Mar 21, 2012 | Change, Leadership, Strategy
Marketing is all about defining the problem we want to solve, poor definition leads to poor analysis and solution implementation. In the climate “debate” to give it more credit that it deserves, we have absolutely failed to include the capital value of the natural assets we currently have, considering only of the value of the current products that are made.
The whole debate about the need for change in the economy in response to climate change is about the costs that will be imposed as a result of those measures.
The classic narrow minded management mistake of believing the future will be an extrapolation of the past has driven the debate.
The “carbon tax” label has ensured that there is little else considered in the pubs, and around the BBQ’s that determine the public mood, and is a really poor piece of marketing by all concerned, except perhaps the opposition who are just there “to oppose” with no responsibility to be responsible.
In the past I have expressed the view that putting a price on carbon is the most easily managed form of insurance against adverse impacts of climate change should it be a reality. That still seems to be the case to me, even though the bumbling in Canberra ensures compromises that emasculate the cost/benefit, and the public mind is now firmly in opposition to imposition of a carbon price.
However, there is another dimension.
Just ask yourself what is the current value of discoveries that will emerge from natural compounds in the future , all of which come from the forests, swamps, sea, and estuaries around us. What is the value of retaining the natural capital that produces oxygen and water?
Because we have not really considered these things, and because we just assume they will continue to be essentially free as they have been to date, it would be a mistake to believe the past will just continue when we are busily changing everything else.
As a part of the debate, we should spend time considering the value of the natural capital we have, assigning monetary value to the olive tree plantations, as well as the olives they produce, simply because they have values beyond the olives, they produce wood, oxygen, habitat, and even a place to have a picnic. This can get pretty complicated, but the data sets are emerging that enable accurate mapping and assignment of values.
ARies or “Artificial intelligence for Ecosystem Services” is an organisation setting out to develop the methodology of assigning values to natural capital, we would do well to try and redefine the debate from the equivalent of a schoolyard brawl to one that uses our innate capacity to be creative and extraordinarily adaptable when we dismiss the power of current vested interest.
Mar 20, 2012 | Change, Innovation, Strategy
On March 14, IPART, the NSW Utility regulator made public a decision that put a price of 6-8 cents for energy exported to the grid, compared to the current cost of 30-44 cents for any power consumed from the grid.
The argument is in two parts, if I can put a complex report into a few dot points:
- The distribution infrastructure, poles & wires make up over 50% of the costs of electricity, and
- The times of peak demand do not coincide with times of strong sunlight, and therefore the power imported to the grid is of less value.
It seems to me that vested interests have got hold of the argument.
If it was truly that we were seeking to reduce our reliance on coal fired power stations, the ones the pollies tell us are better in private hands so the capital requirements are not a drain on the public purse, would it not be sensible to do two simple things:
- Use tariffs to shift the time of peak usage, (This assumes that households are the drivers of peak demand, which seems questionable to me, industry is a much larger user of power than households) this simply means people put their dishwashers on before they go to bed, not as they finish the meal, and ditto for dryers.
- Encourage the “crowdsourcing” of power, which takes the pressure off the network systems. The march of technology seems to imply that in a very short time we will have cheap batteries that will be able to recharge during daylight, storing power for use later. Put simply, put the generation points next to the consumption points.
We mostly accept that crowdsourcing of all sorts of things is the most efficient way of getting them, from ideas, to finance to goods. So why don’t we do it with power?
Why do we insist on insulating a legacy system that we are moaning is from the last century from the winds of change, when the alternative is obvious, and policy decisions elsewhere seem to indicate that the contrary outcome is in our long term interests. This is not necessarily an argument for subsidy, that is an emotive word, but it is an argument for reducing the responsibility for power generation from the public sector to those using the power, taking advantage of C21 technology.
Mar 9, 2012 | Change, Lean, Marketing
Out with the old mass market advertising and business model, and in with the new.
I shave, it costs a fortune, so much that I switched to disposable shavers without all the fatuous claims and high prices of the big brands. Each morning when I look in the mirror to shave I see a 60 year old bloke, a bit worse for wear, the square jaw rounded by too much living, extensive forehead, and none of this will be changed by using a 5 dollar blade instead of one that costs 50 cents.
However, I never saw the disruptive marketing opportunity demonstrated by this story about the Dollar Shave Club, but it is blindingly obvious when pointed out, in this case by my e-buddy Bill Waddell.
What other categories are so ripe for change?
Shampoo & conditioner, household cleaners, personal hygiene, are the three that jump to my mind, all associated with vanity.
The FMCG business model has changed, and for high value products that are easily mailed, like shavers, is breaking. A few categories are yet to have their margins decimated by a combination of house-brands and direct e-sales, but it will not be too long. Anything that can be sourced via the web, where the savings are sufficiently significant to off-set the inconvenience of having to remember to make a few clicks on your device, is at risk.
The fancy, expensive nonsensical advertising appealing to vanity rather than real consumer benefits, that support these products has had its day.
Mar 2, 2012 | Change, Strategy
Will Moore’s Law, validated over nearly 50 years in digital technology development, also apply to renewable energy? This notion has interested me for a while, and it seems that currently our consumption of fossil fuel is a mirror image of Moore’s law, the challenge is to turn the thing 180 degrees so it works in our favor.
Early days, but the jury must be considering the proposition, as the development of technology starts to make an impact, even as new sources of hydrocarbons emerge, from coal seam gas, and shale oil, and may tend to ease the pressure for change in our energy mix, particularly as governments feel the fiscal pinch.
Amory Lovins of the Rocky Mountains Institute has been a persuasive advocate of alternative energy, his 2005 talk on TED has been widely spread, whilst recognising that fossil fuel is the foundation of first world prosperity, and will not move aside easily, so sensible strategy accommodates the evolution of one as the other ramps up. His current treatise “A farewell to fossil fuels” is as logical and convincing as his previous jottings.
In Australia, the debate has been absolutely debased into a school-yard standard populist name calling and distortion of the facts. It is clear change is coming, every industry evolves over time, it is just that energy is so fundamental to our prosperity, and so poorly understood, and so multi-dimensional and emotional, that it makes for good pollie fodder.
Feb 16, 2012 | Change, Innovation, Social Media
The world is full of paradoxes.
Apple, the ultimate closed system is now again, the worlds most valuable company, but was started by two blokes, one of whom was, and remains an advocate of open systems, Steve Wozniak, and the other, Steve Jobs, a passionate and demanding driver of closed systems, with commercial windows. It will be enlightening to hear the analysis of market share and profitability as Googles open Android enabled devices pull away from Apple’s closed version in mobile devices
IBM almost went broke trying to hold everything inside its business model, then opened up, completely revised their business model, and emerged from its near death as a much stronger business. Wikipedia 1.0 was tried as a closed system, but succeeded only when Jimmy Wales relinquished enormous amounts of power to the crowd. Similarly, Linux was started on the bulletin boards of the early web, by a small group led by Linux Thorvaldsen who simply wanted to get away from the control, then exerted by that early, and still, proponent of closed systems, Microsoft.
So what are the lessons in all this?
- Simply that there is no one cookie cutter model that can be applied, that differing models suit different circumstances, and times.
- Nothing lasts forever, the next iteration will call into question all the assumptions of the previous model
- The model is evolving all the time, trying to lock it in is a bit like Canute’s efforts with the tide.
Feb 8, 2012 | Change, Management, Operations
It seems paradoxical to me that the most successful company on the face of the earth over the last decade, one that has been successful because of their astonishingly good product design, have not leveraged that innovative capacity into their operational design.
I refer of course to Apple, whose profit in the December 2011 quarter was $13.3 Billion, and they became, again, the most valuable company in the world.
The woes of Apple’s supply chain, particularly Foxconn have been extensively covered, and most, if not all of Apples customers would be familiar with at least a small part of the story.
Around the developed world, and increasingly elsewhere, it seems consumers are developing a conscience, they care about more than just product performance, and are evolving to make purchase decisions that includes some consideration of the “integrity” of the product concerned, from organic food, to sports shoes, to coffee, and now to electronics and gadgets.
Innovation is way more than just making the products better, it is also about making the supporting structures better, improving the whole operational chain, not just the consumer facing end.
Imagine the innovation Apple could bring to the manufacturing supply chains they employ if they took a small piece of their enormous and well deserved profits from their product design, and focused on operational design. Instead of observers using Toyota Production System as the benchmark, in 10 years it would be the APS, Apple Production System, and their profits would have soared again.
Oh, by the way, if Apple managed to create an APS, their improved profits would come not just from their superior design of the whole value chain, their APS, but because consumers do truly care about the integrity of what they buy. In that event, a few of the building blocks for a re-emergence of manufacturing as a economic driver in the US and Europe would be put into place.
