Nice post, Phil. In your research, did you come across any information about what happened to the toll workers? Were they provided any resources to retrain and look for new jobs? This is just one example of an area where technology is directly replacing human labor, and I believe this is an issue we are all going to have to grapple with as leaders going forward. I hope that as manual jobs are disrupted and replaced by technology, we as a society can agree that it is important to help the people impacted transition to new livelihoods. There’s no doubt that the benefits of ETC are huge – but let’s not forget that some people did probably get hurt by the change through no fault of their own.
As someone who used a broker to find my apartment in Cambridge, I am begrudgingly sympathetic to the role that brokers play. At the time I was looking for an apartment, I lived in Washington, DC and was traveling overseas 1-2 times per month. As painful as it was to fork over the broker fee, I simply needed to hire a person to help me manage the process. Among the functions you list above, my broker was most helpful in: aggregating listings, spotting good deals that matched my personal preferences, adjusting search parameters based on my reactions, and dealing with the landlord. Nevertheless, I might have been more reluctant to hire a broker if I lived in Boston and was just moving locally. Out of curiosity, how many people that hire brokers are moving within a city versus between two cities? I imagine that there will always be a market for rental brokers for people moving between two cities.
Building on Jaime’s point, I wonder whether Alton Lane should get out of the suit selling business and just focus on developing its 3D scanning and measurement technology. There are a number of trendy companies trying to disrupt the suit industry (I have bought suits from Suit Supply and Combatant Gentleman), and perhaps Alton Lane should focus on licensing its technology to these and other companies (Jaime mentioned Indochino as well). In addition, I wonder whether it would be possible for Alton Lane to develop its technology to the point where the customer could scan himself using his iPhone at home, and then transmit his measurements and preferences to the company. This could ultimately enable Alton Lane to become the Warby Parker of suits.
I believe that the technological standardization of the Starwood hotel experience is nothing to fear. When I travel, I try very hard to find authentic experiences and “live like a local” during the day. However, at the end of the day, I want to go back to a clean hotel room where I can get a good night’s sleep and recharge while I recover from jet lag. If I were Starwood, I would use technology to help visitors get out and have authentic experiences during the daytime (i.e., a guided audio tour on your iPhone) and continue focusing on convenience and standardization in the hotel itself, so that tired guests returning from a long day of touring can simply relax.
Max, thanks for this interesting post on the way in which Flexport is using digital technology to streamline freight forwarding. Reading your post, I was struck by how Flexport’s business complements ongoing efforts by global policymakers to implement the WTO Trade Facilitation Agreement (https://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm), which aims to streamline customs processing and has the potential to increase merchandise trade by up to $1 trillion per year (https://www.wto.org/english/news_e/news16_e/fac_04mar16_e.htm). In many countries, this effort entails greater reliance on digital technology by customs authorities (for more info on U.S. efforts, see: https://www.cbp.gov/document/guidance/ace-single-window-info-graphic). I imagine that Flexport might have some unique insights into how to streamline customs processing and would encourage them to collaborate with policymakers at the WTO, if they are not already.
Lee, this interesting post prompted me to do a bit of additional reading about tax credits for electric vehicles. One interesting point made by the non-partisan Congressional Budget Office (https://www.cbo.gov/publication/43576) is that these tax credits have so far probably not reduced overall gasoline consumption or emissions from vehicles. The reason is that automakers must already comply with CAFE standards, which govern the average fuel economy of cars sold by a particular manufacturer. If the automaker sells more electric cars, it can also sell more higher-emission cars – and still meet the average fuel economy standard. However, over the longer term, increased sales of electric vehicles (spurred by tax credits) could lead to more stringent CAFE standards, so the tax credits could still have a positive indirect effect in the years to come. CBO recognizes that a much more direct approach to reduce vehicle emissions would be to raise the federal gas tax, which has not been increased since 1993. Congress did not opt for this approach when it passed a surface transportation reauthorization bill in late 2015.
Hunter, thanks very much for this informative post. Whether China can meet its own climate targets will go a long way towards determining whether the world can meet the overall goals of the Paris Agreement, so I really appreciated the chance to learn more about one aspect of China’s efforts. It seems to me that the action plan you outline – while sensible – would require substantial upfront investment from the company. Is the company in a position to make this investment, especially when its ability to effectively extract gas is in question? If not, is there a role for the Chinese government to play, especially in training workers, upholding safety standards, and developing environmentally friendly infrastructure? As you may know, the Chinese government is preparing to implement a national cap and trade program in the coming years. Let’s hope some of the revenue generated from that program will help support the environmentally friendly development of natural gas resources as a bridge fuel in China.
I am struck by the similarities between this post and the IKEA case we discussed in TOM class on Friday. Interestingly, IKEA chose to vertically integrate its lumber supplies, and while IKEA also faced challenges, my sense is that IKEA is further along than Unilever in meeting its own sustainability goals. As we discussed in class, there is no one-size-fits-all approach, but I would be very interested to see a general study of many companies facing this dilemma (vertical integration versus getting tough on independent suppliers).
One other question I have is what happens to the proceeds from the GreenPalm certificates? I understand that environmental groups have concerns about the efficacy of these certificates, but perhaps if the proceeds are spent wisely (i.e., invested in longer-term sustainable solutions or alternatives), it could help to mitigate concerns.
Frank, thanks for this insightful look at catastrophe modeling in the insurance industry. I agree that the insurance industry has an important role to play in helping the world prepare for and adapt to some of the effects of climate change that are already inevitable. Governments around the world are agreeing with this perspective. Just last year, during the Paris climate talks, President Obama announced a $30 million contribution to help small island nations access”climate risk insurance” (for more info, see: http://www.state.gov/r/pa/prs/ps/2015/12/250173.htm). And the Group of 7 (G-7) nations have set a goal of expanding “climate risk insurance” to 400 million people by 2020. In addition to the modeling-related issues you raise in the post, I would also emphasize the importance of rapid payouts, so that individuals, companies, or governments struggling after a catastrophic event can access much-needed funding to support recovery efforts.
Phil, you are very right to point out that, “Every business in the world, regardless of size, faces exposure to the weather and climate, either directly or indirectly. This exposure will translate directly into increased costs for businesses, which will reduce earnings and increase the risk that these businesses pose to their creditors and stakeholders.” One key question that global policymakers are currently considering is whether companies should be required to estimate and disclose their “climate change exposure” as part of their financial filings. This work has attracted a lot of attention, including from Mike Bloomberg (for more info on what Bloomberg is doing, see: https://www.fsb-tcfd.org/). However, as you might expect, this work is still controversial, and policymakers and private-sector stakeholders are in the early stages of figuring out exactly how to do this type of disclosure. If an effective standard for disclosing “climate change exposure” could be developed, it would help markets do a better job of pricing in climate risk and drive private sector-led solutions to address climate change. GS might want to consider lending its considerable financial acumen to this important effort – to better understand the risks in its own portfolio, to better understand the risks facing clients, and to help markets play a critical role in fighting climate change.