Godbye Big Oil, Hello Big Corn

To follow up on Bre's recent posts about ethanol, the Wall Street Journal has another article debunking the use of ethanol as the panacea to ween us off our oil dependence.

I find it fascinating that barely a decade ago, ethanol was touted as the quickest and most promising route to energy independence, efficiency and low pollution. Yet current research and facts show that, from the business, scientific, environmental and ecological points of view, it is in fact a rather unwise technology in which to invest our future.

For example: Ethanol's net energy output barely exceeds its energy input, at barely a 1.3 to one ratio. By contrast, gasoline exceeds its inputs by about 10:1. In addition, ethanol increases the level of nitrous oxides in the atmosphere, which adds to smog; has driven up the price of corn all across the Americas; and has diverted an inordinate amount of food-producing farmland into ethanol production.

In summary, there have got to be other ways to reduce (or eliminate!) our fossil fuel consumption, without destroying the planet with corn!!

Which reminds me...

Remember the last scene in Back to the Future? Doc returns to 1985 with a souped up DeLorean and dumps a bunch of banana peels into his fuel tank! Imagine if we could just convert all our biotrash into fuel....

perspective

Here is a great article in LA Times ealier this week on Newtwork Philanthropy--about a shift in thinking within private foundations, especially those with tech money. The article focuses on Pierre Omidyar and Jeff Skoll of Ebay fame.

Skoll is doing very intersting work to fund feature films with a purpose (Fast Food Nation, Inconvenient Truth, Good Night, and Good Luck, etc.). Omidyar's passion is microfinance.

I am especially interested in the ways in which they are willing to turn things on their head. Often a small shift in perspective produces exponentially larger results. This what intrigues me so much about leverage - small change, big results. The trick is to find the right point.

Omidyar is convinced he has found a point of leverage in shifting microfinance's emphasis on non-profit funding to profit. Making micro-finance profitable on a global scale is far easier said than done. But without capital markets, you can't scale operations to address the fundamental need.

Omidyar found the first big application for his platform at a dinner for Mohammad Yunus, the Nobel Prize-winning economist who invented microcredit and founded the Grameen Bank. Most of the world's microlending, Omidyar learned, is done with nonprofit cash. The more he heard about it—the high success rates at getting people permanently out of poverty, the low default rate on small business loans—the more he believed it was a viable business opportunity. He wondered what it would cost to bring microloans to every poor family in the world, based on the Grameen Bank's experience. After a few rough calculations, he figured it was probably $50 or $60 billion.

"You're like, that's a lot of money," he says, and it is—if it has to come from foundations. But private capital is functionally limitless. Look at it that way, he says, and "$60 billion is nothing."

see, its all a matter of perspective.

when brutal facts become brutal reality

Here is an interesting follow up to Jessmy's smart post below on Intel's change in logo as a reflection of their renewed strategic empahasis. Among all the buzz about iPhone, I recall hearing that Apple will drop "computer" from their name.

Both of these seem to be real examples of "cosmetic" changes (brand/PR) reflecting strategic changes. Too often, it seems like folks make the cosmetic changes but fail to address the reality ("you can put lipstick on a pig, but it is still a pig"). Branding and PR often (to me at least) have the "lipstick" connotation.

In today's WSJ, Andy Grove channels Michael Porter to discuss how public policy can learn from business strategy. In "Thinking Strategically" (subscription required) He makes the point that while businesses are able to adapt and adjust, governments typically do not (or at least governemtns adjust much more slowly). He attributes this to a few qualities -- most noteably measurement and the ability to confront what he calls "brutal facts" (he uses a stagger chart to illustrate).

He notes:
Our nation's corporations have been under severe criticism for a variety of shortcomings. Even so, the capitalist/free-market system of corporations consistently produces results. When corporations do not produce, they become irrelevant and often perish. In other words, if the brutal facts are not faced by the leaders, the brutal reality sets in. By contrast, our national strategy-setting and -execution machinery often seem broken. Consider this: Could we pull off the Manhattan Project today? With its complexities of planning and execution, under extreme time pressure? I doubt it.

Fruit flies can teach us how to cure diseases in human beings. Why not study how businesses set strategies and execute them, and adopt the best methods to address the overwhelmingly important issues facing our society?

He is especially concerned about nations' (especially the US) ability to adjust to structural changes in the competitive environment (this is the Porter part) - particularly those changes that have the power to influence our future (like foreign oil). However, it is one thing to recognize the change and its importance it is another to confront it. Here is where the data becomes key. In talking about oil dependence he notes:

The most recent addition to this thread of commitments was when President Bush, in his 2006 State of the Union address, set a new goal to replace more than 75% of our oil imports from the Middle East by 2025. Even if we somehow achieved 100% replacement of all imports by that time, when we compare this goal with the one set by President Nixon in 1974, we see a 45-year slippage in the course of 32 years. Even though the importance of the energy independence issue has been recognized and emphasized by every president since 1974, our vital national objective is vanishing like a mirage in the distance.

We have made little progress because we have failed to measure and adapt to facts (this is what a business is structured to do very well). This takes discipline, courage and an aversion to "lipstick" (not that there's anything wrong with it...)

Intel drops logo after 37 years!

Redesign of Brand identity

From “Intel inside’’ to “’Leap ahead” is in keeping with Theodore Levitt's 1960 classic ''on avoiding marketing myopia. Intel’s effort to rebrand is to focus on the reason why they are in business. An aggressive $2.5 billion dollar campaign is an attempt to remember they are in business not for PC’s but in the business of Technology.

Intel’s has scanned the environment to realize they need to listen to the changing consumer demand. Phillip Kotler's Marketing bible emphasizes on scanning the environment and keeping up with changes.
1. The PC business is slowing down.
2. Apple's a big partner which is consumer electronics heavy.
3. AMD it's closest competitor gaining market share.

''Intel Inside'' was used to persuade consumers and businesses that the processor inside a computer was more important than the brand name on the outside.
`Leap Ahead' is about TECHNOLOGY!
Integrating the Intel Inside® logo was created in 1991, and the original Intel “dropped-e” logo, created by Silicon Valley pioneers Robert Noyce and Gordon Moore 37 years ago. Intel’s new logo combines the tradition and where they are headed for the future.

So what do YOU think of the new logo ?

Hunting Wolves in Idaho

Shocking though this may be, the governor of Idaho, C.L. "Butch" Otter, has called for hunters to cull their nearly-endangered wolf population down to 100, in a bloodthirsty and callous bid to keep them from attacking elk:

Idaho gov calls for wolf kill

"I'm prepared to bid for that first ticket to shoot a wolf myself," the ironically-named Otter said earlier Thursday during a rally of about 300 hunters. Hey, aren't Otters also endangered?

The biggest problem with the governor's stance is that he is so brazenly bloodthirsty and doesn't mind knocking the population back down to the endangered threshold of 100 animals, from where it recently recovered. Furthermore, the U.S. Fish and Wildlife Service plans to start removing federal protections from gray wolves in Montana and Idaho in the next few weeks.

I wonder how much of this stuff goes on right under our noses in California.

A Complex Diagram for Complex Problem Solving

Idiagram.com has some really great visual models for tackling difficult problems. I was particularly interested in the diagram for Art of Complex Problem Solving in light of the recent case competition held by the Value Centered Leadership Lab.

This diagram is fascinating. It is well organized and well designed visually (organigraph anyone?).

A Rose is a rose is a rose is a rose.

What's in a name? That which we call a rose by any other word would smell as sweet.

Does this hold true for Microsoft? Can Microsoft brand is way to coolness?

Branding is one place to start. Product names like “Xbox” and “Zune” are arguably a lot cooler than “Visual Studio 2005 Tools for the 2007 Microsoft Office System.”

Microsoft is developing a product line to compete with Adobe Systems (who pretty much dominates the design professionals' software market). Microsoft's Quartz, Acrylic, and Sparkle will face off against Dreamweaver, Photoshop and Illustrator.

While Xbox and Zune are cooler names than Visual Studio 2005 Tools blah blah blah, at the end of the day the product has to work and work well for designers.

Microsoft has a challenge ahead. Winning over design professionals is not easy. It will be interesting to see.

I leave you with a question...

Is it true that a Microsoft tool is a Microsoft tool is a Microsoft tool is a Microsoft tool?

Price Fixing

OK, I know we're feeling a bit bruised after our Econ finals...so let's talk about price fixing some more!

The U.S. Supreme Court has agreed to reconsider a 95-year-old rule that forbids companies from setting a minimum retail price for their products:

High court to weigh ban on price fixing

The currently-standing 1911 ruling "outlaws contracts or agreements between manufacturers and independent sellers that require these retailers to charge a minimum price for a product." In essence, it outlaws price-fixing.

If overturned, this case could have significant pricing ramifications across many industries, potentially leading to higher retail prices for consumer products. Of course, it could also strongly benefit upscale brands and brands in specialty markets such as department stores, while digging into the revenues of discount superstores and chains such as Wal-Mart. It would also empower manufacturers to have much more power in dictating the markets in which their products are sold, and the desired quality of the brand, among other benefits.

Stirring up the pot like this might be just what is needed to resuscitate a once-thriving specialty market that has been in decline since the huge discount chains began gobbling up old department stores and homogenizing our shopping experience.

Something to ponder over a whiskey sour while you check your Econ grades on Wavenet.

Happy holiday shopping!