Monthly Archives: January 2008

Andrew Leonard on Globalization

Posted on
Reply

Globalization is built not just out of the telecommunication and computer network linkages that make financial markets anywhere accessible from your iPhone. The bricks-and-mortar of global production supply chains have turned that iPhone into a product requiring the efforts of multiple nations and multiple companies. An earthquake in Taiwan affects Dell’s quarterly earnings. High corn prices in Iowa lead to an expansion of soybean farming in Brazil. Bad investment bets by New York bankers lead to an infusion of funds from Singapore and Abu Dhabi and bankruptcies in small towns in Norway. In every direction one looks the linkages are multiplying.

Link

The Tata Nano inspiration for India

Posted on
Reply

Ramesh Ramanathan writes in The Mint about the ingenuity of the new car from Tata and how those same principles can be used to meet some of the challenges in health care, housing and public transportation in India.

 But the larger point is the inspirational lamp that the Tata Nano story lights. There are hundreds of challenges in India where the lessons of the Tata Nano can be applied—design innovation, scale efficiency, vendor networking and so on. I want to talk about three illustrative examples.

[...]

Imagine if we could get a CT scan cost down to Rs500, offer a heart surgery for a few thousand rupees or a gall bladder surgery for under a thousand. This requires a fundamental redesign of all the parts of the health- care delivery system—from re-engineering individual components such as the CT scan, to embedding these into scaled health “cities” that can get a critical mass of 10,000 outpatients a day.

[...]

Imagine the kind of demand that can open up if we can change the engineering specifications, reduce the cost-per-unit by scale economies, improve the construction process, and deliver a product that might not have marble floors, but doesn’t compromise on quality.

[...]

I think of the public bus system in our cities. If the experience is bad for passengers, it’s worse for the bus drivers, having to navigate these Noah’s arks through the narrow Indian streets. We need buses designed for Indian conditions: our roads, our traffic, our people. With environmental challenges thrown in, we are looking at a fundamental redesign of the Indian bus. Can we create an icon like the London Routemaster?

The Age on Public Transport

Posted on
1

The recent editorial on The Age in regards to public transport is telling.

The figures for rail patronage clearly show that given a service — reliable, comfortable and inexpensive — people will use it. Two other factors have a strong bearing on public transport: the rising cost of petrol and emissions from vehicles. Cars and trucks not only choke the roads, they choke the atmosphere.

It may seem a small byway in the argument, but the fiasco of the proposed bike ban on trains, illustrates a telling point in why clear-headed thinking is needed. Ms Kosky is to review her ban after she said yesterday that she had been “misinformed” by her department. (On the same day, the Government announced a $52 million upgrade of Clifton Hill station.)

Of all the options a government could take in the transport sector, moving against the most environmentally friendly set of wheels on the road was madness. What message could people derive from the ban but that the Government not only did not care about sustainability but actually worked against it? It is welcome news that the minister is reviewing the ban, but there should not have been a need for it in the first place.

What is true for Melbourne is true for most cities around the world. In my recent visit to India, it was clearly evident that public transport is the solution and that has the least amount of focus from policy.

Eight business technology trends from McKinsey Quarterly

Posted on
Reply

McKinsey Quarterly makes for some interesting and some times ground breaking ideas from one of the world’s best management consultants.

In the current issue, James M. Manyika, Roger P. Roberts, and Kara L. Sprague write about eight emerging technology trends (free reg. req.) that executives need to watch out.

For each trend they provide a bit of background, some current examples, why it may be important in the future and some articles and books to follow on each trend.

Managing relationships
1. Distributing cocreation
2. Using consumers as innovators
3. Tapping into a world of talent
4. Extracting more value from interactions
Managing capital and assets
5. Expanding the frontiers of automation
6. Unbundling production from delivery
Leveraging information in new ways
7. Putting more science into management
8. Making businesses from information

5 steps to carbon reduction

Posted on
Reply

Heather Clancy writes in ZD Net’s Green Tech blog about monitoring carbon and advice from Michael Meehan, founder and CEO of Carbonetworks.

Meehan, who hails from Victoria, British Columbia, figures there are five steps companies need to climb on their way to getting a better grip on their carbon position:

1. Measure actual carbon emissions and document where it’s coming from. What’s true for one division may not be true for another.
2. Understand how your carbon position relates to core business values. In other words, how would reducing your company’s footprint affect profitability?
3. Gauge the financial liability/value associated with your company’s greenhouse emissions.
4. Assess the impact of various reduction strategies across the entire company. Sometimes, something that may seem like a great idea for one division may have a detrimental effect on the company as a whole.
5. Link up with verified offset providers to take action.

Do Well by Doing Good?

Posted on
1

Joshua Margolis and Hillary Anger Elfenbein, writing in the January 2008 edition of the Harvard Business Review (subs req. free for the month) on social responsibility inform us that after a meta-survey of 167 surveys over the last 35 years they find that there is a low correlation between doing good and doing well in business sense.

They write:

While doing good doesn’t appear to destroy shareholder value, we found only a very small correlation between corporate behavior and good financial results (the exception being public misdeeds, which had a discernible negative impact). Moreover, the minor correlation that does exist could well be explained by deep pockets – a history of strong financial performance may simply give a company the wherewithal to contribute to society. Indeed, of the various forms social responsibility can take, cash contributions to charities have shown a stronger correlation with success than have socially responsible corporate policies or community projects.

They suggest:

  1. Corporate misdeeds are costly to companies – if people find out.
  2.  Doing good is unlikely to cost shareholders.
  3.  Profitability should not be the primary rationale for corporate social responsibility.

It is interesting to read this.  Now to be sure the HBR headline reads that CSR. However, what I would like to call ‘Sustainable Business’, how does that fare?

Karl Weber writing in the Triple Bottom Line blog makes some important comments.

First of all, the authors say they found no conflict between doing business responsibly and achieving strong financial results. “Doing good,” they say, “is unlikely to cost shareholders.”…After all, if CSR is (in effect) cost-free, why not make an effort to do the right thing? What is the upside to behaving ruthlessly if it is not even rewarded in the marketplace?
…The fact that Margolis and Elfenbein do confirm such a correlation is, of course, welcome to CSR advocates. And without having access to the original study (which doesn’t yet appear to be available online), it’s impossible to know whether specific factors might explain why the correlation is only a small one.

…The authors might argue that no one, including CSR skeptics, is actually in favor of “public misdeeds,” which means that the CSR movement shouldn’t be credited for any positive impact from avoiding them. I’d challenge that logic. If companies that espouse CSR do a better job of avoiding scandalous behavior, that’s not a mere coincidence.

Stopping the negative consequences do connect to corporate financial performance.

To understand whether any specific circumstances create the scenario where CSR is valuable Vinay Nair, a Wharton finance professor and his colleagues at Columbia University studied whether being charitable — such as donating money to medical research or to organizations that promote economic self-sufficiency — helps a company’s financial picture.

Concentrating only on charity they found that “Corporate philanthropy and profits are positively related only in industries with high advertising intensity and high competition,” the researchers say, citing as examples the beverage and retail industries. In low-advertising industries, such as computer chips and business-to-business services — “there is actually a negative association between philanthropy and profits.” Clearly this helped to serve as a differentiation in a competitive industry.

In thier study they excluded good deeds that could also have the effect of boosting a company’s productivity and, in turn, its profits. For instance, a company’s decision to operate an environmentally friendly plant could increase efficiency. Likewise, a company that offers flex time and good maternity leave benefits may reap the benefits of a more loyal and productive workforce. And I think this is where the companies need to concentrate.

Corporate good deeds need to combine business strategy and sustainability to make a difference. Or else, shareholders will be at loss.

Carbon Neutrality to Carbon Advantage

Posted on
2

Dave Douglas in a Op-Ed in Business Week writes about the carbon or sustainability opportunities available for companies. Dave is the vice-president for Eco Responsibility at Sun Microsystems and like other Sun executives he writes a blog which makes for good reading.

Dave writes about the growing interest in Carbon Neutrality, which is impossible in actual reduction of carbon to zero. What we can do is increase efficiency and buy green energy and offset the rest.

Dave writes that working only for carbon neutrality is a missed opportunity.

It’s good for companies to invest in others’ good deeds, but right now it’s absolutely critical that companies invest in creating more sustainable versions of themselves. More than ever, we need the innovation that comes from competition and open markets. We need companies that view climate change not as a threat but as an opportunity—and are pursuing it with the enthusiasm that big opportunities engender. We need companies to go beyond carbon neutrality to something I call “carbon advantage.”

You can create a carbon advantage for your company in two ways: First, you can use efficiency and resource reduction to provide a fundamental cost advantage in your operations and products. Second, you can use innovation in green products and services to offer customers a competitive advantage, thus differentiating your offerings.

This has been my learning and the theme of my writing for some time now. I believe that there is a great top-line opportunity in this area rather than just risk reduction, cost savings or bottom line increases only. This is where sustainability and carbon become a business strategy.

Incidentally, it seems that Business Week’s subtitle on carbon offsets missed the point and Dave clarified his position again on this weblog. Business Week seems to have changed the sub title now. It just shows the exact point that Dave was trying to make – to move away from just Carbon neutrality and concentrate on carbon opportunities.

Population – A Human problem

Posted on
Reply

Last month I quoted an article by Michael Backman writing about population and emissions. Backman assets that population is the major contributor to emissions growth.

Two commentators on the article did not agree with Backman.  John Brisbin comments that  ”The only obvious thing about sustainability is the per capita resource usage”. He wants to believe in a world where “20 billion living in peaceful resonance with the planet and requiring only the simplest of material inputs?”

I think that is next to impossible. The past has shown that people cannot be expected to behave like that.
It is tough, I know that from personal experience.

The consumer culture is all fine to moan about however, we need to remember that it is the present culture. There is a limit to what you can expect people to change. We need to work with what we have…and what we have is an increasing consumer culture all around the world.

Also, we need to remember that population as such creates problems in other areas – public health, infrastructure, provision of other services, standard of living etc.

And the second comment from Dani where he angrily writes that “Getting rid of all americans will drop carbon emissions far more quickly than all the population control in South Asia.”

What we need to think about is the future. I think we should not take Backman’s analysis personal. I am an Indian and I do know where you would come from.

We cannot change the past. Can we rid of all the Americans? Totally not possible and not ethical. We need to work with what is possible. Controlling population in South Asia is a very good thing in many ways.

Atanu helped me understand the consequences of population growth many years back. Lets read what Atanu Dey has to say on this:

In 1965, about 40 years ago, there were less than 500 million of us. By 2004, the population of India has more than doubled. The effect of this incredible increase has been a falling standard of living in general, shortages, untold misery and conflict. It is foolish to expect that we can provide a decent standard of living to so many in such a short time. The vast majority of us do not have adequate drinking water, sanitation, health care, education and job opportunities. The preceding statement does not even begin to indicate the amount of human misery and sorrow which it implies. It hides within it the teeming millions who suffer without the slightest hope of ever seeing a future remotely human.

Read the entire article. Atanu talks about the limited time available to create a standard of living for a huge population. In another post he quotes Joel Cohen’s book How Many People Can the Earth Support? (1995). Here Cohen explains the finiteness of time.

The finiteness of time, the second thread in the book, limit’s the abilities of individuals and of societies to solve problems. For each human being, time is finite. I want to eat and drink today. As a privileged inhabitant of a wealthy country, I can postpone buying a new car for several years, but the requirements of poor people for subsistence are not so elastic in time. Those who want firewood to cook a meal today will break branches from the last tree standing if they believe that otherwise their children may not surive to lament the absence of trees 20 years hence. In the American legal system, the finiteness of time to satisfy basic human wants is recognized in a phrase: justice delayed is justice denied.

Efforts to satisfy human wants require time, and the time required may be longer than the finite time available to individuals. There is a race between the complexity of the problems that are generated by increasing human numbers and the ability of humans to comprehend and solve those problems. Educating people to solve problems takes time. Developing traditions of stable, productive cooperation takes time. Building institutions with the resources to make educated people into productive problem-solvers takes time. Even with educated, cooperative people and appropriate institutions at hand, understanding and solving problems take still more time.

Re-read the paragraph above twice. The difference between the commentators and Cohen’s and Atanu’s arguments  is that they accept human wants as a given. And secondly, they work with current statistics and situation in many parts of the world. This is not a Malthusian type of argument for sure. It is far bigger than that.