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Part III: Consequences Of Rampant Capitalism…

We have seen a rapid growth in various world economies over the last century. It has been especially pronounced after world war II. Although of late this growth is not equally shared across the population. This results in income inequality and a sub set of the population loses all hope for upward mobility.

This segment of population is completely discounted and does not value the democratic choice that they exercise in elections, and consequently they make their decisions based on either  unachievable promises or even protectionist and racist policies.

 

 

Once the value of the vote goes down, what you see is election of Incompetent or Callous leaders into the government, which further endangers the existence of democracy or capitalism.

 

 

 

Now don’t get me wrong, Capitalism is the only economic system we have seen work – all others like socialism, communism, dictatorship, fascism etc. have all failed the test of time. The question really is how to temper capitalism to not become its own biggest enemy and threaten its own (and democracy’s) survival.

 

 

Our next post is a plan to tackle this….

 

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Part IV: A Plan To Address The Maladies We Have Seen…

So what is the crux of the problem:

  • Capitalism promotes migration of jobs and work to the cheapest possible location;
  • Probably ethically right since it rewards the group that is the most desperate, but is unfair to the group that has a net outward migration of jobs
  • Results in massive job losses and desperation in one location while net influx of jobs and prosperity in another
  • Retraining and a repurpose of labor at source location is usually not attempted or isn’t very successful
  • The group losing the jobs is politically powerless to resist or prevent it

Let’s do a simple SWOT analysis of all the players involved :

Company:

Strength:  Capital; Agile Business and Production Processes

Weakness: Bad Political Reputation, and hence opponents try to fight this practice using protectionist/nationalist policies

Opportunity:  Find the optimal production cost to maximize profits and share holder returns

Threat:  Competition achieves a lower per unit cost of production and thus  loss of market share

Investors & Share Holders:

Strength: Capital

Weakness: Run towards the best returns, sometimes very short term focussed rather than long; i.e. support a steep discount rate

Opportunity:  Deploy capital that can be most productively used; Employ private equity/venture capital investment constructs to lock in capital to generate superior returns in the medium term instead of meagre short term gains.

Threat: Other investors generating better returns

Workers at the outbound location:

Strength: Political say at the local level

Weakness: No Capital to invest

Opportunity: Human capital that is free

Threat: A lower cost location comes up and takes on the production and jobs from them; Not trained in anything other than what they are currently doing

Workers at the inbound location:

Strength: Political say at the local level

Weakness: No Capital to invest

Opportunity: Human capital that is free

Threat: Another lower cost location comes up and takes over the production and jobs from them; May not have any training

Given the incentives, a capitalistic society gravitates towards specializing and optimizing labor, capital and production usually towards the detriment of its own workers but in favor of its investor class.

What I propose:

Change the game to utilize the strengths for each player – investors to provide capital to competitive projects, localities to use their resources to set up the right competitive projects using local resources and labor, executors that have a proven track record to implement the projects in a transparent and efficient manner, operators to run the venture profitably and an infrastructure exchange that removes friction from investment, project execution, operation and the ability to move investments in and out of these projects that compete for being a better investment.

Infrastructure Exchange Market

What?

An open market place for micro/ project level sponsorship.

Starts with a contractual agreement between sponsors/implementors/operators on initial project parameters

Proposal put up for bit to the investors – micro credit – or ordinary shares available to folks with a well defined investment profile

Types of projects accepted:

– wind farms

– solar farms

– energy storage pods

– efficiency projects – reduce energy consumption run rates

– later could move to any infrastructure project – build roads / bridges etc.

Why?

– a way to fund infrastructure from goal minded folks that believe in sponsoring a projects goals while making sure of decent returns on investments

Goals can be

– renewable energy

– create jobs

– reduce pollution

– build infrastructure

– competition drives performance

– easy in and out through trading in the infrastructure bank exchange

How?

– sponsors propose projects on exchange

– investors buy in interest; when project fully invested in – kicks off

– implementors run with it and complete execution

– hand over to operators that run and produce steady annuities

– project shares trade on exchange in terms of how well they are doing and can be traded

– all activities have a std set of metrics that are measured and published for full transparency

– create a path for projects to fail and be winded down

– create market on which mature projects performing as annuities can be traded and folks can move in and out of the projects

– should you create it as a bond structure – like infrastructure bonds backed by local/state government?

When?

– create exchange with functionality for each participant

– get investors to fund operations

– sign up sponsors / implementors / operators

Where?

– where there is the greatest need

– local governments struggling with creating jobs but have local resources that can be leveraged

– Examples of local resources

– Land

– Wind power

– Solar power

– Hydro power

Who?

Initial investors – those that fund the exchange

Implementors – those that set up the projects initially

Operators – those that run and maintain the projects – create local jobs;

Investors – who fund the projects

Sponsors – local governments/state that can provide resources (e.g. Land lease/ rent etc)

 

An exchange like the one described above will align the incentives between the workers and the investors to create a win-win situation for both….

We are currently working on a prototype for the platform….watch this space…

 

 

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Part II: In Defense Of Government

We find “The Government” to be a common punching bag for most folks – politicians and common citizens alike.

Our politicians rail against a corrupt and ineffective government pointing to us  the ills of big government and why the regulations imposed by the government are stifling our industry.

There are folks that talk about the deconstruction of an institution that has evolved over centuries of human development. It seems, everyone has an example of some egregious behavior that they use to justify painting the whole institution bad and in need for pruning. And the travesty of the situation is that there is no one standing on the other side defending this vital institution and its usefulness.

So let me take on the defense for the institution called the “Government”, which allows us to cooperate in very large numbers, prescribes and maintains a rule of law and is able to undertake projects at a scale that is impossible/unsustainable for an individual/family or a small group.

Governments came about when humans started gathering into communities. They were three primary reasons to create a government –

  • Establishing a common benchmark of behavior in society and establish conformance
  • Achieve scale where an individual/family or small group could not
  • Making outsize bets in pushing expertise in any domain – agriculture, industry or technology (for e.g. core science) where short or medium term benefits may not justify a rational private investment

Establishing the Rule of Law:

Humans felt the need to create rules for common behavior that all members within a community to adhere to. Anyone not adhering to these rules was given punishments or incarcerations. The institution developed as a checks and balances for keeping civil behavior.

Bringing the Benefits of Scale:

If you look historically, humans formed collectives and villages/towns/cities etc. to take advantage of the power of the collective. There were some projects/endeavors that were beyond the scope of an individual or a small group like a family to accomplish. Hence we humans invented the construct of “The Government” to allow us to cooperate in larger numbers. For e.g.  maintaining a military for offense or defense or build roads that are more than point to point connections and useful for the entire community.

Before we assign all the blame to the government and we dismantle it – we also should be willing to give up all the gains achieved by this institution.

Are we ready to give up on our military, or our highways, the internet, the GPS system, antibiotics and miracle drugs we have on the market. All of these are innovations that started as government projects and were then handed over to private enterprise.

 

I do not discount the criticism leveled by some that there are government agents that take advantage of their power, or even some individuals who are free riders on the rest of society. Yes, you can find bad apples in any group, but let’s not use these examples to discredit the institution and forgo the benefits of having a functioning and effective government.

 

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Org Design: Governance Vs. Delivery

Benefits of keeping governance and delivery functions together

Over the weekend, one of my ex-colleague reached out to me seeking advice on an org design question – should you keep  governance and best practices functions within a delivery organization?

My take: You can either keep governance functions within your best delivery unit or create a separate governance organization but it won’t be successful without assigning it some critical delivery responsibilities.

 

Here’s an example of what has worked in my professional experience:

At Medco, while running the BPM COE, I was tasked with creating a structure that could parallelize development. We had a massive transformation project, with a scale up target of almost 1000 developers at peak.

We had applications for various products – like mail order dispensing, point of sale adjudications, specialty pharmacy etc. These applications included common workflow capabilities like order processing, customer advocacy, therapeutic resource centers etc. These we chose to implement as frameworks. There were multiple scrum teams working on parallel development. We created a governance group – the Corporate Agile COE that was responsible for orchestrating application delivery across these framework dev groups (COE’s) and the application work station groups (BIACs).  In addition to governance, this group also had some critical enterprise framework delivery responsibilities like authentication and authorization, PHI data access controls, single sign on, personalization framework, and service bus client-server framework.

While governance is a full time job, without delivery responsibilities, it does not carry enough creds to be effective.

Why?

Architecture and Governance should not become an “Ivory Tower”: It needs to be grounded, practical and implementable; Incentives are aligned between delivery and governance, so governance principles are light, not onerous and implementable. And the best way to prove that a design is implementable is to give the person/team proposing it a chance to implement it using the same guidance; The aim for both architecture and governance should be to be simple, rational, elegant and not onerous so as to impact delivery.

Eat your own dog food – hence establish credibility when prescribing your solution: The group prescribing architecture principles is able to demonstrate through their own delivery that it works, hence establishing credibility when prescribing solutions.

Architecture not a scape goat for delivery: Other delivery groups cannot claim that the architecture is unimplementable and thus make the arch and governance group a scapegoat for failed deliveries.

 

 

 

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Virtualization – A Necessary Strategy For Any IT Exec

Enabling technologies (inventions) have brought about faster innovation – now that change is constant, we are all trying to outdo the last incremental change. IT Execs have to worry about faster speed to market, which has shrunk from months to now days and even minutes.

Remember the days when a project had to schedule hardware and software change – and if you missed it on your project plan, either you were running on borrowed capacity or running extremely crippled till hardware was ordered, arrived and was provisioned in the data center. Those days are gone; today, capacity on demand is the norm and “one click provisioning” is taken for granted.

This is the case with the large investment bank that I work for where we have our own flavor of cloud and on demand provisioning; even with with smaller enterprises that can use infrastructure cloud providers (AWS/Azure/Digital Ocean/Google etc.) to spin up containers and add capacity on demand.

Very recently while mentoring a nonprofit, I came across a situation where the founder of a dance studio was forced to work on her IT systems more than the organizations mission. Upon probing deeper, we discovered that while IT tools are excellent productivity drivers, a fragmented landscape of solutions is actually a bigger headache to manage than doing this work manually with a pen and paper. This was a problem of fragmented providers and needing a lot of IT savvy to merge and manage data from the owner and founder of the non profit.

We recommended  a virtualized and a consolidated software solution which was accepted enthusiastically. We ended up setting up a word press instance for her in a matter of hours. In fact my 7th grader son pitched in and set up the entire static site for her. Then one of our other volunteers added various plugins like mail chimp and class scheduling and campaign management to the solution.

This is true democratization of tech – it’s not just the monopoly of large orgs with an army of IT folks – anyone can experience this new paradigm and turbo charge their nonprofit/business.

Here’s a graphic that depicts the types of offerings in the market. The boxes in blue represent what is currently available.