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Wicked Problems, Wiki Solutions

Are these the best of times or the worst of times? On one hand, today’s grand global challenges, the consequence of unprecedented interdependence and resource guzzling, are daunting. But on the other hand, new ways of innovating promise robust solutions to such problems, solutions that may yet create the profitable industries of the future.

The advance of technology and the spread of globalization have helped improve the health of the world’s population in numerous ways, ranging from the spread of HIV medicines and vaccines to the remote provision of care via telemedicine. Unfortunately, globalization and the march of development have also made it harder to tackle some global problems that experts thought they had gotten under control—such as pandemic superbugs that have the potential to wipe out much of humanity.

Bacterial superbugs are a good example of what economists call a tragedy of the commons. The problem arises because a shared global resource (in this case, the effectiveness of antibiotics) is being diminished selfishly or unwittingly by some people to the detriment of all—including future generations.

The classic problem of this sort is climate change. Most environmental problems, be that smog in the air or pollution in waterways, are local and reversible. In time, as countries get richer and as technologies improve, these problems are generally tackled successfully: the air in Los Angeles and London, for example, is far cleaner than it was in the hazy 1970s, never mind how filthy London’s was back in Dickensian times. In contrast, carbon pollution does not automatically reverse itself the richer a country or region gets. Worse yet, there are irreversible triggers in the climate system that may be crossed off in coming years, leaving mankind unable to return to a safe climate no matter how great the willpower or how deep the pockets of future generations.

Getting a handle on such global public goods, which often fall between the cracks of national regulations and an imperfect system of global governance, promises to be one of the grand challenges of this new century. This chapter sounds the alarm bell about such scourges, examining in particular the threat of deadly pandemics, but it also brings good news from the front lines of many such battles. Bottom-up approaches, building on democratic technologies such as the Internet and mobile phones, offer hope that the world may yet overcome pervasive market and government failures in dealing with such challenges.

Can you change the world by changing your underwear? That is what Jeff Denby believes. A lanky young man with a fashionably disheveled look and little money in his pockets, he hardly seems like a revolutionary. But he is armed with a few things more important than money alone in today’s innovation-driven world: passion, purpose, and a provocative idea.

While getting his MBA at the University of California at Berkeley, he realized that there was one essential industry that was just crying out for fresh thinking. He observed that the underwear business, a billion-dollar enterprise, is dominated by two types of firms: those that peddle cheap commodity briefs (think store-brand tighty-whities) and those that market underwear using fantasy hunks and babes (think Calvin Klein and Victoria’s Secret).

Denby and Jason Kibbey, a fellow MBA from Berkeley, realized that there was a huge market opening. Informal polling and their intuition suggested that many people wanted underwear that was nicer than plain-vanilla briefs, but were nevertheless deeply unhappy that their only high-quality choice was underwear marketed with a frat-boy mentality. So they came up with the idea of socially responsible underwear and founded a company called PACT.

The firm’s philosophy of ethical business starts with the sourcing of its raw materials. Denby spent months researching the entire supply chain for undergarments. He settled on a supplier in Turkey who uses only cotton that is certified to be organic and who pays workers a living wage. In addition to the product being ethically produced, PACT also donates 10 percent of the profits of every sale to charity. The most striking aspect of the firm’s business plan is its marketing approach. The firm sells its products using not images of waifs but pictures of real people (including Berkeley graduate students) with realistic bodies wearing its stylish underwear.

The start-up’s novel approach so appealed to Yves Behar, a designer who runs a hip consultancy known as fuseproject, that he agreed to invest in the firm and to design its products. Noting that he has won numerous honors from design societies, the New York Times recently raved that Behar “has helped create some of the most memorable designs of recent years.” He has worked for firms ranging from Herman Miller to BMW to GE, but he is best known for designing the rugged little computers distributed by the One Laptop per Child program—a charitable effort that distributes extremely cheap computers for use in schools in the developing world.

Now Behar’s team is coming up with a variety of novel and ever-changing designs for PACT. He explains that by bringing together sustainability and great design, the firm has been able to create an entirely new reason for people to purchase and wear a product that goes beyond traditional marketing. “Advertising,” he insists, “is the price companies pay for being unoriginal.” Each design (his firm comes up with new ones every six weeks) is associated with a different charity that benefits from its sales. One style of underwear benefits the green charity started by Wangari Maathai, the Kenyan Nobel Peace Prize winner, for example, while another supports Oceania, a nonprofit that works to conserve marine ecosystems. Other designs support literacy projects, endangered forests, and so heartwarmingly on.

Unlike multinational clothing giants with rigid supply chains, the firm’s nimble manufacturing platform is able to make small batches of underwear in those unique patterns. That allows it, like the Swiss watchmaker Swatch, to change its designs frequently. Denby hopes that this encourages customers to change their underwear just as frequently, improving the world a little bit as they do so.

Sustainable underwear may seem trivial in the grander scheme of things, but in fact the PACT story gives a glimpse into the way that the new tools and rules of innovation promise to tackle the world’s grand problems. Globalization and Googlization are essential enablers, of course, as Denby would not be able to manage his foreign supply chain and market his wares globally from California without them. However, the essence of this firm’s strategy is to persuade customers that its purpose is worth supporting. That purpose, as demonstrated by the firm’s embrace of sustainable agriculture and its no-sweatshops policy, is the improvement of the planet and respect for people everywhere. People plus planet means purpose, the firm is betting, and they hope this will translate into profits too.

Greed for Good

The rise of social entrepreneurs like Denby, a theme explored in full in the final chapter of the book, is but one facet of the ongoing innovation revolution. However, any celebration must be tempered by the fact that humanity is also entering a period of dramatic global challenges. The world economy is undergoing unprecedented changes due to several powerful trends that are amplifying the disruptive impact of 24/7 global connectivity and rapid technological change.

One such trend is the transformation of humans into a primarily urban species. For the first time in human history, more than half of mankind lives in urban areas. Within a few decades, that figure will approach three-quarters of the global population. Most of these people will live in the sprawling megacities of the developing world, not just the familiar Shanghais and São Paulos but the dozens of other less well-known cities in China with a population already bigger than Philadelphia’s.

Mass urbanization will both demand faster and deeper innovation and provide the means for getting it. It will demand innovation because crowding ever more people into megacities will strain urban infrastructure, political systems, and civility to the breaking point. That requires imaginative responses. Happily, this migration promises to spark many new waves of innovation, as cities have long proved essential crucibles of creativity. Geoffrey West of the Santa Fe Institute has found that the average city slicker is three times as creative as the average country bumpkin. He also found that the creative output of a city scales nonlinearly. A city that is 50 times the size of a village nearby is, on the average, 130 times as innovative on such measures as creative output, research budgets, inventions, and so on.

Another of the big trends demanding a global innovation response is the rise of China, India, and other giant economies of the emerging world. The striking economic gains posted by the BRIC economies and their less-famous emerging brethren are surely to be applauded, for two reasons. Within one generation, more than a billion people have been lifted out of the most grinding poverty imaginable into lives of relative comfort. That is something unprecedented in human history. More amazingly, the rise of those economies raises the tantalizing prospect of eradicating of global poverty within the lifetimes of those born today. And the rapid rise of the middle classes in those countries could prove the salvation of companies in stagnant or slow-growing economies of the developed world.

But again, that silvery cloud comes with a dark lining. The economic growth in these developing economies is guzzling precious resources such as oil and commodities, raising concerns about food scarcity and greatly fueling global warming and local environmental crises. If this astonishing demographic and geographic transformation happens on business-as-usual trends—if development follows the worst examples from the rich world (think American-style exurban sprawl)—this is an ecological and human tragedy waiting to happen. That is because public policies, technologies, and markets are not organized to deal with the kind of stress that is about to be put on the world’s essential infrastructure, ecosystems, and resource base.

The most difficult aspect of the resource puzzle is that many different pieces of the puzzle actually fit together in ways that make simple, siloed solutions irrelevant. Energy issues could be more easily solved, for example, if many forms of energy conversion did not consume and pollute huge amounts of water. Water scarcity could be dealt with by desalination, but the equipment for removing salt from seawater uses enormous amounts of energy. Lack of fresh water and freakish droughts (aggravated by climate change) are a big reason food prices are up—but in turn, most of the world’s fresh water is consumed in highly inefficient fashion by the agricultural sector, not by heavy industry or thirsty urban households. The World Economic Forum has dubbed this the “water-energy-food-climate nexus” and has set up a high-level group of experts, government leaders, and corporate bosses to come up with possible solutions. One of those heavyweights is Indra Nooyi, the chairman of Pepsi, and she argues that “the only way to measurably and sustainably improve this dire situation is through broad-scale collaborative efforts between governments, industry, academia, and other stakeholders around the world.”

These grand global challenges certainly add up to a mighty headwind for the global economy, but Nooyi is right to suggest that these challenges can be overcome if creative and collaborative solutions are advanced to identify and reward innovations that tackle society’s big problems. This distinction matters, because innovation is not always a good thing. For example, a lot of technological invention is directed at coming up with gadgets and gizmos of negligible business or social value. And the drug lords and mafias of the world are often highly entrepreneurial, but their business-model innovations are hardly to be applauded.

William Baumol, a distinguished economist at New York University’s Stern School of Business, has spent a lifetime studying this topic. He argues that, without innovative entrepreneurship, the growth miracle of the last two centuries would not have happened—but he hastens to add that entrepreneurial activities are not always productive and growth-enhancing. In fact, across almost all of history, most such efforts were directed at redistribution rather than at producing new wealth: aggressive warfare, larceny, bribery, and rent-seeking litigation, among many others. Autocracy, the absence of the rule of law, and prevailing cultural norms allowed elites and free riders to capture most of the gains produced by innovative entrepreneurship throughout history. But starting at some point before the industrial revolution, most notably in Florence and Antwerp, attitudes and institutional arrangements changed so that productive capitalism—which enhances the general welfare, even as it enriches the individual entrepreneur—rather than rent-seeking and deviant entrepreneurship came to be prized and rewarded. That as much as anything explains the transition from millennia of stagnation, disempowerment, and oppression to the economic dynamism, social mobility, and democratic advances seen in the last few centuries.

Now it is time to double down on that tried-and-true pathway to growth by using the tools of innovation to turn the world’s grand challenges into this century’s greatest economic opportunities. The key is for society to find ways to reward socially useful innovation. That is not to say that the inventor of the next Pet Rock or erection pill should not be handsomely rewarded: if such inventions satisfy unmet consumer needs, they do represent value-creating innovations and therefore deserve market success. But plenty of other unmet human needs also require urgent attention, ranging from fresh water and affordable food to protection from climate change and pandemics. Unfortunately, the free market does not currently provide adequate returns for innovators who work on such difficult problems.

That argues for a rethink of public policies, which need to roll in the externalities of such actions as burning fossil fuels through carbon pricing and other mechanisms that will reward investments in clean energy. It argues for corporations to think beyond quarterly results to creating long-term value, which can be done only if the true social and environmental impacts of business are taken into account. And it calls for individuals to be more mindful of their consumer choices, which can have unintended ripple effects across the global supply chain. If the growth to come in this century follows such a thoughtful path, one that is mindful of ecosystem impact and human health concerns, one that leads with innovation rather than blundering and blustering ahead with business as usual, then the current challenge turns into an extraordinary opportunity for economic growth and human advancement.

For that to happen requires a radical rethink of why and how to innovate. Today’s understandable concerns about managing security and fixing finance must be seen through that prism. The world has spent the first decade of this new century fighting conventional battles, looking in the rearview mirror. The two grand global challenges taken on thus far are terrorism after 9/11 and the financial crisis after the collapse of Lehman Brothers. These are necessary battles, of course, and at the moment they seem to be the most important ones imaginable. But they are not, in fact, new ones: political terrorism has been around for more than a millennium, and capitalism has always gone hand in hand with global financial crises—just think of the South Seas bubble and tulip mania of yore.

Look from the perspective of the children born today, and it becomes clear that terrorism and financial panic are not the most difficult of the global challenges. Seen from the vantage point of 2050 or 2100, the big challenge for current generations is the handling of the unprecedented demographic, economic, and environmental transformation that is happening on this watch.

Larry Brilliant is a big believer in innovation. He should be, given the fact that he is a medical doctor who used a powerful vaccine to help eradicate smallpox in India. He later started Google’s philanthropic division, known as Google.org, and now runs the Skoll Global Threats Fund (started with money from Jeff Skoll, the cofounder of eBay). His career progression telegraphs his view of the world. He is very concerned today about the prospects of interlinked global challenges that he considers catastrophic risks. “We live in an uncertain, complex age,” he says, “and the problems of water scarcity, climate change, and pandemics all have the same root cause: too many people living unconsciously.” He believes global governance must change to acknowledge the growing number of existential threats. In early 2011, that view received an endorsement from a surprising quarter: China, the aspiring global innovation champion. Zhou Shengxian, the country’s environment minister, declared that “in China’s thousands of years of civilization, the conflict between mankind and nature has never been as serious as it is today.”

That juxtaposition of a new golden age for innovation with wicked global problems again raises that important question: are these the best of times or the worst of times? One could argue that the question itself is irrelevant; it’s always a bit of both. Perhaps, but occasionally humanity also reaches inflection points in history when the decisions people make, as individuals and together as societies, propel the species decisively in one direction or another. This is one of those inflection points.

There have been occasional periods of history when peace and progress brought tremendous prosperity (think Pax Romana and the Victorian age of invention) or when death and destruction doomed unfortunates to lives of grinding misery (as during the Dark Ages and the Great War). The world is approaching such a crossroads today. The decisions made in the next decade about how to live, the direction economies will take, how resource-intensive development will be, and whether society will do more to reward socially useful innovation will have profound, planet-altering consequences that will last a century or more.

There is now a great race under way between the forces of development and those of degradation. The fate of people and the planet hangs in the balance, and the outcome is not preordained. Even so, mankind can tip the scales in favor of a positive outcome—if the pace of global innovation is accelerated. How to do that, exactly? Part of the answer lies in better-coordinated, scaled-up, and patient efforts at innovation at the global level.

Investing in the Global Commons

John Kao is one of the world’s leading innovation gurus. He is sunny by disposition, and quick with a smile and a warm anecdote. He has been known to bring down the house at corporate meetings by belting out a couple of jazzy numbers on the piano (he toured with Frank Zappa in younger days). Indeed, his breakthrough book is called Jamming, and it compares the art of innovation with the controlled chaos involved in making great jazz music. He is not so cheerful anymore. He is convinced that the core dilemma today is that more and more people are competing over the world’s resources, so mankind has to find innovative ways to make more from less. Doing this will require “an unprecedented marshalling of intellectual energy and of innovation capacity.”

What the world needs, he argues, is a new operating model of innovation itself—what he calls large-scale innovation. He argues, intriguingly, that individual and corporate efforts are no longer enough. Dealing with the world’s wicked problems will require societies themselves to become engines of innovation. Rather than putting out fires when they flare up, he says, countries must organize themselves to innovate at scale so as to build resilience, prevent meltdowns, and invest in nurturing the industries of the future. He points to Finland’s evolution from a focus on mobile telephony to health and wellness services as one example. Another is Singapore’s thoughtful and multipronged strategy for dealing with water scarcity. Kao’s Institute of Large Scale Innovation, which counts policy makers and official advisors from several dozen countries around the world as members, spreads such best practices in the belief that “a global vision of innovation . . . may be how we save our increasingly crowded, fragile and interdependent planet.”

Bill Gates is also convinced that the world’s wicked problems require bold new approaches. He is doing his part by using the heft and resources of his Gates Foundation to stimulate global-scale innovation. For example, the charity’s Grand Challenges program awards cash prizes and publicity to clever thinkers anywhere who can come up with novel solutions to the problems it is trying to tackle. He is convinced that society greatly underinvests in innovation, and he wants to see greater outlays on education, research and development, and other bits of societal infrastructure that boost innovative capacity. He also thinks private sector investors need to take a longer-term view if they are to fund the breakthrough technologies and industries of the future. He points approvingly at the strategies undertaken by two novel investment outfits, Intellectual Ventures and Khosla Ventures, as models for how the private sector can help scale solutions to those wicked problems.

“On the face of it, why should the Gates Foundation bother with us?” asks Edward Jung rhetorically. “They have access to the best minds and technology already.” Yet, he insists, his firm is needed by outfits such as the foundations that are seeking fresh ideas to deal with incredibly difficult challenges, including the eradication of malaria or polio. Jung is a cofounder of Intellectual Ventures, an outfit that is an odd mix of investment fund, technology developer, and (by Jung’s own admission) patent troll. Because the firm has a very long view on its investments—he says twenty years is the shortest investment window his fund considers—it has the patience to invest in complex technologies in fields such as low-carbon energy (it is funding the development of radically different nuclear plants) and public health (it has come up with lasers to zap malarial mosquitoes) that take time to mature.

The firm gained notoriety when the book SuperFreakonomics made much of its radical geoengineering approaches to dealing with climate change, which many environmentalists took to mean it was not serious about dealing with the causes of global warming on the ground. But Jung insists the authors of that book picked just the most eye-catching of the many alternatives his firm is working on in this area. He explains that because the firm is not a peddler of any given technology, unlike multinational engineering giants, it has the freedom to develop a variety of possible solutions based on a set of scenarios. Most efforts at taking on wicked problems fail, so Jung believes such problems require a patient portfolio approach that builds in failure as part of the business model: “Unlike a venture capital fund, who takes ten shots a year, we take hundreds a year . . . but our wide portfolio means we don’t have to pick which technology and application will come first.” The firm is willing to make less money by taking less risk in the aggregate, and in doing so is paving the way for many others who will profit handsomely from taking the technologies it nurtures to market.

One of those who intends to profit by saving the world is Vinod Khosla. “I have a religious belief in the power of ideas propelled by entrepreneurial energy,” he declares. Coming from some businessmen, such talk might sound self-serving or plain nutty. But Khosla helped to found Sun Microsystems, a company that pioneered such essential bits of Internet technology as network servers and Java, a programming language. He then made his name and his fortune as a partner at Kleiner Perkins, a Silicon Valley venture capital firm famous for its early investments in AOL, Amazon, Compaq, and Google.

His eyes have turned toward a new target, the oil industry, and he is now busy plowing his billions into esoteric clean-energy technologies. Why is Khosla taking on this particular crusade when he could concentrate on the technology investments that have served him so well, or even opt for a gilded retirement? Like many very rich men, he now wants to improve the world: “Just starting another Sun doesn’t do it for me anymore.” As an engineer turned venture capitalist, Khosla has a healthy respect for the power of new technologies to create disruptive innovations. And the free marketeer in him clearly relishes the prospect of really taking on the big, rich, and well-entrenched firms that dominate the oil industry.

Another part of the explanation lies in his complex relationship with India. Like several of Silicon Valley’s most successful people, Khosla boasts a degree from the Indian Institute of Technology. When he tried to start a project to help the mother country, he was initially frustrated by its bureaucracy and corruption. His first attempt to start a traditional top-down charity failed, so he now funds only charities embracing microenterprise approaches. A lesson he learned from India, he says, is that one has to think big: “Unless you influence the lives of at least a million people, it simply doesn’t matter.”

His plan is to use technology and entrepreneurship to tackle big social and environmental problems at scale. “In venture capital, we fail far more often than we succeed,” he says. “I’ve decided that I’d better focus on taking on problems that really matter, so that when I win, it makes a difference to the world.” He has developed an investment strategy that pours pots of resources into high-risk but potentially game-changing energy technologies—what he calls black swans—in hopes that one or two of these neglected ideas may one day save the planet. He pooh-poohs fashionable areas of green investment such as hybrid cars and photovoltaic cells as mere greenwashing, choosing instead to put his money into radical technologies that can transform huge markets such as engines, lighting, cement, water, and buildings. He insists that any such technology, when scaled, must pass what he calls the “Chindia test”: prices must be low enough to be attractive in China and India.

Tackling the grand, and thus far, mostly ignored challenges of the twenty-first century—what some have called the most wicked of the current problems—will require better tools, smarter approaches, and, most important, much more ambition. Given that these are global problems, it only makes sense that part of the solution lies in better global coordination, pushing for worldwide economies of scale, and taking the very long view. However, top-down solutions will simply not be enough, no matter how clever or benevolent the visionary behind them.

In fact, tackling the twenty-first century’s most difficult problems will require a completely different approach that also taps into the wisdom of crowds and uses bottom-up innovation. If you doubt it, consider the threat posed to humanity by just one of these wicked problems: pandemic disease.

Beware the Superbug

“There is simply no greater threat to humanity than a viral pandemic,” declares Nathan Wolfe. Though he is young and dashing—the New Yorker declared his demeanor to be “a cross between a pirate and a graduate student”—Wolfe is no armchair alarmist. He is one of the world’s leading virologists, fighting on the front lines to save the world from the next deadly wave of HIV, SARS, or influenza. From the Mekong delta to the strife-torn jungles of the Congo, he and his team are building a global “viral surveillance” network that he hopes will monitor the tropical hot spots that have in the past produced such deadly viruses so that investigators can nip them in the bud.

Monitoring the blood of bush-meat hunters in Africa and chicken farmers in China may seem an esoteric or academic exercise to those sitting in comfortable homes in faraway places such as New York or London. In fact, it’s not. Because of the astonishing growth of globalization, air travel and container shipping now connect each corner of the world to every other. The rapid advance of urbanization and deforestation is whittling away the last of the truly wild places on earth, which have always been the greatest source of disruptive and deadly new human viruses such as HIV.

Gabriel Leung knows this all too well. Leung is one of Asia’s leading experts on infectious diseases and even served for a time as the Hong Kong government official in charge of pandemic preparedness. That city is especially important to the rest of the world for two reasons. First, it is close to the Pearl River delta, one of a handful of viral hot spots that, thanks to close contact between humans and wild animals, are sources of many potential viral threats. Second, Hong Kong is a major hub for air travel, so a deadly bug that passes undetected by the city’s health officials could quickly travel around the world and cause a potential pandemic, as SARS did a few years ago. “We are the world’s sentinel for pandemics,” Leung says.

It is no longer implausible that a new virus would leap from a remote farm in rural China to the “wet markets” outside Hong Kong and onto an international jetliner bound for Europe or North America. That sort of leapfrog is exactly what happened when SARS appeared out of nowhere in Asia and within weeks shut down large parts of the Canadian economy. So big was the economic blow that the Rolling Stones even headlined a huge benefit concert in 2003 for Toronto that attracted some half a million people. Such a leap is probably what happened in 2009 with the appearance of the H1N1 flu that surfaced in Mexico but which turned into a global pandemic. The virulence of that particular viral cocktail was not as deadly as it could have been. But the world almost certainly dodged a bullet with H1N1, given the global lack of preparedness, and next time things may not go so well.

Africa is the hot spot for blood-borne diseases, but the hot spots for respiratory killers such as SARS and H1N1 include China and Southeast Asia. To take just one example, globalization, rising prosperity, and increased meat consumption mean that the number of chickens raised for food has increased manyfold in the past few decades. The problem is that in parts of this region, humans and animals live so close together that an exchange of viruses (called “viral chatter”) is almost inevitable.

Adding to this deadly formula are the side effects of rapid economic growth. As reckless development leads to depleted aquifers and diminished agricultural yields, farmers chop down ever more trees. But those trees used to serve as essential buffers between mankind and the zoonoses, as scientists call diseases that jump from animals—bats, monkeys, wild cats—to humans. The rising temperatures and ecosystem changes that are coming with climate change are driving wild animals closer to human settlements too, exacerbating the problem.

In short, the world is now entering a dangerous new age of pandemic diseases. Zoonoses are on the rise in the world’s hot spots. These already account for the lion’s share of all new infection threats. Some of these are familiar already—West Nile virus, Ebola, SARS, H1N1. But the really scary part of this tale is that these are but the tip of the iceberg. There may be a million or more viruses waiting to be discovered in Africa alone, and the world may well see the sudden emergence of a new such virus with deadly global pandemic potential each and every year this century. In The Viral Storm, Wolfe argues that “the historical approaches to dealing with pandemics—wait and see followed by a rush to diagnostic and vaccine development—will not be sufficient and will fail as they have with HIV.” What is needed, he argues, “are radical new approaches and a paradigm shift away from response and toward pandemic prevention.”

Fleming’s Prescient Warning

If that’s not scary enough, consider the threat posed by superbugs of the bacterial, not viral, variety. These are on the rise because many antibiotics—which, along with vaccines, are probably the technological innovations that have saved the most lives in human history—are losing their effectiveness. Alexander Fleming, who helped discover antibiotics, issued this stark warning during his Nobel Prize acceptance speech in 1945: “There is the danger that the ignorant man may easily underdose himself and by exposing his microbes to nonlethal quantities of the drug make them resistant.”

Today, antibiotic resistance is a costly and dangerous problem. Yet those who misuse these wonder drugs mostly do not pay the cost. Patients pressure their doctors to give them pointless antibiotics for viral infections such as colds or the flu, and courses are often left unfinished. In some parts of the world, antibiotics can be bought without a prescription. Analyzing official figures from the Food and Drug Administration, Louise Slaughter, an American congresswoman who is a microbiologist by training, calculates that four-fifths of the antibiotics used in the United States are given to livestock—often to get perfectly healthy animals to grow faster.

Antibiotic resistance causes longer and more serious illnesses, lengthens stays in hospitals, and complicates treatments. Occasionally, people have died when they need not have. Today, resistant bacteria mostly threaten children, the elderly, cancer patients, and the chronically ill. However, the reason to worry is that this is likely to be a harbinger of worse things to come. Each year there are nearly 450,000 new cases of tuberculosis that is resistant to multiple drugs, causing at least 150,000 deaths. More than a quarter of new cases of TB identified recently in parts of Russia were of this troublesome variety.

Added up, the costs are enormous. In the United States alone, the Alliance for the Prudent Use of Antibiotics, a nonprofit group, calculates that resistance to antibiotics causes $17 billion to $26 billion per year in additional costs to the health care system. In one study, a random sample of 1,400 patients at an American teaching hospital found such resistance in 188 people; twelve additional deaths resulted.

The problem, however, is a global one, and there is another, less obvious cost. In many poor countries, the cost of drugs gobbles up half or more of the total health budget. As resistance grows, points out a task force organized by the Center for Global Development, patients are forced to turn from failed front-line therapies to second-line drugs. These are scarcer and much more expensive. For the cost of treating just one patient with extensively drug-resistant TB, a hospital could treat two hundred with the ordinary variety of TB. So the burden is in the form of greater ill health for the poor and higher health care costs for the rich as proven therapies fail and new superbugs—that is, drug-resistant strains of bacteria—take off.

Some skeptics argue that the global rise in drug resistance, while a problem for those with weakened immune systems, is not a problem for healthy adults. A related argument maintains that overuse of antibiotics does not necessarily lead to an increase in resistance. Herman Goossens, a prominent microbiologist at the University of Antwerp, vigorously disagrees. He conducted a double-blind, placebo-controlled trial, the results of which were published in the respected medical journal Lancet, which debunked both arguments. His team divided healthy volunteers into three groups and randomly gave them either azithromycin or clarithromycin, two common antibiotics, or a placebo. Researchers then checked the streptococcus bacteria that naturally reside in throats.

What they found proved what doctors and researchers had claimed for many years. The patients taking the placebo had no drug-resistant strains of streptococcus, but within days those on either antibiotic suddenly had streptococcus with sharply elevated levels of resistance to those same two antibiotics. Goossens explains that exposing healthy patients to antibiotics leads to nonresistant bacteria acquiring the genes that provide resistance. In his view, the fact that the streptococci retained this resistance for over a year, during which period they replicated many times over, challenges the theory that bacteria do not want to be drug resistant. “This argument is no longer valid in real life, as some bacteria do get resistance and we have shown they are fit—indeed, the bugs select for resistance fast and stay fit for over a year.”

No surprise, then, that new superbugs are now emerging at a steady pace, and the media are noticing. At the end of 2010, a genetic mutation, NDM-1 (quickly dubbed the “New Delhi superbug”), was identified in India. This new bacterial strain led to panic because it was resistant even to powerful antibiotics often used as treatments of last resort. Resistance was found to be able to transfer between different species of bacteria. The immediate backlash in the British media held that Indian hospitals were to blame, and even credentialed experts argued that British “health tourists” should think twice about getting cheap surgeries done in India. But Srinath Reddy, head of the Public Health Foundation of India, offered this chilling observation about NDM-1: “Antibiotic resistance is a global problem, there’s no need to finger-point India . . . thanks to international travel, we now have a virtually inexhaustible supply of human hosts so they can easily mutate into more virulent forms.”

Alarmed by the crisis at hand, the World Health Organization declared that the annual World Health Day for 2011, celebrated on April 7, be devoted to the topic of antimicrobial resistance. “No action today, no cure tomorrow” was the motto. And to be fair, there has been some action of late. The Infectious Diseases Society of America has issued its 10 × ’20 Initiative, which calls for the development of ten new antibiotics by 2020. A transatlantic task force has been formed to look into this problem. Bills were also introduced in the U.S. Congress that would address some parts of the puzzle, such as curbing the use of antibiotics in healthy livestock (to get them to grow faster).

However, these efforts miss the point, argues Ramanan Laxminarayan of Princeton University and the Center for Disease Dynamics, Economics and Policy, a think tank. He was an early advocate of thinking about drug resistance as a global-commons problem. For one thing, simply paying for new antibiotics is an expensive proposition that does not ensure they will be managed effectively in the future. Also, he argues they fail to deal comprehensively with the incentives that lead to overuse of this global shared resource—antibiotics effectiveness—on both the demand and supply sides of the equation.

First, to demand. According to an opinion piece published in 2010 in the Journal of the American Medical Association, as much as 50 percent of antibiotic use is unnecessary or inappropriate. Overuse, misuse, improper dosing, and the use of substandard or diluted medicines all contribute to the rise of resistance. But so too do weak health systems and governance: unless a strict code of practice forbids overuse and systems are in place to monitor behavior, doctors have every incentive to treat the patient in front of them rather than worry about the theoretical patient a decade hence who may suffer from the consequences of antibiotics overuse.

Many Bugs, Few Drugs

The supply side of the equation is equally gloomy, as the pipeline is drying up. From 1983 to 1987, sixteen new antibiotics won approval from the U.S. Food and Drug Administration (FDA). From 2003 to 2007, only five won approval. Pharmaceutical firms have not come up with a new first-line TB drug in many years. Penicillin, still considered something of a miracle drug, is now much less useful than it used to be thanks to the rapid growth of resistance. That frightens Barry Bloom, a former dean of the Harvard School of Public Health, who sighs, “I can’t even imagine what we’ll do if we lose penicillin.”

Why did the industry hit such a dry spell? Kim Lewis of Northeastern University argues that the pharmaceutical industry “overmined” this resource during the golden era of antibiotics half a century ago. Having picked the low-hanging fruit, goes the argument, the science has simply gotten harder.

Ah, but even if the science has gotten harder, surely scientific progress over the past few decades has helped? The drug industry did pour hefty sums into applying genomics, proteomics, and high-throughput screening to this problem. Alas, it did not work. Despite spending millions of pounds on this effort, argued David Payne of GlaxoSmithKline, a British pharmaceutical giant, in a striking paper he coauthored a few years ago, his firm and others came up empty-handed: “It was clearly very hard to find targets, so we stopped.” Other drug research chiefs share his frustration. Mark Fishman of Novartis, a Swiss rival, met with similar frustration at the lack of big breakthroughs in genomics. So now, he says, “we’ve gone back to the brute-force method of screening millions of candidates that kill a bug—and then evaluating them for safety in humans.”

There are signs that the pipeline crunch at Big Pharma may be worsening, but some biotechnology firms are coming up with novel approaches. Theravance, an American company, has come up with an antibiotic that treats skin infections, including some caused by MRSA—an especially nasty type of bacteria that is resistant to many antibiotics. Cubist, another American biotech, took a chance on a new antibiotic that also targets MRSA. The drug, derived from a compound found at the base of Mount Ararat in Turkey, had serious side effects, so it was discarded by Eli Lilly, a big pharmaceutical firm. Cubist worked out how to adjust its dosing so that it no longer causes permanent muscle damage, and now the antibiotic is a commercial success.

“We want to regreen the tree from the golden era of antibiotics research!” exclaims Andrew Myers, a Harvard chemist whose ideas are being developed by Tetraphase, a biotechnology firm. Tetracyclines are a class of antibiotics that have been around for decades. However, research into this area slowed down and few new drugs were approved in this class in the past thirty years. But a dozen years of research led Myers to a novel way to synthesize new drugs in this class—a process that Tetraphase is now hoping to commercialize. He is convinced that such scrutiny of other existing classes of antibiotics may also lead to similar breakthroughs.

Kim Lewis of Northeastern is working on radically different approaches. For example, bacteria are typically grown in a petri dish. Only 1 percent of the microorganisms collected from the natural environment can actually be cultured in the laboratory—a precondition to developing useful new drugs from them. Lewis’s research, published in Chemistry and Biology, fingers a culprit. His team found that the bacteria in question lack siderophores, compounds that bind iron for them, so the microorganisms fail to grow in the petri dish despite swimming in nutrients. He thinks there are many more growth factors for previously uncultured bacteria. If he is right, it may open up a new way to discover antibiotics. “This will give us tools to access biodiversity that have been hidden from us,” he thinks.

Roger Pomerantz of Merck, another giant American pharmaceutical firm, vows that his company is committed to research in this area for the long haul. And it is not after just incremental improvements, as “we are looking for clear major leaps,” he insists. Pushed on the matter, though, he concedes it will not be easy: “As this area matures, it gets harder to hit the innovation threshold, as we are victims of our own success.”

A Tragedy of the Commons

The sad truth is that this industry is a victim of misaligned economic incentives that make it hard for private sector firms to justify plowing billions into long-term research in this area, even though it is very clearly in the interests of society for such work to be done—and done now. For example, even if a company comes up with a great new anti-infective, such a drug will likely earn it far less than remedies for chronic diseases or even those for mundane problems such as erectile dysfunction. That is because a good antibiotic works in a week to two weeks and may never be needed again; it is therefore far less profitable than, say, a statin that must be taken every day for years on end. Many government-run health systems unfairly reward anticancer and central nervous system drugs more handsomely than antibiotics, even though the latter offer more bang for the buck in terms of reducing mortality and morbidity.

That is why it is probably too much to expect the pharmaceutical industry alone to solve this problem, says Ramanan Laxminarayan, given the legion of market and regulatory failures involved in this global resource problem. That argues both for bigger carrots, in the form of financial incentives for the development and use of both new antibiotics and companion rapid-diagnosis systems (it is suspected that only a tenth of TB cases globally are diagnosed properly and in a timely fashion), and for bigger sticks in the shape of treatment and dispensation guidelines for doctors and pharmacists. It also suggests that novel forms of open innovation, be they Web-based collaborations between academia and pharmaceutical firms or public-private partnerships, may be necessary to shoulder the developmental risk involved in such long-term research.

Bottom-up approaches are attractive for another reason. Even coming up with breakthroughs in antibiotics would be akin to wasting precious water by pouring it into a leaky bucket. Tackling this problem requires fixing the bucket by dealing with the demand side of the equation.

Reining in overuse, misuse, and abuse will be difficult and will require concerted action by governments, companies, and health care providers. Well-meaning aid agencies and charities dispensing drugs freely in poor countries should ask themselves whether the necessary safeguards and patient education are in place for proper use of powerful drugs. Governments in some countries, such as China, that link financial reimbursement for doctors and hospitals with the amount of drugs dispensed must abolish that perverse practice.

Regulators must do better in their monitoring and public health surveillance, so that counterfeit or substandard drugs (containing less than the proper dose of active ingredients, for example) do not get to unwitting patients. Companies that hope to profit from antibiotics can do more to encourage the development of rapid and portable diagnostics—a mushrooming field—so that their pills are popped only when they will actually help the patient.

Ultimately, it is the doctor-patient relationship that is paramount. Because both doctor and patient have a legitimate self-interest in curing the crisis apparent today, not the one that may come tomorrow due to growing drug resistance, both have incentives to overuse antibiotics. Medical associations can put in place more rigorous training and drug dispensation protocols that, for example, insist that doctors follow up with patients to make sure they have completed their entire course of antibiotics.

All of the top-down solutions will come to naught, however, if patients continue to abuse these drugs. In the end, solving this problem probably requires the ordinary person to behave just a bit less selfishly. In this, the superbugs problem is much like climate change and other tragedies of the commons: the greatest hope may be offered by bottom-up solutions that start with individual responsibility and are enriched by top-down coordination and democratic technology.

The Perfect Storm

The good news on the antivirus front is that pioneers are starting to answer this call to arms. To see how, travel with Nathan Wolfe to Cameroon, where his Global Viral Forecasting Initiative has set up a world-class virus-monitoring center. His team ventures into the deep jungle, setting up networks of relationships with people who hunt bush meat (such forbidden wild animals as gorilla and chimp), as they are most prone to the viral chatter between species that leads to zoonoses. They take blood specimens from both the hunters and their game, run the samples through advanced gene-sequencing machines, and try to predict which deadly virus will be the next to make the jump into humans.

Now Wolfe wants to go further. He believes that a combination of mobile telephony and information technologies, deployed in a robust global surveillance system, can catch the next SARS or HIV long before it turns into a global pandemic. The key, he says, is early detection and early response, based on information fed in from the grassroots.

One relatively new tool in the box is digital detection. Researchers at Google, MIT’s Media Lab, IBM, and other outfits are applying sophisticated software tools to try to predict outbreaks of disease. For example, software can crawl the Web and look for press reports in many languages that point to the outbreak of an unusual disease. This is valuable, as countries suffering outbreaks of potential pandemics—China and Thailand are recent examples—typically are not eager to advertise this fact out of fear of hurting tourism or exports. Google has demonstrated how this technique was able to predict outbreaks of plain-vanilla seasonal flu in the United States a week or more before the government’s Centers for Disease Control did.

Overcoming its initial skepticism, the public health establishment is now coming around to the use of such communications technologies in the quest to predict, prepare for, and possibly prevent the next great pandemic. John Brownstein of the Children’s Hospital Boston and colleagues published a thoughtful endorsement of these technologies in the New England Journal of Medicine in 2009. They argued not only that the adoption by health officials of distributed communications technologies and Web-crawling software would be useful, but also that ultimately they “expect that patients’ contributions to disease surveillance will increase. Eventually, mobile phone technology, enabled by global positioning systems and coupled with short-message-service messaging (texting) and ‘micro-blogging’ (with Twitter), might also come into play.” Strikingly, the researchers concluded that “Internet-based systems are quickly becoming dominant sources of information on emerging diseases.”

The catch is that while such “rumor registries” are useful, any leads must still be validated by boots on the ground—such as Wolfe’s shock troops. Public health surveillance systems are increasingly using mobile phones and smart handheld devices for this task too. When Kenyan officials suspected in 2008 that Somali refugees might have brought polio into the country for the first time in twenty years, they alerted health workers in the area, who used their mobile phones to log patient symptoms, medications dispensed, and so on. By analyzing those data remotely, health officials in the capital were able to contain the outbreak.

Building on that success, Wolfe now wants to transform surveillance into a predictive tool rather than wait for signs of trouble. One technology he considers promising is the “lab on a chip.” Researchers around the world are now rushing to develop portable, fast, and affordable ways of analyzing samples out in the field. At the moment, samples often need to be sent to distant laboratories for analysis, a process that can take days or longer. Wolfe thinks he will soon have a device that will identify an unknown bug by using advanced genetic analysis. Think of it as a crude form of tricorder, the handheld gizmo used on Star Trek to scan alien environments.

He also sees great potential in the mobile phone. When he visits remote parts of Congo not connected by road or electricity grid, he often finds that there is cellular service. Locals are able to use their mobile phones, recharging them at night using portable generators. His team is developing a software system to offer hunters an incentive (it might be a tiny financial payment, or perhaps some sort of nonmonetary reward) to send an SMS message letting him know when they are ill, which would provide a useful early warning. Health workers would then be sent to test the ailing hunter to see if there is cause for alarm.

Global health visionaries are now pondering a much more interactive smart grid that can make sense of that hunter’s initial warning. One possible technology is FrontlineSMS, a free application that allows health officials to analyze a huge flood of text messages without the need for central servers or Internet access. For a global surveillance system to be robust, though, it must provide the people closest to the trouble with the information and authority they need to act swiftly. There are now open-source applications such as Ushahidi (created by Kenyan activists during that country’s recent political strife) that put together data from disparate mobile sources and combine them with maps and other data to be used by field workers to act on a warning. The Rockefeller Foundation, along with the United Nations Foundation and others, is now encouraging such mobile innovators to agree on best practices and common standards to allow the most promising ideas to spread easily, quickly, and widely.

That, in short, is how a band of brave and mostly unsung innovators is beginning to prepare humanity for dealing with one of the gravest risks of this new century. Dealing with such global threats will be difficult, as both governance and market failures need to be overcome, but it need not be impossible—especially if governments get help from the private sector. The next section of the book takes up that very question: how companies should respond to such threats and opportunities.

In the case of superbugs, as with other potential disasters, getting economic incentives right and deploying decentralized technologies will help. And the early successes suggest that while the world may indeed be getting riskier, today’s innovation revolution means mankind need not enter such a future unarmed. As Wolfe puts it, “If the Internet is humanity’s planetary nervous system, we are now building our planetary immune system.”

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