Behavior Modification or Technology Best for Residential Energy Efficiency?

Residential energy consumers are a notably tricky segment to engage with utility conservation programs as their smaller consumption loads pale to larger, more sophisticated commercial users.  Economic incentives exist for these customers, but it's become clear that utilities cannot make everyone an energy analyst of their home and this has caused DSM programs to return spotty success for some utilities.  In general, no one wants to study their utility bills.  I recently found a video online (link lost) parodying the "Thing No One Says" Internet meme with a video titled "Things No One Says About Their Energy Use."  One-liners such as, "Hey, do you want to hang out tonight with me and weather normalize my energy bills over the past 12 months" comedically strike the heart of every program manager.  The silly video illustrates my point well in that it actually satirizes home residential energy analysis as being mundane, complex, and boring.  It is for this reason that utility DSM programs must go beyond the traditional light-bulb replacement campaigns, smart-meter installations, Energy Star ratings, and the like to engage customers on more innovative fronts and not shun the boring stuff like behavior awareness.

While the importance of traditional conservation programs has continued to grow to peak levels over the recent years, so too should the interest in new engagement methods.  In a great report published by the American Council for an Energy-Efficient Economy (ACEE), available for free here, researcher Skip Laitner defends returning to behavior awareness as a critical component in DSM; "The adoption, use, and innovation of technology are firmly rooted in human beaver.  Therefore, it is difficult to fully distinguish where behavior ends and technology begins, or to determine how best to attribute energy savings whether as a function of technology or behaviors.  In fact, most energy savings that are through the application of new technologies also rely, to vary degrees, on changes in behavior."  His comments support his work in energy-efficiency research related to behavior including notable writing on the 'rebound effect.'  This and other nuances of residential energy efficiency only build the case that consumer behavior cannot only be dictated by economic theory.

Though economic theories such as Pricing Signals, Value vs. Utility, or Rational Consumption clearly have their place while developing any utility DSM program, behavior modification also demands utility attention.  "Lights-off" campaigns for example should not be relegated as a boutique or bonus strategy over a technology-heavy programs given behavior changes have alone resulted in 20% reductions across various empirical studies.  Behavior-heavy programs that build from insights in the social sciences, which has had tremendous success in B2C banking and financial services, could be a great starting point.  Think ING Direct Online Bank's saving tools and the now-copied industry culture they created.  Examples abound of industries and firms slowing their inclination to force technology on theirs customers in favor of a more combined human/tech approach.  DSM across the U.S. can continue to improve on this front.  Programs must become more sophisticated sellers of conservation-as-a-service.

A final dash of salt...

Investor Owner Utilities probably don't favor behavior awareness programs because their results are only faintly quantifiable.  I understand this, but a clever program could overcome this barrier.

Building Energy Management Systems: A Growth Industry

Building Energy Management Systems (BEMS) and the associated industries are set for YoY growth of over 15% through 2020, according industry consultants, Pike Research.  The usual suspects are of course talking up these business segments in their 10-K's as being a major part of growth opportunities: Siemens, Johnson Controls, G.E. I.B.M., as well as countless startups are drooling over this forward-thinking energy industry.  The U.S. commercial building stock provides almost endless room to target existing structures, all of which often see incredible energy savings and payback periods. 

I enjoy watching this industry for several reasons, but primarily because it exemplifies the work required of an efficient and progressive economy, which I'm an ardent supporter of.  A multitude of professionals must come together for a building to become active or alive: one that adapts its systems real-time.  Pipe-fitters must work alongside technologists, engineers with facility managers, or programmers with office clerks.  BEMS design is clearly a stakeholder responsive industry, which requires tight integration of many disciplines.  Firms in this field often tout their vast network of professionals from across industry as a selling point to clients.  One of many reasons I'm motivated to become part of this industry as a business professional. 

A Final Dash of Salt…

What's additionally fascinating about this industry is it's only recent growth due to several technology advancements: network technologies, wireless communications, and micro computing power.  I believe these three tech trends are some of the most powerful societal advancements solidified in the past decade and may sit next to antibiotics, steel, and modern sanitation as critical, historical advancements and paradigm-makers.

IBM's bet on the industry:

http://www.youtube.com/watch?v=fquhe95YTHI

SIEMENS recent 10-Q:

http://quote.morningstar.com/stock-filing/Quarterly-Report/2011/12/31/t.aspx?t=XNYS:SI&ft=&d=14df53e546b524b68980f27c8302a2bb

Thin-Slicing & Rapid Cognition in Commerce

Those who've bickered about business and industry with me over a cup of coffee know I love to blend larger socio-observations into the folds of commerce.  After all, businesses exist within these environments and sometimes even create them.  Because of this congruence, I'm forever enticed by their relation.  As it relates to this post, I'm specifically interested how business leaders make decisions amongst the relentless flow of information in the modern, data-driven world.

The concept of Rapid Cognition or "thin-slicing" is why people declare; "You don't get a second chance to make a first impression."   Thin-slicing refers to the ability of the unconscious to find patterns in situations and behavior based on very narrow slices of information and is a dazzling part of of how people make sense of sophisticated problems such as the hiring of a new executive.  Does it take 8 months for a hiring manager to understand a new-hire's competency or can a settled understanding be had during a single interview?  Much outstanding research supports the fact that the single interview may, given certain a certain context, be more reliable.  So how can this be used in business?

I've been recently writing much about the prevalence of data and real-time decision making in business.  The relentless pursuit of data-driven businesses has flooded most executives minds with more raw information than is bearable and though these metrics do ease many business processes, they also can distract.  Information-overload is pervasive and the topic of many corporate training sessions for small businesses and corporate chains like big-box stores.  I recently spoke with a professional friend who Manages a local Walgreens store.  He reviews hundreds of Key Performance Indicators (KPI's) daily, which are a product of the sophisticated data-driven business Walgreens runs.  I'm curious how his intuitive senses and thinly-sliced judgment may stack against these KPIs.  This Walgreens Manager shares the decision-maker role with countless others within industry trying to make highly influential decisions in regards to very complex problems and sometimes we hear stories of courageous executives turning off the dashboards, etc. and using the the Gut.  The Gut is a product of thin-slicing and research has proven its effectiveness in decision making.  Decision-makers use it when they walk a factory floor or make deals via a hand shake.  The disregard the endless complexities associated with the decision and instead make smart decisions in hours, minutes, and seconds.  Because of proven success, I suggest a tempered look at using thin-slicing during everyday decision making as well as during highly complex problems.  This can work especially well with problems that present countless variables to consider.  Overall, it's simply another angle by which a complex decision can be refined into manageable parts.

A Final Dash of Salt…

Many factors affect the quality of a decision made using rapid cognition techniques and therefore it is inherently full of caveats.  However, I'm most interested how the many topics of data-driven commerce, several which have been touched on in prior posts, can be influenced by rapid cognition.  Business leaders are flooded with data, much of it benign.  Rapid cognition may be the key to making quick, deeply reliable, and sophisticated decisions without getting lost in the sea of information.

Wind Turbine Power Generation & The Science of Emergence

I’d like to continue piggy-backing on my previous posts about localized data and control with an entry-level post about wind forecasting as it relates to energy production and energy markets. 

Wind prediction is part of our local, nightly newscast and the principles guiding it are scientific standards: low pressure persuaded by distant bodies of water make wind.  This is nothing new.  What is new, however, is the hyper near-term prediction of wind velocity, angle, density, etc. for the use in wind farm design and operation.  Day-out forecasts have long been available for these purposes, but several firms now offer data-analytics software (i.e. LIDAR) and turbine blade hardware that can make real-time predictions of incoming wind several thousand feet away.  Micro adjustments are then made to blade pitch and the like so as to better capture the energy within the wind.  This ability is not necessarily new as many newer turbine blades incorporate design that exploits complex hydrodynamic principles, but adapting them to further increase production is still ongoing. This is very similar to the use of automated flight stabilizing flaps used on commercial aircraft.   The below video is a quick, anecdotal example.

What’s more, I believe the concept of Emergence used in Science could also compliment the refined efficiency of large farms.  Emergence is the concept of self-organization without leadership.  Fire-flies, ants, fish, and the like use it to build complex societies and coordinate movement without the aid of central command.  It’s the same reason why some neighborhoods within a city sprout and gentrify quickly.  One unique shop or venue opens up and passerby’s stop.  Soon enough, people come to view the venue, start new venues, move, multiply, grow, etc. until a new neighborhood has formed with new character all without official direction.  I’m leading to the point that wind farms can benefit from this concept too. 

A farm built in such a way so as to capture wind data from the front-facing turbines could then communicate valuable data backwards to the “school” of turbines stacked behind it just as fish do effectively letting them "see" and adjust to wind in real-time.  Farms could make quick, forward-looking micro adjustments to harvest the best catch.  Assuring every installation of wind generation has more up-time is critical to making it a viable node within the larger generation/transmission system.  Independent System Operators will be able to consider using this power more regularly and at better prices with these increased efficiencies instead of it currently being relegated to generation for nighttime load.

A Final Dash of Salt…

This post isn’t a rant into the awesomeness of wind power.  Instead it’s an extension of my recent theme on data-driven, networked energy production and consumption.  I look at any opportunity to turn passive technologies (i.e. wind) into active and controllable ones.

Has Distributed Generation (DG) Reached a Fall-line in the Utility Industry?

In follow-up to my previous post about the Internet of Things, I’d like to discuss one of the most prominently affected industries and a topics: Utilities and Distributed Generation (DG).

When Edison first performed Direct Current (DC) transmission of electricity, the concept of DG was the paradigm of electric consumption: consume electrons near where they’re produced.  Consumption remained this way for a small amount of time before Alternating Current (AC) allowed the gap between generation and consumption to literally widen.  Today, this model is even more evident as most consumers cannot even speculate as to where their electrons come from.  However, several evolving forces have renewed interest in this classic concept and reinforced the possibility of DG becoming a valuable energy alternative for Industrial, Commercial, and even Residential consumers.  It is being seriously evaluated by many agencies and utilities around the country.

                Utility administration must craft their perspective on this topic as it will be continually discussed in this and several upcoming decades.  First, they should settle upon why not to embrace this concept, which includes fundamental power production and distribution issues such as power quality.   Utilities traditionally discourage multiple generation sites on the account of power quality.  The introduction of various generation points, times, sources, voltages, etc. greatly affect the physics of producing and transmitting “good” power: load factor, voltage, harmonics, etc.  In many cases, DG directly erodes the effects of the natural Economies of Scale traditional to electricity generation and the very reason Centralized Generation (CG) exists.  On a purely mathematical basis, increasing DG, at least in 2012, will make CG less efficient.   Classic Economics assures us the most efficient player should always produce the appropriate good/services, which has so far been demonstrated by the AC generators of the last 100 years.  Interestingly, this paradigm is now also driving a resurgence of DG discussions across the spectrum of Utility customers. 

                There are increasing instances when the actual consumer of electrons may be able to produce them more efficiently than a centralized Utility and as such each Utility must render an opinion on why to embrace the concept.  Micro-generation technologies such as turbines, battery storage, PV, bio-reactors, etc. allow for this.  Utility point of view sometimes changes as they begin to run the numbers on Avoided-cost.  If the harm of DG on power quality and planning can be minimized, it may be more efficient to allow for DG, thus making the avoided-cost component an immeasurable real-time stat to monitor.  This is generally in contradiction to most people’s thinking of big Utilities in that many believe they simply want to sell as much electricity as possible just as any other business would.  In reality, Utilities want to sell the right amount of power, which is a delicate dance between bulk and efficiency.  So does DG stand a realistic chance amongst evolving fuel and technology prices?

                Real potential exists for DG to gain noticeable traction right now largely due to two macro trends.  First, the advancement of micro or hyper-local generation technologies across the Utility customer spectrum makes on-site generation economical.  Second, the real-time and decision-making power of a data-driven economy and energy marketplace make micro control and connection realistic.  The Classic Economics referenced prior state that the most efficient player should produce any given service/good, but this fundamental decision process has never been widely applicable to energy generation and consumption.  Energy has always been dumb.  The data-driven information revolution and the implementation of data analysis, real-time control, and networking technologies make it possible for Generators and Consumers to interact, which is a new element to the Utility industry.  DG can generate when most efficient while CG reduces peaking-plants and vise versa.  These are the data trends that are flipping a 100-year old Monopoly on its head and should surely become action-items on any utility CEO’s desks if they aren’t already.

 A Final Dash of Salt…

 Data-driven energy generation and consumption: the biggest change to the utility industry since AC

transmission?  I think so!

Extra Reading…

Check out the sections on the changing nature of risk.

http://www.ferc.gov/legal/fed-sta/exp-study.pdf

The Internet of Things

I'll begin my 2012 musings with a discussion of the Internet.  A digital information network that has been hyper-refined in the past decade to the point of resolving a Marketers once unachievable dream: 1-to-1 commercial messages.  The convergence of several technologies (geo-location, AI algorithms, wireless) now make it very possible for commercial messages to be acute, timely, and accurate for the individuals receiving them.  Those who participate heavily in the Internet have experienced this giant learning-machine and are very aware of how clever Google is in following them around.  For a humble computer network originally begun for the purposes of scientific research and review, the Internet now is purely a commercialization engine and one that is an increasingly apt business person.  This is being led by the comical amount of web/tech firms still setting up ship in the valleys of Southern California.  A drive through this area is like Cirque Du Soleil with acts such as Zynga and Twitter.  What's important to understand is the commercialization of the Consumer Internet is leading to big things for Industry.

Industrial communication and business understanding used to be a grab-bag of trend analysis tricks and executives knew it was a dismal science, but big and little corporate ships were steered in such ways.  "Business Intelligence" didn't even enter corporate jargon until the late 1990s.  In the oddest of stories, advancements in the consumer Internet is benefiting Industry, which is not the norm, to change this.  Industry usually works through problems or opportunities and passes the knowledge, products, or services to consumers.  Or consumers only benefit from certain things because they exist for Industry (i.e. the electricity grid).  By this I mean the consumer 1-to-1 Internet has ushered in the technologies, processes, and culture of Industrial Internet: the Internet of Things.

Micro-chips that require no electricity, can sense variables around them (i.e. temp, movement, etc.), and make educated decisions are the keystone to the Industrial Internet.  Whereas the Internet has been largely a digital facade for humans being, it is now perfectly possible for Things to be part of it as well and Industry can therefore refine their understandings and business management to micro levels.  The possibilities are truly endless. Every assembly-line widget can get itself to the correct destination, traffic signals can adjust to context, buildings adapt to the weather by the minute.  Mail-delivery persons only check boxes that have mail and tires talk to drivers.  Firms are beginning to scratch the surface of this network, but know that many are pouring cash into new ideas that exploit it.

A Final Dash of Salt...
I'm very interested in the Industrial Internet as it pertains to energy use because it's part of why the 120 year old Utility industry is being flipped on its head right now.  Dumb energy has always been consumed in dumb ways.  The Internet of Things is a game-changing force in the worlds of conservation, efficiency, and power management.  Don't worry though, Skynet is not here yet!

Here Comes the Sun!

Play this song while reading this post...

(Here's a more specific PV post stemming from my previous comments on Grid Parity.)

"Jimmy Carter makes the first presidential push for solar renewables in the 70s."  "If the small state Rhode Island were covered in PV panels the U.S. would be set for electricity."  "The thermal value of energy hitting the Earth's surface at any moment is many thousands of times greater than demanded by its inhabitants."  Among other Utopian claims, we've all heard about the Sun's potential to save us from the energy abyss.  It's a endlessly hot topic about a technology that has modernized and as such, legitimized itself in the past 10 years.  Because of these developments, unbridled enthusiasm reigns at many PV startups and has fueled a chaotic landscape of serious players.  But I need a less kabuki-esque presentation of where this technology really stands.

It may be the case that PV energy may finally be coming of age.  Much has happened in the past 10 years and even 2011 alone.  The historical troubles with the 60 year-old technology have slowly been tackled successfully and the trickiest are now being settled as well (i.e. low conversion efficiency, support material industries, etc.).  Most advancement has come from two things; the ramped-up production of traditional Silicon Wafer production now decoupled, scaled-up, and more responsive beyond its previous paternal semiconductor industry and the creation of cheap Thin-Film conducting inks and substrates, which can be printed at 100ft/min.  The former reason is a great example of the power of scale to reduce cost.  A PV Moore's Law has evened been discussed because of consistent 50% boost in production every 18 months as cost are halved.   The latter is a testament to a venture marketplace that truly values new tech and an engineering-focused business model that continually tweaks better manufacturing processes and rising conversion efficiency from Thin-Films.  Both trends address the paramount reason PV hasn't been able to achieve that idealistic idea of using the sun for electricity: cost.  Aside from the forward-looking CEO, the entire industry has long been considered a niche sector and still is by many because of this reason.    But now even big-time utility firms are crafting their PV strategies.  

Utility CEOs produce awesome amounts of megawatts in central locations and distribute it outwards to customers, which is the Alternating Current hallmark of Thomas Edison that allowed him to beat Nicola Tesla's Direct Current.  It's been the only way to deliver electricity for over 130 years.  However, this notion is challenged by the sun's endless ability to electrify every inch of earth, thus allowing each consumer to effectively detach themselves from big utilities, presuming a viably technology is available to them.  Distributed generation via PV and other home remedies are increasingly on the lips of analysts weighing the costs of either building new power plants or instating consumer incentives for PV.  Viable, affordable, and accessible consumer PV is on its way and as I've said before could be in $5,000 DIY kits at stores within years.  Growth of distributed generation is the primary reason a data-driven electricity market is in dire need and the tangent Smart Grid industry is so abuzz.  Too long a passive, reaction-less marketplace, technologies like PV coupled with real-time info-metric communications could really reshape how small and big consumers of an old-school commodity bring their relationship into a new century.  It's extremely exciting to me.  So much new, great work to be done in a old industry.

A Final Dash of Salt…

Silicon PV is efficient, but mostly cost prohibitive, currently.  Prices are incrementally lowering towards grid parity, which is assisted by the overall rise in level of cost for the other typical fossil fuels.  Thin-Film or CIGS (copper, indium, gallium, selenium) are cheap to make, but much less efficient.  Both address overall cost and are close to making the technology economically practical distributed and centralized generation alternative.  Further market and government assistance is needed to bring PV to the masses at the level as it's often spoken about.  Eventually everyone should have access to the original fossil fuel!

GAME CHANGER?

Interested in Thin-Film PV?  Here are some world class play-makers in the industry.

http://www.nanosolar.com/

http://www.avancis.de/en/

http://www.stion.com/

http://www.firstsolar.com/en/index.php

The Fight For A New Electrical Grid Parity

Talk to any energy, clean-tech CEO about what keeps them up at night and I'll bet he/she'll talk about the need to reach Grid Parity at some point. Grid Parity is the averaged cost energy producers pay to produce electricity, which as of late, tends to hover around $1/Kwh. Said CEO would, I'm sure, share anxious optimism over possibly bringing his/her respective energy technology to market at a rate that is competitive with base-load, cheap traditional fuels (i.e. "Big 4"; coal, natural gas, nuclear, hydro). Some of these company leaders are giddy their technology will be the first renewable to get the Grid Parity news headlines because it's just inherently awesome. Others with more subdued commercial egos might discuss renewable technologies and Grid Parity only being becoming a marketplace reality via government intervention. This discussion of risk tends to be the thorn in the side of all game-changing renewables as they try to scale-up and commercialize. So what's the best way to help these CEO's sleep and get their new-tech energy products to market at economically competitive rates… Grid Parity rates?


Rapid technology advances, consumer behavior changes, and a renewed entrepreneurial focus have brought technologies like PV into the realm of competition with the Big 4, though they remain mostly niche, premium products. As we know, these products must be made 'un-premium' quickly. (Commenting on why these products, such as photovoltaics, must come to market is beyond this posts intent.) The shift must be made more quickly than the market's free hand currently directs, thus outside help is needed. This help began at the State government level in the early part of this decade as Legislatures adopted Renewable Portfolio Standards (RPS) directing energy producers to source a certain percentage of their juice from renewables. Cheers came from many, loud yelling by a select few, but overall a big move for renewables like PV. But many people know the mighty USA still sits behind many European and Asian countries on these measures. What are they using? Is it that usual European 'heavy-tax' method or is it something smarter?


Feed-in-tariffs are the crown jewel of over 50 countries renewable energy marketplaces. The tariff is based on the leveled cost of electricity production amongst the industry and is paid by energy producers to many independent producers, which is very common through Power Purchase Agreements (PPA). However, these payment rates decrease over time. Their intent being to cover the cost and associated risk facing firms who want to bring energy technologies to market. It incentivizes these firms to then reduce their own costs to compete rather than allow commercial apathy. Apathetic firms are eliminated via the Free Hand as seen in the modern leader of FITs; Germany. Germany's policy success is so noted that it has every PV firm beating down its door to set-up world class manufacturing facilities there, much to the dismay of U.S. policy-makers.


Futurists here in the U.S. might wonder the difference between RPS and FIT policies. The important difference to note between these similar sounding policies is that a RPS mandates a certain percentage of power be purchased from renewables and is meant to curb greenhouse gasses. FIT are engines of encouragement in that they help subdue the heavy commercialization risks of these industries and provide a predictable regulatory and economic backdrop so PV can have the chance to scale and reach Grid Parity. These are complimentary policies for any nation seeking the benefits of ditching the Big 4.


A Final Dash of Salt...
Once FITs were used to help encourage the immature, but manageably risky renewables such as Wind, leaving the too-risky out (i.e. geo-thermal, PV, etc.). Now PV is close enough to hit the big time with the help of FIT and CEOs in the industry know it. They know Grid Parity could be quickly reached and even lowered by their new energy technologies such as PV. Imagine a day when you can buy a Do-It-Yourself PV system for $2,000 and be on your way to payback-day in a few years. This is the power of RPS, FIT, and a new Grid Parity.

http://www.nrel.gov/docs/fy09osti/45549.pdf

What is the Green Economy?

The biggest buzz-phrase in commerce since "teamwork," Green has developed into a socio-cultural and economic topic that has the potential to rewrite human existence.  At least it's touted as being such by countless organizations.  However, it's scoffed at by an equal amount of detractors who say it's an idealistic fad.  But what is it?  

At its root a Green economy is simply an efficient economy.  One in which ALL inputs are quantified, valued, and used efficiently.  The keystone word is all because ideally this includes every possible input.  This is the exciting part of Green economies.  The part that garners newspaper headlines about waste firms not using landfills or food producers getting amazing yields with GPS applied fertilizer.  All means non-financial accounting is becoming an increasingly thick part of company 10-Ks.  The accountants dream of being able to quantify, track, and make decisions from all the data affecting a firm is now being realized.  In example, Monsanto can calculate the payoff schedule of their financial support for local bee farms that end up fertilizing their client's fields.  Or Target Corp. reporting on the tentative social capital built by giving 5% of their after-tax profit away.  Traidcraft Inc, in the U.K., claims to have audited social statements and DOW Chemical has been quantifying what it calls "ecosystem services" for years.  So is all of this just pleasing corporate Green jargon or is it a genuine shift in corporate capital?

I believe much of the effort is valid and is the result of business evolution.  Firms are not pursuing Green because it's sexy, though it's often written as such in the papers, but because it saves them Green. Rather they are fulfilling their commercial credo; to build widgets in the most efficient manner.  Because of technological advances, organizations can increasingly account for all the factors governing their business, which leads to efficiencies and stories of the Green Economy.  So I applaud these actions, but measure my enthusiasm against the numbers that make this a New economy rather than a Green one.  Green sounds sexier than New, but New is closer to Perfect Competition than ever before.

Further reading from the UN's Environmental Program and Global Reporting Initiative…

http://www.unep.org/greeneconomy/Portals/88/documents/ger/GER_synthesis_en.pdf

http://www.globalreporting.org/ReportingFramework/ReportingFrameworkOverview/

A Final Dash of Salt...
The father of efficiency.  Rube Goldberg!

Does Central Minnesota Have a Place at the Global Economic Table?

“Taking a defensive position presumes insufficient strength.”

-Sun Tzu-

In 2011, the proverbial Global Economic Table at which the world’s citizens sit and compete at is now notably constrained with so many new nations wanting a seat.   Almost a comical metaphor, the Dinner Table notion should surely be recognized by citizens of Central Minnesota as one that tries to capture the evolving modern age of globalization.  Recognition that many of the worlds dormant States and Peoples have all taken to the Tiger-economy mentality is only beginning to settle to some observers.  As with such global growth, the social and economic roles of traditional economies like the U.S. wane in stride parallel to burgeoning economies now present in every quadrant of the globe.  These “Tiger” economies are now rooted firmly in many nations other than the well-known BRIC nations, now solidly established in South/Central America, Pacific-Asia, the Middle East, and in various African nations as well.  All these global hot spots of social and economic activity are bursting with the ferocious growth tendencies characteristic of post-war rebuilding programs: hyper-ambition, endless work-ethic, and a world class mantra towards betterment.  These may be biased and glamorous words of endearment after the author recently finished a second tour of the Asia-Pacific region, but taken together they highlight the trending attitude and reality that is making for a much more competitive Table in our hometowns.  Accordingly, residents of Central Minnesota must settle upon their community’s social and economic role and right at this competitive Dinner Table.  These global relations are now of paramount importance and should be a mental priority for all citizens.

I brand this issue as of ‘paramount importance’ because reality suggests it is true.  The overarching theme of this changing Global Table is the New Freedom emerging in the post information age.  A New Freedom is emerging because of leverage.  Traditional powers have less of it and emerging economies have increasing amounts.  Leverage by way of healthy public debt burdens, growing investment in societal basics, and social influence and foresight.  Leverage is a force-multiplier that has the power to both qualitatively and quantitatively lift national trajectories.  Conversely, diminishing leverage becomes a liability.  Liability via inflated and perpetual Current Account deficits, ballooning reliance on credit, and slighted trust of a nation’s economic fundamentals.  Pre-financial crisis, U.S. banks had debt-to-equity ratios that reached 20:1.  Meaning for every dollar of raw business-equity available they used 20 Dollars in debt.  Unfortunately it is now written, that this leverage became a liability.  I’ll not stray with musings on its results.  What’s central here is how an economy leverages itself, for good or ill.  Leverage must be used in search of positive returns, a concept once greatly heralded by the U.S., now it’s being practiced far better abroad.  Reorientation is in order.

Economies and societies orientated towards high-return investments are an investor’s sure bet.  They are the most rewarding leverage governments and peoples can work to acquire.  Short and long-term actions produce a nation’s sustained competitive advantage (caveat: no CA ever truly sustainable).  A notable paradigm to understand given that much of the developing world works on these exact principles, which the U.S. has long propagated across the world; economic pragmatism, free-trade, relentless pursuit of science/technology, and steady investment in the middle class, the sustenance of modern economies.  These being the U.S.’ historical national creed, it is increasingly apparent they’ve fallen to second priority to conspicuous consumption and immediate economic gratification.  Lengthy subsidies for dated industries, persistent fund cuts across the education spectrum, and narcissistic consumer behaviors.  The remedy against these decade-old trends is much like both a small sailboat versus a large oceanic ship: some is quickly actionable while much is done slowly.  These are social-economic investments, not quick-to-mend legislative story-lines or sound-bites and they are most often rewarding long-term.  These exact principles created the entrepreneurship-inducing social safety net we enjoy, developed leading growth industries, and demanded an equitable system of supportive academics.  So how does Central Minnesota place itself amongst this complexity?

As a result of U.S. keystone economic ideals becoming standard global practice, the economically available Table of St. Cloud and Central Minnesota is more competitive than ever.  Jobs move, livelihoods segue, and towns fade or sustain in this world by the earnings release of every business Quarter.  Galileo’s newly discovered round world is now more metaphorically Flat on all economic and social fronts, thus as local citizens our relation to these realities determines our future livelihood.  Can we, as a region, stay focused on the importance of building our own long-term leverage so that we can have a continued seat at this Table?  As a hometown Tiger, Husky and soon-to-be professional employee I hope so because local and national dialogue of the past ten years depicts mostly economic misunderstanding and petty infighting over irrelevant issues.  Locally, steps should be taken to continually support the entire education system, by way of proper funding that endures economic volatility.  It has never been more evident that a region, State, or Nation’s competitiveness explicitly relies on the quality of its education system.  As such, St. Cloud State University is the single most important leverage the area holds.  This evidence is part of our nation’s history and elemental to that of many modern emerging nations, specifically in Asia where we can learn lessons to get back on track.

A Final Dash of Salt...

Look to the East and further, for a rethink of how valuable our economic fundamentals can be.  Many Asian nations have used them to build incredible international leverage and are now fiercely direct social and economic competitors to Central Minnesotans.  Millions have been lifted from poverty, economy-sustaining middle classes (3 Billion by 2030) have solidified, and dictator-economies are outmoded.  For most of the 20^th century, Asian economies were trying to acquaint themselves with how to best use Western, innovative economic principles.  They now have and are projected to be the masters and commanders of the current century and the increasingly Flat world.  In this Flattened word in which the U.S., Minnesota, and St. Cloud now compete, it seems many have forgotten the basics of investment and as such have turned our vast historical leverages into liabilities.  Taken together, this greatly affects our right to a healthy spot at the Global Economic Table and should be treated as such by everyone.

Further lite discussion from the Father of U.S./Sino relations...

Mj

"You've Got to Fan It" || Impromptu lessons in product communication

Firms often employee hoards of marketing research specialists, strategists, and intuitives as they attempt to settle upon how the famous ‘5 Ps‘ relate to their product/service.  These departments sometimes Ivory-Tower themselves from the rest of the firm, unfortunately, given their work is deemed so elite and central to how customers connect with their product.  The basics of this marketing work is not to be missed or skipped by small firms, a notion not missed by the latest of street vendors I’ve frequented in Shenzhen, China.

Simple meals are not difficult to source in China as their is an abundance of street vending entrepreneurs and all serve equitable foods at similar prices.  The simplest of shops must not serve more than $20/day in my guess, making these operations the smallest of personal businesses.  However, each owner has learned how to fan their product to a hungry customer-base. 

Shop infrastructure amounts to a light bulb, burners, pots/pans, and wooden chairs for those dining-in.  They have also reserved part of their operating budget for powering a jet-like fan tightly connected to their cooking wok, which blasts the gorgeous aromas of their product sky-high into the ambiance of all who pass by.  In mastering this simple trick, they've conquered one of the most underdeveloped abilities of micro/small businesses; understanding, finding, and communicating their product’s qualities to worthy customers.  Both small and large business leaders cannot stray from the basics of “fanning” their products. 

a final dash of Salt…

Lightning Hopkins wrote about fanning-it in his 1961 track titled "Fan It (though possibly about another topic).   Though unrelated, it's clear Hopkins and countless Sino-business owners understand it.  I say this as a reminder to MNCs to not stray from the basics of product communication amongst their multi-million dollar marketing campaigns.

Mj

"Red Dragon Disposable Income"

I open Grain-of-Salt (GoR) with a post from the far East as I am currently spending time for business and leisure in China.  It only seems relevent to comment on my current location and what is the "hottest spot" in the world right now by measure of cultural and economic happenings.

Zhonghua, Middle Kingdom, or the People's Republic of China has been awake from its cultural slumber for close to 40 years now, but it is now abundantly clear the 1.39 Billion people residing within are ready to consume as the West has for so long.  The austerity of the past has given way to endless concrete jungles and legions of roving laborers all making up a new country that is in no way your grandfather's China.  As it is now 2011 (the year of the Rabbit), development in China has been in high-gear since Mao's death in 1976.  U.S. firms have been here for some time exploring the nuances of the country, which there are many, but it is only in the past 10 years that the Chinese have slowly begun to embrace their purchasing power.  This is most notable from the countless white papers, government reports, and corporate fortune-tellings prepared by monitoring bodies and MNCs as they all predict that China will be the biggest luxury goods market be decade's end or earlier.

A notoriously high savings rate and a cultural inhibition towards displaying wealth has been righted and begun to align with the glamourous, brand-loving lifestyles of many Western consumers.  "Showing-off" is now the norm in anyway possible and foreign brands of all types are continuing to Joint-Venture their way in-country in order to satisfy the trend.  Walking around my current place of residence (ChongQing), my personal fashion and demeanour are quickly outdone by the Emergenildo Zegna, Chloe, Burberry, etc. wearing fashionistas around me.  These shopping habits are extended into every range of durable product, thus cars, art, property, and sport industries are also soaring.  Amongst the scurry to show-off are the impecable black and grey markets across the country, which with NASA-esque precision, are producing some of the best copy-cat products and services I've ever seen.  I believe the "iPad 2" is already floating around in some markets here (and Steve Jobs knows it) and it works!   French luxury goods powerhouse Louis Vuitton's past CEO was famously cavaleir about these happenings amongst his own products saying; "Copying is the most sincere form of flattery."  Even amongst all this "flattery," these brands are still seeing amazing margins and predict sequential growth for many years.  So is it possible for less well-known, SMEs from the U.S. to get in on the action without following the typical JV route?

I believe a progessive and forward thinking business owner/operator who manfuctures a unique product should shed the local market mindset and learn how they can become involved in global trade though even if they only operate a 250 employee organization.  As we know, SME's power most economies, but lack the mega resources often needed to connect with foreign markets.  SME leaders have many resources to begin this process that they rarely engage.  Approaching your state chamber of commerce is a sure way to begin building prospects and learning how to easily navigate the world of cross-border trade.  The internate-age has also spawned many respetable B2B and B2C sales platforms, which expedite the process further.  The point being, more can be done by local U.S. business owners/operators to connect their unique or special products with this unsatiable Chinese marketplace.  We've passed the days when only P&G, CocaCola, and General Electric could hack it in China.  Everybody and their brother has an import/export company over here!  Again, not your grandfather's China.  Heck, not even your older brother's China.

a final dash of Salt…

SME's need to get in on the game.  Claiming to operate your local business with a global mindset does not mean you can simply read the Financial Times and watch the action play out amongst bigger and better competitors.  Owner/operators producing novel products and even commodity products still have room to be part of the economic circus that is China and should make strident efforts to do so.

-Mj-