Decontrolling oil prices

The recent discussions towards reaching a consensus on the decontrolling of oil prices is the best possible solution in hand at the moment. People have argued that it may not be wise to expose oil, a a critical commodity for the nation, to market fluctuations. However, the same people had also put forth the same arguments for steel way back in 1985 !!

What happened was, although it was a major blow to the country's economy,it nevertheless learnt to sustain it. The same would happen in the case of oil as well. It is common knowledge that a major proportion of the taxpayer's money goes into indemnifying the losses incurred by the Indian Govt. while providing subsidies to the Indian people. Try imagining a situation where the same amount of money could be used for infrastructure, health care and education for the masses.

Needless to say, this imagination could only be incarnated if the our political parties can get over trifling issues and reach a common understanding where they can all feel the urgent need to decontrol oil prices.

Innovating for a Sustainable World

Interior garden perpetuated by worms, live chicken farm, multidimensional composting system, solar panels and wood burning stove – somewhat like your “eco-home”? Could be your “eco-car”!
“The Permibus” – the world’s first environmentally sustainable tour bus visited renewable fuels company ‘Innovation Fuels’ on Thursday, October 22, 2009 and received a free tank worth or 60 gallons of 100% pure biodiesel – after travelling over 11,000 miles on renewable energy as part of a national tour dedicated to showcasing sustainable living. The Permibus is a travelling road show of education and resources to those interested in cultivating revolutionary ways of living in their communities, or in other words, INNOVATION.

We live in a world where each one of us invariably engage ourselves in the introspection of the morality of our profits or so as to say the profitability of our morals?
The one universal and driving factor (as for all business decisions) is to protect and if possible, increase profits. This desire by businesses to maximise profits is a basic assumption of economics and although there is a clear variation in their ability to do so it lies at the heart of any business decision.

Innovation processes today have to deal with an extended and rapidly advancing scientific frontier, fragmented markets across the globe, political uncertainties, regulatory instabilities, and competitors who are increasingly coming from unexpected directions. Thus, innovation networks are becoming increasingly important in order to make use of a wide set of knowledge signals needed for effective management of innovation. There is a dire need today to design market pull instruments to maximise the energy, economic and environmental benefits from greater innovation in eco-efficient characteristics of the products.

For businesses, usually the decision to commercialise is at least as important as decisions on how to invest in R&D. Businesses are frequently aware of many innovations which they could introduce into their product ranges, but they choose not to develop all of these into commercial products – as they do not see profits arising from inclusion of those characteristics.

It is thus evident that the most significant problem hindering innovation is the 'chicken or egg' trap. It’s a trap that prevents investment: manufacturers wait until there is a demonstrated demand before they develop and commercialise technologies, but buyers wait to see the product on the market before they demonstrate they will buy it. The innovation may well have been developed as a prototype, but reaches a pinch-point at the decision to commercialise, which blocks its development. This problem arises because companies usually decide to invest in innovation by making a comparison of their likely benefits against the risks of their investment.

The Chinese market for household appliances is now one of the largest and fastest growing in the world. In 2006 China accounted for about 70% of global production of air-conditioners, air conditioner compressors and microwaves. By 2004 the EU had became China's main trading partner, while for the EU China is the second largest. However, the Chinese export of appliances to the EU fell in 2005 and 2006. This was the repercussion of the introduction of various standards and regulations, e.g. WEEE, RoHS, and energy labelling in the EU, which the Chinese products faced problems in fulfilling.

China is now in the process of promoting environmentally friendly white goods through a range of instruments: energy efficient standards, energy labelling, and government procurement. The aim of the Chinese reaction has been twofold: to reduce environmental impact but at the same time to increase Chinese manufacturer's global competitiveness.

It is thus, clear from the aforesaid reasons that programmes to promote innovation, including eco-innovation, should contain demand-side measures. Of particular significance are: The Lead Market Initiative (LMI), launched in 2006 to give industries the opportunity to develop niche markets into export products or services in new high-growth markets; and an “innovation procurement” policy to encourage public procurers to share the risk (and reward) of developing and commercialising innovations which fit their needs – this will solve our “chicken and egg” problem.

Procurement designed to support innovation, can take many forms. It can: initiate, escalate, or consolidate markets. The majority of procurement policy already in place – including green public procurement – focuses on purchase of commercially available products, which escalates (expands commercial niche markets) or consolidates markets, in addition to its direct public benefits.

However, what we need are exercises intended to procure innovations which are not yet commercialised! We need procurement to initiate markets!

Noteworthy approaches could be a direct procurement where the public procurement body purchases the innovation for its own needs – defence-related innovations or the acquisition of public transport technologies, e.g. high-speed trains; co-operative procurement involving joint buying with private purchasers to develop a new market for the technology they will both use; catalytic procurement which is a public sector action to catalyse the development of a technology, although the innovation will be exclusively used by private end-users.

Today, the need for businesses to champion the seventh, eighth and ninth principles of the United Nations Global Compact is a global concern. However the much awaited Copenhagen summit with a promise to revolutionise the entire world, left business in a state of ambiguity! With no agreement on emissions cuts it has failed to deliver the certainty required to stimulate the level of investment we need to see in low carbon solutions (which I would like to call as innovation).

This is not the clear direction that business hoped for.

What's more, business leaders were unhappy at being excluded from the negotiations. Lest we forget, it is private sector investment that will provide a significant proportion of the investment needed to drive us to a low-carbon, sustainable economy. The accord states that developing countries will receive $100 billion by 2020 but while it does not provide any detail on how, it does reference a wide variety of sources including the private sector.

If business is expected to take significant action, make considerable investment and move us towards the solutions to tackling dangerous climate change then they need to be given greater inclusion!

We talk about reforms all the time. In the present scenario, reforms are needed to make public policy and regulatory frameworks more conducive to innovation in a range of policy areas from the general business environment - especially in the services, particularly in the network industries - to international trade and international investment, financial markets, labour markets, and education.

Both sustainability and growth require increased cooperation between the areas of innovation and environmental policy. Policies should target value chains and networks, especially to involve SMEs. A choice should be made between quick results and large results. Policy instruments (such as internationalisation of R&D) should be used in a coordinated manner to achieve the best effect.

The complex dynamic environment which surrounds innovation has already been discussed; so has been the need to design effective market-pull instruments. But what should be qualities of these demand pull instruments to be most effective in promoting innovation? How can these qualities meet ethical demands in the most effective way?

Besides targeting a long-term horizon, the ultimate purpose of the mechanism needs to be clear to all those concerned– purchasers and manufacturers. This should ensure that any innovation is directed correctly. Similarly, the extent to which the manufacturers and their suppliers are aware of policy that is likely to change future demand is particularly significant to its potential to change innovation. Communication of the policy is particularly important for SMEs, who may be very innovative, but are much less likely to be aware of policy development than large companies.

Mechanisms should ideally have a built-in incentive to continually strive for best performance. This calls for a dynamic scheme, for instance an A to G energy label where the A level moves up in line with the current "best in class" on an annual basis.

Mechanisms, at the same time will also benefit if an approach towards industry involvement is followed. These include ensuring that any targets are not beyond some technically impossible barriers, that the methodology is technologically neutral to ensure no favouritism, and that the timings (for example for any future upgrading) are in line with industry development cycles and typical speeds.

The market pull mechanism needs to be fair, with the same rules applying for all manufacturers and no obvious bias in favour of one company, for example, a technology which is only used by one manufacturer. This also means that national interpretation of a given instrument has to be as consistent as possible. This quality is of relevance to innovation as without it the market pull mechanism could be accused of "picking a winner" which brings with it the risk of cutting off or becoming a disincentive to research into other potential approaches.

Innovation is the core of creating a sustainable human society. As a society, we will not succeed in creating a sustainable world if we focus merely on doing more efficiently what we currently do. We live in a time when the speed of innovation has increased exponentially and the technological landscape is changing very rapidly. As Bill Gates once said, “Never before in history has innovation offered promise of so much to so many in so short a time!”

Legal but Unethical Profit

It is dismal to see that a course on management ethics and corporate social responsibility (CSR) – qualities and values which are ASSUMED to be innate in ‘human beings’; principles and behavior which we imbibe from a course on social studies in the 3^rd and 4^th grade – are today being crammed into the heads of the so-called “managers”. The very characteristics that make us humans are today being executed in our brains like a computer program written in C++.

The morality of profits is often questioned, but the profitability of morals is seldom put to test. While managers do have the obligation to generate profits for the organizations they are working for, they also have the onus of upholding the interests of the society they are doing their businesses in.

Risky mortgages were bundled into securities and sold on Wall Street. Big funds, frenzied for a higher rate of return, ignored the risks – all resulting in the creation of a “perfect storm.” Followed up by lack of oversight by the Federal Reserve, this is what has ushered us into the recession of 2008. No infringement of legality, but a gruesome violation of ethics. Is this how we want to generate profits? The answer is NO.

Is an MBA degree really essential to become an effective manager ??

What to do, when to do, how to do and why to do – these are the ONLY questions which a MANAGER needs to address. The credibility of an MBA degree most certainly cannot be questioned. But I often fall prey to pondering as to why one’s mother, one’s aunt, one’s grandmother and the like are extremely good managers without an MHA (Masters in Household Administration) degree?

What matters is not spending hours and hours solving case studies during a two year journey from a “non-manager” to a “manager” (as goes the popular opinion). What really counts is BEING PRESENT where the case was actually being given birth to be studied.

With an over-burdening of theory, if there is no provision to vent the same into the world of practice, the value of 31,536,000 seconds (2 years) is merely reduced to a redundant degree.

Does an automobile engineer start working on an automobile the day he is given his job letter? Why is training given to engineers (I call them “engineers” because they have the “degree”) after they are placed? It’s only because theory, books and concepts can never match the true essence of practice and experience...

Management - an art or science ??

For many well-intentioned gardeners, the secret to successful gardening is a mystery known only to those lucky souls blessed with “green thumbs”. Many people see management in the same vein – a black art only practiced successfully by those possessing that certain something (that certain je ne sais quoi). So what is this secret talent? Is it experience? Is it possession of a methodology? Is it possession of tools? Or is it possession of a bag of techniques and templates? As with the struggling gardener, the answer does not lie within any of these. Successful managers will have all of these elements in their possession – elements that address the scientific aspect of management – as well as that certain je ne sais quoi.

So what is this je ne sais quoi? This is the ability of managers to manage the most critical of elements – human relationships, an ability that can be learnt to some degree, but, at the end of the day, relies on the manager’s natural discernment to inter relate and work with people. Simultaneously, managers have to work upwards to the business, sideways to stakeholders and downwards to project team members.

Management is the oldest of arts and the youngest of science, because it is of a dynamic nature. Mere knowledge of applied and time-tested concepts does not always suffice. Understanding human behavior, tactfulness, pragmatism, creativity, compassion towards staff, team spirit is all needed by a successful manager for effective and efficient management. Thus science and art are not mutually exclusive but complementary to each other. Therefore management is both a science and an art.