Impact Investing… The Next Wave Has Arrived


Impact Investing is a simple idea that is taking the world by storm. In the last few years there has been a wave of interest in Impact Investing, and a wave of actual investments. But what is Impact investing? Why is it important? And why is it so important now? Lets dive right in and find out!

Today, most Americans invest in stocks, either directly or through mutual funds or other financial “instruments”. Back in the 1970s few Americans owned stocks. But as the stock market continued to rise faster than inflation, money slowly moved out of safe but poorly performing bank accounts and into Wall Street. Pensions evolved into 401Ks, and their managers turned away from low interest US Treasury notes and invested in stocks, bonds and more exotic investments.

As money migrated to financial investing, individuals who selected haw the money was invested gained immense power. Some large individual investors, calling themselves “activist investors”, wanted to do more than move their money from one firm to another. They wanted to set conditions for their investment, setting goals and timelines for corporate changes. Big funds and big investors realized that their enormous economic power could change the world.

Every corporation has different goals, which are often usually stated or implied in their financial reports. By creating published rules for their portfolios of stocks, bonds, and investments, funds can follow “themes”. One fund might only invest in South African bonds. Another may only buy technology stocks. Yet another may have a mandate to select higher risks investments, with better that average returns. Once portfolios are assembled thematically, non-professional investors can pick one fund (that is professionally managed) rather than researching, buying and managing their own portfolio.

Consider the Teachers Insurance and Annuity Association (TIAA), the pension and insurance fund for teachers in America, with over $600 billion in assets! You can get a lot of companies to do what you want when you have that much money to invest. But TIAA is unique. TIAA may be answerable to millions of teachers, but those teachers are answerable to… kids.

Kids do ask the strangest questions. In the age of Google, they can ask very POINTED questions. Like… “Does teachers invest in guns?” “Why don’t you put more money into renewable energy?” “You invest in company ‘X’? Aren’t they big polluters?” “I saw a terrible new story about sexual harassment at company ‘Y’. The story said that your pension fund invests money in them. That’s not true, is it?”

These questions shaped how TIAA invested, over time divested itself of perfectly mainstream investments with questionable ethics. Later, NUVEEN became a TIAA company, and set up funds that were explicitly “Good Guy”, with over $20 billion worth of Impact Investments.

Did TIAA create Impact Investment? Not really. Unlike superhero movies, the origin story for Impact Investing involves more than just a spider bite.

TIAA and firms like it are one important thread in the story. But equally important is the rise of the Millennial. These young investors constantly face crises… the global financial crisis, climate change, China, globalization, school shootings (from Columbine to tonight’s latest shooting, these kids ARE Millennials), war between the Republicans and Democrats, immigration, school loans, government debt, their debt! The list is long.

Yet, the Millennial is used to the world… at least the on-line world… constantly innovating and changing to meet their needs. Shouldn’t their financial firms do the same? A quick search of the internet reveals search tools that rate firms by social value, by adherence to social investment principles, and similar “good guys” metrics. Organizations like GIIN (Global Impact Investment Network) promote and report on Impact Investment. New organizations are appearing almost every day.

A third thread leads to the United Nations. Since the creation of the United Nations in 1945, the relationship between world peace and the economy has been a regular item of discussion. After WWII, the world began rebuilding shattered nations. By the late 50’s, underdeveloped nations became the new battleground. Poverty, famine, and corruption were creating wars, revolutions, and mass migrations.

If poor nations could be developed, much misery could be avoided. But the lack of transparency in these nations led to corruption, unenforceable deals, and lost capital. Without transparency, there would never be enough deals from good governments and good companies to raise up the standard of living in poor nations.

The start of the new Millennia looked like the right to make a big move. In September of 2000, the United Nation hosted the Millennial conference in New York, and the Millennial Development Goals (MDG) were created. These eight goals promoted education, gender equality, health, human rights, and economic development. Few rejected these goals. Instead, some said that they lacked the funding. Enter the early pioneers of Impact Investment.

Of course, the UN did not stop with MDG. By 2015, MDG was expanded into 17 goals, called the Sustainable Development Goals (SDG). It also led to ESG:

  • Environment: Don’t intentionally do harm to the environment. Extra points for you if you have positive policies for recycling, and other environmental issues.
  • Social: Corporations and governments are responsible to their communities, both inside and outside their organizations. Support employment and education, and you’re a good guy. Grow through bribery, corruption, and sexual abuse, and… you’re not.
  • Governance: How do you run your organization? How many women and minorities are on your board of directors? Your senior management? How are whistle blowers treated? At a time when the US has nearly zero unemployment, well treated workers ARE a competitive advantage.

There are different estimates of the size of US Impact Investments. Should we just count the assets in funds that are explicitly “Impact Investment”? Or should we include all funds with similar goals? A common, but conservative, market estimate is at least $300 billion. A staggering amount, but it is only the beginning.

The US Social Investment Foundation uses a broader measure, including ESG. By the start of 2018, their measure of SRI (Sustainable, Responsible, & Impact investing) rose to $12 trillion. Yet another group, the PRI (Principles for Responsible Investment), tracks ESG signatories. The list, so far, includes over 1,200, asset managers, investment managers, and service professionals.

In just the US, ESG signatories include such prominent names as: the AFL-CIO, Alliance Bernstein, BlackRock, Kohlberg Kravits Roberts, Legg Mason, Mellon Capital, Neuberger Berman, Nomura Capital, Prudential Real Estate, Rockefeller Asset Management, and Turner Investment Partners. Add to this government retirements funds for Connecticut, (over $32 billion), Illinois, Los Angeles (nearly $60 billion), New York city and New York State. Europe has even more signatories, and more pension funds. Consider that the world’s government pension and insurance funds are valued at more than $18 trillion!

That’s a tsunami of money, and its washing up on the shores of nations around the world! If a tsunami can reshape the shoreline, this monetary tsunami will reshape politics and economies around the world. Or at least that’s my Niccolls’ worth! What about you? What do you think about the future of Impact Investing? Feel free to share you opinions here!

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Airplanes By The Numbers: The A380 Is Dead, The 737 Is Back In The Air, & The 787 is Grounded Again


As passengers squeeze into ever smaller seats for increasingly delayed flights, a war has been raging for between airline manufacturers. In America’s corner we have the Boeing Company, the world’s biggest Airplane manufacturer. In Europe’s corner we have AirBus, an amalgamation of Europe’s national airline industries from the 20th century. Each company had a different vision for the air travel industry in the 21st century. Ironically, both firms may have lost!

For decades, the 747 jet dominated national and international air travel. It was a revolutionary plane when it was launched in 1970, and became one of the most purchased airplanes in the world. Today, the design is old, the engines are inefficient, and it is limited to landing at larger airports. The world ha been waiting for a new solution.

But what sort of plane can replace the 747? The 747 defined the JUMBO jet. Larger than the earlier competition, it made air travel affordable. After the 747, everyone could afford to fly! Airbus had an idea for a 21st century sequel, the double-decker A380. By using two decks, the plane could be kept shorter and narrower, and still hold between 525 to 850 passengers (depending on configuration).

Boeing had other ideas. Boeing initially planned on building something similar to the A380, but quickly changed those plans. They could build a super-jumbo like the A380, but market data change their plans. Air travel was increasing, and delays at major airports were getting longer. The biggest airports were reaching the maximum number of daily flights, and a super-jumbo could only land at a few airports. Knowing this, Boeing looked at all of the smaller airports that still had available capacity, and focused on two planes, the 737 and the 787.

Boeing’s latest-greatest plane was the 787 jumbo, and their “market refresh” was the smaller 737 plane. The 787 was an all new, high-tech flagship plane that could replace the 747 in larger airports. The 737 is a venerable line of planes that were first launched in 1968, two years before the 747. These planes were upgraded to digital equipment, and new high-efficiency engines. They could still use many older spare parts, the repair crew didn’t need retraining and pilots could carry over their skills (and seniority) from previous 737 models. At least, that’s the way it was supposed to work.

The A380 is already out of the running. Boeing was right! Building a plane that can only land in the big airports was a bad idea. Big airports cannot get permission from their neighbors to expand in size, hours, or daily landings. New orders have not met expectations, and it was recently announced that the last A380 will be built and delivered in 2021.

Boeing should have been the big winner. But as everyone knows by now, the 737 is the subject of intense scrutiny following two fatal crashes. The “upgrades” were the problem. New engines make the plane “nose up” slightly, and can cause the engines to stall, crashing the plane. Software was supposed to fix the problem and adjust the say the plane flies. Keeping the “feel” of the plane remains the same from older planes to the latest upgrades. But the software may not have worked the way it was supposed to. Pilots did not receive extensive retraining since, “all 737’s fly the same way”. Automated features may “over steer” the planes, causing the crashes.

But there may be an even greater problem… over-delegation . Normally the Federal Aviation Authority (FAA) provides oversight of the development and construction of new planes. And after the first crash, the FAA might have made more demands before letting the planes back into the air. But in an age of increasing delegation and disinterest in government control, the FAA handed control over more safety management and reporting to Boeing. After the second crash in less than a year, will the FAA continue to allow Boeing to fix it’s own problems?

Meanwhile, the 787 has had problems of it’s own. Back in 2012 there were electrical fires, which were blamed on defective batteries. Last year one plane had a double engine failure. Luckily, this happened after the plane landed. Then, last week, multiple 787’s were grounded either due to problems with engines and GPS.

The 21st century opened with three innovative commercial airline designs. One is already gone. One is fully grounded. The last, is partially grounded, but has had repeated problems. Hmmm… I wonder what a bus ticket costs!

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ESG… Impact Investors Rank “Good Guy” Companies


Can you do WELL, by doing GOOD?

Wherever there are investors that are ready to put money into companies, you will also find analysts trying to figure out if that investment is a good idea. But what is a good investment? What is it that turns someone looking at a “good investment” that turns them into actual investors… individuals who are ready to put their money into a company? What gives an investor the confidence to fund a business?

First of all, investors wouldn’t be investors for very long if they didn’t get a return on their money. Most investors want to make at least the “average return”. That average always changes, but for the last century stocks have returned around 10% per year, and bonds have returned around 5%. Bonds are generally viewed as safer than stocks, and therefore have a lower return. Likewise, the more rock-solid and safe that a stock (or bond) is, the lower their return.

So far, so good. If you want to get a higher return, the trade-off is higher risk. Take on enough risk and the company you invested in may not make enough money to pay the return you expect, or it could even go out of business, costing you your entire investment. When investments pay more than what appear to be similar investments, there is usually more risk. But what makes an investment risky?

Unfortunately, there are no simple answers. Teams of research analysts work around the clock on every publicly traded corporation in America to answer this question, and they often arrive at dramatically different conclusions. And, of course, there are always dishonest corporations that hold back data or intentionally mislead investors.

The US and the UK put a lot of manpower and regulations into making risk information available and understandable. Few other nations have such high standards, and therefore are believed to have more hidden risk. That’s why the US and the UK attract so much foreign investment. Russia, Africa, and other less transparent nations lag behind. Wouldn’t it be great if there was some way, some universal and global way, to make it a bit less risky to invest?

Welcome to ESG: Environmental, Social and Governance. ESG won’t solve every problem nor will it de-risk every possible investment, but it does take a very big step towards creating a global standard (and cure?) for risk in investments.

While it is an over simplification, ESG basically promotes “good guy” thinking. When truly evil things are done in the world (polluting our environment, overcharging for critically needed medicine, abusing workers), we either find individual bad actors or we find that the corporation itself didn’t follow regulations and other rules. Corporations are regulated. They pay a ton of money for HR, Compliance and other internal groups that are supposed to sniff out bad people doing bad things.

Investment banks are regularly fined when they mislead investors. The Cigarette industry nearly collapsed due to their conspiracy to hide the dangers of their products. The asbestos industry DID collapse after their similar dishonesty was revealed. The drug companies that created the opioid crisis have just been fined $200 million. Oil and coal companies are being scrutinized. It does take a long time to discover endemic bad behavior, and when bad actors and bad corporations thrive, investors are often left with worthless investments.

If all corporations followed a universal set of ethics, risk would be easier to identify and track. It would be harder for bad players to hide. But corporations don’t want the world to know about their internal problems and shortcomings. Will they let the world know when they act selfishly or are just plain evil? They may not have a choice. Investors are better informed than in the past, and they are demanding to know how their investments are managed. Millenials are very clear that they want to invest in companies that support their personal interests and beliefs.

Even traditional investors are increasingly frustrated with the hidden risk in traditional corporations, and the idea that it’s only the “insiders” that can profit from big corporations. Investing in companies that support ESG has become very popular, and that interest is growing. In the US alone, ESG based assets totaled $8.7 trillion in 2016, a 33% increase from 2014. According to Oppenheimer, ESG based investments now represent 21.6% of all managed assets in the US, with a global total of $22.89 trillion.

WOW! ESG could define how capital markets work around the world. Lets look at the elements of ESG.

  • Environmental: The corporate world has generally accepted that the environment… has value. Degrading the environment creates negative value. Improving the environment creates positive value. Financial analysts know that when corporations illegally dump toxic chemicals, they are eventually found out. Regulators, courts, and shareholders will hold them accountable. Analysts now measure environmental value, incentivizing pro-environmental activities.
  • Social: Each corporation can make our world better or worse. A real estate developer that only builds luxury housing may be profitable, but generates little other value. A firm that builds housing for the poor, or hospitals, or schools… generates higher property values and new jobs… just like a luxury firm… but also does social good. Even when being a “good guy” only leads to a small positive value, it may be enough to sway some investors to the corporations that follow ESG.
  • Governance: Elizabeth Holmes created Theranos, a $10 billion fraud. Their board of directors was impeccable, two former secretaries of state (Henry Kissinger, George Schultz), Wells Fargo’s former Chairman, and more. But not a trace of medical experience. The brilliance of the board was intended to blind financial analysts to it’s complete lack of appropriate expertise. While this was obviously intentional fraud, many boards of directors are 100% multi-millionaire white men, over 60, with an MBA from an ivy league school. Is this the BEST board to… identify opportunities in China and India, understand the consumer preferences of minorities, attract new Millennials, sell to women (50% of every market)? If you want to attract ESG investors, you had better carefully consider the ethnicity of your board!

Even the United Nations has taken an interest in ESG. ESG could bring about a more equitable world and encourage investments in the least developed nations. It would even allow the developed world to put a value the untouched resources of the undeveloped world, which just might help preserve some of those resources for another generation or two.

Nor is the UN alone. The PRI is a group that trains and certifies groups in the Six Principles of Investment, that the United Nations developed. If ESG is how to be a good guy, then PRI is the Bro’ Code, for good guys. And then you have the GRI (Global Reporting Initiative), which promotes “Sustainability Reporting”, a similar set of standards. Especially, for the Environmental and Social aspects of ESG.

It looks like ESG is breaking out all over the world! What about you? Do you have investments in a portfolio or a retirement fund? Have you ever thought about the values of your fund, and what your fund managers expect from the firms they invest in? Maybe you should give it a bit of thought, or even call the people who manage your money and see if ESG is on their mind!

What do you think? Should ESG matter? Is this just a fad, or does it represent values that you want to stick by? Let us know what you’re thinking!

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Noah’s Ark Theme Park Fails


Remember the children’s story from the Bible, “Noah’s Ark?” That’s the one where 4,000 years ago a small middle eastern family builds the world’s largest boat, sails through the world’s most catastrophic flood, while managing the world’s largest animal rescue? You remember the one… where Noah saves two of every living creatures on earth and then repopulates the world?

Most Bible scholars agree that this is indeed a Children’s story. It was never meant to be a history lesson. Yet, some Christians believe that the Bible, including the story of Noah’s Ark, is an accurate historical document. Some firmly believe that Noah had dinosaurs on the Ark! Could the story of the Ark be true? Is there any possibility that the Ark could be real?

The Bible is filled with strange tales. The strangest, and most violent of which, are usually left out of Sunday sermons. But just about everyone has heard the story of Noah’s Ark. I mean, it’s got all those animals and kids love animals! Even kids from secular families know the story about the Ark. But a very few people who truly, TRULY loved this story want it to be true. When they grew up, they would build a real Ark.

Did you know that there have been several attempts to build an “authentic” replica of the Ark? that’s true! Except, of course, that none of these “replicas” had much to do with the Biblical boat. Some used a steel hull, others used modern tools and materials. None used the materials and tools from Noah’s time, because… well… that would be very difficult to do.

Still, regardless of the questionable practices, one Ark that been getting attention. The one in Kentucky called, “The Ark Encounter”, that was created by Biblical Creationist Ken Ham. But before we look at The Ark Experience, lets first take a look at why biblical scholars argue over the historical facts of the Ark. 

If the Bible is right the Ark was something like 500 feet long and built over 4,000 years ago. Bronze was still a relatively new material. However, to even have a hope of this Ark holding together for a few hours in a calm sea, it would take iron or steel nails. But iron barely existed, and steel would not be invented for a long, long time.

Given how little metal existed in the world, just the nails used to hold together the planks of the Ark represented a fantastic amount of wealth. Yet, the Bible tells us that the Ark, a boat the size of a cruise ship, was built by a poor family of 6 without any help or previous experience in building ships. A bit difficult to imagine?   

In reality, it’s a lot harder to imagine. In Noah’s time, everyone was a “subsistence farmer”. It took just about 1 farmer to make enough food for 1 person. Noah’s family would need to spend almost every hour of the day just to feed and clothe themselves. They would have very little free time, certainly not enough for the world’s biggest DIY project.

What does it take to build an Ark? According to the FAQ on the Ark Experience site, it took $135 million to make a replica of Noah’s Ark. Even allowing for inflation, Noah would have been too poor to pay even a few million for the lumber he would have needed. Since there wasn’t any steel, and he wouldn’t have been able to buy bronze tools, that means that this family would need to fell, strip, and finish these trees on their own to turn out the 3 million board feet that The Ark Encounter stated was needed for their replica.

Of course, that means that they would also need to mine the ore they would need for the millions of bronze nails to secure together the planks of the Ark. Dozens of lifetimes would be spent just moving all of these materials around, sharpening tools, and making new tools when old tools wore out. Quite a task for a family with very little time to spare after they feed and clothe themselves.

Another small task for the overworked Noah family is to be security guards for the greatest treasure of that age! Not the Ark… but the nails for the Ark. Millions of bronze nails, plus their tools, the copper and tin mines, and the foundry to refine and forge bronze, would be incredibly valuable. You would need to guard their metallic treasure day and night.    

With a family of just six, it would literally take thousands of years to accomplish the tasks that The Ark Encounter website tells us are needed to duplicate Noah’s task. Of course, Noah’s family was supposed to have built the Ark with their own hands, while the replica in Kentucky was built with steel, power tools, bulldozers and a lot of hired workers.

And the Ark Experience Ark doesn’t, well, float. The Bible clearly states that the Ark was covered in “pitch” to waterproof it. The Ark Project chose not to coat their replica because that would make it sticky and gross. If the replica was ever placed in water, even the people who manage the Ark Encounter would expect it to sink. With a rather inauthentic Ark, and enough work to keep a small family occupied for a thousand years, did the Ark Encounter prove anything? I think it did!

While it was hardly intentional, Ken Ham’s Ark Encounter conclusively proved that a small family 4,000 years ago, could not have built the Ark. It’s not just a question of how impossible it would have been for a bronze aged family to do all of the work (and find all of the resources) necessary to build an Ark. Even with $130 million, Ham’s team was unable to build the Ark without the use of modern technology.

Unfortunately, the investors who raised the $130 million for the Ark Encounter assumed that Ken Ham was a bit better at math than he actually was. Ken has rather deplorable skills at estimating the work needed for a carpentry job were no better at his skills in estimating ticket sales. The Ark Encounter might sink if it were set afloat on the Red Sea, but it has proved to be fully capable of floating on a sea of red ink.

Did Noah and his family build a giant Ark 4,000 years ago? It seems extremely unlikely! Then again Ken Ham is having quite a few problems building a theme park for a giant Ark today. Maybe we should just leave stories about floods and Arks to fairy tales? Yeah, that’s probably a good idea!

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Boss Trump Makes America Great Again!


Union

Love him or hate him, Donald Trump is a multi-faceted individual. He’s the President of the United States. He’s an international businessman. He’s a father… well, to some of his kids. And he’s the smartest man on earth, or so he tells us. He’s a Republican, but he was also a Democrat. But the most important role that Donald J. Trump has ever played is of course… America’s most powerful Union Boss!

Union boss? Well, yeah. Haven’t you heard him promise new jobs in the coal industry? He’ll make America a major manufacturer again? Or that we need to protect our Steel industry from foreign competition? What about the Trump Tariff? When was the last time that you heard anyone outside of a Union utter all of these pro-union positions? It’s like listening to the reincarnation of Jimmy Hoffa!

Think about it. Trump is not the kind of leader who cares if his followers belong to his “union” or not. Or even if they voted against him. Or that they don’t belong to a union. No, Donald knows what good for all of us and if he has to bust a few heads to fix America’s labor problems, he’s ready! Consider the following… 

Jobs and More Jobs: Trump has not only promised the American people more jobs, but he also promised that these will be “God Jobs”.  That means good, well-paying jobs, with benefits. Trump repeatedly tweeted that American firms cannot just downsize or outsource without going through some sort of process… a  government-approved process, with worker participation!

Regulation: Trump is crystal clear that we must get rid of regulations that constrain businesses. Except for the new regulations that he wants in place. Like the rest of the (new?) Republican party, he believes that business should listen to the Government, and follow their instructions… like good little Capitalists. (EXCEPT, Capitalists are not supposed to tell businesses that… sigh! Nevermind. Back to the story.)

Examples? Over and over Trump has said that when American businesses outsource to China they just don’t understand what they are doing. China steals American intellectual property! Business leaders do not understand that the contracts they signed with China ill expose their patents. How about that! The thousands of American firms operating in China … many of which are global behemoths with hundreds of lawyers… just don’t understand how to read a contract like Boss rump!

Luckily, Boss Trump can provide government officials who can tell these businesses which contracts they can and cannot sign, and which countries they can or cannot work with. Imagine those silly company executives thinking that Capitalism is all about profitability, financial models, and return on investment! The government is much better at looking after your best interests! Let your government make the decisions, and everything will be A-OK! After all, isn’t that what Conservatives have been saying since Ronald Reagan? 

Tariffs: Protectionist tariffs have always a favorite of Union Bosses. While conservatives from Ronald Reagan to George W. Bush have been against tariffs and for open trade and globalization, union bosses have always wanted to protect union jobs from foreign competition. 

Now, other union bosses are heaping praise on Boss Trump for joining the flock! Look at this headline, “UAW President Dennis Williams praises Trump’s tariff approach”.  Or this tweet from Richard Trumka, president of the AFL-CIO, “The admin’s steel & aluminum tariffs are good steps towards fixing predatory practices that hurt workers & cheat companies that produce in US.” High praise indeed! 

Free Enterprise: Perhaps the best measure of a union boss is his disdain of free enterprise. Workers first, profits second! Well, General Motors recently announced that they were going to lay off workers from car lines that they were going to close down, due to lack of sales. In the very best of Union Bsss traditions, GM was told in no uncertain terms that there will be NO layoffs of American workers… before the next election.

Trump even tweeted to GM,  “Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan, and Maryland…  The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies”. Is this the 21st century equivalent of, “Nice factory youse gots here. Shame if anything was to go and happen to it.” Good for you Boss Trump for keeping it fresh!  

Back to Reality: Of course Donald Trump, President of the United States is not really a Union Boss. After all, if he was a real union boss… say, like Jimmy Hoffa… his closest associates would have criminal records and would spend years just one step ahead of an FBI criminal investigation. But that’s just fantasy!

I mean, compare that with our President who doesn’t know anyone who has been indicted. Except for Flynn, and Manaforte, and Cohen, and gates and… hmmm. It is a pretty long list. Well, what really matters is that none of them have been found guilty, or imprisoned or… Oh? All of them?  Well, maybe Trump really is the greatest Union Boss of all time! He did say that he would Make American Government Grate again. And I can’t remember a time when Washington was as grating as it is today!

Have a Great New Year America… and see you next year! 


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Intellectual Disability… Why Growing Up Is A Growing Problem!


Many America families have a child with intellectual disabilities (ID) – autism, Downs Syndrome, a traumatic head injury, and many other conditions. These children may never fully developing their mental capabilities. They will grow older, but they may never fully grow up mentally. FOr the rest of their lives, they will have greater challenges in making friends, fitting into their community, getting a job, finding a home, and… getting the services they need to lead a meaningful life.

Is this a result of Trump’s war against health care? Well, not really. The 2017 budget actually had an increase in funding for special education. Which is, strangely, a part of the problem.

Not that long ago, being born with ID didn’t just mean that a child would have a difficult life, it meant that this child’s life would also be very short. Few ID children lived past the age of 21. Naturally, with few ID adults, there were few services for ID adults. But that was decades ago, in the last century.

Today, advances in healthcare have dramatically improved the lifespans of ID adults. Living into their 40s, 50s, and beyond is now common. Medicine has doubled their lifetime. It is a scientific miracle! But, the organizations that provide services for ID adults haven’t caught up. They are still working with the demographics of the last century. Its as if these millions of adults did not exist.

The previously mentioned increase in Federal funding goes primarily to the department of education, to pay for children’s services. Which is a good thing, since EVERYONE with ID needs more funding and services. But it does nothing for children who will turn 21 this year.

At 21, everything ends. There are no more school programs. A severely disabled child that and in a boarding school, they lose their home. Why? One reason is that some years ago something called deinstitutionalization happened. A lot of hospitals and facilities did a very poor job of looking after their patients. Mental hospitals, such as Willowbrook, became synonymous with abuse.

Since the 1970s, reformers have been working to close large hospitals and institutions that serve individuals with mental and intellectual disabilities. When new drugs were developed to help dangerous schizophrenic patients with a history of violence, it made sense to close prison type institutions.

However, individuals with Autism and similar intellectual disabilities were just beginning to be diagnosed in the 1970s. Unlike schizophrenia, the ID population is rarely violent. They have been stuck in between the deinstitutionalization movement (which is closing institutions) and a rapidly growing number of autistic adults.

There are indeed many former mental patients that can live independently with medication and support services. Unfortunately, while the idea of moving these patients into the community is not necessarily wrong, the money needed for this support just isn’t there.

For severely ID adults, who may not be able to feed themselves, let alone live independently, there are virtually no beds or services. According to a recent Psychology Today article, “the US now has only 3.5% as many state hospital beds as it did 60 years ago. We have closed over 500,000 beds, without providing sufficient community services and adequate housing to pick up the slack.”

If that seems like a paltry number of beds, the reality is worse. Apparently half of these beds are only available to individuals who are in the correctional system or are awaiting trial.

If institutions don’t work, and deinstitutionalization was never funded, what’s next for ID adults? The answer, unfortunately, is, “Not Much”. Parents, providers, and even governement agencies seem to know what doesn’t work. Yet, a new system has as yet to arise to disrupt the industry.

Maybe, just maybe, that disrupter has arrived. It’s very early days, but A new group called “Nicky’s Gardens of Hope” has started working on that solution. They’ve developed a different way to fund services and what may be a better way to deliver services to ID adults. They’ve got a long, long road ahead of them, but they just might be onto something new!

Do you have an autistic or ID child that will soon be an adult? Interested in finding out more? You can contact Nicky’s Gardens of Hopehere!

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How The Brexit Stole Thanksgiving!


We waited all year ’round for Thanksgiving. It’s become America’s favorite holiday, eclipsing even Christmas. This is the day that we all sit down together and give thanks for the good things that happened that year. Did junior got accepted into a top tier school? Has your new business venture taken off? Did your investments fatten your retirement fund? Lots of things to give thanks for this year. Unless you’re the Turkey… or if you live in the UK!

Instead of savoring a juicy Thanksgiving Turkey, in 2018 all the UK had to look forward to was the arrival of the nastiest of all holiday creatures, the BREXIT! No one knows exactly what the Brexit is or what it wants, but everyone agrees that this most improbable of beasts is the UK’s greatest nightmare.

Yes, it’s true, the Brexit is a horrifying creature, and it gets worse every day. Especially, if you’re a Prime Minister by the name of Theresa Mary May. 

Strange. I didn’t feel a rhyme coming on. 

Anyway, back in 1993, the UK complained that the US was getting everything it wanted. America was too big to compete with, and their new North American Free Trade Agreement (NAFTA), would linking the economies of the US, Mexico, and Canada into a super competitor. The UK wanted Europe to do the same and create a single trading region. Germany, France, and Italy agreed. And the EU was launched.

The EU had several immediate objectives. First, Europe needed a common currency, Without constantly trying to figure out translations between currencies, tourists would spend more and business across the border would be easier. Done: The Euro was created. Less developed areas (Grece, Portugal) could be developed by turning them into “outsourcing” centers. Done: the economies of poorer nations more than doubled. And of course, it was supposed to create prosperity across the EU. The UK grew even faster than most EU nations. What was the result? 

The UK complained that the EU was getting everything it wanted. They said that EU bureaucrats were too big and powerful. The EU headquarters in Brussels was telling them how to run their economy!

The UK is intimidated by Brussels? The former ruler of most of the world is getting beat up by Brussels? The second largest financial capital in the world (maybe the first… all that hidden offshore banking you hear about flows from former UK territories and through London banks) is afraid of Brussels? The only time Brussels brings fear and intimidation to MY Thanksgiving is when the Brussel Sprout souffle lands on the table.   

Conservative, like Boris Johnson, wanted to make the UK great again. They wanted “UK First”. But it’s a lot harder to put together a plan than to complain about someone else’s plan. The process would be complicated and SOMEONE will be unhappy no matter what you do. And it could fail! That’s not good if you want to be re-elected! 

Boris and his gang of bargain basement Grinches got together and gave this a good thinking out. They puzzled and puzzled till their puzzlers were sore. Then they thought of something they hadn’t before… let’s have a public referendum. Let everyone choose! If the country is ruined, let some other blokes lose! But if it does pass, and the transition goes well… then BREXIT baby BREXIT, uhhh even if it does slightly smell.

More rhymes… must be the time of year.

So, there you have it. The Brexit was born in 2016, without a plan or even the understanding of the financial consequences if it should fail. Rather than being carefully thought out, the Brexit has become a beast of its own making. THose who created the Brexit sold it as a fuzzy bunny or a soft cuddly kitten, but it has quickly mutated into Godzilla’s uglier cousin. Well, it’s not Turkey, but look at those drumsticks!

Still, all may not be lost. There could be a bright side to all of this. The world could learn a lesson from the Brexit. Mostly about what you should not do. You should never believe any “movement” that promises all benefits and no problems.  Never accept the “everyone is unfair” argument, without supporting evidence. Never assume that you must get the most out of every deal.  

The list goes on and on. Basically, be reasonable, listen to arguments from the opposition, and when you complain about the deals that you started… expect that not everyone is going to roll up and do what you want. So, maybe, give thanks and don’t be a giant Brexit!

 

 

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Is America’s Food… Secure?


Paignton004 001

Periodically, America has a food scare. Sometimes it is tainted beef at a big supermarket chain, sometimes it’s E. Coli contamination at a national fast food chain. It might even be bird flu at a chicken farm. Some of our favorite foods… like bananas and oranges… are expected to be wiped out by invasive pests. Food is becoming very scary! Is any food safe? Or at least safely grown?

Today’s food is… complicated. Bugs and pests have invaded America and periodically wipe out a crop. So we double down on pesticides and irrigation. Of course, that washes away the soil, so farmers need to dump fertilizers into the fields to keep the farm profitable. Downhill and downstream, all those chemicals do strange things to our rivers and lakes.

American farming is locked in a vicious circle of chemicals, pests, depleted reservoirs, and angry parents who want more natural foods for their families but have grown used to the low prices that come with mass-produced foods. The thing is, all the land that can be profitably used for farming, is used for farming. Unfarmed land pretty much isn’t worth farming. Except for national parks. But we’re not quite ready to burn down our forests to make more farmland. Yet.

Every day that passes means that a bit more of America’s farmlands die. Over-irrigation washes away the soil. Without soil to hold the plant and to provide nutrients, food can’t grow. In many places in America, over 100 feet of top soil is gone forever. If those fields lose another foot or two… or in some cases just an inch… nothing will grow.

As our soil loses productivity farmers use more and more water to irrigate crops, soaking the soil with minerals and salts that further degrade productivity. This soil degradation destroys 38,000 square miles of global farmland annually. Sounds bad enough, right? But consider this… for every foot of soil that dies, several other feet of farmland less and less productive. 

America’s growing population also requires land for homes, schools, malls, and the rest of the infrastructure of our 21st Century life. Future city land is often made from former farmland. Between 1992 and 2012 urban development in cities and towns cost America almost 31 million acres of farmland.

Commercial farming is headed in a dangerous direction. However, there are alternatives. Like Vertical Farming. Vertical farming is the evolution of hydroponics…. growing food indoors, without soil. The brilliant, but simple, innovation of vertical farming is that instead of growing one flat level of produce, you stack hydroponic “farms” on top of each other… from the floor to the ceiling… multiplying the productivity of the farm with every additional level you add.

A soil based farm has only one level, a vertical farm have 3 or 4 levels (more with a high ceiling). If your V-farm is in an abandoned factory, with multiple floors, you could have ten levels on every floor, with several floors built the same way. That would give you 30 or 40 times the productivity of the same footage of soil. With a temperature controlled environment, you can grow crops all year round, instead of having just the 2 or 3 you get with most soil farms.

There are other multipliers, like 24-hour “sun”. Add it all up and V-farms can be 100 to 300 times more productive than a single layer soil farm. Because the food is indoors and all of the pests are outdoors, there’s no need for pesticides, herbicides, or chemicals. Even storms and cold weather can’t destroy your crops.

Just as importantly, indoor farms can be in the center of a city. A V-farm can be next to (or on top of) a supermarket. Without the need to transport food from across the country, or around the world, millions of tons of carbon emissions would be eliminated.

With all of these advantages, are V-farms the perfect way to grow food? Alas… no. Where it works (and doesn’t) depends on specific circumstances. Consider all of the artificial sunlight you need to grow crops. Today’s LED lights are amazingly efficient, but they still use electricity, which is one of the primary costs of indoor farming.

If you live near coal-fired power plants, more power means more pollution. On the other hand, if cheap hydro, wind, or solar power is available, AND there are abandoned factories nearby, you can have a very successful V-farm. Build your V-farm in a low-income urban environment, where fresh fruits and vegetables are hard to find, and there are other social rewards.

Vertical farms may not be perfect, but they are going to be an important part of the future of farming. What about you? Want to use your roof as a farm? Could your local school grow produce for its students? The great thing about vertical farming is that you don’t need to change the whole world to make a difference that matters. You could just change a few square feet of space, and start your own miniature farm.

Let your fellow readers know what you think!

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Project Manager: The Best New Career For Operation Managers?


person holding book and ceramic mug with coffee

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I recently read an article by Antonio Nieto-Rodriguez, “Re-Humanising Work and Organizations Through Projects“. Antonio raises an interesting point. Typical positions in operation have changed. Automation and management systems have taken over.  Operations managers once had great latitude and followed their instincts, but now their primary job is to simply conform to metrics, metrics that are often defined somewhere else. Is Antonio right? Can project work truly provide an alternative and a new and more fulfilling career for operations managers? Let’s recap where we are and how we got here, and then we can dive in and see where we’re headed!

It’s hard to disagree with the premise that automation, management software, and new PMO and efficiency departments have changed the way that operations managers work. Managers used to have a wider range of duties, combining what is today both day to day management and the management of special projects. Projects have now been siloed, and are generally managed through different groups.

While modern corporations have always compartmentalized functions, operation managers were supposed to focus on their strength, which was knowing how their operation worked. At first IT departments arrived. As work was converted to IT functions, the scope of business managers began to shrink. Which wasn’t necessarily a bad thing. They, towards the end of the 20th century, corporate reliance on consultants and outsourced services increased. This regular infusion of outside expertise and resources both standardized project management practices and increased the number of projects in corporations.

Project management transformed from personal knowledge and art into a professional practice. And the number of practitioners rose. Naturally, that led to the development of Project Management departments or offices (PMO’s). Back in operations, managers learned about management reports from outsourcers. The reports that service providers prepared for operations managers eventually became the template for corporate operations reports.

Managers moved back and forth between competitors, as did service providers. Eventually, this created industry-wide standardization. Operations departments in most corporations tracked the same metrics, using the same tools, even producing remarkably similar management reports. With all of these similarities internal (and later third-party) developers created management software to automate these processes.

Which brings us up to today. Now project managers are a common corporate position and operations software is everywhere. According to the Project Management Institute (PMI), by 2027 employers will need 87.7 million project managers globally. Antonio Nieto-Rodriguez is quite right. There is a huge potential market for project managers. However, the PMI may have missed a few details that will significantly change the future of project management. Consider the following…

Why do we have PMs? Well, obviously to manage projects. But what are these projects and why are there so many of them? Many, if not most, exist to improve efficiency. They have to. Now that project management is a professional practice, projects on a whim or because a manager likes the idea are sorted out in the early stages. There are always more potential projects than resources, so the most valuable ones… the ones that return the greatest measurable benefits, get approved first. Even installing a mandatory software upgrade (to keep a support agreement active), will probably deliver new features to improve productivity.

Think about the drivers of corporate change in the last decade… outsourcing, automation, software, robots, artificial intelligence, change management… all of these types of projects are supposed to deliver greater efficiency or pay for themselves by reducing headcount. Yet, these are the types of projects that either reduce the scope of responsibilities for operational managers or directly replace them. Project management may be the next logical position for operational managers, but only because project management has cannibalized operational roles.

Are PM’s here to stay? Project management is a fairly new discipline. However, it has been around for a few decades. Long before PMs were in corporate offices they were specialists in IT. Earlier still, PMs got started in construction, engineering, and architecture. Building a modern skyscraper (or designing a jumbo jet, or launching a new cruise ship) requires management of a massive number of parts, people, and events. Because of this, Computer Assisted Design (CAD) software has become as common in these professions as Excel is in banking. CAD, predominantly Autodesk’s Audocad, has moved beyond churning out blueprints and now specifies the parts you need, develops a budget, and produces a schedule. Clients today expect a 3D walkthrough on their project before they turn over the first shovel of dirt for a billion dollar project. Big projects are thoroughly integrated with computers.

Robots are taking over in construction, laying bricks, pumping concrete, and building whole houses with 3D printers. Blueprints and schedules are now digital and can be fed directly into construction robots. Site management robots (basically, onsite PMs) will be released this year. Artificial Intelligence is now being used to identify areas of corporate  improvement. This used to be the domain of PMOs and project managers. Identifying important projects and performing the processes needed to develop and deliver these projects… probably the highest functions of project management… but are all in the process of being automated.

The writing is on the wall. Or maybe the digital whiteboard. Many operational managers have already been replaced by technology. For many critical operations, machine intelligence is outperforming humans. Project Management has managed projects that increase productivity in operations, but project management itself is now about to be replaced by automation and Artificial Intelligence.

What will come after Project Management? How will the millions of project managers and operational managers evolve, what exactly will they do? Keep reading this blog, and we’ll cover this soon, in an upcoming article!

What do you think? Let us know if you think that the future for project management is bright, or it is about to be eclipsed!

Posted in Best Practices, Delivering Services, Employment, Improvement, Improvement, Continuous or Not, Project Management Office, Robots | Tagged , , , , | Leave a comment

New Taxi War As UBER Gets Regulated


yellow taxi car

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Cars for hire and nothing new. Taxi’s… hacks, jitneys, limousines, hansome cabs… existed before the first automobile. As soon as the automobile did arrive in the early 20th century, there was an explosion of new car services. The early 21st century started out with a new revolution in services, driven by mobile computing and smartphone apps, eventually leading to UBER and Lyft. In just a few years car services will enter yet another revolution when self-driving cars arrive. Yet, the regulations for car services were written nearly a century ago. Is it time to rewrite the rules?

Ride-sharing services ordered from your smartphone are a pretty new idea, less than a decade old. In this very short time, UBER and Lyft have become juggernauts of personal transportation. By consumers using apps instead of competing on the street for the next taxi, this new generation of car rides has become incredibly popular. UBER alone is worth more than all of the other taxi services in America, combined.

To attain this status, UBER has put an enormous number of taxis on the streets… especially in New York City, the world’s largest taxi market. There are 13,587 iconic yellow taxis in New York. In 2015 UBER had about the same number of cars on the streets of New York. Now, UBER has 80,000 cars in New York. You can’t add those many cars to a single city… even New York City… without having a major impact.

For consumers, that impact has been very positive. At 9am and 5pm it used to be very difficult to get a taxi. When you do get your taxi, it might not be all that clean and the driver’s ability to communicate often left something to be desired. Manhattan is just one of the five boroughs that make up New Your City, but finding a taxi outside of Manhattan used to be nearly impossible. Some neighborhoods in Manhattan were notorious for their lack of taxis. Post-UBER, the consumer experience definitely improved.

But for taxi owners and drivers, things have definitely become worse. The flood of car sharing services has reduced the number of rides that yellow cabs get every day. Yellow cabs also complain that they have many more regulations to follow than the new services, making them uncompetitive. Are they right?

In order to operate a yellow taxi, you need to get one of the 13,587 taxi medallions. Look closely at a yellow taxi and you will see a mysterious little tag are riveted to the hood. The medallion controls how taxis operate.

  1. The number of medallions is limited. The total number hasn’t changed much since the medallion system was created in 1937. Once you own a medallion you own it for life, or until you sell it. However, taxis are on the street 24 hours a day and 7 days a week. That’s 5 shifts. That yields nearly 70,000 driver jobs. Obviously, the addition of 80,000 cars for just UBER have completely changed the economics for drivers.
  2. Medallions are expensive. Before UBER took hold in 2013, taxi medallions reached a peak value of $1.3 million. Some medallions are owned by individuals who drive the taxi, and others are owned by garages that lease out the taxis. Now a medallion can be bought for $250,000. Collectively, medallion owners have lost $14 billion in just 5 years. Drivers with their own medallions usually borrowed money, and are now bankrupt. Still, with a much lower price, medallions have been  “democratized”, allowing more drivers to buy their medallion. But, with prices still falling, buyers are becoming harder to find. UBER and Lyft drivers do not need medallions, allowing them to offer lower prices for rides.
  3. Taxis are regulated. Of all the different type of car services, yellow taxis have the strictest regulations.  Drivers require full background checks, have fixed rates (that are printed on the side of the taxi), carry taxi insurance, have licenses pulled for traffic violations, and all changes to services require approval by the Taxi and Limousine Commission. New car services are not held to the same standards. No medallion, no taxi insurance required, less stringent background checks, and each firm can change rates as they like. Along with the rise of car sharing, has been a rise in sexual assaults, drivers with criminal backgrounds, and something called surge pricing.
  4. Taxi rates are fixed. If you take a yellow taxi, the rates you will pay are written on the door. Every taxi has a meter that tells you the cost of the ride costs so far, and if there are any tolls or special charges. App-based car services usually have a variable charge, called surge pricing. A ride that cost $35 yesterday, could cost $100 today. The idea is that when more people want the service, the price rises. Car services see surge pricing as a major feature of profitability. Customers often see it as price gouging. When you installed the car-sharing app on your phone, you agreed to surge pricing and a lot of other conditions that probably are not in your best interest.

New York is about to cap the number of “for hire” cars, freezing new licenses for a year. This will give the governement time to examine how the rise in car sharing has impacted New York. Just one of the issues is how the addition of all these cars has affected traffic. It’s a very good question. While the UBER’S of the world have been adding to the number of cars, the Amazons and Walmarts have been adding to the number of trucks making home deliveries. Add in the host of new navigation apps that have redirected traffic through formerly quiet neighborhoods, and you can see just how much transportation technology has impacted the quality of life around New York.

The gloves are off and ride-sharing is getting regulated. App-based car sharing has improved the service for customers, but it also congests big cities and has financially crushed many small taxi owners. Balancing the needs of drivers and customers will be very difficult. But it may not matter. Self-driving cars and buses are already on the streets. A self-driving car could offer rides at half the cost of human-operated vehicles. How will the ongoing “Taxi Wars” turn out? Nobody knows, at least not yet. But, dear reader, keep reading here and I’ll make sure that you get all the inside details!

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