It will be a great loss to the US if the lessons learned from the failure of the US investment in Solyndra are not developed beyond the predictable partisan debate that characterizes US politics. Certainly, in an election year the word ‘Solyndra’ will be used to conjure up emotional responses by candidates in voters, but that only makes it more imperative to examine the total phenomenon of the Solyndra investment failure, and elevate some of these lessons for future guidance. The lessons may be painful but are not always intuitively evident. Getting beyond the first blink or two, and the emotional reactions overall calls for a strategy often described as Root Cause Analysis.
Lessons Learned - After Action Reports - Root Cause Analysis
Failure has a vocabulary all its own. Engineers describe various types of failure - ‘test to failure’, ‘critical failure’, ‘failure rate studies’, etc. Unfortunately, nothing like this exists in the rest of our culture. ‘Success has a thousand fathers while failure is an orphan’ is the phrase that characterizes our naïve approach to failure. As consequence we will do almost anything to cover up or cede away responsibility for failure, often in a partisan arena, rather than own the failure, learn from it and overcome it. Solyndra’s collapse highlights the need to treat the financial impact essentially as tuition. We should study the root causes, all of them, and work to make the lessons learned effective teaching tools for our future course of action.
One Root Cause – Solyndra’s Factory was designed to Save Real Estate Agents
For several generations, the United States built communities around manufacturing; starting with factory towns and moving on to planned communities after WW II, the underlying social contract depended on a steady source of work in manufacturing for community stability. This was the foundation for extending home ownership – families knew that they would have a steady job, often with union-protected wages, and it was fairly easy calculus to see that new home buyers with middle class credentials would be good risks in the housing market.
The housing development, construction and housing finance institutions have had an enormous benefit that developed out of the stable manufacturing and factory environment of the mid-20th century. The US housing industry has been a vital force in building the infrastructure for the consumer economy, but their benefits to the country have waned as the saturation point has been reached in home ownership, and the mobility of manufacturing and jobs has undermined entire communities from Detroit to Las Vegas. A severe problem that reached its apex in 2008 has been the US industrial arc that has changed with the markets, while the domestic real estate industry stayed mired in an illusion of it’s halcyon days of the 20th century.
Manufacturing is Mobile – But Homeowners are not
The easy mobility of Boeing’s 787 manufacturing from Washington State to South Carolina, or General Motors manufacturing from Michigan to Mexico, highlights the phenomenon that Solyndra was really trying to overcome – jobs migrating where people cannot. American communities thrive on a notion that a couple can move to a town as newlyweds, buy a home, start a family and raise that family in relative stability through a large part of their lives. This concept of American nuclear family development is founded on home ownership, which in turn in is found on stable jobs within the community.
The Department of Energy and political supporters of Solyndra fed into the desire to use a factory as a community stabilization strategy without going all the way into also stabilizing the price of the units manufactured by Solyndra, and even further, creating a market for the units manufactured by Solyndra. Solyndra’s first mistake may not have been their choice of a technology, but their choice of a community to build their facility. But a guaranteed market is clearly not the course that Americans are taking or should take with some exceptions.
Real Estate Agents, Mortgage Brokers and Buggy Whips
The easy mobility of manufacturing and jobs contrasts starkly with the rapid losses in home values and the ongoing debacle of the foreclosure crisis. The low mobility of homeowners in the job market, and the volatile swings in home value both positive and negative, works against the interests of communities and the homeowners themselves. The continual drive of housing developers and banks to go back to the old days of the housing industry fails to recognize that those days are gone, that ship has sailed and we need to develop housing and community structures that are just as mobile as the jobs needed to fill them.
Mobility in Housing Needs to Match Mobility in Manufacturing
Housing needs to evolve beyond the simple equation of, (A) rental and (B) owned. Coops, shared housing environments and host of other housing alternatives need to be developed to keep pace with changing times. The nuclear family has changed radically over the decades, and multigenerational housing choices need to be available. Zoning laws can be at the forefront of this change, but communities will need to pull their zoning boards out of the hands of developers and put them back in control by the community at large if they want to make headway.
Housing needs to become a utility, and communities need to prepare for a radically different tax structure to maintain themselves sufficiently in this century. Just as gas taxes will be inadequate for maintain roads when a sufficient number of people have electric cars, or use alternative transportation, housing, both rental and owned, will not be adequate to fund a community that uses it.
Finally, this may seem to be a long way from the Solyndra failure, but it is completely in line with a Root Cause Analysis. Root Cause Analysis may result in several reasons for failure in review, but it is nevertheless a useful tool to get beyond the ordinary mayhem of partisan fighting and find a useful insight into the real reason for a failure. Success may have many fathers, but failure shouldn’t be an orphan – it should be the mother of invention.
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