Anybody who has used Google's services has known that they run them in beta for the longest time -- Gmail has been out there for 5 years with more than 100 million users, and it's still in beta. It has become very common in the IT industry to add features incrementally to an existing service, be it in alpha, beta or gamma versions.
It's important to separate the business model from the industry in this case, to truly appreciate the value offered by this approach.
Threadless, an up and coming start-up thrives on a business model that engages the consumer at a deeper level through in-market innovation. People get to grade designs for T-Shirts. The design's grade determines whether/how it gets printed and sold. Instead of planning inventories centrally, based on market research and the judgment of a select few, the company manages its supply chain based on actual demand which is driven by real value, not perceived value.
The concept is not irrelevant beyond the internet. In fact, it was not even pioneered by internet based businesses. World Water Corporation attempted to provide water and power to developing countries, using advanced technology, by getting several central governments signed up for multi-million dollar projects. The corrupt governments impeded progress and the initiative was not successful. On the other hand, KickStart, an international social enterprise based in East Africa, managed to provide water and power in rural areas, through its Micro-Irrigation Pumps, which were co-invented with its potential consumers, to ensure value addition, acceptance and affordability. KickStart was able to accomplish what WWC set out for, primarily, by collaborating with its customers early on in the process, and on an ongoing basis.
KickStart, Threadless and Google embody the transition of business operations from Command to Democracy. Instead of running a business in a command and control fashion, they engage with customers & other stakeholders in a deeply democratic fashion. This in turn helps them run a profitable operation which at the same time is focussed on the outcome -- the value customers gain through their products and services. That's what we call Win-Win.
Sunday, June 28, 2009
Sunday, June 21, 2009
Capitalism 2.0
Folks are looking for green shoots of growth and yearning for an upbeat report on the economy. Many wonder which industry would help kick start the economy. Some say it would be green tech, some say it would be high tech, and the speculation goes on... Here's an economist who says that growth will not be spurred by an industry but by an institution -- a different kind of institution.
Umair Haque observes that capitalism as it's been practiced so far has led us to this mess, and claims that it is not sustainable any longer. He suggests that a collaborative capitalism should and will replace the status quo.
The beauty of Capitalism 2.0 is that it is not anything like socialism, as some might suspect. Interestingly, it shares some traits with Web 2.0 [the long tail, wisdom of the crowds], and underscores the importance of running a business that focuses not only on income, but more so on the outcome -- the value gained by its consumers.
If you have the time, I'd suggest you watch this video from Haque's session on the same topic, with several examples [Threadless, Etsy, Nike, Walmart, to name a few] and exhibits [Global GDP Growth & Interaction explosion patterns].
Umair Haque observes that capitalism as it's been practiced so far has led us to this mess, and claims that it is not sustainable any longer. He suggests that a collaborative capitalism should and will replace the status quo.
The beauty of Capitalism 2.0 is that it is not anything like socialism, as some might suspect. Interestingly, it shares some traits with Web 2.0 [the long tail, wisdom of the crowds], and underscores the importance of running a business that focuses not only on income, but more so on the outcome -- the value gained by its consumers.
If you have the time, I'd suggest you watch this video from Haque's session on the same topic, with several examples [Threadless, Etsy, Nike, Walmart, to name a few] and exhibits [Global GDP Growth & Interaction explosion patterns].
Umair Haque @ Daytona Sessions vol. 2 - Constructive Capitalism from Daytona Sessions on Vimeo.
Sunday, June 7, 2009
Energy Policy 101
Congress has started work on The American Clean Energy and Security Act, which, if enacted, will introduce a cap-and-trade system for curbing green house gas emissions. This officially fuels a much awaited debate on climate policy in the US. In the weeks and months to come, we will hear a lot about cap-and-trade and carbon tax, their effectiveness in fighting climate change, their price and their impact on consumers, workers and investors.
This is the first of a series of posts, through which I hope to communicate what I think you should know about energy policy to make sense of the information that is thrown at you.
1. Why?
If you'd like to challenge the need for regulation in this area, you may read my previous post.
2. What?
Carbon Tax - Carbon tax is a form of pollution tax. It levies a fee on the production, distribution or use of fossil fuels based on how much carbon their combustion emits. The price of commodities that cause higher emissions will increase as a result of the tax, thereby discouraging the use of such commodities and products. The intended benefit is that users of fossil fuels will seek alternative sources, thereby spurring innovations, and the tax revenue can also be used to fund such projects. This option is praised for its simplicity and impartiality.
Cap-and-Trade - The cap is a limit on pollution in terms of emissions. An emitter would have to hold permits/allowances [1 allowance to emit 1 ton of CO2] to emit carbon. If the emitter is able to contain emissions and ends up having an allowance-surplus, they may sell/trade those emissions to another emitter, who needs additional allowances to compensate for the excessive emissions they may have produced. In effect, this option would set a limit on pollution and set a market-driven price for emissions. This approach is lauded for its certainty with respect to pollution control.
3. Why Cap-and-Trade?
It is joked that Cap-and-Trade is the politically correct option, as it doesn't have the word "tax". Jokes apart, the underlying theory behind both approaches is to somehow make the stakeholders "feel the pain", so that they take action to wean themselves off of unsustainable ways of life. In other words, there are costs associated with both approaches that consumers, workers and investors/businesses will have to shoulder in varying degrees. Given that we will have to pay for reducing emissions any way, we might as well go with the option that has a better shot at getting the job done. The implementation of either approach will have to deal with challenges such as effective redistribution of revenue, alleviation of the impact of a regressive taxation framework and most importantly promotion of innovation. While the challenges are common, what gives Cap-and-Trade its edge is that it is the plan that has a clearly stated objective -- tangible limit on emissions. Isn't it funny that something so basic is obfuscated so much?!
4. Why-How?
Before we dive into the details of the Cap-and-Trade system, and which factors determine its success, it is important to recognize that the key to success lies in the design of a system that allows for effective incentives & penalties. The design of a market is no child's play, and this is especially true, when companies are to buy and sell the "right to emit CO2". As strange as that may sound, there is an invaluable opportunity to learn from research done in this area and through experiences from the cap-and-trade systems implemented in the US for SO2 in the 90s, and in Europe for C02.
5. How?
I appreciate your commitment, if you've gotten this far... I know... all you did was skim through and look at the last paragraph! Will cover the "How?" in a separate post.
This is the first of a series of posts, through which I hope to communicate what I think you should know about energy policy to make sense of the information that is thrown at you.
1. Why?
If you'd like to challenge the need for regulation in this area, you may read my previous post.
2. What?
Carbon Tax - Carbon tax is a form of pollution tax. It levies a fee on the production, distribution or use of fossil fuels based on how much carbon their combustion emits. The price of commodities that cause higher emissions will increase as a result of the tax, thereby discouraging the use of such commodities and products. The intended benefit is that users of fossil fuels will seek alternative sources, thereby spurring innovations, and the tax revenue can also be used to fund such projects. This option is praised for its simplicity and impartiality.
Cap-and-Trade - The cap is a limit on pollution in terms of emissions. An emitter would have to hold permits/allowances [1 allowance to emit 1 ton of CO2] to emit carbon. If the emitter is able to contain emissions and ends up having an allowance-surplus, they may sell/trade those emissions to another emitter, who needs additional allowances to compensate for the excessive emissions they may have produced. In effect, this option would set a limit on pollution and set a market-driven price for emissions. This approach is lauded for its certainty with respect to pollution control.
3. Why Cap-and-Trade?
It is joked that Cap-and-Trade is the politically correct option, as it doesn't have the word "tax". Jokes apart, the underlying theory behind both approaches is to somehow make the stakeholders "feel the pain", so that they take action to wean themselves off of unsustainable ways of life. In other words, there are costs associated with both approaches that consumers, workers and investors/businesses will have to shoulder in varying degrees. Given that we will have to pay for reducing emissions any way, we might as well go with the option that has a better shot at getting the job done. The implementation of either approach will have to deal with challenges such as effective redistribution of revenue, alleviation of the impact of a regressive taxation framework and most importantly promotion of innovation. While the challenges are common, what gives Cap-and-Trade its edge is that it is the plan that has a clearly stated objective -- tangible limit on emissions. Isn't it funny that something so basic is obfuscated so much?!
4. Why-How?
Before we dive into the details of the Cap-and-Trade system, and which factors determine its success, it is important to recognize that the key to success lies in the design of a system that allows for effective incentives & penalties. The design of a market is no child's play, and this is especially true, when companies are to buy and sell the "right to emit CO2". As strange as that may sound, there is an invaluable opportunity to learn from research done in this area and through experiences from the cap-and-trade systems implemented in the US for SO2 in the 90s, and in Europe for C02.
5. How?
I appreciate your commitment, if you've gotten this far... I know... all you did was skim through and look at the last paragraph! Will cover the "How?" in a separate post.
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