Concerns about countries aiming to be ‘great again’

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Over the years I have worked with clients in more than 50 countries. They encompass a diverse range of cultures and ethnicities throughout Asia, the Middle East, North and South America, the Caribbean, Europe, Oceania and, several parts of Africa. It has been the most rewarding aspect of my life as I have learned many things beyond the cultural and ethnic environment into which I was born. It troubles me to see growing nationalistic rhetoric in an increasing number of countries and a growing intolerance of, and hatred towards, people who are ‘different’. They are often made scapegoats for everything that is wrong in a country - and yet the majority of evidence indicates that ethnic and cultural diversity is beneficial and enriching.

An ugly side of nationalism

In 2014, journalist Peter O’Conner wrote a brilliant article titled ‘No Voice of Reason’ in Newsday, a national newspaper in Trinidad and Tobago, relevant to this theme. When we look at what is happening in Poland, Hungary, the UK, the USA, Australia and a number of other countries today, this extract resonates.

“Our world is being overwhelmed by crisis after crisis. Wars, disease, terrorism, starvation and natural disasters are sweeping the planet. But all of these Dread Horsemen apparently mean nothing to us here in Sweet TT as we continue to bring our own special forms of calumny down upon ourselves.

Without apparent reference to anything going on in the world beyond our shores, we are blissfully creating our own destruction in a society which should be an example to the world outside on how to live together and to manage our affairs. But we are totally absorbed in doing everything to ensure our collective failure and downfall. And we are doing this with an artificial and disgusting bravado, hurling insults and threats from every source in every direction. And those who cannot shout to add to the din are cheering on the antagonists, mostly through the sheltered havens of social media.

There is a growing ugliness in everything we do. Derision and scorn are poured upon every comment made. And this is not partisan in any way, it is all encompassing— this pouring of scorn upon politicians of every ilk, upon the business sector, upon the media, and upon everyone and everything. We may well argue that most, maybe all of the criticism is justified. And that may well be. But whose criticism can be considered as justified? And who decides what is fair, what is justified and what may be constructive criticism?

But one thing is common among all these derisive critics, notwithstanding their cause or their connections. Indeed, many do not have a cause. They spend their time scanning the news looking for misstatements, revelations of corruption and “bloopers” by people in the news. Upon discovering anything which may be juicy enough, threads with scores of derisive comments are spread, and lots of people who will never bestir themselves to confirm or deny or to take action away from their keyboards, suddenly become authorities on the morality of everyone.”

The relevance?

We are seeing an increasing amount of nationalistic rhetoric, hate and intolerance, and ‘fake news’ being spread throughout social media. As O’Connor wrote, ‘there is a growing ugliness in everything we do’. One only has to read some of the abusive and ugly comment strings on social media. This is leading to greater divisions in society (e.g. Brexit in the UK and immigration in Hungary). It’s leading to trade wars and the increasing imposition of tariffs and sanctions. Walls are being built – both mental and physical. The forces behind this believe by doing what they are doing, their country will ‘become great again’. History shows quite the opposite usually happens. Every Board of Directors, and business leader, needs to ensure that they are not part of this growing trend as, medium- to long-term, it is very unlikely to be good for business!

‘Les Miserables’ a modern-day issue for business!

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The UK drama series, Les Miserables, is on our local TV network. In the initial episodes, the inequities existing in French society in the early 19th century are vividly portrayed. Exploitation of those who had the least was commonplace. The illustration of such inequity and the outcomes for people at all levels of society is interesting when we look at the world around us today – in particular in the context of two of our recent posts The world’s greatest Ponzi scheme? and Date use issues as foreseen back in 2000. There is good reason to stop and ponder about where the world is heading.

The ‘Ponzi’ and ‘Data Use’ stories

The ‘Ponzi’ story included the statement that ‘the world’s 26 richest people own as much as the poorest 50% of the world’s population. During 2018, the wealth owned by 2,200 billionaires internationally grew by 12%. In that same year, there was an 11% fall in the wealth owned by the poorest half of the world’s population.’ The ‘Data Use’ story introduced the ‘Comsumer Manifesto’ from 2000 which said that every individual who provides personal data to social media networks and associated data-mining service companies (such as credit score agencies) should receive a share of the reward generated by the provision of such data. Over the ensuing 19 years, the situation has become more iniquitous as giant corporations make huge profits at the data providers’ expense.

Where’s the evidence?

A recent post by Livia Gershon titled ‘We all work for Facebook’ included an analysis published in the New York Times that found Facebook makes a profit of US$ 635,000 for each of its 25,000 employees. Google’s parent company, Alphabet, makes a profit of US$ 158,000 per employee. On the other hand, Walmart, following a more traditional business model, makes a profit of just US$ 4,288 per employee. What these numbers indicate is that large corporations like Facebook and Google are playing a major role in enhancing global inequity. And they are doing it by exploiting the data provided at no cost by vast numbers of individuals - almost modern-day slavery!

Is that a fair view?

Of course, each of us has the choice whether to use Google or Facebook. There are positives associated with the platforms they provide us. But people are now beginning to ask if such platforms are acting irresponsibly because they exploit billions of unpaid workers who provide the content and exchanges essential for the profits they generate. A recent post in Fast Company says too many CEOs fail to recognise how important social equity and impact is when it comes to business. For example, Mark Zuckerberg barely acknowledged that the live streaming of a terrorist killing people in Christchurch was an issue for his company. The algorithms used to attract interest (and data vital for Facebook’s profit generation) have been accelerating the spread of often obnoxious content. Some say this is free speech. Others say it is capitalism at its worst.

Recognising the potential consequences

Growing global inequity is starting to make some successful billionaires concerned about the impact of capitalism. One US billionaire, Ro Khanna, saw the country’s problems primarily as the product of growing income equality and a lack of opportunity. And that brings us back to ‘Les Miserables’ and life in France in the early 1800s. Today, the yellow shirts protest about inequity in France. Companies such as Facebook and Google appear to be unconcerned about the inequity they are contributing towards- in part by exploiting the unpaid who allow them to generate such massive profits per employee. It may be smart capitalism to generate so much from so little. But, one day, as in ‘Les Miserables’, there are sure to be consequences!

‘Toxic’ leadership

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Some leaders are inspirational and encourage people and the delivery of mutual benefits. Others are divisive and discouraging ensuring no mutual benefit accrues. Following are three examples of the latter that I have experienced first hand.

The ‘bully’

Many years ago, as a specialist advisor, I visited a large plant nursery. The Managing Director was a mature man with a strong personality. He took me on a tour of the company’s operations. They produced a wide range of plants for sale throughout the country. As we entered one protected growing area, he delivered a tirade at a staff member working there. The person concerned was quite shocked, in particular because it was unclear what he was doing incorrectly. At the time I thought the MD was doing this to ‘impress’ me that he was ‘the boss’ and in total control. I remember wondering why anyone would work for him. Obviously not so many did as I found out later that the business suffered from high staff turnover.

80% focused on the negative

I had a peripheral involvement with a PR company that had a mix of public and private sector clients in New Zealand. The owner and Managing Director appeared to be good at developing client relationships. However, when it came to delivery there were often shortfalls and quality issues. Over the few years I was involved, I noticed that the owner spent more and more time litigating and allocating blame to others, including her staff and external contractors. In the end, she was spending so much time trying to exact retribution that the revenue generating side of her business collapsed. As a result, her company failed and she lost the business she had invested so much time and energy into because she totally lost focus of what was most important.

 Stabbing people in the back

This is about a person who managed to ‘wheedle’ her way into controlling a small cluster of businesses and an associated trust. She gave the impression that she was a highly skilled manager and, initially, appeared to make things happen. But then she started identifying faults with just about every person associated with the cluster including the accountant, volunteers, contracted parties and even the original founder. She then devised and pursued devious and vindictive ways of ‘taking down’ such people. In reality there were no grounds to ‘take them down’, The real issue appeared to be that she felt threatened by anyone who might have known more than her or had perhaps generated more success and progress than she was capable of achieving. As a result, virtually every person who had helped develop the cluster felt aggrieved and told the business owner that they were terminating any commitment while this person was in charge. Unsurprisingly, she has become isolated and is now struggling to cope with the workload and situation she has created as a result of alienating everyone.  Hoist by her own petard!

The lesson

The old Saatchi and Saatchi saying, ‘Accentuate the positive, eliminate the negative’, is a great reminder of the character profile we should be looking for in leaders. ‘Toxic’ leaders, who seem to enjoy ‘taking people down’, are destructive and should be avoided at all costs. The challenge is to identify such characteristics in people before they are entrusted with a leadership role. Otherwise they can cause fatal damage to an organisation.

Some major trends that Boards need to think carefully about

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For years we have been identifying trends that we believe will be game changers for many businesses and organisations. Here are a few that we feel are going to have a major impact over the next decade.

The closed cycle economy

Until recently most businesses have operated in an open economy, i.e. they produce a product and/or service and sell to customers but have little or no further involvement post-sale - ‘construction without deconstruction’. For example, many products are supplied in packaging that currently cannot be recycled – either for practical reasons or because it is uneconomic. The result is huge streams of waste that are building up all around the planet. The pressure is coming on and consumers, as well as governments, around the world are becoming increasingly concerned. Demands for producers to take a greater role in dealing with the waste streams resulting from their business models are growing. The concept of the closed cycle economy and zero waste has been around for a long time. But now the demand for a faster move towards more sustainable business models is growing.

Accountability

The roles and responsibilities of global social media groups are being questioned by many, in particular after the recent mosque shootings in Christchurch streamed live on Facebook and YouTube. There have also been instances of social networks being used for spreading misinformation (e.g. anti-vaccination) and hate (right wing extremism and terrorism). To date the corporate groups that provide the platforms that allow this have largely demonstrated a disinterest in doing anything. Some say it’s because any controls may damage their money-making machines. But such disinterest opens the door to regulatory controls that will compel them to do what they should be doing anyway. It’s not so much a matter of censorship but rather a matter of avoiding harmful posts and propaganda. We have seen how harmful that can be over and over – the Nazis in Germany, genocide in Rwanda, and the growing measles epidemic driven by hysteria rather than facts. Any business model that allows hate, intolerance and misinformation to spread is likely to face a challenging future.

The sharing economy and equity of outcomes

In recent years, a number of ‘sharing’ business models have gone global and are worth many billions of dollars. Examples include Uber, AirBnB. Pinterest, Slack and WeWork. Such business models rely on the exploitation of privately-owned assets. They have limited assets of their own. Their success depends up the success generated for the owners of those assets.  One significant issue is the small margins in the areas where these large corporate groups operate. Uber relies on a share of revenue from those who use their cars to drive people from place to place for a fee. It also operates Uber-Eats in the meal delivery part of the market, the meals being supplied by restaurants in a highly competitive market place. The ride sharing company, Lyft, recently listed on the US stock markets and is now valued at US22 billion, even though it lost USD 911 million in 2018. Uber lost $2.1 billion in 2018. The question now being asked is whether these business models are in fact sustainable? Will investors ever get a return in market areas characterised by slim margins? Many asset owners operating within these models have been squeezed as companies such as Uber and Lyft have demanded a greater share. We seem to be approaching a point where the equity of outcomes for all stakeholders is going to make or break these models in future years.

The out-take for Boards

Boards of Directors need to be well-informed about the potential impacts that such trends are likely to have upon the businesses they oversee. All three trends in this post have considerable associated implications. Those companies that ensure they have shifted into the ‘right space’ will do far better in future than those which remain in the wrong space and resist inevitable change.

Leadership and the Psychopath Test

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Some years ago, out of curiosity, I managed to get hold of a copy of a book written by Jon Ronson called ‘The Psychopath Test’. It provided an overview of the particular traits that characterise people with psychopathic tendencies. He also reported research that indicates that 1% of all people outside of prison are psychopaths and some of them are active as political business, religious and societal leaders. A checklist of 20 traits that are said to be expressed in various combinations by people with psychopathic tendencies, developed by Bob Hare and included in Ronson’s book, is quite fascinating when we look around us at people in various political, business, religious and societal lead roles today, and the way they behave.

Hare’s 20 traits

  1. Glibness/superficial charm

  2. Grandiose sense of self-worth

  3. Need for stimulation/proneness to boredom

  4. Pathological lying

  5. Conning/manipulative

  6. Lack of remorse or guilt

  7. Shallow affect

  8. Callous/lack of empathy

  9. Parasitic lifestyle

  10. Poor behavioural controls

  11. Promiscuous sexual behaviour

  12. Early behaviour problems

  13. Lack of realistic long-term goals

  14. Impulsivity

  15. Irresponsibility

  16. Failure to accept responsibility for own actions

  17. Many short-term marital relationships

  18. Juvenile delinquency

  19. Revocation of conditional release

  20. Criminal versatility

What does this mean?

I’m sure many of us have seen or had experiences with people possessing some or many of these traits. It does help explain why certain people behave in ways that we find difficult to understand. They are sometimes leaders of major businesses. They are sometimes high-profile politicians with immense power. They are sometimes religious leaders who incite others to do terrible things. They are sometimes neighbours, colleagues or individuals who we feel are a bit unusual and self-centred, but can’t quite figure out why.  Whilst Ronson is no psychologist and a lot of what he presents in his book is based on the experience and opinions of others, the 20-point Hare check list (that in itself is not accepted by everyone) may give us an indication of why certain people behave in particular ways and help us decide whether we want to be involved with them or not, and in what way.  It may also help us make more informed choices that reduce the chances of future grief!

Centralised systems – vulnerable and lacking resilience?

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For many years I have been followed the arguments related to distributed versus centralised systems in the electricity sector. Similar arguments have been common in the water sector, as well as the evolution of call centres. Something happened recently that reinforces how centralisation increases vulnerability, lowers resiliency, and can cause a great deal of chaos, even on an international scale.

Centralised versus distributed energy systems

Proponents of distributed energy systems point out that centralised grids and generation systems have a high degree of vulnerability. Crippling power outages associated with such systems have brought major cities to a standstill e.g. Sydney. Distributed energy systems are now becoming a significant focus in Australia . In March 2019, large parts of Venezuela suffered long outages due to centralised systems failure. In Germany, 81% of people don’t trust large private sector power utilities to look after their interests. National dominance is being replaced by local ownership and control and a move away from centralised towards decentralised systems.

Centralised call centres

The trend for companies to use centralised call centres based in offshore countries has lost momentum for a number of reasons. Saving money by making such a move has actually ended up often costing more because of language/accent issues, the limited level of local knowledge foreign based call centre staff possessed, and frustration for customers not accessing the information or assistance being requested. For example, one large bank I had an association with ended up having to employ local staff to help solve the issues that were being created because of their offshore call centre. There are certainly some companies and organisations that have brought their call-centres back onshore to ensure that their customers are better serviced.

The recent chaos

In mid March 2019, many around the world were not able to access or use their Facebook and Instagram accounts. One report said the problem was related to ‘Google’s suite of services’. As at the time of writing the FB/IG outage has been shutting out users for more than half a day and alternative social media networks such as Twitter have seen frustrated FB/IG users venting their anger and displeasure because they are unable to access and use their personal or business accounts. Google, Amazon and Facebook have essentially become international monopolies in their fields of focus and dominate many aspects of the global cyberworld. Whilst they may have regional servers, the massive networks they oversee are entirely under their control (or not so under control as demonstrated by the rapid spread of a hideous video streamed live by a terrorist killing Muslims in New Zealand). The almost invisible and largely uncontrollable reach is quite mind blowing, as this techie found out whilst trying to bypass the use of Amazon-linked platforms. It was virtually impossible. In a way these tech giants have become much like centralised utilities and possess an increasing number of vulnerabilities, decreasing levels of resilience, and a lack of accountability. Some governments are looking at ways to ensure those vulnerabilities do not impact negatively on their national spaces.

Crunch questions

Have the tech giants now moved into a space that endangers those who they are supposedly serving by increasing the level of vulnerability and decreasing the resiliency of their networks? Should social networks become more ‘distributed’ with less central ownership and control and have more of a national focus and be interlinked but independently operated? Both options have downsides. Both can be manipulated as we have seen – whether national or international. But the upside is less vulnerability and greater resiliency and perhaps accountability. Maybe it’s time to move towards more distributed and away from centralised giant global tech business models to better service people and businesses?

Jamaica and the power of a long-term vision

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I was involved in projects in Jamaica from 2007 - 2015. After moving to New Zealand in late 2014, I have stayed in touch with interesting people who ‘do stuff’ in Jamaica. What excites me, in spite of many challenges and ‘resistances’, is the progress Jamaica has made towards realising the ambitious goals set in the country’s Vision 2030 National Development Plan - finalised about 10 years ago.

Why is it exciting?

Because I have seen various detailed long-term national visions and plans, developed mainly for smaller countries, which have had great intent but have largely gathered dust on the shelf and delivered few benefits to citizens. The reason the Jamaican plan was always interesting is because, once it was finalised, both the main political parties signed it off and agreed that it would be the overarching framework within which policies and national planning would be formulated and implemented over the years.

The journey so far

Initially, things were extremely challenging because of the country’s huge national debt and, in spite a couple of attempts to change course and deal with the debt issue, including asking for IMF support, by 2013 the national debt had reached 147% of GDP. Because many felt there was a lack of a commitment to deal with the problem, and life in Jamaica was becoming hard, public anger levels rose. To address the growing anger, a partnership between the government, business, unions, academia and different political interests was formed to approve, implement and monitor an ambitious plan to improve the country’s fiscal position. As a result, by March 2019 it is expected the country’s debt will have reduced to 96% of GDP – a substantial reduction from the 147% in 2013. In addition, inflation levels are low and unemployment has almost halved.

Another advance

Opening up the high cost monopoly power generation sector – a process initiated in 2009. Several years later, new competitors in the renewable energy sector could enter the market. This decision has had a major impact. The original Vision 2030 goal was to achieve a 20% renewables contribution towards national electricity generation by 2030. A recent report says a 30% contribution is expected in 2020 – well ahead of the original target and timeline.

Developing a consensus

Vision 2030 also had focuses on a number of areas where there were many rigidities and a lot of resistance to change. I was involved in facilitating the development of a long-term science, technology and innovation (STI) sector roadmap. The start point was a challenge on its own as the country had a highly fragmented STI sector structure was not conducive to delivering the best value for money for Jamaica. The approach included engaging a wide range of stakeholders associated with the STI sector to develop a mutually acceptable go forward plan. A similar bold approach was taken to reforming the agricultural commodity boards, which were largely failing to deliver to all stakeholders.

The lesson for both countries and businesses

Change is tough and disruptive. Setting a bold long-term vision, engaging a broad base of stakeholders in the planning and implementation processes, developing a consensus. making bold political decisions, and monitoring and evaluating progress (as is the case in Jamaica) delivers real progress and results. Jamaica is making impressive progress, given the rigidities and intransigencies that prevail. A valuable case study for both politicians and boards of directors to learn a great deal from.

Technology – a growing moral and ethical tsunami

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Several weeks ago our post about ‘The Comsumer Manifesto’ explained that businesses and organisations using technology to accumulate, analyse and use data must ensure that their activities were fair, transparent, and generated ‘win-win’ outcomes.  Over recent years it has become clear that there has been a cavalier disregard when it comes to using technology for such purposes. It seems we are getting very close (if we aren’t there already) to a very significant technological tipping point.

Close to the last straw?

Techcrunch recently reported that some popular iPhone apps include technology that secretly records the screen when people are using them. Such apps include Air Canada, Hollister, Expedia, Abercrombie & Fitch, Hotels.com and Singapore Airlines – along with a customer experience analytics firm called ‘Glassbox’ that allows developers to embed smart technological ‘session replay’ capabilities into their apps. These record and replay user interactions.

One step too far over the line

Two problems have arisen. The first is that customers using apps incorporating such technology have no idea they are being secretly recorded and played back. It is essentially subterfuge. The second is some of the data recorded and played back includes sensitive content – such as credit card details and personal contact information – which can be seen by people who should not have access. It is viewable in insecure environments e.g. by Air Canada employees. Even though Apple has a privacy policy for apps available through their online store, screen recording is not specifically mentioned. Firms, such as Glassbox, have taken advantage of this and been encouraging the breaking of consumer trust through unethical use of technology.

The building tsunami

Apart from regulatory moves in places such as the EU to enhance data protection, security and privacy for individual users, with a particular emphasis on the ‘big tech’ companies such as Google, Facebook, Apple and other large data gathering networks, there is now a tsunami beginning to build at the grass roots level. For example, Stanford University in the US has traditionally been a ‘farm system for the tech-giants’. However, the increasing flow of negative news about the unethical and immoral practices that such tech giants have supported, (both internally and through 3rd parties) is changing attitudes at the university. Ethics and the social impacts of are now becoming mainstream themes. Increasing numbers of students now regard Silicon Valley in a different light. In the past getting a job with ‘big tech’ was the goal to achieve. But they are becoming concerned about being associated with ‘evil tech-monsters’.

To every action there is a reaction

The Theranos unethical behaviour story; Facebook and Cambridge Analytica; Facebook and Russian political interference; Uber and all its issues; and now the Glassbox/iPhone Apps are changing the view of both staff and students at Stanford as they look at future opportunity areas in the tech sector. Increasing numbers are concerned about the way tech company business models are developed, or working for tech companies that have poor ethical and moral values. In Australia, the financial sector is now suffering from a similar malaise after major recent scandals. The lesson for tech businesses and their boards of directors is that moral and ethical values are just as important, if not more so, than profit generation. Unless companies take a more balanced approach, they may find it a challenge to recruit and retain top talent in future years, as well as retain the trust of their customers. Without both, the bottom line will surely suffer.

Shaping the future – a matter of horizons

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Over the years we developed a framework called ‘The Three Horizons’. It’s a simple way of looking at developments likely to shape the future world from short, medium, and long-term perspectives. It’s a framework that provides a useful context for strategic planning. Here are a couple of perspectives.

The distant horizon

There are a number of businesses and individuals who take a very long view – often decades into the future. Amazon is a great example embracing a range of leading-edge technologies. Elon Musk is another – think Tesla, Spacex, and Hyperloop. Richard Branson is adventuring into space travel. Ali Baba and AI. Real outside the box stuff!

Michio Kaku’s long-view

This renowned US futurist recently released a book titled ‘The Future of Humanity’. He considers humans are super smart and ‘don’t have to go the way of 99.9% of all life forms.’ He reckons the dinosaurs became extinct because they didn’t have a space programme. An interesting thought! He also feels one must be optimistic because pessimists never win. He doesn’t consider climate change or ‘conservation measures’ (such as recycling) to be ‘decisive’ when it comes to shaping the future world. He sees nuclear fusion as being ‘decisive’ as it could deliver endless energy to the world – maybe in 25 – 30 years’ time – as well as space travel. He is the ultimate optimist who considers humans will develop solutions to all their major challenges in future years. He thinks about the distant horizon decades into the future – a fuzzy area that we can’t yet define because many of the ‘answers’ are still to be discovered, nurtured, and realised.

A contrasting short-term view

Trend-Watching recently posted a blog titled ‘5 Asian Trends for 2019’, a sort term view and horizon that actually impacts beyond Asia.  The 5 trends described are:

  • Trend 1: Anti-Affluenza – a consumer shift away from pursuing material wealth towards improving personal happiness and well-being, also a focus of the New Zealand government.

  • Trend 2: C-Commerce – growth of the Chinese online/offline retail model. Ali-Baba’s ‘Singles Day’ is a great example - worth USD 31 billion in 2018, up from USD 14 billion in 2015. Chinese e-payment systems, such WeChat and Alipay, are being increasingly accepted internationally challenging traditional online e-payment services.

  • Trend 3: Accessible Asia – a focus on making life easier for those who are disabled. Recognising that they are a significant part of society and consumer markets. The growing profile of Para Games and Paralympics are, in part, driving this trend.

  • Trend 4: Singles Not Allowed – growing concerns about single use products and packaging and the ‘throwaway society’. The Chinese ban on imports of plastic for recycling is a big wake-up call globally and product manufacturers are scrambling to find ways to address changing consumer attitudes.

  • Trend 5: E-Responsibility. Digital service providers are under pressure to provide users greater online security and peace of mind. Digital providers, such as WeChat, are focusing on ways to improve user experiences, including ways to curb negative effects. Same as for Facebook, Google and others!

Thinking in horizons

The rationale for this post is the difference between long versus short-term horizons. The former is unclear and much of what may shape it in future does not exist today. The latter is easier to understand. The drivers of change shaping it are more defined and visible.  The challenge for Boards of Directors is to have a strategic planning framework which embraces both short and long-term thinking. The evolution of Amazon and AliBaba, perhaps even Tesla before too long, indicates why embracing both is important.

The greatest Ponzi Scheme ever?

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Ponzi Schemes. Pyramid selling. These are ways of doing business that essentially facilitate the transfer of wealth and resources from those who have the least to those who have (or want!) the most. The operational model behind both is the same. Those at the top of the pyramid accumulate wealth and resources, primarily at the expense of those at the bottom.

So, what’s the greatest Ponzi scheme ever?

It is the context within which the entire human race currently exists. A report in January 2019 says that the world’s 26 richest people own as much as the poorest 50% of the world’s population. During 2018, the wealth owned by 2,200 billionaires internationally grew by 12%. In that same year, there was an 11% fall in the wealth owned by the poorest half of the world’s population. The human race is immersed in the greatest Ponzi Scheme ever – an increasing rate of upwards wealth transfer!

What are some indicators?

Here are a few obvious ones:

  • The issue of climate change. The impacts are being driven by large corporations and governments that are ‘passing the buck’ regarding the consequences and costs of their actions and activities, especially on the world’s poorest people. The fossil fuel sector is a classic example. Bolsonaro and his attitude towards the Amazon rainforest is another. Trump and coal. Big bucks talk loudest!

  • The issue of plastic. The world is drowning in plastic and, even if the global plastics sector adopted the most positive recycling scenario, in 2030 the amount of plastic waste that is not recycled would remain about the same as today. Those who suffer the most from plastic pollution are the poorest 50% of the world’s population as such pollution costs and impacts affect them to a greater degree.

  • The issue of housing. Housing availability and high house prices are a major issue in many parts of the world. Those who face the greatest hardship are the poorest 50% of the world’s population. And it’s getting worse as populations increase and the costs of housing soar.

  • The issue of scarcity of resources. We are constantly bombarded with ‘buy, buy, buy’ marketing messages. But many of the products we are being exhorted to buy are produced from resources that are becoming increasingly scarce. Bottled water is a great example. In New Zealand, a growing backlash to the extraction, bottling, and export of fresh finite pure natural water resources has emerged. Water resources vital to the poorer half of the world’s population are now more often being diverted into channels which enhance the wealth of the rich. Water is just one example.

  • The issue of toxic environments. Close to a million and a half people in both China and India are estimated to die each year from health issues caused by air pollution – tendency rising. In Brazil the large mining group, Vale, has stored massive lakes of toxic mining waste at numerous sites with the minimum of investment and now, after two major catastrophes in less than four years, it is facing a backlash from those who have suffered the most.  In both instances it is the poor half of the world’s population who tend to suffer the most as they cannot so easily ‘escape’ such toxic environments.

The challenge

If politicians, businesses, and the human race in general fail to act on issues such as those mentioned, we are facing the inevitable outcome of any Ponzi Scheme or pyramid selling business model – a total collapse. The current global ‘business model’ is simply unsustainable for the human race. Something for Boards of Directors to ponder as they shape future strategies.

Data use issues as foreseen back in 2000

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The issue of personal data use and privacy has become a major global issue. Social network giants, such as Facebook and Google, are feeling the heat. What I find fascinating is that a lot of what is happening today was discussed in an excellent article, “The COMsumer Manifesto: Empowering Communities of Consumers through the Internet”, written by Stuart Henshall and published in First Monday in May, 2000.

 The Article Abstract

“The coming economic era and precepts are emerging as totally different from industrial capitalism. We're learning that e-businesses and their networks destroy many of our basic concepts of production, marketing and distribution. Jeremy Rifkin notes that in this "Age of Access" we are entering an era in which lifelong customer relationships are the ultimate commodities market. This provides a different, more positive, and perhaps more likely view.

The Internet is changing business models and empowering consumers to create new communities that combine the power to aggregate rich sources of individually personalized data in real-time activities. Large-scale data aggregators are emerging to navigate and mediate info markets. While information records are proliferating, new standards for content capture and management are appearing. Most companies continue to hope they will control their customers' information assets. However, what if this is not true or becomes impossible? What if consumers decide to band together and control their own personal information? Are you ready to freely give your customers their data records? Are you prepared to live up to the COMsumer Manifesto?

This article offers a disruptive antidote to the hierarchical, closed, supply-system, explicit, knowledge-driven, "We Know What You Want" data mine world where many customers feel powerless….. Infomediaries are not just trustworthy agents which sit between the vendor and the customer and markets are not just conversations. In this new world, communities sense needs, desires, and wishes for the future and create new data markets - to which organizations must respond or die! We are closing in on the ‘tipping point’ where COMsumers take complete control of their destiny by collectively owning their personal information assets.”

Why was this foresightful?

Because of the wording of the “COMsumer Manifesto” Henshall compiled in 2000 and the global issues relating to personal data use and privacy prevailing in 2019. The “Manifesto” includes:

  • “We realise that the most important thing we own is information: data about our purchases, our preferences, ourselves.”

  • “..Permission remains with us. We determine the level and degree of privacy we desire and we will share our data with those we trust”

  • “We have no desire for data about us to be stored in some remote inaccessible corporate databases which are mined for the benefit of the owners rather than ourselves”

  • “We will share what it is important to share and keep private those details that might empower outsiders to interfere in the lives of individuals in our community.”

The message

In simple terms, Henshall’s message was that there had to be fairness, equity, mutual benefits, and trust with regard to the use and sharing of personal data. Clearly that hasn’t been the case in many instances and so most of the aspects covered in his “COMsumer Manifesto” are now in the limelight as regulatory authorities, governments and consumers demand greater personal data protection and more equitable outcomes for any data sharing. One sided and unfettered data mining and use is becoming less acceptable to a growing number of individuals.  Every company director should read this excellent and, in 2019, highly relevant article. It explains a lot about what is happening today – and why!

Moving towards a post-growth environment

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In 2015 we posted a blog titled ‘Post-growth’. Recent headlines (‘Are We Outgrowing Growth’ and ‘2019: The year after peak global growth’) reminded us of this theme. There are growing concerns about how long the world can continue to rely on ‘endless growth’ to generate business and profits. A growing complex of forces may well lead us into a period where growth is no longer a realistic basis for running a business.

Some indicators

In our 2015 blog we referred to several Australian market related boom and bust cycles. In 2019, the property market in large Australian cities has slumped after years of almost euphoric growth. A similar trend has emerged in New Zealand over the past year. The new president of Brazil has made it clear that he has little regard for the environment and it seems he supports ongoing destruction of the Amazon rain forest to expand agriculture. US President Trump has also made it clear he cares little for the environment and that short-term profits are more important than the legacy left for future generations. And yet there are clear signs that continuing damage to complex environmental systems is having a negative impact e.g. the frequency of severe droughts doubled between 1970 and 2000. Recent multi-year droughts have had a major impact in Australia and north eastern Brazil.

Growth limitations

Something that not enough businesses and politicians are considering. The idea of growth continuing ‘forever’ depends upon a complex of resources being available and sustainable ‘forever’. But clearly that is not the case as we pointed out (‘Scarcity versus Sustainability’). It also assumes that growth in a number of markets will continue ‘forever’, in particular economies such as India and China. But, as they mature, these growth rates are slowing quite quickly. It would be naive to expect growth rates of 6% plus to continue ‘forever’. Yet financial sector observers express surprise when growth rates slow, as they currently have in China.

A changing mood

In ‘2019: The year after peak global growth’ a number of drivers likely to slow growth in the coming years are described. These include the unsustainability or recent high growth rates in the USA (because of an aging population and slow productivity growth); soaring household debt in China and the possible bursting of that country’s ‘growth bubble’; and the potential impacts of Brexit. 200 leading academics in Europe have urged the EU to ‘explore the possibilities for a post-growth future’. In addition, many industries have been irresponsible and grown at the expense of environment and human race. Producing items that damage the environment and/or cannot be practically recycled and passing the ensuing problem on to society to resolve is a mood changer and likely to affect growth prospects for the sectors responsible.

Focusing on ‘post-growth’

Both the article ‘Are We Outgrowing Growth’ and a recent post by a Rob Campbell, mention a need to pursue a more balanced approach in future. Campbell wrote, ‘To be clear, I think that any business has social responsibilities just as do all other forms of social organisation. This extends well beyond simply complying with current laws and extends to meeting all of its costs, even those which it may like to feel are "externalities" which should be met by others. The community has the right to set limits and apply such costs.’ He says that profits are the main driver of a business but ‘individuals owning, working in or with businesses (must) retain personal ethical responsibilities towards their community (human and physical).’  And that’s where things are changing. Growth at any cost is becoming much less acceptable. Boards of Directors now need to consider how to thrive in a low to no-growth environment. The era of endless growth may be coming to an end.

Frog in the pot

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A lot of change is ‘creep’ where nothing radical happens but, like the frog in the pot with the water on heat, after a while we can get ‘boiled. Over the past couple of weeks, we have seen a number of posts that reflect such creeping change.

The growth of ‘new energy’.

We see an increasing number of reports about countries running on 100% renewable energy. For example, renewable energy production in Portugal in March 2018 exceeded 100% of the country’s energy needs for the month. Denmark produces more than a 100% of its daily energy needs from renewable sources on some days and currently averages more than 40% of its annual needs from such sources. In 2017, Costa Rica ran on 100% renewable energy for 300 out of 365 days – a world leader.

The growth of electric vehicle charging networks

Even though the number of electric vehicles in New Zealand is still tiny (at the end of 2017, under 5,000 out of a total vehicle fleet of 4,150,000), they are beginning to increase. One of the key drivers is the availability of a charging network that ensures drivers don’t become stranded. In Barbados, entrepreneurs Jo Edgehill and Simon Richards of Megapower set up a solar powered charging network that covered the entire island some years ago and this has stimulated a shift to EVs. In New Zealand EV charging stations are now located in an increasing number of remote locations -such as Taipa, Pukenui, hallway across the Napier-Taupo Road, Hokitika, Lumsden and Tolaga Bay.

The growing problem of non-recyclables

An issue where the water is now getting hot for the frog in the pot. One catalyst was China deciding to longer accept a wide range of materials previously sent for recycling in that country. This has resulted in stockpiles of plastics building up in a number of countries as they struggle to find alternative disposal options. Some types of plastics are not easy to recycle as only a limited range of re-manufactured products can be derived. This contrasts to glass where the entire original range of products can be produced from recycled glass. Our local council is soon going to stop accepting plastic types 3 – 7 for recycling. Such types are going to go to landfills and will cost individual consumers more as many pay a charge per bag of waste collected by council contractors.

Recycling myths

Biodegradable plastic bags and Tetrapacks are two product types where manufacturers claim they are recyclable but, in reality, they are not delivering on those claims. The biodegradable plastic bag myth was reinforced when the New Zealand government recently included these in their national ban on single use plastic bags. In terms of Tetrapacks, the recycling myth has been exposed in Vietnam where the country is drowning in Tetrapack waste because recycling is neither a viable nor practical option. In New Zealand, Christchurch City recently announced it would no longer accept Tetrapacks for recycling.

The lessons

Both developments pose threats to incumbent businesses. The fossil fuel sector is being affected as the shift to renewable energy and electric vehicles gains momentum. Companies producing products that are difficult or impossible to recycle are coming under increasing pressure e.g. Tetrapack in many parts of the world. Boards of Directors need to ensure that their companies are not like the frog in the pot and are failing to feel the increasing heat!

A matter of trust

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As we begin 2019, one thing we are likely to hear a much more about is trust. A number of leading politicians, businesses, institutions, social media networks and individuals have been making statements and/or using practices that are now giving rise to a wave of concern about trust. Here are a few examples.

False impressions

The globalisation and industrialisation of large parts of the international food value chain has led to increasing concerns about the authenticity, ethical status and safety of products offered to us. For example, a recent report on Weltspiegel in Germany exposed several issues that concern increasing numbers of consumers. One in particular related to the fact that some processed tomato products from Italy were in fact only ‘packed’ in Italy and the actual source of the tomatoes was China. Some consumers would have concerns about such sourcing, given China’s environmental pollution levels and food ‘doctoring’ scandals. Apparently, labelling laws in quite a few countries do not require the source of the raw materials to be stated, just the country of final manufacture. This may lead to a loss of trust in brands that purport to be making Italian tomato-based products, as some are clearly no longer made from Italian tomatoes.

Misconceptions?

In a recent blog post, the ‘Impossible Burger’ and related artificial meat products being developed by a number of companies in different parts of the world, including large international corporate groups such as Tyson, was featured. There has been a huge amount of hype about this new generation of plant-derived products and how they will help save the planet, improve animal welfare, and feed more people. Many are enthusiastic about such claims. But, can we trust that these plant-based ‘meat’ products are actually good for human health, given the complexity of the ingredient list and the likelihood that a considerable loss of nutritional value has occurred in the ingredient processing processes? It is certainly far from being a ‘natural product’. 

Our data

A substantial part of the world’s population has entrusted their personal data to large technology companies. Some have clearly been abusing that trust. It’s not only the Facebook scandals that have highlighted such abuse but also the lack of protection of personal data that is stored in the cloud or in large corporate and institutional databases. First indications suggest that the personal data of many German politicians was recently hacked, possibly from cloud storage sources. I facilitate a number of groups on Facebook which relate to material and data largely in the public domain. No big secrets. But what has become clear over the past 12 months is that many members of these groups have changed their privacy settings to ensure that they are no longer a ‘public item’. Whilst our FB user numbers are steadily increasing, the privacy settings are becoming more private – a reflection of a decline in trust when it comes to personal data protection.

Something to watch

Boards of Directors will need to ensure that they work on strengthening trust at all levels – both within their organisations and with the broader group of stakeholders they engage with. One thing is for sure, in 2019 and the years following, the issue of trust is going to be high on the radar screen and any business or organisation that ‘bamboozles’ those they deal with by failing to be transparent will likely pay an increasingly greater price for abusing trust.

The power of positive people

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As we near the end of 2018 and look forward to a new year where many challenges face both ourselves and our planet, it encouraged me to think about a range of positive people characteristics I have seen expressed by those around me – in both my work and non-work environments – as we need positiveness going forward. These are some characteristics that have really inspired me.

When the going gets tough…

The positive people I know are encouraged and inspired by challenges and, instead of simply giving up, they focus on ways of addressing them and developing and implementing strategies that enable them to be positioned in a more advantageous position than was the case previously. They never see problems - only hurdles that need to be jumped over. I know quite a few people in this category. Their positiveness is infectious and gives those around them a real boost.

Selflessness

Too many in high level positions in commerce, government and at institutional level are more concerned about their own egos and position of power than the people they have been appointed to serve. The arrogance they demonstrate is often breath-taking. Their concern about the broader range of stakeholders in their sphere of interest is negligible. Contrast that with people who go out of their way to support and empower other people. I know quite a few people like that. They do others favours and don’t keep account. They are there when a crisis happens and stand at your side until things get back on track. They are my sort of Champions as the legacy they leave is so positive and powerful whereas the legacy left by the egotists and power brokers is often a wasteland – like a blackened landscape after the fires have burned out.

Knowing their limitations

I really enjoy working alongside people who know they don’t know everything and understand their strengths and weaknesses. They are open honest people who are more likely to succeed in life than those who think they know everything and feel they don’t need advice or help from ‘inferior beings’. Those who know and understand their strengths and weaknesses assemble an eco-system of people around them that fill in the gaps. The risk of failure becomes almost non-existent as their progress is shaped by a team rather than the foibles of one individual.

Holisticness

The hackneyed term – ‘the triple bottom line’ - is simply taking a more holistic view of everything we do in life and not viewing everything only in economic terms. As Macron is discovering in France, the social and environmental aspects of life are equally as important as economic aspects. Unless a balance between all three exists, discontent will prevail and, in extreme cases, can lead to revolutions. Where I live in the Far North of New Zealand, a holistic view and approach to life is much more prevalent than in any other place I have lived over the past six decades. It is palpable and shapes the lives of many people I live amongst and interact with. It is a very comforting feeling as it is more ‘human-friendly’ than the sort of life I have experienced in many other places.

Going forward..

My New Year’s Resolution is to strengthen my connection with positive people who have the characteristics described in this blog. We need more of them to be appointed as directors on boards. You can’t really go wrong in life and work when surrounded by such people. Every best wish to all of you over the festive season!

The future cost of arrogance?

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Rob Campbell is someone I admire. He is well-informed and sees the world in a big picture view - bigger than most people do. A comment he recently posted on LinkedIn has a great deal of relevance when one considers stakeholders and their importance to the bottom line of companies.

What was his comment?

It implies that one should consider broader stakeholder issues in order for a business to deliver the best possible value for shareholders. His comment: “I do think from my experience that the wider issues that matter to people and their positive impact on performance are important. Maybe not in a week, but subject to the economics of the business being valid they will be a value differentiator.”

Plastics sector arrogance

The global plastics industry paid PR firms for years to present the view that it was consumers who were responsible for the rapid growth in global plastic pollution, rather than themselves. Now, a tsunami of anti-plastic sentiment is building globally and that will likely have a negative impact upon their bottom line

Arrogant Microsoft

Microsoft is annoying individual and business customers who rely on the Windows 10 operating system. There have been so many issues with online automatic updates creating problems for users. Microsoft has told some users that it could be months before they can fix update issues and that users will have to “put up and shut up” in the interim. In my small business, the cost to fix Windows 10 updates problems amounts to several thousand dollars – plus a lot of stress. The level of arrogance at Microsoft is unbelievable. It must be opening up huge opportunities for competitors who can offer a reliable alternative operating system and not have to pay to fix up supplier-caused issues and lose thousands in down time.

Arrogant Facebook

The arrogance of Facebook, when it comes to the way personal data has been used and abused, just to make money for the corporation’s shareholders, is giving rise to a wave of concern and dissension that can only be ‘bad for business’. There is growing evidence that the trust of Facebook users has been damaged and that increasing numbers are looking for alternatives. Other social media networks are also facing a growing backlash.

Arrogant politicians

Angela Merkel is unpopular in Germany because she failed to recognise local concerns regarding her open arms policy towards refugees and migrants. As a result, even more arrogant politicians, such as those in the AFD, are gaining power. Boris Johnson is another arrogant politician who essentially writes off the concerns of the nearly 50% of voters who did not want to leave the EU. He and a small group of supporters want a total break, which could have serous ramifications for the UK if they end up with a ‘hard Brexit’. No compromise. Time will tell how much gain (or pain) there will be for the broader group of “stakeholders” (i.e. all UK citizens). Examples of arrogant leadership.

The future costs of arrogance?

As Rob Campbell commented, businesses and organisations that consider “the wider issues that concern people” are likely to enjoy better long-term financial performance than those which ignore such issues. At the end of the day, every director and leader has to understand one simple fundamental fact of life - that without happy customers, clients or voters, their longer-term future will be in jeopardy because people will simply look elsewhere for better personal outcomes. And that always impacts the bottom line!

Food – ‘something has to die for us to be able to live’

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This view was in a recent opinion piece in our local newspaper. There’s been much recent publicity about plant-based artificial meat, like the Impossible Meats burger patty. But I am starting to wonder if it is all that it is cracked up to be. It seems to me that there is a great deal of hype that may be leading us astray and from a basic fact of life - everything we eat is from biological sources.

The argument for plant-based foods

Many say we could feed the world’s population a lot more effectively if we only consumed plants because the conversion of plant into animal products is inefficient. It takes 7kg of grain to produce 1kg of beef and 4 kg to produce 1kg of pork. The argument is that more people can be fed with 7 kg of grain than with 1 kg of beef. Another argument is that plants don’t have the same welfare considerations as animals. In simple terms it is quite appealing – eating plant-based products and forgoing animal derived-products will help save the planet, not harm animals, and feed the world. However, only a proportion of world meat production is grain-fed so a shift from eating meat to plant foods may not free up as much resource as is suggested. And plants also have to ‘die’ when consumed as a food – whether raw or cooked! They are living biological entities.

Some interesting thoughts

Tim Worstall says that animals often graze on areas unsuitable for plant food crops (e.g. hill country). In addition, some plant material is not suitable for human consumption (e.g. plant waste streams such as straw). Another factor often overlooked is the availability of water. In major grain growing areas, e.g. in China and Australia, water is becoming a limiting resource and future productivity is under threat. Is it somewhat simplistic to promote a view that vegetarianism will help feed more people? There is a much greater complex of factors in play globally than just a simple ‘meat to plant’ switch. It is the health of all our biological systems – plant, animal and microbiological - that is of real concern, along with global over-population and resource scarcity.

What about the health factor?

There has been much hype about artificial plant-based meat products, such as the Impossible Meats burger. But let’s stop and look behind the hype. We are seeing hi-tech companies, some being major corporate groups such as Tyson, investing heavily to develop highly processed food products that, in some cases, contain ingredients which some might find unhealthy. For example, a genetically modified yeast is used to provide the haem (the ‘meat’ factor) in the Impossible burger. Other ingredients have been through significant pre-processing. The Impossible Meats burger patty is hardly natural. Are we being offered something that we have been told over and over to avoid?

Busting through the hype

We have been advised to avoid, even eliminate, highly processed foods from our diet and instead eat as much fresh and minimally processed food as possible if we want to be healthy. In countries where people eat large amounts of highly processed foods, diabetes, obesity, heart disease, cancer, and other lifestyle diseases are major public health concerns. Way back in 1931, Dr Weston Price vividly illustrated the impacts of highly processed foods on indigenous groups around the world in his fascinating book, ‘Nutrition and Human Physical Degeneration’. Plant-derived artificial meats are highly processed foods. Processing strips out many natural health factors found in raw bio-materials. Is the boom in investment and sales of plant-based meat substitute products truly good for human health and wellness or just another example of the tech sector finding a way to make huge revenues from a 'fad'? I guess time will tell if this fast-growing ‘fad’ is good or bad for us. The Mediterranean Diet is healthy – but it’s not meat-free and things still ‘have to die for us to live’ – whether from an animal, plant, or microbial source. That’s life!

Postscript

Maori in New Zealand believed all life forms – trees, plants, humans, animals, birds and insects – descended from a common source. Some sources say the plants and trees came first and humans and other animal life were ‘descendants’. All living things are part of Maori whakapapa. Traditionally, I was told by a local tohunga that there was also an intimate connection between the giant 2000 year+ old kauri tree, Tane Mahutu (Father of the Forest), and the whale. In this vein, local journalist, Joe Bennett, noted that the word ‘meat’ originally meant any type of food, and not just animal flesh. Around the year 1300, the word meat became more associated with animal flesh, although the term ‘green-mete’ (meaning plant foods) continued to be used in the Middle Ages. Whether one believes in the Maori myth, creation, or evolution, there was a start point for all living things on this planet. Many of these living things became food, or ‘meat’, for humans – whether plant- or animal-based. It is only in relatively recent times that plants have been ‘relegated’ to a category of ‘lesser beings’ and animals characterised as ‘higher beings’, even though they have all evolved as living things down the same pathway since ‘the beginning of time’. Both were part of the original definition of ‘meat’. Everyone has the choice to be what they want and eat what they prefer. However, this postscript supports the postulation that when we eat, ‘something has to die for us to live’ – whether it be an animal, plant or micro-organism. That applies to vegetarians as much as it does to non-vegetarians.

The uniqueness challenge

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I recently read a post by a local politician who attended the opening of Spring Sheep Milk Company in New Zealand. It was interesting because it was unique and not a traditional business producing cows’ milk for Fonterra – a giant group that has delivered mixed results due to its strong commodity focus and record of rewarding staff handsomely for poor performance. The post reminded me of how a small country like New Zealand struggles to understand and exploit what is ‘unique’ and tends to do what ‘everybody else does’.

Some background

Several years back, I built a database listing research reports focusing on attributes associated with New Zealand’s indigenous flora, much of which is totally unique globally. It seemed that more overseas researchers investigate the unique attributes of our flora than locally-based researchers. One German researcher completed a detailed biochemical profiling of kawakawa, and probably knows more about that profile than all New Zealand researchers combined. Local researchers appear to be undertaking R&D projects relating to improving pasture, finding super strains of broccoli, adding value to various types of berry fruit, producing and deriving more from cow’s milk and improving our exotic forestry sector – not our uniqueness. The only significant exceptions relate to manuka and kanuka, mainly honey. Most effort seems to be focusing on ‘big’ (largely commodity-based) rather than ‘unique’.

Why’s that?

I asked a person at the Ministry of Business, Innovation and Employment (MBIE), who plays a role in deciding how New Zealand government R&D funds are allocated, why we focus so much on ‘big’ and not so much on ‘unique’ – in particular the inherent value in New Zealand’s indigenous flora. His response surprised me. He said it was easier to justify investing in R&D projects in the ‘big’ area because these commodities are known internationally and listed in various approved foods/food ingredient registers. He said that to try and introduce something derived from our indigenous flora would mean a great deal of effort was needed to add them to these approved lists. The suggestion was that it was simply ‘too hard’ and easier to keep doing things with things that everybody else also did things with!

Illogical?

I was quite taken aback by his response but it explains why so much R&D funding is allocated to ‘big’ and much less to ‘unique’. It seems ‘unique’ fits in the ‘too hard basket’. But, when one sees how much value is now being created from manuka (honey and derivatives) and the exciting prospects for kanuka and horopito, we are talking about uniqueness with billion-dollar potential. These are only a couple of examples amongst hundreds of indigenous species imbued with recorded uniqueness characteristics in the health, wellness, food, natural pesticides and fragrance areas.

The challenge for business

It’s clear that New Zealand businesses need to invest more into their own R&D projects (rather than relying too much on state funding) in order to enhance their value propositions and quality of revenues - and focus more on ‘unique’ rather than ‘big’. Small countries everywhere in the world don’t do ‘big’ well because they don’t have the critical mass. But they can do ‘unique’ really well. And that’s something that a greater number of Boards of Directors need to think about - perhaps more than they currently do. Our indigenous flora is a truly unique resource that we have - yet we still largely ignore it and do too much of ‘the same as everyone else’. We need to be more proactive and less reactive!

CEOs versus Teams

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(This is an update of a trend monitoring post originally written by Kim Ivey-Stephens in March, 2012.)

The original 2012 post discussed how the effectiveness of the CEO-based business model was being challenged by one based on team-leadership. It’s interesting to re-visit the thrust of that post, given some of the controversies surrounding some high profile CEOs in recent times, such as the former CEO of Fonterra in New Zealand, the value destruction caused by the CEO of Theranos in the USA, and the recent ousting of the CEO of GE for failing to deliver.

What’s the background?

A 2010 survey by IBM of more than 1,500 global CEOs found that 79% believed they will face greater levels of complexity in the future.  An article posted online in 2012 by Doreen Lorenzo, President of Frog, suggested that collaboration and a team-leadership model comprised of strong, flexible, driven and solidly aligned leaders would be the key to meeting challenges ahead. 

 What are the advantages of a team-leadership model?

 Lorenzo suggested that group decision-making is a necessity in order to meet the increasingly complex challenges of the future market-place, something that cannot be achieved by a solo decision maker.  When selected effectively, the team can provide in-depth expertise across a number of challenge areas and drive strategy with greater consideration of all business functions.  Furthermore, she proposed that diversity in the leadership team was a key factor that drives both success and innovation. A number of organisations have adopted a co-CEO arrangement – SAP, Motorola Mobility. At the time, SAP co-CEO Jim Hagemann Snabe suggested that, because the world is a multi-dimensional place, to divide and conquer is logical in order to achieve the large number of demands a CEO is faced with.

 But, what about the disadvantages?

 Teams are significant where there is need for debate, where a wide range of advice is required, to implement, invent, create and communicate. However, team decision-making can be less effective. Despite being a collective formed to benefit the overall good of the business, team members can find it difficult to reconcile their area of expertise within the organisation with the need for them to take a holistic perspective.  Ultimately, they are accountable for their functional area and, where there is conflict between the needs of their business area and the greater good, this can be challenging.  Furthermore, where there is no consensus on an issue or opportunity, decision-making can be prolonged and disabling. That’s where a single decision-maker, such as a CEO, can speed up the process – but they also run the risk of getting it wrong, as the Fonterra, Theranos and GE cases illustrate.

 What does this mean for businesses?

 Whilst there are examples of both successes and failures associated with either the CEO-led or Team-led models, it is ultimately a combination of both that is needed to enable organisations to thrive in the future. An individual operating in isolation does not have the capacity to deal with the emergent complexities arising from working in an increasingly global marketplace, and collaboration becomes essential for future success. However, without a singular decision maker, organisations may not have the agility or alignment with which to progress. As many Boards of Directors have been finding, it’s a real challenge to balance the CEO and team ‘power balance’ in a way that leads to the best possible future outcomes for all the stakeholders they are responsible for delivering to. Some CEOs have become far too dominant in the decision-making process and sometimes this has jeopardized the future-fitness of the businesses they lead.

Sustainability versus scarcity

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Simon Harvey recently shared a link to an article by Naveen Jain titled ‘Sustainability is actually not sustainable’. Sustainability is such a buzz word these days and it is refreshing to see someone thinking about the whole issue in a big picture way rather than through the fog of buzzwords.

What’s the context?

For some years now, the World Wildlife Fund has published the annual ‘Living Planet Report’ . It is an interesting document with a strong focus on measuring and monitoring a number of key environmental and resource indicators. This report has consistently concluded that humans are using up the world’s natural resources at rates that are higher than their replenishment. Several years back, the report said that we are currently using up the planet’s resources at 150% of the rate they are being replaced and, if we don’t change our habits and the world’s population continues to grow, that rate will increase to 200% by 2030 and 300% by 2050.

What’s Jain’s take on this?

 He agreed that we are using up resources at an unsustainable rate and that the current focus on sustainability ‘actually constitutes our greatest peril’ because it fails to recognise that it is a growing scarcity of resources which is the fundamental issue. With the world’s population heading towards 8 billion and increasing demands for food, water, consumer goods and everything that delivers improved personal lifestyles and living, the issue of scarcity is not being recognised sufficiently as the real challenge.

That challenge

If you watch a population of aphids multiply on a lush, healthy fast growing rose bush, over time you will see the rose stems and leaves become covered with large numbers of aphids. Each one is sucking the sap out of the rose bush to the point where it can no longer sustain the population, i.e. the resource the aphids are feeding on has become scarce and reaches a point where the population rapidly dies off, the rose bush has been ‘sucked dry’, and can barely sustain itself, let alone any aphids. It’s perhaps an interesting analogy for the sustainability versus scarcity context setting.

The answers?

There are two schools of thought presented in Jared Diamond’s excellent book ‘Collapse’ published in 2005.

  1. ‘The world can accommodate human population growth indefinitely. The more people, the better, because more people mean more inventions and ultimately more wealth’. This appears to be a view that Jain supports along with people like Dr Peter Diamandis and his ‘Abundance’ views. The logic is that, somehow, we will be able to ‘create’ additional resources from something that will never be scarce and is essentially infinite. But the rationale for such a view is unclear and seems to be based largely on optimism and an assumption that humans have always been able to surmount challenges and will continue to dos so, even when living on a finite planet with finite and increasingly scarce resources.

  2. The other view is that we need to restore a balance between the world’s population and our known finite resources to avoid scarcity leading to a calamitous readjustment of the population (as happens to aphids on a rose bush). We have seen figures of 3.5 – 5 billion humans being about the level of population the world can sustain on an ‘infinite’ basis – which seems to have some logic, given that we are currently using up resources at 150% the rate they are being replaced. But, being humans, a large reduction in the world’s population is only likely to happen as the result of a major catastrophe, e.g. a nuclear war, pollution (plastics, chemicals, emissions etc.), climate change, a global famine, a serious global disease epidemic, an asteroid/meteor collision, etc., and not because people really care.

The challenge

The challenge for Boards of Directors is to determine what sustainability really means and if the businesses that they guide can either ‘create’ solutions, that mean scarcity is replaced by abundance (and what is needed to generate that abundance), or contribute towards ways that lead us back towards a global balance that is truly sustainable and can be maintained for millennia by ensuring that a scarcity of finite resources never impacts negatively on the world’s population. This latter option poses some difficult challenges, as part of the solution would be to reduce the global population. Not something that will go down well with your average human or a number of major business sectors - such as the fossil fuel, plastics, chemical and the arms industries.