Taking the long view on Coal

Oil will stop being plentiful enough to burn for fuel in the next 50 to 100 years. Coal, on the other hand, has a much longer life, but its distribution and mining rate varies. If you take the long view, the country in the catbird seat right now is Russia. At their current rate of production, their reserves will last 440 years. The USA, on the other hand, has larger reserves, but are only projected to last 270 years.

Oil reserves in Russia will last to the end of oil’s dominance globally.

At current production rates, US coal reserves will equal Russian reserves in 164 years. Everyone else will be out of coal except Kazakhstan and Ukraine. China, which burns half the world’s coal, will exhaust its supply in less than 30 years.

Russia already has its eyes on taking the Ukraine and its 560 years of coal reserves. Kazakhstan is another bordering country with a Russian minority. It is about the size of India, with a total population that would fit into one of India’s major metropolitan cities, and has 288 years of coal reserves. It is rich in other minerals including oil and gas and is a sitting duck for Russian takeover. If combined with those two satellites’ reserves, Russian reserves would exceed those of the US in less than 65 years while also outlasting the States in oil reserves.

Now if Russia can figure out a way to induce the USA to start mining and burning more coal and slow down on alternate energy development, Russia’s dominance in energy will come much sooner than a century from now.

Country	Annual Production	Coal Reserves	Years Left
China	3874	114,500	30
United States	907	246,643	272
Australia	644	78,500	122
India	538	92,445	172
Indonesia	458	4,968	11
Russia	358	157,010	439
South Africa	261	48,750	187
Germany	186	6,739	36
Poland	137	14,000	102
Kazakhstan	109	31,279	288
Colombia	89	6,611	75
Turkey	71	4,186	59
Canada	69	6,578	96
Ukraine	61	34,153	561
Greece	49	3,900	79
Czech Republic	47	5,552	118

Do you go for it?

The Decision:

You are the coach. Your team has the ball on your own 6 yard line (to score you have to drive the ball 94 yards farther down the field).  It’s the 4^th down and you have to cross the 11 yard line to get a first down. 

Do you go for it, or do you punt?

If you punt, the other team will get good field position and the data shows that 75% of the time they will score after such a punt.

However, they will score 90% of the time if you go for it and fail to get the first down, which happens about half the time.

Do you go for it, or do you punt?

We know that virtually every coach in every level of football will punt the ball in this situation. 

One of the amazing things about being a human is our ability to ignore the facts in making a decision.  In this case the data says you’d be wiser to make it a policy to never punt the football. 

At a private school in Little Rock Arkansas, the coach there never punts on 4^th down. 

The reason every other coach punts is because as humans we tend to over value downside risk, the risk of losing something, and under value upside opportunity, the opportunity to gain something.  Plus, like all humans, coaches have a hard time with statistical analysis, especially in the heat of the moment.  Being more of a numbers guy, the coach in Arkansas believes the numbers.

Out of a hundred such 4^th down situations described above, when other coaches punt the ball, then the other team scores 75 times.  In Arkansas, the coach goes for the first down in all of those one hundred 4^th down situations.  Half the time the team makes the first down.  Of the remaining fifty 4^th down situations the other team takes over and scores 90% of the time.  That’s 45 times.

In Arkansas, having the other team score 45 times is better than having them score 75 times.  Weirdly, for the rest of football, it’s the other way around!   The coach also realized that he would have a hard time calculating probabilities in the heat of the moment.  Instead, he did the analysis before football season even started, and made a simple policy decision.

Going-for-it on 4^th downs is not the only unusual tactic and policy this coach employs.  Every kick-off is an on-sides kick, and they don’t return punts.  The school is Pulaski Academy. It has won five state championships since 2003 using these unusual tactics. 

The additional benefits of this policy is that Pulaski Academy’s offense is on the field for more downs and thus the defense is off the field more.  More playing time for the offense causes them to execute better.  Less time for the defense means they don’t wear out as quickly.  The opponent’s defense plays more downs and is exhausted more quickly than they are playing any other team.  In football, it is common knowledge that the defense wears out far quicker than the offense.

Why doesn’t every coach employ statistical based tactics?  It is because, as humans, we find it very difficult to overcome our natural tendency to overweigh loss and thus the coaches will follow tactics that feel less risky even when they’re not.

As a consultant I see this phenomenon in business leaders often.  They are naturally reluctant to take the decision to change direction, even when they know they should.  Fear of the unknown, over emphasis on the  potential downside, and a natural avoidance on anything that implies complexity cause business leaders to procrastinate.  Often they procrastinate forever. 

I am working on the Global Cities Export Initiative to greatly increase the amount of exporting we do.  The perception most non-exporters have is that exporting is extraordinarily complex.  Yet, the statistics are overwhelmingly in favor of exporting.  You grow faster, you become more competitive and innovative, your margins increase, you are more profitable, your valuation multiple goes way up, you’ll be 72% more productive on a per employee revenue basis, and you pay better and can hire the cream-of-the-crop workers.  In spite of all the data, CEOs of most companies are encumbered by not being able to overcome their natural sense of risk aversion, and in this case, fear of the unknown and the great weight of complexity. 

By finding the right export resources, we help Wisconsin companies handle each obstacle one at a time which eliminates complexity and adds control using a defined plan and process which makes exporting feel much less risky.  If you're interested in how to use policy to your business advantage, call me.  414 287-4118

Examples of incredibly innovative solutions

Innovation is a voluntary activity on the part of employees.  Innovation is just problem solving that creates new knowledge.  Very highly motivated employees will employ incredible mental energy to come up with new and amazing solutions to very difficult problems as the article below shows.  For these people, solving these problems gives them both meaning and identity, which are two of the most powerful and sustaining motivator any company can tap into.

In praise of celestial mechanics

Why employees’ ideas go nowhere and what needs to change.

If you are going to be a competitive powerhouse, you have to innovate.  As Gary Kunkle showed, companies that show consistently strong growth get 90% of their ideas from employees.  Other companies don’t seem to realize that their employees have just as many ideas, they just don’t bring them forward.  When you get it right, you can implement lots of ideas.  At NUMMI they implemented over 10,000 ideas per year from about 3,000 workers.

Why do employees hold back their ideas? Fear is one reason.  Lots of actions in a company can create the fear factor.  The obvious one is the tyrant-boss.  Other actions can have surprisingly long impacts.  A layoff years ago can continue to worry remaining employees and they will think about the risk, not the benefit in suggesting change.

"Ideas in Limbo"

However, the biggest reason employees hold back on ideas is not the fear factor.  Writing for the Harvard Business Review, James Detert and Ethan Burris point out that the biggest reason employees don’t bring ideas forward is the concern that managers won’t do anything with them.1

Detert and Burris suggest it’s a “why bother” attitude.  But there’s more to it than that.  An original idea is a precious asset.  There’s a lot of emotion baked into seeing a solution to a problem in a new way, and then proposing your solution.   It’s your baby and you’re better off withholding it than having it undervalued and rejected.  Once an idea is on the table, it’s worth is determined by what happens next, and that depends upon the manager.  If nothing happens, that’s not good.  By doing nothing with an idea, managers can avoid taking a risk.  They too, are influenced by the prevailing culture around risk-taking and will avoid situations where the benefit does not significantly out-weigh the risk.

In the end, an idea that gets implemented will succeed or fail based on its merits as a good solution.  If it’s a product change, the customer will decide.  If it’s an intermediate process change, the effectiveness and efficiency of the new process will decide.  Wouldn’t it be better to let the merits of an idea determine its fate rather than leaving it up to a management structure that flawed, risk-averse, and biased?

The Rebel-Gatetm methodology we promote does just that.  It allows ideas to move forward without a management review.  At the same time it brings a strong element of control and impels a desire among all employee to husband resources.  Rebel-Gate is an ingenious solution to this 'ideas'  problem.  If you're interested in finding out more contact us.

¹ Detert, Fames R., Burris, Ethan R. "Can Your Employees Really Speak Freely." Harvard Business Review Jan-Feb. 2016: 81-87. Print.

Client Fulfillment

As a consultant you are constantly selling yourself and your value.  When you’re done with a client work session, you want your client to feel fulfilled.  In fact, you want to be sure your client feels fulfilled.  This is how we do it. (Thanks to authors Vern Harnish and Gino Wickman for the inspiration and insight.)

The method described below follows the Peak/End rule.  The Peak/End rule is a great sales insight and is fully describe in my book The Peak Interview:  “When people assess an experience that has a clear beginning and end, they attend to two things above all: how it felt at the peak, and whether it improved or worsened at the end. It is important to recognize that everything else isn’t forgotten, it just isn’t used in how the brain judges the quality of the experience.”

The work we do with clients involves a team.  The team usually consists of the President/CEO and his or her management direct reports.  Typically we spend the whole day with the team.  The first time we do this is we spend a little time talking about being open and honest.  

Then we ask them to rate their existing meetings on a scale of one to ten, with ten be best. 

They each privately write down their rating of their normal meetings.  We then go around the table (we never start with the CEO/President) and ask them to read what they wrote.  The average score usually is between four and six.

Then we say we want them to have a ‘Rated 10™’ day today.  We start every day with this stated desire from then on.   We explain that at the end of the day we will go around the table as ask them for their rating of the day.  They are not rating us. They are rating themselves.  After all, they are the ones doing the work.  We say we want them to have a Rated “Ten” Day, and that mean they each need to bring their ten-game to the table.  “Do great work today,” we tell them.

Next, we explain in detail what we intend to do during the session today.  Then, we go around the table and get the expectations from each team member.  These we capture on a flip chart, one page for each participant.  These are posted on the walls.  If a team member has an expectation we don’t expect to deliver, we address it immediately, saying that we don’t think that will be done today and the team member agrees that we can remove it from the expectation list.  Getting this right takes a bit of practice but it is essential that you’re able to deliver against every expectation.  

At the end of the day we go around the table leaving the CEO/President for last, and go down the list of each participant’s expectations getting a “yes” from each person that the expectation was met.  Sometimes there’s a discussion around the expectation and it does happen (although rarely)  that we have to go back and spend a few minutes revisiting a part of the work to get it right. 

Then we ask them to write down how they rate the meeting.  We remind them that they are rating themselves for the work they’ve done today.   You can also ask them to capture what they liked best, and one key insight they will use immediately going forward.  

Then we go around the table asking them to tell us the rating they wrote down.  For any rating less than a ‘ten’ ask why they didn’t give a ten and what would have caused them to rate it at a ten.  By the time you get to the last person, the CEO/President, you’re likely to get at least an eight.  Average the score.  It is usually between eight and ten.  Contrast that with how they rated their average meeting and challenge them to do better work when you next meet.  End the meeting.

By going over expectations and rating the meeting you create a Peak End moment.  You leave the client with the feeling of fulfillment.  The chances of you continuing to work with them is high.  

The Leadership Role

The key question in my new little monograph CompeteAbility, is how to you get the best answer to the "How do we...? questions you ask when you want to be the best:

How do we create a solution that does the job for the customer better than the competition?”
How do we have the strongest possible relationship with the customer?
How do we package the solution better than the competition?
How do we market the solution better than the competition?
How do we price the solution better than the competition?
How do we sell the solution better than the competition?
How do we service the solution better than the competition?
How do we get the customer to feel kinship with us through the solution?
How do we give the customer identity through the solution?
How do we create meaning for the customer through the solution?

The answer, it turns out, is the same for all of the companies who enjoy long term success.  The degree to which you answer these questions well, depends upon your people.  The leader's job is to get the best out of your people, to awaken the possibilities in your people. Go for shiny eyes..  See this one minute snippet from this TED TALK.

(I recommend you watch this entire 20 minute video, it is terrific.)

High Innovation, the elegance of simplicity:

Colgate Palmolive in Brazil had a quality control problem in their toothpaste factory.  Tubes of toothpaste are inserted into individual boxes, and these individual boxes are then packaged together into a larger carton.  Unfortunately, every so often something would happen and an individual box would get sealed without its companion tube of toothpaste.  The problem wouldn’t be discovered until a

store clerk went to stock the shelves.

Solving the problem at the point of insertion proved to be extremely costly and management asked engineering to find an alternate solution.  One idea was to put an Xray detector on the line that would enable them to see an empty box and grab it before it got packed.  Another idea discussed was to but an inline scale into the process and weigh the boxes to identify the lighter box.  There was a lot of discussion around how you would calculate the box-weight when the product is moving vs standing still.

While all this was taking place in the management and engineering offices, an older worker on the factory floor solved the problem by placing a fan next to the line.

Thank you Pat C. for this story.