Author Archives: Kevin L

Expert vs advisors

I’ve been reading the ‘Strategy and the Fat Smoker’ by David Maister. I think very highly of David’s crisp thinking in the manner he approach strategy and the manner in which he cuts through issues and topics. He simplifies the concepts to the core of the subject matter without ignoring the human elements in them.

One of the interesting ideas he introduced is the idea of expert vs advisors when it comes to serving in professional services. A lot of consultants claim to desire to serve customers as advisors, as trusted partners but in reality they want to be treated as the expert, to have control and defend their expertise rather than to build strong trusting relationships with their clients.

In essence, from my perspective, the expert cares about the topic and the subject matter more than the client’s problem. And as a result, the client can benefit from the expertise but more as flat information or knowledge than actionable insights.

The advisor may not be the expert but he gains his authority to consult with the client through his deep understanding of the client’s problem. And that allows his synthesis of insights gathered from other parties, especially those who consider themselves experts.

A client can decide what he needs is an expert but he can never expect the bespoke synthesis to come from the expert. He or she will have to take responsibility for that.

Facts or opinions

I saw a pretty brilliant video of a mother trying to teach her child about facts, opinions and mindsets in response to social environments. It’s in Chinese so I paraphrase in English the approach she has taken.

She held up an apple as her daughter eats a cob of corn and asked, “This is an apple. Is that statement a fact or an opinion?”

“A fact” said the daughter.

“Yes. That is a fact. Now Mummy says that the apple in my hand is tastier than the cob of corn you’re eating. Is that statement a fact or an opinion?”

“An opinion” said the daughter, still happily chewing on her corn.

“So when the kids at the playground says that they don’t like you and don’t want to play with you. What do you think that is? It is an opinion.” the mother continues.

The mother than took out a mug with black coffee in it. She said, “Look, daddy loves to drink this black, bitter drink but mummy doesn’t like it. Whether someone loves it or don’t like it, the coffee is the same, it has the same color, smell and look. People liking or not liking it says more about themselves than the coffee.”

She went on to say, “So when those kids at the playground say they don’t like you, it has nothing to do with you being you. You are still the same.”

The wisdom extended from the simple analogies were really brilliant and the manner she brought it forth and contextualised it for the daughter really made for a great model in teaching these ideas.

Making the contribution

For first time in history but it’s already been a while, the world collectively seem to have abundance. The total amount of food produced could feed the entire world one and a half times over. If energy is used efficiently and excesses trimmed, the entire world should have decent amount of power to live normal modern lives. Of course that depends on what you mean by normal but I’m covering the same point that there’s enough in the world but the problem is distribution.

And distribution is not just a physical problem of course. Distribution can be an economic problem in itself. The fact that the market doesn’t really care that much about the distribution of resources, buying power / puchasing power is actually a problem. It skews the global economy towards what the people with means needs rather than producing for the best outcomes of the world. And this is perhaps why energy continues to be skewed towards the developed, high energy consumption countries or markets.

So making a contribution to this world isn’t really about production. If the world continues in the same fashion tomorrow, you can really make a greater impact on someone’s life – from an incremental perspective – by improving the distribution in the system. By bringing access to higher quality energy, better nutrition, bringing critical and vital knowledge to the communities which can use them properly. That sort of contribution is of unparalleled value. Probably not the kind of contribution involving helping companies break into new markets or keeping fossil fuel businesses alive to emit more carbon.

What is value?

One of the key fundamental steps to take in order to move towards a low-carbon future is to re-assess our notion of value, economic value. Over the past decades, economic value had been increasingly important as more and more things in the world could be bought with money. This is what Michael Sandel calls the making of a market society.

This is worrying because the value of anything and everything used to be so much more. There’s richness in being able to evaluate and appraise value of various things in different ways. And this is why dollar values can never encapsulate all of that. In fact, there is no such thing as a market for single goods and services. The notion of a market price is just about as real as the notion of an average. The same good can be simultaneously sold at low and high prices depending on where, when, and to whom it was sold.

By defining this abstract concept of market values, we are trying to make a subjective valuation something objective. We are trying to abstract from specific context and circumstances and forcefully say that surely there is something about the good or service itself that has nothing to do with all that. And if we can gather the averages or have a large number of observations, we can use that statistic as something objective. In reality, the statistic is just a statistic – is it a market value? That’s up to whoever is reading the statement.

Beyond the market, the real way to appraise value continues to be subjective and that is okay because we all should be selecting the dimensions we all care about and build our decisions based on that.

Ready-made solutions

Just add hot water to instant coffee and you get your morning cup of coffee. Boil some water and pop the noodles and powder in, or even better, just rip the packaging and put it into the microwave, pressing just a few buttons then wait – and you get your meal. Bring a packet of ready-mix cement and mix in water, and you can have some of the bonding materials for your brick building. Or you can start paving the road.

So why can’t you just order a report and instantly know everything there is to know about a market? Or to pay someone to give you all the answers to entering a market for your business? Even better, pay someone to enter the market, run the business for you and then you just reap the business success benefits? The challenge of having instant, ready-made solutions in some parts of life is that we start expecting all parts of life to be like that.

And worse still, we allow the market to grow into crevices of our lives expecting it to deliver but it never does. Professional service can deliver a report but won’t be able to ensure you learn all about a market. You could get someone to develop a strategy to enter a market for your business but you’re the one who would eventually have to follow through with it. And moreover, the less you’re involved in co-developing the plan, the less you’ll be able to actually execute it.

There are just so much work that is better, more beautiful and meaningful because they involve co-creation and where you’re paying for someone to partner with you to make a new thing happen. The reason you’d pay them for it is because you will eventually reap the full benefits of the result while they wouldn’t have been working to partner with you otherwise. And in this domain, there are no ready-made solutions for you to purchase; you will have to do the work if you want the success. And it won’t be guaranteed.

Bridge to the future

Having been based in Australia for two months now and getting a better view of the overall energy landscape, I’d say that the greatest hurdle we need to overcome is developing an alignment in commitment, plans and action to bring bioenergy especially biomethane into the system energy mix in order to decarbonise.

We are trying to build a bridge to the low-carbon energy future. And there has been many announcement, efforts and plans around hydrogen hubs, hydrogen parks. In the year 2023, the prices of electrolysers didn’t seem to come down all that much as expected, renewable electricity in the form of wind and solar, while being cheap, is bringing about a degree of intermittency that challenges grid operations to the extent that overall cost of electricity or at least access to electricity remains high. As it turns out, we were building the bridge from the destination towards us when we were working on the hydrogen projects. They were good, at some point in the future but it seems that they are not being built fast enough to reach us today. We are still unable to adopt those solutions.

This means that as the decarbonisation targets and emission reduction dreams comes back to bite us, we need to start building the bridge from our side. And biomethane is a great solution that allows us to do that. It displaces natural gas on a one-to-one basis and does not require end-users of natural gas to change their appliances. Biomethane can be spec-ed properly in the biogas upgrading process in order to achieve the quality required for gas grid injection. Moreover, the production of biogas (precursor to biomethane) can be done in conjunction with managing our organic and agricultural wastes which were either being burnt, composted openly or sent to the landfill – all of which involves some kind of carbon emission (albeit short-cycle to a certain extent) that does not achieve extra work done. And don’t get me started on the potential of biogenic carbon dioxide as a future market to build.

Lots of clear work and action. Once we get the perception right and eliminate the misinformation around bioenergy in Australia.

Greenwashing label

Is the whole notion of ESG disclosure a massive distraction? In 2021, Tariq Fancy of Blackrock called it a distraction for climate action. And I tend to agree because it tries to pass on the responsibility of climate action into the hands of the market, that had continually proved incapable of generating endogenous climate action. Sure, you need the market to scale solutions, and drive the expansion of some of the good things that will benefit the climate. But to think that the market can drive change just purely from the realisation of climate change as a problem is naive.

By leaving the type of climate action and the labelling of what counts as green to the market will simply generate greater confusion and inaction as we have seen from the proliferation of funds that tout sustainability or impact, or both and often still trying to pair that with financial returns, etc. The extra cost that goes into reporting, emissions accounting and massive resources around disclosure standards and all simply drives activities for the big consultancies without diverting energies towards the direction of climate action.

The issue is that greenwashing is real and pretty easy. And that can take the form of superficial disclosures that tosses buzzwords around. Yet there are corporates taking genuine action drowning in this sea of sustainability marketing and PR nonsense, being accused of greenwashing when they are trying to make a difference. If it was all going to boil down to rules, regulations and laws, then there won’t be ESG funds and non-ESG funds or government having to regulate disclosures. There won’t be accusations of greenwashing because you are either green or just illegal/non-compliant.

Regulation is of course a complex topic for another day but it has to be worked on. Regulating disclosure is unlikely to be enough.

Valuing art

It is interesting how just a year or so ago, people were speculating on NFTs (well, now we can be sure it is speculation though it was to some investing); and then today, people are using generative AI to generate tonnes of images and becoming artists themselves. So then, what is art and how do we value them when the computers with the right algorithms can churn out lots of different interesting nice-looking graphics and respond to prompts with interesting and surprising twists?

Art, ultimately is about the impact on others and the manner by which the message or the intent of the artist gets conveyed or put on the audience through the art work. Ultimately, the tangible art piece or the experience (visual, sound, feel, taste, smell) of it is just a manifestation of the ideas that are being expressed by the artist. It always had a value that wasn’t about money but about influence and ideas.

If we are caught up with the prices of art pieces, or the seeming worthlessness of them, then we are probably missing the point. It is also why people find it hard to accept their children embarking on the starving artist journey. And my most artistic friends are often actually teachers or trainers trying to help amateurs or lay person appreciate art. Connecting to the meaning of things in the world where we’ve allowed meaning to be squeezed out of us must continue to be something affordable for all of us. And we all can consider making that connection and contributing something to the ones who continue to help us make sense and meaning of the world.

Incentive to ignore

In 1977, more than 45 years ago, James Black, a senior scientist from ExxonMobil delivered a sobering message to the company:

In the first place, there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels…

And in later warnings, he was clear about the need for action

…present thinking holds that man has a time window of five to 10 years before the need for hard decisions regarding changes in energy strategies might become critical.

And if you want to know more about this you can check out the article published 8 years ago in Scientific American. What I’m trying to say here is that incentives are important guide to corporations, businesses and while they are operated by humans, we cannot trust them to follow moral principles or human values that are not captured within regulations, rules or laws. In fact, we already cannot quite trust them to follow rules, regulations and laws to begin with, especially when they are at odds with profit-making.

The market is designed to act in certain ways that do not necessarily promote the greatest general well-being of the society. The conclusion that Adam Smith came to unfortunately doesn’t apply to the extent that market incentives rule so many aspects of our lives.

If ExxonMobil had been not only incentivised to ignore the climate problem but potentially contribute to confusion in the subsequent decades, how can we expect shareholder pressure, financial reporting and disclosures to help? And at the same time, putting all of these burden on the companies are probably going to make more enemies to decarbonisation. Disclosures are more about self-regulation and expecting the market to bring the whip. That’s hit and miss; and when there is incentive to ignore the problem, the market would, as we have seen for more than four decades.

It is time for governments to wake up and lead the mission on climate change. Businesses, consultants, NGOs, activists can only go this far and no more.