Tuesday, September 25, 2012

The Killing of Ambassador Christopher Stevens

The killing of Christopher Stevens, the U.S. ambassador to Libya, raises perplexing questions about taking risks. Stevens was by all accounts extremely competent at his craft. He was action oriented, emotionally connected to Arab culture and the Arab street, fluent in its language, and had a wide network of contacts in the region. On September 11 he was visiting the U.S. consulate’s office in Benghazi, a city known to have extremist militant groups, when demonstrators attacked the consulate. It is unlikely that this demonstration was truly spontaneous as was first thought; a response to the inflammatory anti-Islamic video that had circulated on the web the week prior. More likely, this demonstration was planned to coincide with the anniversary of 9/11. Observers noted that the demonstrators had sophisticated weaponry such as RPGs, and seemed to know the location of a U.S. safe house in the city. As Stevens’ Wikipedia page reports, “A Libyan-American who watched the attack from the Venezia has challenged a version of events that describes protests and demonstrations. ‘There was no demonstration. They came with machine guns, with rockets.’” Moreover, the guards at the consulate were hired locals, not marines, and there is some speculation that a member of the Libyan security forces may have tipped off the demonstrators as to the location of the U.S. safe house. In short, the city was a nest of vipers. In light of this attack and Stevens’ death, some of his friends wondered if he had taken needless risks in going to Benghazi on September 11 without the protection of a security detail.

One question is whether or not Stevens took the risk of going to Benghazi without protection, carelessly or cautiously. One version of his carelessness is the idea, as some observers first suggested, that Stevens was the innocent American, unaware of the potential for violence in a post-revolutionary setting such as Libya. Roya Hakakian, an Iranian-born writer who met Stevens while the latter was running the Iran desk at the State Department, said that Stevens, “displayed the quintessential sunny innocence of Americans.”  

I don’t think this explanation is plausible. After all Stevens had played an important role in supporting the Libyan revolutionaries who overthrew and killed Gaddafi. He had been stationed in Syria and Jerusalem and was no stranger to the violence in the region, and the tempers of a revolutionary situation. Moreover, several days after he was killed, the CIA revealed that it had developed an extensive covert operation in Benghazi, with 12 operatives, to keep track of the different armed militias in the city. In addition, Stevens’ diary, discovered by a CNN reporter two weeks after the attack, reveals that he was aware of the threat that the armed militias posed and worried that he might be targeted.  Stevens, as one reporter writes, “knew Benghazi perhaps better than any U.S. diplomat.

There is however another kind of carelessness that we can call motivated. We are familiar with this in everyday situations when, for example, a person misplaces an important document that demands both her attention and a consequential decision. We surmise that in losing this important document she is expressing the wish that she should not have to make the decision, that if the document were out of sight, it could truly be out of mind. In this kind of situation, the person experiences a certain pleasure in “rejecting” the document, ridding herself of it so to speak, even though in the end she must retrieve it, consider it, and decide. Of course, this arc of thought and action is not rational per se. The document stands for a situation of some gravity that cannot be wished or whisked away. But, when under press of strong feelings, we often treat a symbol as if it were the thing it stood for. This is why for example people treat a national flag, which after all is only a piece of cloth, as a sacred object. In sum, what may look like carelessness, losing an important document, may in fact be motivated.

The question then is what could motivate Stevens to be careless? All descriptions of his character and his way of working suggest that he was proud of his ability to talk with common people on the Arab street, to haggle in the markets, to listen intently, to immerse himself in the local scene. Days after his death, sympathetic Libyans posted photos of Stevens on an Arabic Facebook page. In one, he is “slouching down with Libyans eating local food with his hand.” Another reporter notes that, “he often signed letters and e-mails to friends as ‘Krees,’ the way many Arabs pronounced his name.” Describing his character, a friend in Jerusalem said that, "Wherever he was living, he was able to let go of everything else and live that place completely." As a result, security regulations that confined his activity frustrated him. "He wanted that human contact, he wanted to be able to speak to Palestinians on the street, and he couldn't because security regulations made him always travel in armored vehicles," she said. "He used to talk about how he felt this was an obstacle to his ability to really be who he wanted to be."

On its face, this wish for contact is laudable. When it results in better intelligence, wider networks, and trusting relationships with locals, it absolutely enhances a diplomat’s effectiveness. The questions is whether Stevens experienced these skills and abilities as tools in the service of his work as or as expressions of his identity, of the kind of person he was in the world. The above quote; security regulations, “were an obstacle to really be who we wanted to be,” suggests that his identity may have been more central to his self-image than the work he was called upon to do.

But why should that be a problem? Consider the following situation. Imagine a surgeon is inexperienced in a particular surgery but fails to consult colleagues before taking up the scalpel. One interpretation of his lapse is that he imagines he should be the surgeon who knows everything and that it is shameful to consult colleagues. Who he is -- the all-knowing surgeon -- becomes more important than the work he has to do. We recognize in this lapse, the “sin of pride,” and understand why, as the biblical proverb suggests, “pride comes before the fall.”

Consider as well the award winning movie, “The Bridge over the River Kwai.” An imprisoned British officer takes pride in building a railroad bridge, with the troops still under his command, which his Japanese captors need for their own war effort in Burma. He becomes so identified with the discipline and organization he instills in his imprisoned and once demoralized troops, that he loses site of his wider responsibilities, which is to undermine the Japanese war effort in any way he can. In the penultimate scene he races to stop a British sapper from blowing up the completed bridge. In both these cases, attention and feelings shift from the work that must be accomplished to the self that must be expressed. Pride fuels this transition.   

This points to one hypothesis about Stevens’ motivated carelessness, if indeed, that is what it was. He was proud of his capacity to thrive on the Arab street, and felt that traveling with a security detail was somewhat shameful. It would communicate his mistrust of the street and undermine his idea of what made him distinctive as a diplomat. He would in effect fail to live up to his idealized image of himself, which was a source of pride, while losing face in front of his Libyan colleagues. In this way of thinking, the danger, rather than inducing cautiousness, reinforced the pride. This is the sense in which his carelessness was motivated.

Of course, this is speculation, and in that spirit, let me consider an alternative hypothesis. I have discussed identifying with one’s work, or identifying with one’s idealized self. Let me add here a third possibility, identifying with one’s ideals. For example, when reading the accounts of the “righteous gentiles” who protected Jews in Nazi-occupied Europe, once is struck by their humility, their insistence that what they did was based on common sense rather than extraordinary courage, even as they put their own lives at risk. Surely, it is incorrect to say that they took risks carelessly. Rather, their humility expresses their subordination to a wider ideal that is so self-evident, in this case the ideal of our common humanity, that they had no other choice. The anticipated pain of violating an ideal, pain that comes from feeling ashamed in front of oneself, was more compelling than the danger they faced and realistically confronted.

There is a video of Stevens on the web, (http://gretawire.foxnewsinsider.com/video/state-department-video-featuring-ambassador-chris-stevens/ ), moving in retrospect, in which he introduces himself to the Libyan people. He projects the informal stance of the everyday American, calling himself Chris for example, rather than Christopher. The video describes how he came to embrace the Arab world, reflects his pride in pluralism and democracy, acknowledges that the U.S. achieved these ideals through conflict, and suggests that this too can be Libya’s future. In light of his murder, it is tempting to interpret this video as reflecting his naiveté. But it is striking that a week after his death Libyan demonstrators, backed by government troops, chased the militia held responsible for his killing out of the city. Clearly, he touched people. Perhaps in taking the risk he did, traveling without a security detail, he was interpreting the ideals of pluralism, openness and tolerance as injunctions to refuse himself privileges, to be the equal not the superior of the Libyans, to face the same situation they faced. The ideals this stance represented were more compelling than the dangers he faced. He would have been ashamed in front of himself had he violated them. In this sense we was not careless at all but rather consistent.

Until his diary is published, there is little chance that we can interpret what he did with any confidence. And even then, the diary may not be revealing. In light of this uncertainty it is reasonable to ask what we hope to gain by such speculation. I want to suggest that even if we cannot arrive at an objective truth, we can arrive at an emotional truth by imaginatively projecting ourselves into the situation our speculation leads us to consider. In this way we gain some insight into our shared psychology.

Saturday, September 8, 2012

The Facebook IPO and the role of stories in decision making

     Andrew Ross Sorkin, the well-known business reporter for the New York Times, recently reported on Facebook’s difficulties on the day, May 18, it launched its initial public offering (IPO) on the Nasdaq exchange. The opening share price was $38, but by the beginning of September the stock was selling at $18. As Sorokin writes, “three months after the offering, the company has lost more than $50 billion in market value…To put that in perspective, that’s more market value than Lehman Brothers gave up in the entire year before it filed for bankruptcy.” Sorokin describes this as a "debacle." As the following graph shows, the price was at its peak on the very first day of trading and has been falling ever since,   -->
     To be sure, a company profits when investors overpay for its shares, but the size of the gap between the first day, and its price three months later, undermined the company’s credibility significantly. In addition, while underwriters get a percent of the sales, their customers, for example large institutional investors, hope to profit from the bounce between the value of the stock at the beginning and the end of the first day of trading. If the stock is priced cautiously the bounce can be large. But in the case of Facebook, the opening price on the first day of trading was also the closing price. This meant that the underwriters had many unhappy customers.
     One question is how to interpret this debacle. One hypothesis is that the Facebook’s stock was hyped to begin with. While it has close to a billion users, it is still not clear that Facebook can make enough money by selling advertising. The value of digital ads are falling, Facebook’s revenue per user is falling, and as people increasingly access the site on mobile devices they are less likely to pay attention to ads. According to this way of thinking, either the senior executives of the company believed in the hype, or they purposefully jacked up the price the day of the IPO. 
     The second explanation seems less plausible. After all, it means the firm was willing to sacrifice its reputation for some immediate gains. By contrast, the first explanation seems more plausible because underwriters’ requests for shares on the day of the IPO were in fact very high, suggesting that demand was great. As Sorkin notes, “After a company’s roadshow presentations, investors indicate how many shares they plan to buy. They typically ask for more shares than they expect to receive, sometimes twice as many. But in the case of Facebook, investors, anticipating huge demand, put in requests for triple or quadruple the number of shares they expected to get. The bankers — and Mr. Ebersman (the CFO) — did not seem to appreciate what was happening. They seem to have believed their own hype and took those orders as real, giving them the misplaced confidence to push the IPO to the highest possible price and issue more shares.” In other words, they misinterpreted the demand for shares as evidence of the stock’s value, rather than as evidence for unreasonable expectations about the company’s prospects. 
     This explanation has the merit of confirming the features of any complex situation. As Helga Drummond, the decision theorist notes, “ambiguity always lurks,” data and signals do not connote what they appear to mean, making all important decisions, particular the pricing of an IPO, partly a stab in the dark.
     One question is, how do executives deal with ambiguity? I am drawn to another part of Sorkin’s story. “Another issue that weighed on Mr. Ebersman, as well as the bank underwriters, was the example set by LinkedIn. Its shares rose 110 percent on its first day of trading. That might sound good, but it meant that the company mispriced the shares so badly that it effectively gave investors a gift of nearly $350 million. Mr. Ebersman was intent on making sure Facebook didn’t ‘leave money on the table,’ according to several people close to him. But by leaving investors with little upside, he may have created additional pressure on the stock.”
     Sorkin’s argument highlights the central role stories play when in fact ambiguity lurks. One hypothesis is that we rely on two modes of reasoning when making decisions. The first is algorithmic and depends on logical and quantitative thinking. But when ambiguity lurks we rely more on discursive reasoning through which we dramatize situations.  In this frame of thinking we see the ebb and flow of events as shaped by knaves and fools, or heroes and victims, and we engage in trial runs, before deciding, by alternatively identifying with different characters in the drama. In this way of thinking, we can hypothesize that Ebersman saw himself in the role of LinkedIn’s CFO, facing the prospect that he would experience shame by foolishly leaving money on the table. As this argument suggests, dramas are freighted with emotions that in turn shape our decision-making. 
     One question is why do we dramatize when ambiguity lurks?  One hypothesis is that in the face of ambiguity we may not achieve the conviction we need to make difficult decisions. The data on hand do not reduce our sense of uncertainty. Without conviction we may attenuate our commitment to a course of action when we confront our first unexpected obstacles. But one sure road to conviction is through our emotions when we feel the decision we are about to make, as the phrase goes, “in our gut.” And, as the term “drama” suggests, stories are vehicles for discovering how and what we feel about a situation.
Indeed, it is still remarkable, even if commonplace, that we can moved to tears by obviously fictional accounts, whether in the form of novels, films or plays. Even as we know that what we are experiencing is not true, for example, objectively the movie is an image on celluloid, we are nonetheless moved by the emotional truths works of fiction stimulate. History interprets past events by creating a story about them, and if fiction creates emotional truths, history, which has some basis in fact, should be as persuasive, if not more so, than fiction. This is why for example, we often worry that our generals are always “fighting the last war.” 
     Some management theorists overvalue stories as guides to decision making. They counsel executives to tell subordinates stories that are uplifting and motivating so that people will give it their all to a particular initiative or strategy. But as our worry about the generals suggests, while stories are meaningful, they are not necessarily accurate. For example, the reader may recognize in the Facebook case the operation of what behavioral economists call, “loss aversion.” As economists argue, losing $100 is far more painful than is the pleasure of winning $100. As Sorkin suggests, the LinkedIn story stimulated the fear that Facebook would lose money it was entitled to. In this sense Ebersman was motivated by pain, rather than by greed, and by anticipated shame, rather than by an imagined victory. Stories in other words have all the limitations we associate with day-dreams and fantasies. The unconscious roots of a story, for example loss aversion, can distort judgment as much as it can motivate action. 
     Freud long ago described the difference between what he called the primary and the secondary process. The latter was based on conscious reasoning tied to the logic of cause and effect; the former was based on wishes, fantasies and emotions through which we often sustain contradictory ideas. Today the “object relations” school of psychoanalysis suggests that wishes, fantasies and day-dreams are shaped by our internalized conception of how we relate to others, what roles we play in their dramas as well as in our own. Since, ambiguity always lurks and ambiguity provokes us to rely on stories, this suggests that rationality far from being a foregone conclusion,  is instead an achievement.