Facing Reality

Growing up, I enjoyed science and mathematics to the extent that in high school, I took every science and math course offered. I loved these courses because they seemed so elegant and quantifiable. Especially math. Math problems had right answers and I felt it was up to me to find them. I appreciated certainty, rather than the fuzzy thinking practiced by right brained thinkers. If it wasn’t on the computer printout, the conclusions were in question, as far as I was concerned.

This preference drove me to pursue a chemical engineering degree in college and it didn’t disappoint. I loved the thrill of solving the engineering problems I encountered in the textbooks. My left brain was fully engaged. Even though my political nature was far right, I have always been so left-brained that I must have walked with a tilt.

I never enrolled in a single liberal arts or business class. No literature, no introduction to business, no art appreciation, no psychology, no language course. I considered these courses fluff and intended for those who couldn’t cut it in engineering or science. I snickered as the engineering dropouts enrolled in the business school. I didn’t think those courses, other than the ones in my core curriculum, would be of any value. Of course I was wrong, but I wouldn’t realize it until much later.

I graduated with my degree and went into the working world. My first job, which was at Aerojet General, was shift engineer overseeing propellant processing for Minuteman missiles. Interesting job, but I concluded this wasn’t what chemical engineers were trained to do. Even a liberal arts graduate could do this! So I left for Shell Oil’s refinery in Martinez, California. Now this was where a chemical engineer could shine.

During my time at Shell, I was involved in the start-up of a major refinery expansion. I worked seven days a week for several months. The reality of work as an engineer, with only an undergraduate degree, began to dawn on me. And it was not the same as what they taught me in engineering school.

One evening, the compressor at the new Hydrocracker went down. I was the engineer overseeing that area of the plant and so I hurried off to the site of the compressor. The maintenance people were already there diagnosing the problem and ultimately repaired the compressor. I had no clue how to fix the compressor and little idea about what was wrong. This wasn’t a textbook question. It was a problem for people who had been trained on compressors and had years of practical experience. That wasn’t me. I didn’t enjoy this version of engineering and wasn’t very good at it.

These situations kept recurring and eventually led me to conclude that, to solve theoretical problems and do research in the field of chemical engineering, I needed to get a Ph.D.  So I applied to the doctoral program at the University of California at Berkeley. As I later realized what was to my great, good fortune, Berkeley didn’t accept me.

What now? While at Aerojet, I had taken some business courses at a local university and found them somewhat interesting. Maybe this was a new avenue for me, I thought, so while at Shell I enrolled in some night business classes at Berkeley. That led me to decide I should get an MBA. I applied and was accepted. And so I quit Shell and moved with my wife and young son to student housing in Berkeley. The MBA program opened a whole new world for me.

My next lesson in facing reality came while completing the thesis required for MBA candidates.  My topic was optimizing inventories for the Kaiser Permanente Hospital system in the Bay Area. Kaiser had the data I needed to plug into the mathematical models used for inventory control. My left brain was re-engaged.

A thesis requires a large quantity of pages and a little substance too. I gave my wife the tedious job of typing the thesis, including a carbon copy–in total 150 pages. I was thrilled with the results of my analysis: that Kaiser could reduce inventories and avoid building a planned distribution warehouse for two more years. The secret was to establish inventory levels based on a prescribed probability of running out and item criticality. For supplies that were lifesaving, the probability of running out must approach zero, but for items with available substitutes or transportable replacements, the probability of running out could be higher.

My supervising professor, Dr. Leon Richartz, who had taught Non-Linear Programming, liked it too and gave me an A. He liked it so much that, as one of the contributors to the final comprehensive examination that I took, along with all graduating MBA’s, he posed an inventory problem that was basically my thesis. Thank you, Dr. Richartz. I nailed that question.
I was feeling good about the thesis and asked if I could present the results of my work to Kaiser’s management committee. They graciously agreed and so I did. They said, “Mr. Gehrman, you don’t understand health care. We can’t ever run out of anything. We are dealing with people’s lives here!” I suspect my thesis soon found the bottom of their trash can. All my elegant models and theoretical purity was for naught. I believe I encountered the glimmers of behavioral economics before it became wisdom.

Human psychology is a big factor in making any prediction, besides the fact that models never account for all the potential variables and therefore are often flawed. I was never as enamored with models and theories again.

Models have always proven to be flawed. Weather commentators with all their sophisticated computer models can’t forecast tomorrow’s weather with a hundred percent accuracy. Long Term Capital almost brought the entire financial system down by relying on models constructed by Nobel Prize winners. The financial crisis of 2008 and 2009 was in part caused by the inaccurate projections of models.

My view today is much more nuanced. I will still consider the projections produced by models, but with the understanding that the results are just one input. The collective wisdom of a team with complementary skills is much more relevant when making a decision or recommendation.

Be sure your team includes a person with the wisdom that can only be gained through a liberal arts background.

It’s not fluff after all.

Doug Gehrman teaches transformational leadership at Houston Baptist University. He had a 40-year corporate career in energy and financial services. He can be reached at dbgehrman@hotmail.com.

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