Brainstorming for pain

As a consultant, we often need to understand the painpoints, challenges and problems of various parties in the conversation. That is how we can add value to work on the problems, identify the solutions, offer the right recommendations.

The challenge to sharing painpoints or problems is there will always be some kind of resistance. It is difficult for parties involved to openly confess they need help; and the problems they identify at first may not necessarily be the fundamental problem. They might also be afraid that the problems identified traces back to themselves or some mistakes they had made before.

So what can we do? Reminder of the objectives of the brainstorm and objectives of the team. Walk through with the team what is the process they have at present to get from their starting point to their objectives. And ask them about the difficulties or bottlenecks at each step along that process.

Hope this general framework for a start contributes to your brainstorming!

Vertical integration

Industrial organisation was a very important discipline of microeconomics for a period of time especially when it came to supporting or counteracting the trust-busters. And then even as economists were just beginning to peer a little more into industries and understand the workings of firms and the strategic thinking behind them, finance came into the picture and all sorts of crazy connections between business metrics and financial metrics became the science of understanding business, evaluating and valuing them.

Strategic value of firms remain relevant in terms of thinking about merger financial models but these perspectives of looking at incremental value and the ‘main case’ of business-as-usual sometimes misses the point of an acquisition or integration. Aside from financial assessment, the whole strategic decision to undertake a merger or acquisition requires not a business-as-usual view but one that involves a vision of the future. Not forecasting the future but taking active steps to create it.

During a time of massive decentralisation and increasing marketisation, with lots of competitors, we can expect that value can be created by spinning off individual business units but when there’s shortage of resources, intermediate goods and services, vertical integration is powerful. And across the sectors, there are bound to be some that is plagued with bottlenecks and resource problems that only vertical integration can solve – which is to say the strategic value cannot be ignored. In fact, that is very often the way to compete in these markets.

When thinking about firms and business dynamics, are we just focused on the financial metrics or do we want to develop a view on the evolution of competition?

Scaling up production

At the recent presentation I gave on ammonia as the new low-carbon maritime fuel, I was asked about the ability to scale production over the next couple of years. I think the time horizon we should be looking at is over the next 8 years up to 2030 and then 10 years after that, how things are likely going to change. We as consultants are often asked to look into our crystal balls and envision the future. We try our best to do it using data, looking at trends, making assumptions and all.

For ammonia, the demand is expected to more than double over the next 28 years. That’s still a fair amount of time, and as long as it grows by a rate of about 4% per annum, the supply will be able to meet demand in 2050. Not inconceivable though from historical trends on the production figures, it seems far fetched. But that is because ammonia has traditionally been demanded only as an industrial feedstock and for production of fertilisers. The people concerned about the competition with the existing agriculture or food industries have misplaced concerns because those are the guys who have been using grey ammonia and perfectly happy to continue to do so. The new demand is likely going to require green hydrogen; which means we are going to start growing new supply of this ammonia from scratch; no legacy issues of waiting for existing facilities to ramp up.

Then there are people pointing out the challenge of getting green electricity which seem short in supply to begin with. That is true to a certain extent; Singapore is having to import electricity from neighbouring countries, using actual physical transmission lines. But most of the time, this is caused by the fact that renewable resources may be scarce where the power demand centers are. If there are far flung locations rich with renewable resources, we can still capture these sites to produce green hydrogen as well as green ammonia, then ship them out.

So I’m actually pretty optimistic about trying to hit those demand and supply numbers over the long time frame that we are talking about. It might well surpass those numbers when the market really takes off. But the key is ensuring there’s clear price signals; and if there’s proper legitimate demand for green hydrogen, then someone will have to certify it and audit the production.

Making things measurable

One of the most powerful ways for people to influence others to do something about certain causes is just to measure it. The most successful example being the creation of GDP as a concept to measure the economy. Suddenly, it displaced the more traditional metrics of population or military might (which involved more quantities than just number of troops involved).

There are always issues with measurements created. They do not perfectly measure the underlying thing we’re trying to quantify for two reasons:

  • The measurement is inaccurate due to poor instruments used (proxies, poor surveyors etc)
  • The measurement does not reflect the actual underlying concept we are trying to quantify.

The first point can be improved over time. The measurement accuracy would not be perfect but over time, as long as the measurement required is well-defined, we would be able to capture the quantity or at least get really close to it.

The second point is trickier and it is going to always be imperfect. And herein lies the danger of trying to make things measureable. The Goodhart law features an important observation we ought to be constantly reminded of as we’re bombarded with figures like GDP growth, inflation etc. It doesn’t mean they are false! But the key is to be able to distinguish the measure from the underlying concept of what the measure is supposed to imply.

Sense of mission

People with a sense of mission in the workplace can be really hard to manage as it turns out. When you work on projects that have only tangential connection with their mission, they might not be motivated. When your projects are not aligned or even falls severely short of their sense of mission, they can cry foul and risk your business. They might have no interest in chasing the short term KPIs or pleasing you as a manager.

And with them, you might risk not getting the exact outcomes you or the organisation desired – especially when the organisation says one thing about their ideals and principles but is trying to do something else. So you might not want these idealists around.

But often, that is the only choice, and they are the only ones worth paying for. There are plenty of talents out there who are brilliant in what they have to do in the short run and deliver on KPIs but lack the sense of mission that the organisation badly needs. Organisations are like humans, and profits can be like good food, mistaken as the raison d’etre of living. People with a clear sense of mission helps put the organisations back on the right track.

Tracing culpability

My colleague alerted me to this recent judgment in Singapore of a man accused of drug trafficking. It made me think and wonder quite how we conceptualise, construct and then attribute culpability.

In many sense, our laws tries its best to identify evidence disinguishing intention from the outcome when it comes to crimes. This is why there is a difference between murder and manslaughter. So there is some kind of penalty both in terms of intent and outcome; and they compound.

Now the point is that intention is hard to tell; if a person fails to achieve an outcome, it is not always easy to be able to demonstrate his intentions. On the other hand, it can be hard to think that an outcome wasn’t driven by some kind of intent. And there is the intent that is long-developed and the one that emerges on the fly. They are all different.

So to what extent do we take responsibility? When we consume electricity from the grid, are we responsible for the emissions that were produced in generating the power? What if we tried to switch to green electricity but the solar panels aren’t generating so we are consuming from the grid? Who should be responsible of making sure supply chains are free of corruption and exploitation? Is the ability to shoulder responsibility based on financial capacity? Knowledge? Or other resources?

At the end of the day, if we managed to reduce our carbon footprint to zero as individuals and yet our fellow man continues to emit and eventually climate changes and affects all of us, are we being held culpable for a crime we didn’t commit and an outcome we did not intend?

Who are we to college admissions?

What is your positioning? What is your strategy in this application? I asked my intern who was applying to certain colleges. I’ve been called upon to put up a reference for this young colleague and I really wanted to help, as best as I can.

So me being the strategy consultant I am, asked those questions. It drew a blank. And of course, it was a little confusing for someone fresh out of A Levels to think of “strategies” around college applications. Or maybe not if you’ve so much help and advice from those who have gone before you. That, I feel, is exactly what those families with resources are able to equip their younger ones with.

Maybe I was wrong, that we need a strategy or positioning because the only positioning should be to be ourselves. It will take more excavation of ourselves and asking who exactly are we rather than artificially creating a persona we must fit into. In being able to “position” our application as much as possible as being true to ourselves, might be the most precious thing you can give to the college admissions office.

On the ground

I grew up with a diet of Chinese dramas about emperors and nobility or the martial arts world. Often, an emperor or noblemen travels incognito in their own territories. Or a martial arts expert who blends into the cityscape as just a beggar. Great and amazing people who turns up as ordinary. And that kind of being on the ground was actually celebrated, and seen as a positive form of leadership. It was something admirable.

Yet when I’m grown up we don’t seem to be taught to feel this way about being on the ground. Or about being management; there’s always images of cushy offices, well-stocked pantries, brainstorming rooms, being in meetings. Do MBA programmes teach their students how to be on the ground? Or even the benefits of all that?

We don’t hear such stories of management being on the ground in our modern day life often. The latest story I heard that is remotely similar is the CEO of Sheng Siong supermarkets going down to their Tanglin Halt branch to shelf food items when they were shorthanded. And he apparently does the ground work very often. There had been incredible stories about how Sheng Siong staff are cared for, and also care for one another. But if this was never a metric, why would the management bother? Shouldn’t we be challenged to consider being ‘on the ground’ as a metric or attribute leaders need to meet? As a culture, shouldn’t we redefine what good management should look like?

Self-sufficiency

When is self-sufficiency attractive? Or rather, why is it attractive? Does it have to do with trust, or lack thereof? Or does it have to do with pride? Or maybe these concepts generally go hand-in-hand. In Singapore, where our resources are scarce, it is difficult to be self-sufficient in things. We import almost all of our energy and food. And we learnt a long time ago that security can be achieved from diversification.

Same principle when it comes to an individual and recognising no man is an island. We have to work together and that’s why we form societies. The greatest beauty of the market economy is in allowing the greater society to be able to work together and co-create products, services in service of individuals that make up the society. At a global level, that idea has helped to enhance global collaboration to a large extent.

Trading relationships helps to stabilise politics as well; though of course, that is a big source of soft influence, and the challenge of forming connections and relying on others is that we lose some degree of our independence. Straddling that is important, and demystifying that allows us to be better leaders, not just as individuals but as a society, as a nation as well.

Google & Climate

Google left China and soon after that the shares of Baidu on NASDAQ soared above that of Google, going above 600 USD per share. The Economist reports on the message Google’s departure leaves for businesses in China, trying to warn business people that it is still not that easy to do business there.

Yet as Fortune explains, it’s not entirely about business. Beliefs of the founders of Google mattered, it seems. Well, I guess there is a concoction of complex ideas there but to simplify matters, let’s just say Google don’t agree with China and realised that dealing with China might entail too much costs (both in the business, social and emotional sense) and so they have pulled out. Yet they didn’t exactly pull out of the Chinese world, because they merely made Hong Kong their headquarters for the Chinese Language Google.

Meanwhile, it appears as if Climate Science is also under similar sort of mess. People are not agreeing with each other once again and making excuses here and there. But I believe The Economist makes a good point when they say that the uncertainty is precisely what justifies our efforts at combating climate change. The uncertainty should be what binds us together rather than become a point of contention. It’s stupid to agree that the science is uncertain and imprecise and then go on to squabble over what is the ‘true findings’ or ‘accurate data’.