Enterprise Resilience Management Blog

Algae and Unintended Consequences

In January, I wrote a post about research involving algae as a potential source of biofuel [The Potential of Pond Scum]. Biofuels edged their way into the news because of rising oil prices and have remained in the news because of the global food shortage. Critics have argued that extensive use of food crops (like corn, soybeans, and palm oil) as feedstock for biofuel refineries has contributed to the food shortage and rising prices. Proponents of algae a feedstock for biofuel argue that, because it is not a food crop and can be grown where food crops can't be grown, it is a good alternative to pursue. In a May post [Weeds and Biofuels -- a Warning], I focused on environmental concerns about using fast-growing "weeds" as a biofuel feedstock. Environmentalists are concerned that use of such grasses could get out of control and that fast-growing grasses could destroy local ecosystems. Now news out of the South Pacific demonstrates the unintended consequences of trying to produce commercial crops of algae by introducing a new species of algae into areas where algae had never before been a problem ["Corals, Already in Danger, Are Facing New Threat From Farmed Algae," by Christopher Pala, New York Times, 8 July 2008].

"Off the palm-fringed white beach of this remote Pacific atoll [of Butaritari, Kiribati], the view underwater is downright scary. Corals are being covered and smothered to death by a bushy seaweed that is so tough even algae-grazing fish avoid it. It settles in the reef’s crevices that fish once called home, driving them away. Dead coral stops supporting the ecosystem and, within a couple of decades, it will crumble into rubble, allowing big ocean waves to reach the beach during storms and destroy the flimsy thatched huts of the Micronesians."

Pala reports that the above scene is very reminiscent of what is happening in Kaneohe Bay on the island of Oahu, Hawaii. The seaweed doing all the damage is called Eucheuma. It was introduced to Butaritari as a source of income for locals who have few other means of producing revenue. Unfortunately, the seaweed is destroying the fishing upon which the locals rely for protein.

"Seafood is virtually the only source of protein in Butaritari, complemented by breadfruit and coconut. This equatorial island of 4,000 people is the latest victim of a 30-year global effort to encourage poor people in the coastal areas of the tropics to grow seaweed that, while not edible, produces carrageenan, an increasingly sought-after binder and fat substitute used in the food industry, notably in ice cream. Today, about 120,000 dry metric tons a year are produced, mostly in the Philippines and Indonesia, where the two main algae originate. Kappaphycus alvarezii is most desirable because of its high carrageenan content; Eucheuma denticulatum is less valuable but easier to cultivate. Both were introduced in the past three decades to 20 countries around the world from Tonga to Zanzibar and the result in most of them has been failure or worse. The alga K. alvarezii invaded the Gulf of Manmar Biosphere Reserve in south India a decade after commercial cultivation began in nearby Panban. 'No part of the coral reef was visible in most of the invaded sites, where it doomed entire colonies,' the journal Current Science has reported. In the Pacific, for example, the two algae were introduced to 10 countries and are said to be commercially cultivated in three: Kiribati, the Solomon Islands and Tonga. But in the case of Kiribati, interviews with seaweed officials in Tarawa, the capital of this nation of tiny islands sprinkled over a swath of ocean the size of India, reveal that since the first effort to cultivate algae in 1986, the industry has lost money almost every year and the farmers have shown little enduring enthusiasm for the crop."

Although these seaweed farms are not intended to support the biofuel sector, the unintended consequences that the introduction of an invasive species of seaweed has had in many of these countries serves as fair warning about the need to move cautiously. Seaweed farming ended two years ago in Butaritari, but the seaweed problem remains. Local citizens have no resources (except manpower), to apply against the problem.

"[Henry Totie, a fisherman and the] Butaritari traditional chief, says the only way to prevent Eucheuma (which locals call seaweeda, since it has no local name) from destroying the entire lagoon is for the seaweed company to offer to buy it. 'Then the people would go out and get it and it would be gone in a few months,' he said. 'If they wait, the problem will just get worse.' [Kevin Rouatu, a stocky, cheerful former banker who runs the Atoll Seaweed Company in Kiribati,] agrees that some sort of noncommercial purchase plan needs to be set up to save the Butaritari lagoon, perhaps with foreign aid."

The point here is that good intentions don't necessarily make good sense. To underscore the point (if it really needs underscoring), the algae problem now facing Hawaii was actually instigated by a college professor trying to conduct "useful" research.

"In Hawaii, three kinds of algae were brought in during the 1970s by a professor of botany at the University of Hawaii, Max Doty, who developed the techniques of cultivation that were exported around the world. One species dominates Oahu's south and the two others, mostly Eucheuma, have spread to about half of the coral heads of Kaneohe Bay. Celia Smith, the successor to the late Dr. Doty at the university, is now a leader in the effort to save the bay. 'It's not easy,' she said, for the seaweeds grow at a rate of 7 percent a week. The university, state and Nature Conservancy devised Super Suckers, vacuum cleaners on powered catamarans that are sucking up 3,000 pounds of seaweed a day each. 'At the current rate, we’ll need 10 years to clean up the bay,' says Brian Hauk, the state aquatic invasive species supervisor."

Finding a way to use algae as the feedstock for the biofuel industry might help with the development of better harvesting techniques that could be used to clean up some of the trouble spots around the globe. It could also have the unintended consequences of fostering algae farms in inappropriate areas and spread the challenges already faced by sensitive ecosystems. Rarely can a silver bullet solution be found to any challenge. Good research, good planning, and good consequence management are critical for any new venture to succeed in a way that the benefits outweigh the risks.

Little Sacrifices that Make Big Differences

One of the reasons that I enjoy reading New York Times op-ed columnist Nicholas Kristof is that he is basically an optimist. He travels to some of the most devastated, war-torn, poverty-stricken places on earth and reports the terrible conditions he finds there; but he doesn't write about doom and gloom. Rather, Kristof looks at the situation and asks, "What can be done to make the situation better?" In one of his more recent columns, he related the story of how a group of Sunday School children may end up having a great impact on the future of an African nation ["The Luckiest Girl," 3 July 2008]. He begins:

"This year's college graduates owe their success to many factors, from hectoring parents to cherished remedies for hangovers. But one of the most remarkable of the new graduates, Beatrice Biira, credits something utterly improbable: a goat ... and it's appropriate that the goat that changed her life was named Luck."

So far we know that Beatrice Biira graduated from college and that a goat played an important role. As radio commentator Paul Harvey would say, "Now it's time for the rest of the story."

"The tale begins in the rolling hills of western Uganda, where Beatrice was born and raised. As a girl, she desperately yearned for an education, but it seemed hopeless: Her parents were peasants who couldn’t afford to send her to school. The years passed and Beatrice stayed home to help with the chores. She was on track to become one more illiterate African woman, another of the continent’s squandered human resources. In the meantime, in Niantic, Conn., the children of the Niantic Community Church wanted to donate money for a good cause. They decided to buy goats for African villagers through Heifer International, a venerable aid group based in Arkansas that helps impoverished farming families. ... One of the goats bought by the Niantic church went to Beatrice's parents and soon produced twins. When the kid goats were weaned, the children drank the goat's milk for a nutritional boost and sold the surplus milk for extra money. The cash from the milk accumulated, and Beatrice's parents decided that they could now afford to send their daughter to school. She was much older than the other first graders, but she was so overjoyed that she studied diligently and rose to be the best student in the school. An American visiting the school was impressed and wrote a children's book, 'Beatrice’s Goat,' about how the gift of a goat had enabled a bright girl to go to school. The book was published in 2000 and became a children's best seller."

The tale is already a remarkable one and the Sunday School children in Niantic, CT, would have undoubtedly been delighted had the story ended there. But, as we know, Beatrice's education did not stop with reading, writing, and arithmetic.

"There is now room for a more remarkable sequel. Beatrice was such an outstanding student that she won a scholarship, not only to Uganda's best girls' high school, but also to a prep school in Massachusetts and then to Connecticut College. A group of 20 donors to Heifer International — coordinated by a retired staff member named Rosalee Sinn, who fell in love with Beatrice when she saw her at age 10 — financed the girl's living expenses."

Beatrice has now graduated, as Luck (the goat) would have it. So what does the future hold for her? Kristof continues the story:

"Beatrice plans to earn a master's degree at the Clinton School of Public Service in Arkansas and then return to Africa to work for an aid group. Beatrice dreams of working on projects to help women earn and manage money more effectively, partly because she has seen in her own village how cash is always controlled by men. Sometimes they spent it partying with buddies at a bar, rather than educating their children. Changing that culture won't be easy, Beatrice says, but it can be done."

Beatrice's graduation was such a momentous event that, Kristof reports, "villagers in western Uganda recently held a special Mass and a feast to celebrate the first local person to earn a college degree in America." That's a great story, but Kristof is a realist and admits that humanitarian assistance doesn't always produce such amazing outcomes. The biggest challenge that prevents better results from aid is corruption and, according to Beatrice, there is a lot of corruption in Uganda. That is why she considers herself the luckiest girl in the world -- because everything fell in place to make her dreams a reality. Kristof writes about all of the things that could have gone wrong:

"Granted, foreign assistance doesn't always work and is much harder than it looks. ... A crooked local official might have distributed the goats by demanding that girls sleep with him in exchange. Or Beatrice's goat might have died or been stolen. Or unpasteurized milk might have sickened or killed Beatrice. In short, millions of things could go wrong. But when there's a good model in place, they often go right."

I entirely agree with Kristof about the value of good models. Using best practices and internationally recognized standards is part of the philosophy behind Enterra Solutions' Development-in-a-Box™ approach. Models, standards, and practices may have to be adjusted to fit local conditions, but if you don't start with a good model, good things are unlikely to result -- except by chance. Kristof concluded his column by encouraging people to get involved.

"When people ask how they can help in the fight against poverty, there are a thousand good answers, from sponsoring a child to supporting a grass-roots organization through globalgiving.com. (I’ve listed specific suggestions on my blog, nytimes.com/ontheground, and on facebook.com/kristof). The challenges of global poverty are vast and complex, far beyond anyone's power to resolve, and buying a farm animal for a poor family won't solve them. But Beatrice's giddy happiness these days is still a reminder that each of us does have the power to make a difference — to transform a girl's life with something as simple and cheap as a little goat."

Kristof notes that a dairy goat in Heifer’s online gift catalog costs $120; a flock of chicks or ducklings costs just $20. In previous posts, I've talked about how you can help provide microloans to people around the world (see, for example, Financing the Poor). Kristof may be right that it is "far beyond anyone's power to resolve" global poverty, but he is also correct that each of us can "make a difference." Our efforts at charity may never be written up in the New York Times or even have much of an impact beyond the few lives we touch. That's okay. To the person or family we touch, the impact can be enormous. Even if no one else ever knows what you did -- you'll know -- and life will be better.

Reviving U.S. Manufacturing

In a recent post entitled "Development-in-a-Box™ at Home in America," I focused on an op-ed piece by Thomas Friedman. In that piece, he chided U.S. politicians for not embracing policies that fostered the "next great global industry — renewable energy and clean power." Their lack of vision and action, he lamented, meant that America was not taking advantage of an opportunity clearly ready to be exploited. In another New York Times' op-ed piece, former Democratic senator and presidential candidate Gary Hart called on his party's candidate, Barack Obama, to use the campaign to outline a new chapter for American politics ["America’s Next Chapter," 25 June 2008]. Hart argues that new political chapters are, historically, written about every three decades and that the time is ripe for a new one.

"Henry Adams believed that 'a period of about 12 years measured the beat of the pendulum' during the era of the founders. Schlesinger, borrowing from his historian father, estimated that the swings between eras of public action and those of private interest were nearer to 30 years. What matters more than the length of the cycles is that these swings, between what [Arthur] Schlesinger called periods of reform and periods of consolidation, clearly occur. If we somewhat arbitrarily fix the age of Franklin D. Roosevelt as 1932 to 1968 and the era of Ronald Reagan as 1968 to 2008, a new cycle of American political history — a cycle of reform — is due."

Hart, of course, hopes that his party's nominee wins the White House and implements a new era of reform. Never one to shy away from expressing his opinions Hart goes on to tell Obama what he believes are the themes that must form the basis of this new era.

"No individual can entirely determine the architecture of a historical cycle. But much of the next one will be defined by how we grapple with a host of new realities, ones that reach beyond jihadist terrorism. They include globalized markets; the expansion of the information revolution into places like China; the emergence of new world powers including India and China; climate deterioration; failing states; the changing nature of war; mass migrations; the proliferation of weapons of mass destruction; viral pandemics; and many more. Senator Obama's attempt to introduce the next American cycle should include, at minimum, three elements. National security requires a new, expanded, post-cold-war definition. America must transition from a consumer economy to a producing one. And the moral obligations of our stewardship of the planet must become paramount."

I was struck when I read that "America must transition from a consumer economy to a producing one." Hart doesn't make what he means entirely clear, but it sounds like he wants the U.S. to start manufacturing more things and stop buying them from overseas. One could argue, of course, that in the information age a service economy (as opposed to a manufacturing economy) does "produce" value. Nevertheless, I suspect Hart was referring to generating new manufacturing jobs -- some of which, I assume, would be in the renewable energy and clean power sector supported by Friedman. Hart's vision raises another question, however: Can the U.S. recapture its manufacturing base? Pete Engardio, writing in BusinessWeek, asks just such a question ["Can the U.S. Bring Jobs Back from China?" 30 June 2008 print edition]. His answer is "maybe." But he warns, "American industry may not be ready to seize the opportunity" even when it presents itself. He begins his article with the story of a New England battery developer who couldn't find a U.S. company to produce her batteries.

"Christina Lampe-Onnerud has a long-lasting, fast-charging battery for notebook computers that she believes will revolutionize the industry. Her company, Boston-Power, would like to make the batteries in the U.S., which she says is feasible despite high American wages. But Lampe-Onnerud has had trouble finding anyone in the U.S. even to make a prototype, let alone manufacture the battery in bulk. China, by contrast, is home to more than 200 battery manufacturers. On visits to the mainland, Lampe-Onnerud toured dozens of factories with ample staff and laboratories, and none wanted the millions of dollars up front that one contract manufacturer in the U.S. had demanded. She recalls a negotiating session last year that started at 9 a.m. and ended with a midnight dinner. Despite parting with 30 unresolved questions, 'at 9:00 the next morning, the entire management team was there with pressed white shirts and a PowerPoint presentation addressing every issue,' she says. 'That's how badly they wanted the business.' In six months, Boston-Power was ramping up production in a 400-worker factory in Shenzhen."

In the post I mentioned at the beginning of this blog, I indicated that I had observed the same thing about U.S. businesses and workers. They seem to have lost their competitive edge, especially when dealing with emerging economies. I argued that America needs to reinvigorate the culture of hard work and ambition that made it great in the first place. As Lampe-Onnerud found, there are plenty of people elsewhere in the world who still have those qualities and use them to their advantage. Engardio explains why this is a good time to consider increasing U.S. manufacturing.

"The economics of global trade are starting to tilt back in favor of the U.S. to a degree unseen in a generation. Since 2002 the dollar has plunged by 30% against major world currencies and is falling against the yuan. Wages in China are rising 10% to 15% a year. And spiking oil prices are driving up shipping rates. The cost of sending a 40-foot container from Shanghai to San Diego has soared by 150%, to $5,500, since 2000. If oil hits $200 a barrel, that could reach $10,000, projects Toronto financial-services firm CIBC World Markets. But as the experience of Boston-Power and countless companies like it shows, the map of global commerce can't be redrawn overnight. American factories and supplier networks in many industries have withered in the era of globalization, so it will take lots of time and capital before the U.S. can become a big player again. In electronics, for instance, there has been a mass migration of component makers to China in the past decade. Ditto for suppliers to Midwest heavy-equipment makers and North Carolina's furniture industry."

Engardio isn't naive enough to believe that the U.S. can recapture all of the manufacturing jobs that have gone elsewhere. He writes:

"The bulk of goods made in China—clothing, toys, small appliances, and the like—probably won't be coming back, because they require abundant cheap labor. If anything, their manufacture will go to other low-wage nations in Asia or Latin America. And in industries from machinery to motorbikes, China's productivity gains nearly offset rising wages and fuel prices."

So where does Engardio see opportunities?

"In areas where the U.S. is at the forefront of innovation—renewable energy, nano materials, solid-state lighting—the U.S. must compete with Asian and European nations willing to lavish entrepreneurs with start-up capital, cash grants, and cheap loans. Similar help may be needed to persuade U.S. companies to build capacity. The global industrial landscape certainly appears to be in the early stages of a realignment. The euro's breathtaking rise against the dollar has spurred European makers of cars, steel, aircraft, and more to shift production to the U.S. Now the soaring cost of fuel is making it pricier to send goods across the Pacific. Consider Japan's steel industry, which depends on imported iron ore and coal to create high-end metal for Japanese automakers in the U.S. In 2003 it cost $15 to ship a ton of iron ore costing $30 from Brazil to Japan. By last fall, while the ore had jumped to $80 per ton, shipping costs had risen to $90. Shipping of raw materials now accounts for 13% of the price of rolled steel used in car bodies, estimates CLSA Asia-Pacific Markets. The finished steel must then be sent to factories in the U.S., pumping up the price even further. Rising costs are starting to eat into what American managers fearfully call the China Price, the once-formidable 40% to 50% cost advantage enjoyed by Chinese manufacturers—and demanded by customers."

In another post [Looking for Jobs that Last], I wrote: "Countries that want to benefit from globalization must reconcile themselves to the reality that it fragments supply chains and sends jobs in all directions. As my colleague Tom Barnett puts it, 'Globalization integrates trade by disintegrating production chains and dispersing them across economies.' ... The fact is that the vast majority of global trade involves multinational corporations. If you want to get in front of that money you had better embrace them. Why? Not only are multinationals involved in the bulk of global trade, but half of that trade is intra-network trade -- meaning trade within industry sectors or within the multinational companies themselves. ... Understanding the supply chain is critical for understanding what types of job will last." Engardio is basically making the same point. As transportation costs rise, supply chain routes are likely to change and that provides companies with new opportunities.

"Examples of production shifts abound. Chinese steel exports to America are down 20% in the past year, notes CIBC, while U.S. steel output has jumped 10% despite the slowdown in construction. Big electronics manufacturers are expanding assembly of high-end telecommunications, computer, and medical equipment in Mexico and some parts of the U.S. for greater proximity to corporate buyers."

Engardio reports, however, that many U.S. industrial sectors have downsized so dramatically that they cannot easily gear back up for increased production.

"Look behind these examples, though, and obstacles to a broad manufacturing migration become clear. Iron castings maker Donsco, on the banks of the Susquehanna River in eastern Pennsylvania, illustrates the dilemma. In recent years, Donsco has laid off hundreds of workers as customers shifted production of gear boxes, oil rig parts, and much more to Chinese competitors. Now, Donsco says it's flooded with order inquiries from U.S.-based clients. 'All of a sudden our customers are saying, Whoops, it's cheaper to buy in our backyard,' says Donsco Chairman Art Mann Sr. While Donsco managed to keep its doors open, many of its U.S. rivals shut down, so there's now a shortage of capacity."

Engardio goes on to report that industries like Donsco are not rushing to increase capacity because the costs are high and so are the risks. The story, he writes, is same in industry after industry -- furniture, lighting fixtures, heavy equipment, and so on. The risks are high because increased capacity doesn't guarantee clients. Companies that have spent millions to move production to China and elsewhere aren't eager to spend millions more relocating back to the U.S. For its part, the Chinese are working hard to keep manufacturing jobs they have attracted.

"How has China been able to keep its edge in the face of soaring costs? One factor that's widely overlooked is rising productivity. For the past decade, U.S. manufacturing productivity growth has averaged 4.8%. That's impressive for an industrialized nation, and bodes well for U.S. industry when the economy recovers. But productivity at medium and large Chinese manufacturers—the backbone of country's export boom—has averaged nearly 19% over the same period, says Bart van Ark, chief economist at the Conference Board, a business research group. While American manufacturers have been tightening their belts, producers in China have been plowing money into bigger and more advanced facilities that are ahead of their U.S. counterparts. Douglas Bartlett, chairman of Bartlett Manufacturing, a Cary (Ill.) maker of high-end circuit boards used in defense and medical systems, doesn't see a big reversal in store. A decade ago the U.S. accounted for one-third of global circuit-board output. Today that's down to 10%, with China making 80%. Chinese boards are still 40% to 50% cheaper than the ones Bartlett makes in the U.S., in part because producers there have superior technology."

That is why any increase in U.S. manufacturing jobs is likely to come in emerging economic sectors rather than in more traditional sectors. Engardio concludes:

"The new cost equation likely will influence many decisions about where to locate production in the future. America remains the world's biggest manufacturer, after all, because it's still the largest market for everything from drugs and packaged foods to high-end medical equipment. The U.S. may have as good a chance as anyone of being a strong player in nascent industries, whether next-generation wind turbines, medical devices with nano-scale sensors, or electric cars. The challenge will be to persuade reluctant venture capitalists and corporations to invest again in modern U.S. production facilities."

He believes that government agencies can also play a role by providing seed capital to promising startups and by building industrial parks with low-cost facilities and services that rival those found in China. Friedman called that "nation-building at home" and I referred to it as Development-in-a-Box™ at home. Whatever you call it, America needs to build world-class facilities to support emerging economic sectors as well as reinvigorate the pioneer spirit that made American workers the most productive in the world.

Creating a Sustainable Future

Nearly two decades ago, MIT professor Peter Senge wrote a best-selling business book that introduced the notion of "learning organizations." [The Fifth Discipline, New York: Doubleday, 1990]. "As he describes it, a learning organization is one in which 'people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.' Such organizations tend to be more flexible, adaptive, and productive—critical qualities in a time of rapid change." ["Peter Senge's Necessary Revolution," BusinessWeek online, 11 June 2008]  Almost every entrepreneur wants to create a company whose environment fosters innovation, its employees are self-motivated, and everyone understands and works toward a common goal. It's not as easy as it sounds, but it is critical for success. Senge has now directed his attention and intellect toward broader collaborative enterprises and has published the results in his new book The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World (New York: Doubleday, 2008). According to the BusinessWeek article:

"Senge and his co-authors grapple with the daunting environmental problems we face, and highlight innovative steps taken by individuals and corporations, often in partnership with global organizations such as Oxfam, toward a more sustainable world."

The article, which is primarily excerpts from an interview with Senge, introduces Senge's reflections by noting how his first book relates to the second.

"It may seem surprising that an expert in management and organizational change is focusing on sustainability, but there is a strong connection to Senge's work. In his earlier book, he laid out an approach to management that combines systems thinking, collaboration, and team learning. ... In The Necessary Revolution, Senge applies the same thinking to a system bigger and more complex than the organization: global society. The book is a call to arms, an argument to business leaders that they must rethink their approach to the environment or, as one executive told Senge, 'we won't have businesses worth being in in 20 years.' But the authors don't linger on the problems, focusing instead on the stories and insights of successful innovators, on creative solutions, and on practical approaches to meeting these challenges."

As noted above, the bulk of the article consists of excerpts of an interview with Senge conducted by Jessie Scanlon in Senge's office. The interview was focused on "the critical role that business will play in the coming revolution, the visionary leaders at companies such as Nike and Costco, and the future of the corporation." The first question was why he titled the book The Necessary Revolution. Senge replied:

"I don't really like the word 'necessary' because it makes it seem we have no choice. On the one hand, we don't. There's only so much water in the world. There's only so much topsoil. There's only one atmosphere, so there's only so much CO2 that can be stuffed into the atmosphere. But real change occurs when people make choices. We're not going to get out of the predicament that we're in by a lot of teeny incremental things. It's going to take bold ideas. The word 'revolution' was meant to be in the spirit of the Industrial Revolution. Not a political revolution because this absolutely has to be a nonpartisan issue. The future doesn't belong to one party or another."

I have been arguing for some time that in order for industrial age organizations to transform into information age globally integrated enterprises they are going to have to shed industrial age thinking and structures. Senge similarly argues that the many industrial age beliefs are going to have to be abandoned. He explains:

"One industrial age belief is that GDP or GNP is a measure of progress. I don't care if you're the President of China or the U.S., if your country doesn't grow, you're in trouble. But we all know that beyond a certain level of material need, further material acquisition doesn't make people happier. So you have a society predicated on the idea that you have to keep growing materially, and yet nobody actually believes it."

Scanlon also asked Senge if he had discovered any patterns about the kinds of people that are leading the charge in the "necessary revolution." He indicated he had.

"The first is obvious: People have to be passionate. These are innovators in a fundamental sense, and innovators innovate because there is something that they are passionate about. Second, they all in different ways were able to step back and see a bigger picture. This is a huge challenge for people in companies, because so many companies are dominated by short-term perspective and because lots of people in key positions simply aren't very good or don't care very much about the bigger picture. Watch how the decisions are made. Are they thinking of the value of the company 10 years after they retire, or are they thinking about the value of their stock options this year? The other two things we focused on are the ability to connect with lots of people and collaborate across boundaries—you could call it high levels of relational intelligence. The final element that we saw again and again is a shift [in strategy] away from 'we've got to stop doing x, y, or z' and all the negativism that tends to pervade these issues."

For those familiar with studies about innovation, all of this should sound familiar. Most innovators are motivated by ideas more than profits. Seeing their ideas implemented is what keeps their fires stoked -- sometimes to the point of personal exhaustion. Senge's point about seeing the big picture is also well known. Every good book on innovation or change management stresses the importance of vision and how to communicate that vision to others so that it permeates the entire organization. Sometimes that process is called alignment. Next Senge talks about connectivity and collaboration -- generating what Frans Johansson calls the "Medici Effect." Finally, he talks about attitude. Entrepreneurs and innovators are, by nature, optimistic people. It is that sense of optimism that attracts both capital and people to their causes. A company filled with skeptical or negative people will never find a vision large enough to position it properly for the future.

Scanlon asked Senge how else companies must change beyond being able to practice what Peter Schwartz calls "the art of the long view"? He responded:

"You go to any MBA program, and you will be taught the theory of the firm, that the purpose of the firm is the maximization of return on invested capital. I always thought this was a kind of lunacy. A well-managed business will have a high return on invested capital. But that's a consequence. It's not a way to manage a business. I remember a great quote of Peter Drucker. He said: 'Profit for a company is like oxygen for a person. If you don't have enough of it, you're out of the game. But if you think your life is about breathing, you're really missing something.' The purpose [of an enterprise] is never making money. And I think a lot of the best innovators inside big companies, the reason they succeed is that they really understand the theory of their business."

Although that sounds a bit confusing -- i.e., understanding the differences between "economic theory of the firm" with the "theory of business" -- Senge provides an example of what he means.

"Costco is about long-term, reliable, quality supply. It's the key to the business. When the woman who got the Food Lab work embedded in Costco first started talking about the predicament of farmers, people were a little suspicious. They thought the predicament of farmers is a big problem in the world. That's why there are charities, and that's why we give money to charities. They couldn't see the connection to their business until she got them to see that they wouldn't have long-term quality supply if farming communities were destroyed. So she connected the issue to the theory of their business—but not the economic theory of the firm. Well-managed businesses could not possibly have gotten where they are believing this [economic theory of the firm] nonsense."

The excerpted interview concludes with responses to three quick questions: Where are we in the revolution? What role can governments play? and, Are businesses inherently more global?

"[In answer to the first question,] we're pretty much in the beginning. I can certainly say that from the 10 years since we organized this network, the people who joined were small bands of radicals in their companies, even if they were senior. But in virtually all of those companies, those people aren't radicals anymore. There are wild cards obviously: major economic decline. Innovation requires resources to invest, and you can see many companies pulling back and going into an intense protective mode in a major extended period of financial distress. [As for the second question concerning governments,] if you are realistic about how our present society works, the economic clout—and a lot of the political clout, frankly—is in the business sector. And it's the locus of innovation. But you've got to build these networks. I think Paul Hawken's recent book, Blessed Unrest: How the Largest Movement in the World Came into Being and Why No One Saw It Coming (Viking Press, 2007) was on the money. The growth of the civil society is historic, and in some ways it's a response to the inability of government to deal with these kind of issues. Governments, especially democratic ones, are short-term and nationalistic. These problems are long-term and global. [Finally, in response to the question about the global nature of businesses,] yes, they're global, and because they're global they've begun to build partnerships across their value chains. But I don't think business is sufficient. We're going to see a lot of partnerships, as companies partner with global organizations like the World Wildlife Fund and Oxfam and, eventually, with governments."

In other posts, I've referred to some of the points Senge made -- particularly the importance of connectivity. Be it connectivity within a globally integrated enterprise or between communities of practice (Senge's last point). Almost every economist will tell you that national economic policies don't carry the same weight they used to because so much of the economy is interconnected globally. Still, governments must play a role in helping develop solutions to global challenges. Trying to isolate one's nation from such problems only exacerbates the situation and demonstrates a lack of leadership unworthy of the trust placed in governments by their citizens. Senge's point, I believe, is that the connected citizenry of the world are not going to allow the inaction of governments to stop their attempts to address growing challenges. The fact that they feel empowered to do something is one of the characteristics of the information age.

Senge's book, which is co-authored by Bryan Smith, Nina Kruschwitz, Joe Laur, and Sara Schley, is divided into seven parts: Endings, New Beginnings; The Future is Now; Getting Started; Seeing Systems; Collaborating Across Boundaries; From Problem Solving to Creating; and, The Future. Within those sections are intriguing sub-section titles like: New Thinking, New Choices; Never Doubt What One Person and a Small of Co-Conspirators Can Do; Risks and Opportunities: The Business Rationale for Sustainability; The Tragedy and Opportunity of the Commons; The Imperative to Collaborate; Innovation Inspired by Living Systems; and The Future of Us. The book should be a good read and I wouldn't be a bit surprised if it doesn't inspire a post or two in the future.

Development-in-a-Box™ at Home in America

In a recent op-ed piece, New York Times' columnist Thomas Friedman insisted that the next U.S. president needs to focus on "nation-building at home" ["Anxious in America," 29 June 2008]. Friedman laments the fact that America's economic situation is so bad that it will undoubtedly become U.S. voters' most important concern during the rest of the campaign season. He predicted:

"[Both John McCain and Barack Obama] will be looking for a financial wizard as their running mates to help them steer America out of what could become a serious economic tailspin. I do not believe nation-building in Iraq is going to be the issue come November — whether things get better there or worse. If they get better, we'll ignore Iraq more; if they get worse, the next president will be under pressure to get out quicker. I think nation-building in America is going to be the issue."

So what exactly does Friedman mean when he talks about "nation-building in America"? I think he means that America needs to rediscover it entrepreneurial spirit and recapture some of the values that helped make it the world's greatest economy. I firmly agree with that. In fact, at Enterra Solutions we are daily wrestling with those issues as we attempt to greatly scale our organization and look for employees who are competitive with the best the world has to offer in significant volume (more on this later). Freidman continues:

"Up to now, the economic crisis we've been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down. ... My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working."

Friedman decries the current divisiveness in U.S. politics that has both sides more inclined to fight than compromise.

"I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry. 'America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,' Wall Street Journal columnist Gerald Seib noted last week. 'A political system that expects failure doesn't try very hard to produce anything else.' We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. 'But today,' added Hormats, 'the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.'"

Obviously, Friedman isn't so naive as to believe that the U.S. is going to recapture manufacturing jobs that have moved to low cost countries. What he is calling for are policies that will help the U.S. become a center of excellence in emerging economic sectors. The manufacturing jobs in those areas, however, will require a renewal of America's culture of hard work as well as rediscovery of the grand art of political compromise. I have argued several times in the past for new and bold leadership -- the kind of leadership capable of inspiring the nation (and the rest of the world) with a vision worthy of garnering support. Great visions are based on hope not fear. Friedman and others believe that the current crop of politicians have learned how to fight and forgotten how to hope.

The hope, determinism and confidence of post-World War II America was able to put a man on the moon less than a decade after President John F. Kennedy laid out that challenge. Those characteristics now appear dormant within America -– paved over by layers of complacency, materialism and credit card debt. We have to awaken the vital, competitive and innovative spirit that past immigrant and middle classes once instilled in the United States. The concept that one generation stands on the shoulders of the previous generation needs a 21^st century re-launch. This is the only way to make the current generation better off than the last. The question is whether the current political class can lead the nation through this kind of renaissance.

America is not the only country that needs this jolt. Many countries in the developed world could use it. In my travels throughout the Middle East, I routinely come across business leaders who still embrace those qualities of hard work, thrift, and ambition -- unfortunately, many of them lead businesses headquartered in other emerging market countries. In a recent post [Doing Business in Iraq], I referenced a USA Today article that noted most of the foreign businesses taking advantage of opportunities in Iraq were not American. In blogging about that same article, my partner Tom Barnett wrote:

"Paul Brinkley, head of the Pentagon office who talked Enterra into entering Iraq, is quoted as saying 'It's ironic' that the firms rushing into Iraq to take advantage are not American. Actually, it's not ironic whatsoever. Check out the countries described in the piece: Romania, Lebanon, China, Russia, Turkey, France, Germany. None sent troops, but all showed up for the peace. 'Come as you are' meets 'come when you want.' Iraqi foreign minister says: 'They take risks. No pain, no gain.' And before you freak on the war-peace divide, realize that 95 percent of our troops die after 'mission accomplished' and 85-plus percent since the end of the 'lost year.' These countries were our unacknowledged partners all along. You can either be shocked by that or realize that making it our war to run doesn't translate into making it our peace to exploit."

I titled this post "Development-in-a-Box™ at Home in America" to connect with Friedman's idea that we need to conduct nation-building at home as well as highlight the fact that America, too, needs to ensure that it builds the future on best practices and global standards. That is the only way that U.S. companies will once again demonstrate the kind of competitive edge that they will need to compete in emerging markets -- the markets that hold the greatest promise of growth in the future. By focusing on competing in new market sectors, America can remain a world leader, but it must invest wisely in new infrastructure, improved education and training, and technologies that will make it more responsive to the global economy. That is why I believe that Development-in-a-Box™ needs to be rolled out both in the U.S. and overseas in emerging countries. It is imperative to have both because, if we are effective in providing an effective On-Ramp to the Global Economic Grid for the 2-3 billion new consumers, quasi-capitalist, quasi-democratic peoples in the emerging world, we can give peace and stability a chance of flourishing overseas and then the U.S. can spend more of its treasure on development at home rather than on warfare abroad.

I'm a bit more sanguine than Friedman that America can respond to this challenge. A Philadelphia Inquirer story that spotlighted my company [Enterra Solutions Provides Technology to Iraq], discussed the fact that it is entrepreneurs who are taking advantage of emerging market opportunities.

"Hundreds of foreign companies are now doing business in Iraq. Enterra has two Pentagon contracts. One is to establish a call center that will handle incoming and outgoing calls for products from Iraqi manufacturers. The other is to set up a business-to-business trading portal, or Web site, for Iraqi manufacturers, similar to Amazon.com Inc. or eBay Inc. The call center and Iraqi business portal are expected to be operational in about six weeks. Enterra partnered with Iraq and Western firms to do the work, including Korek Telecom in Kurdistan. A Kuwait-based firm, Agility Logistics, will handle supply-chain logistics to get goods shipped out of Iraq. 'We created a business model that will address the nation-state-building portion of war in the 21st century,' said DeAngelis, Enterra's founder and chief executive officer."

Unfortunately, as noted above, most of those foreign companies are not American. I'm working with the U.S. Chamber of Commerce to change that. I recently joined the Chamber's activities in Iraq as Co-chair of its Iraq Initiative and Co-chair of its Kurdistan Region of Iraq Investment Taskforce. Those roles have exposed me to some of the companies that "get it." As they succeed in emerging markets, they should provide a role model for other U.S. companies who will either change with the times or die like the dinosaurs. Friedman concludes his op-ed piece this way:

"Digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters."

Friedman understands that politicians and governments have less influence over global economics than they did in the past. But he also knows that politicians still have tremendous influence on establishing the tone and direction for the future. A leader with vision and charisma can instill hope to replace fear. In an op-ed piece that I wrote for the Philadelphia Inquirer ["A New Global Framework," 6 December 2006], I wrote:

"What we need is a new framework for an entirely different era, a vision like that provided by the Wise Men - Dean Acheson, George Kennan and others - in the late 1940s. These leaders promulgated a governing framework for dealing with the postwar "third wave" of globalization, one that led to the development of institutions (the United Nations, the World Bank, etc.) and concepts (such as mutually assured destruction) that helped establish and maintain global stability for more than 50 years. That framework and those institutions, however, no longer address today's global environment. Today, few organizations - and this includes everything from companies to nation-states - understand how to align themselves with the times. No governing framework exists to help organizations array their resources properly. As the fourth wave of globalization unfolds, new Wise People have not yet stepped forward to create a next-generation grand ordering set of principles. Instead, today's leaders are trying to adapt old concepts and institutions to emerging challenges -- which is why Western liberal democratic principles seem to be in retreat on so many fronts. ... The future will bring new challenges, both natural and man-made. We'll know an appropriate framework is in place when both corporations and governments can respond successfully to these and other stressors created by globalization, rapid technological change, terrorism, natural disasters, and other 21st-century challenges."

Hope is the clarion call needed to re-instill the kind of values that made America great in the first place. People immigrated to America with nothing but hope in their pockets and they managed to build a great nation. We've gotten lazy as we've wallowed in our success. We have assumed that the good times would always roll and that we could continue to live large without working hard and remaining innovative. We need leaders who can make the clarion call and motivate a new generation to greatness. On that point, Friedman is right, "nothing else matters."

Revolution or Ruse in Rice Production?

Science involves the search for understanding and truth. It's about generating hypotheses and then testing them to either prove or disprove them. Although we are used to seeing competing theories debated, we normally associate such debates with high level physics rather than agriculture. With the world locked in the grips of a food shortage (which will be exacerbated by the flooding taking place in America's breadbasket states), a controversy has arisen about the best way to grow rice -- one of the world's most important food crops ["Food Revolution That Starts With Rice," by William J. Broad, New York Times, 17 June 2008]. The controversy surrounds the theories of Norman T. Uphoff, an emeritus professor at Cornell University.

"Many a professor dreams of revolution. But Norman T. Uphoff, working in a leafy corner of the Cornell University campus, is leading an inconspicuous one centered on solving the global food crisis. The secret, he says, is a new way of growing rice. Rejecting old customs as well as the modern reliance on genetic engineering, Dr. Uphoff, 67, an emeritus professor of government and international agriculture with a trim white beard and a tidy office, advocates a management revolt."

It is not just Uphoff's methods that have spawned the controversy it is his claims concerning them.

"Harvests typically double, he says, if farmers plant early, give seedlings more room to grow and stop flooding fields. That cuts water and seed costs while promoting root and leaf growth. The method, called the System of Rice Intensification, or S.R.I., emphasizes the quality of individual plants over the quantity. It applies a less-is-more ethic to rice cultivation. In a decade, it has gone from obscure theory to global trend — and encountered fierce resistance from established rice scientists. Yet a million rice farmers have adopted the system, Dr. Uphoff says. The rural army, he predicts, will swell to 10 million farmers in the next few years, increasing rice harvests, filling empty bellies and saving untold lives."

Critics argue that his claims about harvest yields and the number of farmers using Uphoff's methods are both exaggerated. But Uphoff continues to argue his case.

"'The world has lots and lots of problems,' Dr. Uphoff said recently while talking of rice intensification and his 38 years at Cornell. 'But if we can't solve the problems of peoples' food needs, we can't do anything. This, at least, is within our reach.' That may sound audacious given the depths of the food crisis and the troubles facing rice. Roughly half the world eats the grain as a staple food even as yields have stagnated and prices have soared, nearly tripling in the past year. The price jolt has provoked riots, panicked hoarding and violent protests in poor countries. But Dr. Uphoff has a striking record of accomplishment, as well as a gritty kind of farm-boy tenacity."

His critics, however, are powerful, also enjoy a global reputation, and have a proven record of accomplishment.

"[Uphoff] and his method have flourished despite the skepticism of his Cornell peers and the global rice establishment — especially the International Rice Research Institute, which helped start the green revolution of rising grain production and specializes in improving rice genetics."

The reason that the controversy continues is that critics argue that Uphoff uses anecdotes rather than controlled experimentation to make his case.

"Critics dismiss S.R.I. as an illusion. 'The claims are grossly exaggerated,' said Achim Dobermann, the head of research at the international rice institute, which is based in the Philippines. Dr. Dobermann said fewer farmers use S.R.I. than advertised because old practices often are counted as part of the trend and the method itself is often watered down. 'We don't doubt that good yields can be achieved,' he said, but he called the methods too onerous for the real world. ... In 2006, three of Dr. Uphoff's colleagues at Cornell wrote a scathing analysis based on global data. 'We find no evidence,' they wrote, 'that S.R.I. fundamentally changes the physiological yield potential of rice.' While less categorical, Dr. Dobermann of the rice research institute called the methods a step backward socially because they increased drudgery in rice farming, especially among poor women."

Nevertheless, Uphoff has a broad base of support and it seems to be growing.

"His telephone rings. It is the World Bank Institute, the educational and training arm of the development bank. The institute is making a DVD to spread the word. ... He lists top S.R.I. users as India, China, Indonesia, Cambodia and Vietnam among 28 countries on three continents. In Tamil Nadu, a state in southern India, Veerapandi S. Arumugam, the agriculture minister, recently hailed the system as 'revolutionizing' paddy farming while spreading to 'a staggering' million acres. Chan Sarun, Cambodia's agriculture minister, told hundreds of farmers at an agriculture fair in April that S.R.I.'s speedy growth promises a harvest of 'white gold.'"

Uphoff has even managed to win over some former critics.

"A former skeptic sees great potential. Vernon W. Ruttan, an agricultural economist at the University of Minnesota and a longtime member of the National Academy of Sciences, once worked for the rice institute and doubted the system’s prospects. Dr. Ruttan now calls himself an enthusiastic fan, saying the method is already reshaping the world of rice cultivation. 'I doubt it will be as great as the green revolution,' he said. 'But in some areas it’s already having a substantial impact.' Robert Chambers, a leading analyst on rural development, who works at the University of Sussex, England, called it a breakthrough. 'The extraordinary thing,' he said, 'is that both farmers and scientists have missed this — farmers for thousands of years, and scientists until very recently and then some of them in a state of denial.' The method, he added, 'has a big contribution to make to world food supplies. Its time has come.'"

Uphoff's story is an interesting one. Broad reports:

"Dr. Uphoff's improbable journey involves a Wisconsin dairy farm, a billionaire philanthropist, the jungles of Madagascar, a Jesuit priest, ranks of eager volunteers and, increasingly, the developing world. ... On Cornell's agricultural campus, Dr. Uphoff runs a one-man show from an office rich in travel mementos. From Sri Lanka, woven rice stalks adorn a wall, the heads thick with rice grains. His computers link him to a global network of S.R.I. activists and backers, like Oxfam, the British charity. Dr. Uphoff is S.R.I.’s global advocate, and his Web site (ciifad.cornell.edu/sri/) serves as the main showcase for its principles and successes. 'It couldn't have happened without the Internet,' he says. Outside his door is a sign, 'Alfalfa Room,' with a large arrow pointing down the hall, seemingly to a pre-electronic age. ... Dr. Uphoff grew up on a Wisconsin farm milking cows and doing chores. In 1966, he graduated from Princeton with a master's degree in public affairs and in 1970 from the University of California, Berkeley, with a doctorate in political science. At Cornell, he threw himself into rural development, irrigation management and credit programs for small farmers in the developing world. In 1990, a secret philanthropist (eventually revealed to be Charles F. Feeney, a Cornell alumnus who made billions in duty-free shops) gave the university $15 million to start a program on world hunger. Dr. Uphoff was the institute’s director for 15 years. The directorship took him in late 1993 to Madagascar. Slash-and-burn rice farming was destroying the rain forest, and Dr. Uphoff sought alternatives. He heard that a French Jesuit priest, Father Henri de Laulanié, had developed a high-yield rice cultivation method on Madagascar that he called the System of Rice Intensification. Dr. Uphoff was skeptical. Rice farmers there typically harvested two tons per hectare (an area 100 by 100 meters, or 2.47 acres). The group claimed 5 to 15 tons. 'I remember thinking, "Do they think they can scam me?"' Dr. Uphoff recalled. 'I told them, "Don't talk 10 or 15 tons. No one at Cornell will believe it. Let's shoot for three or four."' Dr. Uphoff oversaw field trials for three years, and the farmers averaged eight tons per hectare. Impressed, he featured S.R.I. on the cover of his institute's annual reports for 1996 and 1997. Dr. Uphoff never met the priest, who died in 1995. But the success prompted him to scrutinize the method and its origins."

So what is System of Rice Intensification? Broad continues:

"The priest [who developed SRI], during a drought, had noticed that rice plants and especially roots seemed much stronger. That led to the goal of keeping fields damp but not flooded, which improved soil aeration and root growth. Moreover, wide spacing let individual plants soak up more sunlight and send out more tillers — the shoots that branch to the side. Plants would send out upwards of 100 tillers. And each tiller, instead of bearing the usual 100 or so grains, would puff up with 200 to 500 grains. One drawback was weeds. The halt to flooding let invaders take root, and that called for more weeding. A simple solution was a rotating, hand-pushed hoe, which also aided soil aeration and crop production. But that meant more labor, at least at first. It seemed that as farmers gained skill, and yields rose, the overall system became labor saving compared with usual methods."

Until a controlled field trial is conducted and the results confirmed, the controversy will undoubtedly continue. Fortunately, such a trial is coming.

"Opponents have agreed to conduct a global field trial that may end the dispute, he said. The participants include the rice institute, Cornell and Wageningen University, a Dutch institution with a stellar reputation in agriculture. The field trials may start in 2009 and run through 2011, Dr. Uphoff said. 'This should satisfy any scientific questions,' he added. 'But my sense is that S.R.I. is moving so well and so fast that this will be irrelevant.' Practically, he said, the method is destined to grow."

Obviously, the field trial and its subsequent impact won't impact the current food crisis unless it lasts several more years. Although current climatic conditions aren't helping this crisis pass, hopefully the food shortage will be short-lived. Regardless of the current situation, the field test should help drive the direction of rice production in the future. If SRI proves as effective as Uphoff claims, I suspect that technologies will be developed to help reduce the manpower requirements to make the method even more effective and efficient.

GE Chairman Urges Pursuit of Cheap, Green Energy

For years people have been looking for technological breakthroughs that would make clean alternative energy sources competitive with electricity produced by coal and natural gas powered power plants. Jeff Immelt, chairman and CEO of General Electric, has declared that "much of the technology to make energy generation cleaner and more efficient is available now." ["GE calls for cheaper, cleaner energy," by Steve Hargreaves, CNNMoney.com, 21 April 2008] The rub, according to Immelt, is that those technologies remain costly. He has encouraged energy sector executives to invest more heavily in research and development so that the costs of implementing existing technologies can be decreased.

"A lot of the technology is already there," Immelt told a crowd of electric utility executives at an industry meeting sponsored by the Edison Electric Institute, a utility trade group. "This is a business model issue, not a technical issue. Our job is to make them cheaper."

Immelt, of course, has a vested interest in having others spend money on R&D in the energy industry. General Electric "makes a variety of energy products - from light bulbs and appliances to coal and nuclear power plants - many of them marketed to utilities." I'm sure GE will be happy to assist any innovator to get an improved technology to market, especially if they can get a piece of the action. In addition to calling for more R&D, Immelt has also been part of the group urging the U.S. government to regulate greenhouse gas emissions. Hargreaves reports:

"[GE] is part of a consortium of manufacturers and utilities urging lawmakers to pass nationwide restrictions on greenhouse gasses. The Bush administration has so far resisted immediate mandatory restrictions, largely on the grounds that waiting for better, cheaper technology would yield better results. [Both] presidential candidates support mandatory restrictions."

If you're living in the U.S., you would have to have been living in a cave not to have seen, heard, or read about General Electric's "ecomagination" advertising campaign. Immelt sees a big future in engaging in "green business" because the sense of urgency and emergence of technologies seems to be coming together at just the right time. Hargreaves notes:

"The climate debate comes as the world is facing a surge in energy demand and a simultaneous desire to cut greenhouse gas emissions. Energy consumption globally is estimated to grow by 50% over the next few decades, while scientists say the world needs to at least halve its greenhouse gas emissions over the same time period if it is to avoid the worst effects of global warming."

Immelt is concerned that inertia could win out over the daunting but necessary task of upgrading infrastructure in the near term.

"In facing this challenge, Immelt urged utility executives to keep all technologies on the table - from solar and wind to nuclear and cleaner coal - and to not let new technologies languish at the expense of maintaining the status-quo. He said low oil and gas prices historically led to massive underinvestment in the sector, with energy companies spending only about 2% of their revenue on research and development. By way of comparison, healthcare companies have invested about 8% of their sales on R&D, Immelt said. (GE also is a big player in the medical devices industry.) But with high energy prices now soaring, Immelt believes investments in energy will follow suit. 'There's plenty of incentive now to drive technology into the industry,' he said."

In concluding his remarks, Immelt observed that many of the green technologies that will emerge will likely be invented and proved elsewhere. In a globalized world, there is nothing wrong with that. He also predicted a bright and growing future for the green sector and urged utility companies to get on board.

"Immelt said GE is investing in a wide range of energy technologies. He specifically mentioned solar as one that has great potential. The cost of solar power should fall from 30 cents a kilowatt hour today to under 15 cents 'in a relatively short time,' he said. 'That should open up a sweet spot for solar.' By comparison, American consumers currently pay about 10 cents an hour on average for electricity, according to the Energy Information Administration. The U.S. utility industry will likely be a recipient of clean technologies developed outside the U.S., Immelt added, whether it be cleaner coal processes fine-tuned in China or renewable technology pioneered in Europe. But he encouraged the industry and U.S. government to take the lead in capping greenhouse gas emissions and developing clean sources of energy. 'The time to act is now,' he said. 'When you lead in clean energy, you create jobs. This is a place the U.S. could lead.'"

In a year when the economy, energy prices, and job creation are dominating the presidential election agenda, Immelt's message should be well-received by policymakers, workers, businesses, and environmentalists alike. Whether he's listened to or not, he's right about one thing -- now is the time to act. In a New York Times op-ed piece, Verlyn Klinkenborg is worried that words are being used as a substitute for action ["Some Doubts Upon Entering a New Carboniferous Era," 24 June 2008]. She writes:

"Has any phrase in the English language ever spread more quickly than 'carbon footprint'? There are contenders — 'hanging chad,' for instance — but they don't reflect the potential revolution in consciousness that carbon footprint suggests. After all, carbon footprint captures something we've never really had a simple phrase for before: the measurable totality of your environmental impact, or, to put it more simply, what your way of life actually costs the planet. ... the phrase sounds conscientious. You feel as though you're reducing global warming by saying it. Which is why advertisers are saying it everywhere. ... Companies of every description have taken up the phrase. Wal-Mart announced last fall that it would ask its suppliers to assess and lower their carbon footprints, one way that Wal-Mart is trying to green itself. BP, the much-fined petroleum giant, has a carbon footprint calculator on its Web site, as well as a link to its conservative thinking on climate change. Consumers who wish to buy voluntary carbon offsets to compensate for the size of their personal carbon footprints are beginning to be able to do so close to home. Why not buy local carbon offsets at the farmers’ market along with your locally grown produce? The swiftness of this change in consciousness — and the linguistic change that goes with it — is staggering. And a little worrying. For one, it is vastly easier to find new words than it is to overturn old habits, and all too easy to mistake the ubiquity of the new carbon-speak for substantive change."

Klinkenborg is calling for a little action to accompany all the talk. She has a point. In this political season in the U.S., politicians are supporting increased production of oil rather than encouraging voters to adopt conservation strategies. She concludes:

"What makes me uneasy is simply knowing how quickly humans adopt new phrases and how readily we confuse them with the reality — or the unreality — of our actions. The two things we seem to do most instinctively are manipulate language and create markets, and those two instincts converge when it comes to carbon footprints. Creating a market in moral carbon — offsets that counter our energy-rich lifestyle — feels a little like Rotisserie baseball, more illusion than reality. Don’t get me wrong. I’m not a climate-change skeptic. In fact, I believe that the idea of a carbon footprint is a little too glib, a little too soothing, a little too likely to persuade us that we can get out of this mess by an easy incrementalism. The same with carbon offsets, only more so. There is nothing trivial about grasping the idea that lies behind carbon footprints, trying to understand the scale of our consumption and its widespread environmental costs. Think about it properly, and it leads you to a profound critique of who we are and how we behave. Act on it, and you immediately see how carbonaceous our lives have become."

We all learn from the time that we are toddlers that deeds follow thoughts. If that proves to be the case with "carbon footprinting," then perhaps Klinkenborg is a bit premature in worrying that the world is becoming all talk and no action. If, however, politicians continue to stress increased oil production over conservation measures and that message gets them elected, Klinkenborg may just be right.

IBM and Global Voluntary Service

A New York Times article a couple of months ago detailed an innovative IBM program that sends some of its most promising employees overseas to provide pro bono services in developing countries ["Volunteering Abroad to Climb at I.B.M.," by Claudia H. Deutsch, 26 March 2008]. Deutsch writes:

"In July, a team of 8 to 10 I.B.M. employees will travel to Ghana to help tiny businesses make their operations more professional. Another team will help entrepreneurs seek microloans in Turkey, while yet another will create training programs on information technology in Vietnam. The projects, which were devised by I.B.M.'s citizenship group and are being coordinated through nonprofit organizations, have all the trappings of corporate philanthropy. But that is not why they were created, or how they are being used. 'This is a management development exercise for high-potential people at I.B.M.,' said Randy MacDonald, senior vice president for human resources."

Although IBM certainly must be credited for its altruism, IBM also understands the program can be good for the company's bottom line -- eventually.

"I.B.M.’s program, which it calls the Corporate Service Corps, stands out on several counts. It uses the volunteer ethos to bring together employees who might otherwise never meet, even as it gives I.B.M. a high profile in countries where it does not yet have a significant presence. 'I.B.M. doesn't have a big footprint in a lot of these places,' said Kevin B. Thompson, the senior program manager in corporate citizenship who is running the Service Corps project. 'And their experiences will be a lot more useful than research that says, say, that the Internet has a 12.7 percent penetration rate.' Management experts say I.B.M. is onto something."

Management gurus interviewed by Deutsch claim the return on investment for this kind of skills development program is quite high.

"'As a development tool, this is a four-for-one,' said Allan R. Cohen, dean of the Olin Graduate School at Babson College, near Boston. 'It's stretching to work in another culture, to work in a nonprofit where the measurement of accomplishment isn't clear, to take a sabbatical from your everyday routine and to learn to accomplish things when you can’t just bark orders.' Indeed, Paul Ingram, a management professor at the Columbia Business School, is planning a similar program for this fall, in which executives attending the school's Senior Executive Program will work with nonprofit groups in New York. Because 80 percent of the students are not from the United States, the New York location is outside their comfort zone. 'The fact that you are an excellent programmer or salesman, or can lead a project in your own area and culture, doesn't mean you can be a great leader outside of your technical or cultural expertise,' he said."

One of the things that the article doesn't state, but that is implied, is that the talent level and skills of the people running the non-governmental organization programs is high enough that even IBM's best and brightest can learn something from them. People don't go to work for NGOs to get rich. They receive personal rewards in other ways; although they certainly deserve to make a decent living by helping others. Unfortunately, they often fail to receive the recognition and thanks they deserve. Back to the IBM program.

"[IBM] views the Service Corps as a way to learn how well employees work with strangers, in strange lands, on unfamiliar projects. And it plans to use that knowledge to customize further development programs for the participants. Clearly, the Service Corps concept sits well with the I.B.M. employees. More than 5,500 of them, from more than 50 countries, applied for the program. I.B.M. narrowed the pool to those who had been designated as fast-trackers, who had familiarity with volunteerism and who submitted the best short essays on how participation would help them develop as leaders. The applications of those that passed that first cut were sent to the heads of I.B.M.'s eight geographic regions, who chose which of their employees to send. The final list comprises 100 people from 33 countries, who will form 12 teams that will be deployed to projects in Romania, Turkey, Vietnam, the Philippines, Ghana and Tanzania. I.B.M. said it would select another 100 before the end of the year and have a total of 600 participants over the next three years. The first projects will not begin until July, but the team members are expected to immediately begin studying the countries they will visit and their cultures. They will also begin interacting with one another, possibly through a virtual venue, similar to Second Life, that I.B.M. will set up. Each team will have electronic 'facilitators,' executives who are well versed in the countries they will visit and the types of businesses they will be advising. After their four-week trips, the participants will go through two months of intensive debriefing to discuss what they learned about leadership — and about the countries they visited."

To support a program like this, a company needs the kind of resources that an IBM has available. Smaller companies could not afford either the expense of the program or to lose the services of valuable employees for an extended period of time. Nevertheless, IBM deserves credit for supporting the program. Other companies with sufficient resources would do well to watch how the program unfolds.

Leadership Training

Blog reader Fiona King, who works for Job Profiles, a company that helps people select careers that appeal to them, sent me an email about a list of free online leadership courses that she believes would be of interest to readers ["The Manager's Handbook: 80+ Open Courseware Collections to Help You Be a Better Leader," by Jessica Merritt, 3 June 2008]. The list is timely. When economic times get tough, education and training are often the first things that get slashed as budgets tighten. I think that is a mistake and incredibly short-sighted. I'm a big believer in training and education. On-line training may be one way that organizations can provide some training and still watch the bottom line. Merritt introduces this particular list of courses this way:

"Although becoming a leader may seem simple, the fact is that there's a lot of consideration that goes into management. You not only have to stay on top of your team, but make sure that you're fostering communication, growth and productivity. Here, we'll take a look at a number of high quality courses that will show you how to take care of these issues and more."

I know few people who believe that "becoming a leader [is] simple." Leadership is difficult; especially if one does not possess the traits of a "natural" leader. I also believe there is an enormous difference between leadership and management. Merritt seems to think the terms are interchangeable. This is surprising since one of the courses on her list is entitled, "Management vs. Leadership." In that presentation, which asked 162 professionals to describe the difference between the two, M. Al Zoubi wrote:

"Management is working in the system; leadership is working on the system. Managers gain authority by position; leaders gain it by influence and character. Management is reaching goals; leadership is fulfilling a vision. Management cares about efficiency; leadership is concerned with effectiveness."

A leader must at times be a manager; but a manager may not be capable of being a leader. Moving back to the list, a quick review shows that at least a few of the "courses" are simply presentations looks filled with interesting or inspiring statements. For example, one presentation is called "Leadership Mashups: Innovation." My first thought was that it would teach one how to create environments in which the "Medici Effect" could take place. Unfortunately, it contained a series of motivational slides containing statements like this one from Albert Camus:

"Great ideas, it is said, come into the world as gently as doves. Perhaps, then, if we listen attentively, we shall hear ... a faint flutter of wings; the gentle stirring of life and hope."

Not exactly the kind of meat into which one can sink his or her teeth and come away satisfied and certainly not what I would label a "high quality course." Not every topic on the list, however, is simply a slideshow. Some of the links lead to actual courses. Take, for example, the topic "Practical Leadership." That link takes you to an MIT Open Courseware site that allows you participate in a real course. Other links take you to case studies, like the link entitled "Defying Gravity." The course description promises, "In this course, you'll see how some leaders make the impossible possible." Unfortunately, the "case study" provides plenty of questions, but no answers. If you think you've had a bad day, however, consider the individual in the case study who had just been appointed to become the principal of poorly performing elementary school.

"You have recently accepted a position as a principal in the heart of an urban environment at an elementary school. Central office administrators inform you of the school's challenges over the past 4 years: 1) Drive-by shootings during the school day; 2) Prostitution rings within the community soliciting business around the school's campus; 3) Drug dealers conducting business on each side of the school; 4) The neighborhood 'crack house' is located less than 400 feet from the school; 5) On average, only 80% of the students attend school each day; 6) Only 25% of students are meeting or exceeding state test scores in reading or math; 7) Parents report they do not feel welcome in the school; 8) Students identify their school as a “'ghetto school'; 9) Teachers report low morale; 10) Community organizations within the school community report a disconnect with the elementary school; 11) Over 50% of the staff and faculty have left within two years; 12) Teachers are hired with no or less than 2 years of experience; 13) Over 75% of the students speak only Spanish at home; and 14) Past principals resigned from their position within 4-6 months of committing to the school."

Turn that school around and you have not only "defied gravity" you can genuinely label yourself an inspired leader! As you can see, Merritt's list of 83 courses varies greatly in content and usefulness. There are 13 links to sites that will help you "get started with learning about management and leadership." In addition, there are 6 links to sites that "will teach you why your behavior is vitally important, and what you can do about it." Six links take you to sites that ensure "your communication skills are up to snuff." Another three links take you to sites that "ask you to take cultural issues into your leadership consideration." Eleven links connect with sites dealing with finance. Four links connect with sites about productivity. The largest number of links (17) connect with sites that help you deal with people. As Merritt writes: "Without a team, you're not a leader, so learn how to properly deal with people through these courses." Four links take you to sites that Merritt promises will help you "learn how to properly build your management strategy." There are five links to courses on ethics. Another five links take you to sites dealing with project management. Four links connect with courses on how organizations work. Finally, there are five courses that don't fit neatly into any of the above categories (e.g., "Governance and management in the not-for-profit sector" and "Competitive information and disinformation").

Although I didn't visit all 83 sites for which links are provided, I suspect that there are some nuggets to be mined by corporate training departments or by individuals simply looking to broaden their general knowledge about leadership and management. Thanks again to Fiona for providing the input.

Weeds and Biofuels -- A Warning

My most recent post about biofuels [Cultivating the Right Biofuel] focused on an article by Roger Cohen who is fearful that the connection between increased use of food grains for biofuel and rising food prices will cripple a promising industry that deserves to be fostered. I've written a couple of posts on the connection between rising food prices and the increased production of biofuels [Search for Oil Alternatives Pushes Food Prices Higher and Rising Food Prices take the World's Stage]. I made it clear in the latter post that using food sources to produce biofuel was only one of the reasons that food prices were rising. Cohen was pushing for the use of sugar cane as stock material for creating biofuel. Others have suggested using crops that have little or no potential as a food source [see my post The Potential of Pond Scum]. Some analysts are warning, however, that the search for a non-food source of biofuel could create havoc as well ["New Trend in Biofuels Has New Risks," by Elisabeth Rosenthal, New York Times, 21 May 2008].

"In the past year, as the diversion of food crops like corn and palm to make biofuels has helped to drive up food prices, investors and politicians have begun promoting newer, so-called second-generation biofuels as the next wave of green energy. These, made from non-food crops like reeds and wild grasses, would offer fuel without the risk of taking food off the table, they said. But now, biologists and botanists are warning that they, too, may bring serious unintended consequences. Most of these newer crops are what scientists label invasive species — that is, weeds — that have an extraordinarily high potential to escape biofuel plantations, overrun adjacent farms and natural land, and create economic and ecological havoc in the process, they now say."

I suspect there are a lot of potential consequences from using arable land to grow crops for biofuels (be they a food or a non-food crop). It will take a lot of land to grow enough raw material to make a dent in the overall fuel market. Removing that much land from producing food stuffs isn't going to help lower food prices regardless of what is grown on that land. The hope, of course, is that second-generation biofuel crops can be grown on land that is unfit to grow food crops -- because weeds seem to grow everywhere. That is also the crux of the problem.

"At a United Nations meeting in Bonn, Germany, ... scientists from the Global Invasive Species Program, the Nature Conservancy and the International Union for Conservation of Nature, as well as other groups, presented a paper with a warning about invasive species. 'Some of the most commonly recommended species for biofuels production are also major invasive alien species,' the paper says, adding that these crops should be studied more thoroughly before being cultivated in new areas. Controlling the spread of such plants could prove difficult, the experts said, producing 'greater financial losses than gains.' The International Union for Conservation of Nature encapsulated the message like this: 'Don't let invasive biofuel crops attack your country.' To reach their conclusions, the scientists compared the list of the most popular second-generation biofuels with the list of invasive species and found an alarming degree of overlap. They said little evaluation of risk had occurred before planting."

Many areas of the United States could offer an earful about their unhappy experiences with invasive species of plants of animals. Nutria (large rat-like creatures), for example, were introduced from South America into the United States in the 1930s. They are now a major problem along the Gulf Coast where they damage vegetation and destroy habitat in wetlands. Zebra mussels, which were introduced into U.S. waters from Eurasia in 1988, compete with native species and clog pipes. They are now a problem throughout many of the river systems in mid-America and are continuing to spread. Hydrilla, a native African plant, was introduced into the United States in the 1960s. It crowds out native species and is a problem in most of the U.S. coastline states. Snakehead fish, Africanized bees, cane toads, fire ants, European Gypsy Moths, are just a few of the hundreds (if not thousands) of invasive species creating challenges in America. The point is, the caution being sounded by the analysts is probably justified. As expected, the biofuel industry claims they are crying "wolf."

"The biofuels industry said the risk of those crops morphing into weed problems is overstated, noting that proposed biofuel crops, while they have some potential to become weeds, are not plants that inevitably turn invasive. 'There are very few plants that are "weeds," full stop,' said Willy De Greef, incoming secretary general of EuropaBio, an industry group. 'You have to look at the biology of the plant and the environment where you're introducing it and ask, are there worry points here?' He said that biofuel farmers would inevitably introduce new crops carefully because they would not want growth they could not control."

The conservation analysts fear that growing pressure from governments and the potential for quick profits will push investors to move much more quickly to plant crops than is wise.

"The European Union and the United States have both instituted biofuel targets as a method to reduce carbon emissions. The European Union's target of 10 percent biofuel use in transportation by 2020 is binding. As such, politicians are anxiously awaiting the commercial perfection of second-generation biofuels. The European Union is funding a project to introduce the 'giant reed, a high-yielding, non-food plant into Europe Union agriculture,' according to its proposal. The reed is environmentally friendly and a cost-effective crop, poised to become the 'champion of biomass crops,' the proposal says. A proposed Florida biofuel plantation and plant, also using giant reed, has been greeted with enthusiasm by investors, its energy sold even before it is built. But the project has been opposed by the Florida Native Plants Society and a number of scientists because of its proximity to the Everglades, where giant reed overgrowth could be dangerous, they said. The giant reed, previously used mostly in decorations and in making musical instruments — is a fast-growing, thirsty species that has drained wetlands and clogged drainage systems in other places where it has been planted. It is also highly flammable and increases the risk of fires. ... Jatropha, the darling of the second-generation biofuels community, is now being cultivated widely in East Africa in brand new biofuel plantations. But jatropha has been recently banned by two Australian states as an invasive species. If jatropha, which is poisonous, overgrows farmland or pastures, it could be disastrous for the local food supply in Africa, experts said. But Mr. De Greef said jatropha had little weed potential in most areas, adding: 'Just because a species has caused a problem in one place doesn’t make it a weed everywhere.'"

The tension between those promoting biofuels and those who see biofuels creating challenges of their own is bound to continue. There does appear, however, to be some room for compromise.

"From a business perspective, the good thing about second-generation biofuel crops is that they are easy to grow and need little attention. But that is also what creates their invasive potential. 'These are tough survivors, which means they're good producers for biofuel because they grow well on marginal land that you wouldn't use for food,' Dr. Howard said. 'But we've had 100 years of experience with introductions of these crops that turned out to be disastrous for environment, people, health.' Stas Burgiel, a scientist at the Nature Conservancy, said the cost of controlling invasive species is immense and generally not paid by those who created the problem. But he and other experts emphasized that some of the second-generation biofuel crops could still be safe if introduced into the right places and under the right conditions. 'With biofuels we need to do proper assessments and take appropriate measures so they don't get out of the gate, so to speak,' he said. That assessment, he added, must take a broad geographical perspective since invasive species don't respect borders."

Rosenthal reports that the annual cost of trying to control invasive species is roughly $1.4 trillion (or about 5 percent of the global ec