Solvation

Top Three "New Finance" Books

I'm on sabbatical from my blog but dropped by to recommend three key books.

If you're a manager or executive in a publicly traded firm, you must have the first one, "Winning Investors Over." In it, NYU Finance Professor Baruch Lev explains how to deal with everything from reporting requirements and earnings guidance to Corporate Social Responsibility programs and managing activist Boards. It's supported by copious research, which he references thoroughly.

The second book, "Intangible Assets," is a quick, more in-depth read that explains what you need to know to RIGOROUSLY think about non-financial assets. (If your book list is too long, I've summarized it here.)

The third book, "The New Financial Order," is a brilliant explanation on how risk management should be reconceived for a global society. Robert Shiller is the Yale economics faculty you may recall from his earlier book, "Irrational Exuberance" - he's got a fine track record as a visionary.

Post-Domestic Replaces Empty Nest

As many of you know, my son and only child left for college over a year ago. The term for my new stage of life had been coined fifty years or so back as "Empty Nester," because, long ago, the sole focus of a woman's life used to be childrearing, so when the child became an adult and moved away, she was expected to have some sort of identity crisis.

However, while there is clearly a transition, childrearing was not my sole identity, so I decided to coin a new term. I chose "Post-Domestic," because I am no longer am a full-time employee with the job "mom" to go along with whatever full-time employment I have had as "head of household." (I also use "single mom" judiciously, since while that states both my marital and parental statuses, it in no way conveys my financial responsibilities.)

I suspect stay-at-home dads will also appreciate avoiding the grief-stricken visual of "empty nest." 

Use it at will.

Developers, Designers, and Project Managers

When resolving conflict, it's important to remember that everyone comes from a different point of view. via GlobalNerdy.

 

 

Highlights of 2011

In 2011, my work focused on organizational and societal development, and its measurement. Here are some professional highlights from 2011, in chronological order. I'm deeply grateful for my teammates and partners, and for those who made these opportunities possible.

(1) I taught Organizational Behavior to 1st Year MBA students, most of whom were military veterans, and all of whom had limited business experience. I'd characterize the students as under-educated (only one could write well), highly motivated, and what I think of as "lawful": prefering discipline, order, and a strongly-normed environment. I learned that the first item of the curriculum is to learn how to learn from someone like me. I also came away from the process feeling like the entire approach to traditionally conceived Organizational Behavior needs to change drastically.

(2) I helped develop the Deliberative Society, a brand new service offering, based on over a decade of work at the Center for Deliberative Democracy with Reframe It software. This was instantiated at a major consulting firm as a trial offering. As a "support" member of the team, I collaborated in thinking through the productization of the offering, built some knowledge in the domain, and became familiar again with the culture of Top 4 consulting firms.

(3) I launched (heh!) Winged Pigs with Eric Grant, focusing on offerings to help startups deal with non-product related issues that can make or break its success. Our strengths are in organizational design, facilitating interpersonal dynamics and agile process design, and its measurement. There was a lot of encouragement but we ended the year without having successfully landed a VC portfolio company client. My business development skills evolved over the year; I believe we would have been more successful had I known then what I know now.

(4) I presented "Measuring Life," which is really an introduction to new economic thinking at TEDxHayward, a joint venture of CSUEB and Stanford University. I was happy to hear feedback that my talk was conceptually understandable and well-delivered. This is a growth area for me.

(5) I organized the Technology Track for the SoCap11, the Social Capital Markets conference with 1500 attendees over three days. The Technology Track was one of seven tracks. Highlights included Jay Nath, the Director of Innovation for the City and County of San Francisco talking about opening data sets and Jamais Cascio from Institute for the Future previewing his thoughts on an upcoming book showcasing the future in 50 years as well as some fascinating panels curated by the UN Foundation and Innosight. I enjoyed this tremendously - the right combination of management, interpersonal interactions, and creativity. I wish I had had more time - there is such great work going on (those are five separate links); a lot to curate.

Finally, and overarchingly, I became involved in several Communities of Innovation, particularly the Innovating Finance group, which has been guided by the success of the WWF UK and ICAEW Finance Innovation Lab. I'm noticing patterns here that I suspect will continue to reinforce each other in the new year.

I look forward to 2012!

Guiding Perspective for 2012

The year 2011 was, professionally, a bewildering taffy-pull of projects on topics relating to facets of organizational and societal reform and its measurement. On a personal level, it has been a year where I have made a lot of progress in composting grief.

I don't do resolutions. I feel they often come from a negative and punitive place, one that encourages us accidentally to tell our own story in a negative way. Why should we begin the year thinking about what we dislike about ourselves? That's just silly! Pick what you like, what you do well, and then expand from there.

I believe I did relatively well raising my son. I had a discussion with someone the other day about adolescent female sexuality, and I realized that retrospectively what I did in a nutshell was to focus my actions around building optimism and resilience. With that point of view firmly in place, decisions, actions, and even philosophies fell naturally into place.

So my Guiding Perspective (not Resolution) for 2012 is to use the point of view of building optimism and resilience for myself and society... socially, intellectually, physically, and financially.

I wish everyone a happy, healthy, and engaging New Year, and the ability to share your joy with many people.

 

Why He Hires People Who Fail - An HBR Article

Great thoughts on creating a resilient outlook, by Jeff Stibel, Chairman and CEO of Dun & Bradstreet Credibility Corp. 

Curious about this "fail wall"? Go read the original aricle. I have nothing to add.

Why Economics Needs Data Mining

Cosma Shalizi explains eloquently the major issues surrounding the accuracy of economic modeling. He talks about how we don't know whether what happened in the past can be relevant for he future.

Also, listening between the lines (at approximately 4:30), please hear the plea for the idea that if you're going to do models, you need data to validate them.

 

Cosma Shalizi urges economists to stop doing what they are doing: Fitting large complex models to a small set of highly correlated time series data. Once you add enough variables, parameters, bells and whistles, your model can fit past data very well, and yet fail miserably in the future. Shalizi tells us how to separate the wheat from the chaff, how to compensate for overfitting and prevent models from memorizing noise. He introduces techniques from data mining and machine learning to economics -- this is new economic thinking. via ineteconomics.org

 

 

CleanTech Open Global Forum 2011 - Part 1

Oddly, cleantech markets and social capital markets are barely aware of each other, despite obvious areas of complementary expertise. So I traipsed to San Jose to the Clean Tech Open Global Forum to interact with the very high quality CleanTech entrepreneurs, and those entities that fund them.

I have a project in mind to facilitate the bridging of these investment ecosystems that I hope will unlock further capital, but for now, let me simply report on some excellent startups I spoke with.

Impact investors would be interested in what I think of as Alchemy 2.0, and Regenerative Products

• Waste (post-consumer, especially) to energy
• Waste (post-consumer or industrial) to disaster recovery goods
• Energy Grid-busters
• Off-grid irrigation and energy solutions
• Those companies in the gray area described below that add Social Entrepeneurial connection into the communities they serve, primarily via directly creating Green Jobs and providing education.
• Very low impact transportation solutions, whether local fabrication, mass transit, remote monitoring, etc.

Impact investors MIGHT be interested in super-stopgaps

• Efficiency solutions for water use
• Alternative building materials
• Efficiency solutions for currently deployed energy or power systems; including transportation
• Behavioral change solutions even if they provide only incremental energy/water advantages, because of the learning involved
• Alternatively-powered individual vehicles (rather than mass transit)

Lost in translation are those solutions that appear to work against inevitable change

• Cleaner dirty energy
• Industrial waste to consumer goods

 

In Part 2, I'll expand on specific companies.

Where are the Jobs?

In this article, the assertion is that there aren't enough jobs, because jobs have been taken away by technology or by outsourcing work.

But... Isn't there plenty of work to do to clean up the environment (and possibly help people) around where you live or work? Who's paying people to do that? No one? Why not?

What's broken is structural. What's going on these days is an inability to identify what work needs to be done. This is because our measurement system for productivity making tchotchkies is out of alignment with what makes life worthwhile: lessening suffering and increasing creative expression, and those goods and services that enable these ends. But we don't measure suffering or wellbeing - we only measure profits. We assume that magically, entrepreneurs will design the right products - the products that the market demands.

But how are those market needs identified? How are investment decisions made?  When we align those two questions with actual "first world" needs, we will see the resurgence of jobs.

Until then, due to our economic lack of imagination, we will remain reliant on creating goods for people who don't need them, just want them. "Want" describes a soft market. If we want firmer ground to stand on, we must do the difficult work of identifying what is needed.

CleanTech Open Global Forum - Top 5 Picks

1. Hydrovolts - I first saw them when they were a finalist in 2009. They have a non-solar off-grid energy solution. This is a microturbine that drops into a water canal. It's designed for extreme environments. These are smart experts who are solving the system of remote power generation issues and there is current demand for their product. They're looking to begin building their next round after the first of the year.

2. Growing Energy Labs, Inc. - They have an off- and on-grid solution for microenergy storage. They have a specific progression of ramp up for which they are seeking funding now. The executive team is polished, experienced, and highly educated.

3. Ventana - Moving further away from power generation, this is a fascinating technology within the world of waste->energy. In this case, mixed, unsorted plastics ("virgin waste") are converted to fuel. There is an 80-90% conversion rate. I can explain a bit more of the science in person, but the long story short is it's reasonable - basically they take very long hydrocarbon chains and "cut them up" into the length of fuels. The risks here are in scale-up and manufacturing. However the benefit is that it makes it cheap and less risky to mine landfills. I know this is not something particularly of interest, but it might be a good one to pass along. Amit Tandon is here through the weekend, resides near Delhi and I suspect is US-educated (very fluent verbally and culturally). Khosla Ventures was interested in him; I don't know if it would make a difference if they led the round. +91 1733 220087 amit.tandon@ventanacleantech.com

4. Kiverdi - a bit further away is Kiverdi, which uses microorganisms to tune refining reactions, taking waste syngas and creating useable chemicals out of that. I mention it because it was very interesting. The CEO is Lisa Dyson. She has a PhD in physics from MIT, is very personable and professional, is a woman, and is black, so definitely worth keeping on the radar in general. lisa.dyson@iverdi.com 510 394 4443. Based in SF.

5. ElectronVault - This is another energy storage play, based in Palo Alto. For more info: http://electronvault.com/solutions/off_grid/  Kathy Kennedy, VP Corp Dev, 650 425 7510 x 556 kathy.kennedy@electronvault.com

Alternative Energy Investment

Out of public companies only, in everything related to advanced materials (nanotech, solar, etc.), my gig was to pick something related to alternative energy. They needed to buy and hold for 3 years. After a few months of analysis, I picked AMSC, which produces superconductive wire and products that incorporate it. They were not profitable yet. Very few analysts covered them, possibly because understanding superconductivity does require some fairly specific knowledge. The ROI was around 190%. This was from 2006-2009.

 

Millenials (GenY) Believe in the Social Contract

It has come to my attention YET AGAIN that many feel that Millenials (b. 1981-2001) have a sense of entitlement; that they expect too much.

While I'm sure there are those within the generation who fit that mold, I disagree with its overarching characterization of the generation.

Every generation has its own culture. Individuals may or may not strongly identify with it (or identify much at all), and after all they might consider a different culture to be more relevant to them on a personal level (i.e. country-of-origin, socio-economic, professional - "jock" vs. "nerd", etc.)

Because every generation has its own culture, interactions between generations can be misunderstood in exactly the same way any representatives from any two different cultures might misunderstand each other: they look at each other through the lens of their own context.

Specifically in the case of Millenials, they were nurtured in groups. Watching Millenials as kids - they were like a litter of puppies: They were put onto project teams as early as preschool; my son actually took group final exams in high school. They were shoved into clubs and sports teams and then told to found their own in the competition to get into good colleges. They formed ad hoc "startups" with their roommates, and many of these lasted long enough to do at least one useful project. They want to land in big companies, do good for society, and generally approach life optimistically and positively. They BELIEVE in the concept of Social Contract.

Contrast this to the Baby Boomers and GenX: Boomers were encouraged to be individualistic. They revered the lone visionary, the breakthrough artist. They talk about and fought for personal freedoms. GenX were the ones who turned the tide, against unfettered individual excess but not willing to assume social cohesion, GenX were the kids who couldn't even trust the social contract their dad made with their mom... but because of that, they knew what it was, they valued it, and most of us spent our careers searching for ways to build that back in.

So what we've got here are Millenials - people who DEMAND that social contracts be honored. They're being evaluated by GenX and Boomers. There are GenX who either think they're spoiled ("Social contract? Dreamer!") or are misty-eyed that the world is being set right again ("You can trust? We've healed!")....and Boomers who are either used to heaping disdain on GenX and forgot to stop ("You made a bad choice? Whose fault is that? You disgust me!") or who are Shocked that their lovely, obedient children, who spent their childhood paying into the social contract by benignly taking parental advice, now have the expectation that they're to get something in return ("Well, there are no *promises*...") or continue to expect the social contract to work in their favor ("Oh you young people are so wonderful! Who wants an underpaid internship?")

Personally, I'm in the misty-eyed GenX group. I think Millenials demanding that they are considered part of the social fabric after following instructions and jumping through hoops is a healthy(ish) thing. I'm really sick of hearing about their sense of entitlement, when what we're actually saying is that their parents taught them to believe that if you are a team player, and you do what your team asks, you'll be rewarded. If greedy parents led those expectations to be too high, it's the parents' fault.

I think the Millenials are about to shock us all with their fierce allegiance to social cohesion and social justice. I think some GenX will come through as modern day Pattons, leading the Millenials through the ersatz minefields to get into a strong position from which to end the destruction of the planet.

Go team!

Economic Catastrophe - Maybe It's the Only Way?

OK. Here's a hypothesis I developed after reading this highly disturbing report on the state of the world's oceans.

Hypothesis: It's GOOD that the US middle class (and lower) is becoming desperate, because in order to change behaviors drastically, it's going to require masses of people doing whatever it takes for them to survive, and the uberwealthy will in turn need to set up and financially support the rules so that "doing whatever it takes" actually is survivable.

(My own objection: most of the uberwealthy are too out of touch to understand what needs to be done, how quickly, and how extensively.)

Have I become too cynical?

Marshmallow Test

The famous marshmallow test, with the results that kids who were able to delay their gratification performed better academically leads me to wonder:

If we admitted kids to school based on the marshmallow test rather than birthdate, would kids be able to at least *begin* their academic experience without being at a cognitive disadvantage, and presumably without adults correcting their behavior so often that their emotional association is that school oppressive? In other words, is this another case where correlation doesn't imply causality?

Quick Look: Innovation and Sustainability

 The New Sustainability is the cover story on launch day for a brand new online magazine which is branding itself as a news source for optimism and solutions. The main thesis, "It's wrong to think economic growth and sustainability are mutually exclusive." That's it. Though there is a shower scene where the author notes that even though people are dying of thirst elsewhere, the (un-bylined) auther did his or her best creative work in the shower, so....

I tried to be brief.

Financial growth is meaningless. It's what we measure, but it's not what we want - what we want is the ability to exchange money for goods and services that make us happy and healthy. In other words, we need growth in intangible assets, such as trusted relationships, an environment conducive to mental and physical health, the ability to attain and maintain health, and continued learning.

But we don't relate any of that as growth in the US. So "economic growth" becomes useless as a measurement of the success of our "economy," and sustainability is a term that also requires a thorough understanding of the ACTUAL things we have and want, not a projection of our current rate of depleting the environment vs. a rate at which the planet can sustain itself.

The reason you're having trouble tying innovation into sustainability is because you're comparing a straw man with an unused metrics system. The connection is only created by thoroughly understanding intangible assets.

Morning Reading: Overwhelmed by Choice

NPR has reported on a really fascinating, solid description of being "overwhelmed": the concept that exercising willpower to make a decision involving tradeoffs or self control lowers the willpower for subsequent decisions. While this can be applied anywhere, they specifically draw the line to the poor: "Many of the tradeoff decisions that the poor have to make every day are onerous and depressing: whether to pay rent or buy food; to buy medicine or winter clothes; to pay for school materials or loan money to a relative. These choices are weighty, and just thinking about them seems to exact a mental cost."

One thing that strikes me is how focusing fear is - you take a bunch of people who are overwhelmed and yell loudly "FEAR THIS!" and they're relieved, because now they're focused, so tradeoffs are suddenly clear. There are days I worry that intellectual progressives make average Joes feel like crap most of the time, that our compassionate examination of every detail is just overwhelming for people, then they have to fight off feeling badly about themselves because we've just said "play nice, even if it's complicated."

Obama came along with "Hope!" as an antidote to "Fear!" and people were able to rally around progressive ideas.

 

What Do We Name Those Kids that Follow Millenials?

LaughingSquid reports a phone application that has turned checking in with one's parents into a game, called ImOK.

In case you missed it, there it is: the Millenials have ended, and the next in the cycle of oppressed Silent Generations has clearly arrived... In fact, they're now entering 5th grade, poised for adolescence. This generation is parented primarily by "Gen Y" (the last few cohorts of Gen X) and Millenials.

After looking and finding no name for them as yet, I'm going to suggest calling them the Disruptive Generation. The past generation was called "Silent" because their childhood was in the shadow of the Great Depression and World War II, spent looking up to their heroic elders who fought the battles and just being very good children so as not to cause any more problems. They were quiet, serious, married young, had babies right away, worked hard, and then after all that pressure, many just "freaked out" in a way that was terribly destructive to the young GenX, their kids (and made us the self-sufficient, innovative, and uplift-oriented generation we are today).

Another thing to note about the Silents is that the few who did disrupt, changed the world: Martin Luther King, Timothy Leary, Gloria Steinem, Jimi Hendrix...? They were all Silent Generation, not Baby Boomers!

So I suggest it's time to find a name for this generation. To get the party started, I've suggested Disruptive Generation because of its ability to bring courage to those who would disrupt (though it will also be mortifying to the rest of them, and it might encourage the generation's worst behavior to hang on...), but I'm hardly a tastemaker. I'd particularly love to hear from the Silents themselves, 67-83 year olds.

Soundbites from Audio Engineers

In my opinion, the best panel at the SF Music Tech Summit was the audio engineers' “Tour Secrets of the Pros: How to sound big even if you’re not.”

Exploring Digitized Music - n00b’s Eye View

“And, when he shall die, Take him and cut him out in little stars, And he will make the face of Heaven so fine That all the world will be in love with night And pay no worship to the garish sun.” - Shakespeare

I was classically trained and have never made the leap from “kid who studied music” to anything resembling an adult musician. I didn’t even try. Unlike me, my brother was a professional musician. I always admired his ability to stay connected to music. And then, recently, he died.

I have been thinking of creating electronic music for a few years, but I never have. Now I have something that feels a little bit like a compulsion: could I make some music based on samples from my brother’s band’s music? It honors him, it’s an emotionally safe exercise where there’s no “right or wrong,” and just the process is itself healing. In short, it’s a nice idea. But how?

I began this journey at the SF Music Tech conference at the Hotel Kabuki.

Spirituality, Power, and Intangible Assets

Aha! The muse that gives me ideas has given me the key to a puzzle I've been thinking about for a few years.

I had previously spoken about Spiritual Assets, which, by its oxymoronic name, seemed a bit off to me; and I had no way to incorporate the concept of power, except as an actual financial asset (fighter jets)... which doesn't work for things like picking up one's toddler to keep her from braining the cat with a toy godzilla because, as a parent, you're just bigger and can do that.

However, possibly due to a conversation about a month ago with Art Brock, I realized that what power is, is the ratio of one person or group's intangible asset to another person or group:  more money, better relationships, more knowledge. It's not its own asset, it's a ratio.

And spiritual assets are then the use of one's power for the other person or group, given unconditionally. You have ultimate power over your child, but you would forego your own wellness for theirs; you have the ability to annihilate a group of people through superior military, but you help them build schools instead. We feel the "giving" but we aren't actually giving anything away. We aren't even giving away our power necessarily, because whatever we choose to give unconditionally increases trust, grows knowledge, improves health, and boosts our own sense of wellbeing.