Monday, March 30, 2009

GM and 21st Century Managment ...

The following is an article written by Dr. Gipsie Ranney. Dr. Ranney is a consultant in Nashville Tennessee and was a close associate of Dr. W. Edwards Deming with whom she collaborated for over a decade. The article is entitled 'Remembering Nummi'. Nummi was a joint venture between GM and Toyota back in the early 1990's. With all today's talk about whether and how taxpayers should be bailing out the American auto industry, I believe you will find Dr. Ranney's thoughts and perspective well worth your time and consideration.

Sunday, March 29, 2009

Heretics and Climate Change

In today's New York Times Magazine (Sunday, March 29, 2009) readers will find an article on Freeman Dyson entitled “Civil Heretic” . Clearly the world needs heretics - especially when they are geniuses and even if they are sometimes flat-out wrong. Dyson is a world renowned scholar and physicist, and has worked at Princeton's prestigious Institute for Advanced Study (the type of place that has hired people like Albert Einstein)for over 50 years. Dyson has recently come out saying that he believes the dangers of human-induced climate change have been greatly exaggerated.

The article is worth reading, but take note of a quote at the end. Dyson is quoted saying “But I knew Roger Revelle. He was definitely a skeptic. He’s not alive to defend himself.” Dr. Roger Revelle was Al Gore’s professor at Harvard and Gore often refers to him as the person who first introduced him to the idea that a build-up in the Earth's atmosphere of human-induced greenhouse gases might have long-term catastrophic consequences. By saying that Revelle was a skeptic is Dyson's way of saying Gore is wrong, or worse a liar.

I point my readers to an article published by the New York Times on July 25, 1977 entitled “Scientists Fear Heavy Coal Use May Produce Adverse Shift in Climate.” The article discusses a 281 page report written by Dr. Roger Revelle and other members of the National Academy of Sciences warning of “Highly adverse consequences” for the planet’s climate system were the world to continue to burn coal through the 21st century. The Times went on to report that Revelle, who authored the summary of findings, advocated early action “which was needed because it would take decades to narrow the uncertainties and then a full generation to move to new sources of energy, if that, as expected proves necessary.”

I can not know for sure that Dyson is wrong about the danger of climate change. What do know for sure is that he was very wrong about Roger Revelle.

Wednesday, March 25, 2009

Business As Usual

President Obama has stated that part of addressing this financial crisis is making all parties realize that "business as usual" is finished. This message was largely directed to Wall Street bankers who scooped up billions of $$$ in the "good" times that brought about this crisis, and then expected the gravy train to continue even now in the depths of the abyss.

But the term business as usual is not new to those concerned about climate change. As a matter of fact it has been used by the IPCC (Intergovernmental Panel on Climate Change) for the last 20 years. They even coined the acronym BAU to indicate what can not be sustained by the planet's climate system to insure long-term stability.

Unfortunately we are still following business as usual here in the U.S. Not only have we not committed to capping CO2, we are ignoring great warnings that change is happening even faster than was previously believed possible. A recent conference in Copenhagen saw the esteemed economist Lord Nicholas Stern revise his 2006 "Stern Review" projections on the cost of not addressing climate change. Guess what? They're up by 50%! This made huge headlines in Europe and around the world.

In the U.S., however there was hardly a mention of it.

Sounds like BAU to me.

Monday, March 16, 2009

The Best and the Brightest ...

I know this is supposed to be a blog about addressing climate change, so why do I continue to harp on executive compensation patterns? Because it is at the heart of how we structure our economy and reflects what we value as a society. One of the reasons we stand at the edge of the abyss of economic ruin today is because of compensation patterns, and one reason our economy has thus far failed to regulate greenhouse gases and deferred addressing the urgent threat of climate change is also directly related to how we compensate executive leadership.

Corporate management is never going to be able to address long-term issues like climate change and sustainable development without an appreciation for systems thinking. What happened to AIG was the result of the creation of a culture that abandoned any such appreciation for systems thinking and replaced it with a myopic focus on maximizing short-term results. In a toothless regulatory environment greed took over, more was better than less, so AIG kept doing more - and the final results speak for themselves.

Today's headline in the Wall Street Journal "AIG to Pay $450 Million in Bonuses" points to the absurdity if not obscenity of what is still going on. Mr. Liddy, AIG's CEO wrote to Treasury Secretary Tim Geithner that AIG "cannot attract and retain the best and brightest talent … if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury." Where have I heard that term before - the best and the brightest? Oh yeah, that was the title of David Halberstam's insightful and excellent book on how America was dragged into the abyss of Vietnam by really smart people. Was it not AIG's best and brightest - people like Joe Cassano - who created this catastrophe? TPM Muckraker referred to this ilk as the Axis of Weasels financial engineers who risked all their firm's money, engineered personal fortunes for themselves and then left Joan and John Q. Taxpayer to absorb all the risk?

Now we're supposed make sure some of these very same guys get bonus and retention pay of over $1 Billion? Absurd! No, OBSCENE! And God help the planet if this is the way corporate America is run in the 21st century.

Late breaking news from the NY Times: President Obama seeks to block AIG bonuses.