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.

About a business being bold

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For many years, I have been a small shareholder of a New Zealand-based company that has traditionally operated in the tourism sector, both locally and globally. The company is Tourism Holdings Limited. The reason I have held my shares for so long is because I have been fascinated by the way this company has looked at changing market opportunities and ways of adapting. The company is now going through a process of change that will largely reconceive a major part of their traditional business model.

What is happening?

For many years THL’s business included specific activities in a number of long-standing tourist destinations such as the Waitomo Caves, ski fields, Kelly Tarlton’s underwater world experience, as well as recreational vehicle (RV) manufacturing and rentals as well as tourist bus operations.  Over the past decade it has been selling off a number of the destination related businesses and strengthening their offer in areas related to their core RV business area. Today, it is the world’s largest motorhome rental company in the world and the strategies pursued have delivered in terms of both growth and profitability.

What’s their go-forward strategy?

It is to add a stronger digital component to their business and build on their long-term experience and strengths in the RV market. Recently, they launched a portal called Mighway which enables travellers to book privately-owned RVs – a bit like an AirBnB type offer. This move has been quite a radical change from their traditional ‘build, own, operate’ business model - which has been asset and capital intensive. Their go-forward strategy is to further develop RV-related opportunities internationally through pursuing a strong digitalisation process that generate greater value all-round.

How can they cope with such radical change?

Because many companies find it challenging to have all the skills and capabilities needed in-house to pursue such a substantial change, progressive businesses tend to enter into alliances with other parties that complement their existing skills and capabilities and enable them to enter into ‘new territory’. And that’s exactly what THL has done. It has formed a US-based joint venture called  TH2Connect LLC which embraces the digital assets of both THL and the largest US manufacturer of RVs, Thor. That JV now employs more than 60 digital business developers and has access to funding directed towards developing new business opportunities that will not only benefit THL and Thor but also a wider range of stakeholders.

Why is this story interesting?

Because many businesses tend to adopt a far more conservative approach to disruptive change that is threatening many traditional sectors. Instead of being bold, companies often continue to ‘flog a dead horse’ and, instead of being bold, they are timid and focus on cost cutting and re-structuring to try and remain competitive. Such an approach often fails – Kodak and Borders are classic examples. Trying to do the same thing ‘forever’ is often a recipe for becoming irrelevant. A quote attributed to Einstein goes, “the definition of insanity is doing the same thing over and over again, but expecting different results”. And yet many businesses pursue strategies that are ‘insane’! The THL story is fascinating because they have a Board of Directors and senior executive team making bold decisions that some view as being radical and even ‘dangerous’. In reality they are being smart and doing everything to ensure that the company does not become ‘disrupted’ and lose its competitive advantage over time by being timid. I’m glad to be a shareholder of this innovative and bold company!

Being ‘stalked’ online by businesses

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We hear a lot about trolls ‘stalking’ people online and making life unpleasant for them. But it’s not just individual trolls that people are becoming increasingly concerned about. It’s businesses that are acting in ways that are intrusive and annoying and make people feel uncomfortable and as though they being ‘stalked’.

What is ‘stalking’?

You go online and look at a product or service and may or may not decide to buy it. But somewhere in cyberspace there are bots that are surreptitiously recording your site and app visits and then targeting you with advertising links on Google, Facebook and other social networks, that are closely linked to your search. Increasing numbers of people (65% according to a survey, even way back in 2012) feel that their privacy is being invaded by these covert online ‘spy-bots’ that are following their every move. It is almost a ‘big-brother’ type feeling – not from state agencies (who are also doing this) but from businesses who are essentially ‘stalking’ us online.  

What’s an example?

I have experienced many examples of such ‘stalking’. One in particular annoyed me. I booked accommodation in a small town in New Zealand on Booking.com for a one-off trip for a particular business purpose. It was not a place that I would normally visit. For weeks after I made the booking I received both online and email messages offering me special deals in this small town – from the day after I had completed my trip. This follow up ‘stalking’ was irritating because it was irrelevant and intrusive and I had already done what I wanted to do. In the end I registered a complaint with Booking.com and, to their credit, I received an email reply from a real person who said that they would ensure that I was disconnected from their online ‘stalking’ bot – and to their credit I have not received any further of these unwanted and unsolicited advertising prompts. However they ‘stole my time’ because I had to go to the effort to contact them to stop their ‘stalking’ otherwise it would have continued ad-nauseum.

People are reacting

The advertising industry seems to be slow to learn that people are people and have a limit to how much intrusion they can tolerate. A recent article reported how people were leaving ‘influencer’ pages on Instagram in droves because the people they were following online – whether celebrities, sports stars, famous people or self-made influencers – were becoming more like fronts for business advertising than interesting people who people enjoyed following. Increasingly people feel they are being conned by smart advertising agencies. ‘Audiences are essentially being played for fools through fake displays of everyday life’ said one industry commentator.    

The message for business

There are not many people who appreciate being ‘played for fools’ – and that’s the lesson that the advertising sector really seems to struggle to learn. They are pushing brands, products and services at people without considering that the ‘stalking’ approach they are pursuing is intrusive and, in an increasing number of instances, actually putting people off specific products and services. Until there is a move away from ‘stalking’ to truly ‘permissive advertising’ (‘opt-in’ rather than ‘opt-out’), businesses run the risk of being ‘ex-communicated’ rather than embraced by potential and actual customers. It certainly makes me become an influencer – in that I now choose not to deal with businesses which are ‘stalking’ me!

Inspirational people outside the spotlight

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We see and read so much about Mark Zuckerberg, Bill Gates, Richard Branson, Jeff Bezos, the Kardashians, and other hugely successful business people and about how they became ‘rich and famous’. There is no question that they deserve credit for what they have achieved. But there are many other people around us who contribute to both the world and our own personal success that make a real difference in a smaller but important way. Here are a few examples of people who inspired me.

Liaquat Shah

The CEO of the Caribbean Industrial Research Institute in Trinidad and Tobago. I include him because he has worked in both the commercial and public sectors and built a bridge that has helped many existing and upcoming entrepreneurs realise their aspirations, particularly young people. He empowers them to explore new ideas and directions and, when they make mistakes, helps them get back on track. One of the most inspirational people I have met and worked with.

Rachel Renie and David Thomas

The founders of Market Movers in Trinidad and Tobago. They have done what everyone said was impossible – established a successful online and experiential business focusing on fresh healthy produce. They have overcome many challenges on their entrepreneurial journey and moved from strength to strength over the past ten years. And they have inspired others to follow their dreams.

Lorna Green

A serial entrepreneur based in Jamaica. She founded and successfully developed a number of innovative companies, including Digital Transtec and Reel Rock GSW Animation. Her passion for people and personal development has extended way beyond her business activities and she has been a champion of women’s business development for many years. A very inspirational person.

Shaun Gregory

An entrepreneur who moved from being an employee into building a business based upon a unique marine sector technology he developed that no-one in the world has ever thought of. It is not just the large potential value adding this technology offers that makes Shaun special but also because he understands what his personal strengths and weakness are. He has built a loyal core of key people around him to cover off those weaknesses and is now in a position of real strength as he moves towards commercialisation. His dedication and determination to succeed are inspirational.

Peter Meyer

I have known Peter for many years. We have never done a project together but have always talked extensively about projects each of us are involved in. The reason I find him inspirational is his approach to business development. Some may find it ‘finickity’ but when he pushes the ‘go’ button on any venture he pursues, it is likely to be a real success – as his business history shows. A person who is wise and has a lot of knowledge about ‘how to do things’ - very inspiring.

Why mention these people?

We live in an age where celebrity culture dominates. We see the same names in the same spotlights appearing ‘ad nauseum’. In real life there are many inspirational people who contribute to both our personal and business success, and not all of them are ‘gurus’. They are good ‘solid’ people who have learned a great deal from practical experience, and this is something that some Boards of Directors have found has been lacking in recent times – e.g. Fletchers in New Zealand. They are not only inspirational but also refreshing!

Customers and Clients are always #1

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This is something that is often forgotten by businesses as they strive to deliver the highest possible returns for their shareholders. Forgetting how important customers and clients are can impact negatively on the outcomes for shareholders. And it is somewhat surprising that some boards of directors and senior executives continue to fail to understand that.

For example…

A recent report from Australian Commission set up to examine the practices of that country’s financial institutions illustrates how many of those in charge forgot who they are really dependent upon for their success. Exploiting customers and clients purely to maximise short term financial gains has been exposed and a number of these large institutions are now scrambling to regain some degree of credibility with these vital stakeholders by divesting business areas that created a number of conflicts of interest and resulted in the negative outcomes reported.

Learning from small businesses

Small businesses, in general, are more innovative and more attentive to their customer/client needs. Whilst there are a few rogues and unscrupulous operators, they are soon exposed. There is a lot that large businesses can learn from small businesses because, without customers/clients, they would soon go out of business. So-called ‘too big to fail’ businesses, especially in the traditional financial, telecommunications and utilities sectors, often seem to think that their customers will always stick with them, even if they are not accorded the level of consideration and respect that they should be.

Lesson 1

A couple we know set up a small business at a village on the coast in the north of New Zealand. They converted a shipping container into a ‘Beach Box’ café and primarily focused on offering great coffee and high-quality gelatos and sorbets. It is in an area where there are quite a few alternatives and so they have had to work quite hard to differentiate themselves. The one thing many of their customers commented on was a need for them to be environmentally conscious. So, after just a year of operation, they have moved from offering so-called ‘biodegradable’ plastic spoons to go with their wax cardboard gelato takeout tubs to now offer beautifully made wooden scoops. Shortly, all their bottled water will only be in glass bottles. They have listened to their customers and acted – and are attracting a growing and loyal customer base

Lesson 2

This is an example of people feeling they have been deceived. Many people were angered when ‘The Book Depository’ was bought by Amazon in 2011. Even today, many have been unaware of Amazon’s ownership. An increasing number of Book Depository customers don’t like Amazon’s dominance of the online book retailing space, the way they have treated their staff, and other aspects of Amazon’s business practices. It is encouraging them to search for alternative independent suppliers who better meet their personal values and standards – often the ‘disruptors’.

The crux of the matter

If customers and clients feel they are being treated poorly, especially by large dominant businesses and institutions, this results in a reduced level of trust. And a reduced level of trust drives at least some of those customers/clients to look elsewhere for alternative avenues to do business. Boards of directors and senior executives that condone practices leading to a loss of trust are doing their shareholders a great disservice – by opening up opportunity areas in the market for the ‘disruptors’. Not good governance because the stakeholder view has been far too narrow.

Thinking about the big picture

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A number of recent reports illustrate how businesses ignoring the big picture can lead to undesirable outcomes. Here are a few examples.

Micro-plastics

The idea of using plastic microbeads in cosmetic and personal care products was conceived some years ago. It appears that those involved with developing and using microbeads to formulate and market such products some years back only focused on part of the product cycle. Clearly, no one seriously considered what would happen to the microbeads once they entered waste water streams and the environment. Now, such products are banned in many parts of the world because of the negative impact they have had – even entering into parts of the food chain that humans depend upon. Concerns have also been expressed about their presence on sandy beaches where turtles lay their eggs – and a distortion the male/female ratio long-term.

PCBs

This group of chemicals was developed many years ago and was used in a wide range of products because of its persistence. But that has now become a real issue. That persistence is now a threat to marine animals, such as orcas. PCBs have been accumulating in the food chain that orcas depend on. There are concerns that half the world’s orca populations are now under threat of extinction because of PCB build up. And orcas are just one species under threat. An estimated 14 million tonnes of equipment and material containing PCBs still has to be eliminated – 83% of all PCB containing products ever made.

Packaging

Leading edge businesses are doing their best to eliminate waste and become more sustainable. Auckland-based operators of a number of specialist cafes made a move to use only eco-friendly products with proven recyclability. However, they were nonplussed when the manufacturer delivered their compostable cups in a non-biodegradable plastic outer. The same goes for Earthwise plant-based laundry powder – in a cardboard outer but with two plastic bags inside. Toilet paper is another example – a paper product but packaged in plastic outers.

Grass grub beetles

In New Zealand, it is estimated that grass grubs are responsible for about a third of an estimated $2 billion annual cost to the farming sector - in terms of reduced pasture growth and associated production. Scientists are focusing on ways to reduce the damage. But, in a big picture perspective, something is being missed. The grass grub is indigenous to New Zealand and was here long before the farming industry evolved. It was part of a natural balance that existed for thousands of years. It was only when settlers cleared vast swathes of forest and planted large areas in grass and clover that the problem emerged. The real issue here is whether it is the grass grub that is at fault or the farming industry for developing a highly vulnerable almost monoculture approach?

The challenge for business

The greatest challenge to business is to think in big picture terms. But, as one network associate commented, it is really challenging to encourage such thinking ‘after the (initial) lust period of (exploring) exciting and new territory’ - something that often arises at strategic planning and foresighting sessions. People tend to slip back into their comfort zones post such sessions – including boards and directors – and end up doing things that are neither logical nor, as in the examples above, good for business, customers, and the world we live in long-term. Not enough companies do the big picture well.  

The challenge of going global

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During a recent trip to Germany I caught up with a good friend of mine who is a serial entrepreneur. Some things he has been involved with have been a great success. Others not so much. That’s the way the entrepreneurial journey goes. Now he is on a new adventure that appears to be very exciting, but he faces a dilemma.

What’s the adventure?

It’s a disruptive online business model that provides a matching service between capacity suppliers and users in the national and international logistics sector. It focuses on a specific area that has long been dominated by leasing companies, large transport firms and global shipping companies. Like many traditional business models, there have been areas of inefficiency which my entrepreneurial friend recognised and he has developed a unique solution to solve.

How has it been accepted on the market?

The initial response in the German market has been positive and encouraged our entrepreneur to build upon the initial success achieved. A number of key players have signed up and are using the online matching service and achieving significant benefits in terms of both efficiency and cost. But the challenge of how to leverage this further into the international market, where it really has the potential to make a substantial impact, has arisen.

Why is that?

It does require either local or global partners to expand its impact beyond Germany and Europe. The role of those partners is relatively small – primarily to direct logistics operators to the portal and its matching service so that they can share in the benefits. The challenge is deciding which partner relationships are going to deliver the best outcomes for the entrepreneur and his backers – as well as those clients and customers that use the service. Ultimately it needs to be win-win.

Choosing the right pathway

Our entrepreneur has several options, namely:

  • To try and fund global expansion through venture funding so that he and his backers gain the maximum long-term benefits – but funding alone doesn’t resolve a need for local representation so easily.

  • To develop a formal business relationship with selected business partners in different key countries/regions. It requires considerable effort to identify such partners, particularly those who are likely to deliver win-win outcomes, and do due diligence.

  • To develop a formal business relationship/ arrangement with major global logistics operations, such as shipping companies, that already have a strong global presence and local representation.

The dilemma

  • The first option is not so easy as it is unlikely to quickly cement the local presences required for success.

  • The second option requires a considerable amount of effort to identify, do due diligence, secure agreements and then manage a number of different relationships over time.

  • The third option offers a potentially rapid entry point for global business development. However, the large corporations operating in the space our entrepreneur is disrupting have a vested interest in protecting the less efficient status quo because it generates millions of dollars of revenue, much of which could be lost if our entrepreneur’s portal were to gain global traction. If he enters into a deal with one or more of them, there is a risk they will ‘buy it out and shut it down’ – something he is keen to avoid.

Sometimes it’s tough trying to make the right call, especially when hoping to go global. It’s not only a challenge for our entrepreneur but also many Boards of Directors of companies of all sizes.

A battle of opposing forces

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As we have noted many times, humans are using up resources at a far greater rate than they are being replaced. This includes forests, fossil fuels, minerals, fish stocks, and fresh water. If we don’t move towards more sustainable and balanced use of our resources, commercially and personally, then the legacy for future generations looks rather bleak.

Hambach Forest

This forest in West Germany is one of the few remaining areas of original indigenous forest. It has been growing relatively undisturbed for hundreds (some say thousands) of years. It is located on the periphery of a large open cast lignite mining operation run by the giant energy corporation, RWE. The lignite reserves extend under this ancient forest and RWE want to cut it down so they can extend their open cast mining operation to extract more of this low-quality coal reserve. The proposed destruction of the forest has angered many people as Germany is supposed to be moving towards a clean energy future that reduces and eventually eliminates the use of fossil fuels and nuclear power. A battle is underway between corporate power and concerned citizens.

Karangahake Gorge

This is a conservation area in the North Island in New Zealand. Much of New Zealand’s landscape has been stripped of natural forest cover for farming, forestry, urban development and industrial operations. Land that is supposedly protected against such exploitation is being explored for potential gold reserves, with government approval. This has angered many local people who see conservation land as being a vital legacy issue for future generations. Another battle is underway between corporate power and concerned citizens.

Am Brocken

This significant mountain in the Harz region of Germany is in what is today a large managed nature reserve. What is stunning, when one travels up the mountain on a unique narrow-gauge steam train journey, are the huge areas of dead trees. According to local sources, the reason they died was because of the high levels of atmospheric pollution that prevailed several decades ago. The pollution weakened the trees and caused them to become highly susceptible to an insect pest known as the Borkenkäfer (known as the bark beetle in English). In simple terms, when numbers are high they ringbark the trees by damaging the vital phloem cell layer between the outer bark and inner wood core of the trunks. This is another example of a disaster caused by industrial concerns not accounting for all the consequences of their activities and releasing damaging pollutants into the atmosphere that resulted in acid rain and fog that caused serious damage to the trees.

What does this mean for Boards and Directors?

In each case, those responsible for running industries that have a significant negative environmental impact are not considering the full range of stakeholders to whom they are ultimately accountable. Increasingly, the future of businesses is not only in the hands of shareholders who are demanding high rates of return at any almost any cost. That future is also being shaped by increasingly powerful groups of stakeholders who also want their aspirations and concerns to be taken into account. It will be interesting to see how such stakeholder battles progress in the coming years. One senses that the balance between corporate shareholder and other stakeholder demands is beginning to shift.