Is COVID-19 or a Bad COVID-19 Vaccine More Terrifying?


Americans are used to confusing messages and questionable theories – even from our leaders. Are the oceans truly dying? How big a danger is global warming? Is nuclear energy a threat to humanity? COVID-19 has pushed us beyond confusion. We must make life and death decisions every day while trying to plow our way through constantly changing and thoroughly confusing information from the very highest levels of government. As a result, Americans are losing faith in medical science. And in vaccines in particular.

While President Donald Trump and his administration have mismanaged many issues, it is perhaps their mishandling of COVID-19 that has gained the greatest international condemnation. It is not uncommon for science to be rejected for political reasons. If a factory will generate jobs but dumps deadly chemicals, there are thousands of examples where the local government tries to downplay or even outright reject evidence that would close the factory. But it wasn’t Trump that started the rejection of science.

As science has risen, so too has science rejection. But the general direction has been that we have a way of living, and then science tells us that we need to change. Early medical research started with hygiene. Keep people away from sewage and garbage and we are healthier. Scientific research found that sewage water and drinking water need to be separated, or contaminated water spreads cholera, diphtheria, and other diseases. When we focused on the nature of the disease itself, we developed disinfectants, antibiotics, and vaccines.

But it has been rare indeed that the direction of science has been reversed, and was headed backward. Consider the past month of the Pandemic. Medical experts would tell us one thing and then politicians would say the opposite. The President would have daily Pandemic briefings, and the medical experts were kept quiet while only politicians were allowed to talk. A podium full of silenced medical experts during a Pandemic does little to encourage trust in medical science.

Anti-vaxxers have been around since the earliest vaccines in the 19th century. But the rise of the modern anti-vaxxer movement started recently, in the late 1990s. It started with a questionable report about a measles vaccine. The real issue isn’t if the vaccine was good or bad. The question was why a fairly obscure report without a lot of medical authority, was quickly accepted by so many families. All sorts of issues with mainstream medicine had undermined decades of goodwill. The rapid pivot to anti-vax status showed that belief in the “goodness” of the medical system had been leaking away for years.

At the same time, mainstream medicine began marketing a new generation of painkillers. Promoted by manufacturers as a safe and non-addictive alternative to older opiates… Oxycontin, Tramadol, and similar painkillers caused severe addiction and unprecedented overdose fatalities. The secret was out, and America was discovering just how deadly modern “medicine” had become. At the same time families were learning that our foods and household products were filled with preservatives, artificial colors and flavorings, and other chemicals that are linked to cancer, autism, and other disorders.

Once again, it almost doesn’t matter if the accusations are true. What matters is that the speed at which the American public accepts alternative theories about product safety is accelerating. Soon, we are told, a new vaccine will arrive that can protect us against COVID-19. The first one may come from Russia or China. But going from the world’s record of 4 years to deliver a safe vaccine, to less than one year… will raise more questions than any other vaccine in history. Yet, some political figures are staking their careers… and perhaps the American economy… on the public turning out in massive numbers to take the vaccine.

But what if they don’t. Polls and surveys tell us that less than 50% of Americans would take the vaccine. If the vaccine is made outside of the US, especially if it comes from Russian or Chinese, even lower vaccination rates are likely. Is there an alternative?

The world of cannabis medicine has been focused on developing less toxic but effective medicines that use natural elements like cannabis and terpenes. This natural approach provides some of the same health benefits as good nutrition, exercise, and exposure to nature.

Big Pharmaceutical companies need to develop patents as much as medicines often leading to the use of obscure chemical compounds that can be both effective and toxic. The rush for a COVID-19 treatment has over 100 companies competing to deliver the first vaccine, and dominate this trillion-dollar market. Concerns about the effectiveness and the ethics of using a rushed vaccine are being voiced by just about very newspaper and media outlet around the world. Plus comments from Medical Colleges, scientific journals… even the Vatican is taking a stand.

There are good arguments both for and against, but if vaccinations become MANDATORY, then it could be a battlefield between needs and beliefs. Every family with a special medical condition or an ethical or religious issue could be on either side of the fence, but lines will be drawn. Both between families and even within families.

Ever since the Swine Flu in 1976, some have questioned if vaccine side-effects are a bigger issue than the disease the vaccination prevents. In 1976 hundreds of Americans came down with a rare and highly disabling neurological disease. In the 1990s, the measles vaccine was questioned, with some believing it causes autism. Today, it may not really matter if the COVID vaccine is good or bad… if no one takes the vaccine.

Vaccinations are already down across America. The Houston Chronicle reported that childhood vaccinations in Texas are down by 44%. The Lansing State Journal found that vaccinations in Michigan were down 64%. Is the Anti-Vaxxer movement has been growing. The American consumer is now much more suspicious of taking medicines without knowing exactly what’s in that medicine. The American consumer has rejected additives in food, home products and anything else that comes in contact with their family mmebers.

What America is accepting, and is spending ever larger sums of money on, is natural medicines. It goes by many names… nutraceuticals, cannabinoid medicine, super foods, alternative medicine, aroma therapy, mega vitamins… and it embraces a variety of disciplines and products, but this is where America goes when it cannot use or cannot trust mainstream medicine.

For decades America has been slowly headed towards “do it yourself medicine”. By one study, 77% of all Americans take nutritional supplements. Consumers will continue in the same direction they are already headed, and continue to put their money into natural alternatives. The battle over vaccines will undoubtedly grow the DIY medicine market, and may even lead to a few revolutionary new products based on all natural ingredients.

What about you, dear reader? Are you planning to take the first vaccine? Will you wait a while? Or do you plan to skip the vaccine? Perhaps you even have an alternative medical plan! Let us know!

Posted in Best Practices, Decision Making, Delivering Services, Uncategorized | Tagged , , , , | Leave a comment

How COVID-19 Killed Nursing Homes!


hospital-coronavirusAmerica is in the middle of an affordable housing crisis. According to FreddieMac, the US has a shortage of 2.5 to 3.3 million homes. Why don’t we build more homes? Because these homes are needed by families with the lowest income. Where it makes economic sense for a developer to build a new home, it makes sense to build the most expensive home the market will bear. That’s why big American cities have an affordable housing crisis.

Consider San Francisco. The cost of rent has skyrocketed, leaving thousands homeless. SF… a modern American city… have families living in tents and the streets of the city. Teachers… full-time, unionized, city workers… cannot afford housing. A study by Trulia found that less than 1% of teachers in San Francisco can afford housing in the city. And SF teachers are some of the highest-paid teachers in America!

Housing is undeniably a crisis in 2020 America. But it’s not the only crisis. Healthcare… cost, quality, and distribution… is a cluster of crises. If you were to draw a graph, with a line for healthcare and a line for housing, where they meet is America’s biggest cluster… ahhh …. crisis. This is where American’s live in nursing homes and care centers.

Ever since the demise of Willowbrook and the film “One Flew over the Cookoo’s Nest” America has been deeply suspicious of government-run institutional care (more often institutional warehousing). Once Americans understood the degree of mismanagement and indifference in these institutions, we began shutting them down.

While we were effective at tearing old, primitive institutions, we have as yet to fund the type of community-based, humane care services that “de-institutionalists” recommend.  If you can afford it, there are some very nice care facilities, but few can afford them. If your care will be paid for my Medicare alone, the quality is not as good (and some times quite bad). Even so, the wait for ANY  bed may take a decade or more.

And that was before COVID-19. It’s easy to understand how the government can neglect low-income housing. But it’s not entirely their fault. The world has changed and governments are notoriously slow at recognizing change. America is aging. More citizens are over 65 years of age than at any point in our history. And, if you live long enough, you’ve going to develop disabilities.

Miraculous improvements in health care are responsible for our healthier, longer lives. Today’s older Americans routinely break athletic records made by 20-year-olds a few decades earlier. But if you have always been sickly, disabled, or were born with the wrong genes, your health issues could dramatically increase as you age.

Our longer lifespans mean an extra decade of dealing with the limits of old age, more physical limitations as we regularly live into our 90s and beyond, and mental disabilities like Altzheimers. If you began life with a disability like Autism or Down’s syndrome, lie expectancy has doubled or even tripled since the 20th century. But… this was all before COVID-19.

In some facilities the coronavirus was like a living beast, killing 30%, 40%, or even 50% of residents, according to Christopher Laxton (executive director of the Society for Post-Acute and Long-Term Care Medicine). Why the sky-high rates? It will take time to say definitively why residents died and why there was so much variation, but here are the “usual suspects”…

Occupancy: Nursing homes are expensive, yet 1.5 million Americans live in nursing homes. In order to manage costs, two or more residents may cohabitate a single bedroom. It doesn’t take a lot to understand how shared rooms spread infection. When you have 20 or 30 infected patients, what do you do with them? Leave them in the shared room? There are no empty rooms to separate them? You could ask another nursing home to take your infected presidents, but in the middle of a Pandemic do you think that will work? Families are going to want answers to these questions… and where homes have few answers, families will probably move their loved ones to another provider.

Bathrooms: A single or double occupancy may have a shared bathroom. Other residents may share a bathroom with an entire floor, or building. Seniors with dementia or physical disabilities need assistance in the bathroom, exposing nurses and janitorial staff to infectious matter, risking the transmission of a virus through the entire facility. As more residents sicken and die, the staff becomes overwhelmed and they too become infected, leaving too few workers to follow proper cleaning procedures.

Air: We are waiting for research on how readily COVID-19 spreads through the air. Even if COVIDS-19 does not easily airborne, the next pandemic spread this way. Modern heating and cooling system have inexpensive options to filter and sterilize the air. However, many nursing homes are older, and few have focused on modern air purification technology.

Laundry: Every millennial uses their grandparents’ behavior as a baseline for what is bad and outdated. But for argument’s sake, let’s assume our grandmothers ran the laundry in a care facility. Grandma would take your sheets and linens (all-white, always white) and clean them in a toxic combination of boiling hot water, chlorine bleach, and environmentally irresponsible detergents. Next, she would fry everything in a superheated dryer or put them on a clothesline for the sun to irradiate them in UV light. Good for the environment? Hell no! But it kills germs dead! Gentler cleaners, water-saving washers, and energy-saving washers and dryers may save the environment, but they don’t kill COVID-19. Instead, a central laundry can spread infections materials throughout a nursing home.

Visitors: The pandemic and social distancing put an end to family visiting time. But before the lockdown, visitors may introduced COVID-19 into the care facility. Handheld electronic thermal detectors are cheap (under $100) and easy to use. Airports have used advanced thermal scanners that cover a whole room at once. The latest devices have built-in Artificial Intelligence to eliminate false positives (you were standing outside in the sun, or just finished exercising) and focus on individuals most likely to be infected. This technology is almost never used in nursing homes.

Now what? Almost likely, we will see years and years of lawsuits. The very best nursing homes, with the very lowest infection rates, will have few or no lawsuits, and be in even higher demand. Sub-average nursing homes will be at risk of being closed. Just keep in mind that “sub-average” means 50% of all nursing homes.

1.5 million Americans live in nursing homes. Hundreds of thousands of these beds could be shut-down due to lawsuits and new regulations. Will a new generation of expensive, more secure nursing homes be built? Possibly. Will these new homes be affordable for someone with just Medicare? Almost surely… they will not!

There is no question that some homes will shut down for their recent poor performance and new affordable nursing home beds will be almost impossible to find. As the lockdown eases, families are going to want answers about the thousands (possibly tens of thousands) who died in nursing homes.

What about you? Do you have a loved one in a care facility? How well did they work during the Pandemic? Do you want to stay with your provider? Talk to us! Tell us your story!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Improvement, Uncategorized | Tagged , , , , , , | Leave a comment

What We REALLY Think About Pandemics!


Keel CalmPandemics are nothing new. Back in the day of the Romans, a plague was sweeping the world… or at least what they considered the world! Anthony and Cleopatra (yup, that Cleopatra) were about to sweep away the opposing Roman navy, BUT… the Egyptians caught the plague and most of the oarsmen called out sick. Results? Cleopatra’s navy ended up on the bottom of the sea. Don’t mourn for Cleo, if her navy had won the world would be very different, and the news crawl on the evening news would be in hieroglyphics! Pandemics can change everything!

A century ago the Spanish Flu swept the world and took millions of lives. Global endemics don’t just happen to humans, they can target livestock or crops. Have you ever heard of the Panama disease? It was harmless to humans but deadly to bananas. In the 1950’s it wiped out the world’s banana crop. It made the banana EXTINCT!

You may be asking yourself, “Then what is that curiously shaped yellow-skinned fruit I had this morning with my breakfast?”It is a banana, of course. But… and here’s the important part… it is a DIFFERENT banana than the one people ate before the 1950s. It took a decade, but a new type of Panama resistant banana was planted around the world. Not everyone liked the new banana… the taste was a little different, it bruised more easily, had to be harvested and packed differently. But eventually, we embraced the new… slightly crappier… banana.

But just like the flu and the coronavirus, new versions of the Panama disease can evolve. The clock is ticking. A new epidemic is expected that will kill the banana yet again. But the banana’s need to get in line behind the very symbol of Florida’s agriculture, the Orange.

The average American is blissfully unaware of the fierce battle that has raged across Florida for the last decade. The Greening virus doesn’t kill oranges. Instead, it stops oranges from maturing and turning sweet. Once infected, fruits from infected orange trees become sour and have no commercial value. A recent study showed that every single commercial orange grove in Florida is infected. Not every tree is infected, but the number of infected trees in each orchard increases every year.

The only “treatment” is to burn infected trees. As this blight grows, farms become less and less profitable. For farmers, infected orange trees are like infected Zombies slowly marching across their fields, turning healthy productive trees into undead trees that will continue to turn more trees until it is uprooted and destroyed. Millions of orange trees are now burned every year, which is incredibly expensive. In a few more years it will cost too much to fight the plague of zombie oranges, oranges will march into the sunset arm in arm (or whatever) with the banana.

But enough about our vegetable brethren. What about us? Human beings, people, civilization! Well, we’re kind of screwed. But don’t despair! We’ve been easing our way into this disaster for decades! My inbox is filled with emails where someone observes, “Hey, did you ever read that book where this infection covers the world, and then everyone dies?” Uhhhh… yes. I have. I read the book, saw the movie, and binge-watched the series.

Here’s some news for the HUGE number of occasional sci-fi readers. This isn’t anything new. It’s a genre of sci-fi. Writers have been writing about natural and artificial plagues for decades! There’s a whole other genre where real plagues are written about, or serve as the foundation of a fictional story. Quite a few books have been written about the devastating Spanish Flu (Note: this came from the US, and was spread around the world as American soldiers fought in WWI).

Why are we fascinated about plagues? I think the Spanish Flu explains it best. This plague and others, whether endemic or pandemic, made a big impact. People were powerless against plagues. In cities where many families were packed into one building, one child would live and one would die. It looked very much like the visible hand of God picking and choosing who lived and died. At the time of the Spanish Flu, medical science was just starting to understand how viruses work. Science might save humanity. Science might put an end to plagues. As babies lived rather than died, mothers might not wail out in the night when their child succumbed to the disease that wretched their small bodies.

Any anti–vaxers in the audience? Been having fun during the lockdown? Have you been listening carefully about the mere possibility that a vaccine might be developed before you lose someone dear to you? Strange, isn’t it, how your opinions about the value of the medical/vaccine industry have evolved over the last month? Suddenly interested in learning how “herd immunity” might save you and your family if the virus comes back?

Until a couple of months ago, the anti-vaccine movement was on the rise. Diseases that had been wiped out, like Measles, have come back and local epidemics have broken out. After the horrors of plagues in the early 20th century, how could we turn our backs on the cure? In part because by the 1990s few American’s and Europeans had ever seen a plague. Add to that a growing suspicion of the medical industry and science in general. After all, by then everyone knew about (or thought they knew about) bioweapons, and genetic engineering, and Frankenfood. It was fertile ground for paranoid theories.

It is in this fertile ground that new ideas for books developed. Ideas about what could go wrong, what WAS going wrong around the world, crept into our literature. This has been going on for a long time. We have all been shaped by these ideas, but we barely noticed it. Think about it. In the 1960s we began to worry about government-developed “bio-weapons”. By the 1970s and 1980s, AIDs… and later Ebola… became front-page news. Stories shifted from government labs to the horrors of nature. Consider…

War of the Worlds (1898): We paid so much attention to Martians, that we forget about the “red weed”, plants that the Martians used to terraform the earth. But in the end, the Martians were killed off by whatever seasonal crap they caught. OK, it was a Martian Plague, but a plague nonetheless.

I Am Legend (1954): This story of the pandemic goes one step further. After everyone in the world is killed by a virus, they later rise from the dead! Instead of the usual zombie hoard, these undead are vampires. So, after the lockdown, we’re supposed to wait for the undead uprising? Prepare for the locked-and-loaded showdown once the lockdown expires. Hey! Think about all of the armed 2nd amendment protesters! They want to end the lockdown. They’re already armed! They’d make the perfect zombie bait! HEY… don’t look at me that way. You were thinking it too!

Andromeda Strain (1969): Here the disease comes from outer space on a crashed satellite. The world’s best scientists are gathered in an underground bunker to solve the problem. Yada yada. The twist is that the military was looking for a bioweapon! How about that as a crazy idea! Governments creating world ending viruses. Luckily, we don’t live in a sci-fi world where the leaders are all power-mad idiots who would kill off half of the world’s population so that the line for their morning coffee is a little shorter. I mean leaders of the world that don’t understand basic science, the military creating secret weapons, maneuvering for which nation is the most powerful in the world. I mean… uhhh… unlikely… enlightened democracy? CRAP. We’re screwed.

The Stand (1978): Virus, wipes out the world. Yawn! It was well written, but even by the 1970s the whole pandemic theme was a bit tired. Oh. I almost forgot. There is also a battle between God and the Devil. It sold well!

The Hot Zone (1995): While this was an incredibly popular book and the term “Hot Zone” even entered the English language, I think it’s just an OK Novel. Sure a killer virus could evolve in the middle of the jungle. And Yeah, it could quickly spread into undeveloped villages near the jungle “wilderness”. I’ll even let the massive death count stand and the idea that every nation on earth needed to get together to stop it from spreading. But it does stretch credibility. And… what?… it’s not a novel? This really happened? On planet earth? CRAP. We’re screwed.

The Zombie Survival Guide (2003): As zombie books and movies became ever more popular, by 2000 every teenage boy knew that pandemics are always followed by a zombie apocalypse! That’ s why building a zombie bug-out kit is a “thing” for teens. If you’re a teenager, you’ve been preparing for this all of your life. The good news is that there is no sign yet of the zombies. The bad news is that the Baby Boomers already burned down your world… plagues, global warming, the coming recession, etc. You’re the last one to show up for dinner, just in time to see your parents head off to their retirement villa home while the waiter is approaching to hand you the bill! (With or without zombies, you are sooooooooo screwed!)

World War Z (2006): Max Brooks, the writer of the Zombie Survival Guide, later wrote this popular book (and still later, movie). He wasn’t the first to conceive of the pandemic starting in a region of China, but he did make the idea popular. So. Pandemics, deaths, destroyed economies, Zombies, government labs, and a virus from China! Yep! I think this is where we get off!

Hmmm… what? Sorry… I didn’t see you there. I was busy building my Zombie Bug-Out kit. What do we really think about pandemics? Well, there is fear. But there is also hope. And opportunity. Should we fear the inevitable Zombies? No. I don’t think so. American’s need to work together. Even the palest and slowest Americans. Besides, if a Zombie can be Vice-President of the US, all of us have a role to play in build the Post-Pandemic world!

Posted in Best Practices, Decision Making, Uncategorized, Unique Ideas | Tagged , , , | Leave a comment

Super Capacitors, Batteries & The Electric Vehicle Revolution!


Car Batteries

During a technological revolution, change happens quickly. Today, we’re flooded by tech revolutions. Ther are so many it’s difficult to sort them all out. Our power grid is slowly going sustainable, everyone is adding power storage, and vehicles are transitioning from gasoline to electric. Batteries have become a key technology behind all of these revolutions. Every day you hear about some new kind of battery. There are endless stories about new and improved battery storage, lithium, and “rare earth” materials. Now we can add a new category of tech… supercapacitors.

We’re all familiar with capacitors. At a wedding, graduation, or wherever a professional photographer takes your picture with a flash, that whine coming from the camera between photos is the sound of a capacitor charging. The flash needs a big, quick burst of power. Batteries can hold more power, longer… but batteries can’t send out power as quickly as a capacitor. Batteries charge the capacitor and the capacitor blast out the power needed by the flash.

Capacitors can do some amazing things, things that batters are bad at. Capacitors charge VERY quickly. Small capacitors can handle vast amounts of power. And… this is BIG… they can charge and discharge over and over again. Lithium batteries can be recharged a few thousand times. Capacitors can be recharged a million times or more.

Batteries are one of the most expensive parts of an electric car. Batteries determine the distance you can drive. Every charge cycle deteriorates your battery just a little bit. As your car ages, it loses range. Electric cars are new and few, so we don’t have enough data, but a frequently driven car will certainly see a significant loss of range in 10 years. Batteries will be the first major component to require replacement, and it will cost thousands of dollars.

New Supercapacitors will not replace batteries, but they can supplement battery technology. How? Well, many electric cars have regenerative braking. Essentially, when you drive you use power from the battery to drive the electric motor. Regenerative brakes make power when they slow down your car. The more you use your brakes, the more electricity you generate. That electricity recharges your batteries.

Regenerative braking can be very effective, capturing as much as 60% of the power it takes to slow or stop your car. If your drive to work is highway only, with roads as flat as a pancake, you don’t do a lot of braking. But your daily drive has a lot of uphill and downhill driving, or mostly city driving (stopping and starting, traffic jams),  … then every tap of your brakes adds milage. For most drivers, regenerative brakes add a LOT of mileage.

Getting more range and “free” fuel IS great for consumers! But not so great for batteries. Remember, current batteries can only be recharged so many times before they deteriorate. But what if you put a supercapacitor between the brakes and the batteries? The supercapacitor soaks up all of the “micro-charges” from your brakes, and holds them for a few seconds or a few minutes, reducing the charge cycles for your batteries. Add some smart software to manage how often charges are sent back and forth, and your battery will work a lot longer!

This model might look very familiar. And it is! Supercapacitors provide a buffer for batteries. Electronics, especially computers, have used high-speed memory to buffer slower memory for years. Hard drives have a lot of capacity and are cheap, but are slower compared to (more expensive) solid-state drives (SSD). Virtually all hard drives use some form of solid-state memory as a buffer. There is a high probability that some bit of information that you just asked for, might be asked for again. Fetching data from solid-state memory is far faster than fetching it from a spinning disk.

In hard drives, “efficiency” is all about speed. In an electric car “efficiency” is about how much power they can store and how often they can be recharged. Batteries continue to become cheaper, with more recharge cycles. A car designed with a combination of batteries and supercapacitors might create a combination that provides superior performance, or it may use a different combination to provide more standard capabilities, but at a lower cost.

There is more to a computer (or a car) than just the buffers. But the use of buffers throughout computers (hard drives, CPUs, graphic cards, between sub-systems) are one of the reasons why computers got so cheap and so good so fast.

Will the cost and efficiency of electric cars improve as quickly as computers? Probably not. But we can expect that in the next 5 years… or less… electric cars will cost less to buy than Internal Combustion, and cost much less to operate. And superconductors will be a big part of the improvements we need to transition between gasoline to electric vehicles!

 

Posted in Best Practices, cars, Decision Making, Improvement | Tagged , , , , | Leave a comment

Impact Investing: How To De-Risk Deals With A New Financial Model, BRRM!


Investing

Nonprofits are in trouble, big trouble! We depend on nonprofits (charities) for a lot of the world’s Social Good… schools, hospitals, nursing homes, senior centers, legal aid, and more. But recent changes may soon spell the doom of nonprofits as we know them! What’s happening? Can charities fix their problems? Will it all be OK in the end? Let dive right in and see!

Back in the 1950’s tax laws were reformed, making charitable donations tax-deductible. But in 2016, the Standard Income Tax Deduction was doubled, and suddenly fewer Americans could donate enough to charities to itemize their deductions. Without the benefit of a tax deduction, would American’s still donate as much money to charities?

Pundits said that donations would start to dry up, and they were right. Despite stock markets rising to new highs and arguably the best economy in US history, charitable donations fell by 2%. Add to that the decline in government funding for programs for the poor, elderly, and sick. That larger tax deduction has had ripple effects, and now there is talk of a new round of cuts to social good programs, to pay for the bigger deduction.

Grants from private foundations are also shrinking. Partially because of falling donations. Partially because foundations have begun to turn to Impact Investment as a way of funding charities. That shifts foundations from giving out grants to making loans. Loans that must be repaid.

Struggling nonprofits will need to struggle even more as they learn how to work with unfamiliar new forms of funding. With 1.5 million US nonprofits, generating 2 trillion dollars in revenue and expenses, we should all be very concerned about how well nonprofits are doing.

Nonprofits have always been the stepchildren of the business world. Banks are cautious about working with nonprofits. Nonprofits can receive donations from complete strangers. That does not sit well with bankers. After 9/11 new Federal rules to reduce money laundering began to conflict with nonprofit functions, like receiving donations or sending money to poor (and politically unstable) nations. From a banking point of view, donations look too much like illegal money transfers.  For bankers, nonprofits raise suspicion and create risk.

Then there’s Wall Street. Stock markets have been the juggernaut of the corporate world! Impact Investors can’t find enough social good deals. Charities and Impact Investors should be a perfect marriage. Apple, Microsoft, Amazon, and countless other for-profits became successful because they had access to capital, and they could sell equity.  But our nonprofits? It is illegal for nonprofits to sell equity.

In a world where Impact Investors are actively seeking out social good investments, if nonprofits want to survive they need to structure good ideas as good investments, and de-risk their projects. The Balanced Risk Revenue Model, or BRRM, can address these issues by making social good investments easier for Impact Investors to execute.

Before diving into the model, a bit of truth in advertising. For the last year, I have been working with a group called Nicky’s Gardens of Hope. They are working to open a residence for 150 adults with intellectual and developmental disabilities (IDD). I’ve worked closely with Nicky’s mother, Adriana Piltz, and seen up-close the hurdles facing any organization that wants to create a comprehensive, quality service for IDD adults.

So Adriana and I worked on a solution, BRRM, to make it easier for Impact Investors to fund social good projects. Nonprofits must address their image of risk. Risk, any risk, can be offset. Balanced. In the 1970s Wall Street learned the math behind risk, and used tools like the Black-Scholes model to balance that Risk. Once risk could be controlled, the Dow was able to grow from 1,000 points in the 1970s to nearly 30,000 today.

We don’t need to be rocket scientists to address the risks faced by nonprofits. We just need to understand a few basic elements, be aware of some new innovations, and then fit these pieces together into a functional model. Let’s begin with…

Capital: All businesses need money to operate. How you access money, and how you pay taxes is dependent on the type of corporate entity your business uses. When Adriana was in the early stages of creating Nicky’s I asked a mutual associate, who had an excellent financial and accounting background, what he thought. Since the project required land for the residency, he assured me that our corporation MUST be a REIT (a for-profit, Real Estate Investment Trust).

B Corporations: I asked him if Nicky’s could receive donations and all government grants. He said we would lose both, but a REIT was still the way to go. So I did a bit of research and discovered the Benefit Corporation or B-Corp. This is very similar to a “normal” forprofit corporation, except that the “B” (in this case Nicky’s Gardens of Hope), receives disbursements of profit before the shareholders.

Nearly, but not quite: B-corps have access to capital markets, just like any other corporation. But there would be fewer barriers to bank loans. Transferring profits from the for-profit to the charity would make up for the decline in government funding. But we would still give up the benefits of a nonprofit. Unless… we added a few more steps.

Together @Last: By merging a B-Corp, with a nonprofit, we can gain the benefits of both types of entities. The B-Corp would own and run all assets, and the charity would provide the services (the residency).  It requires a bit of proprietary wizardry to merge the functions of the two entities, but it creates a flexible structure that can be used by a wide range of charities, foundations, and non-profits.

Revenue: Investments and loans need to be repaid, with interest. Most nonprofits, have opportunities to build on their core businesses and develop new lines of revenue.  But they usually lack the business expertise (and funding) to launch new businesses. But BRRM uses a proprietary Business Incubator to launch new businesses. By working with Investors, funding AND industry expertise can be leveraged to ensure the success of these businesses. And what does the nonprofit provide?

Social Good:  Investment funds and the Millenials that fund these funds, want more than just profit from their investments. The “Double Bottom Line”, is just one way of expressing that investors are looking for a profit (often a very modest profit) plus Social Good. CSR (Corporate Social Responsibility) and ESG (Environment, Social, and Governance) are part of the growing vocabulary of social good terminology. Charities need capital markets, bankers, & investors to finance social good, but capital markets, bankers, & investors need charities to develop the projects that do social good.

The bottom line to BRRM is pretty simple. At one end of the business world, nonprofits are under increasing financial pressure, and projects that could do a lot of good are going unfunded. On the other end of the world are Impact Investors that control trillions of dollars in funds, but cannot find enough deals that make financial sense.  BRRM can’t fix the world. That’s a job for charities and foundations. But if the problem is getting a project funded, BRRM could be your way to bridge the gap.

Are you an Impact Investor with more money that deals? Want to know more about BRRM? Look me up and we can talk!

 

Chris Niccolls

http://www.linkedin.com/in/chrisniccolls

Posted in Best Practices, Common Sense Contracting, Delivering Services, Improvement, Unique Ideas | Tagged , , , , , , | Leave a comment

The End Of NonProfits, The Rise Of NeoProfits!


Donations2

When we think of doing good, we think of NonProfits. Charities, Churches, Foundations, and do-good organizations. Society didn’t always depend on “501 (c) 3” type charities. Charities trace their origins to the beginning of history when the great and powerful were expected to do “good”… giving food and gifts to the poor. But does the ancient concept of charity still work in modern days? Let’s dive in and see!

There is always a need for charity. When everyone was a  farmer, there was a surplus of food in good years and in bad years families go hungry. In very bad years, families starve. Famines killed people and destroyed irreplaceable skills. Continuing famines weakened society and opened the door to rebellion and revolt.

Feeding the poor was an important function for the Church and the King. As soon as medicine became effective enough to be a profession that was separate from religion, government hospitals became a new element of charity. 2,000 years ago the first public hospital was built in India, soon followed by Greece, Rome, and China. The Roman Legions added the idea of clinics and field hospitals (Valetudinaria). By the time of the Crusades in 1100 AD, Templars and other wealthy organizations funded hospitals.

In the 18th century, Royalty and Religion were challenged by the Enlightenment. Fraternal orders, labor unions, and political parties could now provide charity and social services. The industrial revolution and the rise of banking created vast fortunes, and a new class… millionaires. The late 19th century 1% spread the concept of… philanthropy. They either directly funded good causes or donated to Foundations, organizations that specialize in raising money and then granting it to the best causes.

The final element of modern charity came in the 1950’s… the 501 (c) 3 corporation. If you met the IRS criteria, donors receive tax benefits in exchange for donations and charities are exempted from certain taxes. This process was designed to create a “virtuous circle”, that incentivizes donations and reduces the cost to operate a charity. Charities were now ready to fix the ills of the world.

Yet, that’s not what happened. While charities do spend hundreds of billions of dollars, the problems of the world have grown. Hundreds of years ago we worried about crop failure. Today, we fear that the entire world’s ecosystem is failing, or that the sea will drown whole nations. No single nation, to say nothing of a single charity, can solve the problem we face today…

Food Security: Lack of food is still a very real issue. But in America, Europe, and the developed world food insecurity is a dwindling issue. Natural disasters can create temporary food shortages, but the ever-present threat of famine is gone. Well, if you live in the developed world. Famine remains a real threat for the rest of the world. We are approaching our global food production limits. The Earth’s population will grow from today’s 7.6 billion to 11 billion (in 2100). Also, the world is increasingly choosing foods (especially meat) that consume more land, water, and resources.

Health: Modern medicine is literally miraculous. Diseases that have plagued mankind throughout history have been wiped out. The human genome has been mapped. Lifetimes are 50% longer than our great-grandparents. Doctors and paramedics routinely bring the dead back to life. Physically and mentally disabled individuals can live full and meaningful lives… if their families can afford the healthcare bills.

Demographics: Japan, with the oldest population in a developed nation, began to see small towns disappear in the late 1960’s. Too few children, too few young workers, and a goring senior population have played out the same way in Europe and now the US. The remaining rural population moves into big cities, and the small town fades away. 40 nations now have zero or negative population growth. Dozens of other nations will join that list in a few decades. If immigration to the United States slows, we too will have negative population growth. In the coming decades, the poorest half of the world may starve while the developed half dies a slower death from lack of workers. Can nonprofits keep our global world together?

Employment: Jobs are being replaced by computers and robots. Charities have always helped the unemployed, working with whole regions where employment has been permanently disrupted… the rust belt, coal towns, Appalachia, Detroit, tobacco road. If technology changes the very nature of employment, can nonprofits deal with these new unemployment issues?

Economic Inequality: Americans once believed that economic growth alone would close the gap between rich and poor. But inequality is more than just poverty. Many benefits come from wealth… better health, more education, gender equality, and reduced violence. The inequality gap began to close in the 20th century, but in the 21st it is once again growing. Wealth has become more concentrated. The richest 1%owns half of the world’s wealth. Does anyone have a plan for global equality?

The Destroyed Environment: The journey to the 21st century provided us with miraculous medicines, new materials, and phenomenal qualities of food. But our society is only beginning to admit to the cost of that journey. Pollution, global warming, species extinction, economic inequality, and on and on. A few decades ago humanity feared that the world would end in a nuclear winter. Political and military tensions de-escalated, and humanity survived. But global warming may be just as destructive. How do we fix a broken world?

Problems are bigger and more complex than in the past. Today’s young philanthropists aren’t impressed with the results of a century of nonprofit work. Millennials want to do good, but are more likely to write an app than write a check to solve systemic problems. Likewise, they are rejecting investments that fund the corporations that are the source of today’s problems (pollution, depleted resources, gender inequality, etc.).

Modern charities and modern capitalism grew up together. They began at the same time, developed together, and were both created by the same groups and people. Evolving throughout the 19th and 20th centuries, both tackled global issues and added the new features and processes they needed for their expanding roles. In the 21st century, Capitalism has embraced Impact Investment. Nonprofits are ready for their next makeover.

Impact Investors are, first and foremost, investors. The difference is that the “return” on their investment is more than just financial. The “something extra” is often called “the double bottom line”. The United Nations calls it “ESG”, or Environment, Social, and Governance. Simply put, don’t degrade the environment. Contribute to your community (create jobs, buy goods locally, reward workers for improving the community, promote gender equality). And have an open, transparent, and fair workplace (no discrimination, fair promotions, whistleblowers feel safe, management followup effectively on complaints).

The old model was that big corporations would make money during the day, and then philanthropically fix the world’s ills at night. Big corporations need to make money AND do good. All the time!

The nonprofit version of Impact Investing is Mission Related Investing (MRI). 20th-century charitable grants were to be spent. 21st-century charitable investments are to be repaid. As more foundations and funds evolve from grants to investments, nonprofits will need to evolve their operations to be functional, profitable corporations. Impact and Mission investors will seek a more modest profit than other investors, but they will still seek a profit.

All of the top foundations are moving assets into Impact Investment. Ford, Rockefeller, and Gates foundations have pages on their websites that explain their new Investment Strategies. This is a necessary stage in the evolution of Foundations, but the combined financial pressure of impact investing and ever-shrinking government funding will likely be too much of a transition for many nonprofits.

Is that it? Is it the end of the nonprofit? Not yet. Impact Investing and MRI are just two of many elements that are shaping the future of the nonprofit. That future is the Neo-Profit, a new hybrid that blends the best features of the for-profit and the nonprofit. Neo-Profits could solve many of the problems of funding and management that plagued the 20th Century nonprofit. Impact Investors provide the capital, the relatively new “Benefit” corporation provides a better foundation for the Neo-Profit.

But we’re still missing one element that ties everything together. How will Neo-Profits pay back investors? For that, we must turn to the newest and most advanced concept in Neo-Profit… the Balanced Risk Revenue Model, or BRRM. And that discussion… is another story, for our next blog!

 

 

 

 

 

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services | Tagged , , , , | Leave a comment

Will The UAW Strike Change The Auto Industry?


car manufacturer

After a month, it looks like the United Auto Worker’s Union (UAW) strike of 2019 will soon be over. It has been a strange strike. There was a time when even the rumor of an auto strike caused the US economy to falter. President Trump, who ran as the candidate of the little man, hasn’t said much. Neither have the democrats. We have 24 x7 news, but very little of it has been about the strike. Yet, could this strike be the turning point for the Auto Industry?

The reason for the strike goes back to at least the 2009 Auto Industry collapse. With no bank willing to bail them out, auto executives fired workers, cut benefits for remaining workers, and then flew their private jets to Washington to beg for a bailout. Unfortunately, one of their first meetings was with New York Democrat, congressman Gary L. Ackerman.

His opening statement was, “Couldn’t you all have downgraded to first-class or jet-pooled, or something, to get here? It would have at least sent a message that you do get it.” Fly first-class seats and **shudder** rent a limousine (you know, just like the average joe)? The “Big Three” auto-makers never thought that they would suffer such humiliation for a  measly few billion dollars.

The workers, however, are much more familiar with “give-ups” during an economic downturn. When the economy falls, regardless of their productivity, workers get pay cuts, get fired, and lose benefits. In 2006 the full cost of an American auto worker was between $70 and $75 per hour, with a starting salary of $31 per hour. Automakers who moved to the US (Honda, Nissan, Toyota), but built factories far from Detroit, with their labor costs around $45. Our (mostly) American car manufacturers complained bitterly that they just couldn’t compete with the new (somewhat American) car manufacturers.

By 2015, Big Three hourly labor costs fell to around $58. Starting wages continued to head down-hill, and many Detroit factories relocated to states with more flexible labor laws. The current entry-level rate for GM production workers is less than $17 per hour.

This “two-tier” wage system has become a common feature at modern union shops. New workers, usually Millenials, start at a lower wage and are capped at a lower wage than workers with more seniority. have wage caps. They will never make the money the previous generation made. Many will never be eligible for benefits, and even those that are eligible will receive much less than older workers. Workers of past generations could afford to live a middle-class life off of assembly-line work. Millennials can only look forward to declining wages and lost benefits.

In the last century, it was normal for industrial workers to have cycles of pay cuts and layoffs. But these were followed by cycles of rehiring and wage increases. The upside of these cycles has virtually disappeared. It’s now all downhill. While it does look like the negotiations that will end the strike will give one-time bonuses it will also close 3 plants. Despite the fact that business is up (GM alone made profits of $35 billion over the last 3 years), and the labor cost gap between America and “foreign” cars (that are made in America) is much smaller auto companies need to cut labor costs, by another $4.5 billion.

Closing old production lines (and plants) is a central part of the Auto Industry’s plan for the future. The oldest plants usually have the most obsolete equipment and the most expensive employees. oth can be removed when a plant is closed.

In the past, when one factory was closed, workers could transfer to another. Today, however, few factories are still in and around Detroit, the birthplace of the American Auto Industry. New factories are usually in different states, and production workers are never offered financial assistance to move to another state. If they did move, they would lose all seniority and apply as a new worker, at entry-level wages.

Not a very attractive option, but it will get worse for America’s auto workers. The auto industry is undergoing its greatest transformation since Ford introduced the assembly line…

End of the sedan: A “car” used to mean a sedan, or maybe a mini-van or station wagon. In just a few years, all of these models will be gone. Nobody wants to buy them anymore, and auto companies make more money from higher-margin vehicles, like SUVs and Pickup trucks. Auto companies need those profits to produce new products like…

Electric Cars: Few of today’s cars are electric (1%), or even hybrid electric (2%). However, within 5 years every car manufacturer plans to transition from gasoline and diesel to electric vehicles. That’s a HUGE change! Aside from Tesla, every car manufacturer must retool every factory. How will they fund the transition? Largely through worker layoffs and pay cuts.

Today’s electric cars have higher-costs and lower performance than comparable gasoline vehicles. But by 2025 they will cost less, perform better, and have dramatically lower fuel costs. That’s why auto companies MUST retool, and become more efficient.

New Vehicle Types: Gasoline-powered cars have been tweaked for a century, and there’s not much room for further engine efficiency. Electric vehicles (EVs), especially their motors and batteries, have a lot of room for improvement. Electric motors typically have 5 to 10 parts, while the ICE (internal combustion engine) has hundreds of parts. Electric is 2-3 times more efficient as converting power into motion. EV’s don’t need a water cooling system & radiator. Motors are located in or near the wheels, eliminating transmission systems and gears. Even 12 volt power cables can be replaced or eliminated, cutting 200 lbs or more in weight. Most of the mechanical parts under your hood will go away, eliminating the entire front end of your next vehicle.

Lower-weight and increased fuel efficiency allow for new design opportunities. The car of the future could be bubble-shaped, with seats facing each other (like a conference room). Maybe it will be something completely different. But it will have fewer parts, and require less labor. We won’t need billion-dollar factories to make a car. And that means we will see a LOT more new car companies.

China: China never sold traditional vehicles in the US. But they may be very successful in selling EVs. China is the world’s largest EV manufacturer, a major source for elemental lithium (critical for new batteries), and (along with South Korea and Japan) is a dominant battery manufacturer.

Self Driving: Your next car might not drive by itself, but  it will have more self-driving features. Eventually, autonomous driving will become a standard feature. Like seat belts. If the Big Three give away software that took billions of dollars to develop, how will they make up these losses? Yep… more layoffs and salary cuts.

UBER: Fewer young adults want to own a car, especially in cities. They use bicycles for short-trips and shared cars for longer distances. UBER doesn’t want to be a taxi company, they want to be a logistics company that rents vehicles to consumers and corporations.

If we efficiently share cars, fewer cars will be on the road, eliminating 100 million (or more) vehicles. Similarly, if electric trucks are self-driving, inefficient humans (that require sleep) will be replaced. When vehicles can be on the road 24×7, the same work can be done with fewer vehicles.

America has as many cars as adults. The US population has moved out of rural areas and into cities, and no longer needs as may long-distance vehicles. We have reached maximum car saturation. That has increased traffic congestion. Parking is unaffordable. Fewer car sales, simpler and less expensive vehicles, and the loss of vehicles due to sharing. That the reality for UAW workers, which will lead to a loss of a quarter or more of their jobs in just the next decade.

The only question is, “How will this play out?” Will the UAW accept declining wages and small membership or will they rebel? If they do rebel, what will they ask for? Is there any way to choose a different path for workers? What do you think? Share your opinions with us!

linkedin.com/in/chrisniccolls

 

 

 

 

 

Posted in Backup Plans, cars, Common Sense Contracting, Employment, Expectations and Rewards | Tagged , , , , , , | Leave a comment

Why Not Refill Instead of Recycle?


Milkman

Big food companies are revisiting a very retro idea. Why not reuse instead of recycle? Consumers have learned that we haven’t really been recycling for the last 20 years. Instead, we just sent our garbage off to China. Once it was transported around the world, some garbage was recycled. But more was just dumped in the ocean. What was recycled was often done in a way that created a LOT of pollution and toxins. But the pollution was a world away. And that was good enough! At least until last year, when China refused to recycle garbage from the US and Europe. Has the time arrived for America to go back to reusable packaging?

Let’s take a few steps back. Why do we have a crisis today? The oceans are filling up with plastic. Our landfills are… filled. If you live in a big city, in the autumn after the leaves fall from the trees, you see shreds of plastic bags caught in almost every tree branch. Plastic is not the only form of recyclable garbage, but it is a big part of the problem.

Before the 1970s, very little packaging was made of plastic. But as time went on we got better at making stronger, more diverse, and less expensive plastics. And that’s the problem. Today’s plastic is incredibly durable. And cheap. That’s why plastic replaced cardboard containers, paper bags, glass bottles, and other containers.

What was used before plastic? For food products, glass was often used. It was durable, could be made into any shape, and it could be made efficiently cleaned and reused. Consider the milkman. There was a time when milk, bread, and other products were delivered to your door. After you drank the milk, you left the bottle on the front step and the milkman replaced it. The old bottle, a very heavy glass bottle, was taken back to the dairy, washed, sterilized and refilled for the next customer. Except for the occasional broken bottle, there was virtually no “consumer waste”. For the consumer, it all happened automatically!

But then something happened. Small grocery stores gave way to supermarkets. Instead of going to one store for eggs and milk, a butcher for meat, a specialty store for olive oil, another store pickles… you could do all of your shopping in just one store! What will they think of next!

Soon, the milkman faded away along with the home delivery of soda-pop, seltzer and other products. Now, everything could be purchased at the supermarket. Thick reusable glass bottles for milk and soda morphed into plastic containers. Empty a milk or soda bottle and you’re left with a plastic container. Then, water became America’s favorite beverage. Instead of flowing out of kitchen taps or public water fountains, drinking water meant more empty bottles. Plastic bottles. Globally, more than 1 million plastic bottles are produced. Every minute. That’s over 525,000,000,000 plastic bottles every year. JUST plastic bottles!

Initially, we just threw out plastic bottles. Later, recycling programs were introduced. So we carefully separated recyclables, which went to a “recycling center” which just cleaned and packaged the plastic, shipped it overseas to China… where most of it was dumped in the ocean. Pretty soon, the ocean was filled with garbage.

For a while, we thought that the best solution was to design containers that used less plastic or that quickly biodegraded. But it only slightly slowed the tidal wave of plastic. More efficient packaging helped, but we kept wrapping things in plastic. Remember just picking up some tomatoes or a head of lettuce? Now we buy produce in plastic “clam-shells”.

Now add the billions of people have been raised out of grinding poverty in the last couple of decades. As wealth rises consumers tend to buy more processed foods, which leads to more packaging. America and Europe may have created plastic garbage, but every continent now contributes to the garbage pile.

Why not get to the root of the problem? Just stop making plastic bottles and containers. Go back to reusable containers made of glass, steel, and durable materials. A couple of dozen big brands (such as Procter & Gamble, Nestlé, PepsiCo), announced their interest in reusable containers. A firm called Loop will work with consumer product companies to used steel and glass containers’ Loop will deliver products to everyone’s door and then pick up and reuse the containers.

Good, but not good enough folks!

Consumer packing for food and home products is ground zero for plastic packaging.  Amazon and Walmart are slugging it out to see who dominates this space. Both are also pushing for home delivery, with Amazon in the lead. Amazon is building their own air fleet and airports, “one-upped” the industry standard 2-day delivery with a 1-day service, developed hundreds of “delivery partners” to move packages that last mile, and have filled our homes with Amazon delivery boxes.

Unexpectedly, Amazon has breathed new life into a home delivery service decades ago. ESPECIALLY after their take over of Whole Foods. Amazon does deliver milk, eggs and juice… just like the milkman! And a whole lot more. Due to their delivery service, Amazon adds 1.5 million cardboard boxes to our trash every day! And then there’s the soon to be trash inside of the boxes. Wait a minute! If the milkman used to deliver consumer packages to your home and then take it away to be reused… why can’t Amazon take a leadership role taking back and reusing their own packaging?

Amazon is spending millions, if not billions, to deliver their products to consumers. More and more, the guy who shows up at your door to drop off a box to your front door is an amazon employee or partner. Why is it impossible for them to pick up the garbage their deliveries create?  Who is in a better position to demand that more of their suppliers provide reusable packaging? And, wholefoods has it’s own brands of milk, juice, ice cream, sodas, water, etc. As the producer, they can certainly require reusable packaging. And they own the delivery services that can become pickup services to return the empties (and maybe a few of their boxes)?

If Amazon wants to crush its competitors, which does appear to be their goal, having a national “reuse” service would differentiate them from their competition. When you place an order with Whole Foods, you have the option to add a tip, because… ahhhh…. Amazon can’t afford to pay their workers? Why not add another option? For a few dollars more allow customers to select “reusable containers”. Let the market price the value of reusable containers.

IT’s going to take a lot more than Amazon to fix the plastic pollution problem. But no single corporation is better positioned to make reusable packaging something more than a quirky idea. They have the volume, they have the customer base, and they have the ambition to make it happen.

What do you think? Is reusable packing a good ides? Would you use it? Would you even pay a bit more to reduce the pollution problem? Tell us! Let us know what you think!

linkedin.com/in/chrisniccolls

 

Posted in Best Practices, Environment, Improvement, Unique Ideas | Tagged , , , , , , | Leave a comment

A Krafty Lesson About 21st Century Consumers


Velveeta

The Golden Triangle is an interesting management concept. This magical object allows you to easily build any two sides. The third side, however, is more difficult, and expensive. “Good, Fast, Cheap” is one of the most common golden triangles. Want a good fast car (maybe a Tesla)… not Cheap! A fast and cheap computer… it may not be good, and break after a week. How about a tablet? Well built (good), and cheap? Bet it’s not fast!

The economy is filed with these Triangles. When these triangles fail, it can have catastrophic consequences! Today, we will look at a specific economic Triangle that drives how corporations create and sell products.

  • Consumers: In Capitalism, consumers are the most important element of Supply & Demand. All demand starts with the consumer. When consumer need is not met, that market may simply fade away.
  • Producers: When individuals or corporations identify an unmet need, they race to create new products to fill that need. Some can identify needs purely by gut instinct, but most require marketing firms, survey data, and experts to convert ideas into products.
  • Investors: Producers (especially start-ups) need investors to finance new products. Investors, in turn, want assurance that consumers will buy the product. Some investors just want a profit, while others demand a good reputation, socially positive activities, protection of the environment, and more.

Simple, right? Yet, it can be incredibly difficult to build and manage this three-sided relationship. Consider the Oldsmobile. Once an icon of the American car industry, by the late 1980s the brand lacked excitement. Thir reaction was to launch a new ad campaign, “It’s not your father’s Oldsmobile!” Millennials may be asking, “What’s an Oldsmobile?” That’s a great question! Oldsmobile is a multi-billion dollar brand went extinct in 2004. Which is the big “ah-ha” for today’s discussion!

Should designing new cars have been given a higher priority than new ads? Maybe. Too many big corporations fail to address life or death problems, even when they are aware of them. If industry giants can’t solve their problems, how can smaller firms survive? Let’s examine Kraft-Heinz, one of America’s best-known food companies, and a corporation in decline. Let’s see what we can learn!

Big companies always want to be bigger, so in 2015 Kraft and Heinz (two of America’s biggest food companies) merged. Change was coming to America’s food industry. Younger customers no longer trusted big food companies. Millennials want small farms and organic products. They don’t want genetically modified, chemical-filled, highly processed foods. With hundreds of iconic brands between them, Kraft-Heinz could feel secure against the growing winds of change. Or so they thought.

Heinz was founded in 1869. Before refrigeration. Before even commercial canning. Heinz dominated preserved foods… pickles, relishes, condiments, and foods made with brine or vinegar. American consumers could buy pickles and sauces from Heinz rather than making these products themselves, saving homemakers millions of hours of work. More importantly, the move from home to industrial kitchens meant far fewer cases of botulism and other deadly forms of food poisoning.

Kraft was created in 1923. Originally, it was a cheese company at a time when almost no homes had refrigeration. Soft, mild cheeses spoiled quickly. Cheeses that lasted a long time were often quite pungent, and not to everyone’s taste.  Processed cheese (like Kraft’s Velveeta), were mild but long-lasting. Even without refrigeration! Factory processed foods gave America a miracle food and a good value!

Homemakers no longer needed to work from sun-up to sun-down. Soon other manufacturers came up with new miracle foods. In a poorer world, food that never spoils was a great thing! But we soon learned that food additives have consequences. “Forever Food” may be devoid of nutrients, and taste.

Consumers once trusted big companies and valued their products. Now the opposite is true. Big corporations know this. They’ve learned to create small firms, or at least the illusion of small firms, to introduce “all-natural” and artisanal products. In the short term, this may work, but consumers when consumers discover the big corporate ownership of those “small firms”, they become even more cynical.

In the 20th-century big food, firms developed scientific testing facilities to identify new foods preferences. Like Kraft “Easy-Cheese”, a spray can of processed cheese. I doubt that customers specifically asked for aerosol cheese. But surveys, marketers and food engineers turned perceived needs into this product. And Easy-Cheese was a success… for a while.

Today aerosol cheese is out. WAY OUT! All chemical-filled foods are out. Infinite shelf-life is no longer a consumer desire. Kraft executives have known this for a long time. Yet, they continue to manufacture foods from 50 years ago. Food designed for consumers that no longer exist.

Kraft’s corporate reluctance to eliminate or change venerable but no longer desirable products has had consequences. Kraft, not surprisingly, was reluctant to inform stockholders about their downward spiral. But as a public corporation, this reluctance was bordering on misrepresentation to shareholders. Regulators demanded action, Kraft’s stock price tumbled, the CEO and the head of marketing were removed. Most recently, Kraft wrote off $14 billion in corporate value. Consequences.

Consumer demand changes rapidly. Kraft-Heinz must have a board of directors that understands consumer demand and can act quickly. Did you know that women shop for groceries twice as often as men? Then why is the Kraft-Heinz Board of Directors more than 80% male (mostly, older men)? Companies run by people who don’t buy their own products can easily fall out of touch with customer demand.

When a Board of Directors lacks diversity, it becomes risk-averse. A lack of diversity means a lack of personal experience with new (or different) markets and products. New technology and globalization are accelerating change. Big corporations that are still operating like 20th-century firms will struggle in the coming decades, and some will fail.

Not just Kraft, but most big food companies are struggling with the all-natural, no chemical, cruelty-free requirements of the modern consumer. Newcomers like Beyond Meat and the Impossible Burger seemingly came out of nowhere and are now worth billions of dollars. Established brands should have identified the huge (and unmet) demand for plant-based meat products. Established brands like… Kraft-Heinz.

Kraft was wall aware of the market. 15 years ago Kraft bought Boca Burger, a leading plant-based “meat” producer. Clearly, Kraft could identify food trends. The buy-out increased BocaBurger’s sales from $40 million to $70 million in its first year. But in the last 5 years? We are in the middle of the hottest plant-meat market the world has ever seen, yet Boca Burger lost half of their market share. Kraft should have dominated this market. Yet Boca Burger is headed towards obscurity.

This isn’t just a food industry issue. Big car companies face major changes as vehicles become electric and self-driving. Yet today’s innovation and excitement often come from new, small firms. In an age of incredibly fast transformation, big corporations have an Achilles heel. They cannot move quickly. Add to this the often smothering culture of the big corporation, and even when small firms are bought by big corporations, the spirit of innovation may not survive. Small and innovative “DNA” can’t always be transplanted.

Good, Fast, and Cheap have been the legs of the golden triangle for Kraft and Heinz for the last century. These are probably still the right legs, but the definitions have changed. Good means more than “stays fresh (forever)” or “made in a sterile factory”. Organic, natural, no preservatives, sustainable… have all moved up in importance for consumers. other large swings in definition and desire will follow. Will today’s big corporations be able to keep up with these changes?

Probably not. Many very recognizable brands died in the transition to the 21st century. Arthur Andersen, ASK Jeeves, Blockbuster, Borders, Compaq Computers, Friendster, General Cinema, Kodak, MCI, Netscape, Pontiac, RadioShack, Saturn, TWA, US Airways, the WIZ, and Woolworths… to name just a few brands that could not survive, or could not survive on their own. As the speed of transformation increases, so too will the speed at which old corporations die.

What do you think? Will we see most of the old corporations die off in the next few decades? Is there still time to save old corporate America? SHOULD we even try? What do you think?

 

Posted in Best Practices, Decision Making, Delivering Services, Improvement | Tagged , , , , , | Leave a comment

The Not So Little Truck That Could!


E-Truck

A 45 ton truck… with no gas tank!

2020 is expected to be the year of the electric vehicle, a turning point where EVs become a mainstream option for consumers. Every car company has announced an electric or electric hybrid option for 2020. With a simpler engine, far less maintenance, and a lower cost for fuel, electric will make sense for the majority of car owners. After a century of innovation, the gasoline engine hasn’t got a lot of room for improvement, but electric vehicles will get better and better over the next few decades.

Some EVs today cost a bit more but will save money over the vehicles lifetime. In another year or two, even the base price will be lower, making EVs a slam dunk winner. Of course, there are a few other trends that will also favor the use of EVs.

For example, 2020 will also be the year that the Sedan Dies! Sedan style vehicles are just not selling. Every car company is phasing them out. Not just individual models, all sedans. No more produced, no more developed. GONE! Consumer vehicles will primarily be SUVs and pickup trucks. And maybe something new?

Electric vehicles provide new options for designing a car. For example, you can place motors in the wheel hubs. This makes it simpler to deliver 4-wheel drive. Plus if any single motor fails, the car’s software can rebalance the power (and steering) and off you go. Without a gas engine under the hood, everything past the dashboard can go.

A new design could shorten the car profile by several feet, making for a lighter and more efficient vehicle. Alternatively, the dashboard could be moved to the front edge of the car, expanding the passenger compartment by 50%. Move dashboard instruments onto the windshield and the front of the car could be one big window. Make the car self-driving and you don’t need a driver’s seat.

A more conservative design could use moveable seating, allowing you to convert from a traditional layout (driver’s seat facing forward) to a “mobile office” (with all passengers facing each other), by pressing a button. Changing the configuration would be as easy as changing the adjustment features on your seat.

New options and efficiencies mean big changes for the car industry. Even bigger changes are likely for niche vehicle. Consider the mining industry, with their super-sized trucks and specialty vehicles. For example, coal mining is basically the science of blowing the tops off of mountains, digging up the coals seams, and then getting the coal to where it will be used. Usually, there is a road going up the mountain and a lot of very big trucks taking the coal back down the mountain, or to the nearest coal trains.

Interestingly, mining roads are often privately owned. These single-use roads have simplified rules compared to public roads. Also, private roads are not subject to the regulations public roads operate under. It is much easier for private road owners to introduce self-driving vehicles.

Once the coal seam is exposed, god-awful big empty trucks go up the mountain, and then god-awful big truck full of coal go back down the mountain. Pretty simple, right? Because the truck is big and coal is heavy, a lot of gas is burned moving coal around. However, when you change to an EV (a HUGE EV) you no longer need any fuel.

I don’t just mean you don’t need to buy gas. Nor do I mean that some big solar or wind farm provides the power. What I mean is that by driving up and down the mountain you create your own power. Did I hear, “Whaaaaaaat?” Allow me to explain.

Look at a simple electric vehicle, such as an electric bicycle. Most e-bikes have their motor in the hub of the rear wheel… just like putting motors in the wheels of a car. If you apply (electric) power to the motor the wheel turns. Apply more power and the wheel turns faster. But if you manually turn the wheel, the motor becomes a generator and the motion of the wheel generates power.

Sounds like a useful feature! And it is! On an electric bike (or any EV) this is often used to recharge the battery. Tinker with this and you have a “regenerative brake”.  You can increase the resistance so that every turn of the wheel generates more and more power, which creates greater braking power.

Our titan of an EV, the Elektro Dumper (or eDumper), has regenerative brakes. Great big ones! On day one, you start with a full charge, heading up the hill empty (a mere 45 tons). Every site will be different, but the battery will probably still have 80% of the charge left at the top of the mountain. It only takes a few minutes to load 65-tons of coal. The truck then heads downhill, with brakes (Regenerative brakes) on full all the way down. As long as the eDumper can drive downhill with a full load, no recharging is needed… ever.

According to the manufacturer, Kuhn Schweitz, the greater weight on the way down the hill not only recharges the batteries, but each eDumper will produce megawatts of surplus power every year that can be sold back to the power grid. No fuel and it makes money while you drive, by generating excess electricity. All the while still doing the same job of moving coal around as a gas-powered truck. That is a GAME CHANGER!

The switch to EVs will revolutionize Detroit… Ummm Kansas? Ahhhh… Tennessee? Well, wherever we build cars today will be revolutionized. Temporarily at least, a lot of new factories will be built. But a surge in EVs will mean the sunset of the petroleum industry. And a huge change for Agriculture, since 10% of the “gasoline” you buy at the pump is actually Ethanol (alcohol, mostly made from corn).

Of course, Millenials are the biggest wildcard of all. They want a small carbon footprint, they don’t like cars, many don’t even want to drive. What Millennials do want is, bicycles! Manual, foldable, rented or electric… bicycles are everywhere. Trendsetters and entrepreneurs are trying electric scooters, with mixed results. And ride-sharing services like UBER are converting car owners into ex-car owners.

The eDumper is just one example of how electric (and self-driving) vehicles will gain a foothold in America, and then become integrated into day to day life. Driving on a private road is simpler than driving in the middle of a city or on a crowded highway, but each step brings new car technology closer to everyday use. Battery production will ramp up, batteries will become smaller, and prices will fall quickly. Batteries are one of the most expensive components of an EV. Lower prices will catapult the EV ahead of its gas-guzzling competitors.

What about you? Thinking about buying an EV? Waiting for a self-driving car? Giving up on owning a car and just getting an UBER account? Tell us what you think!

Posted in Decision Making, Employment, Environment, Expectations and Rewards, Unique Ideas | Tagged , , , , , , | Leave a comment