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Divide and Prosper: An Asian Model for Successful Business Growth

November 6, 2013 Leave a comment

I recently read Divide and Prosper, by Kuniyasu Sakai and Hiroshi Sekiyama, and posted a review in Goodreads.  My full review is linked here.

The book is, ostensibly, a business book.  It is written as an inspirational management guide.  As such, Divide and Prosper is extremely useful, providing a wealth of practical information for a successful business manager.  But this is only one tiny fraction of the book’s value.  The greatest merits of the book come from its attempt to inspire and motivate younger people to aspire to more than is offered by the status quo.

In my review, I wrote about the author’s detailed description of the subcontractor system in Japan in the section, “Big Business, Small Companies.” In this section, Sakai and Sekiyama describe carefully how the major corporations enslave the majority of the nation’s companies and people.

To Sakai and Sekiyama, the status quo does not provide redeeming lives to the majority of people.  This goes against the conventional “wisdom,” which says that Japan has achieved a higher standard of living than most of the nations of the world.  While it may have severe limitations in space and cost of living, the standard of wealth, safety, and convenience make Japan a mark of success, not failure.  But rather than spreading wealth thinly and evenly across the majority of the nation – as is the “common knowledge” explanation goes – the subcontracting system enslaves the majority of people. The big companies are not much more that a system of installing a small cadre of mediocre administrators to threaten, cajole, and pacify the masses, while pooling the wealth into the hands of a few wealthy and powerful elites, who hide anonymously behind the veils of their organizations.

First, the authors describe how the system is integral to the Japanese economy as a whole.  “The shitauke system is in one sense the very foundation of our modern business and industrial structure, the base upon which our giant commercial structure has been built.”  They continue to say that,”large corporations in a wide variety of fields act merely as “trading companies,” farming out jobs to their affiliates at cut-rate prices while charging their clients for the prestige of dealing with a top-notch Japanese firm.”

This structure is possible because the major, publicly traded, international corporations only comprise a small minority of the Japanese economy.  Sakai and Sekiyama write that, “90% of Japanese economy is minor industry.  Relatively few companies have more than three hundred employees, and more than three-quarters of all Japanese companies are very small, employing only a handful of people.  The real backbone of the Japanese industry is not the Toyotas and Nissans, the Matsushitas and Sonys, the Fujitsus and NECs, but rather, the thousands upon thousands of small firms that allow these behemoths to exist in the first place.”  Here, we start to see that the heart of their story is not just a positive guide to successful business, but a scathing war cry, aiming to defeat the massive corporate giants that cripple Japan and, ultimately, our world.

“In Japan, most small firms (and nearly all small manufacturing firms) exist in the shadow of a few dozen giant corporations which completely control their destinies. The master firm completely controls both its subcontractors’ production levels and unit costs, and this is the reason the giant industrial combines so jealously guard this system.”  Of course.  If a big company can control the production level and unit costs, it can offload most of its risks and take most of the returns from manufacturing.  It automatically inflates the big companies at the expense of the smaller subcontractors.

“What many people, even here in Japan, would find surprising is the astounding quantity of goods the firm purchases rather than manufactures.”  Again, this should not come as a surprise.  Manufacturing themselves would create a large number of “risks”, namely the human resources, facilities, and capital necessary to produce products.  Instead, the big corporations merely farm out the production, waiting “to put its name on the outer case and send the products through its international marketing and distribution system.”

This structure, Sakai and Sekiyama say, is an “industrial shock absorber.”  “The advantages of this system for the parent firm are just as obvious as the disadvantages for the smaller firms.  If the giant corporation falls on hard times, it will take a very long time (as we saw in the 90s) before it needs to lay off employees or radically alter any part of its own corporate structure.  It battens down the hatches and rides out the storm, keeping its own inconvenience to a minimum.”

“Having served as one of these “slave” companies for many years, I believe very strongly that a situation in which one must produce at another’s beck and call is ultimately destructive. ”

Men are not lemmings.  Of course, the “mass suicide” popular story about lemmings is a misconception, but the metaphor that we frequently behave unquestioningly as popular opinion dictates, with potentially fatal or dangerous consequences is, I think, quite valid.  Our fetish with big things – especially BIG business, BIG companies, and BIG data – may, in fact doom us.  I hope not.

Five billion people can’t use the Internet

March 30, 2012 Leave a comment

Aleph Molinari – Bridging the Digital Divide

The Digital Divide is a mother that’s 45 years old and can’t get a job, cuz she doesn’t know how to use a computer.

Most news focuses on the roughly 2 billion people in the world who use the Internet.  Economist Aleph Molinari chooses to focus on the other five billion people.  He is working to close the digital divide and empower people, by providing widespread access to technology education.

Español: Logo de la Fundación Proacceso

Español: Logo de la Fundación Proacceso (Photo credit: Wikipedia)

In 2008, Molinari founded Fundación Proacceso and in 2009 launched the Learning and Innovation network.  The network uses community centers to educate under-served communities and

enable them to use technology for empowerment. In about 2 years, the network has graduated 28,000 users through 42 educational centers throughout Mexico.

Graph of internet users per 100 inhabitants be...

Graph of internet users per 100 inhabitants between 1997 and 2007 by International Telecommunication Union (ITU), source: http://www.itu.int/ITU-D/ict/statistics/ict/graphs/internet.jpg) (Photo credit: Wikipedia)

The Learning and Innovation network

employs a well-designed system to bridge this digital divide.  The system is divided into 4 educational parts.  The first focuses on computers.  The second is the Internet.  The third is office software.  The fourth phase is a 72 hour technology program that produces, in the end, a digital citizen.  While the program sounds somewhat trite, there is no doubt that the programs conducted by Fundación Proacceso and the Learning and Innovation network have made a huge impact on extremely poor communities in Mexico.

Molinari’s arguments are extremely persuasive.  There is no doubt to me that, as he says, “Internet is a right, not a luxury.” We can do a lot to bridge this divide, enabling many of the five billion – most of whom are in the southern hemisphere and Asia – to become active participants as digital citizens of the world.

Although the work ahead seems daunting, it is even more daunting to consider what will happen to our world in the absence of a more fair and just distribution of wealth and opportunity.  It is better to make do with less than to lose everything we love and cherish.

Molinari’s final message is full of hope:

The main message is that technology is not going to save the world, we are, and we can use technology to help us. Most technology is human energy, so let’s use this energy to make this world a better place.

Giving the gift of Light

March 5, 2012 Leave a comment

BioLite. The company’s mission is fantastic! – providing reliable, rugged, efficient, and stylish camping equipment to outdoors enthusiasts to incubate self-sustained energy access for the people who need it most.

I am not sure how I stumbled on this, but now I’ve plugged it all over Twitter, Facebook, and Pinterest. It is also on StumbleUpon and Digg. I could go crazy and add it everywhere else I interact socially, but I’ll stop there for now.

This is an amazing find, though. While I am looking forward to seeing this product in Japan, hopefully even playing a part in making that happen, I think its true merit is in bringing electricity and a potential lifeline to places where the grid is off as often as on. Lights, of course, but radios and mobile phones and other communication devices could mean the difference between life and death in an emergency.  But even in the absence of such a situation, the lack of continuous and reliable power often means even greater hardships for many in the developing world than would otherwise be the case.

Already, the BioLite has won recognition and awards for its performance, making cooking with wood safe and easy while also providing electrical charge to power LED lights, mobile phones, and other devices.  The CampStove is $129 (US) and is planned to ship before camping season 2012 (before summer, I assume).

Sales of the CampStove are intended to support the one-time establishment costs of the HomeStove.  The BioLite HomeStove’s efficient process uses less than half the wood of an open fire and reduces smoke emissions by more than 90%. Since around half the wood used in the world is used for fuel – more than 75%  in developing countries – and indoor air pollution is one of the key issues raised by the World Health Organization as a major cause of respiratory diseases, distribution of the HomeStove may be vital in providing clean, safe, and easy heat and an affordable source of electricity.  The company intends to become profitable while making the homes of the 3 billion people who cook on open fires safer.  Now that, is a great reason to build a company!

Introducing the new BioLite CampStove – Reserve now! from BioLite on Vimeo.

Work/Life Losing its Balance

February 28, 2012 2 comments

Human Resource Executive Online – Work/Life Loses its Balance.

This article on Human Resource Executive Online looks at the drop, as a motivator, from 4th to 7th for work/life balance among American corporate leaders, between 2006 and 2009.  For the past 3 years, it has maintained its position at #7 of 19 possible motivators surveyed.  While this drop is not large, it is significant, because it is frequently said that only the top 5 motivators have a great effect on their actions/choices.  If so, then the idea that work/life balance is critical for success may no longer a priority among a great many corporate leaders in the US.

In the rest of the world, such a balance may be even less of a motivation.  It is frequently said that in Asia people work harder than in most of the world.  While the balance between work and life is complex and very affected by culture, the idea that employers should be concerned for the work/life balance of their employees is one that often starts with how corporate leaders think about it for themselves.

I’m very concerned about leadership, though I’m not as concerned with *corporate leadership* nor what the CL have to say… Nevertheless, it is somewhat disconcerting that CL concerns for work/life balance is lower in importance to them than 6 years ago – if it isn’t as important to them as then, then it is likely that they don’t care as much about balance for their employees, either.

While I believe that my work is my life, giving me the balance that enables my to be healthy and energized, for most people, work is a 9-to-5 grind.  I also think that usually, when execs start to question the importance of work/life balance, it is time to “watch out” – they usually are prepping to step up the pace on the assembly line and drop the axe on those who fail to hop uptempo.

KIPP

February 17, 2012 Leave a comment

The Story of KIPP from KIPP Foundation on Vimeo.

KIPP Schools

KIPP, the Knowledge Is Power Program, is a national network of free, open-enrollment, college-preparatory public schools with a track record of preparing students in underserved communities for success in college and in life. There are currently 109 KIPP schools in 20 states and the District of Columbia serving more than 32,000 students.

Facts about KIPP Schools

Facts about KIPP Schools

The story of KIPP is tremendously inspiring.  It is the powerful story of two teachers, Mike Feinberg and Dave Levin, who launched in 1994 a fifth-grade public school program in inner-city Houston, TX, after completing their commitment to Teach For America.   Following that small start, Feinberg remained in Houston to lead KIPP Academy Middle School, while Levin returned home to New York City to establish KIPP Academy in the South Bronx. Since then, KIPP schools have expanded and achieved unprecedented success throughout the United States, serving in2011 more than 27,000 students in 20 states and the District of Columbia.

While fewer than 40% of students in low-income families attend college nationally, more than 85% of KIPP students who complete 8th grade have gone on to college.  This rate, more than doubling the national average, is staggering.

This success, in turn, has led to a great number of accolades, including The $100,000 Charles Bronfman Prize in 2009 to Mike Feinberg and Dave Levin.

KIPP, though, has its detractors.  Some point to an attrition rate reportedly as high as 60%.  Others say that KIPP’s rigorous admission standards – with as many as 10 times more applicants than places in some schools – enable the schools to attract and admit students and families who would succeed anyway.

In particular, it is clear that KIPP schools have not demonstrated an ability to engender success among IEP students diagnosed with conduct disorders, serious emotional disturbances, or other such learning disabilities, because students bearing such issues do not survive the difficult and highly competitive admissions process.

Finally, another group of critics say that KIPP schools are successful only because they spend more money per student.  The schools certainly are able to spend more, because they have become well-funded through private donations supplementing their government grants.

Still KIPP Schools are the subject of great accolades.  This report on ABC World News in 2007 is dramatic in its portrayal of the special qualities of the KIPP Schools.

To me, the most apparent feature of KIPP Schools is that they have been able to change the spirit and attitude of both students and teachers.  it is not just the increase in class time, or the increase in homework, or class sizes.  It is really a completely different culture, one in which working much harder, putting more time into understanding and improving performance in academics – especially math, and being “smart” is very cool.

It is difficult for me to deny that KIPP schools have been successful at something.  There is little doubt that its students have been achieving success that is unprecedented in their families and communities.  Or, that these children are exceeding even their own initial expectations.

The schools may, in fact, be selectively neglecting the majority of students.  Nor are the kinds of investments of financial and human capital sustainable.  But the result are impressive.

KIPP Results

KIPPs successes, according to KIPP

Much has been written about the success of KIPP and the schools have won them many notable fans, including Bill Gates.  He refers to KIPP as being one of the places in which good teaching is rewarded.  Here is Gates speaking about this in 2009 at a TED talk:

Five Pillars

KIPP Schools share a core set of principles, which they call the Five Pillars.  These are:

  • High Expectations
  • Choice & Commitment
  • More Time
  • Power to Lead
  • Focus on Results

Ultimately, I believe that it is these that have the effect of changing the culture of the KIPP community.  Certainly there are different ways of valuing results, both for students and the teaching staff.  And when kids are in school for up to 8 hours a day and are given 2-4 hours of homework, some things are sacrificed.  But these sorts of issues, I think are those that many people are willing to make, if they lead to greater opportunities in school, work, and life.

The Money Game – for Entrepreneurs

February 8, 2012 Leave a comment

Where do you want to get money for your venture?

That question is a critical one for nearly every startup. Many would be entrepreneurs never get started because they don’t have the answer to this question. Obviously, it is a tricky question. How much do you want? How much do you need? What do you need it for? Is that really necessary? When will it be necessary? What can you do instead to get the same or better result?

But beyond answering these kinds of questions, every successful entrepreneur should reach some point when you think, “How much more quickly could I get to where I need to be if I had some more money?” When this time comes, do you know when and where you would get yours?

More importantly, how do most companies get funded? At least for companies in the United States, here’s your answer. For the rest of the world, it is a good place to start.

Entrepreneurship Catapulted into the Mainstream…

February 7, 2012 Leave a comment

How much more mainstream can you get than on the NFL’s Super Bowl telecast? With more than 110 million TV viewers in the United States last Sunday (February 5, 2012), the day is a de facto American national holiday. It is the second largest day in the United States for food consumption – after Thanksgiving Day – giving special validation to the term, “couch potato”. Due to the large audience, as well as its well-targeted focus, the cost of advertising during the game is the most expensive of the year. This year, apparently, NBC charged around 3.5 million dollars for a 30-second spot during the Super Bowl.

So it is a pleasant surprise that among the Super Bowl commercials for car companies, snack foods, clothes, tech stuff, and – of course – beer, the Kauffman Foundation aired a 30-second spot, the first-ever Super Bowl ad for entrepreneurs. The next great entrepreneur is out there, thinking about and planning how to resolve some pressing need. That is a cause to celebrate!

The only unfortunate thing about this is that the commercials aired only in North America – only a few million people watch in the rest of the world, despite the mythical exaggeration based on potential viewers. Entrepreneurship, I believe, is extremely important, as it champions people who innovate, assume risks, are creative, and take on challenges in order to create value, good, and profit from the endeavor. I hope that others, too, will follow the Kauffman Foundation and develop new means and venues to encourage people (especially youth) around the world to take on challenges and leadership opportunities!

Will it be you (too)?

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