The COVID-19 pandemic has created a disastrous situation in our country without precedent-at least for our current generation of citizens and leaders. The lack of historical precedent has put our state governors and local mayors into uncharted waters causing them to scramble in search for a rational way out of the crisis and a fast, but safe return to normalcy. An optimized solution can be found in basic economic principles, project management, and quality gate metrics tied to demonstrated compliance to standards. This webinar, featuring an expert panel, will explore how these core concepts can be implemented tactically and efficiently at the local level to secure immediate safety, inform consumer confidence and sustain long-term economic prosperity.
Safety and economic prosperity intersect. Following Preston’s 1975 modeling approach as applied to available 2017 OECD data (refer to figure on left panel below), we see that countries with lower per capita GDP in dollars have lower life expectancies at birth. Although correlation does not prove causation, we can say that with some probability p > 0 a structural decline in economic prosperity will eventually lead to lower average life expectancies. And life expectancy is the ultimate measure of safety for a society.
The figure on the right panel below illustrates the relationship between employment rate and per capita GDP. Here we find that countries with higher employment rates tend to have higher levels of per capita GDP, and conversely countries with lower employment levels tend to have lower per capita GDP.
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The above analysis gives an economic framework for the policy maker to observe that safety is a multi-dimensional problem. The most immediate form of safety is, of course, virus avoidance which has resulted in a policy of lockdown of business and residents. But the longer-term dimension of safety is tied to economics, i.e. employment resulting in GDP. So, the dilemma for federal and state policy makers has been to weigh the apparent trade-offs between the short-term and long-term dimensions and to craft a risk adjusted, phased approach toward re-opening. The question becomes how to accomplish this most efficiently and effectively. Here is where decentralization and project management enter the equation.
Decentralized execution is a critical component of implementation. States (Massachusetts as an example) are working very hard to implement the CDC guidelines by setting up COVID-19 command centers for the states. These command centers gather state-wide data, provide guidance to citizens, and support a phased approach to re-opening. The problem, however, with centralized command and control is that central planners never have the detailed knowledge of specific risks (or lack thereof) for individual residents and local businesses. This concept of economic decentralization is the fundamental underpinning of the Austrian school of economics often associated with economists Hayek and Von Mises. If alive today their argument would likely be “let the federal and state authorities give the guidelines and supply available information, but let the local communities acting out of their own self-interest handle the tactical execution at the local level”.
Evidence for successful use of decentralization can be found in both the military as well as in the private sector. For instance, in recent decades the military has adopted command concepts that focus on the importance of communicating the leader’s intent and allowance for individual decision making as a means toward successful mission achievement in combat. This style is in sharp contrast to the earlier top-down approaches used previously in military command.
By setting a decentralized approach as a foundation, this webinar proposes a method of tactical execution whereby each local community optimizes its own re-opening and recovery process by establishing a project management structure and by using available quality gate tools to efficiently implement established federal/state guidelines. A quality gate is a collection of completion criteria and sufficiency standards representing the satisfactory execution of a phase of a project. The gates function as a set of super milestones that can be used to mark discernible change points of quality progress for the project (i.e. phase transition) when sufficiency has been achieved. A quality gate approach is an appropriate methodology for managing high stakes initiatives such as the safe reopening and recovery of local communities and businesses.
In practice, quality gate management relies heavily upon the availability of relevant, detailed metrics to set sufficiency standards and to assess performance to those standards. This is where federal and state command centers have fallen short in some cases. Published metrics have been too highly aggregated for relevant decision making at the local level. As a result, state command centers have been forced to follow the sub-optimal principle of “insufficient reason” whereby state authorities end up trying to enforce uniform risk mitigation policies across widely varying geographic regions without consideration of differing risk conditions. A far better approach would be to treat regional variations of risk as meaningful factors and to provide each local area (such as a county or sub region) with a continuous pipeline of timely and relevant local data. This would enable the local areas to conduct their own community-specific statistical hypothesis tests and predictions related to reopening and recovery.
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Full economic recovery requires a return to normal levels of consumer demand. To achieve this outcome businesses must assure the public that their establishments (i.e. restaurants, bars, hotels, sports arenas, etc.) are safe. To address this requirement, the webinar discusses the use of testing, inspection, and certification services available to local businesses. As illustrated in the figure below, the targeted effect of these certification services is to communicate an assurance of safety that instills consumer confidence.