Elizabeth Kubler-Ross Redux

January 31, 2009 The "Death-and-Dying Lady" lives on. Financial correspondent Floyd Norris of the New York Times writes about a Columbia University researcher whose seven-stage theory about how industries recover from traumatic change derives from Elizabeth's five-stage theory about how terminally ill patients confront the prospect of death:

FROM SHOCK TO ACTION

Industries facing severe structural change go through a seven-step progression before they manage to deal with it, said Rita McGrath, an associate professor at Columbia Business School.

1. Shock.
2. Denial. “This can’t be happening to me.”
3. Sadness. “This is awful.”
4. Anger. “I don’t deserve this.”
5. Bargaining.
6. Acceptance.
7. Renegotiation. It is then that companies find ways to change their business model to survive.

Comments are invited to discuss where in this progression various industries are now, and what they should do. Possible industries for comment are banks, autos and newspapers.

MY COMMENT (embellished from the printed version): How shocked would former University of Chicago psychologist Elizabeth Kubler-Ross be, were she with us today, to see her five-phase model for process of grief in terminally-ill individuals plucked up from the realm of the human psyche, transported to the realm of human commerce and metamorphosed there into a seven-stage model for the recovery of cyclically-afflicted industries!

That said, the seven-step model is useful and invites comment on newspapers in particular. Most papers are hopelessly stuck in step one or two, shock and denial, and are sinking fast, unable to facilitate or even acknowledge the dominant trend of the digital age: the emergence of an increasingly articulate PUBLIC MIND of ALL citizens fueled by massive demand for interactive media experiences and, in politics, by the demand for interactive politics that led to the election of Barack Obama.

The New York Times, whose stock can now be bought for under $5 a share, remains beholden both to its traditional elite Tiffany/Rolex advertising base and to an editorial outlook that seems to want no part of the inclusiveness that marks this developing public mind. I'm no fan of Rupert Murdoch, but the Times' elitist outlook strikes me as arrogant.

In the future, profitable media (including newspapers) will find ways to mediate the disparate elements of this developing public mind, including ways of generating intelligent discourse between intellectuals and non-intellectuals. Economically speaking, they will mediate differences among of America's lower, middle and upper classes. In politics, this mediating media will make citizens and government responsive and accountable to each other in solving the nation’s problems and maximizing its opportunities.

In the last paragraph of his important Feb. 3 column, Martin Wolf of the Financial Times writes that "we are living on the cusp of history." Indeed we are, and in more ways than one. For first time in human history, human beings have the chance to use interactive media technologies to resolve a single critical problem – the collapse of the global financial system – not by military force but by human reason, as President Obama keeps telling us. In this new era, profitable media will find novel and compelling ways to tap the presently untapped Market of the Whole - in America, of all 300 million Americans - that constitutes this emerging, interactive public mind. Only when this public mind is communicating substantively with America's political leaders will America develop the informed consensus that will enable it - and the world (read Martin Wolf) - to survive the economic maelstrom in which all of us swirl today.

Storm Hits Agin!

Jan. 23, 2009. 6am. Dow futures are below 8,000 at the moment and even as the CNBC gang all but begs for an Obama honeymoon rally, I myself see the Dow heading south to test its November lows of 7,400.

This week America (and the world) celebrated the inauguration of a promising new president. But the economic news was not good, for the world was sliding into the second (economic) phase of the global economic contraction whose first (credit) phase hit with gale force last summer. This time, the dangers at home included rising unemployment, consumer spending declines and a still-weakening housing market (not to mention Citigroup, Merrill Lynch and Bank of America). And abroad, they included the Chinese contraction and confirmed recessions in many countries.

Two news items for our times: The Bank of England's historic rate cut to 1.5%, lowest since its founding in 1694. And the Moody's cut of its rating of The York Times to junk status.

LESS SHOCKING

It's worth noting that Phase II, while painful, will if nothing else be less shocking than Phase I. Thanks to the miracle of modern communications technologies, our heads are at long last out of the sand. The years of ostrich denial are done. "That we are in the midst of crisis is now well understood." That was President Obama in his inauguration speech.

Well put. And important to be said. Yet not saying much! Where do we go from here? What are we learning that will help us down the road? As time permits, I'll post links to interesting responses and solutions to the crisis. Some (Wolf, Whitney, Roubini [register], Friedman) will be variations of the $800 billion Obama stimulus plan that's now taking shape in Congress. Others (Morris, Whitney) will be strategies for cleaning up the nation's broken banking system (New York Times "Room for Debate" ). And others (Farmer, The Economist) will focus on the global crisis. Still others will argue that the best course of action is no action. There are lots of good ideas out there, often in conflict, as ideas should be.

CONSCIOUSNESS. CONSENSUS. CITIZENSHIP.

Clearly the world is far from reaching anything like consensus on a way out of the crisis. And solutions pile up so fast that even keeping up with them is a full time job for several people. What's more, the solutions being implemented are coming from the small circle of experts and central planners who for the most part failed to see the crisis coming. Ordinary citizens are voiceless when it comes to generating solutions or weighing the pros and cons of solutions advanced by experts and political leaders. Yet President Obama keeps saying that America will not able to renew itself until Americans are fully engaged in the process of renewal. Here's where civic media comes in, and we are far from having an effective one at this point.

Meanwhile, the crisis seems to worsen faster than anyone can keep up with it. It has the feel of a black hole. Or of a maelstrom, the massive deep-sea whirlpool caused by tidal shifts described by Edgar Allen Poe in his Decent to the Maelstrom, a short story about a Nordic sailor who survives one by staying cool and observing, looking for way to escape. When his brother perishes by lashing himself to the mast of the sinking ship, he escapes and survives by grasping a rising empty barrel. The story was an inspiration to Marshall McCluhan - the Canadian media prophet who first spoke of a global village - and to his biographer, W. Terrence Gordon, who chose the perfect title for his book: Escape into Understanding.

Out of the Crisis, by the way, was the magnum opus of W. Edwards Deming, the American systems engineer whose philosophy of continuous improvement based on listening to and learning from employees is widely credited with bringing Japanese industry from the ruins of World War II to global preeminence in the 1990's.

Looking for an escape. Listening to employees. Listening to citizens. Listening to ourselves and others. Deming, like McLuhan, makes great good sense to me. And I'm no engineer. Once a TV interviewer asked him what one thing he would do to improve American education. "Abolish grades!" was his immediate, blunt response. His questioner about fell off her chair. "Why?" she asked, stunned. "Because grades destroy the two qualities most necessary for productive work: co-operation and creativity." He laid down the hammer. As an educator, I couldn't agree more. These qualities, along with competence, are what the world needs now.

OUT OF THE CRISIS: FROM AN ECONOMY OF QUANTITY TO AN ECONOMY OF QUANTITY AND QUALITY?

Some economists are now speaking of reinventing the economy. Will the day come the economy is no longer seen as a matter of rising or falling GDP, of material wealth-generating productivity affecting many citizens but excluding many others? Has this ingrown, ideologically-tainted notion not utterly and recently failed us? New data-gathering technologies and the dawning Obama era make it possible for economists to generate much more comprehensive ways of measuring the current and future health of the vast networks of human survival and enrichment activities that constitute the economy.

It will soon be possible to measure the health of the economy using both traditional metrics of material quantity and new metrics of non-material quality of life. Take the concept of consumer confidence , which measures how all citizens feel about spending money. As such, it is a qualitative measurement of a quantitative aspect of the economy and, as such, as a forerunner of more comprehensive ways of assessing economic health. Behavioral economists are on this track, and for my money it leads to an economics informed by measurements of citizen satisfaction with every aspect of work and life that really matters.

OK, so all this sounds like a pipedream - like John Lennon singing "Imagine". Yet I wonder if the world hasn't reached a point where it simply can't get by - "muddle on through" as folks used to say - with anything less. The storm that's hit us is NOT an act of God or an event of nature: it's entirely man-made. Is it a life-and-death maelstrom of the kind that Poe wrote about? If so, we - the human race - will survive it only by learning from it. Not just some of us, but all of us.