Resilience vs. Anticipation

The West is resilient and can roll with the shocks. The East copes through anticipation, the static planning that assumes perfect foresight.

Virginia Postrel | August 25, 1997

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"My wife and I honeymooned in San Francisco," says Art Hutchinson, a technology-management consultant with Northeast Consulting Resources in Boston. "We'd love to live there--except for earthquakes. We're willing to put up with months and months of regular pain, sort of do our penance in the dark and cold, shoveling snow on April 1 in a freak blizzard. But the risk of one great whomp and you're flattened on the 880? No. . . . That feels very parallel to the risk profile that people think about in business. If you're willing to move there, you've already accepted a certain subliminal level of risk."

Boston's winter is a natural disaster, but its predictability changes everything. As Hutchinson suggests, New Englanders know winter is coming. Bad weather is annoying but easy to plan for: You build snow days into the school year, buy a car with four-wheel drive, get used to scraping ice and shoveling snow. You make sure you have a coat, hat, and gloves. Snow, says Hutchinson, is no big deal: "You just put on boots." Life has a regular rhythm.

Good weather plus earthquakes creates an utterly different environment. On a day-to-day basis, you can concentrate on your goals, with no need for contingency plans. Your softball game, your picnic, your wedding won't be rained out. But everything could change in an instant. You can't anticipate earthquakes, can't plan for them, can't even predict when and where they'll strike. Instead of providing the certainty of seasons, nature promises a future of random shocks. All you can do is develop general coping skills and resources. There is nothing familiar about the aftermath of an earthquake, and no one survives it alone.

IN HIS 1988 BOOK, SEARCHING FOR SAFETY, the late UC-Berkeley political scientist Aaron Wildavsky laid out two alternatives for dealing with risk: anticipation, the static planning that aspires to perfect foresight, and resilience, the dynamic response that relies on having many margins of adjustment: "Anticipation is a mode of control by a central mind; efforts are made to predict and prevent potential dangers before damage is done. Forbidding the sale of certain medical drugs is an anticipatory measure. Resilience is the capacity to cope with unanticipated dangers after they have become manifest, learning to bounce back. An innovative biomedical industry that creates new drugs for new diseases is a resilient device. . . . Anticipation seeks to preserve stability: the less fluctuation, the better. Resilience accommodates variability; one may not do so well in good times but learn to persist in the bad."

Here, then, is the basic difference between the valley and the Hub: Viewing the world as predictable and itself as the center of the universe, Boston has encouraged strategies of anticipation. People try to imagine everything that might go wrong and fix it in advance. But in Silicon Valley, there are no certainties. The future is open and subject to upheaval. Resilience is the strategy of choice. People do the best they can at the moment, deal with problems as they arise, and develop networks to help them out.

The positive side of anticipation is that it encourages imagination and deep thought, the stuff of intellectual life. And it is good at eliminating known risks. It can build confidence, appropriate in a city whose leading business manages the life savings of America's middle class. "Just look at the name: Fidelity," says Hutchinson. "Rock solid, New England." Building Fidelity Investments meant not just hiring good fund managers but getting customers to trust impersonal computers, phones, and customer-service systems as they'd once trusted the neighborhood banker. Anticipation makes such systems reliable.

But anticipation doesn't work when the world changes rapidly, and in unexpected ways. It encourages two types of error: hubristic central planning and overcaution. To find the former, there is no better source than old copies of the Harvard Business Review, where industrial policy gurus once plied their trade. "Most experts believe that without deep changes in both industry behavior and government policy, U.S. microelectronics will be reduced to permanent, decisive inferiority within ten years," wrote Massachusetts Institute of Technology's Charles H. Ferguson in a famous 1988 article. Who were the experts? "A wide number of university researchers and senior personnel of my acquaintance in the U.S. Defense Department, the CIA, the National Security Agency, the National Science Foundation, and most major U.S. semiconductor, computer, and electronic capital equipment producers. My conclusion, after meetings with groups in the U.S. Defense Science Board, the White House Science Council, and others, is that only economists moved by the invisible hand have failed to apprehend the problem." Ferguson and his mandarin contacts anticipated disaster and demanded industrial policy because their imaginations failed them. They didn't envision an industry driven not by DRAM making but by microprocessors, software, and networks.

To anticipate is to worry: Mandarins worry and propose dramatic plans to fight their fears. Regular businessfolks worry and fail to act. Consider the eternal bug fight. Anticipation says you should try to get all the bugs out of a product before launching it: zero tolerance for error. When Quote.com's Tom Henry talks to his old colleagues at BayBanks in Boston (now merged to form BankBoston), he can hardly believe what they tell him: "They're still trying to get out home banking--and this is 15 years later. Holy smokes! In what other business could you wait 15 years to get a service out?" But no one wants to make a mistake.

Kimbo Mundy, now president and CEO of Bidder's Edge, a Wellesley, Massachusetts, startup developing a Web-based venue to provide information,

tools, services, and contacts to the online auction market, spent 12 1/2 years at Interleaf, first in Cambridge, then in Waltham. He is proud of the work he and his colleagues did there, solving difficult programming problems. His intellectual side considers the Silicon Valley approach to software superficial. But, from a practical point of view, it makes sense. "Being a little bit more superficial, slapping something out there just to get it done and be able to make noise about it is actually the way you should develop software," he says. "The hardest thing is to just get the customers' attention in the first place. Once you get their attention--as long as you haven't pissed them off--you can then do release after release and, like Microsoft, by the time you get to release 3, you actually have a product."

Indeed, trying to identify and anticipate every bug--and to make the programming as elegant as possible--undercut Interleaf's technical achievement by limiting its market. "We had a product that was the best electronic publishing product that could be had in the mid-'80s," recalls Mundy. "It did things that the intellectuals of the time, like Brian Reid who did Scribe [a text editing system] at [Carnegie Mellon University], said couldn't be done. We were a WYSIWYG system with all sorts of fancy formatting. And we sat on that product for a year cranking bugs out of it. . . . That was right about the time that Frame Technology came out and started to eat our lunch."

FRAME, A SAN JOSE COMPANY now part of Adobe Systems, also had another advantage: It used the Sun Microsystems user interface, while Interleaf insisted on its own. The do-it-all-yourself approach, which makes anticipation and

control easier, is the touchstone characteristic of Boston's high tech community, reflected in proprietary systems and company-man loyalty. Boston traditionally keeps everything within the same box. By contrast, the West Coast industry is built on open systems and professional mobility, both of which enhance resilience.

"The minicomputer generation was all about proprietary franchises, proprietary operating systems and architectures, and trying to corral the customers into believing that they could only do their work with one person's hardware," notes Tom Henry. Ten years ago, he was working at Prime Computer (now Computervision) in Bedford, Massachusetts, and suddenly realized, "I gotta get out of here, because hardware is going to become a commodity." He left to sell banking systems for a financial software company in Cambridge. Today, he's in a Silicon Valley business built on partnerships, specialization, and resilience. An Internet-based service, Quote.com isn't tied to any particular hardware or network. It integrates financial news and research from a bunch of different partners and delivers it through still others, as well as through its own site. For its part, Quote.com provides one-stop shopping and a software-based editorial filter, organizing and selecting content with the habits of "serious investors" in mind.

"Our vision is you build a fabric of partnerships and it's a lot more resilient to changes in the business," says Henry. "On the East Coast, there's still the perception--the dying perception--that, `Well, we can do it all on our own. We'll just keep adding the people and we'll develop those core competencies.'" A web of partners provides more "sources of field intelligence" to spot changes in the marketplace. Partners from different industry backgrounds and corporate cultures offer a diversity of perspectives and ideas for responding to new situations. It's also far less painful to drop a failing partner than deal with a floundering division. For new brands like Quote.com, partnerships also offer a way to build credibility quickly.