Stakeholder Capitalism

Meaningful Innovation

Why we should be focused on food now.

Did you catch Eric Schmidt on Face the Nation this weekend? He’s helping leaders reimagine parts of the economy. Interestingly, he touched on many of the topics covered in the Weekly Rush over the last several months including housing and infrastructure to facilitate remote work and education. 

Last week, I raised the need for meaningful innovation in healthcare and incentives to influence industries that effect the health and wellbeing of all Americans.

I’ve been thinking with the food supply chain since visiting family in rural Canada last year. The problems were really clear to me then because my point of reference is California.

When you live with abundance, it’s eye opening when you can’t get what you need. Hopefully, the stories about crops being destroyed, animals being euthanized and shelves sitting empty are illuminating the problems for others now too.

I recently discovered the 2030 Agenda for Sustainable Development and more specifically, how it relates to food.

Stats

“Approximately $1 trillion of food is either lost or wasted annually – an amount that accounts for nearly one-third of the world’s food. According to the UN Food and Agriculture Organization (FAO), ending food waste would preserve enough food to feed two billion people. That’s more than twice the number of undernourished people in the world.”

Food is a problem in developed countries. At the end of 2019, over 39 million Americans received food stamps from the Supplemental Nutritional Assistance program [SNAP]. With unemployment above 14% now and climbing, it’s safe to assume more Americans are eligible for the SNAP benefit and likely in need of other food subsidies.

Despite the Trump Administration’s optimism about an economic rebound in the summer, history tells us main street and all the people who work on main street are not going to recover that quickly. The need for food subsidies will likely persist for the next decade.

Opportunity

Addressing food waste is reportedly one of the most important things we can do to also reverse global warming. Why? Think beyond the wasted food to all the resources and energy consumed to grow, harvest, produce and transport the food.

Without getting into specific ideas now, Covid19 poses the opportunity for us to change:

1/ What we grow

2/ Where we grow it

3/ How we grow it

4/ How we harvest it

5/ How we distribute it

Stakeholder Capitalism

A recent WSJ email answered the question about whether or not we’ll see a shift to Stakeholder Capitalism following the Covid19 shut down. Only 18% of leaders are expecting to make the shift.

The response is disheartening when as an industry we’ve heard nothing but complaints from them about the rising cost of healthcare. If you consider the Sustainable Development Goals, leaders outside the industry have just as much or more control over their rising healthcare costs as the healthcare industry.

We should have a shared responsibility in addressing the goals, reducing the cost of healthcare and achieving peace.

2030 Agenda for Sustainable Development

“The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries – developed and developing – in a global partnership.”

17 Sustainable Development Goals

1/ No poverty

2/ Zero hunger

3/ Good health and well-being

4/ Quality education

5/ Gender Equality

6/ Clean and sustainable water

7/ Affordable and clean energy

8/ Decent work and economic growth

9/ Industry innovation and infrastructure

10/ Reduced Inequalities

11/ Sustainable cities and communities

12/ Responsible consumption and production

13/ Climate action

14/ Life below water

15/ Life on land

16/ Peace, justice and institutions

17/ Partnership for the goals

National Dialogue

Healthcare leaders can help shape the national dialogue.

I needed some repairs done over the weekend and got an ear full from the handyman. He couldn’t contain his emotions about the economic impact Covid19 is having on everyone. Who can blame him?

Mixed into some interesting theories about China and the US, were some new perspectives about the environment, the level of inequality and the prioritization of government spending.

Given the level of interested in Stakeholder Capitalism, I’ve been thinking about how to incorporate workers from every level at “the board table”. There is value in hearing the unvarnished perspectives from people of all walks of life. 

However, this experience left me wondering whether there is a way to filter out the disinformation without affecting the value of the input.

Critical Thinking


I’m not the only one thinking about this right now. Jonathan Haber, author of Critical Thinking has been too. He recently hosted a webinar called Essential Knowledge in the Times of Crisis.

As a society, our critical thinking skills have reportedly become a bit lax. Consequently, we’re leaning too far into our biases especially when it comes to political and other issues that help define us.

The good news is that critical thinking can be taught, assessed and mastered if implemented correctly. General and immersion techniques are commonly used in educational settings now but are less effective than infusion which involves explicit instruction.

Explicit instruction requires the teacher or leader to pause and explain the example when critical thinking is infused into a lesson or problem.

Elements of Critical Thinking

According to Jonathan Haber, there are six [6] elements of critical thinking. Specifically: 

1/ Structured Thinking: Developing a form of logical thinking.

2/ Language Skills: Developing the ability to structure statements from your thinking.

3/ Argumentation: Using your structured statements to form an argument.

4/ Background Knowledge: Having a good foundation of knowledge on the topic.

5/ Persuasive Communication: Amplifying your argument with more convincing and compelling language.

6/ Understanding and Controlling for Bias: Being aware of your own biases and being open to new information, facts and ideas rather than dismissing it as “poppycock”.

National Dialogue

There is a role for healthcare leaders to play in shaping the national dialogue.

A few physicians in my social networks are sharing research, explaining the findings and answering questions so that people interpret the information correctly. It’s been really helpful for me and others in the network. Even if they don’t ask questions, they get the benefit from the group dynamic.

Non-physician leaders could build on that momentum to help develop the background knowledge on the environment, inequality, government spending and other related topics. 

A few ideas of things that all leaders could do now: 

1/ Book Clubs: Leaders could host virtual book clubs and facilitate the discussions. Buy the books for participants.

2/ Lecture Series: The Common Wealth Club is hosting virtual events on relevant topics. Tickets are very affordable especially if you’re already a member. Again, leaders could facilitate discussion following the lecture.

3/ Social Networks: Use social networks to engage with people in “positive economics” which is the explanation of the current situation rather than being prescriptive or opinionated. 

In addition to being heard, people need to know you care. Investing your time in their development shows that you care.

Fast Money

Why it might be even harder to swing for the fences?

I met with an equity analyst a few weeks ago who used the term fast money. The term really resonated with me as a description for what I’ve been seeing in healthcare [aka: out-of-network strategy, balanced billing strategy, inflated pricing strategies, kickbacks etc.] and in the broader economy.

The US economy is built on a lot of fast money. The problem with fast money is that it is usually dependent on timing and evaporates with new regulation, policy changes or when the asset bubble pops.

That’s why a lot of people are trying to predict the next stock market correction and worrying about the student loan bubble. In my opinion, they should be.

Foundation

As a consultant, I often talk to clients about problems with their foundation because they are trying to do too much on a weak foundation. Structurally a weak foundation is a recipe for future problems that usually cost more to fix than doing it right the first time.

As leaders, we can’t look at revenue and profit without looking at what’s happening on the balance sheet. In simple terms, the balance sheet represents the foundation. It tells you whether someone is robbing Peter to pay Paul. We all know that behavior can only go on for so long before the foundation crumbles and disaster ensues.

The US balance sheet is a mess. There are four areas where governments should be spending: healthcare, eduction, innovation [aka: game changing investments] and infrastructure because they are key to sustaining the workforce and a healthy business environment. Unfortunately, we’re likely going to see some big cuts in these areas which will further weaken the foundation unless business leaders fill the gaps. 

It’s likely why the Stakeholder Capital movement is picking up steam and philanthropic organizations and other investors are making some big investments.

Slow Money

Last week I attended a workshop to educate women about angel investing. There are some really stark contrasts between how entrepreneurs and investors in Silicon Valley interact versus what this new crop of potential angel investors are learning.

1/ Timeline: Ten and twenty year investments with no clear exit timeline are okay as long as the founders were still making progress. The Silicon Valley timeline for an exit is often 3-5 years.

2/ Structure: Convertible Notes and SAFE instruments are too risky for this crop of investors whereas these instruments are the norm in Silicon Valley because they are easy to work with.

3/ Cap Table: Changes to the cap table may cause trust issues. Cap tables in Silicon Valley often get restructured to facilitate growth. 

4/ Tax: Lots of talk about tax credits and managing the business to preserve tax credits. Silicon Valley doesn’t talk much about tax until there is a windfall to discuss.

These angel investors are reportedly doing rather well taking a more conservative approach.

Fast and Slow

There are also some similarities in the match making process and criteria.

Match Making: Personal networks and warm introductions are the best way for entrepreneurs to meet investors and vise versa.

Criteria: There has to be alignment in interest, expertise and values. 

Investors also consider the 4 t’s:

1/ Team

2/ Traction/Market

3/ Tech/Product

4/ Timing

The question that remains to be answered…will there be enough slow money invested to fill in the gaps?

Talk is Cheap

Why business leaders need to act now.

I met with the CEO of a mental health company last year and remember asking him “what’s the answer” to some of the biggest challenges that we’re facing. Talking is good but if there is no solution for the problems, then what?

It’s something that I’ve been thinking about given the mental health stats and increasing pressure on the middle class. I’ve been reading a few different books related to this topic lately but one of the messages that leaders should take to heart now more than ever is from Leading with Purpose by Nick Craig.

The message that is giving me food for thought is about circumstance vs. purpose.

Purpose 

Purpose is about living your why. A job or a title does not define us or change how we work if we are working in alignment with our purpose. 

You’ve probably heard that message before and had the good fortune to make adjustments when needed. What about your employees? Are they making decisions and acting from purpose or circumstance? My guess is that many are acting from circumstance and fear. 

Most people are pretty aware of the changes underway and likely wondering where they are going to fit in a new automated world and how they are going to survive in the future.

As leaders, we should be easing that pressure by identifying the people most at risk and helping them to re-skill in ways that align with their purpose.

Job Training vs. Education

There is a lot of talk about companies placing more emphasis on skills and job training rather than degrees and schools. It’s a good direction but what happens if we could offer both?

RUSH was an early pioneer in online training. To gain trust and credibility, we had all of our course work evaluated by the NASBA which is an organization that grants permission to companies to award Continuing Professional Eduction [CPE] credit offered to Certified Public Accountants [CPAs].

We discovered that some of our participants used our CPE credits for college credits. That gave them the opportunity to master the needed skills for their current job while also giving them an economical pathway to a degree and future opportunities.

Extending that kind of offering to employees takes some additional work and/or money but it’s the right thing to do regardless of whether they stay with the company.

Housing

The first chapter of the 5 Rules for Tomorrow’s Cities covers some pretty grim statistics. In short, there is very little correlation if any, between wages and housing costs in most major cities. The stock market and housing gains are signs of asset inflation not general market conditions.

During the housing run up just before the 2008 Financial Crisis, I was looking at just two stats: professional level salaries versus the cost of housing. Using the standard ratio for housing costs versus income [25%], it didn’t make sense in San Francisco even with a two income household. San Francisco stats have gotten worse since 2008 but surprisingly, it is not the worse case scenario now.

Leaders should be looking at the housing vs. income stat now and either rebasing salaries or adding a housing subsidy so that employees who need to be onsite, can live within an hour of their office. A commute longer than an hour eliminates the personal time needed for job re-skilling and health maintenance activities.

Action speaks louder than words

Talk therapy is important but without action, nothing changes for the positive. As leaders, we need to help stem the tide and work to address existing economic issues.

We can change the circumstances so that more people have the privilege to act with purpose. This video of leaders at Davos discussing their results of stakeholder capitalism will inspire you.