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Sunday, 26 October 2008
One Morning...
Topic: Wargaming For Leaders

The interesting thing about discontinuity is it happens between when you go to bed and when you wake up the next morning. The first thing I do each day is look at the front page of the newspaper, its how you first discover discontinuity. As written in our soon to be released book, I discovered that Saddam Hussein had invaded Kuwait from the front page of the Washington Post someone was reading across from me in the Metro. My top discontinuity to watch at the moment is Pakistan.

Pakistan: A civil war has broken out in a nuclear-armed country. Pakistan is reaping what it sowed by clandestinely supporting the Taliban and Al Qaeda as leverage over India and Afghanistan. The ISI has been out of control for years and now the Zardari government is trying to put it all back together.  It will be no surprise, but a major discontinuity, if the government falls and Pakistan fragments.

I think it is time to start sorting out US options if Pakistan folds.

Posted by markherman at 10:36 PM EDT
Updated: Sunday, 26 October 2008 10:38 PM EDT
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Sunday, 19 October 2008
Near Future Crises
Topic: Wargaming For Leaders

As the Presidential election comes to a close all eyes and minds are focused on the outcome. It is at times like these that my mind wanders into what happens next? Regardless of who wins there is an inevitable chaos that occurs after an 8 year Presidency. Most of the senior government officials who have shaped and implemented our national security policy move on and a new set of actors takes the stage. Although most of these new leaders will have impressive resumes that make them confirmable, the overall system will suffer from entropy that will require leadership and time to set right.


It is at this time that we are most vulnerable to foreign powers or groups trying and gain leverage in forwarding their agendas. Not all of these maneuvers are threatening to the US, but even those performed by our Allies can diminish our ability to forward our policies. What I will focus on are those situations that are designed to take advantage of the chaos and gain some long term advantage to our detriment.


A good historical model to examine is the Kennedy presidency. In the foreign policy arena Kennedy inherited a long term policy and a short term operation from the Eisenhower administration that tested his foreign policy acumen. The Bay of Pigs was an operation that was on the 'books' that moved toward implementation, regardless of who was in the White House. America's policy in Asia, specifically Vietnam was too low on the administrations agenda to get the level of attention and senior talent to alter its trajectory. Depending on which historical analysis you read the outcome of the Bay of Pigs  had to a lesser or greater degree an impact on Soviet leadership thinking on how to advance their Cold War agenda. This led to the Cuban Missile Crisis and the high point of Kennedy foreign policy achievements.


I believe that the same factors that faced Kennedy are likely to face the next President. There are several wild cards out there that may have a major impact on the trajectory of the next four years. Trying to think through and anticipate some of these possibilities and sorting through reasonable responses is just prudent. Things that I think are possible, hence worth thinking through are:

 1. A major Middle Eastern or SW Asian government falls. Prime candidates are Pakistan and Egypt.

2. Iran tests a nuclear weapon.  Given that Iran is a 'observer nation' in the Shanghai Cooperation Organization (PRC and Russia are the founding members) it is likely that this will happen at some point given Russian 'technical' assistance and cooperative efforts by this two powers to block UN counter proliferation initiatives. The question on the table will be, what can the next President do about a nuclear capable Iran? In the non-proliferation category we should not forget the DPRK (North Korea) who misbehave to wring out additional concessions, while never having yet kept any of their agreements.

3. Even if the US is able to implement the recently agreed to security agreement with Iraq, which posits most US forces withdrawing by 2011, there is always Afghanistan and Al Qaeda. How these two  situations evolve is a situation that will have a major impact on the next Presidency.

Thinking about the future, especially when it already knocking at our door, is part and parcel to how the next four years goes. 

Posted by markherman at 10:05 AM EDT
Updated: Sunday, 19 October 2008 10:57 AM EDT
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Friday, 10 October 2008
Topic: Wargaming For Leaders

I hope to begin a conversation on the application of wargames to emerging world class issues, such as National and Corporate survival. I will start by making a simple point, all decisions are based on a set of assumptions. Nothing revelatory about that, but it is this aspect of any decision that in the end determines whether it is a good or a bad one. A good decision is one whose underlying assumptions hold true even as the context under which that decision was made shifts and evolves. A bad decision is one where the shifts or the discontinuities that the decision is subjected to invalidate the underlying assumptions leading to unfortunate circumstances.  Said another way, after every disaster the post mortem reveals someone messed up.

It would be hard to have this discussion without looking at the current Wall Street meltdown. From my perspective this situation failed due to two assumptions, both philosophical. The first was the Government’s assumption that the firms on Wall Street would act in their own self-interest and remain solvent even while taking on enormous portfolio risk. The second was the financial firms belief bordering on hubris that between their professional judgment and their computer models they could shift and weave their way through whatever troubled waters they might encounter.

When I think of the issue of computer models I would make the comment that all models are wrong, some are useful. All computer models are based on their creators’ assumptions as chiseled into computer code on the underlying truths that the simulation is portraying. All computer models are limited by the limits of its programmer. A computer model cannot calculate something its programmer could not anticipate or understand. To put an edge on this point, based on work that we have done, no one that we met in financial institutions believed that the value of real estate would go down. We were successful on several occasions in running wargames where we were able to create plausible scenarios for this to occur and sufficiently suspended the disbelief of the participants so they could grapple with the implications of this alteration of reality.

The current economic crisis makes this point. In an article in the New York Times, October 3, 2008, titled “Agency’s ’04 Rule Lets Banks Pile Up New Debt And Risk, “ Stephen  Labaton wrote, “A lone voice of dissent in the 2004 proceedings came from a software consultant… who said the computer models run by the firms – which regulators would be relying on – could not anticipate moments of severe market turbulence.” Here is a case where someone, who like myself, has spent a career using computer models knows their inherent limitations. Although computer models are useful, they have their limitations. It has always been my practice to marry computer models with wargames as they are natural compliments to each other. One is a power tool that can crunch numbers until the cows come home, but knowing the correct context and circumstances that those numbers should be crunched under is the province of wargames.

I am happy to say that none of the Wall Street casualties were our clients, but we do not claim to be financial geniuses or Delphic seers. What we would claim is we are very good at forcing people to re-examine their assumptions, no matter how sacrosanct they may appear. More to follow…

Posted by markherman at 7:58 PM EDT
Updated: Friday, 10 October 2008 8:01 PM EDT
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The Beginning
Topic: Wargaming For Leaders
I am opening a new topic regarding thoughts around my professional wargaming pursuits. I hope to post some thoughts on how wargames have been used to aid decision makers in navigating into the future. I hope to illuminate my thinking on how wargames have and could impact our troubled times.

Posted by markherman at 7:51 PM EDT
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