develop a practical understanding of the interdependencies that can exacerbate its vulnerabilities as well as amplify its capabilities. By using that common understanding, the entire community can then develop a resilience roadmap where each institution and business can play its own role, but also work together to overcome challenges and seize the opportunities

COMMUNITY


inherent in change. Resilience is and always will be a “whole community” process. No individual part—government, private business, or non-governmental organizations—can create a resilient community on its own.

For business leaders, the business case for community resilience is simple, practical, and real. While it is essential that individuals prepare for disasters, coherent and coordinated community-wide preparation for disaster creates robustness and redundancy in all community services that produce tangible economic and social benefits. Creating this enhanced and better coordinated capability to continue the normal flow of goods and services during significant disruptions provides the community with a quality of life and competitive advantage whether or not a disaster occurs.

Further, when a disaster does happen, the additional capacity associated with building resilience will speed recovery and then reestablish normal life and economic activity more quickly. We are learning with each disaster that a resilient community is one that knows how to get its local economy back up and running as quickly and efficiently as possible. The successful ones think about the vulnerabilities that can affect the local economy, the positive preventative and response measures to address these most important vulnerabilities, and the interdependent weak links and positive actions where

government, companies, schools, and voluntary groups can coordinate for a net positive effect.

There are three things American businesses can do to help themselves and the communities in which they operate to be more resilient:

Business leaders can be a voice helping to articulate the need for their community’s resilience.

They can be an active participant ensuring a deliberate and tailored “all-of-society” approach to make their local community more resilient, benefitting themselves and all others. To some extent, communities have been inundated with disaster messages using overlapping and unfamiliar terms—“resilience,” “disaster preparedness,” “sustainability,” and “risk management,” to name a few. All are complex and most are intangible. Community members respond by tuning out and turning off. Business leaders are particularly valued and respected members of the community. They are employers, civic leaders, and powerful influencers. Their position within the community gives them significant leverage with elected officials and civic organizations. They are uniquely positioned to trumpet the message that a strong economy is vital to innovation, growth, quality of life, and, when disaster strikes, recovery.

resilence BUsiness Horizon Quarterly

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COMMUNITY

Business owners, executives, and managers can take concrete action to make their own operations, facilities,

and employees safer; better prepared to withstand a disruption; and have the plans and means to recover successfully.

Without an effective continuity and recovery plan, 90% of businesses that experience a serious disaster close within five years. Knowledge of that fact alone should be sufficient to ensure that business owners take planning for disaster very seriously.

Successful business continuity plans need to address more than operations and facilities to ensure their recovery.

Employees must also know that their families and possessions are prepared and safe before they are ready to return to work and help recover their employer’s business. Chambers of commerce of all sizes can work with local businesses that have expertise and experience to help other companies improve their own resilience while becoming active participants in community-wide resilience initiatives. Each of these chambers is as unique as the communities they serve. They are catalysts for creating a healthy business environment and recognize that disaster preparedness is critical to their mission. They are not alone—economic development organizations and other business networks can advocate together for and assist in local business continuity planning. They can also provide education on the importance of insurance and identify local sources of unrestricted financing that can be redirected in times of emergency.

CONCLUSIONSThe frequency and likelihood of natural and other

disruptions is unlikely to diminish in the coming decades. Taking action to better prepare for these situations will surely benefit those companies that do so. If American business leaders can become a voice in their own communities and coordinate in building resilience, they can help diminish the impacts of a disaster as well as the “down time” for their economy quality of life, and vibrancy that makes each community special.

A resilient America depends upon having resilient communities. Neither can be called resilient if we do not find ways to bring back local economies as quickly and efficiently as possible. n

Maj. Gen. Warren C. Edwards (Ret.) is the

executive director of the Community and

Regional Resilience Institute (CARRI) at the

Meridian Institute. Previously, Edwards served

as the director for the Southeast Region

Research Initiative (SERRI) at the Oak Ridge

National Laboratory, as well as the senior director at CACI, Inc.

Before joining CACI, he was deputy commanding general of the

Third U.S. Army, the command reporting directly to Gen. Tommy

Franks in supporting Army and Marine operations for the U.S.

Central Command in Afghanistan. Edwards holds a Bachelor of

Arts in English from the University of Richmond and a Master of

Science in international relations and strategic studies from the

Naval War College.

Michael T. Lesnick, Ph.D., is the co-founder of

and a senior partner at the Meridian Institute,

with 30 years of experience facilitating national

and international policy dialogues, negotiations,

and internal and multi-organizational strategy

development processes. Previously, Lesnick

served as the senior vice president of The Keystone Center’s

Science and Public Policy Program as well as a resource and

development research associate at Resource Consultants

International. He is also the author of a variety of publications on

conflict management and collaborative problem solving. Lesnick

holds an M.S. and Ph.D. from the University of Michigan in

natural resource policy and environmental dispute resolution.



BY LESLIE BRADSHAWFELLOW, U.S. CHAMBER OF COMMERCE FOUNDATION,

CHIEF OPERATING OFFICER, GUIDE


ENTREPRENEURSHIP

One of the most important things to understand about being an entrepreneur is that there is no such thing as a 9-to-5 or a five-day workweek. You are always thinking about your team, cash flow, customers, company, product, and about a million other details unique to your business. For each thing pulling on your thoughts and time, you are always on call and available to effectively suit up as a firefighter, referee, police officer, high-stakes negotiator, babysitter, garbage collector, disciplinarian, or peacemaker to deal with whatever your company, team, and customers are facing. Furthermore, for each suit you put on, you have to wear it until the job is done.

If you are an entrepreneur, you also don’t have a lot of capital, a well-established infrastructure, or a personnel hierarchy to turn to when things get tough. You are the end of the line.

So what do you have? On the shortlist you have: yourself, your vision, your mental faculties, your network, and your sheer will to succeed. Regarding one’s will, if you’ve chosen the path of entrepreneurship, it means you are likely the professional equivalent of one of the soldiers from the movie 300. You have the ability to wear many hats, fight many battles, be available at a moment’s notice (and at any hour!), and withstand the financial and emotional ups and downs that come with starting your own company—no matter the industry.

Implicit in these Spartan attributes are the concepts of flexibility and commitment. A word that embodies both is “resilience.” The etiology of resilience is particularly instructive here, as it is

rooted in the Latin prefix re-, translated here to mean “back” and the Latin verb salire, or “to jump, leap.” The word resilience therefore connotes an ability to jump back in the face of mounting challenges, distractions, and obstacles.

While resilience embodies flexibility (think of a bouncing spring), it also suggests that one must have endurance through not only the good times, but especially the pitfalls and failures. Just like Sheryl Sandberg suggests in her bestselling book, Lean In, one’s career is more of a jungle gym than a ladder. Similarly, one’s experience as an entrepreneur is

more of a heart monitor than a hockey stick. In both the case of the ladder and the heart monitor analogies, there is a departure from some idealistic model of success that says: “Sorry, it is not linear, it is not contiguous, and it is not always headed in the ‘up’ direction.”

As a serial entrepreneur who has been on the founding team of three companies by the age of 30 (Bradshaw Vineyards, JESS3, and Guide), I have had a number of jungle gym and heart monitor moments. When things got difficult, I mostly chose to weather the storm and have resilience. I also have found that there were times when the cost of enduring was not worth the expected outcome, which meant I decided to go in a different direction.

At 31, I will be the first to admit that I am still a work in progress. However, when it comes to how I approach being a world class professional, there are five fundamental elements that have not wavered since as long as I can remember. These elements have helped me survive, thrive, and succeed in the face of just about anything.


1. Master your craft. One of the most important things to do before starting your own company is to be the best at something. This is what you need to build your company around and why people will want to work with you, hire you, and invest in you. There is another important reason that you need to master your craft as a foundational step: you must have the ability to express high levels of discipline, commitment, and flexibility when you are running a company. When you are mastering a craft, you are showing commitment and discipline as well as remaining flexible as you learn new and more efficient ways to execute.

When I use the word “craft,” you might think about design, textiles, or other forms of artistry. While I mean to encompass a much wider spectrum (operations, strategy, and team leadership are my crafts), I am

purposely invoking the devotional aspects of these artisan pursuits. To be an artist is to commit to quality, try new expressions of your craft, and adhere to a regiment in order to master and perform your craft. What is your craft? How many hours do you spend on it each day? Do you have the right resources—teachers, tools, money—to become the best? These are important questions for which you need an answer.

2. Develop a plan and adjust as needed, but make

sure you’re following a north star. “If you don’t know where you are going, how will you know when you get there?” As simple as that saying is, it could not be truer. Whether you are putting together a roadmap for a month-long digital campaign, a mobile app, or a company, you need to clearly articulate the following:

• Your objectives – knowing what a win looks like is sine qua non

• Necessary resources – these include the nice-to- haves, must-haves, and a plan to fill any gaps

• Required steps – that also means having dependencies within these steps

• Concerns – name these at the onset so that you can work to solve them

• Constraints – time and budget are usually the main two

Having a plan helps you be accountable to something sane in the face of chaos, while also helping your team understand both their individual roles as well as the big picture. If you are thinking about starting a company, developing a business plan is a must. I’ve read a lot about young entrepreneurs (and some investors) who don’t believe in having a business plan, because they focus solely on the quality of the product. It’s unacceptable though to not have to answer questions such as: How do you make money? When will you be profitable? What will it take to get you to profitability? Similarly, it is unacceptable to not know your strategy for engaging a target audience around


Unfortunately, some people are still learning this lesson of teamwork the hard way and taking jobs simply because of the salary and the title. IF YOU ARE DOING THIS, STOP. IF PEOPLE YOU LOVE ARE DOING THIS, TELL THEM TO STOP.

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a product launch. Both require varying levels of planning, but your efforts will ultimately not be successful without going through the exercise of planning and executing against the plan.

3. Find the right team members and partners. As someone who played team sports all through high school and participated in oodles of extracurricular activities like yearbook, Future Business Leaders of America, and student leadership, I’ve known this to be true since about age 10. Unfortunately, some people are still learning this lesson of teamwork the hard way and taking jobs simply because of the salary and the title. If you are doing this, stop. If people you love are doing this, tell them to stop. The number one qualification you should be evaluating when taking a job, building a company, or hiring a vendor should be this: Are the people A players who I can learn from and truly enjoy their company? If they are A players, but are rude, forget it. If they are fun to hang out with, but are C players who aren’t terribly motivated, don’t jump in.

I’ve kept a list of the people I love working with that embody both of these attributes—excellence and a positive demeanor—and look to partner with them or flat-out hire them whenever I can. For instance, my officemate at my first job in Washington, D.C., became one of our lead strategy managers at JESS3. Not only was he super sharp and great at any task you threw at him, but he was also a true pleasure to work with daily. We laughed often, divided and conquered assignments, and delivered hard on our projects. We also earned battle scars together while in the trenches (at both jobs) and have implicit trust in one another. He is just one of the dozens of examples of team members I go out of my way to hire (even when they are in another time zone or country).

Who are the people you’ve enjoyed working with due to their talent and their energy? Do you stay in touch? They should be the first people you call when you are in a position to hire people, especially if it is at your own company.

I also want to underscore for the Millennials reading this: you need to partner with people that are older and

ENTREPRENEURSHIP


more experienced than you are. That doesn’t mean you still can’t be your company’s CEO, but it does mean that you need to establish an advisory board or even formal board of directors to help guide you. You should also be prepared to hand over the reins if the time comes to scale your company beyond your wildest dreams; Ev Williams did it at Twitter and Andrew Mason just did it at Groupon.

4. Treat everyone you encounter along the way

with civility, dignity, and respect. These are things we learn at a very young age, and yet I have been shocked at how many adults don’t practice them. There is absolutely no excuse for being a jerk, for yelling, for making personal attacks, or for talking down to someone. I’ve been on teams where the supposed leaders acted in these ways and they didn’t just lose trust and respect. They lost highly talented people, contracts, and money.

Conversely, I have also worked with people who do an amazing job of keeping their cool despite difficult

situations, who are great at listening to feedback from every level of the organization (and actually implementing it), and treat people who are performing even the most basic of jobs as equals.

5. Be ready to be uncomfortable and spread

thin, but not all the time. When you are building and mastering anything, there is going to be a certain amount of uncomfortability and multitasking that you are going to have to do. Especially in today’s always-on, always-connected, incredibly global marketplace, you are going to have to get on a lot of planes, take a lot of off-hours calls, and respond to requests on the weekends more often than not. When you are building an enterprise, you are going to have to wear a lot of hats while you get set up. I was part head of strategy, part head of client services, part head of PR, part head of admin/finances, part chief of staff, and part head of HR for my last company—and it took nearly four years before we had the capital to hire people that allowed me to relinquish some of those roles.

MASTER YOUR CRAFTDEVELOP A PLAN AND ADJUST AS NEEDED, BUT MAKE SURE YOU’RE FOLLOWING A NORTH STAR.

FIND THE RIGHT TEAM MEMBERS AND PARTNERS.


MASTER YOUR CRAFTDEVELOP A PLAN AND ADJUST AS NEEDED, BUT MAKE SURE YOU’RE FOLLOWING A NORTH STAR.

FIND THE RIGHT TEAM MEMBERS AND PARTNERS.

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The “but not all the time” bit is perhaps one of the biggest things I’ve had to learn in the last five years, as I thought I was supposed to be a Spartan warrior all of the time, in constant battle, with little sleep, and lots of hardship. As I write this essay from my apartment in Miami, which has a 200-degree view of Biscayne Bay, and get in an elevator to go down 24 floors to work alongside one of the smartest, kindest, and most hard working boss-partners I’ve ever had, I can’t help but saying out loud: I was making it too hard before. I wasn’t sleeping enough. I wasn’t eating right. I wasn’t exercising. I’ve also worked with people who don’t follow the tenants that I laid out in #4 above. Not anymore.

If I could sum up my experience so far in just one sentence, it would be this: it is not going to be easy,

but it will be worth it. n

Leslie Bradshaw is a fellow at the U.S.

Chamber of Commerce Foundation and the

chief operating officer at Guide, a software

company focused on turning online news and

blogs into video. Prior to launching this new

venture, Bradshaw co-founded and served as

president and chief operating officer of JESS3, a creative interactive

agency specializing in data visualization and visual storytelling.

Bradshaw, a Phi Beta Kappa graduate of the University of Chicago,

also is a regular contributor at Forbes on the topic of female

entrepreneurship.

ENTREPRENEURSHIP

TREAT EVERYONE YOU ENCOUNTER ALONG THE WAY WITH CIVILITY, DIGNITY, AND RESPECT. BE READY TO BE UNCOMFORTABLE AND SPREAD THIN, BUT NOT ALL THE TIME.

44 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // F A L L 2 0 1 2 44 | B U S I N E S S H O R I Z O N S Q U A R T E R LY // I S S U E 8


BY ALEX BRILL, FELLOW, U.S. CHAMBER OF COMMERCE FOUNDATIONRESEARCH FELLOW, AMERICAN ENTERPRISE INSTITUTE

FINANCE

T he word “resilience” in the context of the U.S. fiscal outlook conjures up images of painful budget cuts and financial sacrifices,

as if only a radical austerity plan could rebalance our federal budget. Yet a careful understanding of the recent financial vitality of the American public lends a rosier hue to this bleak picture. Both the foresight that Americans demonstrated during the recent recession and the ensuing stable recovery of household balance sheets are encouraging signs of the promise that our resilience holds for facing future challenges.

A cynic could point out the resilience of both the federal debt and politicians’ intractability, focusing on the seemingly inevitable increase in the debt and the perpetual headbutting between Democrats and Republicans. Cynicism aside, the economic resilience of the American household makes for an inspiring story—and an important one for understanding the part resilience can play in righting our fiscal imbalance. The resilience of the American household and the American worker is, in fact, the key to tackling our entitlement problems and the fiscal challenges that lay ahead for our country.

Economic and financial resilience among the public will be necessary to fully address these challenges, but our elected officials must also demonstrate a political

resilience. While many American households have responded and will continue to respond wisely to recent economic adversity by preparing for a more uncertain economic future, lawmakers need to strengthen their political courage to reform unsustainable programs such as Medicare and Social Security. At minimum, modest changes to improve the viability of these programs need to be vigorously pursued. The good news is that our leaders can both draw on the public’s resilience for inspiration and rely on the American people to be resilient in the face of necessary changes.

HOUSEHOLD RESILIENCE AND THE GREAT RECESSION

The financial crisis in the fall of 2008 shook the entire global economy. Asset prices suffered a shock: the housing bubble burst, sending home prices plummeting, and the stock market saw its biggest one-day drop in two decades. The U.S. economy contracted sharply in the fourth quarter of 2008, which recorded the largest quarterly drop in GDP in fifty years, contracting 8.9% on an annual basis followed by a 5.3% drop in the first quarter of 2009.1 U.S. employment took a similar dive, with payrolls declining 712,000 per month during the record-breaking period of job losses between October 2008 and March 2009.2 The unemployment rate jumped from 5% at the start of the recession in December 2007 to a high of 10% in October 2009, several months after the recession technically ended.3

Nevertheless, households also demonstrated resilience to this tremendous economic downturn and fiscal shock. This resilience is not only admirable; it is critical. It demonstrates American households’ awareness of and responsiveness to changing fiscal pressures. An understanding and appreciation of this responsiveness will be necessary for policymakers seeking to change programs currently promising retirement benefits to tomorrow’s retirees.

A CAREFUL UNDERSTANDING OF THE RECENT FINANCIAL VITALITY OF THE AMERICAN PUBLIC LENDS A ROSIER HUE TO THIS BLEAK PICTURE.



Evidence of this resilience can be seen in the response of the U.S. personal savings rate to the recession as well as the rebound of the household balance sheet following the recession.

Personal Savings. The personal savings rate, which had been in decline for decades, rose sharply as the economy sank into recession. Chart 1 illustrates how the rate more than tripled from an average of 1.6% in 2005, prior to the recession, to an average of 5.6% in the first half of 2009, as the recession wound down. While the drop in consumption exacerbated the recession, households’ willingness to tighten their belts, defer nonessential purchases, and work toward insulating themselves from the risk of job loss is a perfect example of the resilience of the American household.

Balance Sheet Repair. The Great Recession and the related implosion of the U.S. housing market caused significant damage to U.S. household balance sheets. Total household net worth—the difference between household assets and liabilities—declined from $68 trillion to $52 trillion from the third quarter of 2007 to the first quarter of 2009.4 The value of residential housing stock dropped more than $6 trillion from 2006 to 2009.5 Moreover, the household share of equities dropped over $5 trillion from 2006 to 2008.6

Since 2009, a clear repair of household balance sheets has been underway. Though the labor market has been tepid and unemployment (particularly long-term unemployment) remains stubbornly high, households have reduced their debt burdens and increased asset

CHART 1: U.S. PERSONAL SAVINGS RATE, PRE AND POST RECESSION

Source: Federal Reserve Economic Data, www.research.stlouisfed.org/fred2. Note: Seasonally adjusted six-month averages.

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FINANCE

values. Low interest rates have played an important role, as households with sufficient equity in their homes rushed to refinance at lower rates, sometimes also with shorter borrowing periods. Since 2008, the average rate for a 30-year conforming mortgage has dropped from 6.5% to 4%.

Chart 2 illustrates the strong rebound in household balance sheets. At the end of the first quarter of 2013, household net worth was $70.3 trillion, slightly above the level in 2007 prior to the recession. Both an increase in asset values and a decline in liabilities contributed to this rebound. Household debt declined modestly but steadily from 2008 through 2011 and was almost flat in 2012. Total financial assets increased from $43.4 trillion in 2008 to $57.7 trillion in the first quarter of 2013.7 Corporate equities and

mutual fund shares increased in value from $9.3 trillion in 2008 to $17 trillion in the most recent quarter.8

Need for Political Resilience to Face Our Fiscal Challenges

The fiscal challenges our economy faces in the coming decades cannot be resolved only by increased levels of thrift and financial buffering among the public. While many American households responded to the recent downturn in the economy by working to build reserves and increase personal savings in an effort to ride out the recession, resolving our fiscal challenges simply cannot be left entirely up to citizens. It requires political action, which in itself requires a particular sort of resilience.

CHART 2: HOUSEHOLD AND NONPROFIT NET WORTH (BILLIONS OF DOLLARS)

Source: Federal Reserve Economic Data, www.research.stlouisfed.org/fred2. Note: Quarterly data, not seasonally adjusted.



Our country has experienced large fiscal deficits in recent years as a result of increased federal spending and temporarily depressed tax revenues due to the weak economy, but the deficit challenges in the coming decade are of a distinctly different sort. Federal entitlement spending on both health care (primarily Medicare and Medicaid) and retirement security (Social Security) is on unsustainable fiscal footing. These programs are solvent at the moment, but they are projected to grow beyond their means. Scheduled

outlays in Social Security will exceed revenues for that program in the next decade, and the gap will remain. Medicare, while its growth rate moderated in recent years, is scheduled to again grow faster than the overall economy.

The Social Security and Medicare Trustees recently issued their annual reports outlining the size of these programs and their projected growth. Once again, the long-run forecast is bleak. The causes of the problems in both programs are a mix of both demographic changes and excess cost growth. Particularly in light of the recent heated debates in Washington over spending and taxes, the pursuit of solutions to these problems will demand political resilience as well as political compromise.

Entitlement Crisis Part 1: Medicare

According to the Medicare Trustees’ Report:

Total Medicare expenditures were $574 billion in 2012. … [U]nder current law, expenditures will increase in future years at a somewhat faster pace than either aggregate workers; earnings or the economy overall and that, as a percentage of GDP, they will increase from 3.6% in 2012 to 6.5% in 2087. 9

Furthermore, the report projects that if Congress continues to override scheduled cuts in physician reimbursement for Medicare services and postpones or repeals other large scheduled cuts in health care reimbursement, “then Medicare spending would instead represent roughly 9.8% of GDP in 2087. Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the Federal budget.” Arguably that’s an understatement.

Chart 3 illustrates the Trustees’ projected growth in Medicare and the projected growth in noninterest income available to fund the program. This graph illustrates three concerning trends. First, the size of this program is expected to nearly double as a share of the overall economy. Second, general revenue transfers are projected to increase dramatically. Third, despite the fact that Medicare funding will increase by roughly 2.5 percentage points of GDP, it still will not be enough to keep pace with the growth of expenditures.

Taking together all the projected income and costs in the Medicare program over the next 75 years and discounting future receipts and outlays, the present value of the actuarial balance of Medicare is –$4.8 trillion.10 While these numbers are somewhat uncertain, there is no plausible scenario whereby one can conclude that the status quo represents a sustainable path.

THE TWO LARGEST ENTITLEMENT PROGRAMS OPERATED BY THE FEDERAL GOVERNMENT ARE ON UNSUSTAINABLE PATHS.


FINANCE

Entitlement Crisis Part 2: Social Security

The situation in Social Security is similarly dire. The gap between the cost of Social Security and the noninterest income to the program is projected to be 0.9% of GDP over the next 75 years, rising to and remaining at 1.4% of GDP in the long run.11 According to the Social Security Trustees:

For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period: (1) revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.66 percentage points (from its current level of 12.4% to 15.06%); (2) scheduled benefits during the period would have to be reduced by an amount equivalent to an

immediate and permanent reduction of 16.5% applied to all current and future beneficiaries, or 19.8% if the reductions were applied only to those who become initially eligible for benefits in 2013 or later; or (3) some combination of these approaches would have to be adopted.12

Chart 4 shows the widening gap between the Social Security benefits that are scheduled to be paid in the coming years (costs) and the projected Social Security revenue from the payroll tax (noninterest income). Until recently, revenues exceeded costs, but that has now reversed. Costs are projected to increase from 4.4% of GDP in 2008 to 6.2% of GDP in 2035. Payroll tax revenues will increase slightly from 4.6% to 4.9% of GDP by 2022 but then return to 4.6% in the long run.

CHART 3: MEDICARE SOURCES OF NON-INTEREST INCOME AND EXPENDITURES (% OF GDP)

Source: Medicare Trustees Report, Figure II.D2.



Time for a Resilient Political Agenda

The two largest entitlement programs operated by the federal government are on unsustainable paths. Medicare is projected to grow faster than the overall economy over the next 75 years, which necessitates ever-increasing taxes. Soon, Social Security will only have enough resources to pay 77% of its promises.

These challenges, however, are not new. Lawmakers have known for decades that these programs are not sustainable as currently structured, yet they have continually shirked their responsibilities to enact necessary programmatic changes. From time to time, bold proposals have been made, but we have yet to see an attempt at reform gain traction.

A number of factors are obvious impediments to political action. Many lawmakers worry that the consequence of political courage—voting to restrain the growth of entitlements—will be harsh attacks by rivals in the next election cycle. Other lawmakers worry that such reforms will lead to inadequate health care for seniors or increases in poverty and financial risk.

The fear that future seniors will be uncared for should these programs be made sustainable, in whole or in part, through reductions in future benefits is misplaced. Why? The resilience of the American worker, family, and household. A carefully planned and communicated change to Social Security and Medicare that slows the growth of benefits will undoubtedly be met with an increase in personal savings. Critical to the success of such a reform is gradual change, and that requires an immediate start to the reform effort.

CHART 4: OASDI COST AND NON-INTEREST INCOME (% OF GDP)

Source: 2013 Social Security Trustees Report, Figure II.D4.


FINANCE

Our leaders can draw inspiration from the resilience of the American people and channel it into political resilience to do what is necessary—and most effective—to reform entitlement programs. In addition to inspiration, the public’s resilience can also provide policymakers with the assurance that citizens can withstand necessary financial sacrifices. This can bolster leaders’ resolve to finally take action to return our country to fiscal health—before resilient citizens become beleaguered citizens. n

Alex Brill is a fellow at the U.S. Chamber of

Commerce Foundation and a research fellow

at the American Enterprise Institute (AEI). A

former policy director and chief economist of

the House Ways and Means Committee, Brill

also served on the staff of the President’s

Council of Economic Advisers (CEA). He is also the founder of

Matrix Global Advisors, a boutique consulting firm that provides

legislative and strategic analysis of public policy matters to Fortune

500 companies engaged in Washington strategies and financial

services clients making investment decisions.

REFERENCES 1 Bureau of Economic Analysis, Table 1.1.1. Percent Change from Preceding Period in Real Gross Domestic Product, retrieved June 17, 2013.2 Christopher J. Goodman and Steven M. Mance, “Employment Loss and the 2007–09 Recession: An Overview,” Bureau of Labor Statistics (BLS) Monthly Labor Review, April 2011, www.bls.gov/opub/mlr/2011/04/art1full.pdf.3 BLS, “The Recession of 2007–2009,” February 2012, www.bls.gov/spotlight/2012/recession/pdf/recession_bls_spotlight.pdf.4 Federal Reserve Board, Flow of Funds, Data Download Program, accessed June 18, 2013. 5 Federal Reserve Board, Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts—Historical Annual Tables, 2005–2012, June 6, 2013, Table B.100, p. 104, www.federalreserve.gov/releases/z1/Current/annuals/a2005-2012.pdf. 6 Ibid.7 Federal Reserve, Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts, First Quarter 2013, “L.100 Households and Nonprofit Organizations,” p. 64, www.federalreserve.gov/releases/z1/Current/z1.pdf.8 Ibid., “B.100 Balance Sheet of Households and Nonprofit Organizations,” p. 109.9 Medicare Trustees Report, p. 8, www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2013.pdf.10 Ibid. p. 72.11 Social Security Trustees report, p. 68, www.ssa.gov/oact/tr/2013/tr2013.pdf.12 Ibid., p. 4–5.


BY TAMARA CARLETON, FELLOW, U.S. CHAMBER OF COMMERCE FOUNDATION CHIEF EXECUTIVE OFFICER, INNOVATION LEADERSHIP BOARD, LLC

resilience BUsiness Horizon Quarterly


One feature of great innovation cultures is an abundance mindset.

Business author Steven Covey once defined an abundance mentality as a ‘win-win’ philosophy, in which everyone works together for shared success. In practical terms, this mentality relies on shared resources, shared decision-making, shared recognition, and shared profits.

Expanding on this definition today, an abundance mindset is a way of thinking expansively about future opportunities. In the work environment, people with an abundance mindset believe that there are limitless opportunities for everyone to train for, pursue, and propose.

We know—and studies show us—that what people believe shapes what they achieve. Where someone might see risk, someone else sees opportunity. An abundance mindset gives people permission to dream bigger, think that they can make an impact, and know that they join in both the effort and reward. By working together, people can do more and ultimately benefit the broader community more. An abundance mindset leads to feelings of empowerment, commitment, and generosity.

In times of change, an abundance mindset reminds people that they can build the future they want to see. A positive mindset will

simply see a glass as half-full versus half-empty. An abundance

mindset means people can imagine multiple

potential ways to fill or empty the glass further and then find the creative resources to do so.

THE ROLE FOR LEADERSHIP

Knowing how to create an innovative culture separates

good leaders from great leaders. Great leaders know that culture

matters and what elements induce a healthy and successful work environment. More than simply “how work gets done,” a corporate culture is a mix of what leadership wants to convey and how employees feel about their work experience.

A company’s culture constantly evolves through numerous small actions and decisions that gradually turn into a regular pattern and way of working. Leadership sets the tone. Managing a corporate culture requires a steady awareness and commitment by company leaders because they model and project the culture. Employees then demonstrate similar attitudes and behaviors that ultimately become the dominant mode and outlook.

INNOVATION

Knowing how to create an

innovative culture separates good leaders from great leaders.


Great leaders establish the broader conditions for an abundance mindset to flourish within a corporate culture. They can do this in three ways: by creating a multitude of opportunities that help teams learn,

advance, and suggest new ideas. Opportunities to learn create an abundance of potential;

opportunities to advance create an abundance of initiative, and opportunities to suggest create an abundance of creativity—which together reinforce the abundance mindset.

OPPORTUNITIES TO LEARN

Joe Musselman wanted to be in military special operations since he was 14. He began

training to enter the Navy under a SEAL contract in 2007 as the sixteenth member of

his family to have served active duty within the U.S. Armed Forces. Within two years of training,

Musselman experienced a serious injury that led to years of physical therapy and ultimately a medical


Opportunities to learn create an abundance of

potential; opportunities to advance create an abundance of initiative, and opportunities

to suggest create an abundance of creativity— which together reinforce the abundance mindset.

Figure 1: Leaders establish an abundance mindset in their organization by creating opportunities for their teams to learn, advance, and suggest new ideas

OPPORTUNITIESTO LEARN

OPPORTUNITIESTO ADVANCE

OPPORTUNITIESTO SUGGEST

ABUNDANCE OFPOTENTIAL

ABUNDANCE OFINITIATIVE

ABUNDANCE OFCREATIVITY


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discharge, but he was not ready to leave the military community yet. As he underwent the general transition process, which sees nearly 200 SEALs and related positions rotate out annually, he discovered a big opportunity to help others like himself.

SEALs are trained to conduct operations in any situation, and they spend 18 to 24 months in grueling training before being assigned to teams. From the outside, many people think that former SEALs can do anything. Yet when SEALs consider starting a new job in the private sector, they feel very limited in what they can do.

“The first step is to get them out of the box,” says Musselman. A mindset of scarcity narrows down options. An abundance mindset shows SEALs that they have endless options, they just need to find a way to realize them.

Musselman has organized a rigorous learning program, part of which reminds SEALs about their earlier training. The program includes a mix of online certificates from academic institutions, short courses, and other tools delivered at key SEAL milestones and, most critically, at transition time.

As SEALs see the variety of possibilities in front of them, they learn that they really can do anything again. This hope, coupled with their passion to excel, allows them to build a new future as burgeoning businessmen and community leaders.

For example, former SEAL Gabriel Gomez was a serious political contender in the Massachusetts’ U.S. Senate race. Former SEAL Ted Alexander is a managing partner of Mission Ventures, which invests in promising early-stage business ventures in Southern California.

In companies, a similar learning approach encourages employees to break limited perceptions and think in new ways—which helps instill good innovation habits. Employees can take advantage of different options in learning tools and education, thus bringing new skills to their current roles and preparing them for their next career shift.

OPPORTUNITIES TO ADVANCE

Creating opportunities to advance also matters. Most people are motivated to do more, and they want to find outlets that let them grow professionally and personally.

Of all the reasons given for employee satisfaction, advancement opportunities were valued most at every level of employment from entry level to management, according to a survey by talent agency TMP Worldwide. A separate survey from Right Management, part of ManPowerGroup, found a similar result.

Some surprising shifts in job mobility and turnover have occurred lately that change the usual paths of advancement. Americans of all ages and groups are moving far less frequently than before, the quitting rate for jobs has dropped, and moves between firms are

INNOVATION

Most people are motivated to do more, and they want to find outlets that let them grow professionally and personally.


down. The authors of a recent Federal Reserve Board study surmise that many workers are relying on internal job markets to switch positions within the same company.

For some, a sideways step is the desired option. An innovative culture allows people to create more flexible roles, while retaining an unquenchable curiosity about what is possible.

Kathy Steele had spent six years with technology consultancy Accenture, which entailed many hours of travel to client sites. “You’re not anywhere,” she

says laughing. “You’re in transit all the time.” Steele eventually decided that she needed to build her life and decided to find a job that required less traveling. She soon accepted a position at procurement services

provider Alliente, which was acquired by software company Ariba a few years later.

Ariba’s marketing states: “Aribians are a very close-knit family, and we try to maintain a small-company feel.” Steele has experienced this corporate culture. By 2009, she decided that she was ready to raise her own family and wished to

reduce her workload. “My supervisor at the time helped me look at different options in the company,”

says Steele.

Steele feels lucky since she’s seen other companies that provide less flexibility. “This is a good example of a win-win,” Steele says. She works four six-hour days at Ariba, which increases her on-call time with colleagues and also provides more time to spend with her children.

Leaders build on everyone’s natural ambitions. More than encouraging creative brainstorms, they urge employees to take on bigger roles and lead new initiatives because these actions contribute to building a great innovation culture and help develop additional leaders—which creates a self-fulfilling cycle of abundance.

OPPORTUNITIES TO SUGGEST

A third way leaders build great innovative cultures is by creating opportunities for everyone to suggest and introduce new ideas. Innovation is predicated on new ideas, which may come from anywhere within or outside an organization.

Technology giant Cisco calls this “inclusive innovation” because the goal is to involve everyone in the pursuit of innovation. In the Services organization at


Leaders build on everyone’s

natural ambitions.


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Cisco, 13,000 employees in 85 countries contribute 22% to the company’s revenue. Kate O’Keeffe knew that her innovation team could create a much bigger impact in the Cisco business unit through a combination of top-down and bottom-up mechanisms. Top-down approaches include executive sponsorship and a global software platform for online idea management, while targeted idea campaigns and competitions spur bottom-up creativity.

“We provide the enablers,” says Lisa Voss, who runs the initiatives in leadership and capability development for the Services innovation team. “It’s up to the leaders to create the conditions.”

Employees are often willing to offer their creative input and time simply if they are asked. An abundance of new ideas provides the kindling for the bigger fire of innovation. Part of the success at Cisco rests on the Service Innovation team’s principle to “follow the energy.” They work first with Cisco leaders who already believe in the value of innovation, are willing to commit resources, and lend their name and influence to the broader campaign. These leaders have then created bigger sparks in the Cisco community.

The team organized a global Innovation Summit in May 2013 to generate hundreds of new ideas across Cisco’s Services organization. With the visible support of 25 senior executives, the Innovation Summit involved 2,500 employees from 35 countries in 21 different locations.

“The energy was contagious!” says Voss. “We pulled in another 75 employees globally to help us plan and produce this big event. It helped remind everyone about the collective power our ideas can have.”

NOT A FIXED MINDSET

Creating an abundance mindset takes time. It also does not imply a fixed or excessive outlook. Depending on current business goals, a smart leader selects an appropriate mix of work values, practices, and elements to affect corporate culture and then adjusts that mix over time. Not everything has to be pushed forward or intensified all at the same time.

Corporate cultures that last over time are resilient. More than endure, these cultures reinvent and adapt to changing situations. By adopting an abundance mindset, leaders create an innovative corporate culture that allows everyone to find and increase potential future opportunities for everyone involved. An opportunity today becomes an innovation tomorrow that, in turn, leads to more opportunities in a self-generating cycle. This is the ceaseless bounty an abundance mindset produces. n

Tamara Carleton, Ph.D., is a fellow at the

U.S. Chamber of Commerce Foundation and

the founder and chief executive officer of

Innovation Leadership Board LLC, a global

leader in the design of tools and processes

that enable radical innovation. Previously,

she was a fellow with the Foundation for Enterprise Development

and also for the Bay Area Science and Innovation Consortium.

A former management consultant at Deloitte Consulting LLP,

Carleton specialized in emerging solutions in enterprise

applications, customer experience, and marketing strategy.

INNOVATION

Corporate cultures that last over time are resilient. More than endure, these cultures reinvent and adapt to changing situations.



BY RICH COOPER, VICE PRESIDENT OF EMERGING ISSUES & RESEARCH, U.S. CHAMBER OF COMMERCE FOUNDATION; EDITOR-IN-CHIEF, BHQ

CITIES

W hen a city’s skyline changes, it’s usually a sign of growth or progress. Whether it be a new skyscraper or a soaring monument, the shape

and contour of that structure can often redefine how people see a city. In the case of New York City, its skyline was once changed because of an act of terror. Today, it is being changed again because of an act of resilience.

Rising from the site of the original complex in Lower Manhattan stands One World Trade Center, a 1,776-foot gleaming structure of glass and steel that declares, “We’re back.”

It is the tallest building in New York City, the tallest in the Western Hemisphere, and the third tallest in the world. Similar towers (albeit shorter ones) are already under construction for the 16 acre site, but there is no doubt upon seeing the World Trade Center complex that it will once again be a center of commerce for businesses in the Big Apple and around the world.

Where just a dozen years ago there was nothing but smoldering ruins and a center of national mourning, One World Trade Center has risen and with it a purpose, attitude, and fortitude to build out of a tragic history while keeping eyes firmly locked on the future. No one looking at the rising, gleaming structures today who were alive on September 11, 2001, could begin to imagine what would come out of the shattered ruins of the fallen towers. For those who lived through that day, whether in New York City or watching from afar, it is impossible to forget the ruinous heartbreak of 9/11. Yet when you look at these new shining structures, that sense of loss is now being embraced by feelings of renewal and hope.

For as traumatic as the attack on 9/11 was, those feelings of loss, heartbreak, and even anger are not entirely unique. They are the same feelings that people along



the Gulf Coast felt following the destructive paths of Hurricanes Katrina and Rita in 2005, the New Jersey coastline in 2012 after Hurricane Sandy, or after F5 tornados struck the town of Greensburg, Kansas in 2007; the city of Huntsville, Alabama, in 2011; or most recently the suburbs of Oklahoma City in 2013.

Whether by terrorism, rampaging natural phenomenon, or accident, unforeseen events have

occurred that have forever changed the fabric of a community and the skyline of how we look at them. The challenge in the aftermath of any destructive event is to make the community whole again—physically, mentally, and operationally.

In the case of restoring a central section of the “City that Never Sleeps,” it also means respecting the memories and emotions evoked by the site itself. For as much as Lower Manhattan is a center for commerce and part of New York City’s iconic skyline, the World Trade Center grounds are also a place where nearly 3,000 people perished. As such, fully half of the site is dedicated to the National September 11 Memorial & Museum. The noise and clamor of 3,500 workers a day bringing steel, glass, wiring, and other materials together to build the World Trade Center is balanced with the quiet, solemn remembrance by the six million memorial visitors who have travelled to the site since it opened on the 10th anniversary of the attacks. Resilience does not mean ignoring the past for the sake of the future.

THE WORLD DOES NOT STOP BECAUSE CONDITIONS AND CIRCUMSTANCES CHANGE.

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CITIES

While there is no doubt that al-Qaeda and its 19 hijackers had as their goal attacking America, it was ultimately the structures and operations of The Port Authority of New York & New Jersey that were in their fixed crosshairs on September 11th. As the owners of the World Trade Center site, the Port Authority has had the challenge of leading the local recovery and rebuilding effort. With the exception of U.S. government and military installations, no other organization in America has had its operations and facilities specifically targeted and successfully attacked by terrorists.

Already one of the nation’s most significant business leaders, the Port Authority also operates five of the region’s airports, two bi-state tunnels and four bridges, the bi-state PATH rail transit system, and port facilities that make business and daily life in the country’s most populous region possible. Cars, passengers, fuel, food, and other goods pass through its hands every day, making the Port Authority more than a cog in the wheel of international commerce; it is one of the leading stewards.

Given the 9/11 attacks, the World Trade Center bombing in 1993, the LaGuardia Airport bombing of 1975, and the continuous threats and plots against the area, its personnel, and its users, the Port Authority understands the costs and consequences of its operations. For Port Authority staff, resilience is personal. They know that even when their operations are dramatically interrupted, they have to keep going because commerce and the well-being of many depend directly on them. Such are the implications and lessons of resilience.

The world does not stop because conditions and circumstances change. The ability to respond and adapt to new situations, regardless of how unfortunate they may be, is often what distinguishes victims from survivors. With each unforeseen event or unfolding threat, the willingness to plan, prepare, and respond becomes an essential part of moving forward. These powerful lessons are often woven into a community’s post-event recovery, lessons that allow residents and workers to be smarter, better, and stronger than before.


It’s also an attitude that is shown on the faces of the workers at the World Trade Center site. From the construction workers to pipefitters to engineers and crane operators, the chest-bursting pride of what they are assembling is not lost on any of them. It can probably be best summed up by a simple yet direct phrase seen on stickers on the insides of service elevators, well-worn hardhats, the inside of steel I-beams, and even the occasional tattoo: “Made in America.”

New York City is not alone in the challenge of recovery and resilience. It is part of a fraternity of cities around the country that have endured destruction and persevered. Residents along the Gulf Coast rebuilt in the destructive paths of Hurricanes Katrina and Rita. Today, New Orleans and many other locations on the Gulf Coast are home to some of the fastest growing places for entrepreneurs and small businesses. By repairing neighborhoods and rebuilding school systems (and, in the case of New

Orleans, adding new levee systems to hold back approaching storm waters), the Gulf Coast continues to be a place of resilience in action.

In 2007, an F5 tornado destroyed the town of Greensburg, Kansas, which has today rebuilt itself to be one of the greenest cities in America. All of its city buildings meet the highest LEED standards. We see further inspiring and admirable efforts in Huntsville, Alabama, struck by a tornado in 2011, the New Jersey shoreline following Hurricane Sandy in 2012, and we will see the same in the suburbs of Oklahoma City that were recently devastated by deadly tornadoes.

Resilience is the application of knowledge, information, and appreciation, blended with character, spirit, and fortitude. Much like a changing skyline, resilience always arises in different shapes and forms depending on where it is employed. Yet it also shows a uniform endurance that is the hallmark of every great American story—the comeback.


RESILIENCE IS THE APPLICATION OF KNOWLEDGE, INFORMATION, AND APPRECIATION, BLENDED WITH CHARACTER, SPIRIT, AND FORTITUDE.

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CITIES

As the finishing touches are put on One World Trade Center, the massive building reflects sunlight for miles during the day and shines like a beacon in the night all the while mirroring the activity around it. It is a monument to the spirit of resilience, rising above the New York City skyline and the tragedies of the past, declaring an America that always stands “open for business.” n

Richard “Rich” Cooper is vice president

of emerging issues & research at the U.S.

Chamber of Commerce Foundation. Cooper

is also a principal with Catalyst Partners,

LLC, a government and public affairs

practice in Washington, D.C., focusing on

homeland and national security matters.

Cooper previously served as business liaison director for

the U.S. Department of Homeland Security’s Private Sector

Office, as well as a senior policy adviser at the National

Aeronautics and Space Administration.

RESILIENCE IS THE APPLICATION OF KNOWLEDGE, INFORMATION, AND APPRECIATION, BLENDED WITH CHARACTER, SPIRIT, AND FORTITUDE.


Richard WellsVice President for Operations, Midland OperationsDow Chemical Company

EXECUTIVE PROFILE


Over the course of his 30-year career with The Dow Chemical Company, Rich Wells has held leadership roles in a wide range of areas including advanced manufacturing and engineering (M&E); business leadership; environment, health and safety (EH&S); energy and climate change; and public policy. As a member of the Dow Operations Leadership Team, Wells is responsible for 10 advanced manufacturing sites across North America, ensuring the production and delivery of worldclass products and solutions in a safe, reliable, and efficient manner. He also directly manages Dow Michigan Operations—a global strategic site with over 3,000 employees manufacturing specialty products for the agricultural, automotive, energy, electronics, pharmaceutical, and food industries.

Foundation: What is Fast Start?

Wells: It began as a way to create a pipeline for our advanced manufacturing chemical technicians. The idea is to recruit and prescreen candidates for any field in

high demand, to build or leverage an existing academic curricula targeted to fill those jobs regionally, and to offer these folks non-traditional, high intensity training. It is a win-win, providing just-in-time talent for the employer and finding the right job fit for prospective employees.

Foundation: Can you describe a typical Fast Start student?

Wells: They come from all walks of life. They have strong basic skills, as well as a passionate interest in the field they are pursuing. This is coupled with exceptional initiative and a capacity to learn new things. The youngest Fast Start student was 24 years old (with six years work experience) and the most experienced was 59 years old. Both were hired.

Foundation: What are the skills in highest demand by students and prospective employers?

Wells: Students are looking for training that leads to sustainable employment. Companies are looking for technical skills required for a range of positions. However, we also value critical thinking and problem solving skills, as well as what might be called soft skills (e.g., teamwork, strong work ethic, initiative, influential leadership, strong oral and written communication). In other words, a well-rounded employee.


EXECUTIVE PROFILE RICHARD wells

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Foundation: What role do Dow and other regional employers have in establishing the Fast Start coursework?

Wells: For the original chemical technician course, Dow created the entire 16-week curriculum based on CAPT (national) objectives, which was implemented at Delta College, a local community college. For subsequent curricula–like Solar, Alternative Battery, Business Services, and Advanced Manufacturing–other local employers provided input on important learning objectives and field competencies. This approach ensured Fast Start graduates have the skills required for available positions. To continually improve the program over the long term, employers are assessing the performance of Fast Start graduates and providing feedback.

Foundation: How has Fast Start changed the way Dow engages educators and trains its workforce?

Wells: We take a more collaborative approach to working with our partners, which include Delta College, our regional Workforce Development Organization (MiWorks), and other regional employers in the same fields. They are the first groups we call when we recognize a future demand for talent. We stopped treating partners as our competition. Instead, we recognize that by working together we can create common learning objectives for the talent we need and create a larger, more attractive, and more sustainable talent pool. This helps with internal training, as we know what new employees have already learned, and we can also anticipate an aptitude for learning new things.

Foundation: How has Fast Start changed your workforce?

Wells: Fast Start has had a huge and unexpected impact. Quick learners with a range of external experiences enrich our workplace. They bring in a fresh perspective, new skills and new ways to do things. On a broader level, Fast Start

encourages other businesses to see Michigan Operations as an attractive site for new investments. We can confidently say we provide proven, excellent talent in a relatively short period of time…even for technologies or subjects that are new to everyone.

Foundation: How many people has Dow hired out of the Fast Start program?

Wells: A total of 176 students have enrolled in the chemical process curriculum. From those, 168 completed the entire curriculum with 91% obtaining employment. Placement statistics for the other curricula include: Solar Manufacturing, 78%, Battery Manufacturing, 70%; Business Process Services, 72% and Advanced Manufacturing, 88%.

Foundation: What guidance do you have for companies that want to work with local educational institutions to develop similar programs?

Wells: 1. Know your strengths and partner with organizations that complement those strengths; also know your weaknesses and look for partners that are strong in those areas. 2. Collaboration starts with desire at the top level. Bring the right people to the table and develop a common vision of success. All stakeholders need to have some decision-making authority or role. 3. Don’t forget about your workforce agencies as a primary partner. They are a wonderful resource for candidate outreach and recruitment, pre-assessment, and skill-building. 4. Share information regarding the employment skills and traits you value in employees and work that into the curriculum and program design. That way, you align the training program to the job description and supervisor hiring values. 5. To the extent possible, establish and rigorously screen for training program prerequisites (e.g., WorkKeys, certifications, experience). 6. Provide ongoing feedback during and after the training program for continuous improvement.


RESEARCHThe economy’s continued underperformance, therefore, offers an opportunity to fundamentally reexamine our approaches to regulation and public finance. We believe that such a reexamination will suggest a stark new path—one that demands simple rules for a complex world.

From Keep It Simple: A New Take on Regulation by Bret Swanson

Big Data is already an integral part of every sector in the economy—an essential factor of production as physical and human capital. Much of our modern economic activity simply could not function without it.

From Big Data by Leslie Bradshaw

WHAT YOU SHOULD KNOWCurated from recent U.S. Chamber of Commerce Foundation research, blogs, and events. emerging.uschamber.com

From left to right: Leslie Bradshaw, Chief Operating Officer, Guide; Marc L. Berger, Vice President, Real World Data and Analytics, Pfizer; Katharine Frase, Vice President & CTO, Global Public Sector, IBM Smarter Cities; Rachel Nyswander Thomas, Vice President, Government Affairs, Direct Marketing Association

Photo by Ian Wagreich / © U.S. Chamber of Commerce

// W H AT Y O U S H O U L D K N O W | 67

emerging.uschamber.com


BLOGS http://emerging.uschamber.com/blog/

Crowdsourcing assumes the old adage that “many hands make light work.” The approach brings a group of people together to address a particular issue that then produces a greater number and/or variety of results. Crowdsourcing reflects a belief that an abundance of input by a particular community will generate an abundance of quality output, benefiting everyone involved in the process.

Tamara Carleton, Foundation Fellow and Founder and CEO of Innovation Leadership Board LLC“Crowdsourcing As a Model of Abundance” | June 13, 2013

Innovation is all about what’s new. And regulation is often about disallowing or discouraging what’s new. The growing complexity of the regulatory state, therefore, can only block some number of these innovations and is thus likely to leave us with a simpler, and thus poorer, world.

Bret Swanson, Foundation Scholar and President, Entropy Economics“Regulatory Complexity Gone Wild” | June 6, 2013

Making businesses resilient to disasters is important on many levels. One of the most critical realizations for company owners, however, is that in an emergency, a business’ survival has wide-reaching importance, given the critical role businesses play in helping communities recover, rebuild and move forward. “Open for Business” is not just a catch-phrase. It’s an essential way of life for every community.

Rich Cooper, Vice President, Emerging Issues & Research, U.S. Chamber of Commerce Foundation“Hope for the Best, Plan for the Worst – Lessons from the Tornadoes in Oklahoma” | May 22, 2013

Every generation is uniquely born, coming to bear attributes that some may call remarkable, and they all soon learn to just get over themselves. They learn to trust in things larger than themselves because they must—whether those things are institutions, businesses, or family. Trust becomes their currency for functioning well in the marketplace and community. Today, more than ever before, that trust is increasingly being reinforced by a greater sense of purpose in work. What makes the Millennial generation and every other generation before it “unique” is now being met by a range of opportunities that technology, education, and business values can now afford. Rather than having cause for grief, Millennials should celebrate. I’ll be right there with them.

Michael Hendrix, Director, Emerging Issues & Research, U.S. Chamber of Commerce Foundation“The Age of the Millennial has Arrived, but Are They Ready to Seize It?” | May 20, 2013

emerging.uschamber.com

“We don’t usually start a new regulatory regime and end old ones. We don’t add new regulations and subtract old ones. We tend to build over time, so government risks continue to grow as government continues to grow.”

Rosario PalmieriVice President for Infrastructure, National Association of ManufacturersJune 13, 2013

“The exciting thing is that analytics are understandable and usable and helpful in so many different fields.”

Dr. John F. Elder IV Founder and Chief Executive OfficerElder Research, Inc.May 30, 2013

“There is no company immune from government risk having an impact on their business model.”

Tony Costello Bloomberg Government

QUOTES

WHAT YOU SHOULD KNOW

Tony Costello, Senior Managing Analyst, Bloomberg Government

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“The fact is, if you’re not a data driven marketer these days, you’re not going to be in marketing very long.”

Rachel Nyswander Thomas Vice President, Government Affairs,Direct Marketing Association May 30, 2013

“Big Data is a lot like oil. It’s in the ground and it’s relatively useless. It’s when you take it out of the ground and start to refine it that it begins to show its true potential.”

Stephen GoldVice President, Watson Solutions, IBMMay 30, 2013

Andrew Feffer, Chief Operating Officer, Washington Nationals

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Stephen Gold, Vice President, Watson Solutions, IBM

“We may not be able to control who wins or loses on the field, but we can control the fans’ experience at the ball park.”

Andrew Feffer Chief Operating Officer Washington NationalsMay 30, 2013

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Scholars and fellows SPEAK!

What do you consider a likely future challenge that we must prepare for?

“There is increasingly more information to consume than we have time to consume it. To answer this challenge, we must find more effective ways to sift through the data using the hard sciences and make sense of it using the humanities. Data integrity, context, and visual storytelling will all be key.”

- Leslie Bradshaw

“As a result of lower birth rates, the global human population is expected to plateau by mid-century, rather than the steep population growth of past centuries. This demographic change will have implications for energy use, health care, and economic growth.”

- James Slutz

“The challenge is to prepare for the future we can’t clearly see. As one example, today’s technologies will disrupt more industries, and America’s business leaders must plan strategically for these impending changes. Putting ‘ready’ back at the front of ‘Ready, Aim, Fire’ enables business leaders to move from passive resilience to active foresight.”

- Tamara Carleton

From an economic perspective, demographic changes in the next generation will present both challenges and opportunities as we adjust to a declining birth rate and the retirement of the Baby Boomers, but hopefully also realize the economic promise that increased immigration can hold for our future.


What do you consider a likely future challenge that we must prepare for?

// S C H O L A R S A N D F E L L O W S S P E A K | 71

“From an economic perspective, demographic changes in the next generation will present both challenges and opportunities as we adjust to a declining birth rate and the retirement of the Baby Boomers, but hopefully also realize the economic promise that increased immigration can hold for our future.”

- Alex Brill

“Consumption will increasingly occur on an a la carte basis. As Apple iTunes’s 99-cent song model spreads to everything from transportation to computing, a more diverse set of goods will be available to consumers at more attractive prices. Regulation and business methods must adapt or risk constraining this advance and others. ” - Matt Jensen

“The perennial challenge is the temptation to accept a new normal of diminished expectations, crushing debts, and global catastrophes, which leads to guarantees of security and thus stultifying impediments to the entrepreneurial creation of opportunity and wealth. This mindset amplifies the risks we hoped to avoid.”

- Bret Swanson

“The impact of the Syrian conflict on Jordan, under strain from the massive influx of refugees, an anemic economy, and internal unrest. Weakening of the Hashemite Kingdom to a breaking point and ensuing regression could be a game changing blow to Middle East peacemaking.”

- John Raidt


Introducing Matt Jensen. Matt is a research associate at the American Enterprise Institute (AEI), where his research agenda is focused on debt, taxation, and innovation. Jensen also coordinates AEI’s International Tax Database. He served a short tenure in the finance industry before turning to policy and economics.

At AEI, Jensen has recently studied the effect of federal debt accumulation on households in different income groups; strate-gies to promote growth using business tax reform; and how the methods used for tax policy analysis affect tax policy out-comes. He is currently investigating the way in which firm and industry characteristics affect innovative output.


One of the great themes etched in America’s history, sports, and culture is that of the comeback. For instance, who would have thought that a ragtag colonial militia that seemed to spend much of its time on the run from better trained and equipped British forces would score an upset victory to win the idea of a nation its freedom? Or the sports team that is down a couple of points with just seconds to spare would pull out a win and hoist the championship trophy overhead to the shock of everyone. Or maybe after the main character in a blockbuster movie or bestselling book is beaten down and seems to be down for the count, they rise up to meet the challenge and win the day.

In each of these instances, the odds are overcome in favor of the underdog. Unfortunately, we know life is not always so inspirational. Sometimes the other guy wins and the underdog walks away with nothing but a broken heart. In America, the true measure of a person’s character is found when he or she rises to meet the challenge ahead.

Time and again, we see neighbors helping neighbors battle back fires or flood waters; businesses offering extra space and resources to competitors to keep business moving; out-of-state utility workers restoring downed power and communications lines. The most challenging of times often brings out the best of us. That best is not just addressing the basic needs of an area under duress, but also looking to the future so that those problems can be avoided in the days to come.

The comeback that we all so often cheer for is really about applying the hard won lessons of “before” with the preparations and endurance that enable us to stand upright “after.” That is at the heart of resilience—being able to endure the worst so we can be at our best when that challenging moment arises.

Without a doubt, everyone knows we can be our best under ideal conditions, but what about when they are at their worst? That is a distinguishing moment many of us increasingly face in an ever more dynamic, risk-filled world.

In planning for any future, it is apparent that selecting partners who are willing and able to join you in the proverbial foxholes and trenches under heavy fire is a whole lot more valuable than those who show up for the photo-op.

There is inherent reward in risk, just as there is acquired scar tissue. Both teach valuable lessons individually as well as to those around you. That has always been part of the American experience and we are all the better for it.

Rich Cooper Editor-in-chief

FINAL WORD

1615 H Street, NW | Washington, DC 20062

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