From NYT:
One Target employee I spoke to provided a hypothetical example. Take a fictional Target shopper named Jenny Ward, who is 23, lives in Atlanta and in March bought cocoa-butter lotion, a purse large enough to double as a diaper bag, zinc and magnesium supplements and a bright blue rug. There’s, say, an 87 percent chance that she’s pregnant and that her delivery date is sometime in late August.
From Forbes:
In her book SuperCorp, Harvard Business School Professor Rosabeth Moss Kanter provides many more examples of the benefits companies derive from addressing social issues. These include “market entry (public goodwill and relationships before commercial transactions), learning and capability building for new or different markets, and innovation – creative approaches or technology that gets embedded in successful commercial products.”
Of all the things I can think of this kind of practical orientation towards investing in social change for for-profits organizations is a good thing. Not sure about corporate responsibility.
From Huffington Post (HT: @AcumenFund):
Investors in these companies will look for a commensurate financial return, as well as measurable social impact on the ground. While some prefer the terms venture philanthropy or social investment, impact investing represents a distinct style of responsible capitalism which has become particularly popular among foundations, endowments and high net worth individual investors.
Industry pioneers, such as the $3 billion Rockefeller Foundation in New York, see impact investing as a way to find solutions to poverty reduction and other social problems; but more importantly to access the private sector capital markets that ultimately hold the wealth required to scale up these solutions globally. While charitable donations by high net worth individuals were down 35 per cent in 2010, according to Bank of America Merrill Lynch and Indiana University, the impact investing sector is expecting steady growth.
In 2010, JP Morgan forecast potential impact investment capital of $400 billion to $1 trillion globally over the next ten years. Much recent activity in impact investing has been effectively direct investing, with the typical venture capital approach sometimes supplemented by grants and capacity building. The Omidyar Network, for example, launched in 2004 by eBay founder Pierre Omidyar, "has invested $450 million in equity and grants to promote microfinance, entrepreneurship, technology and government transparency, mostly in developing countries."
Investment managers such as the Acumen Fund and the Capricorn Investment Group, which manages the Skoll Foundation’s multi-billion dollar portfolio, are active in emerging markets across Asia, Africa and Latin America.
Impact investing does present significant challenges to investors. It can be difficult to obtain basic investment information in emerging markets, and equally hard to monitor and track the performance of small companies and projects. This is compounded by the complexity of trying to quantify the non-financial "impact" of investments: it is not that simple to compare the social benefits of investing in, for example, vaccinations in Ghana versus cleaner burning cooking stoves in India.To help donors and investors tackle this issue, the Global Impact Investing Network (GIIN), a non-profit company supported by the Rockefeller Foundation, has worked with B Lab to develop industry infrastructure aimed at improving information flow and creating a more efficient marketplace.
For me a clear definition is still lacking. Is impact investing expecting financial returns from the investment or will accept non-financial returns expressed in financial terms. I cannot imagine pension funds (reponsible to support employees when retired through pension) investing in areas where they will not get a financial return. What happens to the pensioner?
This is a troubling development like "social innovation". It’s ok if social innovation is confused but "impact investing" will effect real dollars and can put projects on the wrong path.
Recently, I looked at a grant from a prominent foundation in Australia and their definition of social enterprise was any for-profit that does good or a not for profit which has a percentage of its revenues coming from sale or business. Is this the best definition that will filter the right organisations to be funded?
We live in a culture that is crazy about numbers. We seek standardization, we revere precision, and we aspire for control. The very ancient and dominant belief of Western culture is that numbers are what is real. If you can number it, you make it real. Once made real, it’s yours to manage and control. We increasingly depend on numbers to know how we are doing for virtually everything. We ascertain our health with numbers. How many calories or grams should I eat? What’s my cholesterol reading? We assess one another with numbers. What’s your I.Q.? What’s your GPA? Your Emotional Intelligence? And of course we judge organizational viability only with numbers. What’s the customer satisfaction rating? Inventory turns? ROI? P/E ratio?
It is numbers and only numbers that define and make visible what is real. This is the "hard stuff," the real world of management- graphs, charts, indices, ratios. Everyone knows that "you can only manage what you can measure." The work of modern managers is to interpret and manipulate these numeric views of reality. The desire to be good managers has compelled many people to become earnest students of measurement. But are measures and numbers the right pursuit? Do the right measures make for better managers? Do they make for stellar organizations?
As we look into the future of measurement, we want to pause for a moment and question this number mania. We’d like you to consider this question. What are the problems in organizations for which we assume measures are the solution?
Q: 37 million units of iPhones shipped. When do we run into the Law of Large Numbers? What are the growth opportunities coming up?
A: 37 million is a big number. It was a decent quarter. It was 37 million — more than we’d ever done before. We were pretty happy with that, but let me give you the way I look at the numbers. As I see it, that 37 million for last quarter represented 24% of the smartphone market. There’s 3 out of 4 people buying something else. 9 out of 10 phone buyers are buying something else.
Handset market is projected to go from 1.5 to 2 billion units. Take it in the context of these numbers, the truth is that this is a jaw-dropping industry with enormous opportunity. Up against those numbers, the numbers don’t seem so large anymore. What seems so large to me is the opportunity.
What we’re focusing on is the same thing we’ve always focused on. Making the world’s best products.
We think if we stay laser-focused on that, and continue to develop the ecosystem around the iPhone, that we have a pretty good opportunity to take advantage of this enormous market.
Found a very interesting reading on Joel Poldolny who transformed the Yale MBA and now is heading the Apple University.
Are Business Schools to blaim (for the global financial crisis):
Business schools provide students with many technical skills, but they appear to do little, or nothing, to foster responsibility and accountability. Society implicitly trusted MBAs to do no harm when it allowed financial markets to operate in a relatively unregulated fashion–but its faith has been betrayed. As a result, there’s an active distrust of business schools and their graduates.
How did we get to such a pass? For three major reasons:
- The traditional MBA curriculum has divided the challenges of management and leadership in a dysfunctional way.
- Business schools communicate the idea that would-be applicants must measure the MBA degree’s benefit in terms of the additional salary they can earn.
- There has been little contrition on the part of those involved in MBA education after the crisis.
From FT:
The essence of the changes, says the dean, are related to the way businesses have changed. It used to be the case that business school departments were aligned with business school careers – marketing or finance. Businesses now are far more complex. “We’re at a unique time where all practice is being questioned,” says Prof Podolny. “What are business schools as professional schools doing if they are not noting down this kind of behaviour?”
A typical marketing textbook might have chapters on the design value proposition or bringing the product to market. But, he says: “If you talk to the CEOs, what they are obsessed about is how you get a handle on what customers want.”
The views of chief executives formed one of the central planks of the thinking behind the new curriculum, says the dean. “Usually a curriculum change is done by the faculty. This time we talked to recruiters and we looked at other schools.”
This focus on the organisational role rather than the disciplinary topic means that in the first year MBA students will study eight courses, working across public sector and private sector boundaries and addressing both internal and external constituents – courses with titles such as employee, investor, and state and society.
“What’s critical in these courses is that they are interdisciplinary in design and in content,” says Prof Podolny.
This has meant developing new teaching materials. As a former Harvard man, Prof Podolny has real insight into the way cases are written and taught.
“Nobody executes the case method better than Harvard,” he says.
“But are there things about the case method that we can improve? I think there are and I think we should.” Last summer, faculty at the school knuckled down to develop interdisciplinary case studies to complement the new curriculum.
On the new programme an overseas study tour is compulsory, with participants this month travelling to Argentina, China, Costa Rica, the UK, India, Japan, Poland, Singapore, South Africa and Tanzania. Initially, faculty leaders could be found for only seven of the eight tours, so the dean volunteered to co-lead the eighth, to South Africa and Tanzania.
“It’s kind of cool to think that the whole class will be overseas at the same time,” says Prof Podolny. “We’re going to try to structure it so that they are all aware of what the other groups are doing.”
From Yale News:
APPLE UNIVERSITY
His departure from the school after just three years was unexpected—especially in light of the school’s plans to build a new campus—according to the Yale Daily News.
Though Yale students and academics were surprised that Podolny chose to leave for corporate America, Podolny’s colleagues at Harvard say they were supportive of his decision—though Khurana adds that Podolny’s departure was “academia’s loss.”
David A. Thomas, who served with Podolny on Yale’s Board of Advisers and is currently a professor at HBS, says he feels Podolny made the right decision in leaving Yale when the opportunity at Apple presented itself.
“He left having been very successful. I really can’t say if he had stayed 3 more years, he would have had double the impact,” Thomas says.
Messina, who was in contact with Podolny during this time, says that Podolny’s decision to leave Yale for Apple was “gut-wrenching,” but ultimately motivated by one very specific reason: the opportunity to work with Apple’s then-CEO, Steve Jobs.
“He literally said to me, ‘This is my chance to work with our time’s Thomas Alva Edison,’” Messina says.
Thomas says that Podolny’s time at Apple will train him to be an even more effective leader, should he decide to someday return to academia as a university president or pursue further opportunities in the business world.
“He understands excellence,” Thomas says. “At the end of the day, Joel really can and wants to have a positive impact on society beyond just the boundaries of business or academia.”
From the latest Equitymaster newsletter.
With over 800 m subscribers (includes GSM and CDMA), India represents a huge telecom market. With the cheapest tariffs, it has seen telecom penetration going up from about 4% in March 2001 to around 71% in March 2011. But the huge surge in the number of subscribers has not translated to huge returns for the network providers. In fact, telecom operators have seen their profitability dwindling down. Hyper competition that led to sharp rate cuts is one big reason for this. As shown in today’s chart of the day, profitability (Earnings Before Interest, Tax, Depreciation & Amortization or EBITDA) per minute has been on the fall for the telecom operators.
From Brad Feld:
Instead, my new approach is to focus on three numbers. These three numbers should reflect “what’s going on right now in the business” and the trend of the numbers should be a predictor of what’s going on. As I think about the companies I’m involved in, I can define these three numbers in 60 seconds – they are almost always painfully obvious. Sometimes I do end up with four and have to make a choice, but I rarely end up with five.
The technology for displaying these three numbers is remarkably simple. They make this thing called a whiteboard that you can write them on. An email can go out to everyone in the company with the three numbers. That’s it.
The interesting thing is that I am currently working on developing those three numbers for my work at Family by Family and Families SA.
Sage advice from Joel Spolsky:
Think about how a university department organizes itself. There are professors at various ranks, who pretty much just do whatever the heck they want. Then there’s a department chairperson who, more often than not, got suckered into the role. The chairperson of the department might call meetings and adjudicate who teaches what class, but she certainly doesn’t tell the other professors what research to do, or when to hold office hours, or what to write or think.
That’s the way it has to work in a knowledge organization. You don’t build a startup with one big gigantic brain on the top, and a bunch of lesser brains obeying orders down below. You try to get everyone to have a gigantic brain in their area, and you provide a minimum amount of administrative support to keep them humming along.
Daniel Tello does an amazing job of analyzing Apple’s growth into the future with some great analysis and charts of the historical growth and the diffusion of innovation theories.
