Today is not only December 7th, but its also a Sunday. If it was 67 years ago, the war would have begun around 1PM EST, so just like others in Washington that fateful day, I woke up, drank some coffee and began reading the morning papers. At that moment the Japanese carriers were NW of Oahu preparing to deliver what they thought would be a killing blow to Americas warfighting capability. I have explored this topic in two commercial wargames (Pacific War and Empire of the Sun, the latter is available for free at: www.e-markherman.com) and I continue to study the decision process that brought Japan to attack Pearl Harbor this day 67 years ago.

The reality of war is it is always an uncertain affair and ending a war is much harder than starting one. Since the industrial age all sides pay a high price in war. The Japanese truly believed that they could prevail in a war against the United States and their allies, but their end game thinking was at best heroic in its assumptions and at worse delusional. The lesson is assumptions that are not put to rigorous analysis are often flawed and lead to very poor decisions.

When I think of the Allied alliance in World War II I am struck by how little is written or discussed about the nature of alliances. One  should remember that alliances have traditionally been mechanisms that take small wars and make them big wars, something that our new leadership should take into account as they re-examine our current theory on expanding NATO. Alliances also have more often than not lowered the barrier to war  and reduced security. The reason is it enables less significant alliance members to make emboldened decisions that impact the collective. These two themes have played themselves out since the Peloponnesian War. The lessons of history are pretty clear on these two points.

So on this December 7th, Sunday morning, I would like to remember the suffering of the brave men and women, from all sides who died on this day and those that came after it. May they rest in peace...

Posted by markherman at 10:11 AM EST

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How many crises can one government handle? Pakistan has effectively lost control of half of its territory, and whether guilty of the Mumbai massacre or not its citizens stand accused of the atrocity. Add to the mix a wobbly government and perceptions that it is not in control of its security service and one can easily imagine it will take just one more push before the house of Jinnah collapses.

What are the possibilities? Some spectacular Taliban victory in the territories or the military losses faith in the  Zardari government if it loses face with the Indians over Mumbai. Clearly it is in Americas interest to bring calm to these troubled waters, but the Indian government is about to enter an election cycle. As we just saw in our recent election, tempers and frustration can spill over very quickly. The Indian government has been damaged by the Mumbai massacre and will need to act and talk tough. Pakistan is being contrite, but as I read about the Indian governments demand for the arrest of 19 wanted men I was reminded of Sarajevo.

During the summer of 1914 the Archduke of Austria-Hungary was assassinated by Serbian terrorist supported by the security service of Serbia. The subsequent investigation and Austrian ultimatum demanded that Serbia hand over the guilty and permit intrusive oversight of the investigation or face war. Without rehashing all of the details the result was World War I.

How the Pakistan government handles the Indian demand within the context of history and the current unstable situation has all the factors present that I have seen in wargames where discontinuity lurks around the corner. Both countries are nuclear armed, under pressure, and it will not take much for things to reach a tipping point.  Hopefully saner minds will prevail.

Posted by markherman at 7:24 PM EST

Updated: Thursday, 4 December 2008 7:32 PM EST

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<a href="http://technorati.com/claim/4cgf5xkhmp" rel="me">Technorati Profile</a>

This is some kind of web requirement for making this blog searchable.

Mark 

Posted by markherman at 10:07 AM EST

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Alfred Thayer Mahan, the famous American naval theorist,  wrote in his 1897 work, "Interest of America in Sea Power, Present and Future", that the opening of the Panama Canal would change the geography of commerce and cause foreign naval forces to follow. The lesson of history is geographic changes have national security impacts.

In my 54 years the geography of the planet has remained more or less static. All significant land masses and the waterways they dominate were owned and written into international law. There remain a few geographic lacunae, but for the most part all nations know who owns what.

Regardless of whether you do or do not subscribe to global warming, the reality is the North Polar ice is melting at a prodigious rate. Estimates vary, but most agree that at some point in the next decade or so, we will see year round open water in a new Northwest passage. What is also true is in an energy conscious world, commerce will use this shorter route from the Atlantic to the Pacific. 

Another feature of year round open water in the Arctic is access to what some estimate to be as high as 25% of the worlds natural gas and oil resources. Add into this mix the fact that international borders in this region are not fixed just makes the situation more, not less chaotic. If this was not enough, fueled in part by the potential resource opportunities, Greenland is moving to become an independent nation from Denmark.

The good news is this situation is not sneaking up on us, but at some point sooner than later, things are going to become very interesting. In some recent internal wargames we have begun looking at the situation and the future will belong to those who pay attention now and not later. Based on these wargames the Russians are in the best geographic and infrastructure position to exploit the situation. More interesting is a United States trying to play catch up could create the conditions for a mini- cold war (pun intended). Stay tuned...

Posted by markherman at 12:16 PM EST

Updated: Thursday, 27 November 2008 12:22 PM EST

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One of the things that I have seen across a wide range of corporate wargames in different industries are the firm's that dominate a market for long periods of time do so by continually attacking their current market share with a more innovative product that displaces their current products. In essence they realize that all products eventually lose to a competing product, so they might as well be the ones to win that competition by displacing themselves. Basically a corporation evolves or it dies, much like the Dinosaurs (think big and slow) who eventually lost to the early mammals (think smart and agile). Mammals have so far kept their market share by continuing to evolve.

So, if one were to look at the software market and hypothesize that it were dominated by a Dinosaur, could they see the seeds of their eventual displacement. If their products were unforgiving and difficult to use and if the new versions were not substantively different than their predecessor all that it would take is for a mammal to come along. The mammal might start by capturing niche markets where the Dinosaur was disadvantaged; ones where ease of use, low user IT knowledge, and innovation were valued above other characteristics. The Dinosaur would not have much to fear initially as the niche markets were small, although willing to pay a premium. 

But this is where corporate evolution raises its ugly head, something changes in the environment. The mammal is better adapted to survive, while the dinosaur struggles. New technology that creates new personal devices enter the fray The mammal links their business model to  capture this adjacent, but potentially more lucrative market. If the Dinosaur misses the moment to rapidly adapt and innovate with a new business model they may have written their own epitaph. The combined leverage of the new devices and the niche infrastructure create market momentum. Like the historical animals, the Dinosaur may survive for quite some time, but corporate evolution has already written the answer. 

There are many ways corporations decide to move forward, but many of the solutions to today's problems are not intuitive, but counter-intuitive. As firms look to thread their way forward through uncertain economic times, it will be the wargames, not the spreadsheets that will show the way.

Posted by markherman at 5:41 PM EST

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Russia's President Medvedev took less than 24 hours (see post below, number 2) to show his hand. Besides setting up a change in their laws that would permit Putin, his likely successor, to have successive 6 year vice 4 year terms, he laid out their response to a US deployment of Missile Defense systems to Poland and Czech. The response is to position some unspecified number of Iskander mobile SRBMs to Kaliningrad. For those who are not familiar with missiles and missile defense, SRBMs can be launched at various trajectories. If they are close they can use a suppressed trajectory, which would give a missile defense system little time and less opportunity to intercept an attack, not to mention shooting sufficient numbers to overwhelm a sparse deployment. To use a chess metaphor, this proposed SRBM deployment is Zugswang.

Zugswang puts your opponent in a position that no matter what they do they hurt their position, usually leading to checkmate. The United States either uses this situation to alter or cancel the missile defense deployment embarrassing our Allies (Poland and Czech) and diminishing our stature or we continue on with the deployment escalating the situation further.

Hopefully all of these moves and countermoves were considered before we went down this path. If not, it would have been easy to wargame and sort through. Clearly this situation has got a ways to go before it is resolved.

Posted by markherman at 8:46 AM EST

Updated: Friday, 7 November 2008 9:05 AM EST

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At long last its time to vote and end another Presidential election. Whoever wins is going to have their hands full. The list of things that are going wrong or could go wrong is truly heroic in proportion these days. If history is any guide, the next crisis is not even on the radar screen. The next crisis will probably fall into one of four categories.

 1. Current foreign problem gets worse: Iraq, Afghanistan, Iranian nuclear test (or we figure it out and pre-empt capability)...

2. Another significant foreign crisis: Russia stoking nationalism to deflect opinion from its economic issues, Pakistan government falls, Egyptian government falls...

3. Economy slides into a depression or does not respond to overt government measures to get things back on track...

4.  Domestic crisis: Al Qaeda pulls off a significant attack or another poorly handled natural disaster

With a list like this, I wonder why the two candidates want the job. Regardless, if the government does not systematically sit down and think the problems through vice just reacting, I suspect we are going to have some interesting times ahead... good luck to whoever wins...

Posted by markherman at 10:01 AM EST

Updated: Tuesday, 4 November 2008 4:48 PM EST

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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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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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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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