Archive for the ‘Beyond Economics’ Category

The Story So Far

The idea that environment initiatives will systematically increase profitability has tremendous appeal. Unfortunately, this popular idea is also unrealistic. To anchor win-win situations as foundations of a company’s environmental strategy is dangerous because environmental costs in most companies are skyrocketing with no economic payback in sight. To achieve truly sustainable environmental solutions, managers must strike a balance between business and environmental concerns, recognising the fact that win-win situations only come few and far in-between.

Evolution of Environment Management

First Era (1970 – 1985)
Companies faced with new regulations of high technical specificity did little more than comply with the regulations and often fought them.

Early Second Era (1985 – late 1980s)
A shift in the regulatory context and the maturing of the environment movement created for managers to look beyond the narrow, predominantly technical approach.

Late Second Era (late 1980s – present)
The emergence of the win-win mind-set is a direct result of the extraordinary success that companies achieved in reducing pollution. Therefore, many jumped to the conclusion that continued environment action could more than pay for itself.

Why win-win won’t work

  • There is little specific guidance to managers. Proponents of the environment movement (e.g. Porter) argued their case on the macro level. What managers really need is specific guidance at the micro level.
  • Win-win situations are not easy and cannot be assumed that they can carry on indefinitely.
  • Win-win situations will become increasingly scarce as environmental challenges become increasingly more complex and expensive.
  • Even without additional regulations, however, progressively tighter standards within current regulations will push corporate environmental spending higher.
  • Distribution inequity of environmental cost among companies. There is a definite risk of the classic ‘free-rider’ problem.
  • The growing array of choices available to managers is only further complicating matters.

The Search for Solutions

Let’s look at the key problems corporations face today in terms of making environmental decisions.

  • Presently, there is a lack of framework for managers to follow.
  • There is a lack of literature that tackles the full range of issues. Present environmental text can only offer a one-dimensional prescription (i.e. effective environmental management) to achieve competitive advantage.
  • Companies do not take environmental issues into their ‘core’ business plans.
  • Other matured organisational functions (e.g. Quality Management, Accounting) have too narrow a focus to be able to encompass the whole range of environmental issues.

The Pragmatic Path – A Value-Based Approach

Instead of focusing on win-win situations, companies would be better off focusing on the ‘trade-off zone’, where environment benefit is weighed judiciously against value destruction. Within this framework, environmental issues can be broken down into three broad categories: strategic, operational and technical.

  1. Strategic issues

Some environmental issues are strategic because their impact on value is high enough to put core elements of the business at risk or to fundamental alter a companies cost structure, and because managers have considerable discretion about how to respond.

  • Decision type – lead or lag
  • Decisions to lead or lag are characterised by the Catch 22 irrationality.
  1. Operational issues

Management’s task with these issues is to ensure that minimum expenditures achieve maximum environment impact.

  • Step One – Understanding the what’s and the why’s of spending.
  • Step Two – Maximise impact with minimum cost.
  1. Technical issues

Systems should be created to track and disseminate emission information to managers so that they can make informed everyday decisions on trade-off between cost and environment.

  • A proactive role with a system in place versus a reactive one when one use an external audit.

Summary

For all environmental issues, shareholder value, rather than compliance, emissions or costs, is the critical unifying metric. The advantages are threefold, they are:

  • Environmentally sound
  • Practical, as it is formed with business experience
  • It is more likely to be truly sustainable over the long run.

The reasons are not only simple, but more importantly, sustainable. In short, as much as each shareholder wants to save the world, each environmental decision must ‘make sense’ for the business first. And as elegant as win-win might sound, in the real world… things are just not as simple.

Note: This paper was presented in a seminar.

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I met a couple of interesting people at a casual meet-up and the topic of the day was a good life.  Sean said that we have already won the cosmic lottery simply by being born because the odds of that happening alone is one in a gazillion times. On top of that, to be born in a first-world country, the odds are even smaller. That got me thinking, being the statistical person that I am, I started to look into “What is the probability of me being born?”

Put that into Google and you’ll get a whole bunch of numbers plus some really-whacky-off-the-charts comparisons (like “the odds of being born human, rather than a chicken”). So I’ll pick something out that made sense, one by a Dr Ali Binazir (http://visual.ly/what-are-odds). In short, he calculated that the probability of you being born is one in 102,685,000. In other words, basically zero.

Basically zero. And I am here writing this in an armchair, my own room, surrounded by books, my earthly comforts and a lovely family. Like Sean said, not only have I won the cosmic lottery, but I have won big because I could very well have been into one of these statistics (http://www.wfp.org/hunger/stats). But I’m not. And chances are… you (the reader) are not as well.

So let us… Regardless of your race, religion or language. Regardless whether you are healthy, suffering from a congenital condition or ill. Regardless whether you’ve been wronged, feeling angry or have suicidal tendencies. Stop! Just stop for the next 10 seconds… Give thanks and be grateful that you are alive… because for whatever situation that you are in, you know that you have won the cosmic lottery and being alive, in itself, is a true miracle.

So what is a good life? From the miracle perspective, a good life is simply to be alive. Of course, some good lives are more fortunate than others. But the fact that we are living and breathing, that alone is against all odds. Once, I was moaning and groaning to a good friend of mine that I was having a bad day and all the different problems that I’m facing. He just stared at me with a pair of steely eyes and said “Do YOU think you are the only one in the world with problems?” Fine. So he was having a bad day too. But he is right, whatever problems we are facing, someone out there has it worse off than us. This may not be consolation to some, but the reality is… in comparison, our ‘problems’ maybe so small that some may not even consider them to be problems at all.

Haven’t we heard of stories of fools who won some lottery but yet end up as paupers? Fools who wasted away their good fortunes. But we, who are having a good life, are we doing the same with our lives? Are we wasting our lives away? If someone asks you “What are you doing with your life?” What would your response be?

Since we started statistics, let’s end with another set (http://www.youtube.com/watch?v=MThtH6fJjSA)

Beyond good… a great life can only happen when you start Living A Determined Life.

As a parent, I am inevitably caught in the cycle of examinations and examination results. Things were not what they used to be. I’m just not sure whether it is a good or bad thing. Triumphant stories of students achieving top results rule the airwaves, web and print space. ‘XXX school achieved 100% passes’, ‘Girl from so-and-so school tops the charts’ etc. Everybody loves a winner.

But there is an inevitability of paradox and always two sides to a coin. While we hail the winners, where are the losers? How do we define winners and losers? Remembering a sweet Indian girl, from many years ago, that took her own life because her examination results were not “good enough”? Closer to me, someone once shared this little story with me (By the way, it’s real) that her cousin from a top local junior college just gotten her GCSE ‘A’ level results and achieved above average results. But yet did not dared return home, but instead went to my friend’s place to seek solace. The reason? She was ashamed of her results. Mind you, these results, though the best, were good! But unfortunately, it was not good enough for her, not good enough for her to face her friends, her family. Just simply not good enough! It was her reaction that startled me. She seemed the less worried about being able to get into the university or not, but more concerned about how others would look and judge her from her results.

If we give every 18 year old the same test, at the same time and is graded, we almost inevitably create a great divide. Half the population will do better than the other half. That’s a fact! Let’s call the top half ‘success’ and the bottom half ‘failures’. The ‘success’ group has done better than the ‘failure’ group, no doubt about it. What if I say that everybody passed the test? Are the bottom 50% failures? But they passed the tests, didn’t they? Through the eyes of the test, they are not failures. But through our eyes, simply because of that dividing line, they are ‘failures’. Simply because they are in the bottom half.

To further complicate matters, this divide between the ‘success’ and ‘failure’ group do not seem to happen at 50%, but rather somewhat higher in many societies. For the ‘A’ level girl above, it was somewhat in the 90th percentile. You see, even if she was at 85%, she would still be in the failure group. That’s because that what she feels on how her world (parents, friends, etc.) views her. For the little girl who plunged to her own death, was failure to achieve a certain mark more important than life itself? Who is to blame? These girls or us, the people who plays a big part in forming their perception? I believe we all have a part in blowing out her candle in our mist.

There is a distinct difference between schooling and education. The school teaches, the students learn and pass examinations to get to the next level. While an education is responsible for developing a student’s intelligence and take it to the next level. Would you want your child to go to school to 1) pass tests after tests? Or 2) come out a better, stronger person capable of contributing to society? The answer seems obvious, but where are we really going with our current system? Are we providing schools or an education?

Discovering one’s intelligence is one thing, but using them is another thing altogether. It involves three skills that Charles Handy (in ‘The Age of Paradox’) identified as: Conceptualising, Co-ordinating and Consolidation. They are the ‘hows’ in oppose to the ‘whats’. For example, students are often asked to answer questions like ‘what’s the price of an orange?’, whereas in real life they’ll face ‘How should we price an orange?’. The former question requires a precise and accurate an answer. Either you get it or you don’t. But the latter question tests one’s ability to reason. Which question should an education system emphasize on?

These three skills should, arguably, be the core of any educational system. However, they tend to sit right behind, instead of the forefront in the classroom. This is the reason why some school drop-outs eventually become successful (note: successful does not necessarily mean wealthy) people. Because they are able to learn these skills faster on the streets. If so, where’s the real value in such an education system?

On one hand, the ideal system would be to be able to identify and then nurture each child’s type of intelligence and talent. On the other hand, the system needs to churn out graduates according to the needs of the economy and society. It’s a paradox… and it will always be. Would Einstein or Picasso survive such a system?

How can we tell our children that ‘it’s OK to fail’ when our own system draws a distinct line between success and failure? How can we tell our children it’s alright to fall when we don’t teach them how to pick themselves up? How can we tell them that it’s ok to fail now and they will have all the opportunities in the future to make good of yourselves? Are we lying to them? Are we lying to ourselves?

No! We don’t have to… just make that change.

Knowing how to build a bicycle does not necessary mean knowing to ride it. Similarly, knowing to how to ride does not mean knowing how to win a race. Obviously, these three activities (building, riding and winning) are three distinct activities, however, all these involves specific knowledge. Knowledge organisations need knowledgeable people to build and run them, and most importantly, have people who know how to win races.

There are six challenges that knowledge organisations face today. To briefly reiterate, these six challenges are:

1) Make Knowledge Productive

This should be the first objective to achieve in any knowledge organisation. The organisation’s function is to put knowledge into work.

2) Become an organisation of equals

One cannot claim that there is such a thing as a ‘superior’ specialty knowledge in an organisation, other than the context of specific situations. Thus, every knowledge worker is an equal and should be treat like one.

3) Enable each specialist to do their part well

In an organisation of knowledge workers who specialises in their field, it is paramount to ensure that the conditions are right for each specialist to do well. Not only does it mean allowing the knowledge worker to work in his area of expertise, but also mean creating or enabling a conducive work environment for each individual in the organisation to flourish.

4) Design for change

The goal for a knowledge organisation is innovation in tools, product and work processes and accumulation of knowledge itself. It is to abandon everything that is established, the traditions, the familiar and the comfortable settings. May it be in products, services, relationships, skills, organisational structure, or even knowledge itself.

5) ‘I’ exists because of ‘We’

The unique among the crowd, the special one. That’s how knowledge workers’ sees themselves – the different one among colleagues, the one that is holds special meaning to the organisation and to himself. He being a part of something bigger, but yet, distinctive different by drawing its identify and definition from the others around him. Without the others, he will lose all of his meaning. ‘I’ exists because of ‘We’.

6) Sharing Knowledge

Knowledge, in its purest form, is meant to be shared. The traditional response in keeping knowledge involves keeping key information secret (to their employees) by maintaining a ‘need-to know basis’ policy. However, possession of knowledge remains secondary, while making innovative use of knowledge is the primary source of competitive advantage. An organisation that promotes open interaction of knowledge encourages many possible uses for one single piece of knowledge. Knowledge is never isolated in its uses; its value will only grow when used with other compatible knowledge. Inevitably, cross-functional cooperation enhances the probability of turning knowledge into successful innovative product and services. Not only can sharing knowledge be a virtue, it can be profitable as well.

Management guru, Charles Handy (1989) once said ‘Intelligent people prefer to agree rather than to obey’. Surely, any intelligent person would agree with this statement.

It became a sign of the times when companies like IBM announced that they allow their employees to go in smart casuals, instead of the customary clown suits (suit and tie). It’s not because they wanted to, but because they needed to. If they don’t, they run the risk of losing their talents to competitors. In this knowledge economy, no company can afford to lose talented employees. Thus, companies have no choice but to let workers have their way.

Trusting your employee to do their job

I personally know of a managing director of smallish firm who still insist on downloading each of his employee’s email to his computer. His response to my somewhat shocked look was ‘I need to know what they are doing’. But if he didn’t trust them, why would he hire them in the first place?! On the other hand, I understand the tension as well; Nick Leeson single-handedly brought the two centuries-old Barings Bank to its knee. And history will certainly repeat itself. But do employers today have a choice? The knowledge worker knows that he/she have the power, and they need an environment that allows them to flourish, which in turn (hopefully) enriches the company that they work for.

With Great Power Comes Great Responsibilities

In Spiderman – The Movie, Peter Parker’s uncle said this to him. Today’s knowledge workers know and understand the power that they hold, but they must understand too that “With Great Power Comes Great Responsibilities”. The firm can put in as much rules and regulations in place to prevent abuse, but end of the day, if this phrase can be ingrained into each employee’s conscience, nothing will go wrong. How? That is another matter altogether.

Bibliography:

Handy, Charles, 1989, ‘The Age Of Unreason’, Business Books Ltd.