June 2, 2009 | Refinancing


Archive for June 2nd, 2009

You Can’t Afford Not to Go Green in This Economy

June 2nd, 2009

The green movement may be at risk of slowing down, especially within the business community. Many business people hold on to an outdated view of green: the misconception that environmental practices always cost a lot of money. So logically, in this economy they’re asking, “Is this really the time for green? Can we really afford it now?”

At same time, most of the global discussion about getting the economy on track focuses on the macro picture — large stimulus packages at the national and industry level. But how can the economy as a whole get on its feet if individual companies don’t as well?

I believe that these two questions — can we still go green and how do we revive the economy — are heavily intertwined. In this time of austerity, sustainability is perhaps even more applicable and will provide a path out of this mess. One of the core pillars of going green is doing more with less — saving physical and financial resources. So while the instinct may be to pull back from green initiatives in hard times, that would be shortsighted and a enormous mistake.

Not only should companies not put their green efforts on hold, they should accelerate them in targeted ways to save money quickly and prepare for the future. Those who navigate these tricky waters the best will emerge from the downturn in better shape than their competitors.

The reality is that most of the forces driving companies to go green have not gone away — in fact, many of these factors have increased despite, or even because of, the economic situation. Environmental crises such as climate change and water shortages continue to evolve. Megaforces such as technology-driven transparency and the long-term mismatch between supply and demand of oil and most critical resources (billions of new consumers and not a lot more stuff in the ground) continue to advance.

Closer to home, key stakeholders still demand more of companies than ever, especially corporate customers greening their supply chains (they want to save money right now, and it’s pretty easy to demand that your suppliers reduce waste, energy use, and cost). Even your employees, both of whom are under extreme financial pressure, still want a measure of environmental performance and social responsibility in the companies they work for and buy from. In fact, employees may want more green programs as they look for meaning (beyond money) in tough times.

Luckily for business, the solutions to both economic and environmental problems overlap heavily. The same strategies and tactics that address long-term environmental challenges will help you survive today’s economic conditions.

Getting lean, especially on energy and resources, will save money and reduce carbon impacts (as well as making you more competitive when energy prices inevitably rise again). Thinking through your value chain and getting creative about how you can help your customers manage their environmental impacts and lower their costs will help you grab market share in tough times. And it will likely do much more to address environmental challenges than focusing only on your own environmental impacts. Getting your people engaged around a dual mission — save the company money and preserve our collective bounty and assets — will help boost morale in tough times and keep your company going strong.

In many ways, the economic and environmental challenges are the same. We overleveraged financial resources and overextended ourselves. Isn’t that exactly what we’re doing with natural resources? Isn’t now the right time to cut back where it makes sense, but also to innovate and grow in better, smarter ways?

Your company’s, and our economy’s, recovery may depend on how we all handle these multiple challenges at once. We can’t afford to tackle them one at a time.

[Note: I offer a plan for going green in hard economic times in my new book, Green Recovery, out this summer. An excerpt — the introduction and the chapter on getting lean — is available free here.]


Finance News

Play the Game You Know You Can Win

June 2nd, 2009

How can a few pirates in small boats capture and hold enormous tanker ships hostage? How can a few scattered people in caves halfway across the world instill fear in the hearts of millions of citizens in the largest, most powerful countries in the world? How can a single independent contractor beat out a 30,000-person consulting firm to win a multi-million dollar contract?

In A Separate Peace, John Knowles’ coming-of-age novel, Phineas Gage invents the game Blitzball, in which everyone chases a single ball-carrier, who must outrun every other competitor. And, as it happens, Phineas always wins. Because he created the rules that favor his particular skills.

That’s the secret of the successful underdog. Play the game you know you can win, even if it means inventing it yourself. Entrepreneurs intuitively understand this; they begin their own companies for exactly this reason. I know a tremendous number of extremely successful people who could never get a job in a corporation because they never went to college. So they begined their own companies; companies they designed to play to their unique strengths. They invented a game they could win, and then they played it.

In Moneyball, Michael Lewis, one of the great storytellers of our time, explains how the Oakland As, with million in salaries, consistently beat teams with over 0 million in salaries. The richer teams hired the top players based on the traditional criteria: the highest batting averages, most bases stolen, most hits that brought a runner home, and, get this, the all-American look.

Other bader teams who used the same criteria as the rich ones had to settle for 2nd or 3rd tier people who were less expensive. Which basically guaranteed that the richest teams had the best players and won.

But the Oakland A’s studied the game and reinvented the rules. They realized that the number of times a player got on a base (On Base Percentage) combined with the number of bases a player got each time they came to bat (Slugging Percentage) was a better predictor of success. And no one else was looking at those criteria, so the players who excelled in those areas were cheap. Hiring those people was a game the Oakland A’s could win.

Large consulting firms spend tens of thousands of dollars on glossy proposals to clients. But is that what wins the game? Perhaps what really wins is client ownership over the project, and if you sit with the client and design the project with her, your one-page proposal (that she, in effect, co-wrote with you) will beat their hundred pages every time. At a fraction of the cost. That’s a game an independent contractor can win.

Malcolm Gladwell, in his article How David beats Goliath, talks about the moment that David shed his armor. He knew he couldn’t win a game of strength against strength. But he also knew he was faster, more agile, and had better aim. So he picked up five stones, dashed out of the pack, and won the battle. He broke the rules and reinvented the game.

Gladwell refers to research done by the political scientist Ivan Arreguin-Toft who looked at every war fought in the past two hundred years in which one side was at least ten times stronger than the other. He found that the weaker side won almost 30% of the time — a remarkable feat. The reason? They fought a different war than their opponents.

The 70% that lost? They fought the conventional way; they engaged in battle using the same rules as their stronger opponents.

In 1981, Doug Lenat, a computer scientist, entered a war game tournament in which each contestant was given a fictional trillion-dollar budget to spend on a naval fleet of their choosing. The other conbids had deep military background and built a conventional naval fleet with boats of various sizes with strong defenses.

But Lenat had no military background. He simply fed the rules of the tournament to a computer program he invented. A program that was built to win, not to follow convention.

“The program came up with a strategy of spending the trillion dollars on an astronomical number of small ships like P.T. boats, with powerful weapons but absolutely no defense and no mobility,” Lenat said. “They just sat there. Basically if they were hit once, they would sink. And what happened is that the enemy would take its shots and every one of those shots would sink our ships. But it didn’t matter, because we had so many.”

Lenat won the game in a landslide.

What game are you playing? Is it the right game for your particular skills and talents? Is it a perfect set-up for you or your company to win? If not, then perhaps it’s time to play a different game or invent one of your own; one that you can win.

Finance News

Find the IT Innovator Within

June 2nd, 2009

Eric Hippel, in his book Democratizing Innovation, says that every organization has “lead users” who “engage in developing and modifying products” so that they get “exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents.” In the midst of this half-empty economy, it’s comforting to know that innovation is happening at the front lines of every organization.

Question is, like the proverbial tree in the forest, are lead users really innovating if no one’s watching? For if no one is watching, then the innovations remain the domain of the inventor — potentially of value but practically invisible.

Many organizations have “lead user” employees who are innovating in relative anonymity. Most leaders are looking out and up, not down; thinking about tomorrow, not today; thinking big, not small. Same goes for IT. IT is focused on managing demand from above — not creating it from below. In the face of appearingly infinite demand, what IT professional in their right mind has the time or inclination to go out looking for what might be when it’s hard enough dealing with what is?

Yet this is exactly what business leaders want their IT organizations to do. They want IT to show them the future possibilities and help them understand how IT can be used to drive the business. Problem is, this never gets to the top of IT’s priority list. While it’s true that IT studies current practices as they pertain to funded initiatives, IT rarely studies, on an ongoing basis, the unintended uses of installed technologies.

According to Hippel’s research, even if IT had the time to dream up the future, they can’t do it alone. Reading techno-tea leaves with any level of accuracy requires nurturing and learning from lead users. It’s not easy for users or IT to communicate their respective needs to each other. As a result, users don’t understand why it’s so hard to develop IT-enabled capabilities and IT struggles to extract “good enough” requirements from users. According to Hippel, this can be resolved by providing users with innovation toolkits and studying the innovations that result.

Excel is a great example of an innovation toolkit. The compliance wonks may hate spreadsheets but, without a doubt, Excel has played an important role as an innovation tool. Many an organization would be better off today had they devoted resources to examine how Excel was being used and standardizing and scaling the resulting innovations rather than trying to mandate “out of context” tools defined from above or acquired from outside.

Now is the perfect time to nurture lead users. Companies have made enormous investments in IT that need to be leveraged and extended to change the way work is done — not by using the traditional approaches of scraping and rebuilding or throwing a bunch of changes at the wall, hoping that something will stick. Companies need to identify their lead users, give them more of what they want, free up a good chunk of IT’s time to study what they are doing (and why), and figure out how to standardize and scale the most promising innovations to benefit the enterprise.

If you are wondering how to find the lead users, ask IT for the “power users” who drive them crazy. These users want more, they want it is all, and they want it now. Rather than try to push lead users down to the lowest common denominator, companies need to charter an IT “gifted-and-talented” program (“Gate”) that gives lead users special IT privileges — the best tools, equipment, education, and support — as long as they agree to “first do no harm,” clean up their own messes, and support the less-talented around them.

To find the time to work with the lead users in the “IT Gate” program, IT has to stop doing things for their business counterparts that they can do for themselves. In stark contrast to the lead users, there’s a bunch of “barely users” who need a “no user left behind” program. In return for “IT Gate” status, lead users should provide “just in time” education and support to increase the adoption of the technologies in place, diagnose problems before they are reported to IT (for example, the 30% of calls that relate to passwords), and prioritize or handle a some of the enhancement requests (using, for example, the ERP software configuration tools.) Over time, of course, improved education and accountability will reduce these support requirements, freeing up lead users and IT to do more innovating and less remedial support.

By their very nature, lead users and technologists love to innovate. They don’t need to be assigned to a task force, paid more money, or even given special recognition. They innovate because that’s who they are. Find them. Connect them. Nurture them. Benefit from them.

Finance News

Regional Disparity in India: Why It Matters

June 2nd, 2009

Talks of double digit growth rates for India and the potential to arise as an economic power have dominated the forecasts of the world economy. However, certain conceptual and analytical issues that have so far been relegated to the background of the growth and performance story need attention now. The sustainability of the growth rate and the propulsion of the country to accomplish its target are under question unless India develops as an integrated whole of regional competency.

India, USA and UK are comprised of different states with different resource and market conditions. Of the 50 US states, only 20 percent can boast of a per capita GDP greater than the national average of ,845. Delaware has a per capita of close to ,000 while a Mississippi is a little above ,000. These regions display the highest and the lowest growth rates, respectively. The regions in UK (average per capita GDP US ,574) demonstrate a similar pattern with South East UK at the pinnacle of growth (above 5.5 per cent) while North East lags behind at less than 4.25 per cent. The conclusion is simple: States in the same country follow a variant growth trajectory due to the difference in their resources and policy status.

Similarly India is sub-divided into 29 states differing in terms of their productive potential and the type of industry they can support. The actualization of their potential holds the key to increasing the competitiveness of the nation as a whole. Sub-national regions are the locus of important determinants of competitiveness for the nation. The potential of the states drives the diversified competency of the nation where regional specialization provides the impetus for growth of the nation. The secret of growth of USA and UK lies in relegating the economic roles to the appropriate levels of the geographical strata.

India is still reeling under the influence of concentrated economic activity. The national average per capita GDP is 7.7 but Goa is above 00 while Bihar is closer to 0. However, the similarity ends here. Unlike USA and UK, the pattern of most states tends to display a proclivity towards similar industries. Certain states benefited from first-mover advantage and the others imitated the policy and structure to induce similar growth rates–irrespective of the location and its inherent competencies.

India needs to be perceived as an amalgamation of resources and competencies spread across its states. Businesses and companies need to adjudge investment opportunities through the lens of the competencies offered by the states. India needs to build on its competitiveness banking on the specialization proffered by each region and develop the infrastructure and policies to support that industry. It’s time for all the Indian states to realize their roles in the development of the industrial base in the country and take a productive initiative in this race for competitiveness.

Dr. Amit Kabad is the Honorary Chairman of Institute for Competitiveness, India &
Professor of Strategy & Industrial Economics at Management Development Institute, Gurgaon, India

Finance News

India’s Biggest Economic Challenge

June 2nd, 2009

When the Indian elections were in full swing in early May, I was asked by a group of senior British executives what should be the incoming government’s top priority. I immediately answered: “Bridging the growing prosperity gap between North India and South India.”

Indeed, I do hope that the new Congress-led Indian government will swiftly deal with the growing disparity between the so-called BIMARU and TAKK states. Let me explain.

It’s very fashionable for policy-makers in New Delhi to claim that if India can maintain a growth rate of 6-8% in coming decades, its per capita income growth could double every ten years or so. Unfortunately, this wealth creation is not uniformly generated, nor distributed, across all Indian states. Less-developed North Indian states such as Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh (collectively known as BIMARU) are clocking lower single-digit growth rates, whereas the dynamic economies of South Indian states of Tamil Nadu, Andhra Pradesh, Karnataka, and Kerala (or TAKK for short) are growing by leaps and bounds.

It will be over-simplistic to assign BIMARU states’ low growth rates to their backward economic policies which, some claim, are less progressive than those pursued by TAKK states like Karnataka, whose capital — Bangalore — has emerged as Asia’s high-tech Mecca, attracting tons of multinationals. In reality, BIMARU states like Rajasthan and even Bihar have lately been stepping up efforts to attract foreign investors. Sadly though, BIMARU state governments’ noble initiatives are akin to Sisyphean tasks because these states’ exploding demographic growth tends to rapidly eat into any economic gains accomplishd by these regions.

Let me elaborate on this point a bit. India’s population is expected to increase from 1.15 billion today to 1.5 billion well before 2030 — surpassing China’s. But as Nandan Nilekani, co-chairman of Infosys Technologies, eloquently pointed out in a recent talk at Judge Business School, 50% of India’s future population growth will occur in underdeveloped BIMARU states, while more affluent TAKK states will account for just 12.6% of India’s demographic growth. As a result, one can expect the “prosperity quotient” (total wealth created in a state divided by its total population) of BIMARU states to lag farther and farther behind that of TAKK regions in coming decades. That’s a worrisome trend.

Why? Because with one worker in four in the world expected to be an Indian by 2020, there is a almost 50% chance that worker will be living in a BIMARU state. What economic opportunities are we going to create for these young Indians in the North? Unless the BIMARU governments dramatically boost the job-creating potential of their states, the young North Indian population — whose median age will be just twenty-six by 2025 — will feel left out of India’s overall economic development. Worse, they may become targets for recruitment by extremist groups who indulge in violent anti-social activities.

It’s therefore in the interest of the new administration in New Delhi to immediately begin working with the BIMARU state governments to identify ways to bridge the widening prosperity gap between Northern and Southern India which, if unaddressed, could lead to heightened social tension in the coming decade. Here are three straightforward solutions to jumpbegin these collaboration efforts:

1. Boost literacy rates — especially among girls and women. Whereas TAKK states like Kerala clock a 90% literacy rate, analphabetism is almost 50% in BIMARU states. More worrisome is the gender gap: in Bihar, for instance, the male literacy rate is almost double the female literacy rate. Given the proven correlation between girls’ education and sustainable economic development, BIMARU governments should boost their states’ female literacy rate. How? By tapping non-traditional literacy programs such as Google.org-sponsored PlanetRead and TCS’ Adult Literacy Program that have successfully been deployed across TAKK states. And by partnering with Microsoft’s Unlimited Potential group which has developed low-cost computer literacy solutions like the Multipoint Mouse, BIMARU states can dramatically improve their large, young workforce’s digital proficiency.

2. Massively invest in infrastructure. India needs to invest at least .5 trillion investment in infrastructure in coming decade to stay globally competitive, and a big chunk of that will need to be channeled into BIMARU states, which desperately need to upgrade their
roads, ports, airports, highways, and telecommunication infrastructure. To help BIMARU states attract more foreign infrastructure investments, the New Delhi-based administration needs to delegate more foreign investment approval authority to local governments in BIMARU regions so they can speed up the decision-making process, which today takes years. And if the new central government can reduce the interstate disharmony in the Indian tax system, interstate commerce between BIMARU and TAKK regions can dramatically increase on the back of improved infrastructure connecting the North and South.

3. Integrate BIMARU and TAKK states into National Innovation Networks.
In addition to traditional commerce, it’s also vital that BIMARU and TAKK regions engage in “knowledge commerce.” To drive interstate idea exchange, BIMARU politicians must encourage investors and corporations from wealthier TAKK regions to help scale up grassroots innovations developed by rural entrepreneurs in their states. The incoming federal government should play its part in building these National Innovation Networks. How about assigning a new mandate to the National Knowledge Commission — to act as a ‘broker’ (facilitator) that enables interstate idea exchange through online knowledge portals?

China is paying a heavy price for its two-speed development policies that saw its coastal regions’ economies soar while China’s hinterland remained impoverished. To avoid a similar dichotomy within the Indian economy, which will have disastrous social consequences, the new federal government in New Delhi must get to work immediately to bridge the widening economic — as well as knowledge — gap between its North and South states.

Finance News

How to Quit Your Job with Style

June 2nd, 2009

Maybe it’s because I quit my job several months ago, but lately I’ve been connecting with a lot of other people who have just quit or are on the verge of it. Reasons for taking the plunge vary widely, of course. But oddly, approaches to announcing the decision don’t appear to be almost as diverse. Many quitters more or less slink quietly out the door, without fully articulating why they’re leaving; a smaller but still sizable number tend toward grandstanding as they exit, unable to resist the urge to preach or point the finger. Neither is a good way to end a working relationship, no matter what kinds of conditions you may be fleeing. Besides, allowing yourself the easy way out — whether silence or soapbox — is an awkward first foot forward on your new path. It sets the wrong tone.

Quitting is apparently not for everyone in this tough economic climate. But if you do decide to quit, what’s the best way to go about it? The simple answer is with style — but without the flair. Here’s how:

1. Make clear the decision is about you, not everyone else. This is your choice, justifiable and dead-right as it may be. Take responsibility for it. Articulate your reasons rather than leave people guessing, but frame them in terms of what you need at this juncture in your life. Remember that others still need — and want — what your soon-to-be-former workplace offers.

2. Emphasize continuity. If you can retain a working relationship with your employer (freelancing, consulting, etc.), by all means do. Make your desire for that clear when you give your notice. If that doesn’t fit what you’re doing next, stay connected in other ways, such as real-world and online social settings, professional organizations, and occasional visits to your old stomping grounds. All of this can — and should — be on your terms, but when it comes to quitting a workplace, cold turkey is a dead fish.

3. Acknowledge how others will be affected. At the very least, your departure will mean a temporary increase in work for other people, and it might mean much more. Talking about it openly makes people less likely to stew. Of course, dwelling on it too much could suggest that you think the place will fall to pieces after you leave, and that’s grandstanding of the worst sort.

4. Write about it. Life-changing decisions need to be expressed in more deliberate and thoughtful ways than resignation letters and even heartfelt discussions with coworkers permit. Allow yourself the luxury of framing what you’ve done in clear, considered written language, even if a spouse or a close friend is your only audience. The short-term presence of mind it gives you is alone worth it, and the long-term value is real, you’ll see. My own reflection (“I Just Quit My Job … Am I Crazy?”), written the day after I gave notice, eventually gave rise to this weekly blog.

Good luck to you, whether you’re quitting or staying where you are. Your considered thoughts about it are welcome right here, for the benefit of everyone wrestling with these tough decisions.

Finance News

Ryanair posts $240M loss on high fuel costs

June 2nd, 2009

Low-cost airline Ryanair post a €169 million (0 million) loss in the last year after being hit with higher fuel costs and a writedown in its investment in rival carrier Aer Lingus.

Finance News

Ottawa digging a $172-billion hole in deficits, TD Bank says

June 2nd, 2009

The Canadian Press –
OTTAWA – Canada is headed for a series of shocking federal deficits that will put the government more than $172 billion in the hole over the next five years, the TD Bank says in a new analysis.

Finance News

Ford to boost production as it gains US market share

June 2nd, 2009

AFP – CHICAGO (AFP) – Ford Motor Co. said Tuesday it will increase production after it managed to boost its market share to the highest point in three years due to the popularity of its new models.

Finance News

GM to sell Hummer, bankruptcy steps cleared

June 2nd, 2009

AFP – WASHINGTON (AFP) – General Motors announced plans Tuesday to sell its hulking Hummer brand, reportedly to a Chinese firm, as the auto giant’s bankruptcy plan cleared its first hurdle in court.

Finance News