June 7th, 2012

The following is a full transcript of FedCentral’ s interview with Cesar Hidalgo, Assistant Professor, MIT Media Lab and Faculty Associate, Harvard University Center for International Development and JR Reagan, Principal and Federal Chief Innovation Officer at Deloitte & Touche, LLP, conducted by Jane Norris on June 7, 2012. To listen to the full interview go to http://www.deloitte.com/us/fedcentral.

Jane Norris
Welcome to FedCentral brought to you by Deloitte. A program where executives and federal government leaders talk about the issues and initiatives that are making a real impact on the business of government today to help government help America. There’s no denying innovation will be critical to helping the federal government find new ways to increase efficiencies and improve mission outcomes. In these tight times, it’s even more important. Today we’ll be discussing innovation as a top priority for growth and improving government. Joining us to talk about it today, Cesar Hidalgo, an Assistant Professor at the MIT Media Lab and Faculty Associate at Harvard University Center for International Development. Cesar’s work focuses on improving the understanding of systems by using and developing concepts of complexity, evolution, and network science; and JR Reagan is the Federal Chief Innovation Officer and Principal at Deloitte & Touche, LLP. He leads the Deloitte Center for Innovation, a leading-edge demonstration analytics and technology development center very close to Washington, DC. Gentlemen, thank you both for joining us today. Cesar, welcome. I know you’re on the telephone today. Happy to have you.

Cesar Hidalgo
Yeah, thank you, Jane. I’m happy to be here.

Jane Norris
So JR, I’ll start with you. Let me ask you this question: Give us a macro view of innovation trends and how is it impacting governments around the world and especially here in the United States?

JR Reagan
It’s interesting innovation now—people would define it differently. In some cases, we think of innovation as invention which isn’t always the case. It’s more about doing things differently than about doing different things, and what that really means is breaking trade-offs, that we’re used to. We think about those costs. We think about the benefits, and we always think we have to add more cost to get those benefits – not always the case anymore. In one of those things that we’re coming across now is this notion of big data. We have so much data available to us, the data that we own, that we create inside of our agency, and all of that data that unstructured data out there that citizens are creating and companies are creating, social media and things like that. So combining this gives us some really great new ways of doing what we did in the old way and doing it differently. Cesar, I know that you’ve been looking at some of these examples in your work. How are things different now with this notion of big data?

Cesar Hidalgo
That’s a great question, and I think the best way of illustrating it is by using a specific example. Both you and Jane remember the Japanese earthquake that happened a little bit more than a year ago?

JR Reagan
Sure.

Cesar Hidalgo
I remember I was in Japan on January and I met a group of people from Dentsu, this is a large advertising company, and they showed me one project they had done, in collaboration with Honda, after the earthquake. The project was called Connecting Lifelines and actually was a project in which big data was used to assess which roads were operational after the earthquake. The project actually was very simple. You would see a large map of Japan and the clock would be running, and as the clock would be running, you would see these little dots that would start moving around—sort of like drawing traces. Each one of these dots was actually the GPS of one of the Honda cars, and that showed how they were able to use all of the data that was being collected automatically and seamlessly by people that were driving right after the earthquake to determine which roads were operational and which roads were not.

Now I found that to be an excellent example of how big data is changing the way that you can do things because this is a task that in any case would need to be performed by a government and would be performed through a network that would be much more formal, much slower, and it would take probably a large effort just to assess which roads were operational or not, and here the designers were showing in this very simple example how they were using big data to actually create a map that was much needed at the time.

Jane Norris
So that would also involve geospatial intelligence, I would imagine.

Cesar Hidalgo
Absolutely. Actually, it involves a variety of things besides analytics; you can think that also involves the ability to actually collect the data and the rights to collect that data. This is a thing where one of the biggest constraints of big data at the moment, that everyone is sort of afraid about different angles of the privacy question, and data’s been locked up or traded mostly in the black market. If you think about in this collaboration, this was made possible because Dentsu is the advertisement company of Honda and they’re already working together and they have a relationship.

JR Reagan
Yeah, the –

Cesar Hidalgo
Now –

JR Reagan
Go ahead, Cesar.

Cesar Hidalgo
So now my question would be, would the government of Japan or the government of any country been able to come up with a map as quickly as the one that the private sector did using the data that they had available? My intuition is they probably would not have, because there would have been too much permission that would have needed to be requested in order to create the map.

Jane Norris
So in my recent past, I remember that the Geospatial Intelligence Agency did actually have to use mapping techniques in order to figure out where to go during Hurricane Katrina because the roads were all covered over. So governments do allow those things do happen. JR?

JR Reagan
Yeah, it’s a great example where a lot of what used to be the domain of government, now we have that ability outside of government to do some of those same things and even cheaper, and it’s a good wake-up call for government to look around, look in its cupboards, so to speak, and say what do we have now that we can combine with different things, especially for geospatial. Cesar had talked about Japan. We see that a lot in crisis mapping all over where we can actually take a lot of the visualization and apply that to lots of different problems. It could be food and product safety. It could be even things as mundane as where are folks going in terms of vacations and where we might need services for that. All this becomes a new way for us to look at this data and combine it in different ways we didn’t have the ability for before.

Jane Norris
So there are different explanations of what big data is. Can you give us your view of what big data is, and then Cesar, I’ll ask you, too?

JR Reagan
We used to think of it solely as the data that I own, and now big data is what we call digital exhaust. It’s produced in all of the different things that we do from buying gasoline at a pump produces data from a credit card transaction to the cell phones types of things. Everything is emanating this data. When you include that with the data that you own inside your four walls, now we get that definition of big data and that’s how I view it.

Jane Norris
And so Cesar, what does is it mean to you, big data?

Cesar Hidalgo
I’ve been dealing with a lot of people that have been thinking about big data and one of the main confusions that I find is that people tend to confuse big data with lots of data. So in order to make a distinction there, what I do is I say, you know, actually big data has to be three times as big, not just one times big, and the three dimensions that I demand, for big data are first to be big in size and that’s where the confusion comes from. You need data, not all hundreds or just thousands of individuals, but millions or tens of millions of individuals or different entities. Then it has to be big in resolution. If I just have, information that for example, is aggregated at a, yearly level or maybe a monthly level, I’m not going to be able to do a lot of things that I could do if I had data at a finer spatial resolution, temporal resolution, or typological resolution, meaning that I know, for example, which iTunes a person purchased or what was the identity of the business in which they were at a certain time of the day, and the third dimension is that actually it has to be big in scope. There’s a lot of data that is big, in the sense that it’s big in size, it’s big in resolution, but it’s only applicable to a very particular industry or a very particular problem, so it’s not big in scope like the data that is big in scope actually allows you to explore opportunities that maybe you didn’t think of at the time that the data was being collected. And for me, when data is big in the three dimensions – size, resolution, and scope – is when we’re really talking about big data and not about lots of data.

Jane Norris
So how do governments utilize big data to their advantage or even cost-effectively? What can governments around the world, especially here in the US do, JR?

JR Reagan
Well, one of the things we can start to look at differently is human behavior. You know, it used to be that we had to ask citizens questions, get that response, and we kind of deal with that kind of erode process. Now without having to ask the questions, we can get a lot of answers because they’re out there telling us already, on Facebook, on Twitter, on these different social platforms, as well as what is happening in industries. The data sets are much greater now. So now it becomes more a matter of what we’d say hypotheses, not requirements, not to say here’s the answer, build this for me, but to ask a question and say how can we answer this and what are we – what’s available to us so we can actually start looking at the types of energy we might need and where that is, where we might need to locate agencies in a building and carbon footprints, food safety. You know, all these different types of things now, we can be a little bit more forward-looking and maybe preemptive and predictive in some ways than maybe before.

Jane Norris
And how do governments put their toe in the water? Innovation is a major driver of change. The concern might be that there are costs associated with innovation. So where can they go or how can they develop a road map for effectiveness for themselves?

JR Reagan
One of the things that we’ve done in Roslyn with our Center for Federal Innovation is actually being able to have that safe place for co-creation. We like for our clients to come in and ask those hypotheses, and we can surround them with what we call a HIVE, a highly immersive visual environment, where they can start putting these unlike things together in a very visual way and start to get some insights from that. We often times talk about BYOD. It’s been described in a lot of the press as bring your own device. We would say bring your own data. It brings some small amount in, begin to work on that and visualize it in different ways. Enormous insights come from that co-creation type of space.

Jane Norris
And so is there anything like that, César that goes on in the global sector, in the private sector, how do they manage to get started on the path to aggregating big data or utilizing it effectively?

Cesar Hidalgo
Well, I will say that as of now, there’s very little of that going on. I think there’s more talk than action. I do see it quite a bit governments do interact with people that have data, and there are many reasons why that is the case. A lot of the data that now exists was not collected for the purpose of thinking about building a business on big data. It was collected for operational purposes, so more phone companies were collecting data, to be able to charge bills and to see if the network was operating reliably to strategize on the plans that they would sell and credit card companies also, you know, they were keeping track of expenses and keeping track of accounts not necessarily thinking that there was going to be a future in which that data was going to be, you know, the most valuable thing. Also when thinking about expanding into new sectors, you can always think of the internal purpose of the data such as trying to predict future credit defaults.

So what happened is that actually the data in many cases, I’ve seen it and its quite siloed, and it’s very hard to access, even for people inside the organizations. And now a little bit of the hype that is going around big data is helping the strong political barriers inside of organizations or between organizations such that this collaboration can be shared because the data is being handled by groups. They’re very different than the ones that would be the creative that will be creating future applications.

So what I would say that it’s the center of all of the discussion that we hear in the newspapers about big data. It’s a little bit of that internal political struggle that is happening within many large organizations, but I wouldn’t say that we’re at the point in which we have seen the benefits of big data yet.

Jane Norris
Very interesting and we’ll continue with that when we return. We’re talking this morning to Cesar Hidalgo, Assistant Professor at the MIT Media Lab and Faculty Associate at Harvard University Center for International Development, and JR Reagan, Federal Chief Innovation Officer and Principal at Deloitte &Touche and the leader of the Deloitte Center for Federal Innovation. We’ll be back with more about innovation in just a moment. You’re listening to FedCentral on Federal News Radio 1500 AM. I’m Jane Norris.

Welcome back to FedCentral brought to you by Deloitte. We’re talking today about innovation and the way that government can grow and improve through innovation. JR Reagan is our guest, Federal Chief Innovation Officer and Principal at Deloitte & Touche, LLP, and Cesar Hidalgo, an Assistant Professor at the MIT Media Lab and Faculty Associate at Harvard University Center for International Development. So we were talking about innovation and how it can be inculcated in places like the federal government, so let me ask this question: Is the federal government a good place for innovation to take root? Is that environment even conducive to innovation?

JR Reagan
You know, I’m of the thought that innovation can happen everywhere. Sometimes we just don’t see it, and it happens in government all over the place. We certainly are very familiar with DARPA and IRP and these places that have innovation – the mission to them, but even outside of that in the agencies that may not be thought of as innovative, they’re doing really great things every day. They happen to get lost in the back room. We see it with our clients all the time that actually produces a better outcome than we started in the programs that they’re at but frankly, they don’t get replicated very often. That’s the problem. So you know, we spend more money on sometimes the same problems in other agencies that if we just had learned from the previous one and replicated some of that success, it allows that zigzag effect that always produces great innovations. It’s almost never in a straight line, and that allows for more of the culture of innovation to grow when we can replicate successful smaller innovations.

Jane Norris
Cesar, what do you say?

Cesar Hidalgo
Yeah, I agree with JR. I do think that innovation occurs all over the place in the public and the private sector, but one of the big problems is not for innovation only to occur but also to spread. So there could be people that you actually find that have great ideas but it’s very hard for them to get an interaction to scale those ideas up, to implement those ideas up, and I think that’s a little bit of the main problem. If you look at a design lab, at an, innovation lab outside of the government setting— in a setting that I would be more used to, like for example here at the MIT Media Lab, which is a very creative place. One important thing for innovation is freedom. It’s the feeling that you are entitled to have a bad idea, pursue it, and then eventually get inspired by that idea that maybe didn’t go anywhere to create something else. So there is this environment that’s very forgiving of taking risks and actually very welcoming of those risks. It’s an environment in which people understand that they have the freedom to explore.

I think that in more structured settings, I found that it’s a little bit harder to do that because ideas are required to be accountable from very early on, and usually when you’re making ideas accountable or you want an idea to sound good very early on, the only thing that you’re going to be doing is exploring the coast of what you know but you’re never going to have a very disruptive innovation, the whole way that you’re approaching the problem. So that I think is one of the big differences.

Jane Norris
Right, so does government have to then follow the lead of the private sector, JR, in order to innovate?

JR Reagan
I think that there are a lot of lessons learned from the private sector. The private sector is incented to take risks and so they’re often able to try new business models a lot, and it’s sort of the opposite side in government. It doesn’t prevent government, though, from taking advantage and learning a lot from private sector. Certainly, the notion of design thinking now is very popular and is actually producing a lot of great results in the private sector. That’s the notion that the user and the user experience drive a lot of that innovation. We’re starting to see that now being adopted a little bit in government and I think the more we can get towards how does the citizens, for example, participate in government, that citizen participation, I think that’s fantastic in terms of driving innovation forward.

Jane Norris
And has that been a success story in terms of user engagement, citizen participation, or you know, is the public at large taking advantage of the innovation much more readily than say larger entities like the federal government? Cesar, what do you think?

Cesar Hidalgo
Yeah, so I think that actually the people who have started to participate a little bit, the way that people have participated until now have been by using social media that actually was not designed originally for participation. Actually Twitter was not even designed for people in the beginning, then it evolved into being a very popular tool among people, but it was actually designed to communicate between devices, and what has happened with that, with the use of Twitter and Facebook and the comments on the newspapers, is that people have created a culture in which it’s okay to write down your opinion about a political issue, share it with others, discuss with other strangers that are posting somewhere in media ideas and share your views but if you think about it, all of that basically doesn’t add up to much because the medium that we’re using to have those discussions does not help aggregate that into any form of action. So what we have is actually a lot of conversations going on but then a new issue comes along, there’s another conversation that happens, but these things don’t add up into any concrete form of action. So what I do think is going to start happening in the future is that we’re going to start seeing media that is going to be designed for participation and you’re going to start seeing that there going to be some state governments or local governments maybe here in the US, maybe elsewhere, that are going to get into the forefront of this idea of having mass forms of participation through online technology. And you’re going to see that go from very simple decisions and very simple issues into larger issues as time goes by, but I see that there is an important future and there’s going to be more mass forms of participation simply because the technology is allowing them and they become obvious and natural ways of progression; not because the decisions are necessarily going to be better. Sometimes technology advances because it’s natural, not necessarily because it’s an improvement.

Jane Norris
It’s certainly utilized. I mean, there’s no doubt that people are engaging, even the federal government. You know, they are encouraging that kind of citizen participation.

JR Reagan
Yeah, absolutely, and when you look at the other things that are out there now like gamification—how can we use principles such as badges and points and things like that to draw citizens into the things that maybe only government used to do and actually to change behavior a little bit. There’s a great example of how just being able to post points of citizens and how they’re adapting to driving patterns and are they staying off the roads and HOV stuff like that. You know, we can incent them to be able to see through leader-boards and these things that maybe they can be a part of the solution in some of these larger problems, and it’s starting to work a little bit. Things like gamification really play into that.

Jane Norris
Gamification is something that’s probably a new word for a lot of people, especially for federal government leaders. Do you want to explain it a little bit?

JR Reagan
Yeah, it’s really that principle then that if we make things more of a game that allows you to participate more, human behaviors – human beings love that kind of scenario in gathering points and badges and being able to have a little bit of a draw into that, often produces some pretty incredible behavior change, and we’ve seen that play out in research literature. We’ve seen that play out in real life, all you have to do is look at things such as Farmville on Facebook and how people really aggregate to games and we’re seeing that kind of mechanics being applied to how we can even create legislation.

Jane Norris
Boy, never thought games would play a part in my development but here we go. So alright, let’s talk about what’s really on the minds of probably many in the federal government, probably those in the private sector, as well, and that’s budget pressures. So talk for a minute about how budgets can impact innovation. Is it a non-starter? Is budget always the biggest factor when deciding whether or not an innovative quality or technique can really be effective for your agency or for your company?

JR Reagan
Well, I think we’re all coming to the realization that the budgets will be less and some cases we have to do more with less. In some cases, we have to do less with less. Regardless, I think we don’t have to give up. You know, there’s things now such as we talked about, big data and even visualization, that allows me to see where things are working better and where we need to focus, and so being able to be innovative around even things such as budget and allowing me to focus and have a little bit of a laser approach to issues will allow us to be a lot more innovative around things that had been more mundane in the past so we can see that.

Jane Norris
Cesar, we have about a minute left. What’s your view about budget pressures?

Cesar Hidalgo
Well, so I do agree that obviously budgets are constraining and they’re containing two things; in the total amount but also you know, in the line items, and when it comes to innovation, freedom is extremely important. So when we’re doing innovation, one question that I would ask, is when there is a budget that has been allocated for a certain project, how much of the time of the people that is participating in that project is going to report back or to ask permissions or actually do administrative work related to the project? Maybe if the budgets go – become smaller but at the same time there is more freedom to do things inside them. It could be that the pressure is not going to be as big as it would be in a world in which budgets become smaller and accountability increases because I do see that there’s a lot of time that is going into the accountability of projects rather than realization of them.

Jane Norris
Excellent point and thank you both for joining us today. The show has flown by, but interesting topic and you can find more at federalnewsradio.com. We’ll put all the information about the innovation lab and the center for Deloitte’s Center for Federal Innovation there, as well. So thanks for joining us today. Cesar Hidalgo, assistant professor at the MIT media lab, and JR Reagan, federal chief innovation officer and principle at Deloitte and Touche, LLP. Thank you all for listening. This is FedCentral on Federal News Radio 1500 AM. I’m Jane Norris.

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