Economic Optimization of Innovation & Risk
Reviewed By: Avraham Azrieli
Avraham Azrieli writes novels and screenplays. www.AzrieliBooks.com
“Economic Optimization of Innovation & Risk – A Theory of Crash Rate for Private or Public Projects” by Robert Shuler is a book with a rare quality: Its accessible content does not live up to its intimidating title. While it delves into complex and often technical systems, this book is interesting, stimulating, and easy to read.
Mr. Shuler tackles here a challenge as old as nature. It is in the essence of the natural world that growth and decline compete, that birth and death always duel, and that to survive, every living thing must constantly balance risk and opportunity. With human beings blessed (or cursed) with a disproportionately large brain, men have faced the challenge of risk assessment from the very beginning. Facing a large animal or natural disaster, and weighing the risk of dying against the chance of eating or finding shelter, men have made risk versus opportunity decisions hundreds of times a day for many thousands of years.
Against this historic backdrop with a record as old as time, Mr. Shuler is focusing on a modern era where innovation, especially in the fields of space science, travel, and related systems, presents the challenge of weighing costs against safety and failure rates.
With an excellent introduction that discusses the history of NASA’s space shuttle program, with a focus on the transition from the glorious early phases of the Apollo flights, characterized by incredibly detailed and exhaustive safety checks and systems, whatever the costs were, to the era of President Reagan and the importation of business measurements into government programs (such as cost vs. results, outsourcing, and generally, cutting to the bone).
In that respect, the author presents the dilemma that preceded two spectacular crashes of space shuttles in plain language: “The idea that economic considerations might override that intellectual achievement is anathema when the optimistic group-think of bright people takes hold, people who are told they should do more with less and are intent on not scaling their plans back one bit. However, it is this very blindness which makes them all the more susceptible to the economic realities. They will cut costs until something breaks.”
As a member of NASA, the author has spent years developing a system that will allow a rational approach to assessing crash risk rates, in other words, forming a crash rate theory and providing a crash rate equation.
This book is incredibly applicable to almost every aspect of human development, innovation, and activity, from space travel to motor vehicles, from national monetary policy to personal investment, from heart transplant to Botox, and everything in between. Especially fascinating is the discussion of motor vehicle fatal-accident risks, analyzing why the United States has exceedingly high risks of roadway fatalities, compared to countries where speed limits are much higher, or nonexistent.
With forward looking interest, as humans continue to innovate at an increasing speed and with expanding human dependency, as the author correctly points out in his Conclusion: “Crash rate theory is not just about manned spaceflight, which serves as an example of something which is really difficult, and requires a lot of energy, control and near-perfection. We must not only “be careful,” but have a quantified theory and methodology of being careful, even in the presence of unexpected effects and human behavior.”
In summary, for a book that attempts to tackle an incredibly complex set of questions, where numerous factors play roles in increasing or decreasing risks, the author does an excellent job of simplifying both the data and the proposed solutions. The subjects are broken down into small segments with informative headlines, the discussions of facts and analysis are clear and methodical, and the explanations are accompanied by tangible examples and clear graphic illustrations, which are particularly helpful when it comes to the equations and formulas the book offers. A creative, thoughtful, and important book, “Economic Optimization of Innovation & Risk” by Robert Shuler adds an innovative and applicable concept to the risk-assessment and decision-making toolbox. Highly recommended!