Past few weeks have been very important to shake off my arrogance about agriculture: Contrary to my belief before – the knowledge about what has to be done on the field when is very static and is passed onto the next generation through apprenticeship – the actions to be taken are so dependent on the state of the crops and weather, very dynamic variables, that there is a great need for up-to-date and relevant information. There is a very big opportunity for digital knowledge, with low cost to produce, update, and distribute, to create significant value.
As you very well pointed out in the post, this can be a great win-win situation: Going forward, Esoko could put less financial burden on the farmers by monetizing the data it produces from the farmers and farmers could utilize Esoko to access critical data for higher yields.
Excited to see how it plays out.
I love it how this bank introduces a new and exciting way of banking in a cost-effective way. If you think about the beauty of the idea, most banks unfortunately believe that there is a very significant trade-off between good customer service (which should simply involve more Relationship Manager time) and cost efficiency (one of the highest line items in branch cost is payroll). ActivoBank just successfully proves that there does not need to be a trade-off.
Another great thing is that this new way of operating is a marketing tool in itself, I can see a digitally-savvy customer going through the ugly experience of switching her bank just to experience this new and hassle free way of banking.
One important consideration I would point out is the applicability in other markets: Especially in emerging economies where cash based transactions are still very dominant, the addressable market for this new way of operating can be quite limited because cost to handle secure cash transactions are still very high. That said, I still believe that this model can be successfully adopted in more developed economies with less preference for cash transactions.
The reason I attribute to many government-related issues is the lack of skilled people working for governments because these institutions are the face of bureaucracy and slow-pace – things that frustrate and drive away skilled people who want to see results.
I think that the innovations in the operating model of the Indian government are going to produce a virtuous cycle: More talented people who see this change and the positive results with this new way of operating are going to be early adopters joining the governmental workforce and eventually help attract more people into these jobs. Since government is the institution that invests in education and infrastructure that influences the long-term growth and prosperity of the country, these initial steps will hopefully lead to a much bigger effect.
Very interesting to see that digitalization not only disrupts or creates revenue streams, but also changes the way we conduct business. One of the great promises made by digitalization is democratized access to knowledge, and using that to increase the transparency of businesses and improve the way business is conducted in a country is a very meaningful way to use that promise.
Of course, when you are able to produce data, the immediate question about the usage of the data arises: Who is going to use this set of data, and for what purposes? Is the mere fact that the business conduct is analyzed and reported through a publicly available system going to shift the way the country operates? I believe that Mexico needs to find more effective ways of putting this tool into use to actually enable the change needed.
It is interesting to see how hardware giants such as Siemens and IBM are adopting to the new digital era. As you point out, their reactive operating structure was a very important enabler to hardware, because it would be extremely costly to operate in a very capital-intensive business with trial and error.
One very important investment component of this new operating model is, as you pointed out, to go from capital-intensive to human-intensive. I think it is also important to think about the implications on the organizational structure. There are just so many people who wants meaningful work with less bureaucracy and these traditional hardware giants have traditionally been notorious for their bureaucratic organizational structures. Going forward, they should think more about organizational structures focused on flexibility and agility to truly embrace a tech culture of innovation.
First of all – lovely writing style 🙂
One of the most interesting topics about climate change is indeed how it will affect tourism.
Thank you for bringing the concerns regarding the extent of the efforts of the Marriott sustainability program. This case is a very classical “Chief Sustainability Officer” vs “Chief Synergies Officer” distinction. I feel that if Marriott cared less about reducing their operating expenditures through energy savings and creating more efficient and less costly suppliers, they would look into building more “sustainable” and locally sourced buildings and zero emission operations.
Thank you so much for bringing up a product innovation that arises from the need to mitigate the effects of global warming and actually seems to be effective in a market economy.
At this point, it is essential to make capital available to the innovators to come up with ways to reduce the adverse effect of our economy on the planet; and Morgan Stanley, as a very large financial institution, is in a unique position to be able to provide that capital.
I could not agree more with the last question you brought up – any institution that claims to be genuinely interested in *solving* the climate change problem we are facing should not be doing something with one hand and messing up with the other one, i.e. funding projects that are environmentally conscious and projects that are the culprits of the problem at the same time.
Though, given the tough competition in the industry and what the company stands for, it is only fair to assume that this initiative is only one to boost brand name, PR, and employee morale rather than to solve the core problem. However, since it adds a net value to the solution of the problem, I would also argue that what the company is currently doing is much better than that its peers do and should be supported.
It was interesting to read about one of the largest players in an industry that is one of the main culprits of global warming.
There is a certain school of thought that assumes that we should not worry about climate change and sustainability because the technological advancements will either reverse the effects of climate change or mitigate the loss of natural resources due to increased efficiency. Many environmental scientists are skeptical about that view – with a delicate subject matter as environmental balance and non-replaceable natural resources, humans need to apply the rule of conservatism and assume worst case scenarios.
Cemex seems to have adopted a technology focused approach in their sustainability program focusing on product innovation to contribute to a more sustainable world. However, I do not see the greater effect of harmed natural resources and harmful effects of cement production to the nature being mitigated by the company. Therefore, the product innovation they have come up with so far only looks like yet another form of ‘green washing’.
Very interesting read, I also was surprised to find out how acidity of water changed the sex of the fish and the dynamics of the population.
I’m not sure how I feel about the manual adjustments to the sea temperature by the company. For the sake of sustainability, humans should not be engaging in activities altering the living habitats unless they are sure of the effects, which is usually not the case.
The strategy around vertical integration that will enable more control over the supply of fish also seems to be the most efficient way of tackling with the supply risk. I think that in addition to the vertical integration initiative, the company should also advocate for changes in fishing regulation to have a more sustainable supply in the long run.
Very interesting read. It is becoming increasingly difficult to raise crops in many of their respective natural habitats; and the risk for a luxury item like wine is much higher since the willingness to compromise the quality is significantly lower for the consumer.
With the natural habitat of the grapes shifting, it is possible to assume that changing the production area is simply easy; however, there are two problems with that approach:
(1) Relocating the families and the workforce who know how to run vineyards is hard
(2) As global warming continues to distort the climate, one cannot expect shifting vineyards to be a sustainably feasible solution