Title: Economic Optimization of Innovation & Risk
Author: Robert Sheller
Publisher: Robert Shuler
ASBN: B00VY7YG0I
Pages: 100
Genre: Non-Fiction, Business
Interview Questions for Author Robert Shuler – Economic Optimization of Innovation & Risk
About the Author
Robert combines 50 years investing experience with the knack for finding hidden principles of a successful rocket scientist with half a dozen patents and several dozen publications in fields ranging from economics (corporate risk compensation, the equity premium) to physics (inertia & quantum gravity). He lives in Texas with his wife Natasha.
You can contact me or get new release notices at http://shulerresearch.wordpress.com/
Today we are talking to Robert Shuler, author of “Money, Economic Optimization of Innovation & Risk”.
PBR: What are your particular fields of expertise?
I have 42 years of aerospace & software fault tolerant systems design, verification and management in the area of human spaceflight. I also have experience with economic models and investing beyond what project managers usually have that enabled me to develop the crash rate model.
PBR: As a noted author of many expertise based publications what factors prompted you to initially start writing for publication?
I had started three different books through the years. When the government shut down for three weeks in the fall of 2013 I realized I had enough data and time to finish one of them. It was a complicated book, so I spent the next year and a half writing what I hoped would be a more popular book. Meanwhile the Bibliogov project had published a set of presentation slides on crash rate theory that were not very useful and frankly embarrassed me as my name was on them. So I started writing the crash rate book in self defense, but the scope expanded beyond what I already had as I interacted with Gerald Wilde, a retired Australian safety and risk psychologist.
PBR: Could you briefly give an overall view of your crash rate theory?
Sometimes we get the result we expect, but sometimes just the opposite happens. No matter how many studies are done and anecdotes accumulate, insufficient insight is gained to form expectations ahead of time as to which result will come from a particular action. The theory models the value of a thing (project, vehicle, etc.), the cost of crashes or failures, and the cost of development, and adds the defect ratio to relate development costs to operational profit and loss. Some of these things are not knowable exactly, but they are good enough to know whether doing more or less of a particular thing will influence failures positively or negatively. So we can realize, for example, that if we add features or increase productivity, we may need to do more testing and get the defect ratio down, just to keep the same crash rate we had before.
PBR: What factors led to the discovery of your theory?
I was having an argument with a friend about whether tools that made it easier to develop software made it more reliable, or less. At the same time I was discussing economic models with another friend. I just combined the two. When the Columbia Shuttle crashed, I tried applying it to more complex systems.
PBR: How long did it take for you to develop your theory towards practical applications?
I started in 2002 with the first draft white paper, and gradually added things, working on it for a few weeks every other year. I have applied it in my own decision making, and shared it with colleagues, but it was hard for people to accept. I thought the book form might allow me to provide more background and evidence from real life than in a technical paper, or short presentation. So it is just now being introduced to a wide audience, and I hope it will be tried on an important project soon. I plan to contact several of the new space companies and offer to explain it to them.
PBR: Who is your target audience for this book?
To make a big difference in society, the owners and managers of companies, and high level government administrators, need to discover it and realize the advantage it offers. So I tried to make the book appealing to these people. It might be frustrating for a project manager, because often they don’t have enough authority to make the kinds of decisions necessary. They used to. Over 42 years I have seen control centralized in the name of efficiency, and project reserves pulled up and managed at a consolidated level. But if one of the new space companies adopts it and has the kind of big success I think they can have, then the rest of the world will pay attention. I think it can be used not just to avoid crashes, but to operate at fundamentally different levels of reliability.
PBR: How could a layperson apply your theory to their personal life ventures?
Anyone can benefit by applying the principles to their own lives. I describe in the book how I used it to decide how much proofreading to do on a different book. You can use it to motivate yourself to prepare more carefully for anything, that is, to get the defect ratio low. You can keep records and find the point of diminishing returns where you aren’t making any difference anymore. But most important, you can think of all aspects of life in these terms. When we make social policy about poverty, that is a crash. Terrorism? Another kind of crash. What causes these crash rates? What effect does inhomogeneity have? Can we raise someone’s aversion to crashes by increasing their wealth? Or does that lower their cost of crashes because they know they will always be taken care of? I think there are some new ways of looking at old human problems in here, that are different than the old tired philosophies of the right or the left. If we want to become a space faring civilization, if we want to manipulate the codes of life, we have to be as a species fundamentally more immune to crashes than we are now. Otherwise we’ll just kill ourselves. If you think an asteroid would do some damage, imagine a spaceship traveling at near light speed, or an engineered life form with high intelligence and poor self control?
PBR: What was the most difficult aspect of writing and publishing this work?
The most difficult aspect is getting real data, a problem we were already having in the project management world. But two other problems are close behind. One is the mindset of systems engineering, that a process to make something easier has to also make it better. And the other that it doesn’t fit exactly the paradigms of behavioral economics or system engineering, so it was hard to find a receptive community to write for.
PBR: What advice would you give to an author looking to publish a work based on their field of expertise?
Research all the alternatives, try to remain unbiased, and explain very carefully how to make a small improvement in the way things are now. Many, many people generate sweeping theories of gravity or particle physics or economics with little data and little relation to what is currently known. These are like Marx’s manifesto, more ideology than thoughtful pushing back of the frontiers of knowledge. Look at the damage Marx did, distracting the world from its real problems for over a century. You have to keep at it a long time, and gradually build credibility in your field.
PBR: Do you have plans for future written works based on crash rate theory?
Yes, but probably not what you think. I alluded to this in the preface, that I viewed crash rate theory as the precursor to the real-life version of Asimov’s psychohistory, in his Foundation series. I want to write novels in which I explore how humans might develop things like space tourism on Mars, and a society that can handle interstellar flight, and use crash rate theory to show how we might envision society changing and improving over hundreds of years, not just decades. And to envision the future based on something that might really work, not just extensions of our instinctive fantasies and impulses that evolved for small tribes living in the jungle. Current science fiction seems to either focus on a near-future dystopia – that’s not very optimistic – or a magical violation of the laws of physics, extending our present type of society on an interstellar scale. I think the reality will be much different. I want to show how it can be as interesting as the fantasy, maybe more so.
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