Four For Friday (23)

A reason behind this series was for me to keep track of my own varied reading. Everything, while appearing disjointed, really is connected. Often there is a unifying theme too. Can you see this week’s?

Much has been written lately about terminology. An “immigrant” has fewer rights than a “refugee” but has exercised more autonomy in arriving in a country that promises her a better future. To an alien, especially one reading European press it would seem immigrants remain just a smidgen more welcome than refugees. Should Europe be worried as much as it is? Click here to see where the refugees come from and where they go.

Should Europe instead worry more than the USA constantly gets high quality immigrants, as Scott Sumner writes here?

One of the reasons why the US is more unequal than a place like Germany, especially at the very top, is that the US is host to economic engines like Wall Street and Silicon Valley and Hollywood. I suppose you could throw in fracking. There’s no particular reason why continental Europe couldn’t have its own Wall Street, or Silicon Valley or Hollywood or fracking industry, but they don’t. Britain has “the City” which is sort of the Wall Street of Europe, and that adds to inequality in Britain. But Europe failed to attract the other engines of wealth creation and inequality that are as dominant as the US examples. Europe’s industries tend to be less of the boom/bust variety that often lead to great wealth, although they certainly have their share of billionaires.

From self-driving cars at Google to teaching and learning at Udacity, Sebastian Thrun outlines the problem with technology.

“Because of the increased efficiency of machines, it is getting harder and harder for a human to make a productive contribution to society.”

In a week when Apple announced more new products — and a plan (in some countries) for annually leasing iPhones — there is no need to wonder about what happens to our old mobile phones. In the EU, the manufacturer must take back end of life electric and electronic goods. Everyone from Mercedes to Apple offers recycling returns; if in working order, Apple devices recycling earns you a neat sum too. But we don’t know what happens to our best intentions & their regulation compliance.

We reached the shore, and looked across the lake. I’d seen some photos before I left for Inner Mongolia, but nothing prepared me for the sight. It’s a truly alien environment, dystopian and horrifying. The thought that it is man-made depressed and terrified me, as did the realisation that this was the byproduct not just of the consumer electronics in my pocket, but also green technologies like wind turbines and electric cars that we get so smugly excited about in the West. Unsure of quite how to react, I take photos and shoot video on my cerium polished iPhone.

It being Friday and New York Fashion Week, let’s finish with a note on style.

“On having his own style icons: “Why should I . . . I am one!””

Of subtractive creativity

In an earlier monograph, I wrote about transformation and emergence, the kind of inspiring creativity that everyone thinks leads to beautiful products.

But emergence isn’t intentional. It has a magic that is hard to understand and often replicate.

Intentional creativity and beauty however can come from removing things. But in any such intentional design process, we must begin by asking: what is our goal? What are we trying to achieve?

I have been contemplating subtractive creativity while I soak up some sunshine in the land of Tesla and self-driving cars. So naturally we are going to talk about cars! And since wall-to-wall sunshine makes me miss Britain and all things British, talking of a British car will be the perfect story to ponder.

Cars really just take us from A to B. We want them to do it fast. We want them to look pretty while doing that. And we want them to embody something magical in all that.

Colin Chapman, the founder of Lotus Cars said: “Adding power makes you faster on the straights, subtracting weight makes you faster everywhere.” There in a few words is the philosophy of design — subtractive creativity — at Lotus cars, who also power the Lotus F1 team.

Some high grade engineering and creativity goes into removing weight from a car to make it that noticeable bit faster. Some of that weight subtraction was made to serve a market for a two-seater car and some was powered by innovation in materials.

But as some of you may know, Lotus suffered financial difficulties which may raise the question I often ask about sustainable – which includes profitable – creativity.

Graham Nearn, the founder of Caterham Cars, bought the rights to Lotus Seven, which despite some regulatory challenges in the global markets, continues to be a popular — fast — car for the enthusiast. (Yes it is not for everyone. Just like any other luxury product!)

As environmental concerns become central to how we think about the transportation problem, subtractive creativity wins again. Lotus is a lead player in thinking about the environmental impact of their cars at every component level.

Indeed Tesla, which seems now to be everyone’s dream car, collaborated with Lotus in the creation of the Roadster. The relationship didn’t work out best for various reasons and now fewer than 7% of the components are common between the Tesla Roadster and Lotus’s EV. But as discussions abound about the weight of the Tesla S, mostly due to its battery, Tesla may yet have to rethink some of its design.

It isn’t, in the end, about Lotus or Tesla but about the homage they both pay to subtractive creativity. And by extension, to sustainability – of the creativity, of the environment, and of the human being’s quest for movement, speed and beauty all at the same time.

Best stated in the words of Colin Chapman, Lotus’s founder: “Simplify, then add lightness.”

What would China do?

After yesterday’s post, Google’s China Game, several lively discussions ensued. On Twitter, on emails with friends around the world, and on the telephone. The topic?

What would China do? And what will it mean?

While there was no consensus, three distinct possibilities were identified.

Nothing/ business as usual

This one is the simplest. In financial muscle comparison, Google, a business with a market capitalisation of approximately US$ 186 Billion and US$ 14.5 Billion in cash is a flea compared to the mammoth, the juggernaut called China, with a GDP of approximately US$ 4.33 Trillion with about US$ 1.6 Trillion cash reserve.

China does not really have to react to Google’s announcement from yesterday.

Denial/ business as usual

Even so, Google’s announcement and allegation of hacking is a public humiliation for China. The US State Department expressed its concern and asked for ‘an explanation’ from China. The White House too is waiting to hear from China. Ooh, remember the cultural cross-wires I mentioned yesterday?

So China responded. With a denial. Worded as follows:

“China’s Internet is open… China has tried creating a favorable environment for Internet. China welcomes international Internet companies to conduct business within the country according to law. China’s law prohibits cyber crimes including hacker attacks.”

There we have it. The denial which may provide a way for Google to salvage its quest for profits in China. And for the US to save face and carry on trading with China. Or which may not. Either way much will be discussed on radio, television and of course, the web.

Trade and technical retaliation/ business as unusual

This is the one to watch. Because this is the long-term game. Not only is the current world order in flux, but the western countries, hitherto world leaders in economic terms, are also in financial dire straits with large deficits.

China meanwhile is the largest exporter, mainly of manufactured goods to the USA, Hong Kong, Japan, Germany and South Korea amongst others. Its cash reserves aside, even the partial list of holdings of its sovereign wealth fund is impressive. China’s main buyers are faced with ailing domestic manufacturing sectors, rising unemployment at home, and aging populations.

Even so, as importing nations feel the pressure to keep standards of living at a level pegging, it seems China really has the importers by the short and curlies. Or does it (read the link in entirety)? If demand for its goods drops, can China keep exporting at the same prices? If it drops prices, the buyer nations can take it to WTO for dumping, the same forum where China has recently complained about the USA. And so on.

The possibilities are endless. It is no longer a one-time game, it is an ongoing game of chess.

Copyright: ๑۩۞۩๑~OTH~๑۩۞۩๑/

Copyright: ๑۩۞۩๑~OTH~๑۩۞۩๑/

It is plain to see that this game goes beyond what individual companies may or may not experience as non-technical or technical (pun intended) trade barriers.

It is about governments, it is about political hegemonies, it is a war of values  and freedom (May be! I am not so sure), it is the tug-of-war between the imperatives of the domestic industrial recovery and the obligations to world trade, it is (as my friend Alan wrote yesterday) about the RealEkonomik. It is about the new world order as the financial crisis, the new policy imperatives, the recovery plans and the electorates of democratic countries may drive.

I will go a step further and say: the realpolitik is the realekonomik.

Let battle commence.

Google’s China Game

This morning, my Twitter stream was full of two things: Google’s planned exit from China and the Haitian earthquake.

The BBC reported the Google development with a headline with quotation marks around ‘may pull out of China after Gmail cyber-attack‘, which parses the Google Official blog content regarding the matter conservatively but in my view, accurately.

Industry commentators have varied opinions: Robert Scoble says Google stopped ‘playing footsie’ with the Chinese government long ago, while TechCrunch says the decision is about business and not thwarting evil.

When after PirateBay, I wrote a post titled “I’m just a dumb pipe”, there was disagreement both online and offline with my contentions about strategic intent and societal contract. Google’s China entry strategy had had to contend with both.

Strategy is a game, where every move has a counter-move and outcomes, both foreseen and unforeseeable. More precisely, it is a repeated game, where it is absolutely essential to know what game one is in and not to misestimate or underestimate one’s opponent, as Chinese military strategist Sun Tzu wrote:

So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself.

I must admit I was a little sceptical about Google’s justification about entering China. Google said it believed that the “benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results”.

So what went wrong? Three things in my view:

Cultural cross-wires: While writing this post, I searched to find any statements that the Chinese government might have issued when Google entered China. I didn’t find anything. What I find were interesting references to China having blocked Google, despite Google agreeing to censor results etc, and to a Chinese representative denying there is any censorship of the internet in China. Both references are from 2006. Did Google misread the signals or the intent of the Chinese government? Were the signs always there? Enough has been said about cultural miscommunication, straight-talking versus hint-dropping styles of communication but I think the Chinese government was always non-committal. Which means both parties were playing different ‘games’. Not a good sign.

Corporate hubris on the part of Google: It led to an underestimation, on Google’s part,  of the Chinese government’s desire to control China’s public, China’s public image and China’s growing economic might. By any means. Legal or illegal in Google’s view. Moral or immoral in the view of any one else.

Confusing vision (“creating a more open Internet”) with strategic choice (“agreeing to censor some results”): Agreeing to censor does not create a more open internet. We all know friends who live and work in China and play a game of cat-and-mouse with the government, using a proxy server till the government catches it and shuts it down, then finding another. And on and on it goes. Am I advocating disengagement? Not at all. It is important to engage with even the most intransigent of adversaries, but it is not the job of a public company whose shareholders may benefit some but lose more, should Plan A fail. On a related note, VentureBeat has an interesting assessment of how good or bad Google’s censorship in China was.

My friends, who work in human rights, are naturally pleased with Google’s consideration of withdrawal from China. For Google, it is a mixed basket – it is not a PR triumph (because sceptics are not easily pleased), nor is it a strategic win (China is a big and growing market and Google could be vacating the space for a competitor).

And the tragedy in all this?

Because Google agreed to censorship, most of the Chinese people probably won’t know it is quitting now. For them, it is business-as-usual! So much for open internet.

Obama's Nobel Prize: Lessons for Business

To say that all hell broke loose on Twitter, when the annoucement came in on late morning on October the 9th, is to euphemise. For once, world peace was achieved as a chorus rose in unison wondering why Mr Obama had been given the Nobel Peace prize. Jokes at his expense flew around, without fear of people being labelled “racist”. I confess I contributed too. People wondered how it could be an award for future performance, I called it his “anticipatory No-Bail”. Several Alice In Wonderland references were inevitable but I spare you those in this post.

Mr Obama is the President of the United States, one of the world’s largest democracies and an economy with an eye-watering deficit, fighting two seemingly never-ending wars away from home, facing-off with Iran after tough talk during the elections, and facing tough fights regarding healthcare and other reform at home. He humbly accepted the award and promised to donate the prize money to charity.

So what lessons can a business leader learn from the episode? I see three main things of varying importance depending on one’s business and its place in society.

Don’t drink your own Kool-Aid (or sometimes, just say “no”!).

Awards can be irresistible even to the most limelight-eschewing people. Indeed many industry awards require business leaders (or their PR departments) to nominate themselves/ their companies for the scrutiny of a deciding panel. Notably the deadline for this year’s Nobel peace prize nominations was within two weeks of Mr Obama having been in office.

But whether one accepts an award humbly, like Mr Obama did, or with a wild celebratory party, the main question to consider is if it is well-deserved or simply a case of the business lapping up its own PR.

If it is not well-deserved, customers and other interested parties will soon let the business know. But if PR is the objective, then, provided you did not self-nominate, saying “no” can garner as many headlines as, if not more than, accepting may. Could Mr Obama have said “no”? Possibly. It would be precedent-setting but no more than the prize itself being given for expected performance in the future.

Can you imagine how much more discussion and positive PR about Mr Obama’s humility and general wonderfulness as a human being and a leader might have come if he had said “no”?

Celebrate success, not potential.

Companies hire business leaders for their past successes and their future potential. The salary may be negotiated based on both, but bonuses are contingent on actual results, for delivering on the promise.

Can you imagine giving your “Business Development Star of the Year” award to a new recruit, however senior she may be or however wonderful her prior record in the industry? What possible impact could such a decision have on the morale of others on the team? Does such a decision burnish or tarnish the team’s view of the leaders’ judgement?  From many perspectives, it is wise for business leaders and firms to celebrate success, not just potential. This is one of the reasons why the Nobel Peace prize being given to Mr Obama has generated so much unwelcome buzz.

A funny and poignant mnemonic to remember this golden rule comes from another Nobel Peace prize recipient, Al Gore, who famously said in a speech: “I am Al Gore, and I used to be the next president of the United States of America.

Engage with your publics but do not become the instrument of their appeasement.

The Nobel is unlike any other prize. It is decided upon by a committee nominated by elected representatives of a country. It is generally given out ex-post and not in anticipation. Some scientists wait 3 or 4 decades to gain Nobel recognition. Two things – both political – stand out about this year’s Peace prize.

In the history of the Nobel prize to date, with 800 prizes awarded, only 12 black people have been given the Nobel, of which 8 were for Peace, 3 for literature, 1 for economics and none for Science. Why is this worth a mention? Because much coverage of the prize deems necessary that Mr Obama’s racial heritage be mentioned.  Wangari Maathai, a former Nobel Peace prize recipient, speaking on BBC’s News 24, also said that it was one of the reasons why Mr Obama’s prize was well-deserved. Mr Obama probably does not want to be the poster-boy of the Nobel Committee’s “race-inclusive” decisions. Especially at a time when he is at pains to say that race is not behind his policy measures being opposed at home. But having been given the prize, he is caught in the middle of this politically sensitive issue.

Further, I am not sure if describing the Nobel Peace prize as a “call to action” is very smart. As a visionary statement, it is all warm and fuzzy, I agree. But as a pragmatic step, it sounds like a mere prize is going to be allowed to influence, however subtly, a sovereign state’s foreign policy! The Nobel is unlikely to win him plaudits and friends inside his own country. His current battles and his real publics are at home, not in the wilderness of Europe.

Many business leaders face such dilemmas when engaging with their broader publics. How far should they go before the publics try to influence their decisions or nudge them along inflexible or undesirable strategic trajectories? And how to avoid being exploited to serve the objectives of another firm or organisation?

I am sure others see different lessons in the episode. Feel free to agree, disagree and contribute your thoughts below.

Related reading:

Henrik Hertzberg in the New Yorker on Nobel Surprise;