The Social Blurb

Citizen Activism and Political Courage

2012-02-08T17:25:00.000-08:00

It is an interesting coincidence that last weekend we saw two striking examples of successful citizen activism (Planned Parenthood vs. Komen Foundation), after Komen had first announced it would stop paying for brain cancer screenings for low-income women before reversing its decision, and political courage (Bloomberg & Menino), when the New York and Boston Mayors took advantage of their teams playing each other in the Super Bowl to stand up for gun control. Those are actually two of the solutions that I suggested in my piece about Reversing Widening Inequalities.

Those are encouraging signs pointing to the end hopefully of the long apathy that has struck the US in particular since the Reagan years. And rest assured - those “small wins” matter. Planned Parenthood for instance fights an everyday battle in the trenches all over the country against extremely determined pro-life people, folks in my book who want to deprive women of a fundamental human right.

La Lucha Continua…

Reversing Widening Inequalities: A few Suggestions

2012-01-29T20:14:00.000-08:00

In this post, I suggest solutions to solve the root causes of the widening inequalities that I identified in my previous article on the subject.

1. Change time horizon (long-term vs. short term) and reallocate shareholder value: Financial markets’ modus operandi presents the biggest obstacle for change. Large investors such as hedge funs, pensions funds, and institutional investors measure results and earn their pay based on quarterly benchmarks, thus their incentive is to maximize profits in the short run. At the same time, as noted in my previous post, the proponents of good governance agree that shareholder value gets maximized if companies focus on the long term. Jack Welch himself, aka Neutron Jack in the days when he conducted fierce restructuring processes at GE, earning him respect of adamant market supporters, has said the same for years.

Not everyone gets it in the corporate world though. Yahoo that has performed so poorly in the past few years and whose previous CEO was fired over the phone (!!) just announced that it paid its new CEO $26m – for what exactly? Probably staying on the job for more than a week…

Thus, there need to be a few corporate leaders enjoying great reputation and credibility in the business world who will come together and say that things should be done differently. This is what Howard Schultz, Starbucks’ CEO, has done with respect to political donations. “A few good men and women” have to step up and show leadership and vision.

A little research would help too. It would be useful to investigate the economic benefits that an additional dollar would bring to a rank-and-file employee vs. a CEO. What would be the macro impact for the economy if someone was paid an additional $10m a year vs. 1000 deserving employees getting an extra $10k? Granted - a corporate board is more interested to keep its leadership happy by paying them bonuses than to contribute to improving the economy. And they’d say anyway that by employing X number of people they provide them and their families with livelihoods and thus play a positive economic role – which is true. But again, the question here is one of allocation of value created. 10 million to one guy or 10k to 1000 people?

In our era can boards afford to focus only on their shareholders and senior leadership and dismiss their companies’ larger economic impact? We are all in this together, aren’t we? In societies where individualism is paramount the notion of “being in it together” does not carry much weight – in the business world maybe. But I bet ordinary people deeply relate to that notion – they feel part of the communities they live in and they care about their neighbors. More broadly, in the US in particular, Americans’ love for their country is a reflection that they feel a sense of belonging to a bigger community (the United States) and as such share a bond and responsibility with their fellow citizens. The corporate world should take note, go back to basics, and reflect the society’s view of the world.

2. Create conditions for bolder public policies: The middle class has little leverage to get politicians to come up with bolder policies that would benefit them. It can voice its concerns through its vote, but because the middle class is not organized its influence is diluted and marginal. We are talking about a large group of individuals that are disconnected from one another.

I am not sure it will be easy to get the middle class to mobilize en masse and become more active politically. Large web-based efforts that are quick and simple like signing petitions on Change.org have been successful – but mainly because they required so little effort. Folks out there are busy paying the bills and getting their kids through college. In the US in particular, most know that they will have to rely mostly on themselves as quality education for instance is generally expensive. As a result, they feel pressure to hold on to their jobs but also keep their heads down, thus reducing the likelihood that they will stand up to protest. The level of tolerance of hardship that Americans display is pretty amazing for an industrialized country.

If a broad political involvement on the part of the middle class is uncertain, politicians will have to show courage and leadership by taking measures that may be unpopular or draw a lot of criticism from the opposing party and possibly from their own camp (e.g. come up with a government-sponsored healthcare option or raise taxes). There should be recent examples - visible to all - of politicians who carried out unpopular measures but did not suffer politically.

New York Mayor Bloomberg has been unapologetic about his decisions around the use of eminent domain or around parking in the city. Yet, he has been reelected consistently. If there were more examples of politicians showing courage and not paying the price politically it may inspire more of our elected officials to be bold.

But are political courage and a greater activism of the middle class the only solutions here? Doesn’t the current political funding system encourage inertia since it relies so much on very large donors (e.g. the recently in the news Super PACS, be they individuals and corporations) who may be keen to preserve some form of status quo and also push their specific agendas? Many corporations give to both parties, which is a clear sign that they are content with the system staying the same. Would they be pleased to see a bold changemaker getting to some high office?

What would be the problem of having a political system with much smaller donation amounts? That money buys ads on TV that in general do a poor job of capturing reality. How about a level playing field with smaller donations and thus a much lower aggregate total to spend on political campaigns and ads? A lot of campaigning is done by volunteers, so having a smaller financial base would not affect volunteers’ involvement and the execution of a campaign.

This new campaign financing system would decrease the potential influence of a few large donors and thus potentially empower politicians.

3. Break the cycle of poverty by focusing on needs and results: I identified the lack of enabling context (lack of infrastructure such as public transportation or good education) as a root cause for the continuation of poverty in many areas. What would it take to have this enabling context in every community? How much would it cost? Do we even know? I think it would be very helpful as a starting point to put a number on those needs. Granted, it won’t be a straightforward and easy number to come up with but it should be possible to make an estimate regarding say the cost of a functioning public transportation system or the cost of bringing x number of students to their grade levels in reading and math. The total dollar figure is likely to be scary - but only with a number will we be able to determine how to go about finding the resources needed.

It is encouraging that the corporate community in some instances has understood the need to work hand in hand with city governments when those are not able to pay for the full provision of basic services to their constituencies. For instance, about 80 San Francisco-based hi-tech companies just created an interest group to collaborate with the City on public policies that affect them. The Chair of that alliance, angel investor Ron Conway, said “We have a vested interest in making San Francisco the “Innovation Capital of the World””.

Breaking the cycle of poverty will also be accomplished if concrete and tangible results of programs currently offered to those in need are evaluated systematically. Programs should have specific and concrete goals and objectives before they start. And they must be evaluated along the way and at their completion. There should be no sacred cows and only programs that have demonstrated results given the circumstances and context should continue to receive funding. I mentioned in the earlier post the Office of Social Innovation created by the Obama Administration that has mobilized funding ($50million appropriated by Congress in 2010 supposed to be leveraged 3 to 1) to support the replication of social programs having demonstrated success. The first grants were disbursed last year. We will stay attentive and check if that money does contribute to moving the needle on the fight against poverty.

I am ending this article keenly aware that coming up with solutions is much harder than identifying root causes. But I can’t help but think that if all those who want to bring about social change and make this world a better place contributed ideas using their experience and intellect and if we spoke to one another more, great solutions would surface eventually. We must believe in ourselves and in our capacity to move the needle!!

Santorum: Reinforcing Negative Stereotypes and the Two-Party System

2012-01-11T03:52:00.000-08:00

I recommend this very interesting NYT article (http://nyti.ms/wvpNLu) that was published late last week and relates how Rich Santorum has made tons of money since leaving the Senate (incl. $1m in 18 months in 2009-10) by working for the very companies that benefited from the legislation he lobbied for when in Senate… Certainly not the first one in Washington to do this but that does not make it alright!!

Two conclusions here - Santorum is the ultimate insider contrary to what he wants people to think. And, how can we expect that a story like this one won’t make Americans even more distrustful of anything government and even angrier at politicians in general?

The US is fortunate to have a two-party system. Given how mad a lot of people are right now there would be a lot of room for extremist parties. The Tea Party chose to join forces with the Republican Party to have representation in the Congress and to potentially put its candidate in the White House.

But had they remained independent they could be the biggest party in the US in a multi-party system, certainly bigger than the Republican Party and potentially than the Democratic Party if a more radical left wing had emerged from the Occupy Movement and other left-wing manifestations of rejection of capitalism gone wild.

Root Causes Behind Ever Widening Inequalities

2011-12-27T17:08:00.000-08:00

I wrote in a previous post about how inequalities have sharply widened in the past 30 years, i.e. how the middle class has been feeling the squeeze and how a lot of poor people have remained stuck in poverty while the richest have been capturing an ever growing proportion of industrialized countries’ wealth.

I will focus in this article on the root causes that I believe explain why inequalities have been so stark in a recent past after decades of more evenly distributed economic prosperity.

1. Unjust and imbalanced allocation of value created: Basically, the allocation of profits made by companies is disproportionately skewed towards shareholders and senior executives vs. employees. Companies’ boards want to keep their shareholders happy and retain their senior talent, so from their standpoint it makes sense to channel most profits that are not reinvested in the company to those folks vs. to regular employees. Corporations have managed to make money despite the crisis. As reported by Time Magazine last June corporate profits were higher in 2011 than they were in 2006 when the economy was booming ($1.7 vs. 1.5 trillion). Meanwhile, unemployment is now between 9% and 10% while it was only at 4.5% then. So, companies are certainly “lean” as we tend to hear often and productivity is up – at the cost of employment probably.

How to convince companies that part of those profits should be redistributed to employees while uncertainty about the economy is at its highest? I am not sure but I know that corporations have done little to revive the US economy even when times were better. I bet that Americans would be angry to know that from 1990 and 2008, according to that same Time article citing Nobel laureate Michael Spence’s research, “companies that did business in global markets […] contributed almost nothing to overall American job growth”. The vast majority of jobs those firms created were located in emerging markets because of those countries’ lower labor costs. Jobs created in the US came from domestically-focused sectors like hospitality, utilities, healthcare, retail, and government.

So, Corporate America seems to be more part of the problem than of the solution.

2. Short-term focus at the expense of long-term development: Most publicly-traded corporations obsess about hitting their quarterly earnings targets to keep financial markets and institutional investors happy. When they don’t their stock prices suffer mightily… The problem is that with such a short-term focus they have little incentive to make investments that would hurt their bottom line in the near term even if those proved beneficial in a more distant future.

Financial markets apparently prefer to see companies sit on $1.7 trillion of profits rather than take calculated risks (yes, times are uncertain) and invest some of those profits in something productive. How does this make sense though??

An interesting exception to that unfortunate situation is Amazon. A recent NYT article related how Amazon has chosen to focus unrelentingly on the long term, thus posting lower profit levels and disappointing the markets. Amazon’s CEO, Jeff Bezos, is absolutely unapologetic about this, pointing out that continuing to invest in his company’s infrastructure and platform will pay off eventually. When your business is logistics, it kind of makes sense, doesn’t it? Finally!!

Ironically, Amazon’s stock price (which is a reflection of how markets see a company’s future earning potential) has done pretty well – certainly much better than the NASDAQ since in the past 5 years (between late December 06 and late December 11) Amazon’s stock price posted a 341% increase while the NASDAQ went up merely by 9%.

So, this can be done… Refusing to follow financial markets’ “dictatorship” is possible.

Ask Jack Welch actually!! He would agree. Wasn’t Jack Welch, GE’s former CEO and “Uber-Leader”, the darling of Anything Corporate? Actually, Welch in line with good governance proponents advocated - for the first time way back in a 1981 speech at the Pierre Hotel - that companies should maximize shareholder value by focusing on the long term (see same NYT article). During his tenure, GE was widely viewed as “the world’s best managed company”.

So, why should companies now cave in to this narrow-minded and unproductive “financial orthodoxy”?

3. Lack of political will around programs targeting the middle class: We are hearing more that the middle class has been neglected by public policies and has been feeling the squeeze economically as a result. It’s certainly been true since 2008 but in fact for much longer - I pointed out in an earlier post that real salaries have on average remained flat in the US for the past 30 years. A case in point is how many big cities’ municipalities just gave up on keeping their downtown areas socially mixed. Revitalization of those areas in New York, Boston, and so many other big cities in the US and abroad has sought to attract wealthy new residents and tourists for the most part. New constructions have mostly targeted the rich, which indeed makes fiscal and economic sense. Cities have made money when they sold parcels they owned in “prime areas” to developers and not only do new residents pay their taxes in those cities but also they shell much higher property taxes than were collected before for the same locations.

But how does this make social sense? Middle class and poorer folks have relocated to less attractive but more affordable areas. The best neighborhoods are left to the rich and the occasional visitors – and god forbid, when social housing projects have remained in some downtown areas (as is the case in Boston for instance), the rich walk by the poor (usually, there is a “color line” too) and everyone equally distrusts and is afraid of each other. Great!!

4. Inability to break the cycle of poverty: The majority of social programs target the poor but many stuck in poverty are still there today – not counting the “new poor” who got stranded by the 2008-09 recession. For many in the US and other industrialized nations it has been impossible to break out this cycle of poverty.

This one is complicated and there are several factors coming into play. First, I feel the “enabling context” to get folks out of poverty is often not there. I am talking about the key ingredients that make it possible for people to be “productive” actors in our society. Two of those ingredients are infrastructure and education. For example, how often do we encounter in the US in particular cheap public transit systems that offer a dense network so that people can go anywhere in their urban areas in an efficient and affordable way? The absence of a solid public transportation system is an obstacle for those seeking employment (to find and keep a job). How about public education? Public school funding is fundamentally flawed in the US as about half comes from local funding and mostly from property taxes. Thus, the higher the house prices in an area, the more money goes to that area’s public school system. How can such a funding formula not generate major inequities?

Institutional racism – or broad stereotypes to use a gentler word – is another factor that undermines the enabling context. In the business world there is still an untold and implicit hierarchy – not everywhere certainly but in most places. Up there sits the “white man”. And if the white man has broad shoulders and looks like a quarterback it is even better!! The rest of the pecking order is open to discussion but certainly people of color still suffer from stereotypes and find themselves at the bottom of the hierarchy. Are we ever surprised when we see low-level jobs (fast food restaurant employees, cleaning or security folks) held by people of color?

How is this empowering to those in poverty? Don’t those stereotypes make obstacles seem even more insurmountable?

Beyond the “enabling context”, last summer’s riots in England have shown how dangerous massive cuts in social programs can be. Given current deficit levels these cuts are certainly tempting for local, state, and national governments. Eliminating programs across the board is the last thing to do but if some cuts are necessary how to decide which programs should go? That leads me to my next point, namely there does not seem to have been a systematic evaluation of social programs’ effectiveness and impact out there. Those stuck in poverty for generations have often been receiving support for a while, for instance to acquire skills or find a job. Do agencies implementing those programs know precisely how effective those have been? If the needle has not moved much in all that time, so to speak, do the folks on the ground know why and how to do a better job?

In an encouraging development the Obama administration created the Office of Social Innovation (now grouped with Civil Participation) in 2010. The idea is to replicate programs that have worked and fund their scaling in as many areas as possible.

Only when organizations implementing social programs can show what their results have been (favorable or not) will they be able to make a compelling case to keep those that have worked and channel more money towards new and improved ones.

Finally, how to make sure that those in poverty can find the courage and build the confidence to go out there, fight for themselves, and overcome obstacles? So many Americans love their country because they think that anything is possible if one is willing to work hard. And they’ll give you examples of folks who succeeded against all odds. Well, that’s the problem I have with this system – “against all odds”… As long as we don’t have a level playing field and the enabling context I mentioned above is not there it will take an extraordinary amount of courage, determination, and persistence to make it for those who were born in poverty.

Yes, those qualities are needed no matter what. Even with the support of social programs and a favorable environment around schools, infrastructure, etc. if you are a slacker, chances are you’ll be a slacker for a very long time.

But we should not expect everyone to be bootstrappers and have incredible grit, perseverance, and resolve to be able to make it out of poverty.

In the next piece concluding this series on our system’s crisis I will try to come up with solutions addressing the root causes of the wider inequalities we’ve observed.

Nutella: People Taking Notice – Finally!!

2011-12-11T18:34:00.000-08:00

As our world is grappling with a systemic crisis, the risk of a major economic disaster in the Eurozone, the impoverishment of the middle class, and unabated poverty in most developing countries, the question, Is Nutella good for you, is on a lot of people’s minds… My post on Nutella’s nutritional benefits (or lack thereof rather) has been the most viewed article on my blog since I started it… I’ll have to think about what that means about the quality of my other posts - oh well…

But in the meantime, I wanted to follow up with some good news since an American mother earlier this year decided to sue Ferrero, Nutella’s maker, for false advertising. Read the story related on the NPR web site below.

http://www.npr.org/blogs/health/2011/02/10/133565759/a-mom-sues-nutella-maker-for-deceptive-advertising

People are taking notice – finally!! Come to think of it, this is similar to the strong reactions we are seeing among so many folks who had never been active politically before but can’t shut up anymore because they are angry, dismayed, and often disheartened. The People is rising…

The Occupy Movement and the need for a new model

2011-11-29T03:12:00.000-08:00

As the Occupy movements are now facing bad and cold weather and the excitement from the first couple of weeks has waned, the big question is, how much of an impact will they have and how sustained will it be

The Occupy – “Indignados” movements will only succeed if ordinary people who are not activists do get involved. The usual suspects in those demonstrations and protest movements are the pacifists, the trade unions folks, etc. They certainly know something about organizing and mobilizing but I don’t think they have a lot of credibility in the general public – especially with those who do not share their political opinions. The young people whose mobilization on campuses across the US has been impressive also lack credibility because they are mostly viewed as inexperienced and idealistic. Activists who form the core of the Occupy movement have been dissenting for a long time, proclaiming that our system was flawed (and they were probably right about that). But ironically, they do not represent change since they have been at it for so long.

They are however capturing the “zeitgeist” as their anti-globalization / anti-capitalism rhetoric and agenda resonate with people angry about the current economic situation and consequently about our system that supposedly has created that mess. Americans – usually among the most disciplined ones and those who believe in the benefits of capitalism - are upset about high unemployment that, contrary to prior recession or slow growth periods, is barely going down and about rocky stock markets that experience large swings from one day to the next.

The Occupy – “Indignados” movements will have a long-term and significant impact if they can lead or actively participate in the reflection about the changes needed in our system. Despite the growing consensus that our system needs to be fixed there hasn’t been a concerted effort so far to carry out that thinking process.

The Occupy folks will probably have a more radical view than I on the question but I don’t believe that fighting capitalism all the way and making it evil, responsible for all the injustice and the suffering in this world, is the solution. The emergence of the middle class after World War II in Western societies, which meant that millions got out of poverty over these couple of decades, took place in a mostly capitalist society – but one that was more just and balanced.

In the 80’s a shift occurred as a result of the “Reaganomics”, the conservative economic policy that Reagan and Thatcher implemented for a number of years, and the gap between the rich and the poor started widening again and the middle class increasingly felt the squeeze. Real salaries (adjusted for inflation) have been flat on average in most Western countries since that time while wealth is increasingly concentrated in fewer hands.

The average difference in salary between lowest paid workers and CEOs were 1 to 8 in 1980. Things are slightly different today – for instance, the CEO of CBS, the US media company, made an astounding 60 million last year. If folks in the CBS mailroom made say $20k, the 1 to 8 ratio skyrockets to 1 to 3000!!!

Thus, in richer nations inequalities have been on the rise while some populations have been stuck in poverty for years. In the meantime, the situation in the Global South is not tremendously better. Even in China, India, and Brazil which are rightly viewed as success stories, significant inequalities persist. And a lot of other nations are still struggling with poverty even though they have received development cooperation aid and benefited from foreign direct investment for a long time, often have a talented work force, and, in some cases, enjoy natural resources that constitute a major source of income.

I will write more on ideas to reform our system in my next post, with a focus on industrialized countries as emerging / developing countries have to contend with particular issues that make their situation even more complex.

People Waking Up - Finally...

2011-10-19T21:30:00.000-07:00

October 15^th was a great day!! I loved the mobilization around the world aiming at making our system better… It is good to see that people are waking up finally – especially Americans who happen to have an incredible resilience in face of adversity but are just used to keeping their heads low. Ordinary Americans conform – they don’t protest. They are docile – but that may be changing.

More on a possible groundswell in America and how the Occupy / Indignados movement could effect systemic change later…

Impressions from Africa - Flaws in Development Cooperation

2011-08-28T09:04:00.000-07:00

I was in West Africa last week for my work and I interacted with folks from the government, foreign donor agencies, and an international NGO. In that short week I saw a number of symptoms of what I consider to be flaws of development cooperation.

First symptom, there may be too much money channeled to a developing country at once. On the surface, there is no such thing as too much money for a poor country. In reality, donor agencies agree with national governments on the destination of the money beforehand. Even though there has been improved coordination among donor agencies and other development actors with respect to their cooperation with national governments, the emergence of several programs focused on the same sector at the same time is far from rare.

The problem with that is one of absorptive capacity as developing countries’ entities receiving the funds have to be in a position to use them efficiently and effectively. The realization of an insufficient capacity may lead the donor agency to agree with the recipient country to put together a sort of program management unit, in addition to the existing structure, the job of which is to make sure that the program is well executed. Setting up such a program unit costs money and thus presents a dilemma: should the program be initiated with the extra costs incurred (money that could be used elsewhere) or should nothing be done until the national capacity has improved?

I can’t help but think however that local resources, such as the donor agency’s country office if there is one or some dedicated team within the recipient entity that would be trained or short-term local consultants, would afford more economical solutions for an acceptable result.

The irony of the ill-timed convergence of funding is that donor agencies and other development actors getting involved are persuaded to do so because they see those other guys committing money. Match funding is often the magic word, donors being much more comfortable, including towards their own leadership, engaging in a program or with an organization when others do the same. This is certainly not a rule that only applies to development cooperation as in the private sector prospective investors often look for cues such as other investors getting involved to make the jump themselves.

Second symptom, some incentives can have perverse consequences. I lament the use of per-diems in the world of development cooperation. It is easy for me to say certainly, writing from my kitchen in Boston and having an easy life compared to the vast majority of the world population. What I mean by per-diem in this particular case is compensation often paid by donor agencies and other development actors to nationals of the country where they work (those can be government officials, scientists, etc.) for completing a given task, most often to attend a specific meeting or series of meetings or be part of a task force.

From the outside, the concept may seem strange as those invited to participate in these meetings do so in the context of their work, so why pay them extra? They already receive a salary or some compensation for their daily work. The reality in Africa in particular is that salaries are low, especially in some sectors such as civil service or academia, and providing that extra compensation gives those folks an incentive to show up but also represents a fair practice as it reduces the income disparity that those people often suffer relative to representatives of development cooperation actors or their own country’s private sector executives for instance.

So yes, it is totally understandable. Where I start having problem with this practice however is when those per-diems create perverse incentives. It happens when members of an ad-hoc task force formed to work with some government entity and donor agency for instance do whatever it takes to keep that working group alive, keen to continue to receive their per-diems and other benefits or perks that may come with those, and thus losing sight of the primary objective, i.e. for the task force to fulfill its initial objective before disbanding.

Of course, there will be a fair amount of jockeying and pretending about why the working group should continue to exist because no one can say openly that per-diems have become a bigger motivation than the substance of the work per se. But it is easy to see through that pretending and schmoozing.

At the systemic level the whole salary scale of under-paid jobs should be revamped so that disparities are reduced. In that particular case of per-diems the problem often arises from the fact that folks sitting in the same room, representing the national government, local universities, donor agencies, and international NGOs may have salaries that range from 1 to 5 or even more. That can only cause resentment. While some disparities are to be expected, that salary gap should be looked at seriously with a view to being cut down.

Third symptom, talent is being squandered. I can think of one guy in particular who is smart and has clear potential but seems to spend most of his time trying to figure out how to “play the system” in order to increase his level of influence and make more money. He is a government official, so again how to blame someone whose income is probably disconnected with his own abilities? Granted. But then I would say that in most African countries the civil service is far from being the only professional option for highly educated folks. Working for the government supposes an interest in serving – if it is not the case, why choose that career? And remember, I am talking about highly skilled folks whose professional outlook is not as limited as that of most of their countrymen.

When providing for one’s family is such a struggle, how can the general interest be a strong motivator for anyone? I don’t know. It is a tough one. I do know however that a lot of folks in Africa decide to serve their countries by working for their government and, also increasingly, by trying to create social value in the private sector. Maybe those are the true unsung heroes – they are never mentioned, but given the hardship they have to endure their commitment is remarkable.

Again, there is only a macro response to that problem of wasted human potential. Government agencies will never be able to attract and retain talent and tap into their people’s full potential if they don’t pay them decently (again reducing disparities with other sectors is key) and don’t get them to work on interesting and impactful initiatives.

Come to think of it, this is what development cooperation should focus on. What are the elements of Africa’s environment that inherently impede its progress and development? I hear talks about promoting an enabling environment. That is fine and well but the short week that I spent in Africa only showed that such fundamental aspects of an enabling environment as coordination of efforts among funders, a decent local capacity, fair compensation, and a dynamic governmental sector, are far from being in place.

It is difficult for me to be optimistic. Maybe this is my nature or just an immediate reaction to what I witnessed. Two non-African colleagues who have lived on the continent for 20+ years told me last week that they are optimistic about the region - because the new generation is different from the older ones and training and capacity building pay off eventually.

At any rate, it is only by addressing the fundamental flaws hampering progress in African economies and societies and plaguing the effectiveness of development aid that Africa will reach its potential.

I am Back + The Meaning of Blogging...

2011-08-26T14:21:00.000-07:00

It is interesting to go back into writing or blogging mode after a long silence. It got me to think about how disciplined I should be about writing regularly, what regularly means (every day, once a week, every time something newsworthy happens, “newsworthy” meaning what exactly), and what topics I should focus on, if any.

I have kept my blogging routine very loose evidently, having started with the intention to focus on social sector issues (more narrowly even on social enterprise or social investing) and actually writing more often than not about politics or social justice, sometimes both. For a “non-natural” writer like myself for whom writing is enjoyable yet not exactly easy there has to be an impetus for me to want to sit down and write. The impetus is often a reaction that I have to an event and that gets my juices flowing.

In that case, the blog plays its role of outlet, giving me a voice to express my opinion. When I get to write about a topic that centers on the social sector and is thus more closely related to my work, even though what I do is a passion of mine, I have more muted reactions to whatever happens in the sector that I want to write about.

Going forward, I’d like to keep the “spontaneity of intention”, i.e. waiting for an inspiration so to speak rather than forcing myself to write on some event because I feel I should. That being said, if I believe that my voice is valuable, among millions of others who express themselves through blogs (all is relative, right?), then I should make more of a sustained effort to write, bearing in mind that not every post should be a thoughtful – or what I try to be a thoughtful – analysis of or reaction to something that I care about.

Coming up… I was in Africa last week and the trip gave me some food for thought regarding development aid. Stay tuned!!

Fifty-Eight Million

2011-04-24T13:54:00.000-07:00

I was in New York over the past few days for meetings related to one of my projects. Half of those were with people working in various parts of the United Nations system and the other half was with colleagues involved in the rest of the social sector, on the operating (NGO) or funding side. The message that I heard most consistently is that money is tight. Very tight. The general funding context for anything that seeks to create social or societal value seems incredibly depressed. The 2008 financial meltdown hit the social sector hard and it appears – based on these few conservations - that we are far from having returned to pre-crisis funding levels.

This occurs while in the US we all have in mind the incredibly hard battle that was fought over the next budget, the threat to shut down government operations for a while, and all the cuts that are going to occur (and luckily some to social programs that were avoided). I am all for chasing waste and redundancies - but the poor, the marginalized, and the elderly will likely suffer as a consequence of the new budget and of the probable changes to come in Medicaid and Medicare financing.

It seems as though we are all struggling and it is just damn hard for everyone these days…

Well – maybe not for everyone. Last week the compensation of the CEO of CBS was revealed for the year 2010. Leslie Moonves made a whopping 58 million – Fifty Eight Million, People. I am sure Leslie is a hard worker and did not steal his money. The CBS Board argued the increase in shareholder value (CBS stock has nearly doubled in the past year) that “outpaced both the industry and the company's internal targets" was the main justification for Moonves’ big payday. But the LA Times article (see hyperlink) is quick to point out that CBS’ total revenues in 2010 were largely unchanged from 2007 and that the company is not as profitable. Basically, CBS has recovered from the slump it went through along with most of its competitors.

Who else at CBS was as lucky as Leslie? CBS Chairman Sumner Redstone received a package valued at $20.3m and Viacom’s CEO Philippe Dauman pocketed nearly $85 million (!!!!), which included a $31.65m signing bonus.

That is about 165 million dollars overall, Folks!! How about the rest of the company’s executives and employees?

It boggles my mind that the question of allocation of profits is too often left aside. Too few among us are questioning our system. How much did CBS’ rank-and-file employees receive for the company’s supposedly vastly improved situation (well, don’t look as far back as 2007 though)? How much will shareholders get in dividends? How much will CBS reinvest in its own growth?

I am writing about Leslie’s (and the Other Philippe’s) Big Payday because I just cannot understand how we find it ok that a few individuals make millions of dollars while hundreds of millions of folks live in poverty around the world, including in our richer countries. We have to fundamentally re-think how income is distributed in our society. Granted, some folks making crazy amounts of dough may give some of it away and thereby create social value. But why be so enamored with redistribution and philanthropy when our distribution model is so flawed?

Friends out there – if you have ideas about how to fix our distribution model, please contribute by making a comment. Also, tell me if you know of any initiatives that are focusing on these systemic questions (income distribution, reducing disparities, etc.). We have to do it ourselves, People. Not much has been done since the Lehman meltdown in 2008 though so many in government and in the business world said that the “systemic crisis” that we went through would fundamentally change the way our society and economy work. Our future is in our hands – let’s do this.

Different Takes on Death Penalty

2011-03-16T16:11:00.000-07:00

Last week, before the terrible tragedy in Japan, two pieces of news went totally unnoticed amidst the Charlie Sheen craziness... The Governor of Illinois abolished the death penalty in his state (only the 14^th state in the US) while the next day a new drug was experimented in the execution of an inmate in nearby Ohio.

What a country…

NGO and BOP – a Shared Ignorance

2011-03-12T12:48:00.000-08:00

I was in Dakar last month ahead of the World Social Forum and on my way back I attended a one-day workshop in Paris on the Base of the Pyramid whose keynote speaker was Cornell professor Stuart Hart who coined the term in the early 2000’s with CK Prahalad who passed away prematurely last year. As I was telling my colleagues in Dakar about the BOP conference in Paris, none of them – yes, none of them – was familiar with the concept of Base of the Pyramid… They all happen to work for national platforms (i.e. country-wide associations) of NGOs, most of which are involved in social and economic development issues, so they know something about those who live at the base of the pyramid - even though the BOP notion is foreign to them…

I found that disconnect truly extraordinary. Those working on BOP-related issues firmly believe that the key to a sustainable social and economic development lies with BOP strategies. Thus, their “theory of change” is that through products or services that they will have jointly designed BOP populations will rise out of poverty.

The NGO community has similar beliefs about the need to empower developing nations’ populations and “teach them how to fish”, while making sure that the enabling context in the form of a democratic government and the essentials for development (infrastructure, education, healthcare, functioning institutions) are in place.

Therefore, two very large constituencies working on development issues, the NGO world and the business and academic sectors (mostly corporate folks, academics, and students attended the BOP workshop in Paris) seem to ignore each other’s strategies for poverty alleviation and sustainable development though – and this makes it even more striking - those are not that different from each other…

And, do not think that the NGO people are more narrow-minded and ignorant than their academic and corporate colleagues. None of the people with whom I spoke in Paris had attended the World Social Forum and, if they knew exactly what the World Economic Forum in Davos was (I used the reference to Davos to help them understand what Dakar was about, i.e. the “counter-Davos” so to speak), very few knew that something big was going on in Dakar (where over 50,000 people from around the world gathered), let alone took the time to visit.

Momentous Start to 2011

2011-02-14T13:44:00.001-08:00

Early last year, I wrote a post that said basically that I was not a psychic and could only hope that good things were going to happen during the year. Shortly thereafter, the Haiti earthquake struck and some time afterwards the same happened in Chile – and before we reached the end of the first semester came the BP oil spill. I guess that if I reviewed every year looking for extraordinary events, I would come across a number of those natural catastrophes and political coups. But 2010 had a particularly momentous start – and so did 2011 with the Tucson shooting and the political upheaval in the Middle East and North Africa region (MENA).

Both were unexpected. Despite the fact that weapons are ubiquitous in the US, particularly in certain parts of the country, mass shootings remain rare and are mostly limited to folks unhappy with their ex-employers often and going back to shoot ex-colleagues randomly. The random nature is always what makes those events so extraordinarily upsetting to most. You hate your old boss and get to the point where you want to kill him or her. Well, shoot the bastard and go to jail for life – but why shoot the folks around him/her? The Tucson shooting was a huge shock in the US because of the consensual figure of Gabrielle Giffords and of the increasing polarization of the political debate in the country. Without implying that the shooter was inspired by some extreme rhetoric he heard on TV – and Obama refused to go there in all his comments, including in his landmark speech at the victims’ funeral service – there is a broad consensus that the level of anger and aggressiveness in US politics is near or at an all-time high, at least considering the last 40 to 50 years.

In America, people strongly relate to individual stories, so with the media massively reporting on the stories of those who died in Tucson (the young girl, the legislative aide, the judge, etc.), the tragedy was perceived as even more dramatic. And there were the heroes too, the one who saved Giffords by attending to her wounds right away or those who somehow tackled the shooter and managed to get him to stop shooting.

Individual stories are also what made last year’s contestation in Iran so striking, particularly for the millions who saw the young woman Neda that was shot during a demonstration die on camera. It is also how the Jasmine Revolution started in Tunisia. A young street vendor who was asked to leave his usual spot by the police for no good reason chose instead to die by immolation (he burned himself alive).

The Middle East has been characterized by strong regimes and is the region in the world where democracy is most lacking. Lebanon is the only country in the region (outside Israel) where there is a regular election cycle and a true multi-party system. Masses in MENA lack a voice (how to express discontent in a country where strong rulers see dissent as a risk to their own power) and lack economic opportunities (there are huge disparities between the rich and the poor and the fruits of economic growth continue to be very unevenly distributed). This is the best recipe to create a generation (two generations by now) of disenfranchised, angry, and disheartened folks, especially young people.

Finally Tunisia’s people took the matter in its own hands and said to its ruler who had enjoyed tremendous political and economic power that it was not going to take it anymore. Ben Ali and his partner Trabelsi controlled the majority of the Tunisian economy and had stakes in all the ventures of importance. Their extended families largely benefited from that incredible position of power.

In Egypt the rise in food staple prices was the trigger for the protests – there had been protests in late 2010 already. As is the case in Tunisia, nothing significant economically could happen in Egypt without Mubarak clan’s involvement. The political opposition did not have a proper voice either.

Western countries have played a controversial role over the past 30 years, not doing much to promote democracy with dictatorial regimes such as Tunisia and Egypt because those countries were stable and considered a “line of defense” against Islamic extremism. Western nations’ nightmare came to reality in 1992 when Islamic extremists won the elections in Algeria – the then regime preferred to cancel the elections and stage an actual coup all the while Western nations stayed put for the most part. A bloody 10+-year civil war ensued.

The fear of the rise of an Islamist regime among Western nations and in Israel remains today. And their concern is not unfounded. But the current situation also presents an amazing opportunity for those nations. They should:

-- Provide whatever assistance that Tunisia and Egypt’s new governments and others in the region will request to carry out more equitable economic programs, and

-- Stay vigilant that aspirations to democracy expressed by the people are not ignored while admitting that a transition to democracy may not be immediate and easy.

2011, Year of Liberation.

WikiLeaks and the Fight for Democracy

2010-12-12T21:39:00.000-08:00

WikiLeaks is under siege in the US. Not only has the web site become an “enemy of the state”, which is not surprising given the series of punches that WikiLeaks has been throwing at the US government, but the public opinion seems to have turned against the web site. The major mistake that WikiLeaks made was to divulge the names of Afghan informants who chose to work with the Americans and other foreign forces there, making those people immediate targets for the Taliban and their friends. I don’t know frankly how democracy or transparency benefited from the release of those names and as such I believe it was a very unfortunate move.

That being said, the founding principle of WikiLeaks that receives information from insiders who often take immense risks to be whistleblowers and releases it through highly respected media outlets such as the New York Times, Der Spiegel or Le Monde remains extremely valuable in my eyes as it will bring more transparency to actions of corporations and governments that find themselves under pressure because of the risk that WikiLeaks will release details of their covert actions to the outside world.

That is why I found really shocking that the likes of amazon, eBay, or Mastecard took repressive actions against WikiLeaks in order to limit its ability to operate. The closest thing in recent years to what happened this week to WikiLeaks is the freezing of Osama Bin-Laden’s bank accounts and assets… Is WikiLeaks such a threat to our world? I don’t think so.

The personality of Julian Assange, WikiLeaks’ founder, has become a lighting rod for those who have come to hate the web site. Accused of sex crime in Sweden Assange has become a pariah in the US public opinion that has a long history of having banned celebrities that had committed repressible sex-related crimes or engaged in so-called immoral behaviors or were accused to have done so. The list includes Roman Polanski, Charlie Chaplin, and Woody Allen who is now viewed by most Americans as the worst pervert for having married his ex-wife’s adoptive daughter.

Assange has been heavily criticized by some of WikiLeaks’ early followers, partly around the decision to divulge Afghan informants’ names but also for its egomaniac and dismissive attitude towards others.

He will have to be replaced at the helm of WikiLeaks for the organization to continue to thrive. For the time being, we don’t know what is going to happen to him as he is now jailed in Britain. But I am concerned rather about WikiLeaks’ ability to continue to do its job as a news organization. If it is sticks to its original mission and avoids Afghan informant-type mistakes WikiLeaks does have an extremely valuable role to play in our world.

Story-telling at the EVPA Conference

2010-11-30T12:38:00.000-08:00

The EVPA conference had three outstanding featured speakers. I have to admit that I am not a sucker for plenary sessions and guest speakers usually as I tend to get bored quickly during those. Jacqueline Novogratz, the founder and CEO of Acumen Fund, Percy Barnevik, ex-CEO of Swedish giant ABB and founder of Hand in Hand, and Sir Ronald Cohen, founder of European PE pioneer Apax Partners and social investor with BridgesVentures, were the featured speakers. They are pretty extraordinary individuals and each talked about his/her own organization that occupies a specific segment in the broader venture philanthropy and social investing universe.

It was quite interesting to hear how differently the three conveyed their message to the audience. Jacqueline and Percy mainly used story-telling while Sir Ronald was much more fact-based. Jacqueline told her usual Blue Sweater story which is her life story really as it starts in her early childhood. Barnevik did the same though he did not go as far back as Jacqueline did and started with his corporate days. Sir Ronald told us about his background growing up in Egypt and having to flee the country with his family after the Suez Canal crisis but the rest of his presentation focused on his last 10 years in the social sector trying to develop hybrid business models and, more recently, financial products targeting the social sector (social bonds).

All three got a pretty enthusiastic response though I felt (but I may be biased) that Cohen was the one best received. Also, I am used to seeing a much more emotional response to Jacqueline’s speeches across the pond in the US where it is not rare to see standing ovations and teary eyes among audience members after she has told her story.

The art of story-telling is based on the premise that the listener will come up with his/her own interpretations and draw conclusions and implications of what s/he hears. In contrast, the more factual presentation feeds information to an audience, thus lending itself to more limited interpretation. Also, personal stories in particular draw on others’ empathy. We tend to put ourselves in the shoes of the one telling his/her story. By eliciting our emotions the one relating her story will seek to compel us, to draw us to her, and also to possibly make us experience a a-ha moment of sort.

Therefore, there is much more processing going on with story-telling and that processing is often done through a very personal and subjective filter, especially when a personal story is involved. The audience has to work harder and the range of lessons and conclusions drawn will be wider than in the case of a factual presentation. But in the end listeners will be more engaged if they feel resonance with the story that they have been told. However, if they do not connect with the story the rest of the process, i.e. drawing lessons and conclusions and possibly experiencing personal growth thanks to a light bulb moment, will not happen.

Convergence around Social Investing at SOCAP10 and EVPA Conference

2010-11-24T09:40:00.000-08:00

I attended SOCAP10, the conference on social capital markets (“at the intersection of money and meaning”), last month in San Francisco and the annual EVPA conference (European Venture Philanthropy Association) last week in Luxembourg. Reflecting its membership the EVPA conference was mostly attended by intermediaries (on the financial / grant-making and advisory fronts) whereas in San Francisco there were also a number of social entrepreneurs.

Coincidentally, social investing was this year’s topic at the EVPA conference. It is a sign of how lines are blurring ever more between grant-making and investing in this increasingly populated pond between charity gifts and traditional investments seeking maximum financial returns.

It is actually ironic to think that impact investing is a relatively new notion for EVPA that happens to have been founded by veterans of the private equity industry in Europe, thus folks who lived and breathed investing for most of their careers but who have defined their involvement in the social sector in the form of philanthropy. I don’t know whether they will be interested to go back to investing – albeit of social nature – and, if so, how big an adjustment this will constitute for them.

Jean-Marc Borello, the CEO of Groupe SOS, was one of the rare social entrepreneurs present in Luxembourg but that may change if social investing becomes a significant area of interest for EVPA members. I frankly find it much more compelling to hear about an entrepreneur’s (or grantee’s) adventure related by him/herself than “derivative” stories told by funders or investors about their beneficiaries’ experiences in the trenches – but one degree removed from the action.

Thus, EVPA will probably have to strike a better balance as far as opening the floor to investors / funders vs. investees / beneficiaries.

Another major difference that I saw between the two conferences was the geographic scope of the actions that were presented. Whereas most of those who attended SOCAP seemed to be working on projects or ventures focusing on emerging markets / developing countries EVPA members have kept a domestic focus, thereby reflecting their geographic preferences historically. But this is changing – Jacana Venture Partnership is a case in point. Jacana’s objective is to promote the emergence of private equity fund managers in Sub-Saharan Africa. Its co-founder Stephen Dawson is the former chairman of London-based Impetus Trust, one of Europe’s premier venture philanthropy funds and one that focuses just on Britain.

Talking about emerging markets and developing countries, it struck me how little those regions were represented at both conferences. Granted, it is expensive for folks to travel from Asia, Africa, and Latin America to Europe or North America and also, a lot of ventures focusing on those areas that I heard about at SOCAP are based in the US or Europe – which itself poses a question.

But a higher representation is needed (through invitations or sponsored participations) for northern countries’ people to hear a different perspective (even for those working in emerging markets / developing countries) and to make sure that conferences in glitzy San Francisco or Luxembourg do not become private club-like gatherings happening behind closed doors.

There was little reference in Luxembourg to a topic that was very present at SOCAP, i.e. current efforts revolving around building the enabling context for the social investing sector. B Corp, an innovative kind of company focused on doing both well and good, was recently created by B Lab and new reporting standards are being developed by GIIRS (Global Impact Investing Rating System), another creation of B Lab, and by IRIS (Impact Reporting and Investment Standards), a project of GIIN (Global Impact Investing Network – a network of social investors). The two sets of measurement systems and standards have different purposes, one (GIIRS) centering on social investing per se while the other one (IRIS) aims to come up with a common language for describing social and environmental performance in general for any organization.

Putting together a robust enabling context is the prerequisite for significant financial resources currently invested in other asset categories to flow towards the hybrid sector between traditional grant-making and investing. It is great that things are moving forward in the US - and the impact of those actions intends to be global (the G in GIIR and GIIN). But Europe has to take notice and be aware of what is going on across the pond.

The upcoming SOCAP Europe in Amsterdam in early May will be a good opportunity to bring the two continents together and I know that the EVPA folks have already started talking with the SOCAP organization about how to collaborate best for that event and beyond.

Chile: Proud Miners and Populist President

2010-10-16T12:48:00.000-07:00

It is fascinating to see how the odyssey of the Chilean miners has captured the world’s attention for several weeks and how their rescue conveyed a message of hope – mining accidents do not end well in general as the most recent ones including in the US (in West Virginia last summer) constituted a painful reminder. Especially after the earthquake that struck their country in early 2010 this victory over fate is what Chileans needed the most.

I lived in Northern Chile for nearly two years – not that far from Copiapo and the location of that mine. I saw every day the faces of those folks from the North, the so-called Nortinos (Northerners), who for the most part have a mixed European and Indian (Native American) background. Despite Chile’s economic takeoff since the early 80’s and continued economic progress since the return of democracy the Northern provinces (Chile’s First and Second Regions) are still populated by mostly poor people. So, the mining industry in spite of its very tough labor conditions that still result in shorter than average life expectancy, continues to represent a major draw for the population as salaries paid tend to be higher than average.

Also, the mining industry that remains the main production of the country is an immense source of pride for all Chileans. Ironically enough, beside state-owned Codelco most mines belong to foreign interests but Chile is proud to be the world’s largest copper exporter.

The national sentiment and love for the flag (there is a holiday called Day of the Flag - “Día de la Bandera” – in Chile and elsewhere in the region) run deep in Latin America. Chile in particular – and you will excuse the generalization here – has always suffered from some inferiority complex towards its bigger and more buoyant neighbors, mainly Argentina and Brazil. This is partly due to Chile’s long isolation – the long strip of land by the Pacific Ocean near the tip of the continent was not an obvious destination for world travelers for a very long time.

Today, while keeping some of that low-key national character and inferiority complex, the country is mightily proud of its economic successes (at least compared to those of its neighbors and case in point of Argentina, the land of booms and busts - for instance the country’s national airline company Lan and its retail giants have expanded throughout the continent), its mining industry’s world leadership, and its political stability since the fall of Pinochet.

All of this explains why Chileans remained riveted by this story for weeks, why soon after the miners were found to be alive spontaneous celebrations erupted akin to those only seen after la Roja (Chile’s soccer national team) victories, and why the country literally exploded in joy, emotion, and pride when all the miners were brought back to the surface alive and well.

In the process, Chilean President Piñera demonstrated how he has understood Chile’s soul as he got extremely involved in the rescue efforts. First – and to his credit – he held himself accountable by saying soon after the accident that those guys would not be abandoned under his watch but then when the happy outcome was soon to become a reality insisted to be there in person for days on end and was the first in line to greet each one of the rescued miners (even the young Bolivian guy… inside joke for those who know about the acrimonious history between Chile and Bolivia).

Piñera acted as a big-time populist here. He is no Chavez and no Castro – his politics or rather his economics are exactly the opposite of his Venezuelan and Cuban counterparts’ but my god, did he force himself on the media stage – prime time, national TV, the country’s hero in short (“Heroe de la Nación”).

He has bought himself enough political credit to withstand whatever crises (economic or political) may strike the country in the next 2-3 years…

Kudos to Piñera for standing up and putting his rear end on the line as he did – but let’s also recognize how he chose to politicize the miners’ rescue.

Good Hair Day

2010-10-07T10:24:00.000-07:00

On my way back from Asia the other day I watched Chris Rock’s documentary Good Hair (see wikipedia page) that depicts the obsession of a lot of African American women about having “good hair”. Good hair means straight hair basically and the film does an excellent job of describing everything that so many women are willing and ready to suffer though to get their hair as straight as possible. Chris Rock has that charisma, charm, and instant connection and chemistry with folks so that he manages to get both women and men, as well as celebrities and no-name people in the movie to speak with their hearts about what “good hair” means to them – those comments are both funny and moving.

Incredible coincidence - my neighbor actually works for one of those LA-based human hair (from India!!) wholesalers. What were the odds, right? He said that the movie was quite accurate – so great job, Chris Rock, and a shout to my neighbor’s company…

Rent or borrow this move if you can. It says so much about the American psyche and about the complexity of social justice, i.e. the fascination of those African American women for straight (in other words Caucasian-looking) hair.

Absolut (sic) Double Standards!!

2010-10-03T15:13:00.000-07:00

I laughed the other day when I saw the Harvard subway station (T station) in Cambridge covered with big Absolut vodka posters. From time to time the Boston subway strikes a deal with a company to put its posters all over some given T station – and not only in the dedicated spaces. It is a little bit of an overkill from a subway rider’s standpoint but at least you can’t miss these ads…

Anyway, I was laughing when I saw Absolut going bezerk MBTA (Boston transit system) style because it made me think about how differently alcohol and cigarettes are treated in the US. Tobacco might well be another word for devil in this country…

Pointing to the addictive power of tobacco, its role in causing lung cancer and respiratory disease and other ailments such as heart disease is certainly the right thing to do. We don’t want our kids to start smoking, nor our grandmothers to smoke, nor our work colleagues, nor anyone around us for that matter because cigarettes stink. Alright…

But what about alcohol? How is alcohol less addictive than tobacco or less damaging to people’s health – to name a few possible repercussions, liver cancer, high cholesterol and heart condition due to alcohol high sugar content, and any dangerous situation that drunk folks can put themselves into?

I just don’t get it. Now, my point is not to discuss whether or not those among us who smoke or drink should be left alone as to how they choose to conduct their lives, what constitutes an addiction, or how much drinking and smoking cost to society from a public health standpoint.

What boggles my mind is just how smoking has been vilified whereas drinking is very accepted in this country’s culture. When I walk around in some Boston neighborhoods (you know who you are, Southie friends) and I see all those folks whose faces are totally ravaged by alcohol (and probably smoking too), I don’t understand how we as a society feel that it is ok. I live next door to a bar – a lot of folks are drunk when they leave. You find people going into bars and taverns at all times of day in certain neighborhoods. And this is more acceptable than people smoking a pack a day? I don’t see how.

In contrast, Europe has been as aggressive in its prohibition of alcohol advertising as it has been with smoking. Western European governments appear to consider that both drinking and smoking can have negative public health repercussions and thus, neither is encouraged – on the contrary high taxes on those products and limited advertising intend to curb consumption.

Why such a different outlook on drinking vs. smoking in the US? I don’t know... Enjoy the good times, Absolut!!

France is Hurting

2010-09-20T08:40:00.000-07:00

I was in France for a few weeks over the summer and the level of discontent I saw among most people there struck me. I know the stereotype about French folks complaining and whining all the time – or at least a lot. This is not necessarily inaccurate but today it seems to have reached epic proportions. And what I heard behind the complaining was quite alarming: widespread sheer unhappiness and fear about the future.

I tried to figure out where all this malaise – uniquely French word indeed… - comes from.

1) Increased stress at the workplace: this is an unintended consequence of the shift from the 39- to the 35-hour workweek several years back. The new law reduced the work time but employers were obligated to keep salaries at the same level. This brilliant economic calculation logically resulted in employers not recruiting anyone for a while – even though the 35-workweek was at its core a measure intended to promote job creation… So basically, folks were told, you may work fewer hours but you’ve got to do the same amount of stuff.
And the headaches and increased stress were not limited to employees. Managers find themselves having to deal with their employees’ increasingly complex and ever-shifting schedules. Those who continue to work through the week without stopping at 35 hours get comp time – 2 days a month (24 days a year – 5 weeks!!!) on average. The comp time generally has to be taken the same month it is granted so that people can’t accrue too much vacation time (which is about 5 to 6 weeks already). Thus, any given day at least one team member is likely to be absent and the job still needs to get done…
What is more - as a consequence of having so much free time, organizing that extra comp / vacation time has become a substantial activity for a lot of folks – and certainly a distraction at work… While they are thinking about when it the best time to go to Musée du Louvre to avoid the long lines, they still have work to do… bummer!!

2) Ambivalent position towards reforms: I feel there is a broad understanding that reforms are needed, especially regarding pensions that are a ticking time bomb in France like in other industrialized nations. That being said, there is widespread concern that today’s benefits – whatever they are because they vary from company to company and quite significantly for those who work for the civil service - will be paired down a lot, which would mean for instance that a 55-year-old having worked hard all his/her life would have to wait until 65 instead of 60 to retire with full benefits if the retirement age was to be increased. The frustration and concern are understandable.
What adds to the frustration of most is that there will be double standards in the way reforms will come to pass. Civil servants working for ministries like the Ministry of Education or large state-owned companies like SNCF, the railway system operator, make up an ultra-sensitive group of stakeholders whose salaries have historically been pretty low compared to private sector compensations but in return whose benefits were quite good. The current administration knows from experience that this group is willing to go on strike and paralyze the country – an effective blackmailing strategy. Thus, those who are not in the civil service or do not work for large Fortune 100-type companies (that tend to offer more generous benefits than small and medium enterprises) feel as though they will be the ones who will pay at the end so that others can keep their benefits - or not lose as much as they will.

3) Lack of prospects: for most young people unemployment seems to be the likeliest prospect unless they graduate from the best Grandes Ecoles, the Ivy League-like graduate schools offering their students the best job and career prospects for that age group. Unemployment among youth has been at an all-time high – and poverty among young people (between 18 and 30) has become a nation-wide issue. It was heart-breaking for me to hear from the adolescents I spoke to (they have not even finished high school yet) that they were certain to be unemployed at some point in the next 10 years… Unemployment is a major concern but beside that concern young people don’t seem to believe that they’ll be able to have great careers and exciting jobs – not even that they will be able to make that prospect happen by themselves. What about a cool start-up? Certainly the French education system is generally not very good at fostering kids’ creativity - but it is still scary to think that the concept of being in control of one’s own fate, namely if you work like a dog things are pretty likely to turn out fine at the end, just seems foreign to most.

4) Too much aggressiveness in labor relations: I don’t know if this is because of the added stress that I mentioned above but I’ve been amazed at how aggressive relations between people have become, and in particular in the work place. In most stories I hear about relations at work, especially between manager / boss and employee, a win-win outcome never seems to be in the cards. Either one or the other is going to get screwed. And that happens mainly because folks will tell you that they know for a fact that the person across the table just wants to take advantage of them. Wow…

5) Middle class feeling squeezed: in a trend similar to the US and Britain in the past 15 years – but very uncharacteristic of France’s long period of growth following WWII that put the country solidly among the richest industrialized nations – the gap between the rich and the middle class has widened as the middle class’s real income has remained flat while that of the richest experienced a substantial growth. Like in Britain and the rest of Europe the expansion of professional services firms (consulting and banking) and to a lesser extent the increase in executives’ salaries in Fortune 100-type companies have broadened that gap while ordinary people were supposed to be content getting the inflation as an annual increase on their pay. Central Paris has become as closed to the vast majority of the population as are most downtown areas in New York, London, Boston, etc. With real incomes staying flat and quite a bit of inflation on some food staples like milk, meat, or vegetables in the past several years (overall inflation figures show modest increases but the consumer price index includes such sectors as tech products or cell phones whose prices have tended to go down for the same set of specs) the middle class is definitely feeling the pinch – and they think it is unfair.

6) Lack of leadership: Nicolas Sarkozy’s Dr Jekyll and Mr. Hyde personality does not inspire his countrymen and women. He can be visionary and innovative but also paranoid and controlling - and most people in France, even among his supporters, now see through his dual personality. Ironically, the country that produced Louis the XIVth (14th), Napoleon, and more proudly General de Gaulle is not big on leadership – probably some libertarian resentment toward the boss figure (the French invented the Guillotine after all). But still – whenever French people look toward the top and get confusing signs from a leader whose powers are immense (France’s “Fifth Republic” has fewer checks and balances to counter the President’s power than most other industrialized nations), that does not help them feel good about their future.

I am not sure where the country will go from there. It is indeed very French to worry about the country’s “decline” (from its powerhouse status dating back to the 18th century…) and I’ve heard heated arguments about this supposed decline for years. But this time it is different. French are frustrated, anxious, and often plain mad (as a result, racism is going up these days) and they generally don’t have the Americans’ optimism and resiliency to envision – and more importantly – work hard for a brighter future.

Quran Burning – Really?

2010-09-13T06:02:00.001-07:00

I was shocked in the past few days that that pastor in FL who wanted to organize a Global Quran Burning Day (!!!!) on September 11th got so much press coverage and such mellow reactions at first. Granted, the US is a country where freedom of expression is sacrosanct – that is how it is possible for Ku Klux Klan advocates or those nostalgic of the Nazi era to demonstrate unopposed by the police. But the KKK / Neo-Nazi folks are exactly in the category where I put that pastor and his crazy and dangerous idea.

This is serious and worrying anti-Moslem sentiment – the worst example of racism. Period.

Inspired and Inspiring Individuals

2010-09-03T17:46:00.000-07:00

I was fortunate to travel to Bogota and Rio de Janeiro a couple of months ago and on my way back from Rio, I sat on the plane next to a guy named Alberto with whom I struck a conversation that turned out to be extremely interesting. Alberto who is an architect by background and designs multimedia and pyromusical events has a passion for Tanzania and decided to start his own organization, Bricks for Life, that has already funded the construction of a library in rural Tanzania and is helping local youth acquire valuable professional skills, using architecture as an instrument for learning (i.e. brick-making, masonry, carpentry, eco-orchard, eco-garden, water harvesting projects, solar power/water heating projects, etc.).

It is a sign of our times that people like Alberto - whatever their means - take matters in their own hands and try to solve the problems that they particularly care about. I think we have a generation of Fixers here. They happen to be individualistic and entrepreneurial too. Here goes their thinking, “why defer to others hoping that they will solve a problem that bothers me”? And also, “I can’t see anyone that does this – or does this right, so I may as well do it myself”.

Bill Gates - and to a lesser extent Pierre Omidyar and Jeff Skoll - have been the most prominent figures of that generation of Fixers. Basically they walked away from the old habits of traditional philanthropy, which I would characterize as active / passive (active because traditional philanthropists would donate money but passive because they also generally accepted the context and resulting agenda of the sector that they got involved into), to rather be “active / active” social investors as they prefer to call themselves.

Gates’ work in global health is the best example of this new way of doing things. What he did was simply to change the global health agenda. He did so by committing vast amounts of money to fight tropical diseases like malaria which everyone had deemed urgent to cure for years but yet that remained under-funded.

Gates and his friends are not afraid to impose their own agenda for an entire sector despite being totally new to it. This is the kind of power and influence that history associates to 19th century philanthropists like Carnegie or Rockefeller.

The Giving Pledge initiated by Bill Gates and Warren Buffett that prompted 40 billionaires to commit part of their wealth to philanthropic causes drew a lot of attention this summer. It is great that Gates and Buffett are raising the bar and are not shy to look toward their peers and say, how about you guys, what do you do with your money?

But the generation of Fixers to whom Gates, Omidyar, Skoll - and Alberto - belong has something else than money in common, namely their drive to make things better.

You don’t have to have money to be one of those Fixers. I am always amazed when I watch Extreme Makeover Home Edition that features ordinary individuals and families with average (or below average) incomes who often make a tremendous difference in their communities through volunteering or some meagerly paid socially-valuable work. They are certainly not well off - and yet they also took matters in their own hands and decided to make a change.

Changing the agenda of an entire sector like global health or homelessness is probably reserved for those with vast amounts of capital at their disposal because money will move the other actors in that particular field and/or draw new ones.

But evidence shows that you don’t need to be a multi-millionaire to be a Fixer and a Change Maker. I am happy that our era counts with Alberto and others who are taking concrete actions to make this world a better place.

Obama Misunderstood By Most Americans

2010-09-03T09:05:00.000-07:00

Time Magazine published an interesting piece about why President Obama has become Mr. Unpopular as they call him. It seems to me that the Democratic Party exemplified by Obama mainly appeals to some “happy few”, namely wealthy / highly educated Americans living in major urban areas.

Obama has probably kept the black vote too – as Clinton did, which is not surprising as we celebrate the 5th anniversary of Katrina and the Bush administration’s major failure in responding to the disaster.

But who else is on board? A significant portion of the working class has historically sided with Democrats because they were supposed to defend those folks’ interests better. But for those experiencing economic hardships it makes no sense to be behind this Administration: they don’t relate to its leader nor have they not benefited from its actions in general.

I don’t hear much about unions these days, so I am not sure where they stand. But I would be surprised if they were elated with this sluggish economic recovery that comes with few job creations. As I wrote in an earlier piece, I fear that this recovery – even when it gets stronger - unlike others in the past will not bring as many new jobs.

Ironically, those who are disenchanted with Obama’s politics do not like big government according to the Time Magazine piece - and yet they are criticizing the Administration for not getting the economy out of its present mess. Most are in favor of tax cuts which seem to be the one and only remedy they can think of for fixing an ailing economy. Maybe that is their vision of the government’s role…

But my point here is about the disconnection between the President and most people who voted for him in 2008. I can almost feel a “social class” disconnect – at least among non-African American voters.

There is a tremendous danger that the Democratic Party becomes the party of the rich, sophisticated, intellectual people while ordinary Americans - and I don’t like using the term “real people” because it tends to be exploited by populists in politics but that is what I mean – will find very little in common between them and what has become the Democratic Party.

Another sign of that “canyon” between the Obama Administration and most Americans is reflected in the people who came to work for the President. There was an amazing wave of enthusiasm in late 08 – early 09 among “the best and the brightest” (or considered as such by our system) to serve for the Obama Administration. Top schools and most prestigious employers in the country were heavily represented among those who got recruited – so many hailing from Ivy League schools or the likes of Stanford and from powerhouse professional service firms, Goldman Sachs in particular.

In a kind of closed loop transplants from those companies, schools or institutions recruited their kin, a crowd of devoted, smart, and hard-working people happy to forego their big Wall Street or Corporate America salaries to work for the Administration.

But how could this homogenous group be representative of America or can we expect that ordinary people will relate to them? “The best and the brightest” will please the wealthy / highly educated / (faux for some) liberal people – who else really?

The current malaise between Obama and most is also caused by the growing angry undercurrent in the country right now. It is certainly due in part to the economic situation and the hardships it has caused to most. But there is much more to this as evidenced by the success of the Tea Party or, more anecdotally, by most comments to the articles that I read on the Boston Globe web site. Every time I browse those comments – recently on an article pointing to the higher price of cigarettes in disadvantaged vs. wealthy neighborhoods – I am struck by how resentful and almost heinous they are. Where does the hate come from? I first saw that anger come to the front locally during the Skip Gates affair last year (when he was arrested by mistake upon entering his home in Cambridge).

Also, the Administration’s actions go against a lot of people’s deeply embedded values or beliefs, for instance their anti-government stance and individualistic nature. Obama won zero point on the health care reform with those who believe that government can’t fix problems (on the contrary…) and who did not care much that a significant portion of the population did not have health care coverage - since they were not affected directly.

I see another sign of that angry undercurrent in the fact that only 1 in 3 American identifies Obama as a Christian - this is anti-Moslem prejudice and it worries me. Finally there may be some “hangover effect” after the exhilaration of having elected the first African-American President in US history. Some voters I am sure are wondering, how did I exactly benefit from being socially progressive – however good it may have felt at the time?

The candidate Obama electrified crowds during his campaign with his message of hope. The reality of the recession has struck hard – hope is an afterthought for many. The current context may just accelerate the dwindling of the Democratic Party to an ever smaller and marginalized – though powerful – group of Americans.

One too many “dumb guy” commercial…

2010-06-20T07:37:00.000-07:00

I think I’ve seen one too many "dumb guy" commercial the other day… I mean the kind where a 20-something acts like an idiot with a woman the same age who is evidently much starter than him and saves the day. What’s more – in those commercials guys are shallow and appear to only like sports, cars, and sex basically. That’s the message. I don’t care for cars but I do like sports and sex, so yes the statement is partially accurate probably but this kind of commercials is twisted in a much more profound and disturbing way.

My interpretation is the following: in our society there remains huge inequality between men and women – and that starts right in the cradle and continues through childhood, teenage years, to adulthood up to Corporate America C-suites or other circles of power where women are still vastly under-represented. And for the same job there is still a difference in compensation between men and women in most professions.

So, the way our society (or rather how corporate America and Madison Avenue see it) compensates with this continued state of inequality is to portray young men and women 1) in a totally stereotypical and grotesque way and 2) in a manner where the balance of power is reversed.

Not only are women way smarter than men in those vignettes of our society but they are the ones in control, making up for guys’ dumbness, solving problems, and saving guys’ blunders.
The rationale of Corporate America and Madison Avenue is maybe that women will feel good about themselves watching those commercials and men will feel less guilty about their actual dominating position – unless they are too dumb to get the gist of those jokes of course…

I don’t know how others feel but I find this whole thing (those silly commercials and the wicked sub-text) infuriating frankly… I like humorous commercials but instead of giving us a false sense of comfort about equality and fairness in our society, they should bring up those issues in a humorous yet substantive way and we as a society should push much harder to resolve them. Let’s not keep our eyes off the prize…

Farewell to Bill Moyers

2010-05-12T09:02:00.000-07:00

Friday night April 30th was the last edition of the Bill Moyers Journal on PBS. Moyers is a monument of American Journalism and he has presented a series of journalistic programs on PBS (Public Broadcasting Service) over the years. Coincidentally, NOW that he hosted for years had also its finale that same Friday. I watched the Journal as often as possible and it struck me consistently that I just did not hear anywhere else what I would hear on the Journal.

It prompted me to think about what information reaches us - and how. It is hard not to infer that the information that we get is filtered big time…

Moyers had strong liberal opinions that he was not afraid of expressing, so those who disagreed on his political views had an easy time criticizing him. I am a bit biased since I would agree with him most of the time. But I think I am critical and analytical enough to see what a balanced opinion is - and it always seemed to me that Moyers asked the good questions and wanted to get to the bottom of whatever topics he covered. I never felt that he gave a pass to anyone on his program.

I read the comments posted by many viewers after his last program and I share most people’s concerns that when Moyers goes (and he’s gone), where will we find balanced, thorough, and fair journalism?

Part of the finale was about everyday folks who had decided to make themselves heard and were not afraid to stand up to “big interests”. The coalition of Iowa Citizens for Community Improvement was featured and I was compelled to see very different people in that coalition in terms of age, background, ethnicity, profession, sharing that same concern, i.e. they had had enough of being trampled on and not being able to express their opinions.

I feel like in the US most of us have given up and are just passive in front of whatever is decided by Washington or big corporate interests that affects us directly. Or rather we think we are powerless – so why bother?? That is a very scary thought.

Also, I think Americans are distracted by their everyday concerns. So many of them are just focused on getting by and making ends meet, let alone preparing for their future and that of their kids (because of the absence of a safety net) that they won’t bother protesting whatever Corporate America or Washington decides that they disagree with. They have bigger fish to fry…

In my view, a lot of folks in this country are like rats in a maze running like crazy or have constantly a gun on their heads – it is just about getting to the next day. Especially since the economic crisis struck.

There is some cultural aspect at play as well I believe. Culturally, Americans are pretty disciplined and law-abiding, which may be helpful sometimes (you don’t sweat about being jumped ahead when you wait in line here…) but also may lead to a certain degree of passivity.

Thus, seeing that group of ordinary citizens rise and say no to business as usual was very comforting. The message was that it does not have to be that way – being a “nobody” and not having connections does not mean necessarily that you’ll never get your voice heard.

Also, it was a shot in the arm for me - with respect to my own engagement and level of optimism. Each one of us has a role to play and we can make this world look like what we want it to be…

Moyers said that he was optimistic about the future as long as the US remains a society of citizens vs. a society of consumers… He could not be more right.

Thank you, Mr. Moyers!!

Are we Winning the Race?

2010-04-22T20:22:00.000-07:00

Happy Earth Day, Everyone!! I had a chance to follow from a distance the Skoll World Forum that took place in Oxford from April 14th to 16th. I was actually getting ready for a trip to South Africa and I ended up grounded in Boston because of that Icelandic volcano ash cloud…

So, I read the summaries of every session on the Social Edge web site. I was struck by the extraordinary variety of subjects that were addressed and by the enthusiasm that this Forum aroused. Videos posted on the site featured happy participants who seemed aware to be part of a global movement (apparently there was a good representation of folks from Southern countries) in which everyone wants the same thing (broadly, make this world a better place) and goes in the same direction, whatever folks work on specifically, improving access to drinking water or supplying financing to SMEs.

I had felt the same momentum and enthusiasm at SoCap 09 last September in San Francisco (see my earlier post about it).

I must say however that sometimes I wonder whether we are talking about a movement or rather a small club closed to the outside world since you tend to run into the same folks and see the same presenters in these conferences. But lets’ remain optimistic – last weekend around the same time that the World Skoll Forum was happening, there was a massive conference on global health at Yale in New Haven with a truly impressive set of presenters. And the other thing that makes me optimistic about the viability of this movement is the increasing number of young folks under 40 who are active in the social sector (however broad its definition) and are in the trenches day in, day out trying to make things happen.

Now, let me go back to one of my favorite themes - sounds like a broken record I am sure… The topic is impact and results. All this enthusiasm and energy for what exactly? At the end of the day, the objective is to make this world a better place. Are we successful? Isolated initiatives have that powerful PR effect when they work: it is nice and easy to communicate on x number of houses built in a village or y number of farmers whose income doubled. And yes, if there are a lot of those isolated initiatives, there will be some impact. But as I wrote in post some time ago on social investing, what is the real macro impact? To what extent are we getting the needle to move?

I have some doubts that the needle is significantly moving actually but the truth is that we don’t really know. It is just very complex and expensive to aggregate results of those disparate projects out there, big and small. Even doing so at the scale of a country (not a big one for that matter) is complicated…

Why is it important however? Because all of us in that movement are engaged in a race against time – look out there and consider a not so sustainable development in most places, climate change over which we have little control, or social inequalities that keep widening (just think about how the middle class is struggling right now in rich countries – we did not quite see that one coming, did we?).

I don’t know whether we are winning that race or not. But what I do know is that we have to do a better job of measuring our collective progress and put that outcome in a standard macro-economic context so that we will better understand where we are in that race but also what it will take to win that race and cause the needle to actually move…

If that does not happen, don’t be surprised to see people dropping out of the race – discouraged and disheartened because as rewarding to them and valuable in general their efforts are they won’t be able to figure out how their actions are helping the greater good.

The Predictive Nature of Leadership (II)

2010-03-21T21:12:00.000-07:00

See Part I below

So, what else to look into or look for? When I was doing those interviews, I would ask about personal and professional aspirations. We would also discuss that person’s vision of his/her environment. How does s/he see the world around him/her? Asking about aspirations was a good way to check for a combination of realism and ambition, which I consider to be a telling leadership trait. The thing with the vision of one’s world is that it gives a sense of how self-aware the person is and also how broad or narrow his/her universe is. I find it quite fascinating to hear how someone defines his/her universe – where to place boundaries? Should those be geographic, sectoral, topical, or generational? Self-awareness is indeed an important leadership trait and I am also biased towards breadth (not having a narrow definition of one’s world) – actually for that matter, a definition that is different (someone who is all about cars for example, and community of car aficionados, new technology around cars, etc.) would strike me as interesting as well.

I also found that the few that I interviewed or with whom I worked like Brian and Abby (whose organizations I discussed in earlier posts) who were clearly off the charts had a lot of charisma, and in particular had just incredible grace. I am not sure whether grace is an innate trait and I know it is certainly not a requirement for leadership, but seeing those young folks show so much grace I knew right away they would go do great things.

I probably did not do enough of those interviews nor have I spent enough time thinking about this question of whether and how leadership can be predicted - but I always felt that this is more an art than a science. Think about the various leadership traits or ingredients that I have mentioned. It would be nice to look for a combination but what’s the minimum threshold for each of them – or is there a minimum overall level to target? This does not seem much practical.

And intuition played a role too, and not an insignificant one. Again, this is related to my own bias. While knowing that I am quite analytical I am also quite intuitive and I trust my instincts. I saw this at play when I was interviewing folks and I would be convinced that those guys would be community leaders. What community leadership means essentially is that students may play leadership positions on campus but above all, they are outstanding members on campus, always being there to help others and being a resource to their classmates whenever they can.

I had that type of intuition a couple of times. That could seem odd because today for a candidate to convey that s/he is a going to be an outstanding member of his/her community is among the requirements. You know the short program in skating and whatever figures skaters have to do – that’s the same for anything related to community in a business school application and interview. Despite the fact that I heard dozens of times folks telling me that they would be engaged from day one, I knew listening to some of them and observing their body language (the sparkle in their eyes, their excitement when I brought up the subject) that they would very likely be truly outstanding classmates.

The funny thing is that coincidentally after some got admitted I caught a glimpse of them doing exactly that: I saw one of my students helping another student in Finance in her classroom and I also heard about another one who was working hard to help his fellow ex-military classmates to think about possible jobs in the corporate world.

In sum, I don’t have a secret formula for predicting whether young folks can become leaders in their own right. Past leadership experience counts. Personality traits such as humility, self-awareness, ambition, selflessness all matter as well. Those are the ingredients. But we also know that leadership is often expressed in challenging times and thus, the true test may very well come only whenever life throws a curve ball at those folks and they have to step up to the plate and react quickly - without having the time to think about the stuff they learned in school or the good intentions they swore they would have no matter what.

The Predictive Nature of Leadership (I)

2010-03-17T19:53:00.000-07:00

[This is the first of two installments.]

When I was doing business school admissions work, one of the big questions that I grappled with was how to tell if a candidate was going to be a future leader. Leadership potential is a key component of any successful business school graduate, so it is legitimate that it would constitute one of the main criteria for admission into business school.

Looking for evidence of past leadership would seem the first thing to do when considering the potential of a candidate – even though the track record of any 25-year old can be slim and also, like in the stock market, past performance does not help predict future one…

For those educated in the US, extracurricular activities give them an opportunity to take on leadership positions in their teen years (e.g. captain of a sports team, class leadership position in high school) and then in college. Moreover, the notion of leadership is one that is understood, well developed, and valued in this country whereas in others – and I am thinking of Europe and Latin America which are regions I know a bit – it is either considered fuzzy (what does leadership mean exactly?) or even despicable in some more egalitarian societies (if someone leads, others will have to follow – but aren’t we all equal?).

In my reflections and discussions with my colleagues about leadership, the very nature of leadership was addressed. What dos it mean to be a leader and how can one lead? The stereotypical nature of the “quarterback leader”, i.e. charismatic figure (often a man) who inspires and awes his colleagues and gets them to work like dogs and do anything they can to please him and reach the organization’s goals, is far from reflecting the full range of what leadership is or should be. Other forms of leadership, such as thought leadership (which is about producing breakthrough concepts rather than leading others) or quiet leadership (which characterizes a more subdued management style), are also now considered legitimate.

However, broadening the definition of leadership does not fundamentally change the question of predicting whether anyone will be a leader. Past evidence does matter. Exposure to leadership positions is valuable because it will guarantee that the person will have learned some skills from that experience, however easy or difficult, successful or tedious. I think it does say something about a young person’s motivation as well even though a lot of young folks seek those leadership positions as “resume builders” because they know that higher education institutions or employers will be looking for those experiences when scanning resumes or going through applications.

So, what else to look into or look for?

Feel free to share your thoughts on the subject… Thanks!!

Comic Relief – Who Speaks Legalese??

2010-03-14T21:07:00.001-07:00

One of my students sent me a job posting the other day for me to review it in preparation for an interview with a potential employer. The position was a very typical post-MBA product management job in a tech company – nothing unusual that far. But them upon reading the posting I stumbled across the following paragraph:

“PHYSICAL DEMANDS: While performing the duties of the job, the employee is regularly required to use hands and arms and talk or hear. The employee requires dexterity in using telephone, computer keyboard, mouse and calculator while seated at a desk. The employee is frequently required to stand, walk and sit. The employee may frequently move to interact with fellow employees and/or clients. Specific vision abilities required by this job include close vision, depth perception and ability to adjust focus.”

I am not making this up… The employee is required to use hands and arms and hear and talk – well, duh… The employee requires dexterity in using telephone – wow, why not virtuosity? And oh yes, the employee is required to stand, walk, and sit – good thing that he/she is not expected to crawl or swim…

When I shared my disbelief with my student, she sort of smiled and said, oh yeah, this is very standard now… So, to those of you who work in Corporate America or Corporate Somewhere Else and are not surprised by this either, I am telling you, wake up, people!! We are talking about an extreme case of Legalese here…

In this world of absurd political correctness, we should pause for a minute and think about what extremity of ridicule we’ve let things reach without reacting…

Global Citizen Year – Shaping the next generation of young Americans

2010-03-02T09:10:00.000-08:00

I wrote about Brian, a former student who started The Right Side of History Campaign, in an earlier post. Another ex-student of mine who is just brilliant, Abby Falik (Abby was one of the speakers at the Harvard Social Enterprise Conference this weekend), created a compelling organization right out of business school, Global Citizen Year. The idea behind Global Citizen Year is to engage a bunch of young Americans in a 9-month program, after they graduate from high school and before they start college, in order for them to get immersed in developing countries where they work for 6 months with local NGOs.

Abby came to business school with the seeds of that project in mind as she had been struck by the lack of international exposure of Americans in general while realizing also that the younger generation was probably different, namely much keener to get connected to the rest of the world. Being one of the so-called Millennials, she also knew that those folks constituted the most socially-conscious generation in history for which doing well does not come without doing good.

There is a long tradition of service (i.e. volunteering) in the US, dating back to the 30’s and the Civilian Conservation Corps created by President Roosevelt and the Peace Corps in the 60’s. Then AmericaCorps was founded in the 90’s during Bill Clinton’s first term and today thousands of young people spend a year doing service as part of organizations like YouthBuild or City Year.

Global Citizen Year draws upon this tradition and adds an international flavor, also targeting slightly younger folks and integrating some component of learning.

Abby who is an extraordinary young woman (by her smarts, grace, and determination) has been successful at getting her organization off the ground quickly and has managed to gather a “heavy-hitting” Advisory Council in particular, with the likes of Wendy Kopp, Teach for America’s founder, HBS professor and “leadership guru” Rosabeth Moss Kanter, or Matthew Flannery, Kiva.org’s founder and CEO.

Abby’s vision is for her organization to count 20,000 alumni, have reached out to 10,000 “host communities”, and have 5,000 projects implemented thanks in part to the GCY Fellows by 2020. This is an ambitious target for a program that costs over $25k per Fellow but GCY is already active in Senegal and Guatemala and is looking to expand to other countries in 2010.

More importantly, Abby knows that her nonprofit cannot do it all by itself and have a truly significant impact – there are about 75m of 18- to 34-year olds in the US alone after all... She has to create a movement so to speak, 1) to institutionalize a gap year between high school and college (that is what she wants) or to make it standard for young people to include a year of service in their education in the US, and 2) hopefully inspire similar initiatives around the world that would have young folks from northern and southern countries go spend several months abroad working on projects having social impact.

I am proud of you, Abby.

The Social Innovation Fund: What to Watch in 2010

2010-02-20T10:33:00.000-08:00

The Obama Administration has set up the Social Innovation Fund with a view to replicating solutions to social problems that have proven effective. 2010 will be a pilot year for the Fund as the first $50m will be disbursed, actually $200m in total as the remaining $175m should come from matching private funds (not an easy task by the way in those tough economic times).

President Obama and his team have tapped into one of the characteristics of the social sector in this country when they designed the SIF: the very entrepreneurial nature of the sector has caused a lot of innovative initiatives to get off the ground. In Boston for instance there is a cluster of nonprofits that have specialized in after-school programs and have earned excellent programmatic and management reputation, such as Citizens Schools, Jumpstart, BELL, or Summer Advantage. Obviously, one has to wonder whether those guys talk enough to each other and partner on joint initiatives – but the proliferation of organizations surely multiplies the chances that new solutions to serious problems will be found.

Those programs or projects can thrive at a local level as it is usually not that hard to find enough funding to pay for activities at a limited scale. However, securing money to pay for a national expansion is a totally another ballgame and the process of expansion itself is complicated and full of pitfalls. That is why the Social Innovation Fund sounds like such a great idea.

This is how the SIF will work: $50m are going to be shared among 5 to 7 intermediary organizations that each will receive between $5m and 10m. This is actually a 5-year commitment, thus those intermediaries will receive the $5-7m amount for 5 years.

By choosing to work through intermediaries, the Fund does what would seem most efficient – no need to treat directly with the multitude of nonprofits on the ground that will receive its support. Also, the model of managing a portfolio of promising organizations and supporting them in their growth phase over several years is quite proven - it is actually called Venture Philanthropy (VP). The likes of New Profit or Venture Philanthropy Partners (VPP) were the pioneers of that “movement” about 10 years ago (not a lot of other VP shops have actually emerged and succeeded since then). Certainly, they know what they are doing.

Now, I do believe however that the SIF grant-making model presents a couple of potential problems. By subcontracting the selection of the ultimate beneficiary organizations to intermediaries (even though it will issue selection criteria) SIF runs the risks that the whole process will lack consistency from one intermediary to the next. Furthermore, if the Fund ends up working with New Profit or VPP, how can we be sure that they are not going to push their “protégés”? They have all the incentives in the world to do so. If they stick to the same organizations they already picked to join their portfolios as beneficiaries of the SIF money, intermediaries won’t obviously have to find the funding that those nonprofits would have needed in the next 5 years. Also, why not promote their “protégés” as VPP or New Profit will already have conducted thorough due diligence and established the social value and effectiveness of those entities’ models? Thus, the likelihood of the New Profits and VPPs of the world seeking out other nonprofits is pretty low.

What is more, even though I did not attend any kind of secret meetings or am in the know on this, I’ve heard enough in the last few months that New Profit, VPP, or Root Cause (another intermediary but one that does not do VP) have engaged in a serious lobbying effort towards the Obama Administration (where they know a bunch of folks) in order to make sure that 1) the money goes through intermediaries like them, and 2) they are the ones actually getting it.

I am not suggesting that they have lacked or would lack integrity but it is fair to say that there is some form of tug of war or rat race around and after this SIF money. I should add though that the press release relaying the news about the 2010 funding pointed out that new intermediary organizations are encouraged to apply for the funding available. We will see if that happens or not and if it does, who is behind these new intermediaries.

The last potential difficulty with the SIF set-up has to do with the challenges of replication itself. To take a community organization that is active at the local level and make it a national force is extremely complex. Scaling – without even going from local to national – is hard and history shows that there have been more failures than successes and that the process is very long. Thus, let’s be realistic and not wait for early miracles!!

In sum, replicating ideas and models that have been most effective at solving social issues is great and much needed. Obama likes to take the Harlem’s Children Zone (HCZ) as an example of an organization (founded and led by the charismatic Geoffrey Canada) that has changed the lives of so many kids (by investing in their early childhood development) and whose model should be replicated in every corner of this country. But my sense is that not all beneficiary nonprofits will be such an obvious pick...

Overall, I remain optimistic and positive about SIF because at the end of the day let’s not forget that dozens of organizations ($200m distributed with an average grant of at least $100k) will be able to ramp up their activities. But there are a few things that we’ll have to watch closely:
· To what extent can matching funds be raised to the level of $175m as planned?
· Will other intermediaries than the usual suspects like New Profit or VPP be selected?
· Among the beneficiaries that VPP or New Profit pick – if they are indeed chosen by SIF – how many will there be that are not in their portfolio currently or were not in the process of becoming one of their portfolio organizations?
· Will the beneficiaries’ management capacity be high enough - whatever support they receive from the intermediaries - to overcome obstacles of scaling up and replication?

The Right Side of History

2010-02-12T10:31:00.000-08:00

I wanted to tell you about one of my former students, Brian Elliot, who founded The Right Side of History Campaign a couple of months ago. What prompted Brian to create that organization was the passing of Proposition 8 in California last year that banned gay marriage.

The LGBT (Lesbian Gay Bisexual Transgender) community still suffers from a number of discriminations in this country and the question of marriage is just the tip of the iceberg.

Brian has chosen to target the straight community to help spread the word about those discriminations and bring about change eventually. He drew an analogy with the civil rights movement in the US in the 60’s when the force that made the difference and caused the Johnson administration to pass sweeping civil rights legislation was not so much the activists or the African-American community (despite the obvious leadership of Martin Luther King or Robert Kennedy) but rather the non-militant white community who got absolutely disgusted and ashamed of seeing on the evening news footage of local police treating black protesters like animals in Selma and other places in the South.

Brian thought that the same rationale could be applied to the non-militant straight community regarding LGBT issues. If the outrage about unfair treatment of LGBT folks on many levels came from straight people, the probability of successful change would be much higher.

Straight Talks for Equality is an initiative launched by the Right Side of History Campaign. As its name indicates, it is about straight folks having conversations about what equality means to them and why some portions of the population, including LGBT people, are still discriminated against today.

Brian has relied on social networks such as Facebook to spread the word towards young people who constitute the Right Side of History’s target age category. He launched a group on Facebook called Give Brian Equality and in just four weeks over 19,000 supporters have become fans.

Brian and his team are working on their web site which does need improvements right now and they have already completed their business plan and raised about $30k.

Go Brian!! A lot of social justice issues are unresolved in the US and elsewhere around the world and it is great news that someone as gifted as Brian Elliot who could do pretty much whatever he wants in the corporate world and make a bundle of money has chosen to take on issues that are not necessarily popular with all Americans or figure prominently on their radar screens.

Haiti Earthquake: A Missed Opportunity for Large NGOs

2010-02-05T16:15:00.000-08:00

The Haiti Earthquake is slowly drifting out of the headlines and as the number of casualties is said to top 200,000, there have been alarming reports that aid does not nearly reach the multitude of people in need.

I don’t know whether coordination is worse this time than it was in 2005 in the various areas hit by the Tsunami. It is probably easy to think that it should not have taken much to come up with some disaster plan ahead of time and then follow it when sadly the catastrophe happened. But I am pretty sure that this is not as simple when it is just chaos around as it was the case shortly after the Earthquake. It is also rare to see a disaster of that magnitude hit a capital city with high density and a large population. One has to remember as well that the Haiti administration ceased to function almost entirely overnight and that most of the senior UN folks died when their building collapsed.

However, a few weeks after the Earthquake hit, it must be extremely frustrating for the population – and for donors on this side – to see that aid is not reaching its destination.

Like in 2005 big humanitarian organizations are competing for people’s financial contributions to the relief efforts. As I pointed out in an earlier post a lot of those large NGOs realized that the emotion caused by the 2004 Tsunami provoked an unprecedented movement of generosity on the part of the general public. The last 2 years have been tough for those nonprofits on the fundraising side, thus it is not unrealistic to think that they are viewing the Haiti Earthquake as an opportunity to be helpful to the Haitian people and in doing so, fulfill their mission certainly but also raise much needed money for non-Haiti-related activities.

I did a search on Google of the term “donate to Haiti” and here is what I got: eleven (11!!) sponsored links, in other words ads, by humanitarian organizations, namely from the top of the screen to the bottom (3 in the top segment of the page and 8 in the right column), Red Cross, UNICEF USA, Habitat, Clinton Bush Haiti Fund, Save the Children, Hope for Haiti, Samaritans Purse, Food for the Poor, Doctors Without Borders, Charity Navigator (a tool to conduct due diligence on nonprofits), and IRC. The search results listed the following links on the first page (not including the news results): Red Cross, how to Avoid Scams (lifehacker.com), Yele (Wyclef Jean’s nonprofit), the general Google page on how to donate for relief efforts that I mentioned in a previous entry, and four newspaper / magazine articles on where and how to donate (in order US News, NY Daily News, Huffington Post, and The Atlantic).

My reaction to this is twofold. As much as I applaud the efforts of the UNICEFs, Red Cross, and MSFs of the world, I think it is confusing to most folks out there to get messages from those organizations and many others asking to help them specifically. In a time of such a huge crisis, considering moreover that the vast majority of the general public knows very little about who does what in the social sector – and even less about who does what well – I don’t see the “greater good value” of sending those messages to the general public.

What the public wants is to contribute to relief efforts in Haiti. People want their money to get where it is needed, they want to see that their money is making a difference and helping those who are suffering right now. My guess is that they could not care less whether the money goes to Mercy Corps, MSF, CARE, or UNICEF as long as it reaches those in need.

That is why the concept of a Fund like the Clinton Bush Haiti Fund is appealing because it is equivalent to having a big bucket where people give to a cause vs. a certain entity and then the money is distributed according to the needs.

It is not surprising that most donations to date have gone to organizations considered as generic names so to speak like the Red Cross or UNICEF. I bet most think that the Red Cross has a particular status whereas in fact the American Red Cross is just another 501c3 like any other nonprofit in the same field. The Federation of the Red Cross and the Red Crescent housed in Switzerland does have international organization status but the national organizations don’t.

In this dramatic crisis, I would like to see nonprofit leaders do for once what they have been long criticized for not doing enough, i.e. BAND TOGETHER. Why don’t they raise money together and figure out a way the money should be distributed among their organizations depending on what part of the reconstruction or relief activities they are taking on?

An interesting NYT article recounted earlier this week how in other countries like Britain and Canada such pooling of funds has taken place on occasion in times of great catastrophes. But it has not been possible in the US yet – it should be noted though the American Red Cross did pass on 46% of the money it raised after the Asian Tsunami to other organizations, which was positive.

Thus, the idea has been around – actually brought up by those organizations that raised very little money obviously – but large humanitarian agencies in the US have not come through on this topic.

This is a shame and a major missed opportunity. For a sector that is widely known for its “planting the flag” mentality (i.e. I want my organization’s name on this project – as a result, the project’s very objective may take a back seat to the organization’s and its leadership’s ego), the Haiti crisis was an opportunity to do things differently, to “think outside the box” – if this cliché is ever to be used… – and to show the world that this is not about them.

And don’t get me wrong, I am not suggesting that it is actually about them but by acting this way, it seem awfully as though large NGOs and international organizations want to get our money because they know better and will do a better job with it than others.

Lastly, I believe that MSF’s co-founder and ex-president Rony Brauman was wrong (no newspaper article found) when he said the other day that people should keep donating to his organization, irrespective of the needs in Haiti because the needs are so enormous elsewhere. The needs in other countries are indeed huge. But as I already argued – and sorry for sounding repetitive, supporting MSF or the IRC is not what the public wants – not now.

This is what I think the NGOs should do: in case there is any money left after the relief and reconstruction needs have been met, all the nonprofits that received contributions should contact those who donated, giving them the choice to get the % of their gift that was not utilized for Haiti back or to allocate it to other programs of their choice (the nonprofit should list options) or picked by the entity itself (no earmarking).

I am afraid that by doing business as usual so far the big humanitarian organizations involved in the wake of the Haiti Earthquake have reinforced negative stereotypes about them and lost an opportunity to change the way they work and, in doing so, be way more effective and helpful to the Haitian people.

Scott Brown, Productivity Gains 2010 Edition, and the State of the Union Address

2010-01-28T15:37:00.000-08:00

The victory of Scott Brown over Martha Coakley for Ted Kennedy’s senate seat last week sent shockwaves in Massachusetts (MA) and across the country. True local liberals must have wondered how their neighbors could vote for Scott Brown, I suppose the same way they asked how all those rednecks out there voted for Bush – twice!! To add insult to injury the senator-elect is not even a social conservative – what is going to happen to gay marriage and the right for women to choose?

There is some degree of misconception actually that the Commonwealth of Massachusetts has always been hard-core liberal and overwhelmingly Democrat. Obama did win the presidential election with a 28-point lead but Massachusetts voted for Reagan both times actually… And Massachusetts was a much more conservative state pre-1970’s than it is today.

Boston is about 85% Democrat but across the state the split is about 60-65% Democrats and 35-40% Republicans. Thus, if about only 10% of the electorate changes its mind and decides to vote Republican instead of Democrat we have a very close race. This is clearly what happened with some Democrats who felt that their votes were taken for granted by Coakley and/or who were unhappy about current unemployment and what they feel is the failure of the Obama administration to do something about it.

And this is not even counting Independents who represent over 2 million people in MA and who heavily favored Brown in pre-election polls (almost 2/3 said they would vote for him according to a Suffolk University poll – similar data was apparently not collected on Election Day). Last year, those same Independents voted 57% for Obama.

Last factor was participation as folks in Republican districts voted more in masses than in Democratic ones. Yes, people, every vote counts…

Another thing that struck me in this election is that voters don’t need to be 100% aligned with candidates to cast their ballots in their favor. Unemployment and healthcare were on most people’s minds and hugely influenced their decisions. And I would bet that a lot of those who voted for Brown did not agree on the more conservative part of his agenda. But they did not care this time.

What people are truly worried about is that they don’t see in the early signs of the economic recovery a decrease in unemployment numbers. There is always a lag between the economic activity and the labor market but this time unemployment figures do not seem to move much if at all.

And I think that a lot of folks who work in Corporate America have been seeing the same thing I’ve been hearing accounts of, i.e. companies have found ways to do the same with fewer people. So, why hire back the folks who got laid off or recruit new people as long as the activity does not pick up significantly? I am afraid that a lot of the jobs lost won’t be coming back, and not only those that were outsourced to developing or emerging countries. The name of the new game is “Productivity Gain – 2010 Edition” - a lot of people out there are not going to protest when they are told they have to take on some of the tasks of someone who just left the company in addition to their regular duties – who would be foolish enough to say “no way, Jose, I don’t like the 2010 Edition and I don’t want to play”?

Obama in his State of the Union Address last night had a clearly different tone than he would have had before the MA election. It is as though his Administration got a shot in the arm and realized they had to come out more strongly to show Americans they are doing something about this crisis. And the situation for the Republicans has also changed radically as they have a totally renewed sense of self-confidence and are dying to take on the Administration and the Democrats...

But frankly, I am not sure there are a ton of things Obama can do to curb unemployment if indeed mentalities have started to change and the “do more with less” approach that bears the fruits of significant future discontent and tensions in the workplace is becoming the new norm in Corporate America.

Some thoughts about the Haiti Earthquake and the 2004 Tsunami

2010-01-17T10:54:00.000-08:00

It has been heart-warming to see the outpouring of generosity and support since the disaster hit in Haiti. I even saw a message about earthquake relief yesterday on a highway sign that normally gives live info about traffic congestion…

As the examples of other catastrophes that gathered far less attention (earthquake in Kashmir or Iran a few years ago) show, the extent of the emotional connection that one feels with those who have been struck by a natural disaster is going to determine in a big way the level of people’s generosity. In the US, the proximity to the island and the presence of substantial Haitian communities in many large urban areas (20,000 in Boston for example) can explain the level of mobilization. Also, most Americans – even those who know next to nothing about other countries – are aware that Haiti is the poorest country in the Western Hemisphere and thus, seeing the poorest of the poor struck by such a catastrophe is heart-wrenching for everyone.

Man-made disasters often generate far less sympathy for their victims – for instance, a civil war in Haiti would be viewed by most as yet another failure on the part of the different parties in the country to work together and make things right for their people.

That same emotional connection we are seeing now explained the big-time generosity in early 2005 after the Tsunami hit Southeast Asia and caused over 300,000 deaths. The disaster struck a day after Christmas (which made the catastrophe even more “unfair” to most though it was a totally irrational reaction) in places that were known by a lot of Westerners who had vacationed there or at least heard about them. The fact that a number of foreign tourists – mainly from English-speaking countries – were among the victims helped spread the word and the emotion. And finally that part of the world is considered “non-hostile” to the West unlike Iran for instance. Although most of us can make the difference between a country’s politics and its civilian population’s plight, this is about emotional connection that by definition is subjective.

A major difference with the 2004 Tsunami aftermath is the role that social networks are playing this time. It has been amazing to see how the likes of Twitter, MySpace, and Facebook have helped people stay connected with loved ones or share or ask for information about family members they had not heard about. CNN was counting on its viewers in the first 48 hours following the catastrophe for images. All phone lines were down but I heard about folks who were able to communicate by skype – incredible.

The 2004 Tsunami turned out to be a bonanza for NGOs that got involved in the relief efforts. Amounts raised worldwide went through the roof compared to whatever those organizations had achieved in the past, even for relief assistance. Arguably, those entities provided a service in the affected areas and thus, the money raised enabled them to do that work on the ground. However, a percentage of the funds that were collected paid for those NGOs’ administrative infrastructure and sometimes for other projects as well. I am under the impression that most of those organizations, even the bigger ones, did not communicate on the way the money was spent.

Now, having experienced how hard it is even for good organizations to raise money, especially in times of economic crisis (see what happened after the burst of the internet bubble in 01-02 and since the Lehman meltdown in the fall of 08), I don’t have a problem knowing that some of the Haiti Earthquake money will serve to fund those nonprofits’ “backbones” and maybe less publicized but equally important projects as well – however, if that is the case, people should be informed before making their donations and every NGO receiving money for the relief efforts should report on its use.

I wonder about the way relief efforts can be coordinated. Obviously, in an area nearly 100% destroyed, the order of business is just to scramble and do as much as possible. Every bit counts, every dollar counts, every pair of arms counts. But given the state of Haiti’s infrastructure before the disaster and knowing the extent of destruction, it is no surprise however that aid relief has a hard time getting to the people right now. In 2004, a week after the Tsunami, Doctors Without Borders (MSF) stopped accepting donations arguing that aid could not arrive where it was supposed to go and thus additional money was not going to help. Let’s hope that those involved in the relief efforts won’t have to get to that extreme. NPR just had a story about possible relief gridlock.

I feel like CNN and other news networks are having a bowl right now – not literally because I know they care about the suffering and the pain of the Haitian people but this Earthquake is such good business for them. I was in Puerto Rico when the disaster hit and I watched CNN (and Fox News) in my hotel room quite a bit. As I already wrote, I am not a fan of media-bashing and I recognize the value of the CNNs of the world, namely informing us and bringing us live news coverage – but you can tell that catastrophes are the bread and butter of those folks. Natural disasters make for such compelling images and so much emotion also that viewers will stay stuck to their screens for days on end. And CNN has the resources to send a bunch of its people down who know virtually nothing about the country (based on the comments I heard) - but hey, there are journalists and even the good Doctor Gupta who are reporting on the ground, so I guess we are all covered...

I don’t want to finish on a cynical note, so here is some information again about how you can get involved in the relief efforts: Network for Good’s web site / blog and Google’s Crisis Response page.

Haiti Earthquake

2010-01-16T18:44:00.000-08:00

We did not have to wait long for this decade’s first calamity… I was wondering in my previous piece what was in store for all of us and boom, the Haiti earthquake hit that poor country so hard!! I lived there for a year in 1995-96, which was probably the best period the country enjoyed in a very long time, i.e. shortly after former President Aristide came back from exile and when there was a high level of optimism about the country’s future. But the increasingly seemingly undemocratic way Aristide ruled the country, his reluctance to leave power, his eventual “exile”, and a continued political instability and economic hardship made the last 10 years tough on the country and left it even less prepared to deal with today’s disaster.

It is just terribly sad to see the pictures of places and neighborhoods I knew well that look all but totally destroyed – it is all the more chilling to have been in these areas and see now that what’s left of them is rubbles and chaos.

Fundraising has been quick to get organized. In particular, the option offered by the Red Cross to send a $10 donation by SMS ($10 is then added to your next phone bill) is very smart and has worked extremely well in the US. Yahoo has a direct link to Network for Good’s web site / blog that has sorted out and listed the NGOs active in Haiti and Google has set up a Crisis Response page featuring a number of organizations that are involved in the relief efforts as well making it possible to post messages (searching for missing folks or providing information) and to use Google Voice for free for 2 weeks for calls to Haiti.

I will be back later with more thoughts on the aftermath of the Earthquake.

I am no psychic…

2010-01-04T17:05:00.000-08:00

I celebrated the end of the decade by falling asleep at 11pm watching a movie and my wife woke me up at midnight… Makes me wonder how I am going to finish this decade - if I am still around then…

I have to say that the past decade started pretty well since I was on the Washington Mall near the Lincoln Memorial all jazzed up about the fireworks and the new Millennium (where did the collective excitement go by the way?). And then came September 11 and the burst of the internet bubble and in an interesting symmetry, those ten years ended with a global financial crisis that put our whole system on the edge of the precipice and with a failed terrorism attempt on a flight bound to the US from Amsterdam last Christmas Day.

I have certainly no psychic talents, so why should I be any good at foreseeing what History has in store for us? But yes, strangely enough, every decade I am just surprised by what happens – stuff that seems to come from left field… In the 70s there was that terrorism in Europe (I lived in Paris as a kid) - but friends and readers, I am not that old, I was not pondering in December 1969 about what might happen in the 70s… Rather I did not want to go to school and I was puking every day, but that’s another story.

If I had been told at the end of the 70s that the Soviet Giant would crumble and collapse and the Berlin Wall would fall, I would have laughed. If ten years later someone had told me that there would be two massive genocides in the 90s, in Rwanda and former Yugoslavia and the international community would be sitting idle (including myself) doing nothing, I would not have laughed but probably banged my head against the wall, wondering how that could be possible after the Holocaust in WWII – my generation grew up with this “Never Again” thing in mind. Did not have much of an effect, did it?

Same tune – end of the 90s, I probably would have disagreed with the assertion that Islamic fundamentalism was going to become the major threat to the Western world – probably out of idealism and naïveté and also because I did not share the political agenda of those who were saying so at the time (because there were some). As to the global crisis, there had been those big systemic crises in Southeast Asia, Russia, and Mexico in the 90s but Western countries seemed far from those excesses – we believed we knew better I guess. Yeah right!!

So, what now? Don’t ask me, I have no idea. But let’s all try to have fun, be happy, and continue whatever little things we all do to make this world a better place.

Happy 2010 - and some cool work in Madagascar

2010-01-04T16:55:00.000-08:00

Happy New Year to everyone and all the best for 2010!! I was fortunate to be away for about 2 ½ weeks in December, escaping the cold weather that came to Boston suddenly and with a vengeance to work in Madagascar of all places on the evaluation of an organization called FAPBM (full name is in French) whose objective is to finance the country’s national park system over the long term. They set up a fund a few years ago that is invested on the financial markets (following a rather conservative investment strategy actually) and that will hopefully produce enough income to pay for part of those parks’ operating costs consistently in the future.

That financial mechanism has been quite effective in Latin America in particular (check the web site of the regional organization RedLAC), so the folks in Madagascar are not reinventing the wheel certainly. But 1) there is no similar success story in the Africa / Indian Ocean region (the Fund in Madagascar has been around since early 2005), and 2) some may have discovered Madagascar only when the cartoon was released (I did not see any lemurs by the way but I did see 2 crocodiles…) but you guys know that Madagascar is off the charts with respect to the biodiversity value of its environment. 80% of all species on the island are endemic, i.e. they are only found in Madagascar.

The thing is that the country was that close to just selling half of its forests to Korean humongous conglomerate Daewoo, is still very poor, and has been stuck in a political crisis for over a year now. So, you can imagine how high the stakes around FAPBM’s work are.

Most folks there - in government, the international community, the NGO sector, and the corporate world - realize that a compromise has to be found between a sustainable use of resources (which means that some extractive activity, i.e. mining and oil drilling, is going to be done within the boundaries of those parks) and the preservation of that amazing nature, all the more that whatever is lost will be mostly lost for good and forever – no other place where you can go find it…

These huge tensions are not unique to Madagascar – they are actually common in poor countries. But the country’s iconic nature and the people’s poverty just make those challenges even more pressing and complex.

I will write more about my impressions of that beautiful and interesting country. First time in that part of the world, I have to give you more than my (boring?) spiel on sustainable development…

Amsterdam and Lille – Worlds Apart?

2009-11-27T07:59:00.000-08:00

I just attended two conferences in Europe, in Amsterdam and Lille (Northern France), that were quite different from each other though there was significant overlap in the topics they covered. I first was in Amsterdam taking part in the European Venture Philanthropy Association’s (EVPA) annual conference that can be summarized as a large networking event (over 300 participants this year) and a substantive forum. This year, the emphasis was placed on social enterprise per se and how Venture Philanthropy (VP) actors (those with money in short) can effectively support social enterprises, be they for-profit companies or NGOs. The content was of uneven quality as is often the case. As one of the speakers said, venture philanthropy or EVPA for that matter is a very big church with multiple denominations. I don’t know whether the agnostics or atheists among us will be comfortable with the metaphor but it is true that a) the definition of what venture philanthropy is and how it should be done still varies quite widely, even as the concept has been around for over 10 years in the US and 7-8 years in Europe, and b) a lot of those who attend the event every year are somewhat parochial and seem to think that the way they do things is the only right way.

That slightly (sic) narrow-mindedness led one of the speakers to open a session on the use of equity or debt in venture philanthropy by making ludicrous statements on grant-making, i.e. grants inherently generate laziness and can’t be effective. The result was a discussion on the merits of grant-making, which was not the subject, and it took way too long for the actual topic to be addressed.

In another session, that one on the possible creation of a VP fund focusing on the arts, one moderator had thoroughly thought about the systemic obstacles that explain why no such fund has been created so far while the other one merely presented his organization, which had a good illustrative value but missed the broader point.

However, other sessions, for instance on best ways to scale a social enterprise or on Ireland’s Foundation One’s story since its inception, were filled with interesting lessons.

As always, the best part of that conference is in the networking per se. Over the years, an actual European VP community – though “multi-denominational” – has emerged and thus, catching up with colleagues and enjoying that sense of camaraderie is both pleasant and valuable. Also, everyone is very much focused on meeting others and the conference is structured to allow ample breaks for networking.

Lille was quite a stark departure from the Amsterdam Conference. The so-called World Forum on Sustainable Finance (is there an epidemic of World Forums? What’s up with the name?) revolved around sustainable finance. It was a mish-mash of economists, social sector practitioners, investors, and finance professionals from all horizons, and as much as EVPA folks represent a wide array of understanding of what VP is and/or should be, I can tell you that in contrast they form a very homogenous group compared to the people I heard or ran into in Lille.

The fundamental difference is that all EVPA folks are business people and bring that mentality to whatever philanthropic activities they have. This impacts their vision of the world, typically “I want to invest my money in order to produce tangible results”, and the way they convey it, i.e. very pragmatically and generally clearly and concisely.

In Lille, there was everything in terms of content, from crystal-clear powerpoint presentations to lengthy boring speeches that – good thing – got me to catch up on sleep (!!). The views of what sustainable finance means and how it should brought about differed also very widely. Thus, there was probably more richness and variety in Lille but the event as a result was a bit all over the place.

It is actually ironic, and probably telling, that everyone I talked to in Amsterdam to whom I said that I was on my way to Lille had not even heard of that World Forum…

Amsterdam and Lille, two worlds apart then?

God Save Charlie’s – A few lessons Charlie’s teaches us

2009-11-17T02:47:00.000-08:00

I had breakfast at Charlie’s in the South End the other day as we wanted to show this legendary diner to a young friend of ours who was in town for a few days. It was a worthy visit because not only did it delight my palate and senses but also it gave me some food for thought…

Charlie’s teaches us a thing or two about business. It is also the last symbolic bastion of the old South End in an ultra-gentrified neighborhood.

Charlie’s has been a staple in the South End for decades – it has found the formula for staying in business all these years: Consistency and Value… Consistency in their staff, quality of the food, and attention of the service. Charlie’s has been staffed and managed by the same 4 folks since the 70’s (two women and two men). Good people, very welcoming – they each have a different personality but just seem happy to be there. Prices are fine given the quality of the food and the huge portion size but the place is not cheap. You’ll order pancakes, or French toasts, or an omelet – order for two and coffee, you are looking at a $20 check. But Charlie’s offers excellent value: they serve the best French toasts I have ever eaten (and I am big and demanding on anything sweet) and thus, the “package” given the quality of the food and of the welcome is very compelling.

So, in short, a few simple lessons: provide consistent quality and value, know who you are and don’t change your personality (or corporate identity / DNA for that matter)…

Charlie’s is also one of the remnants of the old South End, i.e. the neighborhood as it was pre-gentrification. I am not going to romanticize that era – granted, it had a higher crime rate than today and a lot of the sections were just decrepit. There was much less activity all around and there was no such thing as “Restaurant Row” like today.

However, a sign that shows that the neighborhood has not only changed for the better is that Charlie’s $20 bill for an omelet and coffee for two seems actually dirt cheap compared to the neighborhood’s funky “eateries” (what a terrible word…) where you’ll have to pay about $15 just to get an order of pancakes or French toasts over brunch.

I also find it quite striking that we live in an actual state of de facto segregation in the South End today.

For those of you who don’t know the neighborhood, the South End has historically been the home of several housing projects. Since Boston is required by law to have at least 15% of its housing stock as social housing, the South End projects are not going anywhere. In the past 10-15 years, the folks who were paying market rate rents were priced out by inflation and moved further out and a lot of those who owned places cashed in and left.

As it was getting more hip and lively, the neighborhood kept attracting a younger, whiter, and wealthier crowd and that trend has not stopped. I’ve been in the South End for 5+ years now and disparities keep growing wider and wider.

I look around me and I sense that in most cases people of color look at white folks with mistrust and unease – and conversely.

Again, I don’t want to romanticize the old times but there is a consensus among the old-timers that the neighborhood had much more of a community feel in the 80’s and 90’s as folks loving the Victorian architecture or all the studio loft spaces that were available for almost nothing moved in.

I don’t sense any of this today. Most residents seem to care more about property values and new “eateries” and lounges than about their fellow neighbors.

How did we get there?

Gentrification of historic neighborhoods in downtown areas is not unique to Boston. The same has happened in a lot of big cities around the world, in the US and in Europe in particular. But this is where urban planning comes into play. It should be an essential goal of every large municipality to preserve the “social fabric” of its neighborhoods and do whatever is possible to maintain a representation of all levels of income.

By encouraging new construction or building conversions that only catered to the high end / luxury segment, the City of Boston has in my opinion failed its constituency and failed to make the downtown area a place that is lively and welcoming to everyone - where people from all walks of life feel equally comfortable.

Nutella: Healthy Breakfast or Guilty Pleasure?

2009-11-08T09:49:00.000-08:00

Nutella has been running a TV ad in the last couple of weeks that left me dumb-founded when I saw it recently. It basically said that Nutella is an essential part of a healthy breakfast for kids… In my head, Nutella has always been associated with guilty pleasure – at 541 calories for 100 grams (per the Nutella web site and its section on Nutrition Facts) and knowing that adults need between 2000 and 2500 calories per day to function properly (according to the USDA, the US Department of Agriculture), you’d better not feel guilty too much or too often…

1600 calories being the suggested daily intake for kids, 100 grams of Nutella and their 541 calories, that already 1/3 of what a kid needs in his or her everyday life.

Now, the folks at Nutella are smart, or scared of the outrage they could cause, or overly politically correct, or even health-conscious - or maybe all of the above... The commercial that shows a girl and a boy with their Mom at breakfast enjoying a few slices of bread with Nutella spread on them is cautious to say through the mother’s voice that “I [the mother] spread a little on all kinds of healthy things like multigrain toasts” (I put the italics). The text further adds that Nutella is made of “wholesome quality ingredients”, i.e. you don’t make your kids ingest garbage… The commercial ends with a glorious “breakfast never tasted this good”… Perfect, the “Holy Trinity” of foods, i.e. taste, quality of ingredients, and healthy nature of all. That’s a home run, Nutella – bravo, Signor Ferrero!!

It is interesting however to note that Nutella’s web site does not say anything about the 541 calories upfront – you have to dig up and find the page on Nutrition Facts where a Nutella jar label is displayed. And you are in luck only if you thought of taking your calculator with you or if the one in your cell phone has not been bugged by your GPS or something… You’ll see on the label that you’ll ingest 200 calories for 37 grams of Nutella (including 100 grams of fat…), i.e. 541 calories for 100 grams. Thank you, Mom – “I use Nutella to get my kids to eat healthy foods” says she in the commercial, yeah, right!!

If you genuinely care about nutrition for your kids, Nutella while not running away from the actual nutrition facts that are less glorious than its Holy Trinity commercial would suggest has you work pretty hard. The web site does mention “Food Pyramid and Guidelines” but only briefly. The Nutella folks have preferred to post a convenient external link to USDA’s MyPyramid’s web site, a tool explaining how to have a balanced diet.

So, alright, we get it… Nutella has a bunch of lawyers who told them how not to go overboard on the “kid targeting” craziness and thus avoid having obese young adults sue them for selling those guys breakfast that maybe tasted good but had them gulp down an insane amount of calories throughout their childhoods.

And targeting kids and their parents is a smart, sort of long-term strategy that helps Nutella build its brand equity over time to speak business language.

But if Nutella and Ferrero are as responsible as I am sure they claim to be, they’d better stop targeting our children and rather feel free to tempt us adults to succumb to guilty pleasures from time to time…

Leave our kids alone, Nutella people!!

“Subliminal” Messages about Volunteerism?

2009-10-31T20:50:00.000-07:00

I read last week about the main TV networks’ concerted efforts to promote volunteerism in their shows and programs vs. through Public Service Announcements (PSAs) as it is usually the case. The USA Today article gives some details about iParticipate, a multi-year campaign that is the brainchild of the Entertainment Industry Foundation and took place all of last week across major TV networks in the US.

The major difference with PSAs (the campaign includes straightforward PSAs as well) is that this time messages promoting volunteerism or community service were included in the shows’ actual story lines. The article points out that it was actually easy to convince show producers to come on board and there was none of the usual battle and nastiness between networks.

We’ll have to see what impact this initiative is going to have. I’d be curious to hear whether anyone noticed the “convergence” of messages with the same tone and content – this is quite unusual, isn’t it? A barrage of goodness… But obviously, if down the road more folks are inspired to get involved in their communities and give back, that will be all nice and good. We’ll be happy.

However, there are a couple of things that do not feel quite right here. First, I do have a slight problem with the fact that this initiative was conducted unbeknownst to most viewers (not everyone had a chance to read the USA Today article or visit the iParticipate web site). Would the message be as effective if viewers knew? Not sure. I feel a bit odd knowing that some message – however valuable – was fed (force-fed?) to viewers without proper warning with a view to influencing them. Who said manipulation?

Also, can’t we keep entertainment and good intentions separate? I understand that working on the story lines per se may be more effective than delivering straight PSAs with viewers. But this is a TV show – it’s entertainment!! Imagine my neighbor next door – it is Thursday night, she wants to watch a comedy show to relax. It is her downtime. She just wants to let her hair down. At that very moment, she may not care that much about saving the world or helping the needy – maybe she just does not want to think about it right then. When I watch Extreme Makeover Home Edition which is about generosity and the trickle down effect that being good to others creates, I want to be moved by these acts of generosity and gratefulness. I have fun watching the show and seeing the awesome houses built for those nice folks!! That is indeed entertainment but it is also my choice to watch Ty and his team bring happiness to others.

So, kudos to the entertainment industry (don’t like this picture on their web site by the way) but maybe we want to keep all the goodness blurb separate from our favorite shows’ story lines.

Where is the consensus on healthcare?

2009-10-19T13:49:00.000-07:00

I heard report of what President Obama said about insurance companies in his weekly radio address and what the GOP response was, i.e. we would have access to more limited choices and the government would control (meaning constrain) our access to doctors and quality care if the healthcare bill in preparation were to pass.

That really made me angry to be honest with you…
· Angry at both Republicans and Democrats: why is it that I feel like neither Republicans nor Democrats are trying really hard to reach a consensus and come up with a landmark bill that will improve the way healthcare is provided in the US whereas there is a general consensus that the system in this country is not good enough by a long shot?
· Angry at Republicans: How can Republicans use scare tactics again to demean a bill that as far as I have heard is unlikely to bring about anything that the GOP representative mentioned? Well, they know scare tactics works – it has been very effective historically and it is not necessary to go back to the dark days of McCarthyism to realize this. Anyone who was in the US in the couple of years after September 2001 knows it in his/her guts.
· Angry at Democrats: it is easy and it feels good to bash Republicans but is it fair to hold only Republicans responsible for another mostly partisan bill despite its historic significance? Was Ted Kennedy the only one who could do bipartisan politics among Democrats?
· Angry at Obama: wasn’t he supposed to do politics differently? Yes, he is trying and I certainly give him credit for that. But this is not working so far and even though it is not only his or his administration’s fault, at the end of the day history will only remember the outcome of this, thus he has to try harder.

Ok, that is a lot of “politics bashing” but it does bug me that elected officials continuously discredit themselves and in the process make the general public increasingly cynical and distrustful. Or maybe I am being too negative…

Does Social Investing’s Success Mean Impact? (II)

2009-10-19T13:17:00.000-07:00

See Part I below

Overall, the systemic or macro effect of those funds remains limited today, if not marginal. Despite the publicity that an Acumen has benefited from, the fund’s portfolio does not comprise more than about 25 companies. Root Capital that has grown rapidly over the past 5 years and now has a portfolio of 235 borrowers for $120m disbursed has spread its investments over 30 countries (source: Root Capital’s and Acumen’s web sites), i.e. an average of $4m per country since its inception in 1999. And when looking at a company’s environmental impact, how meaningful can it be – even if that enterprise’s area of intervention is a well-delimited territory – if that entity is the only one in that region trying to improve biodiversity health?

I am the first one to recognize the pioneering role that those funds are playing today. If social investing becomes a much larger industry some day, we will all have to be thankful to those entities. They are pathfinders and not only are they showing the way to those interested in creating investment vehicles but also they offer small- and medium-sized enterprises a better alternative to other forms of financing that generally revolve around less suited options such as microfinance (loans are too small for their size) and commercial banking (rates are high and those banks may not want to take a chance on relatively untested enterprises).

So yes, arguably, the systemic impact is there. But the actual macro effect of those enterprises remains minor because overall maybe a couple hundreds companies have received money from social investment funds so far – does that ever get to one tenth of a 1% of those countries’ GDP?

Now, it is not unheard of that an asset class becomes financially popular before it actually proves its value or merit. After all, the bet of those who invested in venture capital in the 80’s and 90’s was that that industry would be able to generate returns that were way above those of other asset categories.

However, the cause of social investing would be greatly helped if a few things were to happen:
· Set up a mechanism among major social funds to share and consolidate their information around impact: it should be relatively easy to find funders interested to pitch in.
· As a prerequisite, those funds should agree on simple metrics around the “straightforward stuff”: investees’ financial success, social indicators such as average / median household in communities affected or number of jobs created.
· Find a “home” to showcase those aggregate results. Maybe the White House’s Office of Social Innovation could be the right place (visibility would be great) - or some prominent foundation interested in the matter.
· Accelerate the pace of strategic investments: this is the way the impact magnitude issue could be addressed. Most funds organize their work by sector but there is a difference between supporting enterprises here and there and having an explicit strategy of - for instance - focusing only on innovative solutions that cover the whole gamut of existing and emerging technologies in energy or sanitation.

Being in the social enterprise trenches (sic), I feel that social investing will be successful, both money and impact wise. But let’s not get ahead of ourselves and let’s make sure we put in place the key ingredients that will bring about success before marveling about the “next big thing”…

Does Social Investing’s Success Mean Impact? (I)

2009-10-19T13:15:00.000-07:00

I have been meaning to write a short piece on social investing and impact and since this is going to be a longer text than in other entries, it will come in two installments.

It is interesting to compare the success that social investing has been enjoying, as an asset class and as a career path in particular, and the impact that companies that have received funding from those entities have actually had so far. As a result of last year’s financial meltdown, the creation of appropriate investment vehicles, and an increasing interest among many (young and old) in addressing social issues, the whole gamut of social investment funds have gotten a lot of attention lately. It is commonplace to hear that whatever their business models (returning money to investors or not, and if so, serving below-market, at-market, or above-market returns) funds find it pretty easy to raise capital these days.

Also, social investing in its hybrid form represents a very compelling value proposition for young professionals who want to do good and do well, as it supposedly constitutes the perfect combination of for-profit rigor and efficiency and social impact. I have seen first- hand how so many “Millennials” contemplating careers in business are almost magnetically drawn to that career option. And this is probably true also for a lot of us, even those with grey hair (yes, I know, how did that happen?), who have had hybrid careers and believe that market mechanisms can bring about social change when used appropriately.

However, the magnitude of the impact that those social venture funds have through the enterprises they support remains a question mark. Funds like Acumen, Root Capital, E+Co, or Verde Ventures take impact measurement very seriously. Since they mostly receive grant and/or subsidized money, their “raison d’être” is more about the impact they can show than about attractive returns they can serve. Those funds’ web sites certainly try to be informative on the subject. E+Co measures the impact of its clean tech investees by tracking 34 social, financial, and environmental indicators and has a very straightforward section on its web site showing numbers related to the three sets of indicators. Acumen Fund explains its BACO (for "best available charitable option") methodology on its web site but does not elaborate on its portfolios’ actual impact. In order to quantify its investments’ social impact, Acumen compares them to the universe of existing charitable options for that explicit social issue. Root Capital shows cumulative results on its web site (number of loans and borrowers, repayment rate, but also organic agriculture under cultivation or number of farmers reached).

Today social and environmental monitoring remains expensive and there are no cases that I know of where investees are the ones paying for that cost. Monitoring is expensive because of its frequency and complexity. Most funds have set up declarative monitoring processes whereby portfolio companies report on a series of indicators previously agreed upon with the funds. However, a couple of times a year, those funds have to send their staff or external consultants to check impact for themselves. Also, while social monitoring can be relatively straightforward if such indicators as number of jobs created or variation in income of families impacted are used, environmental evaluation is more complex and time-consuming. Thorough baseline studies presenting biodiversity health status of the area affected have to be carried out before relevant measures of what is expected to improve can be determined. Moreover, it is inherently difficult to isolate the impact on biodiversity health of actual actions undertaken by the companies involved as other factors may come into play.

Thus, social investment funds are up against a double pressure of having to raise grant money to pay for M&E (whatever money they make out of their investments is rarely enough to pay for the whole monitoring cost) and showing those funders and the rest of the world the social and environmental benefits generated by the enterprises they are backing.

Dynamite Barack

2009-10-10T13:42:00.000-07:00

I was a bit stunned when I read about Barack Obama winning the Nobel Peace Prize yesterday. My reactions (in order) were: what??? – then great!! – and well, there could be a backlash here. And oh yes also, I thought, Bill Clinton must be fuming (and that made me laugh…).

The main explanation for the Prize seems to be around providing encouragement to Obama for him to continue the good work he has started, especially around putting diplomacy back in the picture front and center (a stark departure from his predecessor) and making early efforts on nuclear weapons reduction (ongoing negotiations with Iran). Obviously, we should not forget how appalling the image of the US overseas was when Bush was around and how that has changed in not even a year. Now, I can’t say that the other accomplishments measure up with those of previous winners but yes, I get it, it is about encouraging him.

It has been interesting recently, including following the skit on Saturday Night Live (SNL) last week during which the actor playing Obama essentially said that he had done nothing since becoming a President, to start hearing here and there (among his supporters too) that actually, not much had been accomplished since January. Those same folks seem to agree that a lot has been started but are we seeing results? Don’t want to get into this question now (I actually think there have been some significant accomplishments though I have my frustrations with this administration) but my point is that the tremendous pressure that comes naturally out of receiving such a high honor will only be compounded by this insidious impression circulating that we have not seen much yet. And this could create a backlash for Obama.

PS. For the intellectuals among you, you will have noticed the oh so subtle reference to Alfred Nobel in the title of this posting, the inventor of dynamite and creator of the Nobel Prizes. But the Peace Prize is actually awarded by Norway now (not Sweden) – so yeah, you can call me on that one…

Oh by the way, talking about intellectuals and subtle references, one of my students used the word “self-effacement” the other day – that was nice. Rarely hear that word mentioned – maybe a combination of lack of vocabulary and lack of self-effacement…

Kanye and My Mother

2009-10-01T02:56:00.000-07:00

I was in Europe last week and I got there just after Obama had commented Kanye’s outburst at the Music Video Award ceremony (timely by the way that he did that just before he was supposed to be one of the first guests of Jay Leno’s comedy show – by the way, I still don’t get how different that show is from what he was doing on the Late Night…). Not only was the US media inundated with the Kanye thing (sic) – Dr Phil was on Larry King Live to give his two cents on this important national issue – but when I got to Paris, my mother asked me what was going on with Obama lashing on that guy (she had no idea who Kanye was by the way…) and said it had been all over the news in France in the past 2 days…

Alright, people – I am sorry but this is the side effect of globalization. With no filter for relevance, the most unimportant news is crossing the pond and traveling to the city of lights and beyond – I am sure the Kuala Lumpur tabloids did their home pages on Kanye’s outburst too… I am not a media basher most of the time but Kanye taking the mike from that poor girl, a matter of national (international!!) importance, really??

I am all for having fun and blowing some steam off after completing a boring task or discussing a serious or difficult issue. But Kanye trumping healthcare reform, wow, Larry King and others in the country + media around the world, you are not doing your job properly here…

San Fran and SOCAP09

2009-09-13T21:46:00.000-07:00

I was in San Francisco last week to attend SOCAP09, the second edition of an annual conference focusing on social capital markets. Social investing is the fastest growing segment in the broader social sector, the boundaries of which keeps expanding by the way. Pure-play VC firms doing clean tech or PE firms focusing on emerging markets with no particular social emphasis in their mission are arguably part of this ever-bigger social sector.

The place was bustling last week and there seem to be so many new initiatives – I try to keep informed on what is going on in that space but I was blown away by the number of projects that I did not know about. The level of excitement and activity made me feel that social investing is on the cusp of a tipping point. Maybe it is a fad and nothing much will happen, in that social capital will remain marginal in the greater investment community – but it has the potential to become really big.

My sense is that the size of the socially-conscious investment community is going to grow, mainly through institutions or individuals that may not have that sole focus but 1) are under some obligation to be perceived as more socially-focused, 2) are interested to diversity their asset base and as such, view investing in emerging countries or focusing on clean tech as potential big wins.

The labor market in terms of number of folks, and particularly recent MBA grads, anxious to enter the sector is going to explode for sure. It is one of the hottest areas for MBA students right now and a lot of them seem to be ready to do anything to intern in the sector for free... Now, they won’t work full-time for free for long, thus the sector will have to grow and hire for that enormous interest to be fulfilled.

But this whole sector of social investing could become humongous… It will be fun to be involved and follow its progress.

On the by the way mode – and yes, I like making digressions - the conference took place at the Fort Mason Center in San Francisco, a very cool place by the water that houses a number of local nonprofits. The view of the Golden Gate from where we were was to die for – what a gorgeous city in general, wow!! Who is moving there with me??

If Puzzled, Play it Cold…

2009-09-09T21:10:00.000-07:00

Alright, folks, I am going to be honest with you, I am puzzled… The stock market is going up and down: it had a strong summer since early July and fears of catastrophe (the DJ index hitting 6000 or even 5000) that went around in March have totally vanished, so it seems. However, the index took a hit last week and I have also read a number of comments to the effect that the stock market with its sharp rebound since March and a good performance in 2009 (about a 10% increase overall) is getting ahead of itself and is showing too much confidence in the soundness of our economic system and the strength and imminence of the economic recovery.

It almost felt good when I heard several folks on CNBC last week say that they had no idea where the stock market was heading… I still have a hard time reconciling the couple of apparently very solid explanations that I got in March about the possibility of the Dow hitting rock bottom (way below 7000) and the current seemingly widespread feeling that a Dow below 9000 seems rather unlikely. How did we get from one to the other so quickly?

Also, the question of the US public debt is an interesting one… Some numbers came out in the past 2 weeks, to the order of 7 to 10 trillion (depending on whether you count the free espressos in or out I guess…) as the US public debt total by the end of the next decade. Those are astounding numbers, aren’t they? But obviously, you have to look at what they represent relative to the US economy and to the country’s ability to sustain debt over the long run. On those two aspects, NYT columnist and Nobel Prize Winner R. Krugman says that we should not worry. In his blog entry The burden of debt, he mentions the examples of the Belgian and Italian economies as having taken on much more public debt as a % of their GDP than the US is currently and also draws a lesson from US history as the country had a huge debt after WWII that went down gradually as a % of GDP (despite the arm race with Russia) because the economy grew so much during those years. His point is that you don’t have to repay your debt as long as you stabilize it over time.

Warren Buffett in another NYT column, The Greenback Effect, argues that as long as there are folks out there who are willing to buy US Treasury bonds, the US economy is good to go. However, he does point out that this lifeline is the country’s very danger because once the Chinese and other sovereign funds stop buying those US Treasuries, guess who will be in major trouble. What that means is that the dollar should continue to be viewed as a currency of reference and the US economy has to be perceived as having reasonably strong prospects.

I find all of this a bit unnerving though - both Krugman and even Buffett seem quite optimistic to me. With the country having a huge amount of private debt ($13.8 trillion or 120% of the US annual income in 2008) as well - though the financial meltdown has prompted lots of folks to start to repay some of what they owe and to engage in saving, I am not sure I see how the “fundamentals of our economy are strong”, as McCain famously said amid the meltdown last year. The Obama administration is arguably not saying that exactly – nor is Krugman – but they are not that far.

I’d like someone to explain to me how a system can sustain itself and remain the anchor of the global economy over time with so much private and public debt – how about some serious systemic risk? Anyone?

PS. By the way, and let me go on a tangent here, I was just in San Francisco last week and on my way back I listened to Coldplay’s Viva la Vida album on the plane. I knew the main song only and I really liked Cemeteries of London and also Lovers in Japan. I’ve missed Coldplay a couple of times in concert in my area but good news - after my wife Anne and I saw a piece about Chris Martin on 60 Minutes some time ago, I think I finally convinced her to go and see them in concert… well, now they have to come back to the States…

The Wonderful World of Panera

2009-08-29T11:16:00.000-07:00

So, I am sitting at Panera Bread on High Street the other day in-between meetings, checking emails (got me a while to get on their free wireless network by the way). I stayed there for quite a bit and it was just interesting to observe the movements in the store. And before I get there and tell you more, let me just say - for those who are curious to know - that I find the pastries / breakfast items in general good but too sweet.

In the course of the 40-50 minutes I spent there, I saw a wide array of customers and staff. Customers were either tourists waiting to hop on a city tour, go to the nearby Aquarium, or visit Faneuil Hall which is just close by or people working in the office buildings around. I would characterize the style of the tourists I saw as preppy / suburban for the most part. Those folks may have stayed in nearby hotels too which happen to all be expensive.

There was a pretty strong disconnect between those tourists and the Panera Bread crew – all good people it seems and a reflection of America’s Lumpen Proletariat: Saïd, the store manager, from North Africa; several Latino men and women, generally in non-customer facing positions (fixing sandwiches), a couple of African-American folks, including one who had the distinct honor to clean the bathrooms every 10-15 minutes, and a middle-aged lady from I would guess Kurdistan or Iraq, maybe Iran.

The reason why you’ll find those folks working at Panera is because Panera does not pay high wages. Here in Massachusetts there is a minimum wage and I don’t know to what extent it is enforced. But I am guessing the Panera employees make less than $10 an hour – more like $7-8. In the meantime, I am paying around $2-2.50 with tax for my too sweet muffin / scone and $1.80 for a small cup of coffee. So, yes this is an expensive place.

It is “prime location”, mind you. The store is at the very end of High Street, at the corner of the new Rose Kennedy Greenway (where the Central Artery used to be) and the whole area has been beautified with the extra bonus of being close to the water and Boston Harbor.

That Panera Bread store is quite typical of other coffee / sandwich places in big cities in America: top location, hefty prices, underpaid staff, pretty fat margins I would guess (I can’t see how the rent makes up more than a small percentage of the overall cost).

Alright, but let’s be positive for a second – and I am thinking in particular of the non-US folks I saw in that store. Isn’t that what the American Dream is all about as well? Saïd is a store manager for god’s sake – I did not see any “white anglo” in the staff, he is the boss. The Panera crew did not seem overly depressed (can’t say that the big guy cleaning the bathrooms seemed particularly overjoyed though). They are making $7-8 an hour and hopefully, they get health insurance. Then they probably have another job and their spouse works hard too and their kids will someday go to college – perhaps to a state school and on from there.

I am thinking that they have to believe that it is possible to come to this country, stay, and thrive to some extent at least. Or not? The middle-aged woman from Kurdistan / Iraq (who wore a headscarf btw) sat down next to me for her break – I observed her discretely and at some point she looked outside and just stared blankly. The light was gorgeous that morning, beautiful late summer day. But I could no help but think about where that lady’s mind must have been wandering at that moment – maybe back home in her village, or small town, or big city, having fun with her cousins and friends?

The American Dream, whether she and others believe in it, comes at a price – even in the Wonderful World of Panera.

Ach, Gross Berlin…

2009-08-26T16:59:00.001-07:00

The Track and Field World Championships ended last Sunday in Berlin. It was a wonderful week of competition and the crowd seemed absolutely overjoyed – I saw repeated “olas” (Mexican waves) in the public throughout the competition. Who said the Germans did not know how to have fun? Usain Bolt was the star of these Championships because of his historic world records on the 100 and 200 meters. But there were so many other great performances that I was just impressed with the terrific “ensemble cast”….

The US did pretty well as usual in those track and field competitions. They remain the only country that wins medals across the board, in pretty much all disciplines. Well sure, the Jamaicans kicked their butts in the sprint, both in men and women’s races. And for the Jamaicans, beating the Americans is always as sweet as if Puerto Rico defeated the US in basketball…

My favorite athlete of this generation, Allyson Felix, saved America’s day in sprint by beautifully winning the 200 meters (her third victory in a row in a world championship). That girl is amazing – I’ve had an eye on her since she ran junior championships – she was already terrific and it was not hard to predict that she would be a star. But she has everything going for her, her grace, her smarts (she finished her undergrad degree), and her sweetness.

It is just sad that track and field has to take so much of a back seat to football / baseball / basketball in this country. Such a beautiful sport!!

Different Views on Headscarf

2009-08-23T12:21:00.000-07:00

I have often had questions as to why the burqa – or rather the headscarf - debate sounds quite different in the US than it does in continental Europe. It is actually more about the headscarf that views seem to differ across the pond than about the burqa – indeed, the burqa appears to cause widespread disapproval in Western countries. I guess that most people are put off by the appearance of a woman veiled from head to toe.

The fact that headscarf stirs much less controversy in the US than it does in Europe is related to the notions of freedom of expression and tolerance for religious practice. The picture on both fronts may not be that rosy in actuality in the US but there is still a deep belief among most Americans that those are fundamental rights – mostly, because most people here do not want those rights to be denied to them...

In continental Europe the main reason why the headscarf, even if in lightest form, provokes strong reactions is because most people view it as a sign of oppression. There is a general belief that somehow the practice is imposed upon women – even when they “freely” accept to wear a headscarf - and that at the end of the day the headscarf is just a reflection of women’s lesser status compared to that of men.

The second reason stems from the long tradition of separation of state and church. It gets back to the early 20th century in most Western European countries and there is till discomfort today about the church interfering in government’s affairs and anyone displaying signs of religious affiliation openly. And yes, there is probably a double standard between the headscarf and the Christian cross or David’s star but signs of affiliation are generally not welcome.

Also, and a corollary to this, the baby boomer’s generation and even more the Generation Xers in Europe grew up with a religion in general but feel detached from it for the most part. Even in countries like Spain and Italy, the percentage of those practicing religion is way below 20%. Thus, dealing with an immigrant population that mostly considers its religion quite seriously can only create tensions – let alone when obvious (sic) “exterior signs of affiliation” come into play.

Nice walk with the Minute Man

2009-08-14T17:56:00.000-07:00

I spent a wonderful couple of hours today walking in the Minute Man National Historical Park. The Park is a stretch along Lexington Road in Concord / Lexington that includes a 5-mile trail along the historic route where the American militia man / patriots fought the British colonial forces on April 19th, 1775. This is “where the Revolution began” according to American history (as a National Park Service flyer points out…). For those like me who love nature, trails, and history, this is a perfect combination. I did not know the National Park existed until today. I just was familiar with the nearby Minuteman Bikeway that connects the Alewife subway station to Bedford and is well over 10 miles long. Do not expect everyone to say hi back on the trail though - after all, this is Massasuchetts...

Note that a number of plaques (I plead guilty, I am a “serial plaque reader”…) read, “British soldier(s) buried here” and next to those plaques, a small paper had been placed saying that the plaque honored the memory of “too often forgotten British soldiers” – well, yes, the poor lads lost that battle and their lives but it was a bit bizarre to realize that they had been buried where they were killed pretty much.

More info about the Minute Man National Historical Park at http://www.nps.gov/mima/. Enjoy!!

To cap the day, I had a haircut… Not that anyone cares, I know.

Unemployment in Europe – Two sides of the same coin

2009-08-12T18:41:00.000-07:00

I was in continental Europe for a few weeks last month and the situation as far as the economic crisis is concerned felt different that it does here in the US. The main concern that I saw was the risk of unemployment vs. unemployment itself – as there have been fewer layoffs over there than in the US. The fear of unemployment is understandable, mostly among those who are little skilled and/or depend on their paychecks to just go by. But I have felt that in Europe a far broader section of the population is concerned, the prevailing thought being, “if I lose my job, it is going to be nearly impossible to find another one”.

I think there is definitely awareness that the existence of a solid safety net has contributed to making the labor market more and more rigid, leading folks who have a job to generally stick to it even when their level of satisfaction is low and discouraging a lot of companies, especially smaller ones, to create new jobs as not only do they have to pay high social charges but also – and more importantly – they know that they have little leeway as to eliminating positions even when a downturn occurs.

The high level of rigidity of the job market and the comforting safety are the two sides of the same coin, but not until my last trip did I notice how inherently rigid the labor market has become, at least in most people’s eyes, resulting in a sharp increase in pessimism about the immediate future.

A Favorite Boston Story – Thomas and the Police Details

2009-08-10T17:50:00.000-07:00

Boston’s Mayor announced last week that he was in favor of maintaining police staff at construction sites around the city whereas the Governor has advocated for the use of civilian flaggers on lower-speed road in an effort to curb the cost of police details. According to the Boston Globe article published last week, Menino pushing for police as flaggers, police details cost the state a whopping $20-25m per year (and that is only the state portion) and Patrick’s plan could reduce that number by about $6-7m. The Mayor however has used a – hum – original argument since he cited the tortuous nature of Boston roads to justify the need for cops in all situations (article says, “But city officials contend that Boston’s road infrastructure is far more complex than that of any other community in the state and that roads with low speed limits can still have heavy traffic volume that calls for a trained Boston police officer”).

I did not grow up in Boston and there are a number of “only in Boston“ things (that locals seem to take pride of actually) that irritate the hell out of me… Police details are one of those. The question that goes around in my mind about these “only in Boston” characteristics is, how do other cities manage safety around construction sites? Why only in Boston do we resort to cops as flaggers – bearing in mind actually that not all construction sites have an impact on traffic but still, you’ll find cops there?

A newspaper story about how much money cops can make on details came out about 2 years ago and the highest-paid police officers could actually double their salaries through details. On average, I believe that the extra pay brings an additional 20% to cops. So, yes, essentially, it is a way to increase cops’ compensation. This is what it comes down to.

The value to the community as far as police work is concerned is limited in my opinion. Let’s hear what the police union thinks… In that same article, the union rep said, “If you can put an additional 300 to 400 officers into every neighborhood [working details], it’s a great deterrent.” My first reaction is, do we have to rely on cops hanging out doing details for us to be safe? Is this how police work is going to be conducted from now on?

No later than yesterday, I saw two (why two btw?) cops doing details, their backs turned to traffic, chatting with each other and hanging out with the construction workers. In the meantime, a car ran a red light in front of me and they did not see it… And I won’t mention the number of times that I saw cops speaking on their cell phones even though the use of phones is banned during details. But maybe they were placing important calls – that’s probably what it was…

So, is it surprising that a couple of months away from an election that promises to be one of the most competitive in years for Menino, the Mayor has backed the police unions’ stance around the Governor’s plan? Let’s remember that Menino was not exactly the police force’s hero when in 2005 a number of disagreements arose during contract renegotiations.

In sum, I’ll ask the Mayor to respect our intelligence and not use bogus arguments while his move is clearly political. Thank you Mayor Menino, and yes, I’ll let you shake my hand next time you are on Tremont St…

Modern Tale of Two Cities

2009-08-05T17:58:00.000-07:00

I just finished reading Tale of Two Cities by Charles Dickens. It took me a while (I am not a fast reader) but I really enjoyed it. It is not exactly easy to get into this novel – I guess the 1859 English (the year that book was written) did not help but overall it is a great read. Dickens is very effective at using personal stories (those of a French family having settled in England and of a couple of Paris-based tavern owners mainly) and weaving them into that time’s events.

Tale of Two Cities has become the book of reference about the French Revolution in the English-speaking world even though Dickens himself never claimed his novel related actual stories collected from witnesses. The 60+-year difference between the time he wrote the novel and the French Revolution would not have made that easy anyway.

There are a couple of things that I found remarkable in the book, some of which turned out to be very “modern", i.e. be relevant today:
1) The first few chapters describe the condition of France’s common people in the 1770’s and 1780’s and Dickens suggests masterfully that the abuse they are taking – they are considered less than human beings - cannot last forever. For instance, the accidental death of a child (son of some peasant) that is run over by a Marquis’s carriage is viewed as a nuisance (to him…) by that Marquis. It causes him inconvenience. No feelings there whatsoever for the child and his parents because that kid is a lesser human being at best. It does not sound hugely different from the way slaves were treated in this country's plantations…

2) Dickens portrays the French Revolution as a terrible thing frankly. The end – and climax – of the book takes place around 1793-94 at the worst of the so-called Terror (no picture needed there) and thus, makes little mention of the few years between the time the Bastille was seized in 1789 and the era when the Terror began. By then, the whole thing which was at first a huge and successful liberation movement had become a bloodshed.

3) With that preamble, it is not surprising that horror seems inevitable in the second half of the book. That era seems marked by chaos and indiscriminate murder supported by the populace who seems to have lost any sense of what life is worth. Increasingly, the entire population is at risk actually and anyone irrespective of his/her social class can be brought to the Guillotine and executed.

4) That leads me to the last remark about the very modern nature of the book. While I was reading the last 50 pages that describe the heyday of the Terror period, I got a sense of what massive killings, indiscriminate bloodshed, and civil war could be. One of the main characters, Madame Defarge, the wife in the couple owning that tavern, becomes more and more obsessed with vengeance and fascinated with the Guillotine (that takes a quasi sacred place for her). She wants as many folks as possible to be executed, under the premise that they are all enemies of the Republic. Another central character, Dr Manette, becomes her target even though the guy is almost a saint, having been a prisoner at the Bastille under the Old Regime (which gained him a great reputation) and served as a doctor in prisons, honoring the Republic. She gets to a point where she can not trust her husband himself (who took care of Manette many years before but is like his wife full of hatred and resentment) and talks to friends of hers about her plot against Manette, admitting that she sadly cannot rely on her husband to bring Manette to justice…
Next thing I thought (and the book ends shortly after) is that one day she would start having suspicions about her husband and in her eyes, he too would need to be executed as an enemy of the Republic... Very interesting to see how that slippery slope can work and how one can turn against his/her very loved ones when the level of madness and fanaticism (because it is fanaticism right there) reaches a high.

In sum, an enjoyable read that resonated with some of today’s realities.

Disco Night

2009-08-04T11:36:00.000-07:00

It is fun to see that PBS is airing a special Disco Night program these days as part of its summer fundraising drive. I mentioned in an earlier post that a Police concert was used also as an incentive for viewers to donate money in a fundraiser this spring. There is something good about aging then and slowly but surely being in PBS’s main target audience…

I got to watch only part of the show (the first 20 minutes) and it was great to see Taste of Honey (no idea those two ladies – who are still hot by the way – were “guitar heroes”…), the folks who created Disco Inferno, or two of the ladies of Chic’s early days. By the way, I always thought that their greatest hit “Le Freak c’est Chic” was spelled “Le Fric…”, which means money in slang in French… Not sure I understand why “Le Freak c’est Chic” but it is irrelevant, isn’t it?

Goldman’s profits or Goldman profits?

2009-08-02T17:17:00.000-07:00

I was somewhat shocked that the announcement of Goldman Sachs’s huge profits did not stir more controversy. Goldman posted a record $3.44bn in profits for the second quarter of 2009 and, as a typical professional services firm, has set aside an enormous amount to be distributed as bonuses to its employees in 2009 ($11.4bn). This means that the average bonus (i.e. total profits distributed by the number of employees, including assistants and folks in the mailroom) will amount to $770,000. Why would anyone be shocked? Good for the folks in the mailroom (hopefully, they have a mailroom at Goldman…) and the assistants.

But that is not the point. Two interesting New York Times articles (see reference below) break down the sources of Goldman’s profits and it turns out that the bank made most of its money on trading activities. It reminded me of a presentation I attended late May during which investment management legend André Perold (long-time professor at Harvard Business School) explained, comparing Goldman’s balance sheet and off-balance sheet numbers (trading numbers are captured off balance sheet), that it had essentially become a trading firm as trading totals dwarfed any of Goldman’s more traditional banking activities by a enormous order of magnitude.

One of the articles also said that Goldman had increased its risk exposure in the past few months, which means that they took some “winning” – but risky – positions, and while the risk that they took (that can be measured by the “value at risk” ratio, i.e. how much the firm could lose in one single day) was not as high as the one that was prevalent just before the meltdown, it was still significant and much higher than that of its competitors. In trading, that is how you win big: if you don’t play big, you won’t win big – but you can lose big too…

And that is the main problem I have with these ballooning profits – that they were rooted in high exposure to risk – AGAIN…

What have we learned from the meltdown? What has Goldman Sachs learned from the meltdown? What is the nature of their business? What is their mission? I’d be curious to know. Are they a bank? A trading firm? Why are they around to begin with? What value do they create for society?

I don’t want to fall into the simplistic and cynical view that large financial institutions know by now that they can engage in whatever risky practices because they are pretty sure that the government is going to bail them out, as long as they are big enough.

I don’t think that those firms are led by loose cannons. But it is hard, reading that piece of news, not to wonder how what was supposed to be a new post-meltdown world order is going to be different from what it was before the crisis.

Also, working with MBA students on their career choices, I am probably particularly sensitive to compensation questions and the extent to which compensation is the main driver behind the interest in Finance jobs of the current generation of MBA grads. Oh yes, I have heard everything: those jobs are intellectually challenging, I’ll be with like-minded people, I like the hectic work pace, etc. and all that is true and is arguably exciting for a 27-year old. But how can numbers like that $770k (again it is an average, thus the number will probably be higher for any post-MBA folks) not be a huge draw for those young folks, and how then can their perceptions of a fair compensation – or for that matter of their own worth – not be totally screwed up by such an incredibly high figure?

http://www.nytimes.com/2009/07/15/business/15goldman.html?scp=10&sq=goldman%20sachs%20profits&st=cse
http://www.nytimes.com/2009/07/13/business/13goldman.html?_r=1&scp=7&sq=goldman%20sachs%20profits&st=cse

Health care reform and PR challenges

2009-07-28T12:27:00.000-07:00

It does not seem as though there will be much progress on the healthcare reform before the fall. I am not going to enter into the “Washington insider” part of the story, how the Administration has worked with moderate Democrats and with Republicans, and what needs to happen for that reform bill to pass – I don’t know much about this. The thing that has struck me so far is how little we in the public know about what this reform will consist of in detail. I have heard about a government-managed insurance option that would compete with the private insurance solutions. I have heard about incentives that would hopefully encourage people to have a healthier lifestyle, in exchange for lower premiums – things here and there but really not a clear or thorough picture of what the new system would entail.

The Obama Administration that has done very few communication faux-pas so far has surprised me here in its failure to explain simply to the general public what they have in mind. Maybe I missed it but I went on the New York Times and Boston Globe web sites and did not find any simple and accessible articles presenting the reform in detail.

That lack of clarity makes it easier for opponents of the reform to take any one bit of it that they don’t like and make a huge deal out of it. Case in point is the argument that supposedly with the new system the public won’t be able to make decisions regarding their care any longer and everything will be decided by the government. I understand that this could not be farther from the truth – but the lack of details and transparency about the Obama Administration’s intentions create a fertile ground for that kind of questionable debates to happen. No wonder that the public opinion is only moderately in favor of a major healthcare system overhaul…

Gates Incident (Ctd) – Maybe I am the one who doesn’t get it…

2009-07-28T11:52:00.000-07:00

So alright, just one more post about the Skip Gates affair. Yesterday the 911 call details of the concerned neighbor / passer-by were released and the main comment I heard in the media was that the woman who called did not specify that the two men she saw (Gates and the cab driver who helped him open his door) were black. She said, “maybe Latino for one of them, I am not sure”. Then, the comments generally went, you see, this was not a call motivated by those guys’ skin color – and thus, implicitly, what are you complaining about? Race has nothing to do with this, we live in a wonderful country…

Well, the whole thing about bias (and I speak in general, not specifically about this woman) is that it is really powerful when it gets internalized. You see black kids together and you may want to cross the street, you see two black guys getting into a house by forcing the door, it has to be suspicious - they attract your attention more than two white folks would. That is what bias is about. At some point, you don’t even realize you have a bias – it becomes part of your intuition.

I am going to share a quick anecdote that helped me understand how bias can play out even in the most mundane situations. I like walking around and exploring cities by foot. I did plenty of these walks in Boston the first few years I was back from DC and one day, I found myself in an exquisite part of Newton by the river – it was kind of a peninsula (not exactly sure how to call it). It was a narrow strip of land and there was basically one main street lined up with trees, just very nice. It was during the day – very quiet - and there was no way that as a non-resident I could go unnoticed. And I did not – I saw two or three folks, some closer than others, who were looking in my direction. I nodded and smiled and said hi when people were close enough. Two things that struck me that day: good manners matter – smiling and being polite make you much less threatening. And the very fact that I looked white and was dressed rather conservatively did not raise any eye-brows – I managed to be pretty much transparent, which is what I wanted. Good thing that I am not wearing on my face that I have an Arabic name and I am 50% North African…

Everyone has to hear black folks in this county when they talk about what it is to be black in America (and African-American in particular). A friend told me one day, being black is a 24/7 thing. You are never anonymous. Try to go to a developing country with your Western looks – you’ll see what it is to not be anonymous – the 24/7 thing… It may disturb a lot of folks when they hear what it is to be black in America today, but what everyone should do is listen and appreciate what they will hear. Maybe that is the main “learning opportunity” of this whole thing.

The Skip Gates affair

2009-07-25T15:11:00.002-07:00

It is just mind-boggling how the Skip Gates incident has escalated in the past week – since Tuesday really after it was disclosed and the DA did his best to diffuse the incident. Everyone seems to have had a point of view since then, so that of course kept fueling the debate. But this tells me two things:

1) We still have serious issues with racism in this country - the very fact that some folks reacted so strongly, complaining that the race card was being played or uttering that they could not fathom how race was an issue in the first place is evidence enough that racism is alive and well;

2) There is a silent majority (mostly white lower middle class / blue collar) – or hopefully minority from a pure number standpoint – that sort of woke up with that incident and expressed discontent and frustration with the way the police officer was being portrayed in some media outlets. This is an intuition on my part based on many comments I read on the Boston Globe web site that were frankly pretty scary. Essentially, it seems as though a lot of folks in that group feel disfranchised and resent people like Gates who they see as elitist (which he may very well be). They probably have the same resentment towards wealthy and influential white folks – and for some good reason as socio-economic disparities have dangerously widened in this country in the past 15-20 years.
But the ugly part of the story here is that above and beyond that resentment towards those who have means and power, there may be frustration also against minorities, namely Blacks and Latinos, who according to those folks have received preferential treatments for quite a while. Moreover, since it has become increasingly politically incorrect and certainly slippery to address race issues, t hose guys who would like to denounce what they see as preferential treatments are just stuck saying nothing – and only being able to express themselves when elections come.
The combination of resentment and frustration towards elites and about preferential treatments / double standards produces that hostility against the Gates, Obamas, or Patricks of the world.

Obama with his usual political shrewdness has been the first one to back down and try to have everyone come to his/her senses. Those guys – the protagonists - will have a beer at the White House – or whatever – and we won’t see any riots as no poor black man was shot and killed by police this time. But it does not mean that we as a country can look ourselves proudly in the mirror and think that we’ve done such a great job of putting racism behind us.

Back in town

2009-07-25T15:11:00.001-07:00

I was in Europe for a while and stopped writing… Sorry!! That shows that I have not yet fully comprehended what the concept of a blog is about. Remaining silent for a number of weeks – hmmm, not the point!! I’ll try to get better at this. I’ve actually been back for over two weeks but I always seem to find things to do that take precedence over writing a blog entry –though it is not exactly as if there has not been any interesting news to comment on lately…

Yaoundé

2009-05-01T13:14:00.000-07:00

I liked Yaoundé overall. It is not as hectic as other major African cities I have known like Dakar and I hear that Douala (country’s economic capital) is much more painful to navigate than Yaoundé is. There are plenty of hills and mountains around, a lot of green and brown / red because of the climate. The city feels safe and folks are nice. Those are broad generalizations of course but it is interesting how after 3 days one can develop that feeling of safety or not when one move or walk around. I have taken collective taxis, which did not even cross my mind when I got here (not something someone from a Western nation traveling to a poor country would think of doing) and today I can tell that I would move around that way if I lived here. It is very convenient, there are lots of small yellow taxis. Before getting into the cab, people suggest a price and tell their destination (e.g. “300 Carrefour Bastos”) and the driver says yeah or nay…

Also, it is interesting to see how the economy is geared towards consumption in small quantities. For those not having a cell phone (which was my case and I could not call local numbers from my hotel – go figure…), they just find someone on the street who sell SIM cards and phone cards for cell phones but also lend cell phones for anyone to call – rate is 20 cents a minute… By the same token, my hotel did not have wireless, so guests could either use desktops and pay 500 Francs CFA an hour (less than a buck) or use their own computers, get connected to the hotel’s local network and pay 1000 Francs CFA… You have your own laptop – it costs you more. Supposedly, the connection is faster. That is how they justified the price difference when I asked…

The folks I ran into were all very polite (same with each other) and willing to help. Almost no hustling even though there are few non-African travelers or business folks around – so, one gets spotted quickly. It is just nice to be able to go around one’s business freely and concern-free. There is a certain nonchalance also – did not see a lot of people who seemed to run around and rush from one place to the next and be stressed out. That contributes to the ambiance of fine and calm pace, which I liked.

Ministry of Fauna

2009-05-01T13:06:00.000-07:00

I wrote this waiting for a guy working for the German cooperation agency GTZ at the Ministry of Forestry and Fauna in Yaoundé, Cameroon, last week. Our friend is actually based in the Ministry per se which itself is housed in a big government office tower. I went up to the 7th floor with 7-8 other folks in the elevator and a guy pressing on the corresponding buttons in the elevator. I am not good at descriptions, so I am not sure that you will be able to visualize the picture, but basically the whole thing looks a bit old and shabby. Stained carpet, old office furniture, some folks sitting in the hallways here and there. A number of offices with closed doors. The office of the guy I am to meet with is under renovation, so there is a nice strident noise less than 10 feet (3 meters) away from me… I forgot to mention that the building entrance is all marble – tower must have been built in the 70s and must have looked quite nice for a while.

I did not get the full picture of what happens in the forestry and fauna sectors in Cameroon, so I won’t claim to say anything thorough and even exactly accurate. One quick thing right away: it is interesting (and not uncommon) to see forestry and fauna under the same ministry’s umbrella. Sustainable forestry is a growing trend but standard practices in forestry still dominate the landscape and are not particularly good for the fauna or flora… But considering the glass half-full, there seem to be signs of hope in the forestry sector as several major operators are moving towards certification under the pressure of demand in their countries (largely in Europe) and small-sized operators may be able to carve a niche, operate sustainably, and make some money.

Investing and Africa

2009-05-01T11:22:00.000-07:00

Alright, that interesting project I alluded to is the review of a venture fund that makes loans to businesses that produce not only economic benefits but also social and environmental ones (the so-called “triple bottom line”). This fund, Verde Ventures, affiliated to big-time NGO Conservation International is thinking of expanding its activities to new sectors and new geographies (most of its work has centered on coffee and ecotourism in Latin America so far). A potential new investor asked to conduct a review of their operations and assess the potential of VV’s expansion into Africa. Hence, the somewhat (understatement…) busy time in the past few weeks and current trip to Africa….

Madrid, Madrid

2009-05-01T11:20:00.001-07:00

I have been off line for a while because I started a new interesting project that I will have a chance to write more about. Not that my readership missed me that much and demanded to read an update – but hey, who knows? Who do we write blogs for? For others first? But who are they? Or for ourselves? Anyway, I will revisit this topic at a later point I am sure. Alright then, in mid-March I spent a wonderful long weekend in Madrid – weather was gorgeous and warm for that time of year, in the lower 70’s (over 20 degrees Celsius), exactly when we needed after the long Boston winter.

What struck me in Madrid is the money that has been poured into infrastructure and public spaces. The subway has undergone a vast improvement / expansion plan – absolutely modern and efficient today, a lot of trains throughout the day and at night, a lot of new stations that have made the network pretty dense. There are good bus connections from what I could tell in the outer subway stations to reach suburbs where the subway does not get yet - and there is also a brand-new light rail system that I did not have a chance to experiment.

The real estate boom that has characterized Spain in the last several years before the meltdown has been accompanied by the construction of new monuments or public spaces all across town. I am certainly biased with respect to the place and importance of culture in society, having grown up in France, but the myriad of monuments and public areas, old and new (the Prado garden which dates back to the 17th century is wonderful) make Madrid so livable and just great.

So, the 64-thousand-dollar question to which I don’t have an answer is who foots the bill (and how…). Obviously, it is a big one. In America we would say, “well, that’s why they pay higher taxes in Europe”. Why is it such a bad thing anyway? At least, everyone gets something concrete (a much improved public transportation system) and, granted this is a bit more subjective, a better quality of life thanks to the presence of art in more and more public spaces (free and accessible).

I am not sure Americans realize that so many cities around the world have gone through those beautification processes which have often entailed the integration of more art accessible to everyone. Several US cities have done a good job of revamping parts of their downtown areas, for instance with the construction of ballparks (baseball stadium) that triggered the resurgence of the area around them, especially through the arrival of retail stores and restaurants. Denver, San Diego, and Baltimore are just a couple of examples. But - and this is where it goes back to the subjective part – don’t we need more than just sport, food and shopping?

Dr. Ross

2009-03-16T12:44:00.000-07:00

It was a treat seeing George Clooney (Le Beau George…), Julianne Margulies, and Eriq LaSalle back in ER the other night (no in the ER since the characters played by Clooney and Margulies are now in Takoma, WA and the surgeon played by LaSalle is at Northwestern…). Seeing Le Beau George made me think that I don’t know that many examples of TV series lead actors who became worldwide movie stars. That Clooney guy is sure to go anywhere in this world – he will be recognized. A true old-school movie star…

I read about ER ratings’ slide in the last several years (now the 49th most seen show nationally or something like that). I have remained among the ER faithful (though missing the earlier era) – but I am sure a lot of folks, including those who got tired of the series, enjoyed that episode last Thursday and maybe also felt a bit sad that ER lost some of its momentum over time.

AIG and a Call for Service

2009-03-16T08:51:00.000-07:00

Alright so, there was this outcry over the weekend about the bonuses paid to AIG folks amounting to millions of dollars that will come from the $160bn the company got in bailout money. The Obama Administration was on the defensive of course, displaying a combination of tactics, saying “this is outrageous” and “but this is the best we could do”. They probably understood (Summers and Bernanke are the two I saw) that they had to show empathy and reflect what 99% of folks out there were thinking (it is outrageous) and then they could explain what the administration did, i.e. they had to comply with existing contracts that included clauses about bonus payments (not sure how those were calculated – even when the company loses billions of dollars, those guys get bonuses – pretty good deal…).

That is the story. We have to pay those people to retain them. I don’t know who those folks are, nor what they do exactly, so I won’t make a definite judgment about how valuable they are. But it does seem to me as though the Administration, now holding a 80% stake of AIG, could be more creative and offer something that would be in line with Obama’s Call for Service (in his victory and inaugural speeches and in his state of the union address).

Since working for AIG is basically a government job tantamount to a “rescue mission”, why not call on the thousands of folks unemployed / ill-employed / seeking a challenge / willing to help who would be happy to get involved in salvaging AIG for a set period of time (6 months for instance, renewable once) for a decent amount of money but something lower than they would get in a Finance job (e.g. $100k)? That short experience would look good on their résumés – it would be a quasi-Obama Administration job (something likely to be carried as a badge of honor in the future) focusing on a complex and difficult mission (preventing the AIG-Titanic boat from sinking and thus avoiding a snowball effect in the rest of the global financial system). The opportunity cost for those folks would be acceptable – being away from high-paying jobs (assuming they could get one of the few that are left…) for only 6 months to a year would not be that bad…

I love the Obama Administration – don’t get me wrong… But they have been showing two facets that I don’t like that much: they have not been hugely creative in coming up with solutions to this mess and they have adopted a very middle-of-the-road approach that probably makes sense in a lot of cases (this mess is more complex that most of us understand, so let’s not be tempted by rash solutions) but sometimes they should draw the line in actions vs. in words (saying “this is outrageous” is not enough).

New Labor?

2009-03-15T10:55:00.000-07:00

I read an interesting article in the New York Times the other day (“Job Losses Hint at Vast Remaking of Economy”) whose punch line was basically that a significant portion of the jobs that vanished as a result of the current downturn are not going to come back. McKinsey partner and Harvard Business School (HBS) professor Bhaskar Chakravorti had a more optimistic message in an interview for HBS’s Working Knowledge (“Creative Entrepreneurship in a Downturn”) in late February that new needs will emerge in this time of crisis and resources will be available at a relatively lower cost. That will constitute a kind of “private stimulus” that will contribute to getting us out of the current mess.

It seems as though we are seeing and hearing different things regarding the job situation, how bad unemployment could get, and what we should do to improve the situation. A significant portion of the stimulus plan is going to pay for those infrastructure jobs that the Administration says are needed because our infrastructure is crumbling. Well, they have a point there. However, it is a “shot in the arm”-type solution that will get a number of folks out of unemployment in the short run only – until those bridges or roads are fixed. And then what?

We should focus our resources, we being the government, the corporate community, and society, on thinking about what will be reservoirs for those jobs that in the long run will sustain the economy. Green technologies are big and we all sense that anything related to reducing our dependence on oil and our environmental footprint will be increasingly needed and popular in the years to come. There is also a sense however that a bubble might be forming in the green tech / cleantech world and there will be winners and losers. I guess Venture Capitalists live by that risk, one home run out of 10 tries, but the likelihood or imminence of that bubble bursting might discourage some investors.

Then, related to the jobs that are not coming back (re. the NYT article), what about the folks who got trained on those jobs and are not skilled at anything else really? If the plan is for all those people to go back to unskilled jobs, that is not going to help them (low salaries) or the broader economy as a whole.

As to the question that the Administration does not want to ask bluntly, what about the jobs that should disappear? I don’t want to be too hard on General Motors and Detroit and I know that pension plans have weighed significantly on their accounts and thus have given us a biased view of those folks’ profitability but it is not as though we have not seen the Big Three’s competitive positions eroding in the past 20 years – and mind you, they have certainly been trying to do something about it, but it has not worked so far.

I found ironic actually that GM recently announced that they would discontinue Saturn as a brand whereas when it was introduced Saturn was supposed to lead the way and show the world how differently GM was going to make cars from then on.

So, the temptation is to have GM and the other car makers throw the towel and let markets do their magic (or damage…). Of course, the human price would be huge because of the millions of folks depending on the Big Three directly and indirectly for their livelihoods – but supporting those companies over time just because they provide jobs does not make any sense either. And how about diversification in the Detroit area? Easier said than done for sure – but depending so much on the Big Three is not healthy for the Greater Detroit area – that is certain.

TV Recycling

2009-03-04T07:25:00.001-08:00

I was flipping through the channels last night and stumbled upon a show on CW in which I recognized the actress who played the mother of the clan in cultish Arrested Development. It is so funny to see all those actors being “recycled” from one series to the next – it almost feels like always the same players get to play…

I must say I loved that the Freaks and Geeks folks popped up in more and more TV shows and movies - and how about the two main characters in Arrested Development who have become movie stars now (Jason Bateman and Michael Cera) – didn’t they play together in Juno? Maybe this recycling thing should inspire our new administration, at least it is very in line with the green “zeitgeist” (or whatever). Hum, I should think about this “recycling of people” thing – with folks losing jobs, I feel there is something there…

Lahore and Munich

2009-03-04T07:17:00.000-08:00

I was sad to hear on the BBC yesterday morning about the shooting in Lahore that targeted Sri Lanka’s national cricket team and killed several policemen and injured a few players and others.

But I was also very surprised that I had to look for a while on yahoo.com, nytimes.com, or boston.com for the account of that attack… According to the BBC, that attack was the worst incident affecting athletes since 1972 and the Munich tragedy… The BBC journalist shared that they had received scores of emails from folks being shocked and angered by what had happened.

I guess this has to do with cricket being like a religion in many Asian countries and a very minor sport elsewhere, including in the US. But also, is it just that we have given up on Pakistan and are getting used to attacks here? Or as long as there are not dozens of casualties like in Bombay, why should we even bother? It is also maybe time to tell the US media that we are not on an island here and we should care about human lives everywhere – life has the same worth anywhere, America!!

The Police and Andre

2009-03-03T17:33:00.000-08:00

I saw a concert by Police the other night on PBS at part of their fundraising drive. Police on PBS – wow!! That was unexpected.

Does that mean that the “Police generation” who must be in its 40s today is becoming PBS’s target audience? I thought our baby-boomer friends were PBS’s primary audience. Well, maybe PBS featuring Police surprised me because I thought, “I am getting old if PBS is now showing concerts of groups I love”. I should be happy though because as time goes by, I’ll have more and more opportunities to catch music from the 70’s and early 80’s on PBS.

And kudos to those PBS for being “adaptive” in its marketing – you guys rock (huh, really?). Anyways, this is always better than André Rieu, the Dutch Huguenot (yes, I like those French-sounding Dutch names) Conductor Extraordinaire, or rather “you might as well shoot me” Conductor Extraordinaire – I must say I can’t stand that guy…