Chaos Chaser: What We Can Learn About Risk from Nasa, Nukes, and Tech Start-Ups

By Addison Heard

Risk and chaos are fundamental to the makeup of the world.

Peoples lives are deeply grounded in and affected by them. In Chaos Chaser, author Addison Heard offers basic tools to help you navigate the chaotic world and even benefit from harnessing chaos creative power.

Heard, who has spent his life learning about and exploring the good and bad of risk, chaos, and creativity, presents a guide to understanding the fundamental theories, analytical techniques, and philosophies behind risk, chaos, and decision-making. He then offers a compilation of industry-specific examples, including exploring NASA by investigating the development of spaceflight as a mechanism for understanding innovation processes and catastrophic failures. He focuses on how innovation materialized and on the various high-profile tragedies that have shaped the industry.

Geared for both experts and non-experts who desire a practical background of risk and chaos and their roles in innovation and decision-making, Chaos Chaser gives an understanding of the fundamental impact of chaos on daily life and how you can use its power to create your own run-away successes.

• Language: English
• Publisher: Archway Publishing
• Release date: Aug 24, 2018
• ISBN: 9781480864436

Addison Heard

Addison Heard earned a bachelors degree in chemical engineering from Dartmouth College, a masters degree in risk and reliability from the University of Maryland, and an MBA from Dardens School of Business at the University of Virginia in Strategy and Finance. Heard is currently the chief technology officer of the national nonprofit Child Care Aware of America. He has spent his life working, studying, and living risk, chaos, and innovation.

Book preview

PART I

What Makes the World

Risky and Chaotic and

How to Benefit from It

CHAPTER 1

Why Chase Chaos?

W e gain an inherent understanding about risk when momentous things happen. We are mindful of that understanding in the moments surrounding catastrophic events, such as in the terrorist attacks of September 11, 2001, and the 2008 global stock market crash. We are also mindful of that understanding when we observe the sudden fortunes of massive new business enterprises like Facebook and Google. During these episodes, we become acutely aware of randomness and enormous consequences, and quite frankly, this realization is more than a little scary. The seemingly steady earth drops away from our feet, and we feel unsure of how to react or how to get back to our lives, especially when bad things happen. Our feelings are driven by the scale of the changes, the suddenness of the changes, and how closely we feel the changes affect us personally. We shall delve further into these factors later.

However, beyond those moments, we usually don’t think about risk and randomness at all, other than as a nagging feeling at the back our minds, and oftentimes we learn even that can be silenced. But the risk is still there, shaping our world, regardless of whether we are conscious of it. We are profoundly terrible at understanding risk. It is not in our nature to intuitively understand risk, let alone embrace it. Despite our tendency to avoid coping with risk, we must learn how to think about it. Learning how to think about risk then leads us to incorporating it into our everyday practices. Incorporating risk into our everyday practices leads us to making better decisions. Even better, we can learn how to use our new knowledge to our advantage to avoid catastrophic risks (as much possible) and to benefit from runaway successes, though, as we shall see, most of life is organized around simply avoiding the negative. To navigate the world successfully, we must construct a pair of reality goggles that allows us to see the world as it actually is.

Let me take the point a bit further. Virtually all of us recoil from the idea of randomness and chaos largely controlling our lives. But we should not fear randomness and chaos. The only way to not be overcome by large-scale negative events is to embrace the chaos. You cannot control floods, earthquakes, or financial crashes, so the negative aspects of chaos will still find you no matter how ingenious you are. But you can rob yourself of the opportunities that come from chaos. If you don’t embrace those opportunities, your competitors will. You will be tomorrow’s dinosaur. Instead, you’ve got to grab the shooting star, hold on for dear life, and ride it to glory. Become a chaos chaser. I will show you how.

This book is for many different kinds of people, but mainly it is meant to cover what I see as a gap in much of our thinking about risk. First of all, for people who are not experts in risk or quantitative methods, this is a book about how to understand risk in practical decision-making and how fundamental it is to much of our lives. Second, there are many (too many) technical books about risk, data science, applied mathematics, and so on. Those books are all about how to implement some particular family of algorithmic recipes, such as Bayesian, regression, Monte Carlo techniques, simulation, or machine learning. There are many books about finance and business of a similar flavor. Correspondingly, our culture is awash with experts in these various techniques. What is missing from our collective understanding is how to think about risk. What is missing is guidance on how to make real-world decisions involving risk, and not just in convenient textbook examples. What we are missing, especially among our most technically talented folks, is a philosophy of how to understand the application of our craft and the ethical responsibilities of doing it right. This includes doing it in a way that is intellectually honest and practical.

Let us begin this journey to knowledge with a thought experiment. Imagine two worlds: the known world and the chaosverse. The known world is comfortable and well understood. It’s the place you go at the end of the day to rest. It is warm and full of food and friends. It is the place where you get As on all of your tests. It is the place where every action has a nice, predictable outcome, determined by some set of well-understood laws or rules, which you have long since mastered. Even when you cannot get the outcome you want in the known world, you know exactly why. Life in this world is long, happy, and safe.

The other world is the chaosverse. You wake up in this world one day after a lifetime in the known world. Nothing makes sense in this world. The colors all seem wrong. Even the most basic actions have wildly and dangerously unpredictable outcomes. You try to walk forward and find yourself spinning out of control. You call out, and the sound reverberates back an incomprehensible cacophony. The rules and laws of this world are unknowable (assuming there are any). Life here is frustrating, difficult, terrifying, harsh, and (without outside assistance) exceedingly short.

Our real world is neither the known world nor the chaosverse but a subtle mix of the two. Our human tendency, however, is to the see the world as mostly the known world, punctuated by unfortunate side trips into the chaosverse. My suggestion is that we are often living in the chaosverse but do not realize it, mistaking our temporary comfort as a mastery over the known world until it is too late and some catastrophe strikes. There are good reasons for our tendency toward indulging in this illusion. There are times when it is appropriate to maintain that illusion. This book seeks to break that illusion, explains why we need to break that illusion, and discusses when we need to shatter that illusion with our reality goggles.

So what are reality goggles? Put simply, the reality goggles allow us to strip away the artifice of normalcy, of knowing, of data, and of prediction. They allow us to rip off the warm, comfortable blanket of our own expertise and mastery, not as a kind of psychological flagellation but as a salve against becoming overly fond of our own knowledge and forgetting to see what we truly do not know, which is often more informative than what we do know. Reality goggles also tell us when it matters that our lack of knowledge impacts our decision-making and, conversely, when we can indulge our fantasy of control. And most excitingly, reality goggles teach us how to find and make the most out of opportunities and become chaos chasers. They help us to truly break away with new discoveries and escape from at least some of the mundane problems that plague our existence.

CHAPTER 2

How Close Are We to the Chaosverse?

I t may sound like hyperbole and fearmongering to some to say that the real world is chaotic or that any significant portion of it is chaos. After all, the sun rises every morning in the east. The lights usually work when we turn on the switch. Our cell phones make calls, our computers connect to the internet, traffic flows, war doesn’t break out every minute, and generally things in our lives are predictable and safe. Until they aren’t. That until is very important. A relatively simple analysis of the world reveals that most of the important things that happen are sudden jumps, changes, or discontinuities in the world. Long periods of peace are suddenly broken by inexplicable wars. Years of market growth are unexpectedly crushed by a single day of market crashes exceeding all of the cumulative growth up to that point. The lightbulb operates perfectly for months and years and then suddenly and completely fails. The technology start-up sits in obscurity for years, losing money, and then finally wins a huge contract valued in excess of the entire current valuation. The researcher toils dutifully for decades, unrecognized for her sacrifice in a previously unremarked field, and then one day, she makes a discovery that completely changes our worldview or the state of the scientific field.

This goes to the heart of what I mean when I say that the world is chaotic. It is not that every minute of every day is an ongoing incomprehensible mess—with the exception of when we are infants. (More on this important point later.) It is that the entire universe is, at best, in a metastable state, at every scale imaginable. The universe is temporarily stable within a particular area of applicability. Once we move out of the window of time or out of the area of applicability, the system operates fundamentally differently from the current seemingly stable system. If we do not have the tools or experience to navigate that new system state, we find the world exceedingly unpredictable.

Why isn’t the world stable? There are two essential reasons. First, randomness impacts the behavior of dynamic systems, and our world is a giant dynamic system. Second, the variables and relationships among the variables that most impact the behavior of each system can change over time. Consequently, there is an inherent uncertainty in the universe from the standpoint of human decision-making, which is closely tied to our ability to process information. It is simply too hard to make out clear meaning from all of the information we take in. Note that I refer to uncertainty here with respect to human perception of the world around us. I do not mean to speak to the inherent probabilistic nature of the universe, as some physicists postulate. I mean that we as people must perceive the universe, understand it, make decisions, and act to effect changes in the universe. This human-centric inability to perceive and understand the universe is the failure focused upon here. As decision makers, as leaders, as investors, as parents, as citizens of the world, we need to focus on these inherent human flaws if we are to make well-reasoned and ethical decisions.

Anyone who works in research and development, engineering, the sciences, tactical military leadership, or teaching and learning is already deeply familiar with how confusion and lack of certainty are more the norm than the exception when making decisions and dealing with the world around us. In the sciences, scientists often ask basic questions about fundamental relationships. If I do A, will it cause B? They must conduct painstaking experiments to eliminate all other factors (ensuring that B was not alternatively caused by C, D, E, etc.) and trick nature into revealing her underlying secrets. Improperly designed experiments can leave an intellectually honest scientist with more questions than answers. Thus, much work goes into properly designing experiments; and even then, the results can be inconclusive. This can be even more difficult when the science seeks to understand some contradiction to existing theory.

In research and development and (at a more sophisticated level of technology application) engineering, workers strive for specific outcomes based off of more basic scientific principles. For example, if previous science has demonstrated the relationship between temperature, volume, and pressure for gases, the researcher or engineer may attempt to use those principles to derive a machine for breathing under water (including many other technologies and principles, of course). There will be many attempts and failures before success is finally achieved, as the specific application of the principles allude us without trial and error. Thus, much of the effort is spent in speculation about the outcome or in attempting to achieve the outcome but ultimately not knowing until the engineered item works. Even after a working version is made, failures and breakdowns ensue, requiring more trial and error and engineering to create a more perfect version. Some of the improvements will not be discovered via analytical or deliberate processes. Instead, they will be made because of some accident or some happenstance observation. Those discoveries too are then folded into the next generation of updates. And the updates will need updates, forever and ever into the future. Engineering. Design. Science. Discovery. These are all engines of tinkering, blind alleys, and accidents. Forever improving.

Another context that tends to be dominated by chaos is war. The additional complexity (not to mention the severity of the consequences when leadership gets something wrong) engenders even greater difficulty in decision-making than science and technology. In the military, there is a saying, No plan survives first contact with the enemy. Most people are also familiar with the term the fog of war, which describes the uncertainty of actual conditions in the war zone—yet a military leader must still plan and make decisions in such an environment. Given all of the military resources we have and knowledge and experience, why is it that even the simplest plan cannot be counted upon? Why is it that information and certainty are so hard to come by just at the time when they are needed most? Because that is the nature of the universe. Causality and relationships are not apparent upon observation. Dynamic systems change faster than our ability to assimilate the information we would require to analyze them. Confusion abounds, but still decisions can be made in such an environment, and some people learn how to cope well because they learn to embrace the chaos.

To really understand the nature of confusion and uncertainty, we must look to an experience we all have in common: childhood. Children are often stumped by the most basic elements of the world around them as they struggle to make sense of it. Most of us can remember back to a childhood experience where we failed over and over again, a time when we were unable to interpret basic information that later we found trivial in its simplicity. My personal favorite example is my experience learning music on the piano. I started when I was four or five years old. Initially, I did not know the names of the notes, time signatures, how to read music, which notes corresponded to which keys, how to hold my body and hands while playing, how to hear that what I was playing was not what was intended, and so on. All I knew was that I enjoyed the sounds of the piano. It was a period mired in frustration, confusion, and failure but also spiced with fun, growth, learning, and fulfillment as I progressed. Through practice (which is trial and error and experience-based learning), I slowly accumulated a body of knowledge and familiarity with my instrument and the music. Each new piece of learning, each new skill acquired was similarly frustrating, confusing, and failure prone.

Many of us forget these early experiences (or choose to suppress them), preferring our more current positive and affirming views of ourselves. Our childhood early learning allows us two advantages over our older selves. First, we are forming new connections and literally building our brains during those years. But more importantly, second, we are much more open to the learning process of experimentation and failure that we know as play. As adults, the same processes play out, but we often avoid these circumstances because they are uncomfortable and remind us of our weaker, less experienced selves. My own adult foray into jazz piano illustrates this concept. After a long hiatus, I returned to music at age thirty or so, this time attempting to learn jazz piano. I had listened to jazz all of my life but had never played it, as my training was in classical music, and my early exploration of other styles mostly led me to rock and blues and popular music. It was during this period of training that I was rudely reacquainted with the frustration, confusion, and failure that is endemic to the learning process. At first, my fingers would not play a swing beat on the piano even though I could plainly sing a swing beat and knew exactly what it sounded like. I could not solo or improvise, which are both staples of jazz music. I didn’t know most of the songs that were considered standards. I couldn’t read the notations and didn’t understand the scales. And what was worse, I had forgotten other basic skills I had mastered as a kid like sight-reading, intuitively knowing where all the notes were under my fingers, and even being able to quickly identify certain uncommonly used notes and parts of the piano. I spent an absurd amount of time wishing that I was playing some other more familiar music style, one with which I had more experience. Why? Jazz grossly exposed my lack of knowledge and experience, and I had no choice but to start over as though I were a child. It is my assertion that much of the world is like this experience of learning a new music form but that most of us lean on our past experiences, assuming the skills acquired in our previous times will carry us through the new unknown territory. But what if we cannot rely on those skills? What if we cannot turn back and simply give up because it is too hard? The real world rarely allows you to get off so easily as quitting the new music form.

Let us return for a moment to childhood learning, back to the very earliest learning in our infancy to help us better understand our lack of understanding. And more importantly, let us explore how we progress from understanding little to eventual mastery. At birth, our vision is not fully developed. This is partially due to the physical immaturity of our bodies, which still are developing quickly at that point. However, it is also due to the lack of neurological development. At that point, our brains have not yet learned how to process visual information. We are primed with the basic building blocks to establish visual mastery, but we actually have to go through the pain of developing that skill as our neural pathways form and reconfigure in response to stimuli. For example, we seem to be preprogrammed to recognize faces (or at least certain aspects of faces), but we do not have the full vision and visual comprehension that we do as adults. This seems to broadly apply to many of our skills, ranging from language acquisition to abstract symbolic expression to walking. Our minds require several things in order for understanding to emerge, especially in the initial phases of learning. We require a baseline predisposition to acquire a skill, basic instinctual building blocks on which a complex trellis of mastery can be constructed. We require repeated exposure to a stimulus, such as seeing a face over and over again. We require emotional resonance associated with the experiences we gain, to give those experiences context and meaning. As we