Category Archives: risk

Placing a price on research; #HBR blog on #innovation and the long term . . . .

Posted on by
Reply

Anne Marie Knott from Wash U biz school raises briefly a profound question: how to maintain a major R and D budget when returns are graded quarterly and markets fluctuate by the second. Which always makes me realize how much better, in fact, is our corporate decision-making than it really should be. Out there is one alternative universe in which is really is the current stock price and the next quarterly report that shape every decision.

I’ve written elsewhere that, as it happens, the principal-agent problem (both here and also in the political realm) ends up helping to mitigate short-termism, since executives (like pols) want careers, and careers require reputations for long-term effectiveness. There are other reasons too, the most legitimate of which lie in the minds of long-term investors (of whom there are still a few).

The point Anne Marie Knott makes tellingly here is that what she terms the research quotient (RQ, a way of measuring research commitment/effectiveness) offers a different slant on capitalization. My somewhat broader point would be that the market needs to find ways to place a more reliable value on both such balance sheet commitments and the willingness of the executive team to take short-term hits for long-term value. That might involve polygraphs in the C Suite. It certainly (sigh, don’t we know) involves coming up with salary and bonus structures that deliver what is needed rather than what gluttonous execs feel is their desert for a good day’s work. This may seem like rocket science, but as Elon Musk is demonstrating, rocket science isn’t necessarily, well, rocket science. And the growing shareholder revolt on executive remuneration, reaching most recently to Barclays and now very much a mainstream effort, can’t fail to help.

At the core, it’s all about the long term. And the fact that as change comes faster innovation becomes both more necessary and more risky is driving a very different kind of corporate culture from that to which big companies used to aspire.

 

 

Don’t Cripple Innovation for the Sake of This Quarter’s Numbers – Anne Marie Knott – Harvard Business Review.

Rupert #Murdoch ‘s Unfolding Disaster #CSR

Posted on by
Reply

How to Hit an Iceberg: Rupert Murdoch’s Unfolding Disaster

Reposted from 7/28 2011

As events have unfolded in the News of the World scandal I have kept being reminded of a phrase that explains much of the appeal of that (now defunct) newspaper: the fascination of the horrible. Really grim things can grip. That’s 50% of the key to “tabloid” newspapers and their stories. (The other half is celebs; and when celebs hit scandals, tabloid sales get supersized.) It is a delicious irony that the most celebrated scandal-sheet on the planet has fallen rapid victim to just the kind of story it has always loved to report. The fact that it also saw itself as a campaigning newspaper – crusading on the side of truth and goodness as it drove up sales –further seasons the feast. There’s nothing more grimly gripping on the planet than a loud-mouthed and out-and-out hypocrite.

We don’t know where this will end, and neither do Mr. Murdoch, his executives, shareholders, and those who wish him well or ill. What we do know is that we are looking at a corporate empire under threat. We don’t have to speculate about the potential use by U.S. prosecutors of the Foreign Corrupt Practices Act (which makes bringing foreign officials, like British cops, a particularly nasty federal offence) to note the potential impact of public sentiment on a corporate empire. Or, in other words, of values on value. We may find it curious that the public seemed to care little for the hacking of celebrities’ cellphones – which was round one of the scandal – but was thrown into rage by the use of that same news-gathering technique on a victim of crime. But for the very reason that the British public is a vast consumer of “tabloid” news its appetites are fed by sensation and sentiment. Sentiment has swung with a vengeance. Murdoch’s big move to control the key satellite broadcaster has been condemned by all political leaders. The police have placed several of his top execs on notice that they are being investigated. He and his team are being invited to be quizzed by parliamentarians. And here in the United States, Congress is waiting in the wings.

What’s the moral? Well, first, look at the impact of technology. Before there were mobile phones all we had were clunky answering machines. Now there are great vats of highly sensitive and potentially valuable private information digitally accessible from any telephone in the world – if you punch in the right sequence of digits. Asymmetries are breaking out all over. Low-level people under pressure for stories break the rules. High-level people may pay the price and market value may be destroyed. What’s the moral? Simple, really: the leveraging that emerging technologies are bringing to business make it far more important for values to be aligned throughout the organization than they were before. Dumpster-diving for discarded correspondence is one thing; pumping 4,000 names into a spreadsheet, bribing the Head of State’s security detail, eavesdropping on the victims of crime and terror, and hacking the phones of cops who are investigating, is quite another.  That’s the power of the handset in the hand of the representative of an organization that, at some level, has been shown to be corrupt.

Sure, you can argue that every organization has bad apples. In the nature of the case scandal-focused journalism operates on the edge. The boundaries overstepped did not look so big at the time. All correct. But some lessons learned. First, bad apples are now far more toxic to organizations than they used to be – because of the combination of technological leverage and reputational damage so devastatingly demonstrated here. When all is said and done, the little nexus of private detectives and journalists at the heart of this story may end up destroying billions of dollars of shareholder value. Second, the edgier the effort – whether sensationalist publishing or, say, healthcare systems where physicians can be rewarded for the denial of care – the more central the need for unambiguous, enforced values to pervade the organization from head to toe. Third, just as corporate leaders are now post-Enron required to sign off on the accounts, they need to sign off on the values that pervade their entities. Not because Sarbanes-Oxley requires it, but for an even more pressing reason: their building sustainable value for investors does. We don’t need a SOX for values. We already have one. It’s called the bottom line.

Go figure. And watch News International’s value in weeks to come.

 

First posted on the US Chamber of Commerce BLCL site.

Unilever’s #CSR #Sustainability Marketing Push

Posted on by
Reply

Unilever plans corporate sustainability ads | News | Marketing Week.

It’s an old principle that if you don’t actually keep your good deeds entirely to yourself, at least don’t flaunt them all over the place. (Jesus said quite a lot about that.) In general, companies have been cautious about claiming too much for their efforts in philanthropy and corporate social responsibility (CSR), partly as they have often borne not a lot of relationship with their brand (with the move to CSR this has shifted somewhat), partly because they can draw critical attention (hard this: you want to be noticed but not too much).

It’s not new for a major corporation to try greening its image, though the example we all remember is (ahem) Beyond Petroleum, Lord Browne’s effort to reposition BP as one of the good guys, which finally blew up in the Gulf.

Yet the context is shifting fast, as brands get weaker, transparency strengthens, uppity customers engage in energetic social media, and a new premium is placed on alignment between social mores and the values of the each stage of the value chain. Apple has recognized this in its rather bold move with Fair Labor and Foxconn (smart business move to contain social risk to the planet’s leading and most profitable brand, though with its own hazards).

So Unilever’s decision to push sustainability into its advertising is notable. It will encourage scrutiny of its claims and more generally of the company behind them (CSR is, at the end of the day, like all values efforts, indivisible). It also sends a message to the gazillion workers at all levels in the corporation that the C Suite is serious about this re-messaging and what needs to lie behind it. And it offers a good example, as Susan McPherson @susanmcp1 of Fenton has noted on Twitter, of the steady mainstreaming evident in CSR.

More on this theme in my columns for the U.S. Chamber – http://bclc.uschamber.com/profile/nigel-m-de-s-cameron

We Need to Talk – about #Twitter: Reciprocal Knowledge Engine PLUS

Posted on by
4

Some time back I wrote and then revised a piece on both my Twitter use and the power of Twitter as a machine for building knowledge through mutual or reciprocal curation – what perhaps we can designate a “reciprocal knowledge engine. ” Google just told me that it could not find the phrase, so it looks like it’s mine. Here’s the piece: http://nigelcameron.wordpress.com/future/why-twitter-matters/

I don’t really have a lot to add on that score; seems to me this medium/platform is pregnant with capacities to enable the building of cross-disciplinary, convergent knowledge, in a world defined by the data explosion of the exaclasm and the exponential need and opportunity for understanding – as a prelude, one would hope, to wisdom in decision-making in the face of global risk.

Point about Twitter, though, is that it is also many other things, and yesterday’s post discussing the proposal that our @ addresses serve as our personal universal locators is not without merit. Then again, it’s a source for every crowd one could wish, from flashmobs during demos to the nuclear flashmob that was unleashed on SOPA. And market research. And (another recent theme in this blog) C-Suite engagement with stakeholders. Of yes, and if you must, the Lady Gaga fan club and the PR people from our favorite pols. And on and on.

Which suggests: Twitter as a corporation or a brand may or may not have immortality. In general, businesses in this space are ageing fast (not good news for current valuations). A rival could pick it up, mess it up, close it down. Or, more likely, a nimbler, smarter, son-of-Twitter will emerge in 20 months’ time and we will all feel how MySpacey Twitter used to be.

But in all the social media melange, in Twitter we have lighted on something far more valuable than the other platforms, useful for particular purposes though they may be. It’s why many of the smartest people on the planet are spending serious time here every day of their lives. And (back to reciprocal knowledge) they are my research assistants. And I am one of theirs.

 

Leadership 2.0? #Corpgov #Risk #Twitter

Posted on by
Reply

@dorieclark’s post on transparency and leadership draws attention to both the need and the opportunity that social media offer executive leaders to put themselves out there, known by their stakeholders.

Yes and yes, but there’s more. The famous example of Paul Levy’s blog on how to run a hospital dates way back to 2006 (!); his example of using Youtube to make video messages for the global company network offers a handy and economical mechanism, but of course it’s for one-way (and, for example, UBS has had their own closed-circuit company TV channel for many years – I remember being interviewed on it more than a decade ago).

Point is: 2.0 is 2-way, engaged, social rather than broadcast, transparency through interaction in place of statement, web 2.0 used to its complex multi-layered exponential advantage – and, as it were, corporate governance 2.0 as we have government 2.0 in the public sphere.

Which isn’t to say that execs need to spend all their time chit-chatting with whatever Qwerty-qualified interlocutors wish to catch their attention. Plainly. But sampling, risking actually saying things, learning free of the corporate filter what stakeholders and potential stakeholders actually make of things. And, back of that, as I don’t tire of saying, immersing themselves in the social culture which defines the rising generation and offers the leading edge experience of every emerging market.

A very particular transparency results when leaders mix with mere mortals, and the risky joy of social is that it enables exactly that. That’s why I admire the way @rupertmurdoch has jumped into Twitter this year, plainly tweeting for himself (he isn’t a good typist). He says he reads the incoming, and I can believe it. Make what you will of him, he has a brilliant capacity to engage in popular markets for ideas and communication, and he realizes that Twitter is a (one could argue the) core knowledge pathway of today. It may not endear him to those who were unendeared by him before. But this man is learning.

And in the process he is setting a tremendous example to every News International exec – indeed, every one in the Fortune 500 – of the need to risk engagement with social media. If he would go one step further and be more evidently responsive, it would be even better.

Corporate governance 2.0 has yet to take much shape. Let’s get to it.

Transparency is the New Leadership Imperative – Dorie Clark – Harvard Business Review.

Rolling down to Rio

Posted on by
2

Rolling down to Rio:
The Twin Challenges of Global Process: Sustaining Credibility and Engaging Dissent

Nigel M. de S. Cameron
Center for Policy on Emerging Technologies, Washington, DC

I spent this past week at Planet under Pressure (PuP), a global conference on sustainability and climate convened in London under the eminent auspices of the Royal Society and the network of science academies around the planet– as a preparation for Rio+20, which is just around the corner. It’s plain the organizing committee were no fans of Rudyard Kipling or we would have been greeted on daily arrival by renditions of his splendid song Rolling down to Rio, in place of the housemusic (ahem, housemuzak) that I assume was picked by the ExCel Center (which, somewhat amusingly for a such a carbon-conscious event, is owned by Abu Dhabi). Here it is, sung by that wonderful American baritone, Leonard Warren: http://www.youtube.com/watch?v=uk99b7sNFzQ.

It was a privilege to be invited to participate, and admire the skills of my esteemed professional friend Lidia Brito (science policy director at UNESCO and former science/education minister of Mozambique) as conference co-chair; and Nisha Pillai, network anchor turned gracious but when necessary lethal emcee. 3,000 people, mainly scientists, filled the hall. After an opening evening and four long days it finally all came to a conclusion, and I am mulling. So take these thoughts as ideas in progress on a process of high significance for the good of the planet (which includes us) – and an object lesson in how to do, and perhaps not to do, what needs to be done. And that is true whether or not your own view lies in the climate/sustainability mainstream. The video and closing statement are here: http://www.planetunderpressure2012.net/

I had been invited to speak in the session on innovative solutions, and focused my remarks on the need to innovative the shape of the debate itself – partly by bringing other parties to the table. I summarized my comments – and much else – for those who follow me on Twitter (@nigelcameron).

On reflection there is much on my mind, including, in no special order:
• What’s the value of endless exhortations? We should, we must, everyone needs to. My suspicion is they are counter-productive. There were hundreds. Life in an exhortatory community is depressing and a little tedious. And it was left to Oliver Morton of the Economist to ask pointedly that speakers not say “we” without defining who. EC science adviser Anne Glover’s push-back on this point was not helpful.
• What’s the value of advisers and committees? We are awash with them. And while I don’t object if the UN Secretary-General wants a science adviser and an advisory committee to boot (one leading idea being ventilated), it is hard to see what difference this will make in the scheme of things; as if an exponential, hockey-stick increase in the number of advisers and committees will solve the problem (whatever, precisely, the problem is).
• Has the emergence of the scientific community as, may I say, a lobbying community, been useful for science or for society? I suspect not at all. I’m all for scientists taking ethical views and engaging society; but their operating, or seeming to, in a manner that makes them look like a labor union or enviro pressure group has been less of a good idea. And (note to the more enthusiastic) shrill is always a negative factor in the effort at persuasion.
• The old joke that insanity may be defined as doing the same thing over and over expecting a different result kept haunting me.

Participants in the Conversation

1. I opened my remarks with the suggestion that the debate is running backwards. If the capacity of the global science/NGO community to shape policy on the broad climate/sustainability agenda is weaker than it was pre-Copenhagen, what does this mean? Inter alia: That people need to get better at listening and learning –and focus on reshaping the discussion. The alternative reality of international conferences is not doing the trick.
2. I argued for much greater inclusion, around the table, of the business community. PuP had a smattering of business speakers – one of whom was the subject of a demo (sigh). Unless the discussion of sustainability and the global environmental good is owned by industry and, more specifically, by those who shape the global capital markets, it may make activists of the NGO or science professor variety feel good, but it will not leverage planetary decision-making. Where was Goldman Sachs? Innovation leaders such as IBM, GE, Google, Apple? Top VCs – like Reid Hoffman (LinkedIn) and Peter Thiel (Facebook et al., and also one of the most stimulating global thinkers about the future and technology)? Leaders in the energy field? In complex ways the take of all these parties shapes global policy choices.
3. It’s complicated, but the “new corporate social responsibility” (CSR) is increasingly building alignment between business activity and global sustainability. Famously, Harvard’s Michael Porter – long the guru of value in the world of business – has come out in favor of a radical notion of “shared value” as the key. It’s a third-generation notion of corporations thinking about the wider impacts of their activities, after old-time philanthropy and the more recent thinking about CSR. (Discussed here in my column for the U.S. Chamber of Commerce: http://bclc.uschamber.com/blog/2012-01-11/so-what-about-board)
4. Then we come to government. At PuP, among various luminaries, we had two members of the British government speaking – they arrived, delivered their speeches, and left, making it very plain that PuP was not the main thing on their minds in the UK this week. I was thinking that it would have been interesting, for example, had David Willets stayed the full 4 days and served as respondent to key speakers. Until the G8/BRICS/OECD governments can own this process, it is not owned. IGO, NGOs, and science networks are needed and can accomplish a lot. But they do not hold the whip hand.

Subjects of the Conversation

I have neither the intention nor the competence to get into the pros and cons of the very complex climate debate. But to an interested observer, some matters seem to me to be clear after my engagement in PuP.

1. For one thing, there are various distinct logical strands in the conversation that tend to be lumped together. You do not need to be convinced that humans caused warming to see it occurring and note a need to act to contain its impacts both through mitigation and (in whatever manner) through efforts to affect the future process. By the same token, you can accept the entirety of the conventional analysis and not think it is politically possible to do much about it (a view more widely held I suspect than is often admitted). You can doubt pretty much the entire analysis and yet believe that a prudent world should act just in case it should be true. There are other variants. It would be helpful to disentangle their logic. That (ahem) is how one builds alliances and a case for action.
2. For another, advocates of the conventional view have to my mind been much too ready to throw everything into the hopper. Yes, I know, it’s all ultimately connected. But if you are looking to engage global opinion in action to mitigate the impact of warming and, separately, limit its pace, why bring the population issue to the fore? It’s a surefire way of losing a billion potential supporters here (err, the Roman Catholic Church) and a billion there. The same is true of the issue of rising differentials between the rich and the poor. It isn’t that these questions don’t matter. But, again, they are guaranteed ways to push away people who don’t buy these agenda items. By the same token, there are many particular sustainability issues (fish stock depletion?) that stand on their own two feet and do not depend on other areas of analysis for their credibility. The tendency to aggregate the issues into one, like that to aggregate views into two, is not helpful.
3. For a third, advocates of the conventional view need to be careful not to damage their case further in the manner in which they seek to make it. Feverishness in advocacy invariably undercuts credibility. Suggestions, for example (heard at PuP) that skeptics need to be given “treatment,” or that we need a move to qualified majority voting in global environmental regulation, are as rhetorically counter-productive as they are impractical; and the widely held idea that the only reason some people question the conventional view is that Big Oil is funding them is simply untrue – as well as unhelpful. In a global knowledge economy, truth wins out through respectful dialogue. (And, needless to say, “denier” language – which I did not hear this week – is as disrespectful to the victims of the Holocaust as it is to partners in the current discussion.)

These are notes, not points in argument of a thesis, so I do not offer a conclusion. But they are notes offered toward the repristination of the process. Your responses will be appreciated, as we roll down to Rio, and beyond.

Two good blog summaries of the week:

http://www.eaem.co.uk/news/global-eco-summits-compared-matrix-amid-call-urgent-action

http://www.scidev.net/en/agriculture-and-environment/planet-under-pressure-2012-2/news/science-policy-relations-stuck-in-outdated-era-.html#.T3ceQghloc0.twitter

Vivek Wadhwa and the Facebook IPO

Posted on by
Reply

Facebook and the big IPO letdown – The Washington Post.

Vivek’s commentaries are among the most stimulating out there. He only ever shoots from the hip. And, shifting metaphors, he knows his onions. As entrepreneur, biz school researcher in more of them than I can remember, and now leading academics at the singular Singularity University hosted by NASA Ames as well.

I hosted a teleconference with him last fall which gives the flavor of his thinking rather nicely. And now the Post has helpfully carried one of his characteristically sharp-edged opinions pieces on the IPO climate, not least as encouraged by  a recent statement from the President. “Everybody is going to be disappointed. We are not going to see the flood of IPOs that happened during the late 90’s.”

Facebook meets European Privacy

Posted on by
1
Mark Zuckerberg, founder and CEO of Facebook

Image via Wikipedia

Austrian Law Student Faces Down Facebook – NYTimes.com.

There are so many issues raised at the interface of Europe, the United States, the Facebook IPO, privacy in general, the future of the internet, the cloud, the internet of things . . . goodness, on and on it goes; the complex and fast-evolving nerve-system of 21st century knowledge engines as they interconnect people and institutions and ideas and the rest of the personal and  social order. It’s not easy to speak about any without speaking of all. Perhaps we should invent the hyperlink so we can do both.

But as this story shows, some facts are plain. Europe’s forward position on privacy is leading the global policy discussion willy-nilly – that is, the lack of an integrated global conversation that can shape policy has left the field open to the most conservative major player, which happens to be based in Brussels. At the same time, as the story demonstrates, Facebook’s decision to plonk down its European HQ in Ireland (I assume for tax reasons) leaves the Irish Data Protection office with something close to veto power. The Austrian law student, whom Facebook’s European policy head is quoted as saying very nice things about, is pressing his case and reckons that even the Irish response is far from adequate.

Lessons? Well, we sure need a more adequate global discussion. We need privacy issues to be viewed by the major corporate players as keys to profitably business models and not as a nuisance. We need the idea that they seem to assume – that mi casa es su casa; once we hand over the data it’s theirs for ever – to be replaced with a far more  (cliche alert) granular approach. It’s coming, but much too slowly. And I still don’t understand (help me please, Facebook and Google) why we don’t have a fee-for-service alternative in which no data gets kept or tracked at all. Since (per the Facebook filing) each user is worth remarkably little in in dollar terms, this would seem a no- brainer.

Meanwhile we note that Facebook now enables us to see all the data they have on us (in Europe they are required to put it on a hard disk in the mail), which is something.

And an Austrian law student is using Facebook’s Irish corporate registration to leverage the conversation. But hey, century 21 is all about asymmetry, no?