A Safe and Just Doughnut

Today’s post is about the doughnut.  I’m not talking about an ordinary sugar-glazed, jam-filled, deep-fried doughnut.  No, this is a safe and just doughnut we can all live in together.

If safe and just aren’t the flavors you normally look for when buying a dozen fresh ones at your local grocery store or Tim Hortons, then please stay with me.

assorte flavoured donuts

Photo by Sides Imagery on Pexels.com

I’ve been reading a lot recently about how we can live more sustainably on Earth. A hotly debated question is whether economic growth is compatible with sustainability or whether we need to move to a no growth or even a de-growth model.  One thing does seem pretty clear though; to build a sustainable future we need to set broader goals for ourselves than just GDP growth.  But what exactly should those goals be?

Safe

If we’re concerned about the environment and sustainability, if we want to preserve the Earth for our kids and their kids, then we need goals aimed at protecting the environment.  You’ve probably heard about one of these goals:  limiting global warning to 2 degrees Celsius above pre-industrial levels, preferably 1.5 degrees.  That’s a good goal, but is it enough?  What about other problems like deforestation, ocean acidification, and mass extinction?  Should we have goals around those problems too?

Yes, we should.  We need a comprehensive set of environmental goals that we can use to measure and guide our activity on the planet.  Fortunately, we already know what they are.

Back in 2009, Johan Rockström, director of the Stockholm Resilience Center gathered together a group of scientists and came up with a set of nine “planetary boundaries” that we should not cross.  These boundaries correspond to critical ecological systems or processes that scientists think are necessary to preserve the stable Earth environment that humans have been living in for about the last 12,000 years, a geological epoch known as the Holocene.

The nine planetary boundaries establish thresholds for:

  • Climate change:  primarily caused by CO2 and other greenhouse gas emissions.
  • Biodiversity loss: the number of species becoming extinct each year
  • Stratospheric ozone depletion:  thinning of the Earth’s protective ozone layer
  • Ocean acidification:  Earth’s oceans absorb most of our CO2 emissions but in so doing become more acidic. This harms coral reefs and other marine life.
  • Nitrogen and phosphorus overloading:  nitrogen and phosphorus leaching into the water supply, primarily from excessive use of chemical fertilizers.
  • Fresh water consumption:  the amount of global runoff humans use each year
  • Land use/Deforestation:  the fraction of ice-free land under cultivation or development
  • Aerosol loading:  discharge of soot and other particles into the atmosphere
  • Persistent chemical pollution:  manmade chemicals like plastics and heavy metals that persist in the biosphere

These nine planetary boundaries form what Rockström called a “safe operating space for humanity.”  Crossing these boundaries could destabilize critical earth systems and push the biosphere out of its current equilibrium into an unpredictable and far less hospitable state.

To learn more about planetary boundaries, you can read Rockström’s 2009 paper published in the journal Nature, or you can read his fabulous 2015 book called Big World, Small Planet, which I reviewed here.

Just

There are about 7.5 billion people on Earth today. We’ve made enormous progress in the last 50 years against hunger, poverty, disease, illiteracy and many other social development goals.  But nearly 800 million people still live in extreme poverty and billions don’t have access to safe drinking water, sanitation or handwashing facilities.

How do we make further progress?

Meanwhile, population is still increasing.  Growth rates have fallen, but our population is not expected to level off until around 2100 at about 11 billion.

How are we going to accommodate all those additional people?  How will we feed them, clothe them, shelter, educate and employ them?

It seems like we need social development goals too; goals that will help us ensure that everyone on the planet can live safe, healthy lives with dignity and opportunity.

Here too we already have a good set:  The United Nations Sustainable Development Goals or SDGs.

UN Sustainable Development Goals

Source: United Nations

Adopted in 2015 by the UN General Assembly, the SDGs are a set of 17 goals for the year 2030.  They include:

  • No poverty
  • Zero hunger
  • Good health and well-being
  • Quality education
  • Gender equality
  • Clean water and sanitation
  • Reduced inequalities
  • Peace, justice and strong institutions

Together they provide “a shared blueprint for peace and prosperity for people and the planet, now and into the future.”

You can think of these goals as social boundaries.  If the planetary boundaries form a ceiling that we should not exceed, then these social boundaries form a floor, a foundation built on human rights that we should not fall below.

The Doughnut

Kate Raworth a “renegade economist” and research associate at Oxford University’s Environmental Change Institute first put these two concepts together to form “the doughnut” in a 2012 paper called “A safe and just space for humanity” published by Oxfam.   Here it is.

The Doughnut: A Safe and Just Space for Humanity

Source: Oxfam

The nine planetary boundaries are the “safe” part of the doughnut.  They form its outer circle.  The social boundaries are the “just” part, forming its inner circle.  Raworth’s original social goals line up pretty well with the UN SDG’s.

Our task, according to Raworth, must be to find ways to live within these boundaries, to live within the doughnut.

We need to tackle both sets of goals at the same time. Why?  Because poverty can exacerbate environmental stresses, she says.  For example, billions of people still people burn wood, coal and biomass for cooking and heating. This contributes to CO2 emissions, particulate pollution and deforestation.  Similarly, the effects of climate change, such as droughts, severe storms, and changes in seasonal weather patterns will severely affect people’s food security, health and access to clean water and sanitation. The poorest will be hit hardest. We can’t successfully address environmental issues without solving poverty and we can’t solve poverty without addressing the environment.

Traditional GDP growth, if it is to continue at all, must be harnessed to help us move into the doughnut.

* * *

What does all this mean?  Why is it important?

For me, the doughnut and the work of Johan Rockström and Kate Raworth and countless others, shows us what sustainability might actually look like. I haven’t studied all these goals in depth so I can’t say with certainty that every detail of every goal must be met.  In fact, some of them are in tension with each other.  And it is true that meeting them will require significant changes to the way we live and work, produce and consume.  But these goals and boundaries paint a picture and set out a course of action that gives shape and direction to achieving sustainability.  I think that’s helpful and hopeful.

So how are we doing?  Are we meeting these planetary and social goals?  Are we moving towards the doughnut?  I’ll be looking into that in an upcoming post.

* * *

We’ve been talking about sustainability for 30 or 40 years.  Many of these ideas are not new.  Maybe I’m just catching up.  If this post has helped you catch up too, that’s great.  If there are questions on this topic that concern you, or books and articles you’ve read that have inspired you, please leave a comment.  Thanks.

Related Links

A safe operating space for humanity
Paper by Johan Rockström, September, 2009

A safe and just space for humanity
Paper by Kay Raworth, February, 2012

5 transformational policies for a prosperous and sustainable world
TED Talk by Johan Rockström, September 2018

A healthy economy should be designed to thrive, not grow
TED Talk by Kate Raworth, April 2018

 

Posted in Environment | Tagged , , , , , , | Leave a comment

Is Decoupling GDP Growth from Environmental Impact Possible?

Can we have economic growth while reducing our impact on the environment?

Some people believe growth is incompatible with sustainability and that we need to move to a “no growth” or even a “de-growth” economy.

Others think we can still have growth if — big if — our consumption of energy and resources did not increase as the economy grew.  This idea is known as decoupling.

Relative decoupling occurs when resource and energy consumption grows more slowly than the economy; in other words, when we use energy and resources more efficiently.  There’s lots of evidence that we are indeed using fewer resources and less energy to make the things we need and want.  In some areas those efficiency gains have been really impressive.

Absolute decoupling would occur if resource and energy consumption stayed constant or better yet declined while the economy continued to grow.  Here too, there seems to be agreement that absolute decoupling has occurred for some specific resources or pollutants.  For example, we’ve done a good job dramatically reducing the use of chlorofluorocarbons that once threatened the Earth’s ozone layer.

And according to this report, in 2019 greenhouse gas emissions actually declined in the US while the economy grew moderately, largely due to declining use of coal for electricity generation.

These are good steps forward, but the real question is whether absolute decoupling is happening, or even possible, at a national or global level over a sustained period of time.

gray industrial machine during golden hour

Photo by Pixabay on Pexels.com

I’ve been reading quite a bit about this question over the last few months. I’ve written a couple of posts about it too – one post about a book called More From Less, and one about a research paper called Peak Stuff.

In this post I am going to look at another paper about decoupling.

James Ward of the University of South Australia and his co-authors examined decoupling in Australia in a 2016 paper called Is Decoupling GDP Growth from Environmental Impact Possible?  While Peak Stuff looked at empirical data about material as it flows through the economy, this paper takes a more theoretical approach by building a mathematical model of environmental impact and then attempting to determine if absolute decoupling is possible using that model.

Warning: there’s a bit of math coming up.  This won’t hurt a bit.

Ward and his associates modeled environmental impact using something called the IPAT equation which looks like this:

I = PAT

where

I = environmental Impact
P = Population
A = Affluence, usually measured in $ GDP per capita
T = Technology

The IPAT equation has been used since the 1970’s. It represents the relationship between population, affluence, resource consumption and environmental impact.  Increasing population for example will increase environmental impact.

T is probably the most difficult part of this equation.  Apparently, T is usually interpreted to mean the “factor intensity” of a resource or pollutant – the amount of that resource or pollutant required to produce one dollar of GDP.  For example, it might measure joules of energy per dollar of GDP, or metric tons of steel per dollar of GDP.

This leads to another point:  you need an IPAT equation for every resource or pollutant you’re trying to measure.  So in general, for resource “j” the equation would be:

Ij = PATj

Finally, you need to run this equation over time, say each year, over the period you are trying to model.  Using “t” to represent the year, the equation really would be something like:

Ij (t) = P(t) * A(t) * Tj(t)

OK, I don’t want to dive too deeply into the math. Please read the paper if you’re interested.  And if you want to learn more about the IPAT equation you can read a 2001 paper called The IPAT Equation and Its Variants.

Suffice it to say that Ward and his associates make some assumptions, do some calibrations and run the IPAT equation for energy and resource extraction in the Australian economy out to the year 2100.  Their conclusions:

“On the basis of this simple modeling, we conclude that decoupling of GDP growth from resource use, whether relative or absolute, is at best only temporary. Permanent decoupling (absolute or relative) is impossible for essential, non-substitutable resources because the efficiency gains are ultimately governed by physical limits.”

and

“Our model demonstrates that growth in GDP ultimately cannot plausibly be decoupled from growth in material and energy use, demonstrating categorically that GDP growth cannot be sustained indefinitely.”

Essentially their argument boils down to two key points:

  1. In the long run, some resources have no substitutes (e.g. land, fresh water) and therefore efficiency gains will eventually run up against hard physical limits.
  2. For any given resource or pollutant, absolute decoupling requires declines in use or intensity at a rate equal to or greater than GDP growth not just for a year or a decade but forever.

I’m not completely convinced.  I think the authors have overstated their case. They’ve reached some very definite conclusions on the basis of a relatively simple, perhaps simplistic, mathematical model.  My concerns come down to this: the farther out you try to project, the less confidence you can have in the accuracy of your predictions.  Even looking out to 2100, within the lifetime of kids being born today, there’s enough time for some wildly unpredictable events or innovations to occur.  Or for elements of the model to interact in unforeseen ways.  Or for substitutes to be found for supposedly non-substitutable resources.

That said, I think the models do point to a set of plausible outcomes based on current trends and data. The paper should dissuade anyone from assuming that absolute decoupling is going to happen automatically.

As with models predicting global warming and sea level rise out to 2100, we should use them as warning signals that tell us action is needed now if we want to avoid highly undesirable outcomes.

This is also a good time to note that the debate about decoupling is related to but separate from taking action on global climate change.  Without question, one of the things we need to decouple from is CO2 emissions.  And that challenge ought to be our most critical and urgent and overriding concern.

Unless we bring CO2 emissions under control, decoupling will become moot.

UN Sustainable Development Goals

Source: United Nations

The authors make one more important point towards the end of their paper: if we want to build a more sustainable society, we need to adopt a broader set of goals than just GDP growth.  They point to the United Nations Sustainable Development Goals which include eliminating hunger and extreme poverty, providing health care and quality education for everyone, addressing gender inequality, building sustainable cities, action on climate change as well as inclusive and sustainable economic growth.

On that, I completely agree.

References

Chertow, MR (2001) The IPAT Equation and Its Variants. Journal of Industrial Ecology, Vol. 4, No. 4. https://notendur.hi.is/bdavids/UAU_102/Readings/Chertow.pdf

Ward JD, Sutton PC, Werner AD, Costanza R, Mohr SH, Simmons CT (2016) Is Decoupling GDP Growth from Environmental Impact Possible? PLoS ONE 11(10): e0164733. https://doi.org/10.1371/journal.pone.0164733

Posted in Environment | Tagged , , , , , | Leave a comment

20/20 Foresight

20/20 Foresight: Crafting Strategy in An Uncertain World
By Hugh Courtney
Harvard Business Review Press, Boston, 2001

What better way to start 2020 than a book called 20/20 Foresight?

There’s an old Danish proverb that says,

“It is difficult to make predictions, especially about the future.”

Difficult for sure, but we do it all the time anyway.  Whether it’s something as simple as arranging to meet friends after work, or as complex as developing business strategy, we’re making predictions and dealing with uncertainty.

20-20 Foresight - cover

20/20 Foresight: Crafting Strategy in An Uncertain World is about how to define business strategy in the face of uncertain predictions about the future.

Hugh Courtney, Professor of International Business and Strategy at Northeastern University, wrote this book back in 2001, but I think the framework he created is still useful and powerful today.

Levels of Uncertainty

The first thing Courtney does, and probably the most valuable part of the book, is to show us that not all uncertainty is alike.  He identifies four levels of uncertainty.

20-20 Foresight 4 Levels

In situations with Level 1 uncertainty, there is only one possible outcome, or a very narrow range of outcomes.  An example might be predicting population growth to estimate the size of a potential market.  Population growth is well-understood and changes relatively slowly, so projecting, say, ten years into the future, does not involve much uncertainty.

With Level 2 uncertainty there is a small set of discrete, mutually exclusive outcomes.  Take government regulation. The government could decide to step in and regulate political advertising on social media, for example. While the exact regulations may not be known, there is only a finite number of ways this can be done. Policy analysts should be able to identify the most likely types of regulation and maybe even assign probabilities to each one.

Under conditions of Level 3 uncertainty there is a continuous, rather than discrete, range of possible outcomes and the actual outcome could fall anywhere in the range.  A good example would be trying to predict the value of the S&P 500 stock index five years from now.

Finally, Level 4 represents radical uncertainty. Here there is true ambiguity, many “unknown unknowns” and both the range and the nature of possible outcomes is unbounded.

As time passes and more information becomes available, the level of uncertainty decreases.

Knowing the type of uncertainty you’re dealing with helps you set strategy.  Courtney lays out a set of questions that people should ask themselves when defining strategy, and provides some guidance on how to answer those questions depending on the prevailing level of uncertainty.

Shape or Adapt?

Should you try to shape the market or industry or situation you’re in, or adapt to it?

To be a shaper, you’ll need to introduce fundamentally new products, services or business processes.  You might need to redefine industry standards.  You could reshape your industry through mergers, acquisitions, integration or divestment.  Or you might replicate existing business systems in new markets.  As a shaper you will influence your competitiors’ behavior.

Adapters on the other hand may choose to follow a shaper’s lead.  This could be a good hedge against multiple possible outcomes (level 2 or 3 uncertainty).  It requires continuous experimentation and a flexible organization to adapt quickly and successfully.

Apple’s introduction of the iPhone is a clear example of a company, well Steve Jobs really, deciding to be a shaper. Apple completely redefined the mobile phone industry despite the presence of established incumbents.

Now or Later?

Do you need to act now, or can you wait, perhaps until more information become available?

Courtney suggests that “no regret” moves, that is moves that make sense no matter what the outcome, should be done now.

Beyond that, you need to ask yourself are you trying to maximize upside potential or minimize downside risk (i.e. reduce uncertainty)?  You’ll need to make big bets for the former, and explore real, present-day options for the latter.

When looking at real options, Courtney suggests they should provide an asymmetrical payoff.  In other words, a small investment should yield a large reward.  The Black-Scholes model can help you figure this out.  Examples include options that help you learn about new business opportunities, markets or technologies, and options that help you hedge agains undesirable outcomes.

Courtney says that situations of high uncertainty favor exploring real options, while known competitive threats favor making bit bets.

Focus or Diversify?

Should you focus your investments or diversify?

Courtney describes different types of investments that can help reduce risk:

  • Diversification: a group of investments that have uncorrelated outcomes or risk.
  • Hedge: investments that have negatively correlated outcomes.
  • Insurance: provides specific payoffs for worst-case scenarios

If you’re a shaper acting now, Courtney says you should focus.  If you’re an adapter who can afford to wait, you should diversify.

The answer also depends on the type of uncertainty you’re facing.

  • Level 1: No need to diversify.  In fact, diversification would be wasteful.
  • Level 2: Use hedging and/or insurance to reduce risk
  • Level 3: Diversification plus insurance to guard against the worst-case outcomes
  • Level 4: Focus if you’re willing to accept high risk/reward, otherwise diversify and insure.

Tools

Courtney ends the book with some tools for thinking about strategy under radical Level 4 uncertainty. He suggests working backwards from your desired strategy and asking questions like:

  • “What would you have to believe …” or “What assumptions would you have to make …” in order for a given strategy to succeed?
  • Or what facts or developments are needed to reduce the uncertainty to Levels 3, 2 or 1?

All in all, 20/20 Foresight is a powerful way of thinking about and developing strategy in uncertain conditions.

Related Links

A fresh look at strategy under uncertainty – a 2008 interview with Hugh Courtney in McKinsey Quarterly
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/a-fresh-look-at-strategy-under-uncertainty-an-interview

Posted in Books, Management | Tagged , , , , , , , | Leave a comment

2019 Recap: A Meta-Post

photo of fireworks

Photo by Anna-Louise on Pexels.com

New Year’s Eve seems like a fitting occasion for a meta-post; a post about posts.

Looking back over 2019, I wrote 19 posts.  Coincidence?  They break down into these categories:

  • Management & personal development: 4
  • Environment & energy: 4
  • Personal reflections: 3
  • Computers, science & technology: 2
  • Fiction: 2
  • History; 1
  • Politics: 1
  • Law & justice: 1
  • Miscellaneous:  1

My interests are pretty broad, but they’ve certainly shifted towards environment and energy, especially in that last half of the year.  I expect that to continue in 2020.  Being an election year here in the US, I imagine I’ll post more in the politics category too.

19 posts is pretty small output compared to lots of other bloggers, so I’m going to try step it up next year.

As always, thanks very much for reading!

Happy 2020!

Posted in Uncategorized | Tagged , , | Leave a comment

Range

Range: Why Generalists Triumph in a Specialized World
By David Epstein
Riverhead Books, New York, 2019

I didn’t finish Range: Why Generalists Triumph in a Specialized World for the same reason I don’t eat chicken wings: too much effort for too little reward.

Range - book cover

I’ll give an author 100 pages.  If they haven’t captured my interest by then, I stop reading. I rarely invoke my 100 Page Rule, but I did with Range after the first four chapters.

It’s too bad really.  I had high hopes for the book because I figured it was about … me! At least, I see myself as something of a generalist, and I do have a wide range of interests.

Range was written by David Epstein, a journalist who has written for ProPublica and Sports Illustrated.

Epstein’s main idea in Range is this:  to be successful in today’s world it seems like you have to be a specialist, focusing in on a narrow field, and you have to start from a very young age.  Yet in reality, the most successful people in any field, Nobel Prize winners for example, demonstrate breadth of knowledge, diverse experiences, interdisciplinary thinking and delayed specialization.

And those characteristics are becoming increasingly important in today’s world.

Epstein distinguishes between “kind” and “wicked” learning environments.  In kind environments, the rules are well understood, patterns repeat frequently and feedback is fast and accurate.  In wicked environments the rules are not understood or even defined, patterns might not repeat and feedback is often delayed and/or unreliable.

Early specialization and deliberate, intense practice might help someone succeed in kind environments like chess or golf or piano playing, but they are wholly inadequate strategies for coping in wicked ones like a hospital emergency room. Increasingly, we live and work in wicked environments where abstract thinking, the ability to make inferences based on incomplete data and to make connections across different knowledge domains are key.  These are environments where range is critical and generalists succeed.

So what’s so bad about all that?

It’s not that there were no interesting ideas in Range, just not enough to earn my time and attention.  I was especially put off by long digressions into historical details — like the story of some 17th Century orphan girls who became famous musicians — that just didn’t add very much to the overall thrust of the book.

As an aside, a digression of my own I suppose, I see many authors these days trying to imitate Malcolm Gladwell’s narrative style.  Gladwell is a terrific storyteller and he can go off an a tangent and usually make it work, or at least make it entertaining.  Few authors can match Gladwell’s ability and I wish they wouldn’t try. It just gets annoying.

Anyway, the specialist-generalist debate is really a false choice.  Both are needed. Teams cannot succeed without some people who have deep expertise and others who can make connections across diverse areas. In your own work you will probably need to be both too. Early in your career or even in a new job, you typically need to specialize in order to learn and contribute and build credibility.  Later, especially if you move into a leadership or management role, you won’t succeed unless you can generalize and take a broader, long term view.

I think this post by Thomas Oppong on Medium captures it well: The T-Shaped Approach To Building a 21st Century Career. And it’s only a four minute read.

Posted in Books | Tagged , , , , , , , , | Leave a comment

Peak Stuff

I’m going to try something different in this post.  Instead of reviewing a book, I’m going to look at a research paper called “Peak Stuff — did the UK reach a peak in material consumption in about 2001-3?

Sounds pretty obscure, right?  Why would anyone want to read such a thing let alone write about it?

Fair question. I’ll try to explain.

grocery cart with item

Photo by Oleg Magni on Pexels.com

Many people these days believe our way of life is unsustainable, that the Earth cannot support a growing human population with a seemingly insatiable appetite for material goods built on an assumption of unlimited economic growth.

These are valid concerns.  You only have to look at the headlines or perhaps just look out your window to see the impact humanity is having on the environment.

Yet it’s not all bad news.  One positive development is that we are learning to produce more goods using fewer resources and less energy.  This phenomenon is called dematerialization and it’s pretty widespread.  You can learn more about dematerialization in a book called More From Less by Andrew McAfee which I reviewed here.

With enough dematerilization, some people predict (or hope?) that economic growth could become decoupled from resource consumption.  First, resource consumption would grow more slowly than the economy as a whole.  That’s called relative decoupling.  Then, ideally, we would progress to absolute decoupling where the demand for resources and energy actually falls while the economy keeps growing.  Decoupling would help relieve the pressure humans are placing on the environment.

Peak Stuff is a paper that looks at decoupling in the UK.

Peak Stuff was written back in 2011 by Chris Goodall, a British businessman, writer and former Green Party candidate who runs a blog called Carbon Commentary, associated with The Guardian Environment Network.

Goodall’s thesis is that the United Kingdom may have achieved absolute decoupling around 2001-3.

I’m going to walk through his argument because the method he uses to figure this out is just as interesting as his conclusion, and it can be applied to other countries too.

How would you calculate the amount of resources used by an entire economy in a year? (This sounds like one of those trick job interview questions you sometimes get asked at tech companies.)

Well it turns out you can weigh them.

National statistics bureaus in many countries, including the US and the UK, track the production, import, export, consumption and disposal of various materials by weight.

Goodall uses a simple flow model of the British economy illustrated in the diagram below to calculate the trends in resource consumption.

The model tracks material as it flows through the economy starting with inputs of natural resources.  These fall into three categories:

  • Biomass:  Crops, natural fibers like cotton and hemp, meat, fish, timber
  • Minerals:  Ores, clay, sand, stone, gravel
  • Fossil fuels:  Coal, oil, natural gas

These resources are transformed into products we consume, like food, paper and cars, and eventually end up as waste.

Using government statistics, it is possible to measure how much the UK is producing and consuming at each step.  Goodall tracks three key measurements.

  • Total Material Extraction (TME): The total weight of all the biomass, minerals and fossil fuels extracted in the UK.  Literally the weight of the stuff taken out of the ground.
  • Direct Material Consumption (DMC):  The amount of those materials actually consumed in the UK.  So this is TME plus imports minus exports.
  • Total Material Requirement (TMR):  Finished goods imported into the UK contain biomass, minerals and fossil fuels consumed in other countries where they were made.  TMR attempts to account for these additional resources by adding them to DMC.

Goodall shows that TMR in 2007 was 96% of its value in 2001 — a small but measurable decline.  Even though the British economy was growing during those years, the total amount of raw material consumed in Britain during those years fell slightly.  By 2009, TMR was only 81% of its 2001 level.  This is a sharp drop but likely reflects the economic slowdown of the Great Recession.

I wanted to find out what had happened since 2009 so I went to the UK Office for National Statistics web site and found data for Direct Material Consumption.  Here’s the chart showing data from 2000 to 2017.  You can see a significant drop in 2008-2009 during the recession followed by a very slight decline in the following years when the UK economy has been growing strongly.

I couldn’t find the raw data for Total Material Requirement, or it might have been called something different on the government web site.

Goodall goes on to look at trends in some of the key goods from the middle column of his model, and at trends in waste disposal.  In most cases there is a noticeable downward trend even before the Great Recession.  Goodall concludes, tentatively, that the UK economy may have achieved absolute decoupling around 2001-2003.

There are a lot of questions you could ask about this paper:

  • How accurate are the statistics compiled in the UK generally?
  • In particular, is Total Material Requirement, which include estimates of the foreign resources contained in imported finished goods, accurate?
  • Have the downward trends in Total Material Requirement continued after the Great Recession when UK economic growth resumed?
  • What is missing from Goodall’s flow model?  He himself has a section on fresh water, but, for example, he doesn’t talk about plastic and how it gets produced, consumed and disposed of.
  • Are developed countries like the UK just exporting their resource consumption to developing economies like India and China?

Nonetheless, the fact that Goodall could find even tentative evidence for absolute decoupling is really startling.  I’d love to see Goodall update his paper with the latest available data.  But even if absolute decoupling has not been achieved in the UK, there’s pretty strong evidence of relative decoupling at least.  That too is a step in the right direction.

This all sounds too good to be true.  Can we really have both sustainability and economic growth?  There’s a theory that as an economy develops it tends become more efficient in its use of resources.  If this theory is correct it means that that developing economies should also move towards reduced resource consumption as they advance.

As Goodall concludes:

“…. it is a hypothesis that suggests that economic growth is not necessarily incompatible with sustainability. In fact GDP growth, because it brings technological progress which is correlated with more efficient use of resources, may help reduce environmental damage.” [p. 23]

Posted in Energy, Environment | Tagged , , , , , | 1 Comment

High Output Management

High Output Management is one of the most disappointing books I’ve ever read, and in some places it flat out pissed me off.  

High Output Management cover

High Output Management
By Andrew S. Grove
Vintage Books, New York, 1983 (2015 ed. reviewed)

I started with high expectation.  After all, it was written by the late Andrew S. Grove, former Chairman and CEO of Intel Corp.  Grove is credited with transforming the company from a manufacturer of memory chips into the world’s leading producer of CPUs. During his time as CEO, Intel’s revenue grew by 4,500%.  He must have been an amazing and inspirational leader.  

You’d never know it from reading his book.

Overview

High Output Management is Andy Grove’s handbook for managers.  I’ll summarize the key points and then give some unsolicited feedback at the end.  

The book is organized around three main ideas.

  1. The focus is always on output. Everyone and every team produces output. A manager’s job is to plan, organize and guide their teams to produce the right quantity and quality of output in the right period of time. Because of this output focus, Grove uses manufacturing as the framework for discussing many management topics.

  2. In organizations, output is produced primarily by teams rather than individuals. The output of a manager is therefore the combined output of their team. So managers should spend as much of their time as possible on activities that provide leverage, that is, activities which increase the output of their teams.

  3. Teams function best when they are getting peak performance from every individual. It’s the managers job to get that peak performance through coaching, formal training, feedback and performance appraisal.

The book is divided into sections dealing with each of these ideas.

The Breakfast Factory

Grove uses the simple example of a breakfast factory that turns out soft boiled eggs, buttered toast and coffee to show us how to manage output,.  He talks about breaking work down into discrete steps, sequencing and overlapping the steps properly, understanding where bottlenecks can arise, and ensuring there’s enough inventory to meet customer demand.

This section also deals with the importance of metrics, which Grove calls indicators, Grove discusses leading indicators which can tell you what’s likely to happen inside the “black box” of your operation, and trend indicators which measure performance over time.

Quality assurance is one of the key aspects of managing any production process, and here Grove recommends monitoring quality at three stages; input material inspection, in-process inspection, and final inspection.  Inspections can either be done by gating where all material is held up until it either passes or fails inspection, or by sampling where material moves continuously through the process and random samples are taken to measure quality.  The goal is to identify flaws as early in the precess as possible.

Even if you don’t work in a manufacturing setting, it’s pretty easy to apply this to your own work. In my case, I work with a team that produces mathematical models using machine learning. We need to be concerned about the quality of our input data, whether the modeling process is running correctly, and whether the final models perform satisfactorily.

orange ceramic devilled egg stand

Photo by Krisztina Papp on Pexels.com

Managing Teams

Next Grove covers techniques for managing teams.  He stresses that a manager’s most valuable resource is their own time.  They should spend as much of their time as possible on leveraged activities; activities that either impact a group of people, or impact a single individual over a long period of time.

Grove also tackles decision-making in this section, He lays out a model for decision-making that has three main elements:

  1. Decisions should be made at the lowest competent level in the organization — a principle known as subsidiarity.
  2. Everyone should know their role in the decision-making process. Who formally makes the decision, who contributes information, who gets informed afterwards? There are various ways to organize this and they go by cryptic acronyms like RAPID, OARP and RACI,.
  3. Finally, once debate is over and a decision is made, everyone must commit to successful execution. This is known these days as “disagree and commit.”

The section concludes with a chapter on planning.  How do you identify and organize the actions and the resources needed to move from the present state to a desired future state? This is where Grove discusses objectives and key results (OKRs), but although Grove has been called the “father of OKRs” they’re really just a small part of the book. Objectives identify where you’re trying to go or what you’re trying to achieve. Key results are the milestones you use to measure progress. 

Peak Performance

The final section of the book is about what managers should do to obtain peak performance from the people on their team. Performance is a combination of motivation and capability, Grove says.

To understand what motivates people, Grove uses Maslow’s hierarchy of needs. But in the end he recommends using competition to motivate your team. Getting people to compete against other teams in the same organization, or against real industry competitors can help motivate exceptional effort and performance, he says.

“Turning the workplace into a playing field can turn our subordinates into “athletes” dedicated to performing at the limit of their capabilities — the key to making our team consistent winners.” [p. 171]

On the subject of capabilities, Grove walks us through the details of training, giving feedback and performance reviews.

Unsolicited Feedback

This all seems pretty reasonable, right?  So what’s so disappointing and annoying?

To be fair, Andy Grove wrote High Output Management back in 1983 and our views about management and organizations have evolved considerably since then.  And maybe his ideas have spread so widely, especially in the tech sector where I work, that they no longer seem fresh.  They’re just part of the atmosphere we breathe in many organizations.  

The book does contain a lot of useful nitty-gritty details, tips and tricks for stuff like managing your work, your team, and your calendar, for running meetings, for sizing your team, for handling performance reviews, etc. And the writing is clear and concise enough.

But this is Andy Grove!  I expected something … more.  Deeper, more insightful, more sophisticated.  More.

Instead he serves up a breakfast factory.  And a sports team analogy.  Really?

What disappointed me most was the total absence of any discussion of managing research and development work which is inherently more creative, less structured and less predictable than manufacturing.  Yes, some of the principles of manufacturing can be applied to R&D activities, but they have their own unique characteristics and challenges.  Intel does a huge amount of R&D so why Grove ignored this part of his company and his own experience is beyond me.  

But I think it’s his approach to dealing with people that kills this book for me.  Too much of the book seems to be written under the assumption that team members are fungible assets and not human beings with individual needs and specialized skills.  I found the chapter on motivation to be especially weak,  At one point he says,

“Fear won’t work as well with computer architects as with galley slaves; hence, new approaches to motivation are needed.  [p. 159]

Yeah, it was so much easier back in Roman times.  Later, after introducing Maslow’s hierarchy, he says,

“Simply put, if we are to create and maintain a high degree of motivations, we must keep some needs unsatisfied at all times.”  [p.159]  

Let’s keep everyone just a little bit hungry.  How enlightened! 

I’ve never managed a large team, let alone an organization of hundreds or thousands of people, but I’m sure we can do better than that. 

What about creating an environment in which people can grow, flourish and fulfill their needs in a way that also helps the organization achieve its goals? 

You won’t find anything like that in High Output Management.

If you’ve never read anything about management or leadership, there are better books. And if you’re looking to dive deeper into specific management topics, there are better books.  Here are some that I’ve read recently:  

  • Radical Candor by Kim Scott (review) is aimed at helping you be a better boss.  It provides simple, nuts-and-bolts advice for giving guidance, building teams and getting results.  
  • Principles by Ray Dalio (review) is mostly about personal development. It’s a hierarchically organized set of a couple of hundred heuristics refined over Dalio’s forty year career that are designed to help you get the most out of your life and work.
  • Crucial Conversations by Kerry Patterson, Joseph Grenny, Ron McMillan and Al Switzler (review) is about how to hold high-stakes, emotionally-loaded conversations where opinions differ. Performance reviews, giving tough feedback, a frank talk with your mother — those sorts of conversations.  
  • Dare to Lead by Brené Brown (review).  Leadership requires courage, and courage requires vulnerability.  Dare to Lead helps you develop the courage to lead in the full knowledge and acceptance of our own vulnerability.

They overlap quite a bit, so you don’t need to read them all, but they each have something unique to offer. 

Related Links

Ted Talk:  Why the secret to success is setting the right goals by John Doerr who worked with Andy Grove at Intel and later convinced Google’s founders to adopt OKRs.

Posted in Books, Management | Tagged , , , , , , , | Leave a comment