Author: Ben Debski

Sri Lankan pioneers shake up spirit of the age

Posted on by Ben Debski

MAS Holdings is a Sri Lankan company with a 25-year tradition of excellence that has made it the preferred supplier of some of the world’s foremost fashion brands.  It is a company founded on an idea and resolve to be different. Yet it is more than this that sets the organisation apart: it is its endorsement of originality and creativity, and its encouragement of employees to embrace a culture of innovation and empowerment.

MAS has always differed from a traditional manufacturing company: from an unconventional product choice (lingerie was almost unheard of in South Asia in the mid-1980s) to superior working conditions: from ethical manufacturing practices to the relationship between management and associates.

…make a difference in the lives of the female employees and their families by fostering pride in their job

MAS pioneered the art of intimate apparel manufacturing in the South Asian region. Today, it is one of Asia’s leading manufacturers of intimate apparel, sportswear, performance wear and swimwear, with an annual turnover of over $1bn. Their 41 state-of-the-art facilities, spread over 10 countries, provide employment to over 57,000 people.
Under the leadership of co-founder and chairman Mahesh Amalean, supported by a team of enterprising senior leaders, the company established its operating model around ‘new thinking’ in terms of product, process and people, which continues to be their key differentiator in a saturated global clothing industry.

Product, process and people
The company evolved from a contract manufacturer to a concept-to-delivery solutions provider, offering customers innovative and Speed services: it also transformed itself into a lean enterprise. In an industry that focused on cost cutting, the company differentiated itself through investment in three core areas: product, process and people.

Customers identify with companies that generate new ideas, ready to invest in the latest technologies, the right talent, and cutting edge operational and business processes. This principle also applied to the company’s partnerships: they collaborated with companies that were likeminded and open to constant change.

Since its inception in 1986, the empowered employee has been at the centre of the company’s organisational strategy. This has been achieved through platforms which are both operational and sustainable. The company’s aim is to nurture an associate who is not only exceptional in their job, but in their expected role in society as well.

MAS’s Women Go Beyond (WGB) programme was launched in 2003. It challenged the accepted norm for employment, generating a paradigm shift in a profession that was looked down upon as a ‘sweat-shop’ trade.  The women of MAS, who form the backbone of the operation, were recognised for their efforts and accomplishments: their success was celebrated and they were provided with opportunities to learn new skills.

Internalising lean manufacturing principles to the apparel industry through the MAS Operating System (MOS) brought operational empowerment and transformed the business into a lean enterprise. A culture has evolved in which each worker is responsible and has the authority to make decisions relating to themselves and their team’s success.

This shift in power has allowed the company to tap into a stream of innovation that is hindered in most organisations. Such measures contributed to the company’s steady growth during the global economic downturn in 2008 and 2009.

Building on innovation
MAS designated 2012 the Year of Innovation to build on the innovations, inventions and best practices within the group, and moved towards formalising the informal innovation ecosystem which evolved through the years. MAS has numerous patented technologies, products and processes.

MAS’s patented technologies have been applied in the 2008 Speedo LZR, the English and French Rugby jerseys for the Rugby World Cup 2011, and most recently in the performance-wear for athletes representing 12 countries (including the US and China) at the 2012 London Olympics. It is also the official clothing provider for Sri Lanka Cricket.

The company has a further seven technology patents pending.

The past five years have seen the company widen its focus beyond apparel to provide SAP-based IT solutions to the global apparel and footwear industry. It also owns Sri Lanka’s first international lingerie brand, Amanté. It has diversified through design and manufacturing to encompass lifestyle and fashion solutions.

Community endorsement has been MAS Holdings’ licence to operate. This has been strengthened by the organisation’s investment in the communities in which it operates.

Empowering women
Of the company’s total workforce in Sri Lanka, 90 percent are women, as are 83 percent of its overseas employees. In recognition of the need to address gender equality, 2003 saw the launch of the MAS Women Go Beyond programme. The objective was to make a difference in the lives of female employees and their families by fostering pride in their job and showcasing the employee as the true ‘value adder’ in one of Sri Lanka’s key revenue generating industries.

WGB aimed to acknowledge and support the many roles women play in society through focused initiatives for career advancement, work-life balance, skills development, and rewarding personal and professional accomplishment. The components include knowledge acquisition, awareness, leadership skills, and attitudinal and behavioural changes.

Due to evolving employee demographics and aspirations, and as a result of MAS becoming a signatory to the Women’s Empowerment Principles – jointly developed by UN Women and UN Global Compact – in November 2011, WGB aims to mainstream gender equality across the group by 2013.

In partnership with the International Labour Organisation, the issue of violence against women is being addressed and new interventions on gender-sensitivity for men in decision-making positions have been introduced. In conjunction with the UN, HIV/AIDS awareness workshops have also been re-energised.

In 2005, the company’s work was recognised by the American Apparel and Footwear Association for Excellence in Corporate Responsibility. In 2010, the divisional project Psychological Relief Through Counselling was judged the Best Project at the Ann Taylor Compliance Conference. 2012 brought further recognition, this time at Asia’s Best CSR Practices Awards in Singapore.

The WGB programme has been featured as an award-winning case study at INSEAD Business School and is a topic of study at local and global learning forums.

Sustainability and the next generation
MAS Holdings also lays claim to another world first: in 2008, MAS Intimates Thurulie became the world’s first purpose built eco-manufacturing plant. Working in conjunction with Marks & Spencer (M&S) ‘Plan A’, Thurulie was designed to have a low ecological footprint. Fully powered by renewable energy sources, the facility became the world’s first LEED Platinum certified New Built Factory by the US Green Building Council and was awarded the Globe Award for Sustainability Innovation in 2010. MAS has committed to mainstreaming green manufacturing elements at all group facilities within seven years.

The company’s sustainability focus has also extended to its products. MAS has been successfully managing a three-way project with Victoria’s Secret and Alok Industries on an organic, fair trade cotton partnership sourcing from Burkina Faso. The company again partnered with M&S to launch the world’s first carbon neutral bra in April 2011.  Each product was ‘foot-printed’, certified and made carbon neutral via ethically sourced carbon credits to offset the same.

In 2006, MAS Holdings launched MAS Eco Go Beyond, a community outreach programme with the support of the government of Sri Lanka, to raise awareness of sustainability among students. The company incorporated concepts from the United Nations Environment Programme, Youth Exchange Programme and the Consumer Citizenship Network’s LOLA toolkit to develop a sustainability curriculum for Sri Lankan schools.

In 2008, UNESCO used the outline of the Eco Go Beyond programme to develop the Education for Sustainable Development (ESD) Toolkit for the Asia Pacific region. UNESCO Sri Lanka recognised the company as ESD’s best partnership with the private sector in 2009. The Eco Go Beyond programme fosters an educated and activated youth community, who will in turn nurture sustainable livelihoods for themselves.

In its six years of operation, Eco Go Beyond has impacted over 17,500 students of the target 15-18 age group in 30 schools through a focused intervention, and indirectly their families and communities: taking sustainable development from an abstract concept to a way of life.

Investing in inspiration
Sport has a strong influence on MAS’s culture, be it for team building and recreation or for creating elite pathways for raw talent. Over 100 MAS associates have represented Sri Lanka at international meets in 21 sporting disciplines, among them four Olympians.  This has been supported by investments in sporting facilities and infrastructure in schools across the island to support the creation of opportunities for rural sporting talent.

With manufacturing facilities spanning the island, MAS is strongly committed to community building and re-building, with a particular focus on education and health infrastructure. Responding to the tsunami disaster in 2004, the company raised $1.8m.

This money funded houses, community centres, school buildings and playgrounds.

The company invested $1m between 2009 and 2011 to upgrade the country’s health infrastructure: the largest private contribution in the country’s history.  With the end of a 30-year war, resources are being channelled to build factories, vocational training centres and hospitals in the areas that were affected.

MAS Holdings has assured its key stakeholders of its efforts towards environmental, economic and social sustainability. The group’s 2020 vision proposes strategies aimed towards an even stronger framework that would adapt to change.

Yet another recall hits automotive giant’s reputation

Posted on by Ben Debski

Despite reclaiming its spot as the world’s largest car manufacturer in terms of sales, Toyota had to recall close to 10 million vehicles in 2012. The latest recall involved 2.77 million vehicles worldwide across 13 models. The news was embarrassing for Toyota as one of the models recalled was the hybrid Prius, an icon of the company’s technical expertise and innovation.

670,000 Prii built between August 2003 and March 2009 were recalled in the US alone. The problems involved potentially defective steering and faulty water pumps. According to Brian Lyons, Toyota spokesman for safety issues in the US, the steering problem was “a design-related issue: insufficient hardness on the specification”.

This fault can cause spines or ridges on the steering shaft to deform and wear down, causing noise. In some cases, the car felt as if it had lost manoeuvrability even though this was not technically the case. The recall also involved fixing the Prius’s electric pumps, which cool the car’s hybrid system and batteries. If the cooling system fails, it can cause a shutdown of the entire powertrain, causing the car to stall.

With the latest problems coming so soon after the recall in October of 7.4 million vehicles due to a fire hazard caused by a faulty window switch, it is tempting to compare the situation to Toyota’s previous recalls in 2009-11. Those recalls, triggered by several vehicles experiencing unintended acceleration, were blamed for a series of crashes and road deaths in the US.

Toyota’s reputation was damaged and President and CEO Akio Toyoda testified in front of a Congressional hearing. In his testimony, Mr Toyoda admitted the company had expanded too quickly as it “pursued growth over the speed at which we were able to develop our people and our organisation”. In other words, safety may have taken a back seat in the interests of growth.

Limited damage
However, comparisons to earlier recalls are premature at best and alarmist at worst. Unlike the unintended acceleration incidents, the latest Toyota recalls did not come with any reports of crashes or injuries: although Toyota did receive some 400 complaints. It’s therefore unlikely that the recent problems will cause much long-term harm to the company. Recalls are common in the automotive industry.

Senior Analyst at BNP Paribas Koichi Sugimoto said: “Nobody is perfect. Vehicles nowadays are very complicated. The company is taking appropriate measures to fix the problems, so I don’t think this will cause significant damage to
Toyota’s reputation.”

Automotive analyst at Euromonitor International Neil King said: “Any long-term damage to the Toyota brand probably already happened with previous recalls. Any Toyota customers that are sensitive to recalls have surely defected long ago.”

In a 2010 Rasmussen poll, 59 percent of Americans still claimed to hold a favourable opinion of Toyota, including 22 percent who held a very favourable opinion of the company despite the negative publicity it had received. Toyota was also ranked 33rd overall in Fortune’s Most Admired Companies 2012 rankings and came 37th in Forbes’s Most Reputable Companies rankings.

Toyota recently raised its profit forecast to ¥780bn (£66m) after a 221 percent jump in profits over the previous year for the period of July to September. Its production capacity has recovered from Japan’s 2011 earthquake and tsunami, and the resurgent US automotive market has aided the company.

US industry sales for September were up 12.8 percent. Toyota outperformed the competition, posting increased sales of 42 percent for September in the US market. Among its top sellers was the Prius hybrid and, thankfully for the company, the recent recall did not affect the latest models of the car.

Consumer trust in Toyota’s cars stems from their reputation for reliability, despite these high profile incidents. Whatcar.com ranked Toyota as the second most reliable brand after Honda in its car reliability index. Toyota’s luxury brand Lexus came third in the same ranking.

Realiabilityindex.com gave the company third place in its ranking.

Bigger problems
Not all is rosy, however, as the company was forced to abandon its objective of selling a  million cars in China in 2012: anti-Japanese sentiment triggered by the Sino-Japanese dispute over the Senkaku Islands caused sales to plummet in the country. Sales in Europe are also down and are not expected to recover any time soon due to the current debt crisis.
Toyota’s main competitors are unlikely to capitalise on either of these markets, however. The European debt crisis has hit sales of Ford and GM hard, and the European Automobile Manufacturers’ Association reported a 7.1 percent decrease in automobile sales across the continent during the first eight months of 2012.

In China, now the world’s largest automobile market, the domestic automobile manufacturers are expected to capture 90 percent of consumers as the government plans to merge the top 14 domestic car producers into 10. A report into the automotive industry by Zacks Equity Research, concluded that the greatest potential for the industry lies in the development of ‘green’ cars.

Rising fuel prices caused by the Arab Spring, and increased environmental awareness are expected to drive consumer demand for green transport. In this area, Toyota and its competitor Honda already enjoy a clear advantage with their Prius and Civic hybrid models. However, other automakers have recognised the potential of a market due to represent 30 percent of sales in developed markets this decade and are honing in.

Having learned from the past, Toyota’s handling of recent recalls may win it praise rather than damage its reputation. Looking forward, the company will have to continue to innovate, especially in green cars, to stay ahead of its rivals, while avoiding the overzealous expansion it believes caused its previous problems.

After all, Toyota’s flagship green car is the aforementioned Prius: Latin for “before” because, the company claims, it was produced before environmental awareness became mainstream. Arguably, it was produced before the competition got there too.

Emails still provide key to future of telecommunications

Posted on by Ben Debski

You may have heard of the ‘quantified self’ movement: the idea that you monitor your own vital signs such as weight or blood sugar, and then (ideally) adjust your behaviour in order to stay healthy. Sometimes I half joke that the primary metric that I monitor is my email inbox count: when it’s high, I’m too busy and stretched thin; when it’s low, I’m on top of things and able to concentrate on more important matters.

So imagine my delight upon meeting Dave Troy of the company 410 Labs in Moscow last month, on the ‘Geeks on a Plane’ tour of the former Eastern bloc.

A simple solution
Actually based in Washington, DC, rather than Silicon Valley, Troy is a throwback to the old days when the internet had just emerged from a US government project. His latest product, the cleverly named Mailstrom, seems almost retro in this age of social messaging: it helps you manage your email. But, unlike some new tools that guess – usually inaccurately – whose mail is important to me, Mailstrom does an excellent job not only of categorising my mail, but also of helping me to get rid of it by applying my own intelligence – and willpower.

It helps me do things that I cannot do for myself when I’m trying to sift through my mail. It finds all the messages from a certain person, and then lets me handle them in a batch: delete, move or even answer. Or it finds all the Mediapost newsletters about mobile marketing, so I can scan their headlines, and decide which to delete and which to save for later. And it rewards me if I delete them all by crossing that sender off the list (yes, I’m so easy to manipulate!). Or it can show me all the messages from, say, September 27. And so on.

Mailstrom does this in a sleek way, replete with numbers: selecting, counting and sorting messages by date, subject, sender, social network, size and so forth, and showing charts of the statistics. Mailstrom shows you how many messages of each particular type you have, it ranks the frequency of subject lines, and it lets you see how many messages you have received and how many you have handled each day.

Mailstrom does not actually do anything to the mail, but it does let you see the hidden patterns in your mail so you can concentrate your clean-up efforts more effectively. It is amazing how important contextual information is to accomplishing tasks – especially the boring ones.

At the moment, after a few days in the wi-fi-free countryside, I have 17 messages from Dave Farber, 15 from the Business Insider group (it catches some related senders), and 11 from The New York Times. I just got rid of all the Times headlines in one fell swoop, leaving only 1,356 to go!

Communicating consciously
The other result of using Mailstrom is that it makes me more conscious of the emails that I send. How can I avoid having my messages end up in the jumble of emails that gets handled en masse by someone else: abandoned, sent to an archive, or, even worse, deleted?

The first rule is to have a clear, unique subject line: “follow-up re BioWorks, deadline Nov. 3” or “Oct. 12, dinner with Juan and Alice” versus “introduction” or “Hi!” or “investment”. That leaves little chance of my messages getting lumped with someone else’s.
Even worse are subject lines showing that the person actually thought a little, but not enough: “From Tiger Haynes” – yes, it says that in the “from” field as well. Or, “For Esther Dyson.” Or even, in February, “Re: Re: lunch November 15” [of
last year].

Although I cannot change the subject lines of messages that I receive (something I could do with Eudora and which I still miss), I can and do change the subject lines of my replies. Whenever something concerns a specific date, I change the subject line to, say, “13 December” and file the message under “December 2012” for easy sorting and retrieval.

Another lesson is to make sure the primary point of your message lies in the first paragraph or two of the text. Don’t rely on attached files that the recipient may not open or on graphics that will not load if the recipient is not online. Busy people travel a lot and often check their email in trains, planes and the wi-fi-free countryside, where online access is limited. So, to the extent possible, include details such as dates, deadlines, locations and requests.

I (and many others) have the annoying habit of replying to vague messages with a clarifying question, kicking the can down the road. Many of my email threads consist of a long initial message, a short question from me, another long reply from the original sender, and an unsatisfactory experience for everyone.

Tangled net
Of course, if you follow the news, you know that kids nowadays are not using email; they communicate via social networks and text messages. The social networks, meanwhile, are starting to create their own email services, which, of course, assume that your circle of friends lives within that particular social network (Facebook, Google+, etc).

For many people, the value of social networks is that you don’t have to answer everything; it is a group environment. But it is also a closed environment. As social-first users start to engage in business, whether at work or for their own finances, purchases, and the like, they will have to keep track of their communications.

The typical email system is unstructured, but at least you can see it all – and some of the metadata (dates, size, sender). By contrast, most social network email is not just unstructured, but almost actively obscure. Most messages have no subject line, and at best you can see a single message thread.

Perhaps those message services will change, or perhaps Google, Facebook or Yahoo! (for example) will buy Mailstrom. Regardless, the visibility that Mailstrom affords is likely to be widespread by the time the current generation of kids develops complex, transaction-based lives. Or so I hope.

(c) Project Syndicate, 2012

A deluge of data creates demand for a cool new phone

Posted on by Ben Debski

Eta Devices, a small startup in Massachusetts, has offered a solution to the inefficient power amplifiers that phones and cellular base stations use to transmit data. The amplifiers essentially convert electricity into radio signals, but they are horribly inefficient in the way they do it.

If you get 30 to 35 percent efficiency with today’s amplifiers, you are doing really well

The answer: new, geared amplifier technologies that will drastically increase the efficiency of the phone’s batteries, doubling the battery life of the average smartphone. Joel Dawson and David Perrault – two electrical engineering professors from the Massachusetts Institute of Technology – have developed the technology, called ‘asymmetric multilevel outphasing’.

Their company, Eta Devices, has designed a new amplifier that quickly calculates power requirements and chooses an appropriate voltage to operate at, efficiently controlling the distribution of energy in mobile devices. This means standby mode uses considerably less power, giving the phone a much increased battery life without actually changing the design of the battery.

The cost of standing by
The power wastage in smartphones is a result of the amplifiers currently used. Power amplifiers in phones have two states: ‘standby’ and ‘output signal’. Switching from one state to another distorts the phone’s signal, so the makers of the devices keep the standby mode power use high to avoid distortion when there is a sudden need to transmit. Joel Dawson said: “It means you are pulling a lot of energy just to keep the thing on. With high data rate communication, you wind up needing far more standby power than signal power. This is why the phone is warm.”

The power wastage occurs not only when the phone is transmitting data, but also when it is receiving incoming data. The amplifier is kept busy as it sends out receipts of data packets that confirm it has received the incoming data: it also alerts the network when it does not receive the data packets. Dawson said: “The transmitter is very active, even when you are downloading a YouTube video: not many consumers realise that.”

The findings were published in MIT Technology Review, where Chief Correspondent David Talbot described the latest advance as being “essentially a blazingly fast electronic gearbox. It chooses among different voltages that can be sent across the transistor and selects the one that minimises power consumption, and it does this as many as 20 million times per second”.

The technology is still being tested and is currently at the lab stage. However, the test results so far show a 50 percent reduction in power requirements. The technology, by allowing devices to use less power, will also reduce the amount of overheating from which handhelds, particularly tablets and mobile gaming consoles, suffer.

To market, to market
Although the technology is still being run through testing, Eta Devices is hoping to commercialise it in the coming months. The company, funded by $6m from Ray Stata, co-founder of Analog Devices and founder of Stata Venture Devices, plans to launch its product at the Mobile World Congress in Barcelona, February 2013.

It comes as good news both for businesses and consumers. There have been few advances in battery longevity in recent years and improvements in the efficiency of amplifiers have similarly stagnated. Vanu Bose, founder of Cambridge wireless technology startup Vanu, said: “There really has been no significant advance in this area for years. If you get 30 to 35 percent efficiency with today’s amplifiers, you are doing really well. But they can more than double that.”

The new amplifier will initially be marketed to LTE base stations, of which there are 640,000 in the developed world that use diesel-powered generators. They guzzle a combined $15bn in diesel each year. The power amplifier in these base stations uses about 67 percent of the power, which the new asymmetric multilevel outphasing could cut in half, creating some massive savings.

Cooling off
ETA’s amplifier would also reduce the amount of heat produced in the base stations. This would mean less air conditioning was required and therefore less electricity to keep the equipment cool. The current total cost of powering all base stations around the world is $36bn. That figure is equivalent to about one percent of global electricity usage – and 11 percent of that is the cost of air conditioning.

It is a huge market to tap into. As data-rich communication is coming into greater demand throughout the world, roughly one million macro base stations are being deployed each year, the majority of which use LTE technology. Soon after,  the technology will be chip-scaled for use in smartphones.

Eta Devices also hopes to develop an even more advanced power amplifier that could single-handedly deal with all the modes and frequencies currently used in smartphones, such as CDMA, GSM, and 4G/LTE. The iPhone 5 requires five separate chips to do this, which is a heavy burden on device power and physical space.

This more power-efficient technology is unlikely to mean consumers will need to charge their phones less often, however. There is a fair chance that developers will instead downscale batteries and produce much smaller and thinner phones, or opt for greater processing power within the phones, keeping battery life around the one-day mark currently common to most smartphones.

Lebanese bank tops women’s empowerment billing

Posted on by Ben Debski

In the Middle East, where normative and cultural barriers obstruct the advancement of women in the workplace, governments – let alone private actors – fall short of effecting social transformation in the face of staunch societal resistance. As a consequence, women – who represent 51 percent of the population of Lebanon and the world – find themselves socially restricted, economically marginalised and bereaved of equal citizenship rights.

International studies conducted by the World Bank, United Nations and Goldman Sachs show that women are a missed  opportunity for increased economic prosperity. Bridging the gap between male and female employment rates can lead to major advancements, boosting GDP by 22 percent in certain cases.

BLC Bank has emerged as a catalyst for change in Lebanon. The bank spearheads social, economic and cultural change through its pioneering Women Empowerment (We) Initiative. The We Initiative is the beginning of a long relationship between the bank and women, and among women themselves. It is a learning process: one the bank has voluntarily embarked upon.

Apart from marketing a wide array of products and services, the initiative advocates a novel approach to doing business that ought to pervade every aspect of business transactions in Lebanon. BLC Bank’s Chairman Maurice Sehnaoui said: “I am very proud of the initiative that aims at empowering women and contributing in the journey of women to enhance their financial performance.

“We, as a bank, employees, agents, investors and society at large, are concerned with providing a fair and healthy environment for enhancing the concept of equality between men and women. Our value proposition to our target audience, being women, is that we recognise, and indeed it should be recognised, that women have high potential equal to that of men, and we are ready to provide them the right opportunities to achieve their ambitions.”

Bringing global standards to MENA
The We Initiative evolved from a set of strategic developments amicable to women. In 2011, BLC Bank became the only bank from the Middle East and North Africa (MENA) to join the Global Banking Alliance for Women (GBA) – a network of international financial institutions that have dedicated programmes for women – paving the way towards its objective of becoming the reference bank for women.

Sehnaoui said: “The initiative launched by BLC Bank qualifies it to become the financial and banking reference for women in the Middle East after being the first bank in the region to join the Global Banking Alliance and to sign the Women Empowerment Principles and preparing… tools for the inclusion and advancement of women in the business world, based on the strong belief in their vital role in developing the economy.”

BLC Bank’s GBA membership gave it access to a seemingly infinite source of best practices on a global scale. By exchanging experiences, networking, scrutinising possibilities for further cooperation and planning ahead with professionals in the field, the bank became a forerunner in the attempt to level the regional playing field and catapult MENA society to international standards.

BLC Bank, alongside the International Financial Corporation’s advisory services team, invested much effort in market research to comprehend the needs of women-owned small- and medium-sized businesses and test new product concepts. Adopting a strategic in-house approach, the bank aims to become the employer of choice for women, with an equitable gender distribution of senior management and overall staff by 2020.

Enterprise and motherhood
BLC was the first bank in the MENA region to commit to the UN Women/UN Global Compact Women’s Empowerment Principles: a set of seven principles for business, offering guidance on how to empower women in the workplace, marketplace and community. What distinguishes the bank from its counterparts is that staff across all echelons work to create a fair working environment, promote gender equality and foster a merit-based environment free from gender preferences.

BLC Bank was also a pioneer in the MENA region of the women’s unit. The women’s unit was not created simply to respond to queries but to provide high-quality assistance to women in any phase of the business cycle. Whether approached by women requesting procedural information or those inspired to start a business from scratch, the women’s unit extends a hand in business development, financial advice, marketing and communications, management and business growth.

The We Initiative markets a host of financial and non-financial products and services designed to integrate women into the economy. It targets all women, be they mothers, employees, professionals or entrepreneurs, seeking to find solutions to their challenges and concerns. As mothers, Lebanese women were prevented by law from opening an account for their children without the consent of the legal guardian: the father.

In 2009, the Association of Banks in Lebanon (ABL) proposed a solution to allow mothers to open fiduciary accounts for their children.  BLC Bank was among the first banks to adopt the ABL circular and launch the Mother’s Fiduciary Account in 2011. The bank remains keen on expunging impediments hindering growth in the SME sector.

BLC Bank presented the first collateral-free loan to established SMEs and works incessantly to facilitate their access to finance. At the same time, the We Initiative puts forth a host of non-financial services including trainings, educational workshops, networking events and advisory services, aimed at the enhancement of women’s personal and professional lives.

Providing a platform
The We Initiative also presents women with we-initiative.com: a unique and innovative platform allowing users to connect, network, share experiences and interact with the site and other women. Women often find themselves disoriented as to which business to develop or expansion plan to proceed with. In certain cases, they simply require access to ideas to carry out their business planning.

The We Initiative platform caters to women’s needs by displaying articles on a wide range of topics, and sharing information on upcoming events, conferences and job vacancies.

The platform’s experts and mentors dispense invaluable information to women seeking guidance. They counsel on topics ranging from legal affairs, financial, managerial to mediation and others.

The platform was designed with the intended purpose of supporting its visitors, absorbing them into the We culture and empowering them to speak out. We stands for what it embodies. As well empowerment, the We Initiative aspires to represent and acknowledge female entrepreneurs, executives, evolution, experiences, everyday life and excellence.

When push comes to shove, BLC Bank exerts the necessary muscle to translate its ideals and principles into operational concepts. The bank launched a series of reforms with the aim of becoming a ‘customer-centric’ bank. Its efforts are focused on identifying the unique mix of customer value components that will help it achieve sustainable customer satisfaction.

What women want
A market research study commissioned by BLC Bank revealed that conscious and unconscious biases were critical factors in determining women’s perception of a bank. The respondents praised banks that treated them with respect and equality but criticised those that did not. One of the study’s most compelling findings was that women cared less about the product and a bank’s features than they did about excellent service and honest, transparent and equal treatment to men.

As a result, the bank reformed its approach by training its employees to eliminate all forms of conscious and unconscious bias in dealing with women forthwith. But turning the table on the antiquated way of doing business in such a short period of time required the bank’s management and staff to show enormous levels of commitment.

The bank worked on equipping its staff with the necessary information and practical tools needed to develop sales and service strategies that met the needs of women. In particular, the reforms focused on meeting the needs of women-owned SMEs. Injecting a novel mind-set to doing business proved challenging at the outset but generated great returns.

Encouraging employees to think outside the box and to develop comprehensive offerings with a focus on women culminated in products and services that fitted women’s lifestyles. Bank management insisted on adopting a hands-on approach in reaching out to clients and assisting them in pursuing their potential. This approach was embodied in financial education and targeted training solutions.

A proactive approach
BLC Bank staff did not wait for women to request their assistance: they went on the lookout for interested clients at road shows and networking events. The bank was aware of the hesitancies surrounding non-banking women. Hence, its road shows spanned various parts of Lebanon and tapped into urban and rural communities.

In the spirit of boosting entrepreneurship, especially among women, the bank launched awards for the Business of the Year and the Woman Entrepreneur of the Year. The bank rewards creativity, proper finances, sustainability and corporate social responsibility. Distributing a $30,000 prize to the winner of each category attested to a genuine interest, on behalf of the bank, in nurturing SMEs.

The selection of BLC Bank by the International Financial Corporation as the SME toolkit partner licensed for Lebanon promises to serve the interests of all SMEs. The toolkit incorporates a detailed programme, including an online platform (www.smetoolkit.org), dedicated to providing SMEs with non-financial services. These include computer-based training, online interactive tools, information and educational resources that will enable them to learn and implement sustainable business management practices.

BLC Bank is keen on delivering what matters. As numbers show, women matter and they matter a lot. Ostracising 51 percent of Lebanese society would generate dire socio-economic consequences. With this spirit upheld, the bank approached the predicament and, by conceiving the We Initiative, rushed to simultaneously change the community and economy.

The We Initiative speaks to the countless new realities which face the MENA region, such as the understanding that private actors can change society by changing the conceptions which previously constituted the order of business. If there existed any specific cultural obstacles to the advancement of women, moulding a new reality was made possible through BLC Bank’s consistent efforts. The bank introduces no product into the initiative that is not extended to any other client: its aim is to increase the number of banking and economically active women through the We Initiative.

3D printing: A new dimension

Posted on by Ben Debski

For 3D printing
The concept behind 3D printing, the much-discussed new technology said to be on the verge of revolutionising industry, is often thought of as confusing, with some struggling to detach the thought of a traditional paper printer producing advanced physical objects. Also known as ‘additive manufacturing’, the process is widely regarded as the future of the manufacturing industry and is expected to transform the way in which a whole range of products are created.

While many sceptics believe the process will negatively impact upon the job markets, the advantages for both consumers and businesses are obvious. Companies as diverse as shoemaker Converse and Italian coffee manufacturer Alessi have been using 3D printing technology for a number of years to bring down costs and increase production speeds.

3D printing is set to totally reverse many countries’ over reliance on manufacturing, creating more streamlined, efficient, greener and personalised industries

According to Converse, who use Z Corporation’s printing technology, production is 30 times faster. They have also been able to cut back eight annual trips to Asia, costing $12,000 per person, for design meetings. The cost of equipment required for production has also been dramatically slashed, with Converse saving $200,000 from its previous costs. A 70 percent decrease in costs, from shipping components and materials from overseas, allows for a far more profitable and efficient business.

A considerable advantage of the speed with which 3D printing creates products is the allowance for on-demand manufacturing, which will sharply reduce the costs associated with unwanted stock. This should work in favour of smaller firms that don’t have the infrastructure to store and bulk-buy components, and especially those with just an online presence.

While online firms will benefit, a trend has emerged of shops with 3D printing machines springing up, offering clients the ability to customise their products in-store. They can select the colours, materials and size of whatever they are looking to buy.

Another advantage is the ability to cut down on the materials required to manufacture products. Aircraft manufacturers can waste up to 90 percent of the materials they use in making their planes. 3D printing requires less energy than traditional manufacturing processes and cuts down on waste. While this greatly reduces costs, it is also better for the environment. The 3D printing machines come with the added bonus of being multi-purpose. They eliminate the need for specialised machines and create a far more sustainable process.

As the world moves towards a more technologically advanced society and the tech-savvy youth begin to dominate the jobs market, the opportunities for developing new products through 3D printing software will be vast, while the need for traditional manufacturing and factory-based work will be less prominent. While this may reduce the employment opportunities for many current workers who may not be able to retrain, those entering the jobs market will be suitably skilled in many of the design applications and concepts involved in 3D printing.

Economies over the past century have been underpinned by their manufacturing industries due to the employment and output figures they produce. 3D printing is set to totally reverse many countries’ over reliance on manufacturing, creating more streamlined, efficient, greener and personalised industries.

Against 3D printing
Every few years, a new invention or technology comes along that has techies falling over themselves with excitement. In no time at all the media is up in arms, declaring a ‘new industrial revolution’ is imminent. The revolutionary technology du jour is the so-called 3D printer.

All steps in the manufacturing process would be left in the hand of designers and perhaps engineers, further limiting the employment market

Of course, it’s not a printer at all. In fact, the technology produces a three dimensional object from a digital model by layering microscopic layers of plastic, resin or metal. The printer itself is essentially a gantry that allows a depositor to travel around 3D space, creating objects. In the future, as this technology is developed, it might well prove useful in some precision technology industries where the human hand is just not steady enough: but reports of its wider usefulness have been greatly exaggerated.

It has been suggested that these devices might soon be able to craft objects out of biological tissue, allowing doctors to produce cartilage, heart valves and other human bits-and-bobs. One group of scientists in the US is working on printing a human ear, but they estimate it will take around 20 years for the process to be perfected.

And that’s just the problem with 3D printing as we know it today: it is just not as diverse a technology as it has been made out to be. Most 3D printers use plastics, resins or powdered metals to produce the objects because they can only print things made of one particular material. Anything more complex than an intricate vase, a phone cover or a Star Wars action figure will have to be assembled using bits not made by the printer. Suddenly, it’s not looking so useful.

In fairness, these issues are likely to be overcome as the technology develops. By far the more important concern is the effect this cheap method of mass production will have on the labour market and manufacturing. When these machines are being touted as universal producers, the effects their widespread use could have on the manufacturing labour market are potentially catastrophic – and this at a time when many governments are already fighting to preserve their manufacturing industries.

3D printer-based production puts the designer in the centre of the manufacturing line and completely cuts out the manual labour element of the process. Billions of people work in factories and manufacturing jobs around the world, all of whom could potentially be left unemployed if cheap machines can print anything from guns to bras. Essentially, 3D printing can provide the skilled labour to produce complex designs, but without the need for a worker.

Furthermore, if the use of 3D printing becomes widespread, it would severely restrict the variety of skills required in the industry. All steps in the manufacturing process would be left in the hand of designers and perhaps engineers, further limiting the employment market. For the time being, the benefits of 3D printers do not outweigh the potential damage to the labour sector and, by extension, the political and economic spheres.

As the technology develops, 3D printing will be better suited to the precision industry than to widespread use in manufacturing. After all, consumers are already willing to pay a premium for ‘homemade’ or ‘handcrafted’ goods. No machine will be able to replace the superiority of a handcrafted object because human skill and creativity will always be the most valuable commodity.

Businesses turn to affordable, accessible solar energy

Posted on by Ben Debski

Over the past few years, most governments have been on a conscientious drive to tackle the issue of our increased dependency on fossil fuels. There are many universities and research centres developing and challenging the ways we produce and consume energy in a renewable and sustainable way. After all, the sun radiates enough energy onto the Earth in one hour to meet the entire plant’s energy needs for a whole year: the question has always been how to harness it. Chairman of the European Photovoltaic Solar Energy conference Daniel Lincot said: “The solar energy resource is enormous. There is thus an enormous resource that can be used everywhere and can, in principle, cover all the world energy demand from a renewable, safe and clean source.”

Much has been said about the benefits of installing solar panels in homes as a way of significantly reducing energy costs. Many countries in Europe and North America offer tax deductions for homes equipped with solar panels, and some even allow homes that generate more energy than they consume to feed their excess back into the national grid and get paid for it. But not a lot has been said about how businesses can benefit from the use of solar panels. The specialists at UK-based price comparison website the Eco Experts said: “Business solar panels are not much unlike residential solar panels. The main difference would be their application and perhaps the upgraded components that can make a fully fledged business solar panel system more durable.”

Cutting costs
For companies in which electricity costs are a big part of the overheads, operations can particularly benefit from the installation of solar panels. Generating its own energy, at least in part, would leave the company much better prepared to face increases in energy costs and to maintain its outgoings under control. And while many companies might initially be put off by the costs of installation associated with solar panels, the long-term savings can be considerable.

Even the installation costs can be much lower than companies often expect. Many governments subsidise the purchase of the equipment, or offer tax rebates and other incentives in order to ease the burden of these additional costs.  In the US, for instance, almost all of the 50 states offer tax credits of up to 30 percent for solar generators or heaters, which means that installation costs are slashed by almost a third. Germany and Sweden also offer installation incentives.

Because of these grants and subsidies, the installation of photovoltaic panels offers a significant return on investment for business. The Eco Experts estimate that 21m2 of roof space for solar panels costs around £6,000 and generates an estimated 2,550kWh annually. And though that is unlikely to be enough to power a whole building, the Eco Experts estimate that the total returns for the first year could be up to £657. In the UK, some local authorities also offer substantial installation grants of up to £1,000.

The UK government offers a further incentive in that it pays for the production of energy from solar panels. Under the feed-in tariff scheme, regardless of whether or not a business is consuming all the energy it generates through its photovoltaic cells, the government will pay a standard rate for it. It will also pay an additional rate for any excess energy a business or home generates but does not use and feeds back into the national grid. Other countries like Australia, Canada and many EU countries operate similar schemes.

There is the question of space. While businesses operating in larger office buildings will probably have more roof space available for the installation of panels, they are also likely to have a larger energy bill. More substantial bills might not be met exclusively through the use of solar energy. But as energy prices skyrocket all over the world, the clear advantage for businesses is the reduced operating costs of generating some of its own energy.

Across the Atlantic
In the US, businesses have the further alternative to lease the solar panels, thus eliminating installation costs altogether. Some American solar energy providers will install the equipment for free and handle all maintenance and operation costs for a set fee each month. This also includes all the energy the photovoltaic cells produce. Companies like Whole Foods and Staples signed up to leasing schemes, which can reduce electricity bills by 15 to 20 percent over the duration of the lease with no installation costs. In effect, companies like SunEdison and SolarCity are selling cheaper power to businesses and homes.

Though leasing schemes have been running in the US since 2003, they are still not widely available in Europe. The trend is likely to catch on, however; the UK already has solar companies offering leasing opportunities. Head of SolarCity Lyndon Rive expressed doubt, however. He said: “People don’t buy gas stations. People don’t buy utilities. Why are we having them buy solar equipment?”

In the US, manufacturing businesses such as Anheuser Busch have started turning to photovoltaic cells for their power. In 2008, the brewery’s Newark plant in New Jersey had over 7,000 panels, covering 130,000ft2 of the factory’s roof. The panels produce around 10 percent of the brewery’s electricity: equivalent to 1.1 million kWh annually, and enough to power 125 average New Jersey homes each year. Since then the company has also converted six acres of its Fairfield, California plant to accommodate 6,500 photovoltaic panels. Energy prices have been going up an average of 5.9 percent a year in the US, and by investing in the installation of solar panels to produce at least part of its own energy, Anheuser-Busch will be able to maintain their energy costs down over the years.

Businesses that have ample grounds or roof space are the ones that will be able to generate the most power. GreenWaste Recovery Materials is a processing facility in San Jose, California, which treats 2,000 tonnes of waste per day. In order to reduce its immense energy bill, the company installed 1,502 photovoltaic panels, distributed on a dual-axis system to maximise the efficiency of the cells. But the system occupies 1.8 acres, and though the company’s energy bill has been drastically reduced, they opted for leasing the equipment rather then investing in their own panels.

Data storage facilities can require a huge amount of energy to function. Servers must be on 24 hours a day and must be kept at a cool temperature. Intel installed a solar array at its New Mexico plant in order to supplement its capacity. It has been so successful that the company has since installed solar panels in nine locations in the US and Israel. The projects include a one megawatt solar panel field occupying around six acres in Folsom, California.

Catching the sun
One thing that all these projects have in common is their access to sunshine.
Photovoltaic cells will produce less energy in places with fewer hours of sun per year. That is a serious downside, one which limits the geographic locations where the costly installation of the cells will provide an adequate return on investment. The use of photovoltaic cells is popular in Sweden, for example, because local researchers have developed technologies that generate energy even on overcast days: though they are admittedly not as efficient as regular panels and are more expensive.

Intel and Anheuser-Busch have so far only invested in photovoltaic energy at their facilities located in sunnier climes. Even the US government is taking advantage of the country’s copious deserts. In California’s Mojave Desert, it has invested, through its ‘energy department loan guarantee scheme,’ in the largest solar energy project in the world. Exploring the most cutting-edge technology, the facility will rely on 350,000 curved mirrors reflecting light into boilers. As the water boils, it turns turbines that will generate enough electricity to power 140,000 homes.

Cheaper solar panels, manufactured mostly in China, have also been contributing to drive down installation costs and can make the transition to solar energy more viable to smaller businesses. Hefty subsidies by the Chinese government have significantly lowered the cost of photovoltaic cells, though the Chinese panels tend to be more rudimentary and often not as sophisticated and efficient as some others on the market. However, they can still significantly lower the cost of energy bills for small- and medium-sized enterprises.

The installation of solar panels can also be a huge asset in terms of marketing. Companies perceived as ‘green’ or as being eco-friendly are often seen as more socially responsible and may attract additional consumers because of that. Many companies are now tackling their carbon footprint as a way to enhance their corporate social responsibility and increase their appeal to customers.

Despite the high upfront costs, there are many clear advantages for businesses considering installing solar panels to help meet their energy needs. But like many infrastructural developments, the installation of photovoltaic cells must be carefully considered, not only in terms of investment but also in terms of the average amount of local sunshine per year, and as a possible branding strategy. But like the energy from the sun that powers the panels, possibilities for development are seemingly endless.

The secret behind Harvard University’s success

Posted on by Ben Debski

No country dominates any industry as much as the US dominates higher education.

According to Shanghai Jiao-Tong University’s Academic Ranking of World Universities, for example, 17 of the world’s 20 best universities are American, with Harvard topping the list by a substantial margin.

The traditional explanation for this phenomenon – America’s wealth, large population, generous research funding, widespread private philanthropy and ability to attract scholars from around the world – is incomplete. Although the US boasts the world’s largest economy, it comprises only one-quarter of global GDP, and possesses roughly one-twentieth of the world’s population. And its support for research is not unique.

Moreover, according to the accepted explanation, large countries such as France, Germany, Japan, and even China and India should also be represented at the top of global university rankings. But they appear only sparsely anywhere in such rankings, if even at all. These countries lack America’s innovative governance model for higher education.

Harvard’s history
Harvard was established as a public institution in 1636 by the authorities of the Massachusetts Bay Colony. Its value to Massachusetts is exemplified in the Commonwealth’s post-independence state constitution, ratified in 1780, which includes a specific section about the university’s function and boundaries.

When Harvard alumni dominated the Massachusetts legislature, the university was given support and consideration. But, in the 1840s, mass immigration, fuelled by the Irish potato famine, altered the state’s demographic balance, enabling populists to gain control of the legislature.

Almost immediately, Harvard came under attack for being too elitist, too exclusive and too expensive. Even its curriculum was challenged. Over the next two decades, the state increasingly impeded Harvard’s functioning by, for example, refusing to release funds and obstructing the appointment of professors. This behaviour reached a head in 1862, when the legislature blocked a university president’s appointment.

In response, Harvard requested that it be placed “out of the reach of ordinary political strife and change” and into the “hands of alumni who have the interests of education most at heart”. On April 29, 1865, this radical proposal scraped through the Massachusetts General Court (the state’s bi-cameral legislature), owing to intense lobbying and the goodwill generated by Harvard alumni’s distinguished service for the Union during the Civil War.

Since that ruling, Harvard’s Board of Overseers has been controlled exclusively by alumni.

Inspired by Harvard’s success, other universities – starting with Yale University and the College of William and Mary – took similar action. This “genuine American method,” as Charles William Eliot, Harvard’s longest-serving president, called it, became the norm not only for private universities, but also for public institutions, such as the University of Michigan and Purdue University. The governance model was even adopted by religious institutions such as the University of Notre Dame and Duke University.

The motivation of prestige
Today, 19 of the top 20 American universities in US News and World Report’s much-watched rankings are controlled by alumni (defined as 50 percent or more representation on the Board of Trustees). The only exception, the California Institute of Technology, has a board with 40 percent alumni representation.

Of the top five, three (Harvard, Yale and Columbia) are managed entirely by alumni and two (Princeton and Stanford) are under 90 percent alumni control. Alumni run the show even at public institutions such as Purdue (90 percent) and Michigan (63 percent). On average, alumni make up 63 percent of the boards of the top 100 US universities, both public and private.

In general, a higher percentage of alumni on the board is associated with a higher ranking, increased selectivity and a larger endowment. After all, no group cares more about a university’s prestige than its alumni. They are the very people who gain or lose esteem as their alma mater’s ranking rises or falls.

Indeed, alumni have the most incentive to donate generously and to manage the university effectively. Given their intimate knowledge of the university, alumni are also the most effective leaders. Through alumni networks, board members can acquire information quickly and act upon it without delay.

All great universities are non-profit organisations, created to administer higher education, which benefits society as a whole. But US universities found a way to integrate competition’s benefits into the European concept of non-profit, or so-called eleemosynary, corporations. The lack of profit does not diminish an alumni-dominated board’s incentive to compete for prestige by, for example, hiring distinguished faculty, accepting meritorious students and striving for athletic or artistic achievement.

Using alumni to infuse the benefits of competition into non-profit institutions exemplifies the genius of American adaptation. Countries whose universities aspire to compete with US institutions should take note.

(c) Project Syndicate, 2012

Let’s not let banking get too boring before its time

Posted on by Ben Debski

Many economists are advocating regulation that would make banking ‘boring’ and uncompetitive once again. After a crisis, it’s not uncommon to hear calls to limit competition. During the Great Depression, the head of the US National Recovery Administration argued that employers were being forced to lay off workers as a result of “the murderous doctrine of savage and wolfish competition, [of] dog-eat-dog and devil take the hindmost”. He appealed for a more collusive business environment, with the profits made from consumers to be shared between employers and workers.

Concerns about the deleterious effects of competition have always existed, even among those who are not persuaded that government diktat can replace markets, or that intrinsic human goodness is a more powerful motivator than monetary reward and punishment. Where the debate has been most heated, however, has been about the effect competition has on incentives to innovate.

The great Austrian economist Joseph Schumpeter believed that innovation was a much more powerful force for human betterment than ordinary price competition between firms. As a young man, Schumpeter seemed to believe that monopolies deaden the incentive to innovate: especially to innovate radically. Simply put, a monopolist does not like to lose his existing monopoly profits by undertaking innovation that would cannibalise his existing business.

By contrast, if the industry were open to new players, potential entrants, with everything to gain and little to lose, would have a strong incentive to unleash the waves of “creative destruction” that Schumpeter thought so essential to human progress. In a competitive industry, only paranoid incumbents – those constantly striving for betterment – have any hope of surviving.

The benefits of security
As an older man, Schumpeter qualified his views to argue that some degree of monopoly might be preferable to competition in creating stronger incentives for companies to innovate. The rationale is simple: if patent protection were limited, or if it were easy for competitors to innovate around intellectual property, a firm in a competitive market would have very little incentive to invest in path-breaking research and development.

After all, the firm would gain only a temporary advantage at best. If, instead, it withheld spending, and simply copied or worked around others’ R&D, it could survive perfectly well: and might be better off. Knowing this, no one would innovate.

If the firm enjoyed a monopoly, it would have the incentive to undertake innovations that improved its profitability (so called ‘process’ innovations). It would be able to capture the resulting profits, rather than see them be competed away.

A ‘boring’ bank, shielded from competition and knowing that it ‘owns’ its customers, would want to go the extra mile to help them, because it would get its pound of flesh from their future business. Customers can be happy even when faced by a monopoly, though they would grumble far more if they knew how much they were paying for good service!

An analogy may be useful. A monopoly is like running on firm ground. Nothing compels you to move, but if you do, you move forward. The faster you run, the more scenery you see: so you have some incentive to run fast.

Competition is like a treadmill. If you stand still, you get swept off. But when you run, you can never really get ahead of the treadmill and cover new terrain: so you never run faster than the speed that is set.

Boring markets don’t innovate
So which industrial structure is better for encouraging you to run? As economists are prone to say, it depends.

Perhaps one can have the best of both worlds if one starts on a treadmill, but can jump off if one runs particularly fast: the system is competitive, but those who are particularly innovative secure some monopoly rents for a while. This is what a strong system of patent protection does.

But patents are ineffective in some industries, like finance. The overwhelming evidence, though, is that financial competition promotes innovation. Much of the innovation in finance in the US and Europe came after it was deregulated in the 1980s: that is, after banking stopped being boring.

The critics of finance, however, believe that innovation has been the problem. Instead of Schumpeter’s “creative destruction,” bankers have engaged in destructive creation in order to gouge customers at every opportunity while shielding themselves behind a veil of complexity from the prying eyes of regulators (and even top management).

Former US Federal Reserve Board Chairman Paul Volcker has argued, somewhat tongue-in-cheek, that the only useful financial innovation in recent years has been the ATM.

Hence the critics are calling for limits on competition to discourage innovation.

Of course, the critics are right to argue that not all innovations in finance have been useful, and that some have been downright destructive. By and large, however, innovations such as interest rate swaps and junk bonds have been immensely beneficial, allowing a variety of firms to emerge and obtain finance in a way that simply wasn’t possible before.

The chance to fail
Even mortgage-backed securities, which were at the centre of the financial crisis that erupted in 2008, have important uses in spreading home and auto ownership. The problem was not with the innovation, but with how it was used: that is, with financiers’ incentives.

And competition does play a role here. Competition makes it harder to make money, and thus depletes the future rents (and stock prices) of the incompetent.

In an ordinary industry, incompetent firms (and their employees) would be forced to exit. In the financial sector, the incompetent take on more risk, hoping to hit the jackpot, even while the regulator protects them by deeming them too systemically important to fail.

Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.

(c) Project Syndicate

A real Peruvian beauty: By women, for women

Posted on by Ben Debski

Mercedes García came to Lima two decades ago from the Andes mountains, striving for a better life: she was alone, with few resources and options, and two children to feed. Today, she has been able to move her family from a single room to a house, and her two children are now university students. Mercedes is one of the one million independent beauty consultants at Belcorp.

Belcorp, a Peruvian beauty products company founded in 1968, is one of the three largest direct sales beauty products company in Latin America. According to Direct Selling News, in 2011 Belcorp ranked among 10 of the largest direct sales companies in the world. Driven by its vision “to be the company that most contributes to bringing women closer to their ideal of beauty and personal fulfilment”, the company considers its beauty consultants its main asset.

Using direct sales as a key marketing strategy, the company offers each consultant an opportunity to progress by establishing her own business and starting a path to personal and professional fulfilment. In fact, Belcorp’s business model is centred on the belief that women are agents of social change, having the ability to transform the lives of their children and their communities.

More than 9,000 employees in 16 countries in North and South America are driven by the understanding that a “beauty consultant’s success is Belcorp’s success”: a statement used as a ‘mantra’ by the company’s founder and CEO, Eduardo Belmont.

Challenging the cosmetics sector
Belcorp is committed to achieving its vision and solving key problems for its consultants through women’s empowerment, offering not only economic benefits, but also promoting their personal and professional development. The company offers a business opportunity by providing a source of income with flexible working hours, which allow women to combine family and other professional activities.

The company has additionally developed an integral solution to attend to its consultant’s financial needs, since the lack of access to financial services affects the opportunities of women to grow their businesses. Its key programmes are:
– Familia Protegida (Family Protected): A life insurance policy with hospitalisation assistance, which has already benefited 160,000 underserved women in six countries in Latin America. To date, insurance premiums have been paid to more than 3,000 low-income families.
– Flexipago (Flexible Payment): A preferred credit line of working capital that allows consultants to finance their orders in 63 days. Flexipago, which also includes training to run their own business, boosts the consultant’s entrepreneurial spirit by facilitating loans which otherwise would not be available to them in the traditional banking system.
– Crece Segura (Grow Secure): A micro-savings programme that allows consultants to work towards saving enough money to accomplish their mid-term goal.

Belcorp has confirmed its commitment to sustainable development and women’s empowerment through different alliances with international organisations. As a member of the World Bank’s Global Private Sector Leaders Forum, Belcorp committed in 2009 to financially include 50,000 underserved women in Latin America within three years. Belcorp has by far exceeded its initial commitment by becoming the company with the largest number of micro insurance holders in Latin America.

Moving forward
In October 2012, at the international conference Power: Women as an Engine of Growth and Social Inclusion, Belcorp committed – before world leaders such as US Secretary of State Hillary Clinton and the UN Women’s Executive Director Michelle Bachelet – to keep working in favour of the financial inclusion of women. The company set a goal of creating 500,000 beneficiaries by 2015.

By 2020, Belcorp expects to reach three million women with a solid social inclusion agenda. The programme will give them access to microcredit, savings and life insurance, allowing them to reach their dreams and keep positioning the company as a leader in women’s empowerment in Latin America.

A recipe for growth
A unique aspect of Belcorp is that it is mostly run by women and for women. Women constitute 72 percent of the company’s workforce and 79 percent of its senior staff: 51 percent of its employees are mothers. It offers breast-feeding facilities for mothers, and flexitime policies to all staff (male and female): a novel practice in Latin America.

In 2011, Belcorp ranked 12th among the best 25 multinationals to work in Latin America, according to Great Place to Work. Its brands embody Belcorp´s beauty ideal, which is a beauty that comes from the inside, the beauty of a successful woman and owner of her future.

Belcorp Foundation
Created 10 years ago, the Belcorp Foundation is aligned with the company’s vision for women’s empowerment. It delivers two key programmes: Grandes Mujeres (Great Women), focused on promoting women’s self-esteem, and Mujeres Iluminando Mujeres (Women Enlightening Women), focused on granting scholarships.

Present in 12 countries, the foundation has already provided more than 1,500 scholarships to young Latin American girls from vulnerable sectors. In alliance with local civic organisations, it has trained more than 14,000 low-income adult women in personal development, violence prevention and economic development. By 2020, Belcorp plans to have expanded its foundation across Latin America and reached over 100,000 beneficiaries.

Versant Corporation tackles big data challenge

Posted on by Ben Debski

As we write this, several million people are without power on the East Coast of the US as a result of Hurricane Sandy. In the aftermath of the storm, the press and industry experts are writing about the fragility of grid infrastructures and how a lack of smarter, newer, more secure grid technologies contributed to the extent of the power outages.

Sandy’s circumstances and commentary echo those of other large-scale blackouts in the last several years. The 2003 blackout that affected more than 50 million people in the US and Canada was particularly significant. After that event, the US Department of Energy (DoE) issued a report that found that it was not for lack of action that the outage happened.

Many decisions were made, but the DoE found that the blackout was due in large part to “lack of awareness of deteriorating conditions”. The report recommended a real-time measurement system, and computer-based operational and management tools be developed to enable improved decisions and actions.

Almost 10 years later, the world’s energy infrastructures are beginning to get the injection of better intelligence needed to create the smart grid, and enable utilities to achieve situational awareness to reduce the risk of power outages from outside forces.

Situational awareness
The term ‘situational awareness’ (SA) originated during World War 1. The concept was a crucial capability for crews in military aircraft. Today, SA concepts are used in a variety of industries, such as air traffic control, nuclear power plant operation, vehicle operation, anaesthesiology and, of course, the smart grid. For the smart grid, SA involves recognising the current state of grid elements, analysing implications and taking effective actions. The implementation of systems for SA will involve sensors for data collection, information systems for analysis and processes for effective courses of action.

Given the scale of the grid, these implementations will involve big data operations, substantial real-time analytics and systems for complex decision-making.

Utilities’ big data reality
While conceptually simple, the complexities of big data and being able to manage volume, complexity and speed make building SA systems for the smart grid especially challenging. Today, widespread sensors create new data at an exponential rate. The deployment of planned synchrophasors alone over the next several years will increase data volumes for utilities by 700 to 800 percent.

Furthermore, the use of millions of smart meters will create many new substantial data streams. Smart meters measure a variety of data types such as consumption and power quality, as well as diagnostic and event-related data (e.g. connect/disconnect information).

The number of smart meters will triple between 2010 and 2014, reaching 50 million in the US alone. Italy rolled out smart meters to an entire customer base of more than 30 million between 2000 and 2005. The Department of Energy and Climate Change in the UK will have smart meters in all homes (more than 27 million households involved) by 2020. In China, State Grid has pledged to roll out a smart grid system by 2020.

Scalable, real-time big data solutions will be the only way to deal with hundreds of thousands and eventually millions of transactions per second to create value through wide-area situational awareness and informed decision-making. Utilities face key issues about smart grid data that make situational awareness a challenge for them. Big data is traditionally defined with three parameters:
– Volume: Certainly a big data problem for utilities, as increased synchrophasor use is projected to create an eight-fold data volume increase in less than 10 years. Moreover, tens of millions of households will be added to the smart meter network. This will create hundreds of thousands of transactions per second to be handled by the utilities’ backend information system.
– Variety: The array of different sensors and systems that utilities already apply to gain intelligence about power consumption and flow create more than a dozen different data formats. This will drastically increase with the deployment of additional smart grid technologies.
– Velocity: Many critical decisions about grid operations and power trading require analysis of large and complex data sets and must occur in milliseconds.
Utilities present their own unique challenges. Two of the biggest data characteristics that must be managed are:
– Validity: Utility data must be validated as clean, correct and useful. Otherwise, business process execution will be harmed. Data corruption or security vulnerability will be the result. Due to data validation, information in the utility environment has a ‘shelf life’ during which it is valid and useful and therefore needs to be stored for that particular amount of time. The question of when to archive or even dispose of data becomes relevant. It drives the cost of storing large data quantities inherent in a big data problem.
– Veracity: Establishing trust in big data presents a huge challenge as the variety and number of sources grows.  The integrity of the business processes, the security of the information systems and the protection of privacy for the customers are all significant issues and become increasingly complex as data volumes, variety and velocity increase.

Further, utilities must manage and analyse even more event data for power flow and consumption.  They also need to ingest, analyse and manage data about large external security risks and information about compliance requirements. Security for the grid used to be relatively simple compared to today, as infrastructure was really only at risk from natural disasters and equipment failure.

Today, through the rise of potential security threats to critical infrastructure, sophisticated cyber-security threats present another big problem for utilities.  There are also many new legal and regulatory issues associated with the smart grid for which compliance is a critical business issue.

Out with the old, in with the smart
Utilities have primarily used relational databases (RDB) to manage and analyse their data for the last 30 years. The RDB began to be used prominently by utilities during the 1970s, when storage media was very expensive.

The main advantage for RDB was that storage costs could be minimised, but at the expense of needing to write substantial proprietary code to describe the relationships between data sets.

The shortcomings of RDB have become apparent as needs for analysis across multiple data types, formats and domains are created to enable situational awareness for the smart grid.

After the US DoE issued findings on the 2003 blackout, the Electric Power Research Institute (EPRI) began a project within its IntelliGrid programme to develop architectures to help utilities avoid another disaster characterised by a “lack of awareness of deteriorating conditions”.

The programme led EPRI and many of its member companies, including Versant Corporation, to create a system architecture capable of providing advanced warnings. The new system showed exactly where problems were occurring, and delivered the real-time intelligence needed to keep the lights on.

The technology was demonstrated in a joint EPRI-Versant presentation at the June 2012 Data Management and Analytics for Utilities Conference in Redwood City, CA. This demonstration used sizeable data samples from utilities’ data from the hours leading up to the 2003 blackout. Many utilities will need to make substantial and difficult changes to many of their existing systems to implement such architectures. However, the above demonstration showed some of the benefits of making these changes.

The demonstration platform provides an automated means by which to ingest, manage and analyse large, complex data volumes in real time. An advanced, high-performance data management architecture allows data to be modelled as objects and classified into object classes that inherently match those of the smart grid. This architecture, developed by Versant, provides an effective platform for the complex applications of the smart grid. Further, the architecture adheres to the IEC CIM standard, including interoperability among all network devices used in smart grid systems.

Implementing the smart grid on a large scale presents many challenges and opportunities. The management and analytics of big data will be critical in many ways, including the development of sufficient SA systems. With the intelligent design of sensor networks and analytics systems, utilities can reduce operating costs and the risk of blackouts, mitigate potential security threats to the network, and improve their environmental impacts. Transforming the power grid is one of the great opportunities of this century, and with the intelligent use of information technologies, we can make it happen.

Bert Taube is Director of Energy and Smart Grid Solutions, and Robert F Brammer is Director of Versant Corporation

Money market resistance causes havoc for mutual funds

Posted on by Ben Debski

The United States Securities and Exchange Commission (SEC) recently rejected proposed rules aimed at making money market funds safer in a financial crisis: a rejection that has caused consternation among observers and other regulators. Given the risks that money market funds can pose to the global financial system, as shown by their destabilising role in the 2008 financial crisis, it is not hard to see why they are worried.

Money market funds take excess cash from investors and use it to purchase short term IOUs from businesses, banks and other financial institutions. They mimic bank accounts by allowing investors to write cheques and promise that their investment’s value will not fall.

In 2012, American ‘prime’ money market funds, which buy bank and corporate debt, were worth nearly $1.5trn. The money flowing through these funds went to many of the world’s largest banks, including not just the obvious US suspects (JP Morgan Chase, Bank of America and Citi), but also major European and Japanese banks such as Barclays, Deutsche Bank, Bank of Tokyo, Sumitomo, Credit Suisse and ING. These six international banks alone accounted for nearly 20 percent of the prime money market funds’ value.

Breaking the buck
Many readers know how money market funds work: an investor buys a $1 share from the XYZ fund, which keeps each share’s value at a constant $1, allowing the investor to believe that the money – invested in a pool of safe, secure, but not always government-guaranteed assets – is on deposit. Even if the asset pool declines in value, the fund’s managers keep the value of each share at $1 by rounding upward the fund’s real value. If the fund’s losses are big enough that rounding off still leaves it short of a stable $1 value, the fund “breaks the buck.”

That happened when Lehman Brothers failed in September 2008. The Reserve Fund, a well-established money market fund with too many unpaid IOUs from Lehman, could not keep its value steady. It broke the buck.

All money market funds then became suspect and many investors fled: withdrawing one-third of a trillion dollars in a single week. Since much of the money market funds’ assets are IOUs from the world’s biggest banks, the withdrawals weakened the already shaky global banking system. The Federal Reserve, seeking to stem the growing panic and stabilise the American and international banking system, promptly guaranteed the value of all money market funds.

Proposed regulation
The proposals that the SEC rejected were aimed at making money market funds more robust by requiring that each fund maintain capital reserves or let its value ‘float’ – and not be rounded up – to reflect its true, underlying risk. The proposal would also have required that money market funds hold back a fraction of some redemptions, thereby making investors take some risk that funds might not have complete transactional liquidity if their investments weakened.

A majority of the commissioners turned down the proposals after substantial lobbying from the mutual fund industry. If money market funds had to maintain capital reserves, industry representatives argued, yields to investors would decline and the industry’s profits would suffer. And, if retail investors saw their money market funds’ values declining from the amount that they had invested, and if they knew that they could not get all of their money back immediately, the funds would become less attractive. Investors might choose other places for their excess cash, like banks.

Banks are obliged to hold reserves, maintain capital and pay deposit insurance to ensure that they can honour their deposits. The mutual fund industry, one can assume, feared that the SEC’s rules would induce customers to redirect much of their cash directly into banks.

As a result of the SEC’s inaction, money market funds will continue to operate outside the scope of bank-style rules on capital and reserves, even though investors treat them like bank accounts. Unlike banks, though, they do not pay the government to insure their investors. But the 2008 financial crisis showed that, when push comes to shove, the government will backstop money market funds nonetheless.

The rejected proposals are thus good policy: money market funds should be made safer – via capital requirements and liquidity restrictions – because they already receive a de facto government guarantee. Their steady value makes them appear safer to investors than they are to the world’s financial system.

The influence of lobbying
The SEC’s rejection of the proposed rules demonstrates the power of concerted lobbying: and that concentrated interests often trump diffuse benefits. Typically, an interest group lobbies Congress, blandishing persuasive arguments, campaign contributions and other support: often enough members – or enough key members – come to see the merit of the group’s point of view (or at least vote as if they do). Meanwhile, ordinary citizens do not notice unless the issue receives significant media attention. Often no one lobbies the other side of the issue.

One might think that banks would counterbalance the mutual fund industry’s lobbying efforts because the likely effect of forcing money market funds to pay for more of their systemic costs would be to expand funds flowing directly to banks. But inflows through money market funds are not so bad for banks, which get the cash without having to set aside reserves or pay for deposit insurance. Some banks may even prefer the inflow from money market funds to direct deposits.

So the mutual fund industry had the regulators all to itself. Its lobbyists told the SEC commissioners that current rules already did everything possible to ensure safety, that retail investors want money market funds’ steady value, that change would hurt all investors and that the recent Dodd-Frank financial reform legislation disrupts regulators’ ability to bail out money market funds next time.

Other regulators were watching, as were academics and journalists, and some regulators may now feel compelled to take over the money market safety rules from the SEC or push the SEC back into action. With no one having a direct financial interest in the outcome pressing an alternative view, the SEC’s initial decision was as predictable as it was bad.

(c) Project Syndicate, 2012