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On December 1, 2017, Katharine commented on Jumping through hoops: Cirque du Soleil in an era of isolationism :

Interesting challenge.

In response to your questions about is this enough and what else should we do….

If we think about every country around the world as a supplier of talent and also as a potential consumer / show destination / policy challenge, I wonder if we should be thinking about how we source supply instead of focusing as much on beefing up the muscle of the immigration department or adjusting where we put place shows. For example, is it possible to pursue a dual pronged approach, where we focus on building a training school in countries that have relatively “safe” passports when it comes to worldwide travel – this would be places like the U.S., Canada, etc. And then supplement that with the talent that we pull from all over the world? Ideally there would be a sharing of talent in skills through training so those with more flexible passports could travel to the harder to reach areas but through training learn from those with the unique skills who may also have difficult passports. Then as a whole we would have a more diversified supply that can ensure we have duplication as necessary if some markets are closed off. I imagine we may have more than 1 show running concurrently so this duplication ideally wouldn’t be too much of an excess cost but would require some additional management of who is going to which show. In markets that seem to be long term growth opportunities but that also have challenging entry visa restrictions (like China perhaps?) it might be helpful to build a “school” to ensure continuous supply of new local talent (and again supplement this with international talent that is able to get into the country). Ultimately though how much do you think the mystique of the show is the acrobatics or the international background – because if it truly is the latter, then the approach of building training departments and improving local talent in these markets would not be a successful supply chain solution.

On November 22, 2017, Katharine commented on Ford: Building a Cleaner Fleet of Vehicles :

Thanks for putting together this interesting article.

A few thoughts:

With regards to investing in hybrid and electric vehicles, this only makes sense if the energy source supplying the electricity is clean. There are many parts of the U.S. that still rely on coal so I think its a multipronged approach that not only requires better technology for hybrid vehicles but also government regulation to reduce coal. And I’m a little skeptical that there will be any government regulation to move beyond coal and other “dirty” energy sources in the next few years with this administration.

In terms of investing in new technology and more fuel-efficient car design – my understanding is that companies have technology to make cars nearly twice as efficient as they already are (and they could have taken these steps long ago to improve efficiency but chose not to until regulations were put in place). I agree that consumers are currently less likely to be interested in such vehicles. First I think that people perceive these lighter, fuel efficient vehicles to be less powerful and less sturdy. They are in fact usually made from lighter material, etc. Therefore people interested in – either functional or for their image – in a sturdy / powerful car or truck are turned off by a lot of the more fuel efficient vehicles. If fuel prices were high, some of this might be mitigated. But currently that is not the case. Thus with low fuel prices I think there is little incentivizing consumers who would currently buy large inefficient trucks to be interested in instead purchasing a more fuel efficient vehicle. Ultimately Ford needs to strike that balance and despite all of its interests in improving efficiency, it needs to make and sell cars customers ]want to buy.

So I wonder how much we can expect to change in the next decade with the current administration and current fuel prices? But maybe that’s just my pessimistic view.

Thanks so much for sharing this!

Super interesting post! Thanks for sharing!

I had read about the supply shortages in the U.S. due to the demanage of the Puerto Rico plant. It’s a serious public health concern and one that I think merits both public and private sector attention. I think this absolutely points to the need to diversify the supply chain. Especially in an era of global warming when we can expect more catastrophic events, we must have more resilient supply chains that can withstand such shocks. The long term investments to make these changes are expensive especially when potential damage is unpredictable. I think if customers, like hospitals, had stronger contracts and more leverage on suppliers, they would demand terms that posed astronomical costs on suppliers like Baxter who are not able to meet their order demands in time (think Fuyao). If this was the case, Baxter would face a different calculus in how it thinks about supply chains costs and it might actually be more attractive to build a more distributed supply chain closer to the end consumer to limit the risk of late-delivery related costs. I think insurance plans could play a role in this if they partnered more with hospitals to pressure suppliers into contracts that created these types of incentives. Insurance providers who are responsible for the total cost of patient care, also have an incentive to reduce supply restrictions as such restrictions would lead to more catastrophic health events and deterioration of patients to a situation in which they need even more expensive care. Not sure if this would work but just an idea!

Would love to get your thoughts and discuss further. Thanks for sharing this!

On November 22, 2017, Katharine commented on The Disruptor: the Costco of the Internet :

Super interesting post. I had heard about Jet but I wasn’t aware that the supply chain costs (and the specific combinations of certain items) are what factors into its savings – I thought it was just a simple bulk purchase play (ie the more you buy at once the cheaper it is). Very interesting how it works!

Few initial reactions

I wonder if this is a case where consolidated supply chains isn’t necessarily more efficient or better. Jet’s supply chain and distribution centers are geared towards the end consumer and Wallmart’s are geared towards stocking stores and also serving end customers shopping online. While some of the customer promise is the same (low cost, reliable delivery, fast) are similar, the nature of the customer (big box store vs individual purchaser) are a little different. I think it likely makes the most sense to combine the supply chains for items serving the end customer but keep the supply chain and distribution for Wallmart’s stores separate? My guess is that there are a lot of items that are more frequently purchased online vs others that are more frequently purchased in stores? An alternative would be to combine them and use Jet and others to help offload excess inventory that wasn’t distributed to stores or wasn’t purchased at stores. But I don’t think Jet has positioned itself as the bargain basement so my guess is that’s not the direction it wants to go in.

I wonder about the play of either sending customers items you think they need or signing customers up for recurrent purchases (e.g. ship me 4 rolls of paper towels and toilet paper every month). There has been some talk about Amazon going in this direction and I’d be curious to see if Jet / Wallmart is exploring this space as well. If so, Jet could lower its supply chain costs through more forward looking data / insight over demand.

I wonder what the relative benefits are in keeping Jet.com’s SKUs relatively narrow vs. just using Jet.com’s technology and distribution to serve any customer that makes purchases on Wallmart.com. I’d love to better understand why you think Jet should limit its SKUs to items millennials want? I feel like Wallmart purchased Jet to be its key play in competing with Amazon’s ecommerce platform and thus Wallmart / Jet likely wants to target a broader consumer base? But maybe I’m misunderstanding something?

I’m excited to watch and see where Wallmart / Jet goes in the future! Thanks so much for helping me learn a bit more about the Ecommerce space!

Super interesting post!

In response to your second question: 35 million gallons related to daily consumption of 300+ billion gallons is only drop in the bucket. But I think the key issue – and one that you get at in your post – is the geographic distribution of consumption. I wonder what the picture looks like if you were to layer onto your two maps 1) daily agricultural water consumption and 2) personal water consumption (homes etc). Looking at those two consumption patterns in the face of climate trends would likely identify that in certain areas a few million extra gallons being taken out of the ground for bottled water are a bigger deal than in other areas.

I think there is huge promise in using recycled waste water – perhaps recycling that water for home uses though, not necessarily bottled water. I would worry about the effect that any news about a bottled water company using recycled waste water might have on the brand. I think using desalination presents a more palatable option for bottled water. My understanding is that technology is still very expensive but the cost is coming down and would be a good long term investment. The economics are investing in such technology is difficult though. And this is an area where government can be helpful in encouraging businesses to invest in technology development that supports a public good. Not sure if that will happen in the current administration but potentially in the future?

I also wonder the extent to which climate change related demand shocks threaten the bottled water supply chain. For example, large volumes of bottled water are distributed whenever there is a major hurricanes or other disaster events. We anticipate these types of events will become more frequent and extreme as global warming continues. How prepared is the supply chain to respond to such shocks? What is the current “shelf life” of bottled water, how and where is inventory stored? My guess is Nestle and others aren’t trying to hold any excess inventory given costs of doing so, so this consideration likely falls to the government. I’d be curious about how organizations like FEMA partner with companies like Nestle to keep stock prepared for disaster events like hurricanes and whether they have any plans to adapt this as climate change related events increase.

Related to the policy question: water is definitely public good just like clean air is. Without water people cannot survive. I see two policy tools: 1) regulation use of current natural water shed supply and 2) investing in technologies for recycling, desalination, and other tools to generate more drinkable water supply. On 1), it is absolutely the government’s role to regulate the usage of water such that there is sufficient supply but I think however until very recently, there wasn’t sufficient technology to test how much ground water was remaining in certain regions and to predict trends in future climate change related supply changes and agricultural demands. Water is thus very underpriced in the U.S. because I think we’ve assumed we have a larger supply. I worry that the current pro-business administration will forsake the regulation of water – both in terms of supply and investing in new technologies. My hope is that private business have recognized the extensive potential market for technologies that efficiently convert nondrinkable water into drinkable water and will take risks to invest in such technology without waiting for government to create programs and policies to encourage such investment.

Super interesting topic and would love to discuss further!

On November 21, 2017, Katharine commented on Isolationism, the Antithesis of Innovation :

I love that you did a post on this topic. Really enjoyed reading your piece, and not just because I’ve worked in this space and its thus near and dear to my heart 🙂

Viiv is a super interesting organization and an exciting model for how private sector companies can join together in addressing global health challenges. Viiv definitely leaning into innovation and the digital space. They’ve recently started a Viiv innovation unit called the “hive” that uses design thinking sprints (think Ideo-esque approach) to solve problems along the value chain for HIV service delivery. While some of these might be more focused engagement with HIV populations, improving adherence, and other customer focused areas, I imagine some projects are also focused on supply chain improvements.

I wouldn’t really consider CHAI a philanthropy. Gates Foundation (for example) is a philanthropy that has funded a lot of work in the HIV. While CHAI may accept direct donations, my vague understanding is that most of its work (which includes doing a lot of work partnering with business and governments to help build more efficient supply chains) is almost entirely funded by large grants from philanthropies (like an organization like Gates) and aid organizations from countries around the world.

The point you make about Trump reducing PEPFAR funding is a serious problem but I think one that did not come as unexpected to the HIV community. Globally what tends to happen is that funding for diseases tends to plummet as soon as incidence rates flattens or starts to decrease. There is a sense that “we’ve conquered” a certain challenge and so aid and philanthropy dollars move onto other issues (which is often premature…but that’s a whole other discussion). HIV incidence peaked back in 2010 and since they my understand is global funding has started to fall. It makes sense that eventually PEPFAR would wind down as the name suggests it was an “Emergency” fund for AIDs relief. HIV is now really a chronic condition (people can live nearly full lives on HIV treatment) and the biggest challenge I see facing the world is how to integrate it effectively into health systems as a chronic disease management and not be treated in a silo. Additionally, with so many millions of people now on HIV treatment, ensuring adherence and thus preventing the development of drug resistance is essential. The big challenge I see how governments are going to build sustainable supply chains (operationally and financially). While the international emergency funding push was essential to address HIV/AIDS at the time, the large amount of aid and philanthropy dollars built a dependence in countries with the largest HIV burden on that aid funding. So while I think its good that PEPFAR is winding down I worry that it might happen too suddenly and leave the in country supply chains struggling to manage on their own without direct aid funding and aid-funded organizations/nonprofits there to help them.

Your piece reminded me of a recent news article I saw that the companies developing the Ebola vaccine were set to miss the deadline for FDA submission. Ebola is another condition like HIV that threatens global health but is currently concentrated in developing countries. I wonder the extent to which Trumps isolationist / nationalist policies has contributed to this. I don’t know much about the Ebola vaccine development but I imagine the U.S. might have been both a large funder of research and the likely primary buyer of the vaccine (through CDC, or USAID) and Trump may be changing that unfortunately. Luckily there are still many other governments around the world with development/aid organizations committed to furthering global health. So it is not a lost cause!

Would love to discuss further and get your thoughts!

Very interesting read! Few initial thoughts in reaction to your piece. I wonder if we should accept that PBM and prescription pharmacy is CVS core business moving forward? My understanding is that they are focused now on “health” more broadly and I could see a strategy in which they try to leverage their store locations (within ~3 miles of every American) to decentralize healthcare delivery and become more of a one stop shop for primary care and preventative medicine (my understanding is they already have clinics and staff physicians at some pharmacy locations). By playing a larger role in the primary care and the prescribing, they’ll get more data on patient conditions and needs and be better able to manage supply chain (both in terms of predicting demand and finding efficiencies). Additionally CVS now has a digital innovation lab in Boston which to me signifies their commitment to deploying digital innovation to both improve customer experience and their supply chain operations – but we’ll see! While I see Amazon being influential in this space I still see a big role for brick and mortal. Specifically I see Amazon as potentially playing to the more wealthy prime member who orders everything off credit cards to their doorsteps. I see CVS serving an important need in reaching those Americans without credit cards, those living paycheck to paycheck, and those without internet at home (27% of Americans do not have high speed internet at home according to Pew). Would love to get your thoughts and discuss further!