The energy transition and decentralisation of energy had quietly started shifting the capital markets since close to a decade ago. While the traditional energy players continue to compare the cost of green energy against the cost of their own fossil fuel based energy, they found no reason to diversify their business. Even in face of some subsidy, or some Feed-in-Tariffs, they were reluctant to invest.
There was no scale, and they thought they were going to face more competition and erosion of any green premiums they could secure. But then the capital holders started taking notice. The projects were simple enough to invest into. Solar farms had minimal requirements from an operational perspective, and represented to some degree a pure capital good where almost all the cost are paid upfront for a stream of revenue in long term.
From a risk perspective, it was safe. And so long-term funds which needed safe investments at moderate yields started piling in. The utility scale projects expanded, driving down the cost of equipment, and fostered more innovation there. Here is a case where, the technical simplicity of the operations enabled investors to bypass the typical operating businesses to get into the underlying projects themselves. All of a sudden, it is not about looking for the premium anymore. Because you’re alright with scale.
Sometimes, growing and developing a market is about finding customers who are willing to pay a higher price; but other times, it is about finding investors who are willing to accept a lower expected return for other attributes.
What happens when you are ‘stuck’; what exactly does it mean to feel stuck. Is it more about not making progress? If so, then progress towards what? You can’t get stuck if there’s no sense of destination you are trying to get to. And having no destination is not the same as being stuck. Because not knowing where you want to go means it’s perfectly fine wherever you are! Stop thinking like you need to go somewhere if you’re alright with here and now.
If you’re not alright with here and now, and unsure where you need to go, then it’s not about getting out. It’s about figuring where you want to go. And figuring out where you want to go has more to do with rethinking about your objectives. Your objectives for life, for lifestyle, for your work, your career, your relationships and all. Reflect on what is it about the here and now that is uncomfortable; consider what you know you want, and what you don’t know you want.
The same applies to problem-solving. When you feel that you’re not progressing towards the solution, and hence ‘stuck’, it’s time to revisit the objectives. What are you trying to do exactly? Have you contextualised or defined the problem in a way that narrows the solution set such that you are missing out things that can get you your objectives anyways. For example, if you are looking to hammer a nail into the wall, and you contextualise the problem as you “needing a hammer” then you essentially ruled out solving the problem by using any other equipment.
Revisiting objectives helps; and that’s also why it is sometimes difficult to deal with higher level issues by contextualising a problem within a silo-ed context. That would be a good topic of discussion for another day!
Talking about creating net-zero businesses reminds me of the time when I wrote about zero-based thinking about the education system. Only by reconstructing what we want to achieve from scratch, can we try to uncover new innovations and ideas that we have been missing out to think about problems we have.
The agrifood industry supposedly produces about one-third of all the carbon emissions that humans are responsible for these days. We can try to think about where to cut emissions or we can consider how to overhaul things. One of the chief challenge of the world today is that we have been taking the theory of comparative advantage and trade too far, forgetting in part the risk of concentration, and the issues around carbon emissions of the logistics and supply chain. Once we start factoring in carbon costs, we can start considering more about growing and consuming local more because it might actually be worth the while.
So a net-zero agrifood business quite likely will have start from considering crop cycles, relevant crops to be growing for the local taste and preferences, and the techniques for cultivation, processing, and marketing these products. It will have to reduce distribution or tap on synergies with other nearby industries for distribution. It should concern itself with strong focus on quality and selection of robust crops.
Of course, it will also concern itself with minimizing packaging, pioneering newer retail approaches; once again leveraging more on synergies with surrounding industries. Of course, there is still room for trade and exporting but it might be harder especially if the produce is perishable. Nevertheless, the idea is no longer to use economies of scale and efficiency to sell to the mass market and allow the whole capitalist-industrial complex to be built upon heaps of waste and trash.
Can people be talented in terms of their attitude and work ethic rather than in content? I think it is potentially harder to find good people who takes ownership in their work and do them well than so-called skilled people. Because our work and education system increasingly churn out lots of generalists in the market, education stops being a good system for sifting out the non-committed, the slackers and non-resilient.
We want the system to help everyone get a degree, get good jobs and get paid well but we forget that our market system continues to be built on the competitive premise of “may the best team win” – which is to say that at some space between the education system and our industries, something is going to snap.
To move away from creating broken systems or breaking one part of the system while trying to fix another part. You choose.
One of the biggest argument for capitalism and market economy is the promotion of innovation. Competition promotes innovation; and the common incentive of money (as a placeholder for all things monetised) helps to drive that competition. The challenge is that money is based on those who actually happen to get hold of a lot of it, no matter how.
Consequently, the market economy can develop a lot of innovations that are not useful. An additional brand of shampoo, or another design of reading glasses, or another variation of packaging. Yet these sometimes seemingly useless improvements can be incremental steps towards newer, disruptive products. So even during those times when money is seen to be chasing something frivilous, the march and progress in innovation can still be advancing.
Yet we are unlikely to rely purely on the movements in the market to develop innovations that we as humans truly need. Often, innovations that eventually change the world involves some degree of intentionality and sense of mission. The market for innovation isn’t as much about dollars and cents, as compared with purpose and mission.
One of the most power tools that economics have brought to the world is cost-benefit analysis and really assessing what is the constitution of cost or benefits at various levels: individuals, firms, regional government, national government, countries.
Where it fails is the ability to properly ascribe who cares about what. The assumption around rational, selfish agents cannot possibly hold in reality. On the other hand, there is radical inconsistencies when you perform such optimisation on behalf of “government” which is staffed by human agents and with politicians have their own agenda. Over the years, these poor assumptions have made room for more colourful, richer analysis of agents, decision-making units at different levels.
Now if we move our attention to the dimension of time rather than perspective of our agents, we realise another issue. We can assess somehow the cost and benefits of today if we use our imaginations but to stretch it to the future would require even more manipulations. And the uncertainty make render the exercise less fruitful than one may expect.
Alas, we continue to use these tools expecting them to work while not having proper assessment of whether they work or not when the outcomes play out in reality. It is not the issue of calculating those figures but how we incorporate them into our judgment that matters. Yet with limited budgets and resources, most have chosen to opt for a semblance of the exercise, paying a smaller cost but getting almost none of the benefits.
About 81 years ago, Dorothy Sayer, a British writer penned these words:
A society in which consumption has to be artificially stimulated in order to keep production going is a society founded on trash and waste, and such a society is a house built upon sand.
Dorothy Sayers (1942), Why Work
In the article, I’m amazed by the clarity which Dorothy Sayers foresaw the world post-war, with piercing critique of the economic system we have created. The economics that she was schooled in was one of observations of the market, of history and of human psyche itself.
The second world war has ended for more than 70 years now; and as predicted by Sayer, we had immediately jumped back into the business as usual, where work and labour was valued only by money. And this is why we churn out more waste our planet can scarcely handle (both in terms of carbon emissions and lots of material wastage).
Sayer’s remedy has to do with appreciating our work in a different way and valuing it more. And much of it certainly sounds like echoes of the messages around ESG, corporate social responsibility and sustainability these days. Yet she also points to something deeper, points revolving around values of work, of the things we do in society, and value that is created to serve lives and human beings, not abstracted by the market in the form of price signals.
Her full essay can be found here. I confess of course that my shared faith with Sayers help me appreciate the essay in a deep way. If you do care about sustainability and our world, even if you are not a Christian, surely some of the points she brought up should give us a deeper motivation to drive us to live in a manner that is a part and yet apart from this market system?
When is it good for something to be structured and when is it good for it not to be? It’s not entirely clear. I think humans do enjoy a bit of both. At some level, the world is structured but it is also messy and complex. There is land and sea, forests and deserts. But there are also ecosystems and lots of freedom to roam within the realms you find yourself in.
What happens when an environment is too structured? Problem solving becomes playing games, more about figuring out the rules and toying with it than to really deal with problems at hand. This is how the big companies develop more bloat and bureacracy with politics.
And what if the environment lacks structure?Outcomes become less reliable. The randomness can create uncertainty and encourage inefficiency. Yet at the same time it can build resilience.
What do you want for yourself? For your kids? For your staff? How would you structure it?
It begs the question if a company or a brand’s identity is meant to hang around and if so, what kind of values should persist as it grows. Or as the market changes. The idea that Google can quietly push out something and slap a Beta sticker to insulate themselves is attractive when their market share is still not exactly dominant in a new space they are trying to enter. Moreover, the pool of audience they had targeted; the ones who would try something new or be eager to take the tech guinea pig role might no longer be enough to feed the company’s need for growth and scale.
So certain aspects of the company changes and one could say the identity is forgotten but it could also mean they have allowed it to be forsaken in order to pursue something else.
The question is what defines the company’s identity? Is it a way of doing things? That’d be too dynamic. Is it the targeted group of customer it serves? Then it’s growth is constrained to the size of that group. Or the pursuit of the company? But surely the world changes and that pursuit gets altered.
In any case Google is long past their “original identity”; and practically all of those dimensions I mentioned above have changed for them. It is up to them to tell the story of their identity’s evolution and redefine what they really want to keep or discard.
Reducing carbon emissions is about doing less things. But our culture and economy is not used to that. Maybe that’s why it is easier to sell the idea that we must do more new things or different things.
New actions from various parties in the economy requires new forms of coordination. We are not familiar with all that and neither are we familiar with the roles, actions and expectations.
In some sense the talents who used to do this sort of work would have come from those with public policy background but because of the manner the economy and talent flows have evolved in the past few decades, these people now come from everywhere.
For those in research, it is knowledge that catalyses actions. For those in politics it is the voice from the people. And for businesses, it would tend to be what constitutes opportunity, these various pockets of objectives, desired outcomes and tools need to be laid out and strung together.