stargeek
ASHOKA: A LAUNCHING PAD FOR SOCIAL ENTREPRENEURSASHOKA: A
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 In an article in this month's Fast Company, Keith Hammonds profiles an unlikely hero of social and environmental progressives: Ashoka founder Bill Drayton. Drayton, a former Director at McKinsey and the Environmental Protection Agency, is now a philanthropist with a difference: Ashoka provides a 'leg up' to those with vision, creativity, entrepreneurship and a strong ethical sense, by making them Ashoka 'fellows', who receive a stipend, funding for project costs, and the legal, management, intellectual and networking support of the Ashoka team. From a modest start 25 years ago, the group has grown to over 1500 fellows in 53 countries, including some highly celebrated and astonishingly creative social entrepreneurs who are household names in their home countries. The support team includes representation from McKinsey (management consultants), Hill & Knowlton (PR) and the International Senior Lawyers Project (legal counsel). According to the group's website, "Ashoka Fellows are individuals who share qualities traditionally associated with business entrepreneurs — vision, innovation, determination, and long-term commitment — but are committed to systemic social change in Ashoka's areas of interest: learning/youth development, the environment, health, human rights, economic development, and civic engagement. Fellows receive up to a three-year financial stipend to allow them to concentrate fully on their programs, and in addition may apply for supplemental funding for collaborative projects and are eligible for training and technical assistance." Here are a few examples of what Ashoka fellows are doing:
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 If
you're like me, you at least take a serious, and guilty, look in the
Organic and Vegetarian section of your grocery store, but may be put
off by the significantly higher cost of these products compared to
less
pure, less wholesome, meat- and dairy-containing products. Part of
this
is due to lack of volume of organic, vegan and vegetarian products,
part of it is due to the fact that it takes more work to produce them,
and part of it is due to the fact that many of these products are
heavily processed and packaged. You can find these products in bulk,
at
cheaper prices, in natural/health food stores, and sometimes at local
farmers' markets, but for most of us that means adding additional
stops
on your shopping trip, since you can't get all your groceries at these
places. A recent study indicated that the exploding European demand for organic products will only be sustained if the price premium relative to non-organic products is held to no more than 20-25%. My guess would be that North American consumers are much more price sensitive, and premiums will have to be reduced to no more than 10% to attain major market share. Before botanic (meat-free, dairy-free, chemical-free) foods can start taking a big chunk out of the grocery market, and really start to have an impact on the quality of the food most people eat, on public health, on our beleaguered environment, and on the despicable practices and animal cruelty of factory farms, we need to solve these problems. That means we're going to have to be willing to be innovative and open-minded about both the process and products, provided this doesn't compromise the quality of these products or the nutritional, social and environmental objectives that are behind many people's choice to adopt a botanic diet. Last June I proposed a 10-point plan to take botanic foods mainstream:
Supposing you're an aspiring entrepreneur and you want to help meet the need for inexpensive yet wholesome, widely-available botanic foods. Points 3, 5 and 8 of my 10-point plan above would be excellent starting points for a new enterprise. My articles on Natural Enterprise can help you through the process of building the business, and here's a few additional thoughts specific to botanic food enterprises:
If you're not an aspiring entrepreneur, this is still an excellent time to Take the VegPledge, and learn more about the value of a botanic diet. |
 I've written recently about the future state of business, a world incorporating powerful, versatile social networking tools. And I've played with most of the first-generation social software and read volumes about how it will, or won't, work in business and ultimately affect our daily lives. The concept is wonderful, and the technology is fun, but the tools developed so far suffer from three fatal flaws:
In an earlier post I stressed the importance of allowing each individual to maintain and organize their own content and their own networks their own way. At that time I said: "When you force people to adapt their mental models to a standard model (inevitably a complex one to accommodate a variety of specifications), a standard model that is dictated by the technology and its designers, you will get no usage, or at best reluctant, inefficient usage." If I were start all over again, to design the second generation of social software, it would be transparent to the user, wouldn't require any submissions, wouldn't keep any content in any central location, and would be so simple to use that even people without computers would use it.  That
may sound like a tall order, but it really isn't. It would be like
building a house. Let's start with content, the foundation of the
house. Rather than getting people to submit stuff, we need to help
people to organize the personal information they already have, and
then
harvest it automatically. When I talk to people in the front lines of
just about every business, from proprietorships to large companies,
they confess their filing cabinets, the document folders on their hard
drives, rolodexes and other personal collections of information are
chaotic and impossible to find things in. They also say no one ever
taught them how to organize these personal repositories so that
content
could be found easily. Everyone just assumed that the skill to do this
comes naturally. So first order of business is personal content management. No
rules, no standards. Just some simple
tools that allow people to organize all the information and documents
they have into some order so it can be readily found again when
needed.
Let a whole bunch of PCM tools loose on the market, and let them
evolve
as people learn what they need and what they don't and what
organization makes sense to them as
individuals. Weblogs would be a good source of ideas for the
design of PCM tools, since essentially that's what blogs are.The next floor of the house is the metadata. Software developers would work with the users of individuals' content other than the individual him/herself to ascertain how they might want to use the individual's newly-ordered content, and develop tools to harvest the relevant metadata to do that. This second layer of tools essentially reorganizes the individual's content, transparently, in ways that make it more useful to the individual's networks -- actual and potential friends, associates, customers, suppliers etc. These tools would spider the content and essentially 'fill in the forms' that those in each of the individual's networks might need to access the individual's information in the format they want it in. The PCM tools would allow people to specify which content could be seen and accessed by others with the appropriate 'permissions', and the metadata tools would repect these permissions. These metadata tools would be invisible to the individual user, and would work automatically in the background as the individual added, deleted, and changed the content using the PCM tools. Still with me? Now comes the pièce de résistance. The third level of the house is the networking and connectivity tools, the ones that, analogous to the telephone switch, actually enable the identification of relationships, the making of connections, the transfer of information, and ultimately even collaboration and other more dynamic interactive applications of connectivity -- transactions. These applications harvest and mine the metadata, and have no content of their own. They operate on a just-in-time basis. These tools might include an Expertise Finder, a Connector, a Super Address Book, a Network Builder, a Publisher, and a Subscriber. So for example, if I'm researching solar power for my new house, or looking for people to work with me on a Meeting of Minds business assignment, I could use the Expertise Finder tool to identify who I could and should talk to, what information each of those experts has in their personal content that is permissioned for me to look at, multiple contact information for each of those experts, and the cost, if any, of contacting the expert and/or accessing their personal content. A Connector tool would then enable one-click connection to the selected expert(s) regardless of medium selected -- telephony, instant or asynchronous messaging, Simple Virtual Presence, etc. The Connector tool, just like a telephone switch, would connect people within an organization, or between organizations, or between an individual and someone in an organization -- it wouldn't matter. So if I work for a bank and I need to find an expert in financial derivatives, it would work exactly as my personal solar power search did. I could then choose between 'found experts' within the bank and those outside. If I want to contact my father in Winnipeg, or the group I play poker with on Friday nights, I would use the Super Address Book instead of the Expertise Finder before using the Connector tool, but the process would be analogous and as simple and intuitive as looking in a rolodex or phone book. And if I wanted to build a new network of people interested in discussing New Collaborative Enterprises, or whether Kerry should pick Kucinich as a running mate, I might use the Network Builder tool, which would function exactly like the Expertise Finder except it would identify people with particular interests rather than particular expertise. Finally, I could use the Publisher tool to 'push' selected content out instead of waiting for people to come and get it, and a Subscriber tool, based on RSS, that puts out a 'standing order' to pull in and aggregate others' content that meets my specified criteria. Just-in-time. Dead simple. Built on information I maintain, control and organize my way. Personal versus business information, internal or external, doesn't matter. A utility. An appliance. You could even build additional commercial and transaction tools on top of this. Buy a 'smart' fridge/freezer that takes inventory of what you have, 'permission' it to feed your PCM tool, and your grocery supplier can automatically compute, fill and deliver your order with no intervention by you at all. There are some important lessons to learn from the success and failure of previous technologies. A combination of simplicity-of-use, personalizability and adaptability has made tools like paper, books, pencils, paints, diaries, typewriters, newspapers, timepieces, telephones, radio & TV, personal calculators, CDs and DVDs ubiquitous and hugely popular. In contrast, the lack of these attributes in tools like the PC, musical instruments, the VCR, the fax machine, almost all software, PDAs and videoconferencing, has severely limited the market for these tools, and caused millions to curse their complexity. I don't blame first-generation social software designers for making the three mistakes that already have detractors raising their eyebrows. We need to do lots of experiments to see what will work and what won't. There's no harm designing and playing with skylights and new types of shingles even before the foundation is ready to be poured. And as Stowe said, social software "will become the cornerstone of a revolution in IT", not to mention a revolution in how we connect, network, and organize and share information -- activities that comprise much of the fabric of our lives. We just need to remember: Simple, Personal, Decentralized, Just-in-time. |
 A few months ago I wrote about Edward Hall's book The Hidden Dimension, on the science of proxemics -- the study of 'social distance', how we relate physically and psychologically to space and to overcrowding. A month earlier I wrote a fanciful piece about how people choose where to sit at a boardroom table and what that says about them. Now I'm reading Impro, by British playwright Keith Johnstone, which is ostensibly about the art of improvisational acting, but which has a great deal to say about other subjects, including proxemics. Here's a passage on Status and Space that especially caught my attention: Imagine that two stangers are
approaching each other along an empty street. It's straight, hundreds
of yards long and with wide pavements. Both strangers are walking at
an
even pace, and at some point one of them will have to move aside in
order to pass. You can see this decision being made 100 yards or more
before it has to. In my view the two people scan each other for signs
of status, and then the lower one moves aside. If they think they're
equal, both move aside. If they both think they're dominant (or if one
isn't paying attention) they end up doing the sideways dance and
muttering apologies. But this doesn't happen if you meet a frail or
half-blind person: You move aside for them. It's only when you think
the other person is challenging that the dance occurs. I remember
doing
it once with a man in a shop doorway who took me by the forearms and
gently moved me out of the way -- it still rankles. Old people tend to
cling to the highest status they have had, and will deliberately 'not
notice' others while clinging fiercely to the (often walled) inside of
the walkway. A bustling crowd is constantly and unconsciously
exchanging
status signals and challenges, with the more submissive person
stepping
aside.
Johnstone is interested on how this subliminal body language and
status-checking can be exploited, to both powerful and comedic effect,
on the stage. I'm more interested in its implications for human
behaviour in a crowded world. I didn't believe the above passage was
true until
I started observing people (and myself) moving in crowds. You can
easily pick out who
sees him/herself as dominant, and who's going to move aside, a mile away by their demeanor and
body language. It's hilarious to watch. Older people almost always
expect, and subtly signal to younger people to move aside, even young
people in gangs with attitude. And they do move aside, belying their whole
superficial demeanor. Women tend to defer to men of the same age, but
old, frail and pregnant women somehow trump everyone else -- everyone
moves aside for them. I watched adults puff themselves up and brace
for
collision with children (especially those of cultures that let their
kids learn these status rules slowly) rather than simply
get out of their way. In one case I watched a very respectable,
well-dressed middle-aged man actually deliberately kick a child out of the way, and
then apologize to the mother (not the child) that he (the man) 'wasn't
paying
attention'. I never realized how arrogant I must appear in crowds. I tend to dislike them, 'pretend not to see' people in them (much to the dismay of people who later tell me I 'rudely' ignored their smile or nod or wave of recognition), and take on a hurried, distracted, disinterested, hostile and elbows-raised demeanor. It works very well, except with some children, and except when I have to pass people from behind. Imagine how this plays out in protest demonstrations! And in lineups, especially where first-come first-served is hard to observe because there are no clear lines, or where some lines move much faster than others. So here you are a dominant person, forced to wait passively behind a long, crowded line of 'people of lower status', while other people of low status move ahead faster or even cut into line. Foaming at the mouth time! Ever noticed that the people angriest in lineups are middle-aged businessmen? Maybe I'm finally starting to understand pecking orders: Why they're important in nature, as a simple and automatic mechanism for social organization and balance. And how, in man, in our horrifically overcrowded civilization culture, they get inflated and perverted into political hierarchies and produce megalomaniacs and nuclear pissing contests. What disturbs me most is what this bodes for us idealists trying to establish non-hierarchical, leaderless political and economic structures -- communities of peers. Are such structures unnatural? Or do we simply need to learn to recognize the pecking order for what it is -- a primeval tool for minimizing conflict and deciding who will do the breeding -- and what it isn't -- a license to take an unfair share of wealth and power?  Impro has some other
wonderful insightful observations on several topics. Here are my
favourites:On Creative Blocks: At a time when I seemed to have lost all my artistic talents, I began to explore [dream images] and hold onto and attend to them..Then I progressed to attending to mental images [things I pictured for example while reading]...The effect was so interesting that I persisted...I looked in the window [that I was picturing in my mind] and saw strange rooms in amazing detail...I belatedly thought of attending similarly to the reality around me. The deadness and greyness of my life and imagination were immediately sloughed off...The dullness was not, as I had thought, an inevitable consequence of age, but of education. On Overcrowding: People travel a long way for a 'view'. The essential element of a good view is distance, with nothing human in the immediate foreground. It lets us experience the pleasure of having our space flow out unhindered. Posture improves, breathing improves...These are all probably symptoms of human overcrowding. On Social Distance: When you hand out leaflets on the street, you can't just thrust them into people's hands. You have to establish that you're giving out leaflets, and then present one at exactly the right moment. If you get it wrong, people will either ignore you or be alarmed. [It's a very complex social activity, hard to do well, as any election campaigner will tell you. It's a submissive act, requiring great improvisational skills, and almost impossible for dominant personalities to master.] On Education: Most schools teach children to be unimaginative...Many teachers think of children as immature adults. It might lead to better teaching if we thought of adults as atrophied children. Many 'well-adjusted' adults are bitter, uncreative, frightened, unimaginative, rather hostile people [anyone you know fit this description?]. Instead of assuming they were born that way, or that that's what being an adult entails, we might consider them as people damaged by their education and upbringing. Many teachers express surprise at the switch-off that occurs at puberty, but I don't, because first of all the child has to hide the sexual turmoil he's in, and secondly the grown-ups' attitude to him completely changes. A story written off as childish fantasy in an eight-year-old may be taken, at fourteen, as a sign of mental abnormaility. The adolescent therefore has to learn to 'fake' everything. On Art: We have this idea that art is self-expression, which is weird. An artist used to be seen as a medium through which something else operated...Imagining should be as easy as perceiving. [In children, it is.] On Acceptable Behaviour: Sanity is a performance...It's a matter of presenting yourself as safe... When people are perceived as unpredictable, they are socially rejected...And it's no good telling a student he won't be held responsible for the content of his imagination [he will]...so the student must pretend to be dull...People's normal behaviours destroy other people's creative talent. All the social weapons we use against other people we also use, inwardly, against ourselves. On Assuming an Identity: Our faces get fixed with age, but even in young people you can see that a decision has been taken to appear tough, or stupid, or resigned. (Why Stupid? Because then people expect less of you). Sometimes in extreme situations people will break out of their usual expression and you can't even recognize them...Our personality is the Public Relations department for the real mind, which remains unknown. It always seems to function at some level in terms of what other people think. If I am alone and someone knocks on the door I 'come back to myself'. I do this to check that my social image is presentable. Though I may later get 'lost in the conversation' [and get outside my personality]. People isolated for long periods report 'personality disintegration'. [Perhaps this isn't madness -- maybe they become who they really are]. A final caution: Despite its insights, this book is hard work -- it's written for those who know the jargon and rituals of acting, and for the rest of us it's tough slogging. |
 If
you're a regular reader of this blog, you probably know that I'm
opposed to unregulated 'free' trade, very worried about the
extraterritoriality of the WTO, NAFTA, Davos and other corporatist
captives, strongly opposed to domestic corporations 'offshoring' jobs,
using influence with the Bush regime and other right-wing governments
to circumvent social and environmental laws and responsibilities, and
a
great believer in taking the pledge to buy local, and in community
self-sufficiency.At the same time, I'm a strong supporter of the UN and other multi-lateral NGOs, and I believe that we each have a responsibility for the well-being of all the people and creatures of this world. Some readers have said this view is inconsistent, and I wasn't quite sure how to respond to such charges. Fortunately, Peter Singer, in his recent book on global ethics, I'll have more to say next week about Bush's fraudulent and despicable Earth Day media blitz, and the major media's shameless lack of critical evaluation of the utter nonsense that his propaganda machine has been churning out this week on the environment -- newspeak of Orwellian proportions. The first part of Singer's book deals with environmental responsibility, and his prescription for increasing it -- immediate ratification of Kyoto by the US and other holdout countries, and introduction of an emissions trading mechanism to make the realization of Kyoto feasible (subject to the need for some oversight on the disposition of the proceeds of such trading when it involves autocratic governments). The second part of the book deals with the global economy, and Singer adroitly tears apart the Economist's (and other neocons') naive assertion that economic globalization somehow benefits both rich and poor countries. He then goes on to prescribe a substantial reform of the WTO and the GATT, which could actually lead to more equitable distribution of wealth and more efficient production of economic goods, while safeguarding human rights, labour and the environment. Unfortunately, the multi-national corporations and corporatists who hold sway in the WTO would never tolerate Singer's prescription, since it would entirely divert the benefits of economic globalization from their pockets to those of the world's poor. The third part of the book deals with international law, and Singer lashes out at Bush for his unconscionable refusal to ratify the International Court of Justice, and for the UN's continued hesitancy to accept a duty (not a right) to intervene in situations of genocide and other humanitarian crises, even within a single nation. Singer is sanguine about the limitations and dangers of 'global government', but supports strengthening the UN to enable it to act as a 'protector of last resort', and including in its mandate the responsibility to supervise elections in all member nations. The fourth and final part goes back to ethical principles and proposes that countries must, in this world where national boundaries no longer have any logistic meaning, set aside national interest and embrace, once and for all, global interest, impartially. That does not mean cultural homogenization, but imposes a responsibility for the reduction of inequality, both of economic resources and personal rights and freedoms. Always the pragmatist, Singer concludes by worrying out loud about how the responsibility for a global ethic could be managed: It
is widely believed that a world government would be, at best, an
unchecked bureaucratic behemoth that would make the bureaucracy of the
EU look lean and efficient. At worst, it would become a global
tyranny,
unchecked and unchallengeable. These thoughts have to be taken
seriously. How to prevent global bodies becoming either dangerous
tyrannies or self-aggrandizing bureaucracies, and instead make them
effective and responsive to the people whose lives they affect? It is
a
challenge that should not be beyond the best minds in the fields of
political science and public administration.
I'd like to believe that this was possible, because if it isn't, we're in serious trouble. We cannot expect national governments to set aside parochial interests, especially when this entails accepting a responsibility that would, for the richer nations, inevitably lead to a drastic redistribution of wealth to poorer nations and hence a sudden and sharp reduction in, at least, economic living standards (if not necessarily well-being). But as John Ralston Saul has so eloquently argued, larger organizations and institutions, whether public or private, are almost always, and inherently, less efficient, less agile, more resistant to change, more hierarchic, and less transparent than smaller organizations. So the challenge is to achieve the best of both worlds, having organizations of global scope and authority and responsibility, but broken up into sufficiently small, autonomous and dynamic units that they are sensitive, resilient, responsible and responsive to the people and communities they serve. We can only hope that "the best minds in the fields of political science and public administration", wherever they are, are up to the task. |
(Warning: some financial math ahead.) A Ponzi scheme, named after its early 20th century inventor Carlo Ponzi, is a form of pyramid scheme. Basically it involves selling a nearly worthless security to a small group of investors, with the promise of great returns if they promote the security to more investors, and so on, ideally, forever. Like any pyramid scheme or chain letter, of course, it eventually collapses when it runs out of suckers. The first ones in get rich, and the last ones in (much greater in number) get shafted. As we all know, the stock market is focused on the short term, and fluctuates wildly in response to a single quarter's earnings, external economic events, even rumour. If you look at it holistically and long-term, however, it has all the markings of a century-long Ponzi scheme, the most lucrative, and potentially most devastating, in history. Let's take a look at the US S&P 500 as a surrogate for the entire stock market, the entire market for equity securities of listed public corporations. The index goes back to 1917, but was revamped in the 1940s and recalibrated so that the index for the average of 1941-43 was 10. It slowly rose to 100 over the next 50 years, and then to 1000 over the next 12 years. This broad index earned, in 2003, about $55 per average share of the component securities, using GAAP (generally accepted accounting principles). So at its current level of about 1100, it has a P/E (price-to-earnings) ratio of about 20. That means investors are willing to pay $1100 now for a share that will theoretically 'pay back' $55 next year, and hopefully successively more in future years, to justify the 'present value' of $1100. To think of ir another way, it's like a bank charging you $55 this year, $65, say, next year, and so on for at least 50 years, as 'interest' on a loan of $1100. The 5% interest in the first year isn't very attractive for such a risky 'loan', but since future 'interest' will be dependent on (hopefully rising) earnings, there is the prospect of a very lucrative return eventually. So the S&P 500, like all equities, is said to 'discount expected future cash flows'. A general rule of thumb says that the P/E ratio approximates the annual expected growth in earnings, so that means the investor in the market is expecting earnings to grow by close to 20% each year, essentially forever. How is that possible? Well, it isn't. Earnings grow because (a) prices increase, (b) costs decrease, and/or (c) volume increases. In a 'free' market economy, prices are determined (theoretically, now) by competition -- new competitors will enter the market, and/or existing competitors will adjust their prices, to the point that their return on invested capital is just high enough to justify the investment risk. That level, in a low-inflation economy where the alternative 'risk-free' investment in GICs and bonds is only 2%, is roughly a modest 7%, with the extra 5% compensating the investor for the risk implicit in equities. And, in the long run, volume can't increase -- there's only so much market for anything, and once it's saturated, earnings should therefore level off at a flat rate. Let's suppose we've more or less reached that state now. Let's also set aside the fact that the $55 earned last year by the average share is likely considerably inflated -- there are undoubtedly some more undetected Enron-type exaggerations out there in some of these 500 companies, and GAAP allows capitalization of stock options and other near-fraudulent practices that significantly overstate 'true' earnings. Is the $55 a fair return on investment in these companies? To answer that question we need to calculate what the investment is. According to the S&P, this $55 represents a 17% return on investment. In other words, the net assets or 'book' value of the average share is $55/17% or about $325. We already indicated that a reasonable return, given the risk, was 7%, which on $325 would be about $22 per share. Why are stocks earnings $55 per share when in a 'free' market they should only be earning $22? To answer this we need to look at the three components that make up ROI (or more correctly, return on equity -- ROE). These three components are: Margin (profit/sales), Turnover (sales/assets), and Leverage (assets/equity). Leverage can be inflated by excessive borrowing, which companies can get away with in times of low interest, but which boomerang when interest rates spike. Leverage can also be inflated by stock buy-backs, where the company essentially uses excess cash flow to buy back its own stock and hence increase the value per share of the remaining stock -- but this is a form of cannibalization, and leads to the same imbalance between debt and equity. Neither is sustainable. Turnover can be increased by lowering inventories, factoring and off-balance-sheet financing, but ultimately tops out -- you need to have a certain amount of money tied up one way or another in assets to be able to run an effective business. So you're left with Margin, which ultimately is the only explanation for the enormous ROE of $55/share, when in a free competitive market someone should be willing to accept $22/share. The truth is that the market, and big corporations, are far from efficient. Many industries are heavily subsidized by governments to the tune of billions of dollars in kickbacks -- er, I mean, support payments -- per year. Big corporations also work as oligopolies to prevent smaller companies from entering their markets and charging more reasonable prices for their products. We, the consumers, are in fact paying $55 for goods and services that could be sold for $22 and would still provide the corporations with a very reasonable return. If and when government subsidies end, oligopolies are broken up, and the market for goods and services truly becomes free and open, the S&P 500 should then generate $22/share each year, a 7% ROE, still an attractive return in a low-inflation economy. So we have a number of factors at work, conspiring to drive up stock prices in the unsustainable illusion that double-digit growth can and will continue forever, or at least until we're dead and it isn't our problem anymore. We have big corporations earning exorbitant returns, two and one half times a reasonable level given the risk, paid for by the taxpayer and consumer (the same people who then take what's left of their meagre paychecks and invest it, with insane trust in the brokers' unsustainable recommendations, in the stock market). And we have a P/E ratio that is already assuming that these wildly inflated, taxpayer subsidized, price-gouging levels of profit will continue to rise even further, at close to 20% per year, forever. Voilà, Ponzi scheme, par excellence. Let's do the math. Take the $22 per share that big corporations should be earning per share in a properly regulated and open market. Acknowledge that the assumption that these earnings are going to grow in the future, when markets are saturated, consumers, corporations and governments are already buckling under grotesque and unprecedented debt loads and cannot afford to buy or pay more than they already are. Discount that annual stream of $22 of earnings for 50 years at a reasonable 7% discount rate. Know what you get for the fair value of the S&P 500 with these calculations? About 300. That is what, when you strip out the growth hype, the subsidies, the price-gouging, and the unsupportable P/E valuation, the S&P 500 should be trading at. Not 1100. Eventually the Ponzi scheme will collapse. There may yet be time to con yet more foolish investors into believing that it will rise from 1100 to 1500 to 2000 or 5000 or higher, and if investors can be duped into believing that's what shares are worth, that's what they'll trade at. This scheme has been running for a century, and made many people millionnaires. But eventually we, or our children or grandchildren, will realize that the S&P 500 should be at 300, and since stocks always trade at what people think they're worth, that's where the S&P 500 will end up. The millions left holding the bag will lose most of their life savings, their pensions, everything. (Oh, and if you change the assumptions about inflation and interest rates, the above valuation doesn't change. Future values and discount rates both go up proportionally, so the inflation-adjusted present value stays the same.) Even the brokers can see the writing on the wall. They will now try to convince you that by wise investing you can 'outperform the market' by buying low and selling high, even if the market is ultimately doomed to do no better than go sideways. This is another great variant on a Ponzi scheme. It's the stuff that has hooked the new breed of gambling addicts called 'day traders'. For every investor whose holdings 'outperform the market' there will be, of course, at least one loser. But the magic of Ponzi is that it's always the other guy, the next guy, the not smart enough guy, who will get burned. You'd be better to play slot machines or buy lottery tickets -- at least the potential payout isn't overstated by 250%. In addition to the perpetual-growth Ponzi scheme, and the 'outperform the market' con, brokers also make scads of money from IPOs -- initial public offerings. As James Surowiecki has elegantly pointed out, the IPO is a scam by which an aptly-named 'syndicate' of investment firms ('underwriters') buy a mass of shares from the company 'going public', at about half the price per share they know they can flog them to gullible investors, many of whom rely on these very brokers for investment advice. They then dump their shares on these investors, knowing that the price will promptly drop back close to the IPO price. The underwriting brokers get rich, and the unsuspecting customers get burned. That's the reason Surowiecki and others, most recently Lawrence Fisher in yesterday's excellent analysis over at our mother ship Salon.com, have urged Google, potentially the most lucrative IPO of all time, to screw the brokers and either sell all the shares directly to the public by auction, or, even better, not to go public at all, and save the delirious investors the grief they will suffer when they find out Google has no direct line to God, and hence isn't worth a million dollars a share. Eventually we, or our descendents, will learn (or have no choice but) to 'just say no' to dysfunctional stock markets and all the evils they breed. Until then, we'll continue to be addicted to short-term thinking, the illusion of perpetual growth, paying too much for everything we buy, subsidizing public companies with our taxpayer dollars, downsizing and outsourcing and offshoring as 'productivity enhancement', and putting up with the atrocious greed, corruption and devastation of insatiable global corporations that pull the strings of politicians like puppeteers, all in the name of 'maximizing shareholder value'. It's addictive gambling with a staggering cost, it's insane, and it's fraud. |
| Four
years ago I wrote a well-received paper entitled A Prescription for Business Innovation:
Creating
Technologies that Solve Basic Human Needs. I've updated it,
broken it into three manageable pieces, and present the first part
below. The remaining parts will follow on successive Tuesdays. Introduction: Why I'm Here My modest objective in this presentation is first, to tell you some new, interesting and useful things about innovation, and, second, to persuade you that innovation is the most important determinant of every business' success, and perhaps even the quality of our lives. I want to convince you that in your business, whether it employs one person or one million, innovation is probably the solution to whatever is currently keeping you awake at night -- whether that be sales growth, cost control, customer satisfaction, employee retention, or maximizing shareholder value. And if you, like me, spend some of your sleepless hours worrying about things more altruistic than your personal and business success, I want to convince you that innovation is probably also the solution to most of the problems that have befallen our suffering planet, in part because past innovations have created many of these problems. And finally, if I'm successful in this evangelical task, I want you to leave today not only with renewed hope about the future of your company and our world, but with some new tools to make innovation happen in your business. I would like to ask you to listen to these ideas with an open mind, suspend briefly your disbelief, and give this your full attention. If this was that easy to explain, someone much smarter than I would have done it years ago. One: Learning from our past: How Need Drives Innovation The advent of a new millennium has recently given many business, political and economic thinkers pause to consider what will be, as most put it, the 'Next Big Thing':
Technophiles who favour the Acceleration Model tend to be infatuated with artifacts of the last thirty years: more digital, faster, smaller, lighter. Advocates of the Chaos Model, on the other hand, believe there are no rules for our brave new world of the 21st century. Their advice for business and other leaders is to be opportunistic and think short-term. I lean towards the Evolutionary Model. I believe that using an understanding of the past, with the right perspective, can help businesses anticipate the future with exceptional clarity and probability of success. There are two reasons I hold this belief, and they form the basis for much of the rest of this presentation:
 Figure One: How Fundamental Needs spawn Innovations & Technologies (Adapted from Credit Suisse First Boston New Economy Forum 1999 Synthesis) According to this model, innovations like crop cultivation, the printing press, and the harnessing of solar energy, have always arisen in response to an urgent human need -- overcoming the sudden food scarcity after the Ice Age, bringing literacy to the masses, and solving the energy crisis respectively in these three examples. Technologies are applications of these innovations. The intriguing organic-looking ovals for each technology are also from the Credit Suisse Synthesis, which proposes are technologies are best developed using the following process:  Figure Two: Development Process for Technologies (from Credit Suisse First Boston New Economy Forum 1999 Synthesis) Let's now take a look at this synthesis model in more detail, to test whether it represents the way in which historical innovations have occurred, and then what this might tell us about innovations of the future. Two: Man's Earliest Innovations: A Brief History of Technology The first humans to walk on our planet, according to most anthropologists, were not the mighty hunters most of us might picture. In fact we were particularly disadvantaged, lacking both keen senses and a hide adapted to changing climates and weather. As a result, early humans were scavengers, ignominiously surviving off the leftovers of creatures with better innate hunting 'equipment'. In the first scene of 2001: A Space Odyssey, Kubrick & Clarke hypothesize that a carrion bone was the first human tool. Marshall McLuhan explained in his book Understanding Media that this early human was using the bone, this very first tool or technology, as an extension of his hand, giving it strength, reach and durability his hand alone did not have. McLuhan argued that all technologies are extensions of the human body and the human senses, and it is these technologies that have allowed the poor, badly-pelted, sensory-deprived human species to buck Darwin's odds and survive. So picture our poor shivering proto-human looking among the bones of a wolf's recent meal for new tools beside the greasy bone, and thinking, in true McLuhanesque and 20th century economics terms: 'If the bone as an extension of my hand helps me to compensate for my competitive disadvantage in the hunter-gatherer marketplace, why can I not use other tools similarly? Then, lacking the appropriate scientific training but still intoxicated over his first innovation, he or she comes across a dead wolf and considers the following applications of this technological insight:
Without animal domestication and crop cultivation, we as a species might well not have survived to come up with newer and more sophisticated innovations like the wheel, paper and the computer. Three: Six Principles about the Innovation Process The first humans used precisely the process shown in Figure Two to develop and 'commercialize' the technology applications of the innovations of animal domestication and crop cultivation. It is the same commercialization process taught in business schools today. However, the success of the process is only as good as the idea, the innovation, that lies at its front end. Business schools are actually very good at explaining the recipe, but they, and most educational and business institutions, are absolutely terrible at teaching people how to find the essential new ingredients -- the 'grey matter' at the left side of Figure Two, the ideas & innovations that make the recipe work. The problem isn't a scarcity of good ideas either -- it is the lack of rigour and investment in infrastructure to surface, capture, develop and qualify new ideas prior to commercialization. Figure Two also recognizes that many innovations and technologies are derived from other innovations and technologies, and often come from applying an idea or a technology from one application domain, or from nature, to an unrelated application domain. The BBC/Discovery program Connections made this point very powerfully, and its author James Burke continues to develop both examples of such non-obvious connections, and exercises to help us learn to discover more -- in essence, to become more innovative. Burke's latest book explains how a problem with the irrigation of Italian gardens led to the invention of the carburetor, for example. Furthermore, Figure Two acknowledges the importance of the story in the successful commercialization of innovations. It is hard to pick up a business book or attend a business conference these days without being lectured on the importance of story-telling, but the idea is neither new nor complicated: Stories convey the context for the application, they explain how it can be used in the user's or developer's day to day life. Knowledge transfer is an essential precondition to commercialization. The easiest way to transfer knowledge, i.e. to explain or persuade, is to do so in a way that lets the learner internalize what they are hearing i.e. to fit it into their own mental models of how things work. And the simplest way to enable internalization is by telling a story, be it a Utopia or Future State Vision, a parable with a built in lesson, or a simple recounting of processes and events that lets the learner relive the teacher's experience as if it were their own. From all this we can derive six basic principles about the Innovation Process (again, the names given to them are mine), to add to the two espoused earlier about cultural resistance to innovation:
|
 Time
for another of life's imponderables. Both in Canada and the US, family
farmers and small business people have, in recent years, consistently
voted conservative, and show every intention of doing so again this
year. This makes absolutely no sense: Most farm states and provinces
are net recipients of government largesse (i.e. they receive in
equalization payments and services more than they pay for, subsidized
by the more urban and more liberal states and provinces). And even
though in the past 20 years conservative governments have spent more
than liberal governments, that money has largely gone to tax cuts for
the very rich and defense spending, creating huge deficits that small
farmers and small business people have to repay in taxes, and receive
almost no benefit from.I talked to a few local farmers and small business people to try to find out why they vote conservative. This small sample may not be representative, but what they told me was:
In Canada, which has five parties to choose from, the 'first past the post' electoral system undoes the benefits of party pluralism. With the three small parties all socially liberal, Canadian liberals are forced to 'vote strategically', which means voting for the Liberal Party instead of their real choice, the NDP or the Green Party, to prevent the 30% of Canadian conservatives, who have only one voting choice, from stealing the election. We'll find out in ten days whether they did so or not. Alas, both the US Republican and the Canadian Conservative parties are consistently and heavily propped up by small farmers and small businesspeople. Without that support, these parties would be history. It doesn't make any sense, but it's the reality that both right-wing parties are counting on for election success this year. It's a brilliant con. |
 We went out for a delicious dinner last night at a wonderful, and completely packed, restaurant in downtown Toronto (it's called Mildred Pierce, for those who live in the area), and spent some of the time unobtrusively eavesdropping on the conversations at nearby tables. The discussions, much like the one at our own table, vacillated between the very personal (who's dating who, personal anecdotes) and the impersonal (entertainment, sports, weather). But not a single word was uttered about politics: Nothing about Canadian politics (collapse of the right), Ontario politics (health care and education strikes threatened), Toronto politics ('new deal' for cities in peril), US politics (Bush/Kerry), or international politics (Iraq etc.) Not a word. This was a Sunday night so there were no obvious business reasons for steering away from the subject. It just never came up. And it occurred to me that at our annual neighbourhood BBQ on Saturday night no one talked about politics either. Is politics just too boring in Canada or has it become tacitly PI to talk about them, because of the political polarization that seems to be happening everywhere? Is the left-right gulf getting too wide to even try to broach in 'decent conversation'? I appreciate that there is less urgency about politics here in Canada than there is in the US, at least. The election here is over. And I'm told that at least 40% of Americans know personally at least one person on active duty in the Mideast, and that, I would expect, would probably make it a more likely topic of conversation. But some of my American readers tell me that talking about politics in face-to-face conversations is just too uncomfortable for them these days as well -- too likely to lead to arguments. So outside of political rallies and other meetings of like minds they don't talk about it much either. What does this mean? First, it means the end of true political debate -- I don't mean those phony, scripted events where politicians roll out their rehearsed one-liners, I'm talking about articulate exchange of political views and information between real people. If you don't talk with others about politics, how do you form your viewpoints and where do you get your information? From attack ads? I don't think so -- maybe I'm naive but I don't think they work; most people know when they're being manipulated, and won't fall for it. From radio talk shows or editorials or blogs? Most of them are only for people who have already formed an unwavering political opinion on everything, and are merely looking for reassurance and justification for their belief. From television news and the print media? There isn't enough information content in the sound bites and newswire rehashes in most of them to allow an informed decision or point of view on anything. It seems to me that, on almost any political issue, 50% or more of the population is completely disengaged -- even if they care, they don't think anything they do or say or feel will have any impact, so they can't be bothered to voice, or sometimes even form, any strong opinion on it. And the rest are in two, polarized camps, each believing that the other is irrational or immoral or misinformed, hopelessly so, so that meaningful discussion with the 'other side' or with the disengaged majority is impossible or fruitless. So except for the one-way palaver from the political flaks and political advertisers and partisans and oversimplifying mainstream media, there is no political information flow. And there is no discourse, no exchange of ideas or views, no balanced presentation of opposing views, no true political conversation. Because what purpose would it serve? I see an astonishing paradox in modern society -- in an era with unprecedented access to information, most people are ignorant of even the basic facts on most political issues, from the connection between 9/11 and Saddam, to the causes and implications of global warming, to the political situation in Sudan and Venezuela and Chechnya< /a> (not to mention parts of the world less in the news), to the numerous ecological and humanitarian crises that everyone from the Union of Concerned Scientists to Amnesty International is shouting about. Why are so many so ignorant? I think because they choose to be uninformed. Why? Perhaps either because they they can't relate to the issue, or because they don't think there's any point in getting stressed about issues they feel they can do nothing personally about. So you end up in a vicious cycle: The less people know about a subject, the less inclined it is to come up in conversation, so the media conclude there is no interest in it, so they don't cover it, so people know even less. And if they do know about it but feel helpless or disinclined to do anything about it, they don't share their knowledge with others, and eventually with enough indifference the situation gets worse and the solutions become more intractable so people feel even more helpless and disinclined to try to do anything. Political disengagement is infectious, and it's reached epidemic proportions, especially among the young. All of this supports Richard Manning's argument in Against the Grain that politics was and is designed to protect and entrench the status quo. As a result, nothing pleases those with power and money and influence more than massive political indifference and disengagement -- what Gene McCarthy in the 1960s during the fight against the Vietnam War called 'acedia' -- a Greek word meaning spiritual torpor, lack of care, apathy and inactivity in the practice of virtue. Unlike the 1960's, the numbers of politically disengaged is inversely proportional to the age bracket -- it is the young who I love so much and have such great hopes for who are least engaged in the political process, who infect each other with their indifference to global issues. But I don't think it's that they don't care. Most of the young people I know are overwhelmed and intimidated by how much those of us who are politically active know about global issues. My teenage granddaughter has read my blog, but says she "doesn't understand it". The young focus their energies and their passion instead on issues in their own networks, local things, things that they can do something about. We need to show them the way to do more. We, who have been in the streets, need to reach out to the young and not-so-young who have given up on the political process (often before they began), and stop drowning them in facts and laying guilt trips on them and filling them up with bad news and instead:
The real 'swing voters' are the ones who have never voted before and don't expect to vote in future. Rhetoric won't bring them to the polls. If we can 'activate' them, then conversations about politics will no longer be politically incorrect, and political activism will spread like a virus. As those who fought against the Vietnam War can tell you, political activism is as infectious as political apathy. The defenders of the status quo will be shaking in their boots. And then the revolution we all need, the revolution to save the world, can begin. Cartoon by the incomparable Robert Mankoff (from the New Yorker, of course) |
 Last year I waded through Jeremy Rifkin's The Hydrogen Economy and wrote a blog post that explained what's promising about hydrogen as a fuel, and its two major drawbacks. I used two charts, reproduced here, to explain how it works and what's holding it back. The chart above shows the energy economy we have today. Red boxes are non-renewable, polluting and environmentally damaging energy sources and green ones are clean and renewable. Whether we use hydrocarbon fuels or electricity to light, heat and cool our homes, it's likely that non-renewable, damaging sources are producing it. Our cars likewise burn fossil fuels, and although hybrid cars are certainly an improvement, they still depend on fossil fuels to create ('reform') the hydrogen that the fuel cells convert into electricity. The chart below shows the energy economy in twenty years, if we can solve the two major dilemmas of the hydrogen economy.  Under this scenario, hydrocarbons are replaced by solar, wind and other renewable, non-polluting, non-damaging energy sources. The central hydro utility is replaced by a local energy co-op, which produces energy for your community from its own solar collectors, wind turbines etc. The compressed hydrogen used to power next-generation pure hydrogen vehicles is produced from some of this electricity, and distributed through local service stations. The excess electricity produced by these cars can be used to provide light, heat and cooling to the home or sold back to the local energy co-op. The cars themselves will have no engine, no pedals, clutch or gearshift, make no noise and produce no harmful exhaust. The entire process will require no burning, no pollution, and no grid at the mercy of multinationals and sheikhs. What are the two catches? First, the current cost of electricity produced from non-renewable sources is very expensive, and the process is cumbersome and not yet terribly efficient. Even more problematic is the $100 billion cost of building the infrastructure to generate, distribute and store the electricity and hydrogen, obsolescing a comparable amount of existing energy infrastructure, and probably causing some consternation to and resistance from the owners of that infrastructure.  Yesterday the University of New South Wales
predicted that by 2010 a new generation of photovoltaic
'harvesters' based on titanium dioxide ceramics will both collect
solar energy and
use that energy to produce compressed hydrogen from water. A 10m
square
array, such as that depicted at right, mounted on just half the
households in a sun-rich country like Australia, could produce the
entire country's energy.This would allow an even more distributed, decentralized model than that depicted above: With each household able to produce its own energy, the local energy co-op might be nothing more than a virtual market, and the need for local service stations selling or even producing compressed hydrogen would be obviated. We'd all change from consuming to producing energy. The university has even higher hopes for the titanium dioxide technology behind this advance: They believe it will allow innovations in other areas such as "water purification, anti-viral and bacteriacidal coatings on hospital clothing and surfaces, self-cleaning glasses, and anti-pollution surfaces on buildings and roads". Anyone know anything about titanium? I know it's a metal, but is it plentiful and easy and clean to extract? Is it recyclable? Durable? Toxic in landfill sites? I sense a bit of grandstanding and breast-beating by UNSW here. Is there another catch they're not telling us about? |
 In Beyond Civilization, Daniel Quinn
says:People will listen
when
they're ready to listen and not before. Probably, once upon a
time,
you weren't ready
to listen to an idea than now seems to you obvious, even urgent. Let
people
come to it in their own time. Nagging or bullying will only alienate
them.
Don't preach. Don't waste time with people who want to argue. They'll
keep
you immobilized forever. Look for people who are already open to
something
new.
When presenting a new
idea, you don't have to have all the answers. It's better to say 'I
don't know' than to fake it. Make people formulate their own
questions.
Don't take on the responsibility of figuring out what their difficulty
is. We each internalize information differently. If you don't
understand
a question, keep insisting they explain it until it's clear. Nine
times
out
of ten they'll supply the answer themselves.
Above all, listen.
Your close attention is sometimes more important than your
articulateness in winning converts. And learning is always a good
thing.
When I've talked to people about the ideas I've presented in this blog, I get the sense that maybe 10% really understand and appreciate what I'm saying. Perhaps another 40% are ready to listen and want to believe, but either my inarticulateness or their internalization mechanism garbles the message. After all, saving the world (or, as one recent commenter 'geo' put it more accurately "changing how humans live so we as a species can continue to survive") is not easy or obvious, or we'd all be busy doing it. This reading list is for that 40%, in the hope that better writers than I can convey more clearly and compellingly what we need to do and why. The remaining 50%, I suspect, are not ready. Five years ago someone gave me The Spell of the Sensuous and I gave up after five pages -- I just wasn't ready. Here's the list -- 56 books and articles that forever changed my worldview, and my purpose for living:: What Life was Really Like Before Civilization: Revisionist History
Radical Analysis, Radical
Solutions (these are the most important readings, but you
probably won't 'buy' their arguments unless you've first read much of
the material above)
Toolkit for Change: Knowledge We Can Use to Save the World
|
 In a recent
post
I advocated almost a complete replacement of existing knowledge
management systems and intranets with a three-tiered set of simple,
intuitive tools consisting of:
On giving it further thought, however, I wondered whether PPI was the solution to the wrong problem. If the tools and information on people's PCs and intranets are unduly complex, counter-intuitive, and inappropriate for the key business problems that front-line people need to solve, so that people use other processes (walking down the hall to speak to colleagues), other tools (the public Internet) and other sources of information (the people in their rolodex) instead of the ones supplied by their employer -- doesn't this suggest it's the tools that need 'improving', not the users and the processes they use? I believe personal content management tools are the place to start, because since the earliest days of business, the principal way of sharing information has been peer-to-peer, the most valued 'repositories' of business information have been personal filing cabinets, and the principal schema for organizing work has been the personal desktop. It makes sense, therefore, that tools that facilitate and reflect these well-established 'knowledge processes', information sources and networks should be much more successful than the complex, centralized, hierarchical knowledge management tools and repositories that have been foisted on users for the past decade. I wrote the other day about attempts to replace paper, and about Gladwell's study of why paper and documents have proven so durable and successful even in this electronic age (spatial flexibility, tailorability, browsability). And I believe any schema for personal content management needs to reflect and honour our most established 'information behaviour' -- the shuffling of paper. The founders of a company called Alias Research (now part of Silicon Graphics, but in the process of being spun off again) were powerful advocates of making technology adapt to human behaviour rather than the other way around, and I agree with them 100%. Lowest common denominator, across all job descriptions, levels and industries, are these fundamental 'knowledge worker' behaviours and needs:
I'd start by creating a machine-readable analogue of the physical workspace. We need a Workspace Tool that allows us to shuffle virtual documents the same |