All systems break down. Some bounce back, others do not. This is a book about why.
Establishing a ?warm zone? of diversity plays an enormous role in resilience and is one of its most important correlates. Whether it?s the biodiversity of a coral reef or, in the social context, the cognitive diversity of a group, increasing the diversity of a systems? constituent parts insures the widest palette of latent, ready responses to disruption. The trick is to balance such diversity with mechanisms that ensure that these diverse actors can still cooperate with one another when circumstances dictate.
In our travels, wherever we found strong social resilience, we found strong communities. And here we don?t mean wealthy. Resilience is not solely a function of the community?s resources (though of course those help) nor defined solely by the strength of their formal institutions (ditto). Instead, we found resilient communities frequently relied as much on informal networks, rooted in deep trust, to contend with and heal disruption. Efforts undertaken to impose resilience from above often fail but when those same efforts are embedded authentically in the relationships that mediate people?s everyday lives, resilience can flourish.
Finally, when we found a resilient community or organisation, we almost always found a very particular species of leader at or near its core. Whether old or young, male or female, these translational leaders play a critical role, frequently behind the scenes, connecting constituencies, and weaving various networks? perspectives, and agendas into a coherent whole. In the process, these leaders promote adaptive governance?the ability of a constellation of formal institutions and informal networks to collaborate in response to a crisis.
These elements?beliefs, values, and habits of mind; trust and cooperation; cognitive diversity; strong communities, translational leadership, and adaptive governance?make up the rich soil in which social resilience grows. Taken together, they suggest new ways to bolster the resilience of communities and organisations, and the people within them…
***
On Friday, September 12,2008, the treasury secretary of the US, Henry ?Hank? Paulson, and a team of officials from the Federal Reserve called some of Wall Street?s most powerful executives to the Fed?s offices in Lower Manhattan for a secret meeting. Limousines, town cars, and taxis pulled up to the giant slab of white stone at 33 Liberty Street… Savvier senior executives opted for the building?s underground garage, to avoid the scrum of reporters. There was good reason for their low profiles: All at once, and with a frightening speed and apparent randomness, seemingly unassailable emblems of the US financial industry were being felled like giant sequoia in the forest…
At 6:00 pm, the group of 20 or so financial titans?including John Mack, chief executive of Morgan Stanley; John Thain, head of Merrill Lynch; Vikram Pandit, chief executive of Citigroup; Lloyd Blankfein, of Goldman; and Jamie Dimon, head of JPMorgan Chase?were all settled in and seated around the table. Paulson declared his position to the players. It was time to re-establish moral hazard. The bankers would have to clean up their own mess. With no political will for another bailout, the only way to save Lehman Brothers?and the stability of the market if not global capitalism itself?would be through the collective effort of the bankers sitting around the table. ?You have a responsibility to the marketplace,? Paulson told them…
***
Primatoligst Frans de Waal, together with his research partner Sarah Brosnan, investigated cooperation and perceptions of inequity among capuchin monkeys. In one of their experiments, two monkeys were given either a grape or a piece of cucumber for completing a simple task. If both monkeys were given the same reward, de Waal and Brosnan didn?t observe any problems. They confirmed that the grapes were far preferred?de Waal noted that all primates enjoy a sugar rush?but even if both monkeys received a cucumber, they seemed to have no problem repeatedly performing the given task. The experiment started to get interesting, however, when monkeys received different rewards. The one who got the lesser reward?a cucumber instead of a grape?would start to hesitate, eventually putting up a fight by either not eating the cucumber or putting up a fight.
De Waal concluded that this is an irrational response: ?If profit-maximising is what life (and economics) is about, one should always take what one can get. Monkeys will always accept and eat a piece of cucumber whenever we give it to them, but apparently not when their partner is getting a better deal.?
Humans have this same instinct?referred to as inequity aversion?but economists, game theorists, and mathematicians have historically counted on us to care more about the pursuit of self-interest over fairness. Yet when it comes to the distribution of scarce resources, there is little evidence that humans actually act purely in accordance with their own self-interest. Even when we have a fresh, tasty cucumber in our hands, humans have evolved the tendency to start fixating on the asshole with the grapes.
All of this is to say that, despite the dictates of Adam Smith or Milton Friedman, the bankers at 33 Liberty Street were still using their social and emotional brains. Amidst discussion surrounding systemic risk and toxic debts, every one of the suits around the table was assessing who would get stuck with the cucumber and who would walk away with the grape.
In addition, the bankers also bought a whole set of cognitive biases that help to inform how all of us, as social creatures, make decisions… These CEOs?like the rest of us?use heuristics (mental shorthand) to identify colleagues in different firms, akin to different tribes: ?You know Bob; he?s with Morgan Stanley.? These tribes in turn have their own values, cultures, myths, risk tolerances, and styles, which help bind them together and reinforce distinctions for their members. And tribal thinking can assert itself with a vengeance.
As the bankers considered bailing out Lehman, for example, they were threatened with the thought of handing over their scarce resources to help Barclays sweep in and score with a strategic and profitable move. Barclays registered in mental shorthand not just as ?threatening? but also as ?British?. In cognitive terms, when negotiating over possible money coming in from the American taxpayers, Barclays was an outside group?a foreign tribe. WSJ noted that the bankers ?were loath to provide support when a rival like Barclays might still buy Lehman?. Later they reported, ?By Sunday morning, the UK?s Barclays looked like the sole potential buyer. That further minimised the chances of a government bailout: If the Bush administration wouldn?t help to fund a Wall Street solution, aiding a foreign buyer was even less likely.?
Is it possible that oxytocin?our love and trust elixir?is the very same hormone underlying such in-group and out-group biases? Scientists like Carsten KW de Dreu, a psychologist at the University of Amsterdam, believe so. He gave Dutch students a standard moral dilemma: Do you save five people in the path of a train by throwing one bystander over the tracks? He left the five people nameless while giving the sacrificial victim either a Dutch or a Muslim name. Dutch subjects given a whiff of the oxytocin before beginning the experiment were far more likely to push Muhammad over the tracks than Maarten…
***
Recruiting in a more diverse array of players?enlarging the tribe through both technological platforms and collaborative processes?might not only have changed the moral vector of the discussions, it could have opened up entirely new vistas in the modes of thinking around the table at 33 Liberty Street.
