Jim Harris

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World Economic Forum streams sessions live via web

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Public & Private Davos: Live Streaming Sessions & Private Conversations

There are two Davos experiences: one public and one private. The public sessions have been democratization – as anyone can now watch many of the World Economic Forum sessions live from Davos, streaming on the web.  And for those who don’t want to get up in the middle of the night in Canada to watch the morning Davos sessions live there is a library of sessions available.

But the private experience occurs at by invitation only sessions often breakfast, lunch and dinner sessions that are not taped, where “Chatham House Rule”

applies – i.e. no reporting. These “off the record” sessions are designed so that participants can speak frankly without fear of attribution. Of course there are the discussions that happen in hallways and meetings that go on behind closed doors.

When you sit, you never know who you’re talking to it could be the Chairman on a global consulting firm, a Minister of Finance, a journalist or a venture capitalist.

The fact that the public sessions are streamed over the web is a great democratization of Davos. But many of the most interesting insights occur in the “private” discussions. My next post will look at one of these conversations – and a game changing technology that you won’t hear talked about in other reporting from Davos.

Jim Harris is reporting from the World Economic Forum in Davos Jan 26-30. He’s tweeting continuously – and you can follow him here. You can read his prior Davos posts: “Davos Debate: The West isn’t Working” “The Age of Human Capital”and “World Economic Forum focuses on risks; CEOs on innovation”

Jim is a GreenTech columnist for the National Post. You can read his past columns here.  He is the author of Blindsided, a #1 international bestseller published in 80 countries worldwide. He consults to organization wanting improve their bottom line and green their operations.  Learn more at www.jimharris.com

The Age of Human Capital?

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We have 21st century tools but most companies are constrained by 19th century command and control management paradigms

Are we entering an age where human capital become more important than financial capital? That was the topic of discussion of a breakfast session here at Davos.

New tools (wikis and social networks) enable an empowered workforce to share information, collaborate, solve problems, create new products and services far beyond what hierarchical decision making in old companies allow.

So the real work in my opinion is working on changing management systems and structures to enable a more fully engaged, connected workforce and push responsibility and authority throughout the organization.

I have been in some organizations where people didn’t have the authority to buy $1.57 of paperclips without a sign off from someone else. But outside work people negotiate quarter million dollar mortgages. So the question for me is: “Is there some latent potential that we’re not taping?”

And if we double spending limits – “Okay, everyone is empowered to spend $3.14 any way they want!” – would we be getting anywhere close to the full potential of what people are capable of contributing?

The event was put on by Manpower (which has an obvious self interest in the topic) and featured a panel including Frank Brown, Dean of INSEAD; Jeff Joerres, CEO of Manpower; Sharan Burrow, General Secretary of the International Confederation of Trade Unions, Dan Brutto, President of  UPS International and Don Tapscott, author of Macrowikinomics who commented from the audience.

Positions that panelists took were fairly predictable: Burrow as a unionist didn’t want to see offshoring of jobs, and wanted to see companies invest more in training and development of employees. Brutto made the point that promoting from within the company is a powerful motivator – he began as a package handler and after 35 years is now the president of UPS International

Now don’t misunderstand, I’m all in favour of greater investment in training and development – but the way to look at is is that it’s necessary but insufficient. Really what we need is changing the idea of how an organization works.

When giving a presentation on this topic I’ll often ask the audience “how many here feel that their organization pulls on the full talents of all employees?” the only hands that ever go up are those of entrepreneurs who work for themselves!

Then I run through percentages from 100% down to 20% asking every to benchmark their own company – and the average for the whole audience is usually below 50%. If you consider the total investment in payroll that’s quite a glaring gap.

In study after study the #1 motivator for individuals in work is developing mastery: having responsibility and authority. Taking responsibility, gaining experience and thereby increasing talents. But very few companies pull on all talents of employees. So is the challenge investing more in training and development – or in changing the management paradigms?

At the time I co-authored The 100 Best Companies to Work for in Canada for what was then Financial Post, the best companies invested 4% of their salary base in training and development. So in the hierarchy of problems, not pulling on the full talents of all employees is an order of magnitude more severe than training.

There are a few companies that “get it” – but they’re typically in the high-tech field which experiences relentless and incessant change. So the quest to survive and thrive in a whitewater market has forced them to adopt new ways of working.

Don Tapscott pointed out that some organizations don’t even remain within the boundaries: for instance, 50% of P&G’s innovation comes from outside the company. The challenge is how to orchestrate it. Because the person at the top can’t learn for the whole organization.

The Sufi’s have a saying – “Why do you seek new knowledge, when you don’t apply what you already know?”

Jim Harris is reporting from the World Economic Forum in Davos Jan 26-30. He’s tweeting continuously which you can follow him here. If you’re interested in following Don Tapscott he’s on Twitter too.

You can read Jim’s prior FP posts: “Davos Debate: The West isn’t Working”; “World Economic Forum focuses on risks; CEOs on innovation” and “Jim Harris will be reporting Live from the World Economic Forum in Davos”

Jim is a GreenTech columnist for the National Post. You can read his past columns here.  He is the author of Blindsided, a #1 international bestseller published in 80 countries worldwide. He consults to organization wanting improve their bottom line and green their operations.  Learn more at www.jimharris.com

World Economic Forum focuses on risks; CEOs on innovation

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The World Economic Forum’s (WEF) serious agenda doesn’t formally begin until tomorrow (Jan 26) but there has been a tremendous activity in the tiny Swiss town of Davos – and the steady noise of helicopters reverberating most of today off the surrounding mountains.

The global gathering of corporate and political elites draws 2,500 attendees who in turn are protected by an even larger number of Swiss police, army and security forces.

Serious Business

The World Economic Forum is serious business. The organization has just released its Global Risks Report 2011 Sixth Edition. The report is the result of surveying more than 500 leaders and experts worldwide in assessed 40 global risks. The three worst risks in ranking order? Climate change, fiscal crises and geopolitical conflict. The analysis looked at the likelihood of occurrence in the next 10 years and the perceived fiscal response to cope with it. All three of these were deemed to be very likely and to each cost $US900 billion respond to. The report looks at how risks are interconnected. For instance, climate change impacts food security, water security, flooding, extreme weather (storms and hurricanes) and biodiversity loss.

 

With the global economic crisis blindsiding companies and countries, risk will be a hot topic here.

PwC has just released a global survey of 1,200 CEOs on their confidence Growth reimagined Some of the highlights:

  • Overall 88% of CEOs are confident re the coming 12 months; and 48% are very confident (vs 31% a year ago).
  • In 2010 CEOs focused on fundamentals but this year (2011) 84% CEOs have changed their strategy to focus on growth & innovation. CEOs looking to innovation to deliver new products & services. Innovation is now the #1 focus for CEOs
  • CEOs #2 concern for CEOs: Levels of deficits & cumulative debt from stimulus spending by national governments worldwide
  • 72% CEOs are worried about economic volatility. Why then is confidence so high? Because trans national companies know that they can rely on growth in their operations in growing markets.

But here’s a really great question a media colleague asked at the press conference where PwC Chairman Dennis Nally released the findings: Is CEO confidence a leading or lagging indicator? I’d just point out that CEO confidence was at all time highs just prior to the credit crisis

Jim Harris is a GreenTech columnist for the National Post. You can read his past columns here. He is the author of Blindsided, a #1 international bestseller published in 80 countries worldwide. He consults to organizations wanting to improve their bottom line and green their operations.  Learn more at www.jimharris.com

Jim Harris will be reporting Live from the World Economic Forum in Davos

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World Economic Forum 2011, Davos, Switzerland 26-30 January

I will be attending the World Economic Forum (WEF) in Davos, Switzerland Jan 26-30 and continuously tweeting from the event. You can follow me on Twitter at @JimHarris and the FP online team will be retweeting these. In addition I will periodically be blogging at FP Posted. You will be able to email me directly at

jimh@jimharris.com

Davos draws about 2,500 participants including the CEOs of almost all of the Fortune 1000 companies as well as political leaders. Over the years events at the forum have shaped world affairs:

  • In 1989, North and South Korea spoke for the first time at Davos
  • When the Berlin Wall fell, German unity started at Davos
  • In 1992, Nelson Mandela & FW de Klerk began discussions at Davos that ended apartheid in South Africa
  • It was in Davos that Bill Gates, met the World Health Organization and got the idea of giving billions from his foundation for immunizations

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Davos 2011 Theme

The theme for the World Economic Forum Annual Meeting 2011 is “Shared Norms for the New Reality” The theme reflects the fact that world that is becoming increasingly complex and interconnected and, at the same time, experiencing an erosion of common values and principles that undermines public trust in leadership as well as future economic growth and political stability. The forum will wrestle with issues such as:

  • How can leaders and government respond to the new economic reality?
  • The economic outlook and defining policies for growth
  • Building global risk response mechanisms

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Stories I’ll be Exploring:

Where are we with respect to the global recession? This has been the worse global recession since the great depression. In order to combat it, national governments responded with the largest stimulus plan in the world’s history. How will national economies react as governments cut spending to reduce annual deficits?

Shifting nature of power between China and the US. The US deficit hit a record $1.4 trillion for the year as of September 2010 and a number of economists predict it will rise to $1.6 trillion before the year is finished. That’s equal to 9.9% of GDP and the highest level since World War II.

The cumulative US debt now stands at $13.7 trillion – or about $44,000 per citizen. Basically the US is bankrupt.

Simon Johnson, the former chief economist for the International Monetary Fund, estimates that China owns about $1 trillion in US Treasury securities, or nearly half the $2.37 trillion stock of Treasury debt held by “foreign official” owners.

But other economists put the figure even higher. Many assume that 70 percent of China’s $2.4 trillion in foreign exchange reserves is invested in dollar-denominated bonds, which would put China’s holdings of US government debt at $US1.7 trillion.

I’ll be interviewing participants about their analysis of this and what they see as the implications going forward.

Canada’s banking system the soundest in the world. In September 2010, the World Economic Forum ranked of Canada’s banking system as the world’s soundest for the third consecutive year. WEF provides rankings on more than 100 indicators for 139 national economies.

Personal Interest Stories: The Canadians who attend Davos: Why they’re attending, what they hope to get out of it.   Canadians who I bumped into at the 2009 WEF included Sonya Bata, Don Tapscott and his wife (his daughter Niki is now a WEF staffer); Nick Parker, the founder of Cleantech;  among another of others.

Jim Harris is a GreenTech columnist for the National Post. You can read his past columns here. He is the author of Blindsided, a #1 international bestseller published in 80 countries worldwide. He consults to organization wanting improve their bottom line and green their operations.  Learn more at www.jimharris.com

Waste not, want not and profit

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What is the future of energy? is a critical question. The three fastest-growing sources of power in the future will be: negawatts, smart systems and clean power.

Issue: As demand for energy increases and traditional wells for energy dry, the future of energy becomes less certain Shift: Take a three-pronged approach to energy: make more, use it more efficiently and get it from green sources

What is the future of energy? is a critical question. The three fastest-growing sources of power in the future will be: negawatts, smart systems and clean power.

Negawatts This is a term coined by Amory Lovins to signify electricity that isn’t needed to be produced due to energy efficiency. Mr. Lovins is one of the world’s leading energy efficiency experts — and coined the term when he saw a typo in a report — “negawatt” instead of “megawatt.” Every kilowatt hour (kWh) that I save through energy efficiency is a kWh that someone else somewhere else on the grid can use. It’s the cheapest form of power generation. A negawatt strategy can apply to: 1) how electricity is produced; and 2) how it is consumed.

The way we produce and distribute electricity in North America is grossly wasteful. For every 100 units of energy input at a nuclear-powered or coal- or gas-fired plant, less than 20% is actually used for practical purposes. A staggering 66% of energy is vented as “waste” heat — the average power plant is only 33% efficient. By comparison, combined heat and power (CHP) — or co-generation — uses the waste heat to heat buildings and hot water, reducing the need to burn natural gas for heating.

CHP systems are up to 90% efficient, so if all electricity was generated from co-gen, our electricity system would be more than 250% more efficient. A further 10% of electricity that is actually produced is lost through transmission and distribution, so more than 75% of the electricity is wasted before it even gets to the wall socket for use.

Using existing proven, practical technologies we can dramatically reduce energy end use, e.g. more-efficient motors, pumps and energy efficient buildings. It is far, far cheaper to increase the efficiency of our industrial, commercial and residential energy use than it is to build new electricity plants and find new energy sources.

 

And the need for efficiency doesn’t just apply to electricity but to all energy use. Here’s a simple but stunning fact: If every car on North American roads got the same fuel efficiency as my Toyota Prius, there would be no need to import any oil into North America.

In 2008, the United States consumed 7.1 billion barrels of oil — and more than half of it was imported — requiring the United States to pay almost half a trillion dollars to other countries for oil imports. T. Boone Pickens has called it the “biggest transfer of wealth in history.” And all simply because North American governments refuse to get really aggressive with mandatory fuel-efficiency standards for vehicles.

As the transportation sector accounts for 70% of all oil consumption, fuel efficiency is the high leverage activity.

So we’re paying a high price for ridiculously low energy-efficiency standards.

Smart Grid

Our electric grid has not fundamentally changed in 100 years. Electricity is produced at large, centralized plants and delivered via transmission lines.

But the smart grid will allow for decentralized production (the co-generation described above). So, for instance, a manufacturing plant could generate its own electricity and sell any excess into the grid — and use the heat from generation for its plant operations. Some industries, such as pulp and paper, already use co-gen but it will become more widely adopted by other industries.

The smart grid promises to create greater transparency into how electricity is consumed and give greater control over consumption to businesses and homeowners.

Over time, the smart grid will become like the Internet, where every device that draws power will have an Internet Protocol (IP) address, allowing each device to be remotely managed. For instance, smart buildings have sensors throughout that adjust lighting and heating levels in real time, reducing the unnecessary use of power.

Clean Power

Wind and solar are the fastest-growing categories of power production. The installed base of wind has been growing at a 30% compounded annual growth rate (CAGR) for the past decade, while solar had experienced a 40% CAGR. In 2008 a staggering 42% of new electricity capacity was wind power.

The fastest-growing sources of power — negawatts, smart grid, smart buildings and clean power — promise to wean North America from foreign oil imports, reducing foreign payments and creating greater energy security.

• Jim Harris is the author of Blindsided. He speaks at conferences and seminars around the world on topics of leadership, change and going green.

Soon oil prices will soar again

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The law of supply and demand states that when the demand for a good increases faster than the supply, prices will rise.

Issue: Wind and solar are not the only subsidized forms of energy production: worldwide, taxpayers fork over $250-billion a year to finance the already-wildly lucrative oil and gas industries Shift: End oil and gas subsidies to reduce government debts and so that the free market can produce cleaner, more efficient energy alternatives

Many National Post readers are committed to the free-market system. They’ll be surprised, then, to learn that oil and gas is subsidized by taxpayers to the tune of $250-billion a year worldwide.

Doug Koplow, an expert who studies oil and gas subsidies, points out that financial support comes in many forms: consumption subsidies, tax breaks, loans and loan guarantees, required purchase of particular energy commodities, funding research and development, and reducing risk by government assuming liability or providing insurance.

And it’s happening right here, too: Canadian taxpayers subsidize oil and gas interests by $1.4-billion a year. Export Development Canada supported $13.2-billion of overseas oil and gas projects. Public subsidies make up 5% of oil profits.

The Canadian oil industry turned a profit of $26.4-billion in 2007. Why are our provincial and federal governments subsidizing the most profitable companies in the world with taxpayers’ money?

Now is the time to end such carbon subsidies for two key reasons: because global governments have created huge debt levels due to stimulus spending, which ultimately have to be repaid; and because subsidizing fossil fuels slows the speed of energy-efficiency adoption.

The time to end carbon subsidies is even more urgent because we have reached peak oil. The concept of peak oil is easily misunderstood It’s not that we’re out of oil — there’s still a trillion barrels of oil under the Earth’s crust — it’s just that we’ve developed all the easy-to-access and easy-to-refine oil deposits — and these are now declining.

To meet rising oil demand, companies are now oil drilling on the ocean floor, miles under the sea, in the Arctic in hostile conditions, and in the tar sands, where it takes a barrel of oil equivalent in the form of natural gas to refine three barrels of oil. The effect of all these trends — smaller deposits, harder-to-access locations and harder-to-refine oil — means that the cost to extract oil from new sources is rising. The rate of extraction from the new deposits is slower than the declining rate of production from the traditional oil fields.

The law of supply and demand states that when the demand for a good increases faster than the supply, prices will rise.

Chinese consumers are buying more than a million cars a month — and in India when the US$2,500 Nano went on sale, more than 200,000 were ordered in the first two weeks. Adding millions of cars a month to roads will inevitably drive up oil prices.

Jeff Rubin, the former chief economist for CIBC World Markets, predicts that the price of oil will rise to US$225 a barrel by 2012. For readers who dismiss Rubin, think about this: We are in the midst of the biggest recession since the Great Depression and oil has already risen above US$80 a barrel. In 2003, few pundits would have thought US$80 oil was possible. (And Rubin’s past predictions have proven deadly accurate: In 2006, he predicted oil would hit US$150 a barrel in 2008.)

Aggressively pursuing energy and fuel efficiency should be a top priority for all business leaders — while we still have the luxury of US$70 to US$80 a barrel oil. Becoming radically more energy efficient will give a company a competitive advantage in its industry and insulate its profits from the inevitable rise in the price of oil coming out of this recession. Companies that fail to do this will be blindsided.

Walmart is spending US$500-million a year on sustainability initiatives — mainly energy and fuel efficiency, with paybacks of four years or less — giving an internal rate of return (IRR) of 25%. Just to put it into perspective, the long-term (30-year) returns for investing in the stock market gives an IRR of 10% and investing in real estate 16%.

So energy efficiency gives a better rate of return than investing in the two vehicles conventional wisdom claims give the best long-term returns. And that’s with the price of oil being subsidized and the recession depressing oil demand. Chance favours the prepared.

• Jim Harris is the author of Blindsided, a number one international bestseller published in 80 countries worldwide. He consults with organizations wanting to go green.