Tag Archives: business

Green race

The beauty of the market system emerges when there’s competition along the right dimensions just when we all need them. But competition doesn’t always require a market economy – there’s always limited resources, time and other constraints that requires us to somehow compete. There’s also reputation, attention of people and recognition that drives us to compete. In the 20th century, the space race during the cold war led to phenomenal technical and technological advances which powered the growth over the 21st century.

There was an alignment of political, and public interest. The economic interest was not entirely foreseen and only realised much later. But it seemed that entire economies of Europe, US and Soviet Union were engaged in this mission. It seemed like a conflict and perhaps competition of egos but eventually worked for the good of mankind.

Today we need to shift this mission for space to a mission for mankind on our planet. Developing a green race probably takes a good alignment of the public and political interest, as well as some kind of competitive tensions. We are beginning to observe this with first sound of the trumpet from US with its IRA focus on Clean Energy and climate transition last year; and then Canada followed with its own programme to fund indigenous clean energy projects. Australia’s announcement last week with a highly targeted programme focusing on hydrogen reflects the same sort of tension around the competition to attract the competent hydrogen players to develop required projects in their backyard.

As an energy transition consultant, I welcome this. As much as we might think the competition can result in duplicative efforts and inefficiency, it is what we need to align the incentives in the market with the interest of the overall society. Moreover, harnessing the public interest and pressure upon this topic through directing the workforce and human capital towards the low-carbon economy is much needed. The green race should hopefully create the necessary ecosystem we need to drive further changes and ensure the climate transition.

Being a market leader II

Last year, I wrote a post about market leadership. And it is interesting to see the move by Home Depot to increase salary as an investment towards increasing market share and dominance. Retail and service are being automated more and more with the improvements in technology and rise of AI. It is not so much about the existence of the technologies as they had existed for a long time. But the investment made over the years have accumulated and mass acceptance have reached this stage where broad-based adoption becomes increasingly common.

In the situation where capital investment in machines and technology becomes a more level playing field for companies, the edge that companies can get from replacing humans with machines becomes smaller. But it takes market leadership to decide that the new basis of competition is probably not about having more automation than the competition but to be able to attract and motivate the best frontline workers serving the customers and making their day.

Market leadership is not about following what the rest of the industry is doing but deciding what is the next basis of competition and focusing on those parameters. Scale helps but more critical is the courage and strategic thinking of those in charge.

Superconnections in organisations

Organisations work in silos and we often talk about breaking silos because it is a real problem. What is interesting is how silos form naturally and what keeps them functioning and feeds the way human behaves. The truth is that majority of people connect well only with a handful of people around them. It’s all they need to survive and even thrive. Organisations are set up for people to do their best work each day rather than over a long time horizon, and rightly so. Silos are natural tendency and efforts to resist them will be inefficient in short term.

The real solution to breaking silos is having superconnectors, being able to identify them in organisations and bring them into roles that allows them to help arbitrate across silos. They ought to be put in charge of coordination problems and given the authority to enable those connections. These people could also take the form of external consultants who have no stakes within the organisation.

Mathematically, clustering is just a natural population, psychological phenomena amongst people. Yet with just a handful of “super nodes” that connects across clusters, the other nodes within clusters can be quickly brought together and average degrees of separation reduced dramatically and really quickly.

Organisations need to recognise the role of these superconnectors that enable silos to continue working alongside in ways that are productive and non-duplicative. They allow everyone to remain efficient even as they ensure that the organisation overall operates strategically in the right direction.

Age of mediocrity

Each leap forward by technology is accompanied by fears around humans becoming or being mediocre. And most fears are basically exaggerated versions of reality as it turns out. So indeed, mechanisation has reduced the need for physical human labour and it has made majority of mankind physically less able than our forefathers but we’ve also been healthier and lived longer lives.

With the rise of AI, there’s fear of depending on it and concerns in schools about teachers losing their jobs or students outsourcing their work to ChatGPT. Lousy journalists who had been churning out mediocre pieces of work can be now replaced by AI, customer service representatives that don’t know their stuff can be replaced by chatbots and so on. The problem isn’t really about chatbots or AIs, or quality of humans. It is the issue around industrialization specifying standards, creating processes and expecting humans to fit into that.

We should begin to see all of the roles we humans can take as something relatively temporarily. That does not mean we shouldn’t invest in our craft and up our skills but that does put into question where is the boundary between human and machine in the work that we do. Measured in a single dimension, machines and technology can always be optimised to eventually deliver better performance than humans. The issue isn’t human’s mediocrity because there are mediocre workers and they’ve long been easily replaceable. Seth Godin recently talked about the matter on his podcast through two episodes (here and here).

The fact that AI frees us up from having to do the basic, minimum kind of work should present an opportunity for all of us. It might threaten some of us, but only if we allow it to.

Small firm in energy transition

The energy transition exposes the weakness of the current energy system of the world. It reveals how much we are reliant on a few resources to draw our energy to power the economy despite how dispersed and distributed energy resources are.

Take for example a rural area in Indonesia, where there are small farms and villages – and they are relying on diesel or kerosene refined and fetched from some far flung areas in order to power their generators or farm equipment. All the while just sitting beside heaps of bioenergy resources that are seen as waste.

The emphasis on low-carbon economy helps us recognise that we may have to start shortening our supply chains and reducing its complexity if we want to decarbonise our economies. Part of this has to do with how stuck we are between the CAPEX and OPEX distribution of the manner we consume energy. By consuming fossil fuels, we shift the burden of costs mostly to the OPEX since equipment are mostly standardised and so they are cheaper to procure and use while we adopt the long supply chains needed to achieve the delivery of fossil fuels on regular basis.

If we were to shift to shorter supply chains where the distributed energy resources were consumed instead, there might be more local equipment needed, the CAPEX might increase. But OPEX may actually decrease because now you’re saving on storage or disposal costs of some of the feedstock that might go into making the fuel you need.

If the world is to develop shorter supply chains, it will need more small firms. And governments all around the world needs to know better how to encourage, support and empower small firms to rise up to the challenge. We need local firms who are familiar with the local constraints, context and needs. They need to be upskilled technically to rise up to the challenge and generate solutions.

This mode of development is vastly different from the old school model of having a big multi-national firm come into a less developed location to help ‘develop’ it by reshaping local demands. Aside from how much this harks back to colonialism, it is creating long supply chains which seem to create more jobs but is not doing much for the climate and environment.

Coffee stories III

Continuing on the theme of business models, hacking the target audience in multiple dimensions, and also incentivisation by government for social objectives. More governments can learn from this but with the clear objective of advancing social good and making sure that the help they render to the populace lands in the right hands. And that people are behaving in the socially desirable direction.

This is different from the typical incentivisation that is driven by cost-benefit calculations of corporates, and enabling companies to cross certain cost hurdles to invest in certain activities in an economy. The sort of incentivisation that we are operating on here deals with longer term, more strategic directions that the government is driving at – not just trying to hit GDP growth targets or stimulating the aggregate demand of the economy.

And these strategies also gets at cultural shifts and change. Done properly, they create a new, better culture that treasures the future. That does not claim the present or the short term at the expense of the future. Parts of this incentivisation could be about a mixture of regulation that creates demand while subsidisation that buffers the costs of compliance. For example, applying a hefty carbon tax while subsidising decarbonisation technologies and programmes.

It’s not about sticks or carrots but sticks and carrots.

Coffee stories

When I was doing my masters in New York, I was drinking about five cups of coffee a day. On occasion, it could be five cups of double shot. I had this coffee subcription app that allowed me to order unlimited normal brews at $45/mth and those specialty coffees at $85/mth from a base of nice cafes around New York city.

I came from a coffee drinking culture in Singapore. I’d order my Kopi C each morning with breakfast and in those days, these drinks were less than $1.50 (USD) a cup, unlike the >$5 barista coffees in New York city. But strangely, I consumed more coffee than I ever did in Singapore because of the business model.

Business models are interesting and in some ways, they hack our demand curves, taste and preferences by targeting aspects of our preferences that the economists were not able to incorporate into broad demand analyses. And there are entrepreneurs, marketters who thrive on coming up with such hacks.

The issue about hacks and short term profits is that they accomplish little worthwhile in the longer term. And there are far too many short term studies in the social sciences that gives us a lot of “scientific results” which may be spurious correlations or short term correlations which do not persists. We need to engage our talents is more long term thinking and challenge them to deal with the longer term problems of our economy and societies.

Con-sulting

Chanced upon Mariana Mazzucato’s The Big Con in the bookstore today and took the chance to read a bit of it. I first heard of the book from the media and my curiosity was piqued, not least because I’m a consultant myself. The firms highlighted by the book are the usual big consulting groups and Mariana’s main area of attack was on their work for governments enfeebling the public sector and exercising undue influence on the decision and politics of countries.

Being focused on the energy transition, I thought perhaps that my work is less implicated by Mariana’s attack but having been a public servant myself, I do wander if the government contracting out work to the consulting industry is a problem in itself. I think for Singapore, we can safely say that Mariana’s attacks don’t have teeth because the public sector in Singapore maintains a lot of the critical capabilities and information even whilst drawing upon consultants to help drive forward its work.

The Big Con then has in mind very specific governments as targets and in some sense, cherry-pick specific stories, case studies and situations to make its argument. Nevertheless, I still empathize with what the authors are driving at and the change they are hoping to make. Mariana Mazzucatto also wrote The Mission Economy and while I have not read it, I understand the underlying ideas and how The Big Con interacts with some of those fundamental notions. I do think that governments and more actors in the economy needs to get together to galvanise the economy and wider society to collectively embark on the joint mission for a future that is worth creating.

Having answers

In school, the guy who raise his hands to answer a question gets praised. The one who puts up his hand to ask a question feels like he might have disrupted the flow of a lesson or wasted everyone’s time on something that no one seemed to be interested in besides him. Besides, there never was a quiz by the teacher where credit was given to a student for asking questions.

Yet the older I got, the more I realised that having answers is overrated. The ability to ask the right questions and discover new ideas or thoughts from there is so much more important. The journey of discovery starts with questions and not knowing what to discover. The incentives that our education system designed was more about ease of creating robust, scientific measurement without necessarily aligning with the needs of students going through the system.

There has always been a question of whether schooling and the education system is ultimately about training and uplifting people or just measuring and sorting them. I’ve previously pondered over this quite a bit – whether we intend for the system to produce a pooling or separating equilibrium. It is still a question on my mind and I think it’s a conundrum for systems all around the world.

Banking relations

Banking business is about trust and a lot of traditional trust is based upon relationship. And so it is not surprise that old institutions are tied in deep and strong relationships that we may not always be particular conscious of in trying to create a future for our economy and our world.

In this funny video, we are reminded of the bits of the iceberg we don’t see in all public communications of people, companies and governments. And in our bid to drive change, such exposure continuously played out, spoken of, reminding the public, every staff of financial institutions and workers of oil companies ought to put some tension for greater change.