Sunday, October 30, 2011

The concrete shoes of legacy and sunk costs.


I am slowly working my way through Thomas L Friedman’s book Hot, Flat Crowded (2008). One reason for taking so long is that my reading time is limited to airports, planes, and car service waiting rooms. Another reason (the book is only 482 pages) is the thought provoking content. A new understanding, a twist of the current way of thinking or an explanation will often set my own thought wheels turning, causing a background conversation that competes with further reading.

In the part on “America” just after the chapter “Can Red China Become Green China?” the notion that “legacy industries” are one of the main resistors to the greening of America is introduced.

Legacy industry (a weak attempt at a definition):
  • industries that are fundamental to the way our economy and social structures exist today (e.g. the auto industry, the tobacco industry, the carbon based energy industries - coal and petroleum, the banking industry, the insurance industry, the arms manufacturing industry, the medical service industry, trade unions, etc...)
  • industries that base their current success and market position on maintaining the status quo (this is how we always do this...)
According to Friedman, one of the problems faced by America is that the democratic system opens the door for the legacy industries to stop the implementation of energy policies required to end the dependence on a carbon based economy. 

China is now leading in the environmental technologies:
  • their governance allows for top down policy change
  • the inertia of their population brings them closer to environmental collapse
  • if necessity is the mother of invention, their necessity is larger than any other country's
They may fail because in the democratic system everyone can be a watchdog and has voice, but that is topic for another discussion.  

Also this week I was introduced to the concept of "sunk costs" and their ability to limit change. The wiki definition seems to get suffocated by economists’ theories and testing. The simple notion of “sunk costs” is that your investment to date may increase your resistance to sell out. This would be the reason you stay in the check-out line that seems to be the slowest, or why you are devastated when your report is shelved (after all that work!).

Two concepts: “legacy industries” and “sunk costs”, same fundamental evil. They are found everywhere.

The union structure protects workers rights against any change that may make the worker redundant.

When the mini bus was introduced to the public transit system for routes with low ridership it appeared to offer marginal employment (off peak hours, split shifts, ect...). The senior drivers wanted to be sure they wouldn`t be driving the mini-bus. Once they realized that the mini-bus is actually “easier” work and offers more consistent employment (fewer big buses run during off peak times so there are fewer shifts available for the senior drivers) they fought for exclusive rights to this scope.

The democratization of information management, through the internet, social media, open source software, and advancements in computer technologies, is the disruptive innovation challenging our educational system. .

Educators, once the gate keeper of knowledge (a legacy industry), are facing a dilemma: redefine your scope or become redundant. Even the shift from “sage on the stage” to “guide by the side” is being eclipsed by open source “mentors” on Youtube, or on sites such as "edufire" or "The Khan Academy".

Departmental exams based on information retention were never measures of intellectual accomplishment.  They continue to be mandated by provinces, states or other levels of government (the legacy industry) as a way to demonstrate accountability and have become legislated life-wasting exercises.

What other legacy constructs exist in the educational system?

The old person distrusts the young person because the young person lacks experience. Or is the new order a threat to the “sunk costs” embedded by the old person’s life experiences?

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