Some of fearless ones are fanning out into the woods. Others are huddled in smartly constructed camouflaged blinds. These self styled eco-warriors brave the cold and the discomforts of inclement weather. They keep a watchful eye over the stale remains of Dunkin Donuts, bagels and bacon grease they cleverly scattered outside their deadly bivouac. These bold ones eagerly finger the barrels of their high powered rifles palming the smooth wooden stocks with warm naked hands. They itch to squeeze the trigger but discipline and fortitude inform the vigilance of these sentinels of sustainability. They philosophically muse about restorative balance and the paradox of killing in order to survive. Another day has broken over the New Jersey Highlands. The hunt for bear is on. Let the mammalian cleansing begin.
Risk: bears, environment
Locked and loaded their going for bear in New Jersey’s Highland Region. The Highlands is one of the states last stand of expansive underdeveloped woodlands and critical watershed that provides drinking water to over two million state residents. The Highlands is also the preferred habitat and home to most of the states black bears. But starting Monday, the Highlands will become a deadly killing ground for the lovable species as the state appeals court threw out a suit brought by two animal rights groups to halt a six day bear hunt.
Environmental Commissioner Bob Martin signed off on this year’s hunt, saying it’s needed to help control a growing black bear population. The agency estimates the state’s black bear population at 3,400, up from 500 bears in 1992.
“The Comprehensive Black Bear Management Policy is full of scientific flaws and outright fabrications,” APL contends. “In their zeal to hold a recreational trophy hunt, the council has slapped together a scientifically sloppy, self-contradictory document that pretends the hunt is necessary when in fact, the science does not support a hunt.”
The suit filed by the Animal Protection League (APL) contends that the scientific assessment of the bear population and its environmental impact is flawed and its findings are biased. The suit also alleges that proponents of the hunt, The New Jersey Outdoor Alliance made illegal contributions to Gov. Chris Christie’s election campaign. The New Jersey Outdoor Alliance disputes the claims made by the APL and issued a response that appears on the Ammoland website.
During public hearings comments ran 3 to 1 against the bear hunt. Public opposition to the hunt has been vocal and considerable. If the voice of the public counts for nothing why go through the charade of soliciting public comments? A recent public hearing on the expansion of the El Paso Corp gas pipeline through the Highland region had a similar tenor to it. Of the twenty of so citizens and groups who spoke at the meeting not one supported the expansion of the pipeline. Local residents and groups affected by the El Paso expansion initiative are concerned that their opposition to the project is falling on deaf ears of regulators and government officials responsible for green lighting the project. If the project is a fait accompli regardless of public criticism why solicit public comment and go through the motions of participatory democracy?
The Highlands Commission was formed to determine how the resources of the region are managed and how the area will be developed. The Highland region is a critical watershed area and a vital open recreational space for an overwhelmingly urban state. The Highlands Commission is the stewardship body chartered to reconcile the competing interests of a complex community of stakeholders. The immediate needs of wildlife preservation, smart development and long term sustainability of an environmentally stressed ecosystem will require effective engagement of all Highland Community stakeholders. Governor Christie’s slate of nominees to to the Highland Council is being criticized as too pro development. This may auger well for stakeholders like El Paso Corp but it may have deadly consequences for endangered bears and other species struggling to hang on in an increasingly hostile environment.
You Tube Video: Junglebook, Bare Necessities
Risk: environment, bears, sustainability, water, open spaces, democracy
As we start the second decade of the new millennium, innovation is understood as a critical driver to overcome the economic malaise plaguing the global economy. Economic stasis and political factionalism has made it increasingly evident that faltering economic and social institutions cry out for sweeping reform. These reforms can only be achieved with innovative approaches in policy and practice. Innovation is realized by giving flight to uninhibited thought and the clear application of ideas with decisive action. Though most agree that we badly need reform, we remain at painful odds as to what those reforms should be and how to implement them. The destructive legislative debates on health care and the ugly political theater of town meetings that occurred in the United States over the summer accomplished little in regards to meaningful reform. The exercises only served to drive a deepening wedge into the ability of a democratic culture to form a transformative consensus.
Our society is a complex ecosystem comprised of many competing interests. The classic definition of politics, “the means to decide how limited resources are allocated to disparate interests” is clearly a truism that must be applied if we are to realize the reform that we desperately need. In a post scarcity society that definition may seem a bit crude or antiquated. America’s history is marked by a culture of innovation and the incubation of industry. Innovation and its commercial expression in entrepreneurialism is a national asset that tempers the hard edges of stringent allocation or resources and has been the source of our great social wealth. Democracies continually require citizens to arbitrate how competing interests are reconciled and converge. As a self professed democracy the United States must break down the barriers that inhibit innovation by confronting the challenges posed by convergence.
Convergence has been the watch word in the tech industry for the past few years. Convergence aggregates, joins and aligns discreet trends, competencies, technologies and missions to spawn innovation and progress. Masters of business innovation understand that a precondition of convergence is the ability to collaborate. Collaboration requires extended conversations and dialog to understand how competing interests can be reconciled and brought together so that innovation and progress can be achieved. Marketeers invent neologisms like coopetition to brand the idea and lend heft to its thrust. We believe that innovation borne from convergence is the path to rebuild our economy, heal cultural wounds and take a step toward political maturity the United States needs to sustain the great experiment of our democratic republic.
With that in mind we offer a list that outlines the inhibitors to innovation. It is hoped that our nations leaders and people can begin an earnest conversation to address these barriers to growth. Maybe I’m wrong with offering this modest list but I remain willing to discuss it, hopeful that people of good will with a different viewpoint will be open to correct my thinking and contribute to my enlightenment.
1. War: War is inherently wasteful. The current wars in Iraq and Afghanistan are grievous examples of waste and national distraction that hampers the United States economic recovery. At an Ecumenical Memorial Service held at Yankee Stadium following the 9/11 terror attacks a Buddhist Monk stated that he believed “it was wiser to drop refrigerators on Afghanistan then bombs”. Almost a decade later and two wars on I can’t help but to think what a meager $100 billion investment in Afghanistan would have returned to the United States tax payers. More importantly it would have shown the world that above all else America values the sanctity and preservation of life. It would have also minimized the rising toll of casualties of both citizens and soldiers. We developed some great bunker buster bombs but we can’t figure out a way to stop a suicide bomber with exploding underpants. We succeeded in stirring up a hornets nest of angry insurgents and failed to build innovative pathways to peace with steadfast bridges to secure allies and pacify combatants.
2. Politics: To be sure politics is omnipresent but the politicization of faith institutions and government functions is a great separator of people. When politics infects faith institutions their ability to breach the social divide and join people together is seriously compromised or downright destructive. The Catholic Church’s practice of denying the Eucharist to parishioners based on political biases of the communicant places politics at the center of the Lords alter. The recent occurrences of radical Islamists burning down Christian Churches in Malaysia is tragically ironic. The violence, a response to the Christians appropriation of the word Allah as a name for God; is a violent rejection of language convergence of two great faith traditions. It would seem that unity is a threat that God cannot abide and is a growing threat that must be abolished. In the secular world government agencies were instructed to withhold scientific climate change research of the National Science Foundation because it did not conform with the politics of the party in power. The extent of the politicization of the judicial branch of government under the Bush Administration was a seditious move worthy of dictatorships. Innovative application of constitutional law in defense of civil liberties is one of the greatest challenges the war on terror poses to this country. The creation of kangaroo courts to support the politics of the ruling party would undermine our system of justice. It would transform our judiciary into a repressive apparatus of the state, our laws into stale dogmas ill suited to meet the legal challenges of our time and a justice system that is indistinguishable from the justice offered by our opponents.
3. Ideology: Only good ideas need apply. Deng Xiaoping said it best “does it matter if its a communist or capitalist mouse trap. The question is, does it catch mice?” Seeing this as a threat, Mao Zedong unleashed the cultural revolution and routed the capitalist roaders as a threat to the Great Proletarian Revolution. After the death of Mao, Deng would be rehabilitated and play a key role in China’s adoption of a market economy and its current ascendancy as a world economic power. In my mind there is a striking resemblance to the debate about heath care. Socialized medicine is bad. Do you want to turn into France? Canadian health care is too expensive. UK heath care system is overloaded and can’t cope with demand. These problems would be solved however after the death panels had a chance to meet and decide who shall live and who must walk the plank.
4. Entrenched Commercial Interests: Though we are ardent believers in capitalism as an engine of innovation the dictatorship of ROI, entrenched concentrations of capital and an unwillingness or inability to adopt longer term investment horizons hamper innovation. The failure of the United States automobile industry to develop fuel efficient vehicles is a good example of market intransigence. The development of junk bonds by Michael Milken and Drexel Burnham Lambert dismantled the manufacturing base of the US economy accelerated the countries decline as a net exporter of products creating the foundation of a debtor nation. During the presidency of Jimmy Carter solar panels were installed on the roof of the White House. The succeeding administration had them removed. Imagine where the alternative energy industry would be today had it developed this leading edge idea and capitalized on this first mover advantage.
5. Unbridled free markets: The economic carnage of the banking meltdown is a startling example of the excesses the pursuit of profit will create. The boom in commercial and residential real estate construction created massive stocks of unused inventories that misdirected and wasted enormous resource. The energy and capital expended on these wasteful endeavors misdirected funds and created huge social hazards that requires massive amounts of capital to mitigate. Also worth mention is the development of video gaming. Lots of energy and creativity is being expended on the best techno music to use while your Mafia Avatar bashes open the head of your opponent with a baseball bat. We are not suggesting censorship or a prohibition of video games nor centralized economic planning. Its a compensation and social value issue. Perhaps a communicants denial of participation at the Lord’s Table lead them to leave the church and miss the message about social values.
6. Technology: It may seem odd to include technology as an inhibitor to innovation but technology for technology sake may inhibit the development of innovative applications solutions that are not technological in nature. The technorati of the world is transforming technology into a religion. Deprived of its human dimension it can become a dogma that grows in an antagonistic relationship with its human masters. The United States continues to trumpet its technological prowess as the deciding factors in its war in Afghanistan. But that paradigm was explored during the war in Viet Nam where pungi sticks ultimately trumped napalm bombs. The power of an idea and how it connects and motivates people is force that is mightier then the sword.
7. Fundamentalism: The Pharisees once asked Jesus, “is it lawful to heal on the sabbath?” Jesus answered that it was always the right time to heal those who are sick. The world recoils in horror at the capacity for destruction fundamentalism regularly visits upon the world. The denial of equal civil rights to LGBT people creates a bifurcated system of citizenship. It is an ugly stain on our democratic heritage. The gravest peril to democracy is the abridgment and denial of civil rights to any group of citizens. Democracy necessitates that all republicans enjoy equal access and rights in order for it to function. The denial of that right based on a fundamentalist reading of religious scriptures makes it particularly abhorrent because civil rights of citizens in a secular democracy is not an issue that is decided by theologians or the adherents to a particular theology.
Tolerance and consensus are both antithetical to the precepts of fundamentalism. Fundamentalism is not the sole province of religion. It has its secular and ideological adherents as well. Fundamentalism is a pillar of dictatorship; either of a political or theocratic nature both are enemies of secular democracy. Secular democracies require tolerance to respect the diverse ideas and competing viewpoints require in the democratic process. Secular democracies require the trust to converse and hash out the best ideas that serve the greatest good. This is only possible if consensus can be achieved. It is how “out of many becomes one”. It is the true genius of America. It is a worthy innovation of governance that every freedom loving citizen should jealously guard and consciously pursue.
8. Public Education: The public education system that the United States built is the true arsenal of democracy and the nations source of wealth and its many contributions it has made to the world. Without the vast network of learning institutions built and supported by successive generations of Americans the worlds great experiment in representative democracy would have long ago perished. The public schools sole charter is to create an enlightened citizenship with the skills to discuss, discern and decide in a civil and constructive manner the ever evolving dialectic of a democratic consensus placed at the service of the republic. It is one of the true geniuses of America and remains her enduring strength.
Today public schools are under attack by forces whose agendas are the pursuit of parochial goals that first and foremost seek their enrichment and interests at the expense of the greatest good of the republic. The charter school movement is a trend that threatens the public school system by privatizing some of the systems assets and draining away much needed resource and financial support. It forces public schools to dispense with curriculum offerings like music and arts, sports programs and civic excursions that will convey an understanding of how institutions interact and support the greater social good. This aspect of the educational experience is supplanted by an exacting examination regime that destroys the love of learning. Secular learning is also being threatened through the introduction of theological precepts like creationism into the science curriculum of public schools. Religion and faith are important precepts to offer in a public educational curriculum; however theology that masquerades as science is an ideological stricture that has no place in public schools. These trends are pose great challenges to the public schools mission to form enlightened citizens free to think and free to act in the sole service of liberty and participatory democracy. Innovation and progress is in danger of becoming a secular sin a disease of the soul that needs to be eradicated from the public schools as its threatens to infect the greater body politic.
You Tube Music Video: Louis Armstrong, I Get Ideas
Risk: innovation, convergence, progress, tolerance
What a difference a year makes. A year ago the banks came crawling to Washington begging for a massive capital infusion to avoid an Armageddon of the global financial system. They sent out an urgent SOS for a $750 billion life preserver of tax payers money to keep the banking system liquid. Our country’s chief bursar Hank Paulson, designed a craft that would help the banks remain afloat. Into the market maelstrom Mr. Paulson launched the USS TARP as the vehicle to save our distressed ship of state. The TARP would prove itself to be our arc of national economic salvation. The success of the TARP has allowed the banks to generate profits in one of the most prolific turnarounds since Rocky Balboa’s heartbreaking split decision loss to Apollo Creed. Some of the banks have repaid the TARP loans to the Fed. Now as Christmas approaches and this incredible year closes bankers have visions of sugar plum fairies dancing in their heads as they dream about how they will spend this years bonus payments based on record breaking profitability. President Obama wants the banks to show some love and return the favor by sharing more of their balance sheets by lending money to small and mid-size enterprises (SME).
Yesterday President Obama held a banking summit in Washington DC. Mr. Obama wanted to use the occasion to shame the “fat cat bankers” to expand their lending activities to SMEs. A few of the bigger cats were no shows. They got fogged in at Kennedy Airport. They called in to attend the summit by phone. Clearly shame was not the correct motivational devise to encourage the bankers to begin lending to SMEs. Perhaps the President should have appealed to the bankers sense of patriotism; because now is the time that all good bankers must come to the aid of their country. Failing that, perhaps Mr. Obama should make a business case that SME lending is good for profits. A vibrant SME sector is a powerful driver for wealth creation and economic recovery. A beneficial and perhaps unintended consequence of this endeavor is the economic security and political stability of the nation. These are the worthy concerns of all true patriots and form a common ground where bankers and government can engage the issues that undermine our national security.
The President had a full agenda to cover with the bank executives. Executive compensation, residential mortgage defaults, TARP repayment plans, bank capitalization and small business lending were some of the key topics. Mr. Obama was intent on chastising the reprobate bankers about their penny pinching credit policies toward small businesses. Mr. Obama conveyed to bankers that the country was still confronted with major economic problems. Now that the banks capital base has been stabilized with Treasury supplied funding they must get some skin into the game and belly up to the bar by making more loans to SMEs.
According to the FDIC, lending by U.S. banks fell by 2.8 percent in the third quarter. This is the largest drop since 1984 and the fifth consecutive quarter in which banks have reduced lending. The decline in lending is a serious barrier to economic recovery. Banks reduced the amount of money extended to their customers by $210.4 billion between July and September, cutting back in almost every category, from mortgage lending to funding for corporations. The TARP was intended to spur new lending and the FDIC observed that the largest recipients of aid were responsible for a disproportionate share of the decline in lending. FDIC Chairman Sheila C. Bair stated, “We need to see banks making more loans to their business customers.”
The withdrawal of $210 billion in credit from the market is a major impediment for economic growth. The trend to delever credit exposures is a consequence of the credit bubble and is a sign of prudent management of credit risk. But the reduction of lending activity impedes economic activity and poses barriers to SME capital formation. If the third quarter reduction in credit withdrawal were annualized the amount of capital removed from the credit markets is about 7% of GDP. This coupled with the declining business revenues due to recession creates a huge headwind for SMEs. It is believed that 14% of SMEs are in distress and without expanded access to credit, defaults and bankruptcies will continue to rise. Massive business failures by SMEs shrinks market opportunities for banks and threatens their financial health and long term sustainability.
The number one reason why financial institutions turn down a SME for business loans is due to risk assessment. A bank will look at a number of factors to determine how likely a business will or will not be able to return the money it has borrowed.
SME business managers must conduct a thorough risk assessment if it wishes to attract loan capital from banks. Uncovering the risks and opportunities associated with products and markets, business functions, macroeconomic risks and understanding the critical success factors and measurements that create competitive advantage are cornerstones of effective risk management. Bankers need assurances that managers understand the market dynamics and risk factors present in their business and how they will be managed to repay credit providers. Bankers need confidence that managers have identified the key initiatives that maintain profitability. Bankers will gladly extend credit to SMEs that can validate that credit capital is being deployed effectively by astute managers. Bankers will approve loans when they are confident that SME managers are making prudent capital allocation decisions that are based on a diligent risk/reward assessment.
Sum2 offers products that combine qualitative risk assessment applications with Z-Score quantitative metrics to assess the risk profile and financial health of SMEs. The Profit|Optimizer calibrates qualitative and quantitative risk scoring tools; placing a powerful business management tool into the hands of SME managers. SME managers can demonstrate to bankers that their requests for credit capital is based on a thorough risk assessment and opportunity discovery exercise and will be effective stewards of loan capital.
On a macro level SME managers must vastly improve their risk management and corporate governance cultures to attract the credit capital of banks. Using programs like the Profit|Optimizer, SME’s can position themselves to participate in credit markets with the full faith of friendly bankers. SME lending is a critical pillar to a sustained economic recovery and stability of our banking system. Now is the time for all bankers to come to the aid of their country by opening up credit channels to SMEs to restore economic growth and the wealth of our nation.
You Tube Music Video: Bruce Springsteen, Seeger Sessions, Pay Me My Money Down
Risk: banking, credit, SME
The practice of selling food additives laced with salmonella bacteria makes it difficult to win back the trust of customers that had been so grievously violated.
PCA’s actions to knowingly ship contaminated products that have resulted in nine deaths and have sickened 637 people in 44 states. PCA’s salmonella laced peanut paste has contaminated 2,226 processed food products. A full list of recalled products can be found on the FDA website. These potentially criminal acts by PCA’s management has demolished the PCA corporate brand making it impossible to continue as a going concern.
The Chapter 7 bankruptcy filing will liquidate the company. This strategy will protect the PCA shareholders in the privately held firm from the significant legal liability that this event has created. It does not however protect PCA’s company management and accomplices that knowingly shipped contaminated products from potential criminal prosecution. Criminal persecution of those involved should be pursued and if anyone is found guilty punishment must be severe.PCA released its contaminated product into a large and extensive supply chain. Many leading brand food processing manufacturers that use PCA’s peanut paste as an ingredient in their packaged goods products have suffered severe reputational damage to their product and company brands. Though PCA’s corporate liability may be mitigated with the bankruptcy filing, aggrieved consumers will continue to have have legal recource by filing suits against the major consumer product companies that are still in business. This could make for a record breaking class action product liability suit.
Unfortunately this tragic occurrence could have been prevented. PCA’s actions demonstrate a disturbing ambivalence toward effective sound corporate governance practices. Companies that willingly sacrifice risk management and ethical business practices for the sake of short term profits consistently undermine corporate sustainability. All may not result in a dramatic corporate implosion like PCA. But ultimately the song of corporate liquidations remains the same. Unemployment for workers, aggrieved consumers, community desertion, tortured consciences and and in some instances criminal prosecution.
You Tube Video: Fairfield Four, Lonesome Valley
Risk: corporate goverance, ethics, risk management, legal
Amidst all the layoffs, business closures and shutdowns the hard edge of capitalism is a painful experience far too many people are forced to endure. During times of plenty, the relationship of labor and capital is harmonious and symbiotic. Both parties recognize the value that each bring to the corporate community and each parties enrichment and well being is served by the degree of harmony present in that relationship. During down business cycles management may resort to layoffs to preserve the enterprise. Unfortunately this often causes resentments and hard feelings on the part of workers who have lost the means of earning a living. When workers return to their jobs this can cause problems and hurt an affirmative corporate culture that is critical to maintaining a sustainable business enterprise.
In the face of the meltdown in the automobile manufacturing sector, Honda Motors is one of a very select few that is not resorting to layoffs. Honda Motors known for product quality and leadership in product innovation and business processes is also highly respected for its treatment of employees. Honda Motors places great emphasis on the creation and maintenance of an affirmative corporate culture to sustain profitability and market leadership.
Honda Motors decision to restructure the work force, and give workers a period of paid leave until business conditions improve speaks volumes about how management respects and values the contribution labor makes to the long term sustainability of the enterprise. Any remuneration workers receive during the leave will be paid back to the company with unpaid overtime when the workers return to the production line.
The value of good will on the Honda Motor balance sheet has increased exponentially. The sustainability of an affirmative corporate culture will drive profitability, product innovation and market leadership for the many years to come.
We applaud Honda Motors for this innovative and enlightened response to the current market challenges.
You Tube Video: June Carter Cash & Johnny Cash, One Piece At A Time
Risk: sustainability, labor relations, corporate culture