Green finance developments in China


As the European Commission works to elaborate its Sustainable Finance Action Plan; with the aim of encoding sustainability into the DNA of the European financial system, it is useful to look to the experience of China, which has become a leading case study in greening a national financial system over the past years.  Green finance has moved from a niche concept to the mainstream over the last decade, with China leading the way through the establishment of a sweeping 14 principle plan to create a domestic green financial system.

The People’s Bank of China (PBoC) estimates that an annual investment of at least RMB2tn-4tn (USD320bn-640bn) will be required to address environmental and climate change issues.  This investment proposition is clearly related to China’s challenges and emergent solutions related to fostering economic growth and development in the face of pressing environmental and resource concerns, framed by urbanization, governance and financial market development initiatives.

A major element in the evolution of China’s role has been its recent nurturing of a massive green bond market, which functions in parallel to the green loan operations of the principal state development and commercial banks.  As an indicator of the scale and pace of change, the Chinese green bond market has become the fastest growing and largest globally with over USD 90 billion of issuance since the PBoC moved to create a green financial system in 2015.

Chinese issuance peaked in 2017

An analysis of moving Last Twelve Months (LTM) of green bond issuance shown in Figure 1 visualizes how over the last years the Chinese green bond market has featured around USD 30 billion of issuance per year (from Chinese domiciled issuers). Chinese issuance peaked twice at USD 34 billion in 2017 but has been falling since, dropping back through the USD 30 billion level over the summer as deleveraging efforts increased domestically.

At the same time, cumulative LTM figures for Europe (ex-Nordics) have been rising continuously over the last two years to reach USD 53 billion before dipping over the summer back to USD 51 billion, and the Nordics have almost tripled their contribution since October 2017 to USD 17 billion. This has been driven by European corporates, financial institutions and sovereigns, alongside increasing policy attention; as the European Commission adopted its sweeping Action Plan on Sustainable Finance and the Technical Expert Group on Sustainable Finance (where SEB is a member) started its work in July on making proposals in relation to the priorities of its Action Plan on sustainable finance.

At the same time, as can also be seen in Figure 1, LTM issuance from Asia-ex China has almost tripled over the last year, briefly passing Supranationals as a category to touch USD 14 billion in June, with Japan, South Korea, Indonesia, Hong Kong, Singapore, Malaysia and others making increasingly significant contributions as some of these economies add policy incentives to stimulate the market, following China’s lead.

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A Silicon Valley insider revealed how companies like Intel and Google grew exponentially

Silicon valley

Venture capitalist John Doerr was a pioneer in Silicon Valley, building companies such as Intel and Google to be what they are today. In Doerr’s New York Times bestseller Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs, Doerr chronicles how Google and others broke through being startups to become companies with hundreds of billions in enterprise value.

Google embraced management practices first introduced in “the Valley” by Andy Grove of Intel. Grove’s maniacal focus on OKRs (objectives and key results) was the straw that stirred the drink.

Doerr’s book resonates with me because we operate in an environment in which more and more is written and said about measurement and metrics, and yet it feels harder to hold people accountable. Our business culture is ripe with poorly-planned projects, missed deadlines, and badly-executed meetings.

What’s truly fascinating about OKRs is that they work for large and small companies for different reasons. Startups have limited resources and little time and capital to waste. OKRs help them achieve more with less. Large companies are often challenged to manage value-destroying complexity and need common goals across divisions and geographies.

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The Blockchain Economy: A beginner’s guide to institutional cryptoeconomics

Bildresultat för blockchain

The blockchain is a digital, decentralised, distributed ledger.

Most explanations for the importance of the blockchain start with Bitcoin and the history of money. But money is just the first use case of the blockchain. And it is unlikely to be the most important.

It might seem strange that a ledger — a dull and practical document associated mainly with accounting — would be described as a revolutionary technology. But the blockchain matters because ledgers matter.

Ledgers all the way down

Ledgers are everywhere. Ledgers do more than just record accounting transactions. A ledger consists simply of data structured by rules. Any time we need a consensus about facts, we use a ledger. Ledgers record the facts underpinning the modern economy.

Ledgers confirm ownership. Property title registers map who owns what and whether their land is subject to any caveats or encumbrances. Hernando de Soto has documented how the poor suffer when they own property that has not been confirmed in a ledger. The firm is a ledger, as a network of ownership, employment and production relationships with a single purpose. A club is a ledger, structuring who benefits and who does not.

Ledgers confirm identity. Businesses have identities recorded on government ledgers to track their existence and their status under tax law. The register of Births Deaths and Marriages records the existence of individuals at key moments, and uses that information to confirm identities when those individuals are interacting with the world.

Ledgers confirm status. Citizenship is a ledger, recording who has the rights and is subject to obligations due to national membership. The electoral roll is a ledger, allowing (and, in Australia, obliging) those who are on that roll a vote. Employment is a ledger, giving those employed a contractual claim on payment in return for work.

Ledgers confirm authority. Ledgers identify who can validly sit in parliament, who can access what bank account, who can work with children, who can enter restricted areas.

At their most fundamental level, ledgers map economic and social relationships.

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Wang Chuanfu Is Leading A Clean Energy Revolution In China & Beyond

BYD’s core competency is batteries, which blossomed as a result of founder, CEO, and Chairman Wang Chuanfu’s technical mastery and eye towards the future. He led BYD into cell phone batteries when cell phones made their entrance into the market (in the ’90s!) and then into laptop battery supply as businesses shifted from desktop computing to portable computing solutions.

Mr. Wang has been a thought leader in technological innovation since he founded BYD back in 1995 as a humble battery company. In the early days, company executives would tote BYD’s products around in suitcases to potential clients in order to land a deal. Nowadays, its products are everywhere, popping up in mobile phones, tablets, laptops, and more from many of the largest manufacturers in the world. The halls of BYD’s welcome center at its headquarters in Shenzhen, China, are lined with the batteries, cases, and components it produces for these industry titans.

BYD’s subtle dominance of the consumer electronic OEM space continues to this day, as BYD is currently the largest mobile phone battery manufacturer. Its market ownership can be seen in other segments as well. It has, for the last two years running, sold more plug-in vehicles than any other manufacturer in the world, for example. But it’s still not a household name in the USA. Nonetheless, BYD keeps its head down and does the research, develops the products, closes the sales, and churns out products for its customers. Whether it’s a cell phone battery for the latest and greatest new smartphone, a backup battery for your home, or a new fully electric taxi destined for Macau, BYD is changing lives every day. I recently got to witness that in person on a trip to BYD’s headquarters in Shenzhen to interview Mr. Wang Chuanfu and others.

Building on its mastery of battery chemistries and technologies, BYD has spun up new product lines in battery management systems (BMS), mobile electronics, screen technologies, and even portable electronics cases for many mainstream phone, tablet, and laptop manufacturers. BYD’s name stands for Build Your Dreams, which syncs up nicely with its ability to look several steps ahead of current technologies and build its business for the technologies of tomorrow.

BYD doesn’t pull any punches when it comes to its mission. After all, that’s built right into its name: Build Your Dreams. BYD leader Wang Chuanfu shared this same sentiment when I spoke with him, noting:

“We strive to help people realize their longing for a better life through technical innovation. Just like what we’ve been doing, we will keep making contributions with green transportation solutions and across the whole clean energy industry with our impressive technologies. And we firmly believe that we have the ability to do so.”

Dreams have a funny way of evolving as technologies evolve and humanity learns more about the impact legacy technologies like coal-fired power generation and diesel combustion engines have had on the planet. BYD’s business strategy and execution to date have made it clear that BYD sees a future where all transportation is electric, all energy comes from renewable sources and can then be stored for use at a later time.

It has built an impressive portfolio of new energy products in electrified transportation, photovoltaic solar panel production, and an impressive array of stationary energy storage products for residential, commercial, and grid-scale applications that leverage BYD’s non-toxic lithium-iron-phosphate battery chemistry — the foundation for its thermally stable, long lasting products.

The connection between BYD’s roots as a battery company and a new energy company might not make sense at first, but digging into the details, it is clear that there is a common thread connecting its energy storage products, solar products, and automotive businesses. Mr. Wang talked me through it:

“Those look like different businesses, but the key for all of them is the battery. They all depend on energy storage. Electric vehicles are replacing petrol vehicles and require energy storage to do this. It’s the same case for solar power. They are actually all about batteries. We set up the extended businesses to meet these demands and better serve society.”

Mr. Wang saw this common thread early on and shaped BYD’s business model for its new energy future in the early years. “BYD is a company that values technology and we have an engineering-oriented culture. We are also a company of innovation.”

He continued, “when we saw China’s huge demand and market potential for new energy, we also discovered some problems along the way. To solve these problems, we positioned ourselves to be a company dedicated to the development of new energy and clean energy technologies.”

Tesla garners headlines in the mainstream media and finds its vehicles adorning Facebook feeds and desktop wallpaper around the world because it chose to attack personal vehicles from the top of the market down. BYD took a different tack and chose to focus on fleet vehicles not because they were sexier than personal vehicles or because they could sell more batteries but because they could make a larger impact in emissions. Mr. Wang shared more behind the strategy:

“The volume of commercial vehicles is not high, but the oil consumption and pollution they cause is significant. Even though there are more personal vehicles on roads, they are used fewer hours per day, so they use less petrol and generate less pollution. This is why we focus our efforts on commercial vehicles. For example, the emissions and petrol consumption of a bus in a single day is the same as that of 30 personal vehicles. That’s why we started with commercial vehicles like buses, taxis, and trucks and developed BYD’s ‘Electrification of Public Transportation’ strategy.”

This pragmatic approach to products and to the markets it moves into are foundational to understanding BYD. On campus at BYD’s Industrial Park in Shenzhen, China, it is clear that BYD isn’t just talking the talk about using its products, but rather, BYD puts it products to use en masse at its expansive campus and is truly walking the cleantech walk.

Driving into the gates at the BYD industrial park in Shenzhen is akin to entering the gates of Disneyland. Futuristic electric vehicles buzz silently around the property in every which direction like busy bees, each laser-focused on its own destination and purpose. Internal combustion vehicles are the rare exception to the silent dance, with each standing out as the deviant from the otherwise peaceful processional, as if it were inadvertently let onto the property.


BYD’s SkyRail installation frames the entrance with its monorail and main station perched 10 meters overhead, starting just inside the main gate. The sleek SkyRail train glides silently out of the cocoon-like station, picking up speed as it heads off towards the next stop on the test track. Its rubber wheels glide silently along the single cement monorail in a combination that keeps SkyRail operating with a minimal footprint while at the same time keeping the noise generated down to levels significantly lower than traditional metal-on-metal light rail systems.

SkyRail was first shared with the world in 2016 when BYD announced that it would be manufacturing the system 100% in-house in order to deliver it at a total installed cost that is one-fifth the cost of subway systems and can be installed in one-third the time. Further enhancing the allure of the overhead transportation system, it takes up essentially no ground footprint, with the supporting pillars designed to be installed in the center median of existing roads.

To demonstrate just how practical SkyRail is, BYD installed a demonstration line on its own property in just 4 months, with work underway on a second phase of the system which will connect a handful of critical hubs in BYD’s industrial park.

Grid-Scale Batteries

Just up the road, a bank of BYD’s containerized energy storage units have been installed to demonstrate their ability to store and discharge significant amounts of energy. Each container is capable of storing more than 1 MWh of energy.

This particular installation was brought in as part of the SkyRail demonstration system as a backup for SkyRail. It ensures the system will continue to have power even in the event of a grid failure. BYD’s containerized storage products are being installed all over the world and serve to highlight BYD’s focus on products that are deployed at scale: transit buses, medium- and heavy-duty trucks, taxis, electrified rail systems, and utility-scale solar systems.

BYD Walks the Talk

BYD doesn’t bother hyping up its products with the media or in over-produced commercials. In fact, it is quite the contrary with BYD. It continues to focus on leveraging its technical mastery to develop and deliver breakthrough products that customers can purchase and install to bring about meaningful environmental, functional, and cost-effective change today. As Tesla was busy getting the world press all frothed up about its Tesla Semi at its massive event in Hawthorne, California, BYD was hard at work delivering its own fully electric Class 8 trucks to Loblaws in Canada. BYD is making the products the rest of the world is only talking about, even including Tesla.

The two companies operate largely in different market segments of electrified transportation, with the Tesla Semi being the single exception. BYD’s products are largely geared towards fleet applications, while Tesla builds primarily luxury and higher end vehicles that compete with the likes of Mercedes, BMW, and Maserati. In the grand scheme of things, it’s a good tag-team effort.

As Tesla struggles to ramp up production of its Model 3, BYD has already converted numerous cities to fully electric bus and taxi fleets, including the enormous bus fleet in its home city of Shenzhen, China. These vehicles have transformed the city. Instead of a bustling metropolis of more than 10 million residents with streets filled with the usual sounds of gurgling diesel buses and the moist, noxious exhaust that are familiar smells and sounds to city dwellers around the world, you get a city of eerie silence. Massive city transit buses glide around the city silently in a delicate dance. They move residents around as part of a truly modern transportation system.

BYD Vehicles are Gaining Traction

Cities around China are following suit, with Beijing announcing plans to convert its fleet of 70,000 taxis to electric vehicles over the coming years and the city of Taiyuan converting its entire fleet of over 8,000 taxis to fully electric BYD e6 vehicles. Shenzhen itself has committed to fully electrifying its taxi fleet this year. At the beginning of the year, 62.5% of the 12,518 taxis were already fully electric.

BYD doesn’t brag too much about its successes. Instead, it keeps its head down and continues forward with product after product and project after project. Shipping some of its e6 electric taxis to nearby Macau, followed by a handful of electric buses in Portugal, and bringing its high-tech transportation solutions to posh Santa Barbara, California, BYD is sharing its solutions with the world.

In Conclusion…

BYD has created an entire ecosystem of clean energy solutions that customers can buy today. They are not concepts slated for 2020, 2030, or beyond, but real commercial products that are reducing emissions in cities around the world.

This reality is visible in BYD’s home city of Shenzhen more than anywhere else. Now that the city has converted its entire fleet of transit buses to electric, more than 16,000 fully electric buses silently zooming around the city make it an experience unmatched anywhere else in the world. Compare this to the meager hundreds of electric buses in the entire United States and it is clear where the transition is happening and who is leading.

The BYD electric buses are complemented with a mass of blue and white BYD e6 taxis that together serve to reduce emissions and vehicle noise, which is greatly appreciated in a city of more than 10 million residents. Shenzhen is not alone in going all-in on electric vehicles, but it is clearly the leader in the transition of its transit system to fully electric solutions.

BYD’s solutions are not the future, they are current technologies that we will continue to use far into the future. “The future is now,” as we like to say here on CleanTechnica. Adopting old technology like petrol buses or even hybrid buses only serves to anchor buyers in the past instead of taking them one more step into the future.

Here’s how China is going green

After years of heavy industrialization, China’s environmental challenges are nearing a tipping point.

The factories and power plants that have driven its economic growth have also polluted its air, water and soil, to the point where environmental hazards could lead to a significant risk to China’s society and economy, if not corrected in a timely manner. In a bid to tackle these challenges, China’s government has declared a “war on pollution” and introduced a number of green initiatives.

Here are the most important ones:

Less coal, cleaner air

China has taken steps to dismantle coal-fired power plants, reduce overall emission levels and cut particulate-matter emission rates. Huge progress has been made on air quality, and there are now fewer smog days in China’s largest cities.

Better regulation

The former Ministry for Environmental Protection has been transformed into the Ministry of Ecology and Environment (MEE), a new entity with broader, clearer responsibilities. The new ministry will oversee all water-related policies, for example, from ocean resources management to groundwater. Previously, these were scattered among different departments. The ministry is also in charge of policies on climate change.

Funding a greener future

China needs an estimated additional RMB 40.3 trillion ($6.4 trillion) to RMB 123.4 trillion ($19.4 trillion) to finance the transition to a greener economy. It has started collecting an environment tax to help fund its environmental policies, and is also trying to attract more green investment.

China’s Belt and Road Initiative (BRI), a massive global programme aimed at improving inter-connectivity between countries, inspired by the ancient Silk Road, seeks to boost trade and economic growth in Asia and beyond. As Vice Premier Liu He said at the World Economic Forum’s Annual Meeting in Davos this year, reducing pollution is one of China’s main strategic goals as it pursues this initiative, along with preventing major financial risks and alleviating poverty.

Years of life saved per person Image: China National Environmental Monitoring Center

The BRI will be backed by considerable resources. At maturity, investments in the initiative are expected to hit around $4 trillion, stemming from private sources, dedicated funds, and multilateral development banks. If aligned with sustainable development priorities, these resources have considerable potential to help advance the green agenda.

The next challenge is to improve green investment standards. Recently, China launched the Environmental Risk Management Initiative for China’s Overseas Investment. There is huge potential to “green” the Belt and Road Initiative, if Chinese financial institutions and enterprises improve the environmental risk management of their overseas investments and adopt responsible investment principles. Green bonds are a win-win for investors and developing countries, since they fund the green infrastructure projects that are so urgently needed by many of these countries.

Sustainable development zones

Earlier this year, the Chinese government approved three sustainable development zones, which will implement the United Nations 2030 Sustainable Development Goals:

Shenzhen is China’s innovation engine. This zone will integrate technologies in sewage treatment, waste utilization, ecological restoration, and artificial intelligence to solve issues from resource management to pollution.

This zone will focus on innovations that tackle desertification, creating solutions that can be replicated by other regions facing the threat of encroaching deserts.

Targeting air and water pollution, this zone will foster innovative solutions that can be replicated by regions relying on resource extraction.

Tech companies as green innovators

China’s technology giants play a vital role in sustainable development. Tencent, Baidu and Alibaba are among the world’s top 10 internet companies. Online technology – particularly e-commerce, internet banking and social media – is accelerating the pace of change.

For example, Ant Financial, a banking subsidiary of Alibaba, is a founding partner of the Green Digital Finance Alliance. This alliance aims to use digital technology to advance green finance.

Over 200 million of Ant’s users signed up to Ant Forest, an app that gamifies carbon footprint tracking. The app prompts users to cut greenhouse gas emissions in real life, demonstrating the massive potential of Fintech for supporting sustainable development. By the end of January 2017, the approach had saved 150,000 tonnes of CO2.

Spotify CEO wins backing of business families for ‘creative Davos’

Daniel Ek, Spotify co-founder and chief executive © Bloomberg

The chief executive of Spotify is teaming up with some of Europe’s leading business families to finance an annual conference they hope could be a “creative Davos” with a focus on technology and innovation. Brilliant Minds, an event set up by Daniel Ek of music streaming company Spotify and Ash Pournouri, the ex-manager of the recently deceased DJ Avicii, is now owned and financed by a group of Swedish families including the Wallenbergs, Stenbecks and Olssons, whose companies include Ericsson, Electrolux, Kinnevik, Zalando and Stena.

“Daniel Ek would like to put Sweden on the map more in this new world and the new economy. This is not about one family or one entrepreneur — it’s about Sweden,” Marcus Wallenberg, the chairman of bank SEB and defence group Saab, told the Financial Times. This year’s event will take place over two days next month and feature a variety of events including a keynote speech from David Solomon, the favourite to become the next Goldman Sachs chief executive and an electronic dance music DJ, and a focus on female and creative business founders. Mr Ek and Mr Pournouri launched Brilliant Minds in 2015, featuring speakers such as singer Wyclef Jean, Prince Daniel of Sweden, and Skype co-founder Niklas Zennstrom. They wanted to secure its future without resorting to commercial sponsors.

Natalia Brzezinski, chief executive of Brilliant Minds, said the idea was to bring together two worlds — technology and traditional business families — that did not often mix. Leading Swedish business figures now financing the event include Caroline Berg, the fifth generation of the Ax:son Johnson family, Fredrik Rapp, the owner of investment group Pomona, and Mr Ek himself. Other families have been approached, with Karl-Johan Persson, chief executive of retailer H&M, sitting on the advisory board. The families are backing the event for five years for an undisclosed investment. “It is important that Brilliant Minds promotes and supports the transformative environment we have, which isn’t well known outside of the Nordics,” said Mr Ek.

For all their backing of Sweden, however, both Mr Ek and the Wallenberg family have warned the government to take action to avoid start-ups and bigger tech groups leaving the country due to problems with housing, taxation of stock options and so on. Spotify listed recently in New York while payments company iZettle was bought by PayPal of the US last week instead of floating. “It is fair to say that one of the big challenges for Sweden is to keep its entrepreneurs so they want to stay here and develop their companies. [The Wallenberg cousins] think it would be very sad if entrepreneurs of this time and age decide to develop their companies somewhere else,” said Mr Wallenberg.

Climate Change Is Already Depressing the Price of Real Estate

New research shows that real estate properties in areas affected by extreme weather and sea level rise are losing value relative to less exposed properties. The effects are already substantial, but they may point to a looming collapse as climate change makes coastal communities untenable.

Work by Harvard researchers published last week and highlighted by the Wall Street Journal finds that, after accounting for an array of other factors, home prices have appreciated more slowly in lower-lying areas of Miami-Dade County, particularly Miami Beach. A broader study using data from Zillow, still under peer review, found that properties exposed to rising sea levels sell at a 7% discount to comparable properties not subject to climate-related risk.

As many as 13% of Americans are still convinced climate change isn’t happening at all, and 30% are confident that humans play no role in it. But real estate prices now seem to confirm the chestnut attributed to author Philip K. Dick: “Reality is that which, when you stop believing in it, doesn’t go away.” Even those who don’t believe in climate change, or have never been hit by a hurricane, are nonetheless seeing an impact on their property values. That foretells inevitable and large economic impacts in vulnerable areas, but could have the broader positive effect of discouraging risky investment.

These impacts are unfolding even despite large taxpayer-funded outlays that effectively subsidize flood-prone real estate markets by providing artificially cheap flood insurance. The National Flood Insurance Program – the only flood insurance available in many such markets – sets rates and risk measures using outdated flood maps, and does not incorporate projections for climate change. The resulting actuarial imbalances have forced the program to run up more than $30 billion in Treasury borrowing as major weather events accelerate.

President Trump signed a disaster relief bill last October that included forgiveness for over half that debt. That is an effective admission that budget spending is required to prop up the NFIP’s broken model, even as the Trump EPA attempts to downplayhumans’ role in climate change through greenhouse gas emissions. Florida’s Sun Sentinel recently reported that, even after reforms in 2012 and 2014 aimed at making the NFIP more solvent, most homeowners are seeing annual premium increases below 5 percent.

‘No Cash’ Signs Everywhere Has Sweden Worried It’s Gone Too Far

“No cash accepted” signs are becoming an increasingly common sight in shops and eateries across Sweden as payments go digital and mobile.

But the pace at which cash is vanishing has authorities worried. A broad review of central bank legislation that’s under way is now taking a special look at the situation, with an interim report due as early as the summer.

“If this development with cash disappearing happens too fast, it can be difficult to maintain the infrastructure” for handling cash, said Mats Dillen, the head of the parliamentary review. He declined to give more details on the types of proposals that could be included in the report.

Sweden is widely regarded as the most cashless society on the planet. Most of the country’s bank branches have stopped handling cash; many shops, museums and restaurants now only accept plastic or mobile payments. But there’s a downside, since many people, in particular the elderly, don’t have access to the digital society.
“One may get into a negative spiral which can threaten the cash infrastructure,” Dillen said. “It’s those types of issues we are looking more closely at.”

Disappearing Cash

Value of Swedish notes and coins in circulation has dropped to the lowest level since 1990

Last year, the amount of cash in circulation in Sweden dropped to the lowest level since 1990 and is more than 40 percent below its 2007 peak. The declines in 2016 and 2017 were the biggest on record.

An annual survey by Insight Intelligence released last month found that only 25 percent of Swedes paid in cash at least once a week in 2017, down from 63 percent just four years ago. A full 36 percent never use cash, or just pay with it once or twice a year.

In response, the central bank is considering whether there’s a need for an official form of digital currency, an e-krona. A final proposal isn’t expected until late next year, but the idea is that the e-krona would work as a complement to cash, not replace it completely.
Riksbank Governor Stefan Ingves has said Sweden should consider forcing banks to provide cash to customers. In its annual report on Monday, the Riksbank said the question is what role it should play in a future with even fewer cash payments.

“The Riksbank is carefully analyzing this development,” Ingves said. “Overall, I think we are facing structural changes in areas that have previously been stable. This is a development which will affect all the Riksbank’s departments and we will need to make strategic decisions regarding the way forward.”

Is the era of management over?

Image: REUTERS/Jason Reed – RC11A5782D60

“The key to management is to get rid of the managers,” advised Ricardo Semler, whose TED Talk went viral, introducing terms such as “industrial democracy” and “corporate re-engineering”. It’s important to point out that Mr. Semler isn’t an academic or an expert in management theory, he is the CEO of a successful industrial company. His views are unlikely to represent mainstream thinking on organizational design. But perhaps it is time we redefine the term “manager”, and question whether the idea of “management” as it was inherited from the industrial era, has outlived its usefulness. ​​

The World Bank estimates the size of the global workforce at about 3.5 billion people, and by no means would I expect, much less advocate, that those who are employed today will transition into a management-free structure in the near or even medium term. The vast majority of work involving human labour is still best carried out in a traditional organisational structure.

In a world of VUCA (volatility, uncertainty, complexity and ambiguity), it is the tech unicorns that will be the early adopters of a post-hierarchical model. In fact, some have already embraced it. Today’s competitive landscape is defined by one word: disruption. The ideas of incremental progress, continuous improvement, and process optimizations just don’t cut the mustard anymore; those practices are necessary, but insufficient. It is now impossible to build enduring success without “intrapreneurship” – creating new ideas from within an organisation.

The organisational dilemmas faced by ambitious disruptors are best exemplified by Netflix. Their human resources guru, Patty McCord, identified a problem that appears obvious in retrospect: as businesses grow, so does their complexity. But that comes at a cost of shrinking talent density: the proportion of high-performers within an organisation.

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If you think productivity is about motivation, you’ve already lost

Ramit Sethi accomplishes a lot.

Among other projects, the CEO and entrepreneur has penned multiple best-selling books on business and personal finance, coordinates annual conferences across the US, and runs two websites – GrowthLab and I Will Teach You to Be Rich.

Apparently, one of the most common questions he gets is how he does it.

In a post on I Will Teach You to Be Rich, Sethi broke down his answer for curious readers and clients. It all comes down to what he calls “The 3 Tiers of Productivity”:

“Look, productivity isn’t about ‘motivation,'” he writes. “If you think it is, you’ve already lost.”

He continues:

“Productivity is about understanding what you really want to do, then building systems to make it work for you. The goal isn’t Inbox Zero. (Who gives a sh–?) Your goal is to enable yourself to perform at your very best, every day, and over the course of weeks and months and years.”

Instead, he writes, think about true productivity as a pyramid with three tiers:

First: fundamentals. These are basics like sleep, health, and your workspace. “Everybody ignores these because they’re not sexy,” Sethi writes. “But if you don’t get these right, nothing else matters. ” Next: psychology.This includes mental states and skills “like the ability to set boundaries, handle setbacks, and be positive and resilient,” Sethi writes. Later on, he adds: “No productivity app or 7-second solution is ever going to tackle the psychological and emotional barriers we feel. Only you can do that. And it’s hard.”Finally: details. This is where all the fun stuff comes in, like the perfect apps for your to-do lists or the calendar hacks that clear up your meeting schedule. Sethi writes: “Everybody wastes their time focusing on this stuff. (Get a life.)”The entire post is worth a read – he goes in-depth about each tier and how it applies to his own work. You can read it here.