The inability to leverage and connect intuition, understanding and knowledge and tap into that higher level of human intelligence called Sechel may lead to nothing short of disasters. It is already tragic to see companies and entire industries disappear but it is even worse when the lack of Sechel leads to the decline of entire cities and regions.

In September 2009 Time magazine dedicated the front-page article to what seems to be the demise of Detroit. They called it, with brilliantly sad wit, “Notown”. The editor and the journalists of the magazine were so bowled over by the state of the city that they decided to buy a house, keep a rotating team of writers there for a year and scout for as many stories as possible to narrate the life of a city with a glorious past and a possible future. Their goal was to put Detroit under the spotlight and attract the attention of all those who can contribute to the city’s rebirth.

I have never been to Detroit (although I was a great fan of Isiah Thomas) but I lived most of my life in Italy where the economy is almost entirely based on districts, well identified territories where a small pool of leading companies in one business sector (textiles, leather, precision mechanics, automotive, etc.) facilitate the development of a myriad of small companies all in some way connected with the leading firms, often as suppliers. For a number of reasons, in Europe the social implications of the decline of districts are never as brutal as in North America but in recent years we have witnessed the fall of many of these districts everywhere with heavy socio-economic losses.

The cultural familiarity that I have with the issue of declining areas as well as a strong empathy with the situation in Michigan prompted me to offer a small contribution of ideas on how I feel the problem should be addressed.

Mental models: an identity crisis

The daunting task that Mr. Bing, the Mayor of Detroit, is facing is to recreate an identity for the tens of thousands of citizens who thought of themselves as part of an industry. The whole mental model of the city and its people was based on being part of some gigantic and somewhat invincible guild that was leading the Country’s economy: “What is good for GM is good for the Country”. Indeed, I do not need to stress the monumental and continuous strategic mistakes that the American automotive industry has made over the years until its final collapse; I think it is more interesting to look at what is needed to come out of this mental model and how we can do it.

Dr. Deming and the resurrection of post-war Japan

In 1950, Dr. Deming was summoned by General McArthur to compile a census of means and infrastructure of Japan, the Country that he had been governing over since the end of the War. The goal was to have a basis for action to rebuild the nation. I am sure the reader is aware of the state of disarray of Japan at that time as well as all the problems connected with the effects of the post-nuclear holocaust. Deming immediately gained the full attention of the JUSE (union of Japanese scientists and engineers) as well as all the top industrialists; what Dr. Deming explained in the ensuing several years to the diligent ruling class of a country that was on its knees was the following:

1. A Country should be seen as a system; a network of interdependent components with one common goal;
2. If you want to manage your country for indefinite and sustainable growth you must control the element that may make or break these interdependencies and therefore the system: variation;
3. Understanding and addressing systematically all the root causes of variation, Deming called it “Quality”, (in processes, machines, methods and materials) leads to an ever improving reliability and triggers an increase in productivity;
4. Such an increase in productivity allows the capturing of a larger share of the market, which in turn enables the creation of more jobs;
5. Every element of this “virtuous cycle” (more quality leads to more productivity that leads to more market share that enable the creation of more jobs) must be dealt with following the scientific approach embedded in the PDSA cycle.

The Japanese listened very carefully. In 1958 they produced the first car and in 1978 they had 28% of the American market. In Detroit they will certainly remember when the “Italian” CEO of Chrysler, Mr. Lee Iacocca, inaugurated the post war season of government bailouts to American industry. (That season regularly comes back anytime we confuse “free world” with “free trade”).

The parallel with Detroit

Detroit is no different from Japan in 1950. It looks like a place which has been bombed; it has been defeated when it thought of itself as invincible; the psychological state of its inhabitants is one of lost identity and, just like Japan, Detroit has an astounding and largely unexploited heritage. Detroit, just like Japan, needs to rebuild itself like a system leveraging all its incredible cultural and professional resources.

Mr. Bing will be flooded with solicited and unsolicited advice; I hope he will not mind mine too much.

First, he needs a census of all the intellectual capital available; a precise survey of all the skills and competencies (which ones, how many, their availability) willing and able to work for the rebirth of the city. Indeed, they can be drawn from everywhere, especially from the state of Michigan, and easily enticed to join in if the city displays a coherent and rigorous plan.

Second, a carefully chosen subset of these resources must gather under a common umbrella, a sort of Agency fully empowered by the Mayor, populated and run by competent, visionary, fully committed officials, not white collars. This Agency has, first and foremost, the goal of designing the “Detroit system”: Vision, goals, economic infrastructure, capital and human resources needed; short, medium and long term plan to create prosperity for the city. The Agency must provide the leadership and some of the skills needed can be learned.

Third, The Agency needs a commonly agreed method to Plan, Do, Study and Act on all the issues at stake and also a practical algorithm to implement the necessary projects/programs.

Fourth, once the Agency has designed the plans, resources are needed to execute them. Invariably, these plans will call for the creation of a number of enterprises. These companies will start themselves up by providing the services foreshadowed by the plans. They will provide employment and the covenant with the employees will be based on the adherence to a philosophy of sustainability and long-term common wealth for the city.

Fifth, Detroit will need to anchor this development to a citywide continuous learning program involving all the components of the city: Hospitals, schools and colleges, public utilities, civil service, etc.

I am aware of a very well intentioned initiative in Michigan, MEDC. Indeed, providing tax benefits and “one job shop” to facilitate the life of businesses wanting to relocate to Michigan is a good thing but it does not address the issue. I do not believe the future of Detroit is in its transformation into a fiscal haven. Rather, I believe it is in the political, administrative, infrastructural planning of synergies in the city starting from the model of capitalism it needs to adopt.

Personally, I believe Detroit has a unique chance to herald a badly needed paradigm shift in the way historically Americans have looked at the role of “government”. Detroit, at the most fundamental level, faces two major challenges: the first is to wake up from the illusion that another Leviathan will rise to save them from the abyss they are in; the second is to realize that individual, unbridled, uncoordinated, speculative efforts aimed at reviving the city are doomed to failure.

Detroit has the possibility to prove that the way for individuals to increase their personal wealth is not through individualism; that the way to promote free enterprise is not through the far west of unregulated activities; that taxpaying is an enhancer not a debaser of people’s freedom. Detroit has the chance to show that it is only through cooperation, not competition, that long-term, sustainable wealth can be created.

Intelligent Leadership

To face these two challenges Detroit needs Intelligent Leadership.

“Intelligent” refers to the ability to connect the faculties of the intellect we have been talking about throughout the book; Detroit needs to tap into its collective Sechel (intelligence). Leadership calls for a Theory and a Method to use that collective Sechel. I would like to elaborate further on Intelligent Leadership.

The five, very basic, aforementioned issues that the city has to address are part of a comprehensive solution (we have come to call it “injection”) to a not precisely stated problem. This comprehensive “to be found” solution will paint a picture of the future reality of the city. A plan will have to be designed and implemented to make that future become reality.

In order to bring about a monumental transformational effort such as reviving Detroit we need to have clarity on the problem, the solution and how to implement it; we need to connect systemically the intuition, the understanding and the knowledge/consciousness that the leaders of the city must possess.

The problem can be stated in terms of the Core Conflict the city is perceived to be in by its leaders. The mechanism to build this conflict cloud has been detailed previously:

1. We gather the Undesirable Effects (UDEs)
2. We build the conflict
3. We raise the assumptions
4. We develop solutions that invalidate the assumptions (injections)

The main outcome of this exercise is threefold:

1) the team of competent and visionary leaders called upon to develop the conflict finds a precise verbalization for the endeavor ahead of them;

2) through the verbalization of the assumptions, i.e. the mental models that craft the way the team perceives reality (and their subsequent invalidation), it becomes evident what is limiting them towards their goal;

3) the team finds agreement on the direction of the solution.

The following step is to paint the future of the city; the Leaders need to show what the future reality of Detroit will be like once the Injections have been carried out. In order for this to happen we must use cause-and-effect logic to connect all the injections with the intermediate states of reality that are achieved through the successful accomplishment of the injections and, ultimately, through the satisfaction of both needs of the Conflict. We call this picture the “Future Reality Tree” (FRT) of the City. This network of injections and intermediate states of reality allows us to verify the completeness of our solution and enables the raising of negative implications that, once identified, can be trimmed.

At this point a full understanding of the plan for the city is in place and we can move on to its implementation.

Making it happen

The implementation of this plan follows the procedure described in this book: we build the operational plan, using the Prerequisite Tree (PRT). Moreover, in order to ensure full comprehension of all the intermediate objectives that need to be achieved, a few Transition Trees (TRTs) will have to be developed. PRTs and TRTs capture all the knowledge needed to bring about the transformation day after day, but they aim much higher than that.

A gigantic endeavor like the rebooting of Detroit certainly requires knowledge and for sure a hefty amount of know-how. More fundamentally, though, what these logical tools (PRTs and TRTs) facilitate is the development of the consciousness needed to embrace and execute the plan.

The rebirth of a city is neither a mechanical exercise (although a precise set of actions have to be taken in a coordinated manner) nor is it something that can be accomplished by just throwing money at it (although a fair amount of capital is needed). What will determine the success of this program is the level of “intelligent emotions” that all the key players will put into this effort. Let me be clearer.

Intelligent emotion

I am not talking about an undefined, wishy-washy, feel-good, popular fiction “emotional intelligence” that so many psycho-pundits love to rave about. I am talking about a cohesive, aware, concerted, relentless and orderly effort of synchronization of the wisdom, intuition, understanding and knowledge needed to activate the superior use of the mind called Sechel. I call “intelligent emotion” the ability to apply the intellect in a compassionate manner to the deployment of a rigorous and all encompassing methodology to the challenging feat in front of us.

In order to give Detroit the chance for a future its glorious past deserves, the word Leadership must be given its real meaning and a full scope. This leadership must start with affirming a new economics based on a superior ability to deliver goods and services of which people can make good use. This ability can only stem from an approach to wealth creation based on a systemic approach and a vision of the world where every choice we make must be inspired by the common good, not short term personal gain.

This is not fantasyland, on the contrary. This is the only chance for the free world to sustain its legitimate ambition to represent the best possible way of life. Hopefully we will soon relegate the word fantasyland to a world where ‘sustainable’ money can be made by trading derivatives. Maybe Detroit will not miss the opportunity to represent the first step towards a real and better world.

Domenico Lepore