ECO SPECIAL...... Why the circular economy is all about retaining value

Why the circular economy is all about retaining value

By reassessing where waste is most prevalent in their value chains, companies can learn to close those loops to get more from the resources and materials they use.

Contrary to popular thinking in various companies, the circular economy isn’t the latest sustainability fad and shouldn’t be thought of as a recycling or green program. It requires top-down management and change across a company, including reevaluating product design, business models, and the supply chain. In this episode of the McKinsey Podcast, McKinsey partner Eric Hannon and senior partner Clarisse Magnin explain what the circular economy is and how companies create loops throughout to recapture value that would otherwise be lost.

Why the circular economy is all about retaining value

Josh Rosenfield: Hello and welcome to theMcKinsey Podcast. I’m Josh Rosenfield, an editor with McKinsey Publishing. In this episode, we’ll be talking about a concept known as the circular economy and how it can help companies get much more value out of the energy, materials, and other resources they use. With me is Clarisse Magnin, a senior partner in McKinsey’s Paris office, who is a specialist in supply-chain management and the retail business. Welcome, Clarisse.

Clarisse Magnin: Hi. Delighted to be here.

Josh Rosenfield: We also have Eric Hannon, a partner in the Frankfurt office, who works on product development. Eric, thanks for joining.

Eric Hannon: Thank you for having me.

Josh Rosenfield: The idea of a circular economy has been around for years, but some listeners might not know what it’s all about. So what’s a circular economy?

Eric Hannon: It’s probably easiest to understand a circular economy if we first juxtapose it with our traditional linear economy. Our traditional linear economy consists of a simple linear value chain—things like source, design, produce, consume, and dispose.

And even though, over the past couple hundred years, we’ve squeezed an extreme amount of efficiency out of that linear supply chain, it still contains a seemingly incredible amount of waste. Essentially, at end of life, we either dump everything into landfills or incinerate it.

That destroys nearly all—or the entire—value that was created in those previous process steps. A circular economy answers a simple fundamental question: How can we capture more of the value that’s lost in a traditional linear system? In the circular economy, we try to find ways to create loops in that linear supply chain in order to retain that value.

I would point out a common misconception: this is not just about recycling. Recycling is the least value-capturing loop in a circular economy because it is only incrementally better than disposal. Rather, the tighter the loop, so to say, the more the original value is captured, including loops such as refurbishment or increased utilization, secondary-life uses, parts harvesting. These are all loops in a circular economy that can capture significant value much more than recycling. Even after roughly 30 years of applying lean principles across the entire value chain, there is still a tremendous amount of waste that we can capture.

Josh Rosenfield: What’s the pressure on economies and industrial systems to become more circular now? It sounds like the linear model has prevailed for decades.

Clarisse Magnin: It’s even more than decades. It’s 150 years—a very long period. There is a strong case for change that comes from major shifts in our resources and constraints in our regulatory environment; consumers are changing their behaviors, and technology enables us to do things differently. To give a quick example on the resource constraint, you have to think that three billion new middle-class consumers driving demand will enter the global market by 2030.

This is going to put a huge amount of pressure on resources, and the ease of accessing resources is going to reduce. We see a lot of volatility in most of the raw materials. The price levels and the price volatility—the world has never experienced that in most commodities.

The second thing is consumers are also changing. We talk a lot about millennials, but there is an attitude toward more access rather than ownership. That’s why people prefer to access a service as opposed to owning a product. On the supply side, we’ve seen a lot of disruption.

The last point, on the regulatory side, is that governments are getting mobilized on carbon, on energy, on waste. There are many studies showing that there’s a lot of waste in our economy, and that creates negative externalities. Governments and all stakeholders are starting to get mobilized to urge companies to change their ways of working. The good news is that technology can help on that front.

Josh Rosenfield: Are there examples you can describe of how companies that make products or that offer consumer services are starting to go circular and eliminate waste from their processes and from their systems?

Eric Hannon: There are many examples of circular-economy principles that listeners may be familiar with but are unaware that they fit within the circular-economy framework. One of the most value-retaining circular-economy levers is increased utilization.

Many of our very expensive capital assets have extremely low utilization. If we could improve that, then we’d retain significant value during that asset’s useful life. The prototypical example here is cars. Cars have a utilization of something like 5 to 8 percent.

Even when they are utilized, they are used way below capacity—roughly one and a half people in a five-passenger vehicle, for example. So the ride-sharing companies are attacking the utilization lever. The hailing companies are attacking both utilization and capacity. There are other examples, too, such as refurbishment. Industrial-machine manufacturers get back their very expensive engine cores at end of life, refurbish them, and have created a really nice market around refurbishment rather than just simply scrapping those engine cores at end of life.

Josh Rosenfield: Clarisse, what are some ways you think a company can get started in embedding circular-economy ideas into the way it works?

Clarisse Magnin: A circular economy is not just something you do on the side or one more initiative that you add into your pipeline. It should be a priority for management. It is pretty transformational by nature, so it requires involvement from the top.

The second thing is that the circular economy should be seen as a value-creation driver as opposed to an investment or an image builder. Third, it is about collaboration, partnering, and leveraging your ecosystem to find creative solutions. It is not usually what companies are the most comfortable doing. And it takes embracing a different operating model to implement these type of solutions. There’s a need to raise awareness and communicate about the initiative to employees, to suppliers, to clients, to all stakeholders in order to educate people about the concept. As Eric was explaining at the beginning of our conversation, it’s not that complicated to understand the concept of the circular economy, but people tend to understand it only as being about recycling. Obviously, when you understand the circular economy as being only about recycling, you struggle to see it as a value-creation driver across the different steps of your value chain.

It is a transformation journey. It’s going to take a bit of time, and it’s going to take effort. But that’s not a good reason to wait two to three years to start to work toward seeing some impact.

Eric Hannon: I’d like to stress your third point because it’s a really important one, which is the ecosystem factor. A unique feature of implementing circularity is the truly cross-functional nature of the activity.

I know we say that lots of things in a company need to be cross-functional, but this is especially true here. When we’re asking people to move toward a circular model, we’re asking them to change product design, change their business models, change the way their supply chain is set up. You have to have all those people at the table working together to make that happen. We had a client whose sales team was trying hard to break into emerging economies, but the price point of their product was simply too high.

By working cross-functionally with R&D, they realized that, with some design changes, they could remanufacture end-of-life products from their home markets. And with it, they could reach the right price point they were aiming for in emerging markets. This opened up a whole new market for them, applying these circular levers. Neither R&D nor sales would’ve been able to successfully reach this market on their own. It was only by the cross-functional collaboration, trying to implement circular levers, that they were able to unlock this value.

Josh Rosenfield: Eric and Clarisse, are there particular management disciplines or operating processes that you think need to change the most in order for companies to go circular, so to speak?

Clarisse Magnin: There are a few things, and I’m sure Eric will have other ideas. It should be a transformation that is anchored into the business. We need the CEO or the CTO, the transformation officer, to be fully supportive and even maybe lead or be part of the steering committee of initiatives that will be launched on the theme of circular economy. If you leave it to the sustainability function, you really take the risk of adding yet another sustainability initiative, as opposed to making it the real source of competitive advantage and business continuity, in addition to having a greater impact on the environment and a lot of the negative externalities that companies should work on. I would think about the incentives. It should be part of the incentives of the top management to go circular.

Eric Hannon: I would echo especially your first sentiment, Clarisse. We’ve seen this quite a bit already. Very often, when a company learns about the circular economy, its executives ask the sustainability officer to figure out a few circular levers. That’s just not sufficient. What we’re doing is, when we’re implementing a circular-economy business model, we’re asking the company to do a fundamental transformation, which means questioning their business model, questioning the requirements around their product design, questioning the way the supply chains work. That’s not something that takes place in a sustainability office. Rather, that’s driven from the top down.

Clarisse Magnin: The element of innovation is also very important. The circular economy somehow profoundly challenges the way companies operate. If you genuinely want to rethink the different steps of your value chain—I’m working a lot in the consumer-packaged-goods sector and in the retail sector and in food service.

You really have, from the field to the fork, upstream sourcing practices and agricultural practices. You have the supply chain. You have the transformation. You have the downstream logistics. And you also have the way you market the products: the way you communicate the origin, the benefits, the quality of the product. I’m giving you this example because I am truly convinced that there is a lot of innovation to be found in each step of the value chain. But, obviously, it is more difficult and substantive. That’s why we talk with Eric about building competitive advantage and creating value. It’s not being incremental and just doing a bit more of what you’ve done in the past that’s going to make you transform your value chain. That’s what we are excited about, and that’s why it is a bit difficult. But I think this is where the upside will come from.

Eric Hannon: Yes, we see the need for innovation—not only in the product but along the value chain. Some of the most successful implementations we’ve seen of the circular economy so far are when the business model itself is fundamentally changed and innovated.

Great examples here are the transition from product to service in a lot of industries. Product-as-a-service examples would be instead of buying tires, you buy kilometers. And instead of buying a jet engine, you buy hours of time in the air.

What those types of models drive is a rethinking of how durable your product is, what you do with the product at end of life, what value is left in it, what value you can capture, and how you maximize that value over the entire cycle. By innovating your business model, you push the circular-economy principles throughout the rest of the organization.

Josh Rosenfield: It sounds like there’s a lot of value that companies can capture by getting all their departments and functions on board with the idea of moving toward circular business models and rethinking their processes along those lines. Once they’ve begun that journey, what are some of the obstacles they’re likely to encounter? How can they work around those, in your experience?

Eric Hannon: I’ll start with a tangible, practical example, Josh. Very often we see when we’re trying to implement circular business systems that reverse logistics is a huge operational hurdle. What we mean by reverse logistics is when a product reaches end of life and we say that it retains a lot of value and we want to capture that value, we need a way to get that product from the consumer or the business user or the customer.

We need to get that product back into our possession. There are very few supply chains that are set up with robust reverse-logistics networks, so we need to make sure that by whatever circular-economy levers we’re applying, we’re generating enough value that we overcome the additional challenges, the additional costs associated with implementing those reverse logistics.

Clarisse Magnin: Building on Eric’s point on the obstacles, they come from the fact that it is difficult because it is cross-functional. It requires realigning the incentives on a different set of key performance indicators (KPIs) and it starts with the top management, meaning, they should have sustainable value-creation KPIs in their performance dialogue and assessment. Then, number three, it is because this is often considered another sustainable initiative, while it should be, once again, a value-creation transformation for the greater good, but also, in economic terms, something that is going to bring a lot of value through savings and through revenue upsides, as well as business continuity or risk mitigation.

Josh Rosenfield: Clarisse, you just mentioned a few of the benefits that companies can realize if they shift their businesses to become more circular. Where do you see the biggest near-term opportunities, whether by industry, product category, or even by geography?

Clarisse Magnin: Before answering your question on industries and sectors, I would say that the opportunity is to be found along multiple dimensions, both costs and revenue. So there are lots of cost reductions that can come from material savings, reduced price volatility, and reduced need to duplicate value-adding activities.

There is a big cost component in value creation, but there’s also a lot of revenue upside that can come from secondary sales. It can come from an increased service portfolio but also from simply having closer and more frequent customer interactions. I also believe that consumers are becoming much more sensitive to quality, to origin, to sourcing practices, to company practices. There is also a side to think of in the way products and services are valorized when they have been produced or developed in a different way. I would like to insist on those two dimensions, costs and revenues, because this works for most industries across the globe.

Now, in terms of sectors, we did this work with Eric to go through thinking about consumer-goods companies but also IT services. All the transformation companies, obviously, because they tap into resources. They do transformation, therefore they are using energy. They are often using water, and they are generating waste. But frankly, there are very good examples of companies beyond consumer and automotive, in IT services. The examples of the reverse logistics that he gave works very well with servers and works very well with different types of equipment that companies that provide services can think of.

It does apply across sectors, and then from a geography standpoint, emerging markets start to get organized. They tend today to have less strict regulatory practices, but I think local stakeholders—including nongovernmental organizations, and sometimes it’s not the government but it’s the state or the district or the municipality—they are all getting organized. Therefore they are also creating a case for change for companies, both multinationals and local companies.

Eric Hannon: When I think about your question very specifically from the geography dimension, Josh, in Europe, we see a regulatory environment is probably going to lead to a much quicker adoption of circular-economy levers than in other areas of the globe, especially from the consumer side.

First of all, there’s been a long history of legislation about taking back end-of-life products and e-waste and things like that. Up until recently, there’s even been very specific circular-economy directives coming from the EU Commission that industries will have to respond to.

The regulatory environment is tightening and will push a lot of this onto companies. When you look at a more B2B environment, China has for a long time been pushing circular-economy principles in its B2B business and their B2B industries but has not yet addressed the consumer environment. So we’re seeing a legislative landscape that is going to maybe accelerate the adoption of circular-economy principles in certain regions faster than others.

Josh Rosenfield: That sounds like a good note to finish on as we think about the prospects for the circular economy in the future. Thanks very much, Clarisse Magnin and Eric Hannon. This has been a fascinating conversation.

Eric Hannon: Thank you.

Clarisse Magnin: You’re welcome. Thanks for hosting us.

Josh Rosenfield: And thanks to our listeners for tuning in. 

http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/why-the-circular-economy-is-all-about-retaining-value?cid=sustainability-eml-alt-mip-mck-oth-1610

HEALTH SPECIAL ...BEWARE OF SUGAR

BEWARE OF SUGAR

A recent article from the British Medical Journal lends much needed insight into the sugar vs. salt debate. I often tell my patients that sugar is their enemy (and other foods that quickly turn to glucose). We know that heart disease is the leading cause of premature mortality in the developed world and hypertension is one of the biggest risk factors. This information shifts the conversation. To avoid hypertension and heart disease, we should be focusing on the sugar in our diets.

Hypertension is a primary or contributing factor in almost 350,000 deaths and costs $50 billion annually (2009 data). Based on this study, dietary guidelines should target sugar-high fructose corn syrup in particular.

High fructose corn syrup is the most common sweetener used in processed food and drinks such as sugary fruit juice and soda. A diet consisting of daily added sugar intake that adds up to a quarter of total daily calories can triple a person's heart disease risk compared to people who consume less than 10 percent. Consuming more than 74 grams of fructose a day can also lead to a 77 percent higher risk of blood pressure above 160/110 mm Hg.

Processed foods are a major source of both sodium and sugar (in the form of refined carbohydrates). These refined carbohydrates (starches) are quickly converted in the body to glucose, raising blood glucose and insulin levels, contributing to insulin resistance and causing weight gain.

Sugars, especially monosaccharide fructose, are now being more closely associated with development of hypertension and increased cardiovascular risk through a variety of mechanisms. Lowering fat in our diets by increasing sugars (i.e. fat-free ice cream) is likely doing even more damage due to increased intake of simple carbohydrates and sugar. It seems that the drive to lowering sodium may actually be increasing hypertension and heart disease.

So what is the best diet to avoid cardiovascular disease? Vegetarian, vegan, paleo, Mediterranean, low fat, high fat? I have nothing against those who choose a vegan or vegetarian diet for themselves. However, be aware of the simple carbohydrates (breads, pasta, and white rice) which will lead to higher risk of hypertension and heart disease.

Low fat likely isn't the answer in the presence of simple carbohydrates. Atkins has been shown to be difficult to sustain and I am not convinced in its true form it is a healthy long-term diet. I tend to recommend a Mediterranean type diet-one rich in vegetables, moderate fruit intake, healthy proteins, monounsaturated fats, and low in simple carbohydrates (garlic bread and pizza are NOT found in the Mediterranean diet plan).

The CDC estimates that 16 percent of total caloric intake for children and adolescents currently comes from added sugars. More than 40 percent of calories from added sugar come from sugar-laden beverages, like soda. We should remember that the naturally occurring sugar found in fruit and vegetables have not been found to have harmful effects on our health. When it comes to adding sugar, don't. As a society, we need to address this now to prevent our children from having a lifetime of ill health.

By Lt. Jason Valadao

Naval Hospital Camp Pendleton

BOOK SUMMARY 263 You Have the Keys, Now Drive

BOOK SUMMARY 263

You Have the Keys, 

Now Drive

·         Summary written by: Carol-Ann Hamilton

"No one else can live your life for you – no one else will have to live with your regrets – so do not allow them to determine your successes or failures."

- You Have the Keys, Now Drive, page 14

As author Danny Stone declares, You Have the Keys, Now Drive will take you on a journey of self-exploration. You’ll dig deep on what you want. A magic wand won’t come along to make everything alright. Rather, this volume is filled with tools to go from stuck to unstuck, from satisfaction to true happiness, and from dreaming to actively shaping your future.

The Golden Egg

The Ten Steps

"Living your dreams sometimes means not following the rules, not conforming, and not wanting to be like everyone else."- You Have the Keys, Now Drive, page 40

Unfortunately, many people can’t see their situation from a different perspective because they don’t understand that who they are and what they value are catalysts for new decisions. Once they understand their values and passions, these forces will form the driving purpose behind how they comport their lives.

Via his research, Stone discovered 10 essential steps that people must take to get out of the “mud” (a state of being stuck in some area of your life). Here they are:

Identify and acknowledge where you’re stuck.

Find self-awareness – a deep connection with yourself.

Reconnect with your values, passion and purpose.

Shift your perspective to get unstuck.

Set powerful goals to achieve what you want.

Use failure as an opportunity to learn and grow.

 Learn the importance of celebrating milestones and successes.

Establish a support system.

Discover the power of taking time for yourself.

  Achieve a life free and unstuck.

Gem #1

No Really – Who Are You?

"Albert Einstein’s definition of insanity is: ‘Doing the same thing and expecting a different result.’ I think many people can relate better to this: ‘unhappily doing the same things over and over and settling for the same result.’"- You Have the Keys, Now Drive, page 9

So, how is it that we come to think small as opposed to dreaming large? One factor is that we’ve been conditioned to accept a limited reality. We look at the glass as half empty. Now, imagine a hot day of beating-down sun. You desperately need water. Someone offers you half a glass. Would you accept it or would you tell them you’ll only take a full glass?

While these questions may seem strange, the author poses them because a chief reason people are stuck is because they can’t think bigger than their specific situation. To prompt our expansion, here’s a compendium of food-for-thought inquiries:

·         Without over-thinking, write down 20 of your best attributes (strengths).

·         The top 5 positive words or phrases I’d use to describe myself are… (fill in the blanks).

·         Imagine you’re being interviewed by a top talk show host and asked: “Tell me about yourself.” What would you say?

·         What accomplishment are you most proud of?

·         How do you want other people to see you?

·         What are you most passionate/excited about?

·         What do you want your legacy to be?

Gem #2

The F-Word – Permission to Fail

"Everyone can rise above their circumstances and achieve success if they are dedicated to and passionate about what they do."- Nelson Mandela, quoted in You Have the Keys, Now Drive, page 82

In order to achieve great success, we must be willing to step out of comfort zones; we need to challenge ourselves to do something different. Being uncomfortable helps us tap into unrecognized skills and/or allows us to play to current strengths even more. Interestingly, the world’s greatest entrepreneurs have all failed at some point in their lives. Even Steve Jobs got fired from Apple before later returning as CEO.

To advance our “comfort” with failure, we’re offered these questions for reflection:

·         What would your life be like if you were not afraid to fail?

·         If you could not fail, what would you do?

·         What would you attempt to achieve?

·         What impact would that have on your life?

At the same time, it’s important to reward and celebrate our victories as well as maintain positive self-talk to reinforce our worthiness of success. That’s why Danny shares stories and examples throughout of how he transformed his life – from growing up in a low-income housing project surrounded by drugs to being a business owner and public speaker.

As he says, the book is not called Danny Has the Keys and Will Be Your Chauffeur or Danny Handed You the Keys and Will Teach You to Drive. We already have a license to drive in any direction we choose. In the end, Stone’s only role is that of an “alarm clock” waking us up so we can begin (or continue) the journey to our end destination.

How encouraging it is to know we don’t need to settle or accept quiet dissatisfaction as the norm. Let’s always remember to declare and believe that we deserve more!

GOOGLE SPECIAL.... GOOGLE’S QUEST TO DOMINATE THE WORLD

GOOGLE’S QUEST TO DOMINATE THE WORLD

The tech giant’s new offerings are set to disrupt the market, but there’s much to be critical about

THE LAUNCH of Made by Google was big, glitzy and packed to the gills... not just with people but also with the number of products being announced. Two Superphones (Pixel and Pixel XL), a Virtual Reality headset (Daydream), an Amazon Echo-style voice assistant speaker (Google Home) and an all-new Chromecast device (4K version). Exciting, right? Well...

Google and hardware devices have a truly poor history. Google Glass was a failure, the buyout of Motorola ended in shambles, Android One devices would win the award for worst executed idea and even some Nexus devices didn’t do as well as they should have. So let’s dial down that excitement a little and do a reality check for each device announced.

PIXEL AND PIXEL XL PHONES

Absolutely top-of-the-line specs (first phone with a Snapdragon 821 processor), spiffy optics and camera (in some tests it’s been declared as the best camera in a smartphone ever), superfast charging (15 minutes of charging will give you 7 hours), unlimited storage for photos and videos (in the cloud) and the most killer feature, the Google Voice Assistant. This is a context-aware assistant that can understand full conversations. You could ask for directions to a place and then also ask “how’s the traffic on the way” – it will know you mean the same destination. So what’s the caveat here? Well, Google thought they’ve created a bomb of a phone and priced it at Samsung Note and Apple iPhone levels. Huge mistake. To play at that premium level, one needs to prove one’s worth and create a demand over time. The specs will be matched by lower-priced competitors almost immediately, leaving Google with a serious number of unsold Pixels on their hands!

GOOGLE HOME

I really like this product. It’s a small speaker with built-in microphones that are always listening. It can answer queries, play music and control smart home products like lighting and thermostats. They can also connect to Chromecast devices and give you the same control for your videos and movies. Just ask for a YouTube video or search for a movie by its cast and have it play immediately. You can even have a series of Google Home devices in your house and use them as a multi-room intelligent system. However, the Amazon Echo does nearly all of this and is also a refined product as it’s already been out for a while. Still, the Home is one of Google’s better devices and I have great hopes for it.

DAYDREAM VR HEADSET

It’s made out of fabric, fits you like a glove with no hard plastic bits digging in, and comes with a remote control. This is the bigger and more sophisticated brother of the poor Google Cardboard and takes Virtual Reality to greener pastures. You’ll still have to insert a phone in it (which means you can’t use your phone at the point), continues to have some pixelation issues and will still be a middling experience.

CHROMECAST ULTRA

Take a very successful product and upgrade it to 4K. That’s the new Chromecast for you. It still looks like an ice hockey puck and plugs into your TV – but now streams faster and in Ultra HD. Oh, and it costs twice as much as the previous generation.

That’s the Google avalanche of products, part of its strategy to dominate Smartphones, VR, Home and Content streaming. Those are the big four categories supposedly worth billions of dollars for the next two years. There’s serious innovation but overall, many missteps too. The Pixel phones at about half the price, the VR headset with a built-in non-pixelating screen, Home with Chromecast built-in and Chromecast Ultra at the same price as before – that would have been my strategy. But then I’m not Sundar Pichai! I am available for consultation though. You know where to get in touch with me, Larry and Sergey.

HTBR 16OCT16

BRAND MANAGEMENT SPECIAL.... Branding Evolution

Branding Evolution

The media business is percolating with over-the-top content — shows, series, events, and whole channels that bypass cable and reach consumers through social media, the Web, and other platforms. So it may not come as a surprise that coffee shops are getting into the game.

This fall saw the introduction of “Upstanders,” a Web-based series that uses video, podcasts, and text to tell the stories of 10 ordinary people creating positive change. Brought to you, literally, by Starbucks.

In a press release, Rajiv Chandrasekaran, a former Washington Post editor who is senior vice president for public affairs at Starbucks, said that “Upstanders” shares stories of inspiring Americans that “are often ignored by traditional news organizations, with millions of our fellow Americans through Starbucks’ unparalleled platform.”

Several keywords and phrases in that sentence — “shares,” “inspiring,” “traditional news organizations,” “Starbucks’ unparalleled platform” — illuminate how the company’s thinking about content has evolved in today’s mobile- and social-first world. For “Upstanders” is aimed less at selling coffee or other products, and more at enhancing Starbucks’ brand promise and deepening consumer engagement.

As it uses media to create personalized, relevant experiences its consumers desire, Starbucks is breaking out of the traditional mold. It is relying on its own creativity instead of the expertise of a media, entertainment, or advertising company. It is focusing distribution on its own digital channels — among them its social media platforms, its mobile apps, and its online and in-store digital network — rather than on traditional outlets or even its physical stores. And the coffee chain trusts that audiences won’t care who created the content as long as it is genuine, transparent, informative, and entertaining.

This approach represents an evolution, if not quite a departure, from Starbucks’ past media efforts. A decade ago, before the Internet had developed into the robust entertainment platform it is today, Starbucks sought to become a cultural tastemaker by turning its physical stores into a retail channel for books, music, and movies on a mass scale. In 2006, it promoted Mitch Albom’s second novel, One More Day, with discussions and readings as part of a newin-store book program. It promoted the Lionsgate movie Akeelah and the Beeon coffee cup sleeves and coasters that encouraged customers to spell difficult words (the movie was centered on a spelling bee). It established an in-house media division, Starbucks Entertainment, and hired talent agency William Morris to find projects to market in its stores.

But its most ambitious effort was in music, which has always been an important part of the atmosphere Starbucks aims to create in its stores. The company offered a carefully curated selection of CDs at the cash register — and sold millions of them. In 2004, about one-third of Ray Charles’s platinum duets CD, Genius Loves Company, were sold in Starbucks. The company later bought digital music company Hear Music and launched a record label that signed its own artists (Sir Paul McCartney being the most notable among them).

“We believe strongly that we can transform the retail record industry,” Starbucks chairman Howard Schultz said in 2004.

That didn’t quite happen. The company stopped selling CDs in 2015. Schultz may have been wrong about transforming the retail record industry — in fact, there wasn’t much the coffee chain could do about the digitization of music. But he was dead on as an early proselytizer of the power of social media. After reclaiming the CEO title in 2008, Schultz implemented a holistic social media marketing strategy that not only helped reverse a sales decline, but also paved the way for a new media strategy.

In the years since, the company has become a leader in harnessing the social aspect of social media. Its Instagram followers, for instance, primarily control Starbucks’ content with fan-submitted images. “My Starbucks Idea” is a social platform where customers can submit ideas for new drinks, food, and merchandise. And its “Starbucks Rewards” program offers deals, free music downloads, and other perks via its iOS and Android apps. Today, more than 25 percent of all Starbucks transactions are conducted through the apps.

With each engagement on its social platforms, website, and apps, Starbucks is gathering data and learning about its customers’ behaviors and interests, which it can use to create relevant content experiences. So instead of pushing new bands’ CDs, it is instead developing projects like “Upstanders” based on its impressions of its consumers’ interests. Put another way, Starbucks is moving away from selling media to earn a profit to creating media that engenders loyalty and deepens customer engagement. The belief and expectation are that this will pay off in the form of longer-term relationships and connections.

 “Upstanders” is a perfect example of this new strategy. The company has always been vocal about social issues, from healthcare and education to open carry and race relations. In that vein, the inspirational and aspirational nature of “Upstanders” neatly fits with Starbucks’ brand reputation. Some of the subjects covered in the series include an ex-NFL player who helps train wounded veterans, a college student who created a Web program to limit food waste, and residents of Baldwin, Mich., who raised money to provide a college scholarship for every student in the community.

The series is essentially a hyper-realized form of sponsored content. Starbucks is intimately tied to the production, though the series has nothing to do with coffee and doesn’t feature the company at all. The halo effect from financing, promoting, and distributing the series accrues to Starbucks’ brand.

In this instance, Starbucks has a direct relationship with its customers and exerts a high level of control over the user experience. The company has expertise in distribution, physical infrastructure (via its nearly 24,000 stores), and terabytes of customer insight. Chandrasekaran brings the content expertise. Starbucks has the status and authority to create content that results in compelling user experiences.

The idea of collaborating on “Upstanders” came about after Schultz and Chandrasekaran coauthored the book For Love of Country: What Our Veterans Can Teach Us About Citizenship, Heroism, and Sacrifice.

If everyone who views an “Upstanders” video is motivated to do the same, then Starbucks has created a virtuous cycle of content, consumer data, and purchase behavior that it can replicate and optimize in its media offerings for years to come. And that’s likely to be more valuable for its long-term growth than a 30-second television ad for pumpkin spice lattes.

Peter Lauria

http://www.strategy-business.com/blog/A-Java-Based-Media-Platform?gko=11df7&utm_source=itw&utm_medium=20161018&utm_campaign=resp

EMAIL PRODUCTIVITY SPECIAL..... Three Email Habits That Kill Your Whole Team's Productivity

Three Email Habits That Kill Your Whole Team's Productivity

The way managers communicate sets expectations for how everyone on staff communicates.

Eric, a client of mine, owned and ran a successful service firm with sales of $3.5 million per year and a healthy profit margin. But, he told me, "We’re bursting at the seams. I’m working six or seven days a week, putting in 70-plus hours a week, and my team are all regularly working 60-plus hours a week. Is it that I just need to hire more staff?"

He didn't think so, but wasn't sure what else to do. "We’ve got a solid team here, and I don’t want to make it any more complicated," he added. After hashing things out together, it became clear that the overload Eric and his company were experiencing wasn't just a staffing issue. It was more likely a productivity one, starting with how Eric communicated with his staff. Three of his bad email habits were trickling down to everybody else, undermining the entire team's working methods.

The faster you reply, the more responses you'll get.

Make no mistake: They're widespread in other companies, too. And especially when leaders misuse email, the negative consequences for others can quickly become magnified. Here's what to watch out for.

1. HYPER-RESPONSIVENESS

If you're constantly checking your inbox—or even worse, getting push notifications that prod you to—chances are you aren't using email very effectively. Over time, that makes email itself a source of anxiety. My client confessed to feeling uncomfortable as a result of simply not knowing what was in his inbox, and he worried that if he didn’t stay on top of it, he would drown in it.

These are fallacies that can quickly become self-fulfilling prophecies. First, it means your attention is constantly getting pulled from higher-value activities so you can handle an incoming message—often a trivial one. As UC Irvine researcher Gloria Mark discovered, it takes the average office worker 20 minutes to return from that interruption to whatever they were doing before.

Hyper-responsiveness to email doesn't just chop your day into a series of small slivers of work punctuated by distraction, it also increases the volume of email you're likely to get. And if you're a leader, that can magnify your entire team's email load proportionately. Think of it this way: The faster you reply, the more responses you'll get in. If you write a total three notes to a team member about the same project in the space of an afternoon, that means they've likely written three, too—one of theirs alternating with one of yours—for a six-email thread. But if you'd just waited to check in until the end of the day or the following morning, you're only writing one note apiece.

One of the best ways to reduce your total email load is to let it "age"—in other words, simply waiting for an hour or two before you reply, or holding your reply for the next day. This allows you to "batch" your time spent responding to email during defined periods, then ignore it the rest of the time so you can focus on other things.

When leaders do this, they give their teams tacit permission to do the same. But it helps to be explicit about it: Discuss hyper-responsiveness with your team and make it clear you consider it a risk to avoid, not a bad habit to indulge.

2. NIGHTTIME AND WEEKEND "CHECK-INS"

"Eric, how often do you handle an email that is so important that it couldn’t wait until the next workday to respond to?" I asked my client.

"Rarely," he said. "But I like staying on top of my email. I want to know what’s in there. And it’s easier to send the response right then and there versus having to reread it a second time the next workday." That meant Eric was checking in on his messages after-hours and on weekends, which put pressure on his team members to do the same. Over time, this became part of the company’s culture, leaving no one with truly uninterrupted downtime to recharge away from work.

Cutting back on this habit wasn't going to be a cold-turkey kind of thing, I realized. Understanding that Eric felt compelled to check his email and respond immediately, I suggested he start writing his replies right away but use the "delay delivery" feature so the email gets sent the next workday.

My client confessed to feeling uncomfortable as a result of simply not knowing what was in his inbox.

If you’ve had a history of late-night emails to your team, you need to acknowledge it first to yourself and then to your team members. Since it affects them, too, it isn't just a personal quirk you can deal with solo. Bring it up at your next team meeting. Come clean with them about the bad habit and discuss it candidly: When do you and they feel it's important—for the company—for everyone to be available by email? Just make sure you can clearly define the business goals you're serving by whatever timeframe or regularity you agree to; if you can't, think again.

3. OVER-CC'ING

"Eric," I said, "I noticed on the agenda I emailed you for this call that you cc’ed two of your team members. May I ask why?"

"Oh, you had asked for some information in advance of our meeting, and I was delegating it out."

"Okay," I said, "That makes sense, but why two people?"

"I always send administrative tasks to two people," he replied. "That way I know at least one of them will handle it."

In your company, do people often feel they have to cc multiple parties, even on mundane emails? Do you notice that people who are only tangentially affected get copied in on the responses to a cc’d email?

You may think you're just keeping folks in the loop. But remember that every email has to be opened, read, mentally processed, and then "handled," even if that just means moving the email to an archive folder or deleting it. Be intentional about when you do and don’t cc someone, and work with your team to determine what situations warrant cc'ing and which ones don't. Here's a good rule of thumb: If you want someone to do something with the information you're sharing, include them. Otherwise, think twice.

Your team members may share these email habits or even exhibit some of them that you don't. But as a leader, the way your whole team communicates starts with how you communicate with them.

DAVID FINKEL 

https://www.fastcompany.com/3064695/work-smart/three-email-habits-that-kill-your-whole-teams-productivity

FUTURE SPECIAL...... An integrated perspective on the future of mobility

An integrated perspective on the future of mobility

A number of social, economic, and technological trends will work together to disrupt mobility, potentially creating three new urban models by 2030.

To view a city from above is to observe a world in motion. Trains carry people to and from work; taxis circulate in abstract patterns; trucks deliver goods and carry away garbage;pedestrians hustle down city blocks; cyclists zip through traffic.Mobility is the lifeblood of our cities and essential for urban life.

Yet, our desire for mobility has consequences: cities can be noisy, congested, and prone to smog. Far too many urban residents spend hours stuck in traffic; no one can escape airborne pollution. Mobility is also a critical economic factor, both in its own right and as the means of providing the goods and services that are the foundation of economic life. Finally, mobility matters to people, whether this is getting to work or school with ease, visiting friends and relatives, or simply exploring one’s surroundings. In relatively few places, however, does the reality of what is available match the public’s aspirations for safe, clean, reliable, and affordable ways to get from Ato B—and back again.

We believe, however, that the way people move around the urban environment is primed for dramatic change. Already, new business models, as illustrated by organizations such as Uber and Didi Chuxing, are changing traditional mobility patterns. Technological innovations in the form of electrification, connectivity, and autonomy are on the horizon. Increasing urbanization and the growth of “megacities” with more than ten million people provide the conditions for change.

What, then, will be the future of urban mobility? A new report, An integrated perspective on the future of mobility, a collaboration between Bloomberg New Energy Finance and McKinsey, seeks to answer that question. To do so, it explores how a number of existing social, economic, and technological trends will work together to disrupt mobility at the local level.

The result is a radically different future based around three models of advanced urban mobility that are achievable by 2030. Inevitably, individual cities will make different decisions, based on specific local conditions, and go in different directions—and, globally, mobility systems in 2030 will on average look very much like they do today.

Yet there is a cluster of some 50 urban areas that could lead the way toward one of the three advanced-mobility models. These areas have the potential to demonstrate the profound effects of mobility innovation on everything from power systems to the use of public space, while simultaneously introducing a new city dynamism.

The mobility systems of the future are likely to be very different from what exists in most of the world today. The individual traveler is at the heart of this evolution, so consumers will need to be open to adopting new technologies and services. However, both the public and private sectors will have roles to play in paving the way.

The value of an integrated perspective

Numerous trends, ranging from energy decentralization to the Internet of Things, are likely to come together to create drastic changes in mobility systems over the next 10 to 15 years.

Predicting the future is perilous. In this case, however, two factors point us in this direction. First, several key mobility trends—electrification, shared mobility, and autonomy—are poised to take off. The costs of a lithium-ion battery pack fell 65 percent from 2010 to 2015, and they are expected to drop below $100 per kilowatt-hour over the next decade. Car-sharing and ride-hailing services are already at work in hundreds of cities around the world, enabled by smartphones and backed by substantial venture capital. An array of established automotive and technology companies, as well as intriguing start-ups like nuTonomy and Zoox, are testing self-driving capabilities, with the aim of providing door-to-door travel, with no human intervention required.

Second, and just as important, trends in related areas reinforce one another. Urbanization is expected to increase average city density by 30 percent over the next 15 years, stretching existing systems as demand rises. Urban planners and residents are putting livability and sustainability higher on their agendas. Increased connectivity is opening the door to multiple shared-mobility options and could also help to smooth traffic flows.

Looked at in isolation, each trend is significant. Their combined impact, however, will prove to be truly powerful. For example, more shared mobility could boost electric-vehicle (EV) sales because shared vehicles are used more intensively, improving the economics of ownership. In turn, higher EV production could accelerate innovation and reduce the cost of batteries. That opens up applications in adjacent systems, such as distributed storage. And the plummeting cost of distributed power generation could improve the greenhouse-gas abatement potential of EVs, because they would get more of their juice from low-carbon sources. In these and other cases, there is a powerful dynamic of mutual reinforcement at work. It’s not just one oar in the water—but lots of them, all pulling in the same direction.

The future of mobility in three models

Today, a small number of cities, such as Amsterdam, Singapore, and Stockholm, are singled out as having effective mobility. With varying degrees of emphasis, they have efficient public transit, encourage cycling and walking, and have managed to limit congestion and pollution. By 2030, we expect a number of additional systems to be at the leading edge of the next phase of advanced mobility.

In broad terms, the best will combine shared mobility, autonomy, and electrification with integrated energy systems, public transport, and infrastructure. In specific terms, cities will navigate these possibilities differently. Local conditions—such as population density, wealth, the state of road and public-transit infrastructure, pollution and congestion levels, and local governance capabilities—will determine what changes occur, and how quickly.

For the near future in cities leading the advance, we envision three mobility trajectories, with trends such as sharing, autonomous driving, and electrification all moving forward at a different pace. Each is suited to a specific type of metropolitan area, whether it be a dense developed city, a suburban sprawl, or an emerging metropolis.

Clean and Shared. Delhi, Mexico City, and Mumbai are examples of densely populated metropolitan areas in developing countries. They are all experiencing rapid urbanization, and they all suffer from congestion and poor air quality. For cities like these, the widespread use of self-driving cars may not be an option in the short or medium term, because of poor infrastructure, interference from pedestrians, a variety of vehicles on the road, and a lack of clear adherence to traffic regulations. The approach most likely to apply is a shift to cleaner transport, in the form of EVs, while also limiting private car ownership, optimizing shared mobility, and expanding public transit. In conjunction with some connectivity and autonomy, traffic flows and safety could be enhanced. According to our research, if relevant Asian cities move toward this model, by 2030 shared vehicles could account for almost half of passenger miles due to a combination of greater utilization and more passengers per trip.

Private Autonomy. There are many cities around the world where development and commuting patterns have increased sprawl significantly. In such cities, having a car is all but essential. That will likely remain the case for the foreseeable future. However, there are genuine costs to this way of life; congestion in Los Angeles costs the city an estimated $23 billion per year.¹

To do better, we envision consumers in these cities embracing new vehicle technologies, such as self-driving and electric vehicles. Dedicated road space, for example, could be allocated to self-driving vehicles. Connectivity could make it easier to implement demand-driven congestion charges, which could increase road capacity while limiting new construction. Car sharing and ride hailing could emerge as complementary options but would not replace the private car on a large scale.

There is a possible drawback to this scenario: with lower marginal costs to travel an extra mile in an EV, and without requiring a driver’s attention thanks to autonomy, the demand for mobility could increase and thus add to congestion. Passenger miles traveled could grow 25 percent by 2030, with the majority attributable to additional autonomous travel in private vehicles.

Seamless Mobility. This is the most radical departure from today’s reality. In the near term, it is likeliest to emerge in densely populated, high-income cities such as Chicago, Hong Kong, London, and Singapore.

In this system, mobility is predominantly door to door and on demand. Travelers have many clean, cheap, and flexible ways to get around, and the boundaries among private, shared, and public transport are blurred. Mobility is delivered through a combination of self-driving, shared vehicles, with high-quality public transit as the backbone. EVs become far more common, spurred by economics, consumer interest, incentives, and the creation of low-emission zones. And all this is enabled through the use of smart software platforms that manage multimodal traffic flows and deliver mobility as a service.

In a seamless-mobility system, people would potentially travel more—likely by 20 to 50 percent—because it is cheap and easy. However, the number of cars would likely remain the same or decline, due to the high level of sharing and significantly higher utilization. EVs could account for as many as two-thirds of vehicles on the road, while those capable of self-driving may exceed 40 percent.

Knock-on effects

Combined, these three models could apply to around 50 urban areas globally—representing some 500 million people—but the majority of cities are expected to develop more incrementally. Cities are most prone to accelerated uptake based on a ranking of metrics, including income, population, government effectiveness, level of public-transit development, congestion, and pollution. Each model can deliver significant benefits, such as saving time, reducing congestion, and improving air quality. We quantified the possible cumulative societal benefits of each model until 2030: $2,800 per person for Clean and Shared, mostly in the form of improved safety; $3,300 for Private Autonomy (boosting 2030 GDP by 0.9 percent); and $7,400 per person for Seamless Mobility (boosting 2030 GDP by 3.9 percent).

To take full advantage of these benefits and avoid the pitfalls, the public and private sectors would need to work together, while city officials would need to be willing to reconsider how they conduct their own business. For example, sharing and autonomy could cannibalize public-transport systems, and cities may consider whether it makes sense to partially shift ownership to private shared-mobility providers. Governments may also want to rewrite fuel and power taxation and to use the opportunity of connectivity to revisit how infrastructure is priced.

These new mobility models will also require a number of sectors to do some hard thinking in order to find new opportunities—and to avoid some major risks. In the power sector, for example, EVs could represent 3 percent of electricity demand globally, and nearly 4 percent in Europe, by 2030. Differentiated time-of-use rates and investments in charging infrastructure could help utilities to mitigate negative grid effects from EV charging. EVs could also play a role in reducing curtailment as solar-photovoltaic and offshore-wind generation increase.

The automotive sector faces a future that could be fundamentally different from its past and may need to consider moving from using a pure product-ownership model toward providing a range of transportation services. EVs, of course, are a direct threat to the internal-combustion engine. Gasoline retailers should be thinking through how to further monetize current assets and how to capture future value through new propositions around convenience retail, the connected car, fleet services, and electric charging. For tech companies, the three mobility models offer a world of opportunity. As the use of connectivity and autonomy increases, so, too, does the need for sensors and software. The data generated could be highly valuable in and of itself.

Moving into the future

In cities from Tokyo to Vancouver, the reality of changing mobility is already apparent. More shifts are coming. These changes will allow people to travel more efficiently, more cheaply, more often, and in different ways. But the future is not set, and there is a strong role for the public and private sectors to help avoid pitfalls associated with increased congestion, air-quality concerns, and other potential negative outcomes.

To best capture the benefits, the public and private sector—at a local and global level—need to prepare for the future, not wait for it. Governments may want to anticipate these new mobility models by crafting regulations consistent with consumer-friendly technological developments that also promote larger public goals, such as clean air and reduced congestion. They need to think ahead, with regard to both replacing the possible loss of fuel-tax revenue and reviewing their connection with the private sector. Strong partnerships that make it easy to blend public transit and private mobility will likely produce the best solutions.

Why does this matter? Because getting mobility right could be a significant competitive advantage for cities. This shift can help clear the air of pollution and reduce traffic deaths. It is an opportunity to improve the quality of life—day in, day out—for billions of people.

By Eric Hannon, Colin McKerracher, Itamar Orlandi, and Surya Ramkumar

http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/an-integrated-perspective-on-the-future-of-mobility?cid=other-eml-alt-mip-mck-oth-1610