Tag Archives: business

When oil saved the environment

In Seth Godin’s new book, This is Strategy for, he had a chapter (the book has over 200 chapters, all of them short and highly readable) on killing whales.

He documented the rise of the whale-hunting industry in the 1800s where sperm whales were hunted down for their blubber. The activity was both dangerous and lucrative because a single sperm whale’s blubber could yield many barrels of lamp oil. The demand for lighting onshore and offshore fueled the whaling activity.

For a time to the mid 1850s, it seemed like they could just go on and hunt sperm whales to their extinction. Yet the earth today still has sperm whales. Thanks to the discover of petroleum and hence the advent of keroscene used in oil lamps. The cost of keroscene was much more competitive than lamp oil made from whale blubber and the petroleum industry was also costing less human lives.

Climate solutions that displace fossil fuels would need to achieve cost reductions to scale. But we could all inprove their chances by removing fossil fuel subsidies and pricing carbon. Of course, that will “hurt” the cost of living for many people. But if we think about it at system level, it is more about a sort of attachment to the current status quo of how we value different things, and refusing to change that.

I don’t think we could derive any sort of moral authority from the market to say we’re producing something that destroys our future because it is cheaper. We may not have a future to spend that surplus savings on. At the system level, we will have to help one another cope with changes.

Waiting for standards

There are lots of excuses to choose from for a business to avoid the sustainability pressures upon them. Especially those who doesn’t want to have anything to do with activities that are not geared towards generating profits. One of them is the lack of standards in terms of what constitutes being sustainable.

And so the wheel turns and regulators churn out a whole bunch of different kinds of standards: CSRD, TCFD, GRI, CDP, SASB, UN SDGs – and all of them are basically reporting standards.

Technically they don’t tell you exactly what being a sustainable business is about; but they do emphasize some aspects and bring to fore different aspects of the business that may not be captured in more traditional business disclosures.

Nevertheless, no one is going to be able to tell you what is the ‘sustainability standard’ threshold that marks your business as being sustainable. There are ways to look good in each of those disclosure standards of course – and businesses sure knows how to cherry-pick the ones. The whole industry could even gear up to pander to that kind of work.

Yet at the heart of building a sustainable business is really considering the relationship of the business with everything else other than profits. And only you as the leader, the business owner, the manager, the employee can make decisions that determine how sustainable the business it. The metrics that you care about will naturally be tailored to your business.

You don’t have to wait for some regulators or the ‘market’ to make up their mind.

Analysing externalities

In public finance, there are multiple approaches to determining how to use the public budget. There will always be the standard expenditures that will have to be costed in, the overheads to cover the public service.

Then there are past liabilities that will need to be paid for. But then, each time, the government can make a decision whether those liabilities are still worth their while to continue financing.

After which, we determine the infrastructure and other investments essential for development of the society. When it comes to investing into infrastructure, the government will definitely need to meet needs, but they might have to ask themselves what kind of social benefits are generated in order to work out whether the price tag for fulfilling those needs make sense.

This is the realm of externalities. And the reason we care about that is because the free market would not. If private benefits exceed private costs, then the free market will find its own means of fulfilling those needs. When there are externalities, the government has to step in. From a business point of view, where there are negative externalities, it is a revenue-opportunity for the government. And where there are positive externalities, the ruling political party can get some political mileage out of it.

Such is the interaction across politics and economics that is worth a bit more attention.

Feature or bug

The only time you have to say something is a feature, not a bug, is when it appears to be a flaw. The notion behind this idea is that there was an intention. That aspect of a software, or product design, or service experience was not supposed to be a flaw but an intentional part of the design. It assumes there was an intention, some objective being served.

The reason people might think it was a bug could be because:

  • They had different objectives from that of the way the product designer had imagined the objectives of their users to be
  • They were not the target audience of the product/service
  • They were forcefully making a product fit their needs
  • They did not know how to use the product – which could reflect badly on the UI design or the UI of whatever instructions needed
  • The product had a poor product-market fit
  • The product designers were giving excuses for themselves

There isn’t supposed to be a debate whether something is a feature or a bug. It should always be resolved by the one who had designed the product/service. If it was a result of something being overlooked, it is a bug, and pointing out that it could be a feature is just an excuse.

Who foots the bill?

You bought an expensive foie gras meal and paid for it but can’t finish it. So who foots the bill?

If you finish it and get sick as a result? Is the doctor’s fee part of your foie gras bill?

If you don’t finish, and it goes into a food waste heap that requires public subsidy to manage and clean up, are the taxpayers footing your bill?

Would knowing all that change your decision to buy that foie gras meal?

What if you knew the future path of your choices? Who would you allow to foot the bill? How far ahead would you care about the consequences of your actions?

This is a story about externalities, cost and consequences. Who should care? Who should we care for? How much should we care? No one teaches us all these? We have to work them out and make decisions.

The corporation

The faceless corporate had been painted as the enemy of man in popular culture and broader artistic endeavour. The idea is haunting. Some kind of machinery driving its machinations through its cogs and gears to achieve some broad vague goal that sounds appealing in concept but nefarious in practice.

Of course, the reality is that it is not just the corporate that can behave and seem this way. There is the bureacracy that is a manifestation if a “government” or even a non-profit. There is also loose organisations centered on single-dimensional stuff (hobbies, interest groups, certain kind of political activism, etc).

The point is this idea of a “corporate” or some kind of machinery is anti-thetical to being human. Why would that be so? Here’s the tricky part.

We are all complex and multi-dimensional that in creating singular objectives or goals and trying to relentlessly pursue them reduces us to something less than human. And those “big entities” essentially embody this limited dimensionality compared to what life really is. Same goes with money, when we make everything in business about that. We reduce richness with riches. What a shame.

We don’t have to be anti-corporate. But we probably would do better to understand why its reach should not be all-extending.

Mandates vs voluntary action

We all want to make the world a better place. And in Singapore, we’ve somewhat cultivated the idea that we need to force people to take the right action or they won’t. Often it is because they will point to others who have not done it and say ‘why don’t you ask them?’

The people who failed to bring their trays back to the shelves at the hawker centres before NEA’s mandate had excuses – they were busy, the cleaners had to have something to do, they forgot, and so on. But it was never clear enough that they ‘had to’ do it. Once the mandate and the penalties came, it was clear. As clear as day. So, mandates make requirements clear to a large extent. It makes people sit up and recognise they had to take some action. More so than the consequences of dirty hawker centers, or when you have to take over a messy table.

What can we learn from this that we can apply to climate change?

If we don’t feel hit by the experience of a messy, unclean hawker centre, it is even harder to feel like we need to take any particular course of action just because we have a few more hot days. After all, one could turn up the air-conditioning (which worsens the problem at the system level). So mandates are needed to help with the coordination. The direct consequences alone are insufficient because of externalities, so the government should step in to ‘make them feel the pain’.

Significance of work

What does a job mean for you? What is work to you?

It used to be just tasks or collection of tasks that had to be done. The tasks were easily connected to the end goals.

Then things got complex and the tasks were clear but it felt more distant from the ultimate outcomes that the whole lot of people were trying to achieve.

Finally we did away with task-based identification of the work and changed parts of the work to be based on creating some kind of outcomes. In trying to connect the outcomes to the person, we lost the clarity on the specific tasks required. That can lead to undisciplined exhaustion of energies and burn out.

On the other hand, for all the jobs where tasks can be clearly specified, technology has been used to displace human workers. Leaving humans to only supervise or check through the results. In fact, at some point even the quality checks can be automated.

Where does that leave us? What does that mean about the future of work?

The future of work can be meaningful if we resume our human role of caring for who the outcome of work is for, and the manner in which the work is done. We carve out that higher role for ourselves by being capable of continuous improvement that focuses on the final objective of the work itself – the satisfaction of the user.

Promoting into oblivion

One of the big struggles of corporate is that when you have clearly defined roles where there are job titles, managers, and the ‘managed’, there is this false sense that you get promoted because you’ve proven yourself. Now, you start being required to work with entirely new skills, and you no longer have to use that much of what you were good at.

The tricky bit often in management is that the corporates are not sufficiently focused on training and bringing you up to the level required because mass training is easier to justify than just training a handful of people. Moreover, in many organisations, being in management has a lot more to do with handling internal politics and jostling for resources than to do with getting the real work done. Politics is of course important because that enables the delivery team to be able to deliver but if you just got promoted from being the best performer in the delivery team, you’re almost completely oblivious to what this new management role really is about! Not to mention growing the skills overnight to be able to do the new job well.

Some organisations, like the military that operate based on the old British aristocratic style tries to overcome this problem by having two classes within the service. The commissioned officer and the non-comissioned officer tracks are ways in which you focus one group on the ‘leadership’ (really, it is more management) skills. In contrast, the other group are more focused on ‘operations’ (or what is deemed more as ‘follower’ type) tasks. Of course, reality is a lot more complex than that but this form of organisation, while crude, aligns expectations and allows the specialists to focus on the frontline nitty gritty and have the ‘leaders’ focus on the big picture elements. Over time, though the commissioned officers have ever been trained in the basics, they lose their ability to really keep up with the changes on the ground to be able to command at high level.

Yet that form of organisation is probably not ideal as it can be a bit elitist and does not incentivise people to perform in ways that allows them to utilise their potential well. It boxes people into neat categories that serves the organisation more than the individual, and at some point, a lot of people would give up on the system as they find themselves uninterested in being thumbed down as second-class citizens, or being forced only to do the big ‘leading’ kind of stuff.

The market presents a new way of organising people, and as our markets develop, I’d expect a lot more small tiny firms to exists and serve large swathe of people when technology enables them to.