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Great post Duarte, you’ve highlighted a big problem and disturbing trend in basketball. The NBA is definitely paying attention, but to this point has been unable to identify solutions that appease all stakeholders (im assuming all players would be in favor of fewer games until it started to trickled down to their own personal bottom line).

Many of the smartest executives and players in the league have resorted to strategic resting of players as a means to mitigate the injury bug. Old-school basketball purists attribute this to millenials being “soft” or “pampered”, but there is something bigger at play here. I have no scientific data to back this up, but I think the tremendous improvements in player training and player performance have actually contributed to more injuries. Men and women now run faster, jump higher, react quicker than ever before. Players who are seven feet tall run around like little point guards and athletes like Russell Westbrook look like they are playing with rocket boosters in their shoes. Ironically, I think this amazing improvement in players’ athletic ability has led to their bodies being put in more precarious situations. When your body is being required to do more and more amazing things, and you are competing against bigger, stronger, faster, opponents, it follows that you see more injuries. In football, as players get continue to evolve and get stronger the hits become more dangerous. Likewise in basketball, as players are jumping higher and contorting their bodies in unimaginable ways, the stress being put on joints is scary.

There is no doubt that a number of factors make you more prone to injury (lack of rest, diet, travel, overuse, etc). And then when you start to combine all of those factors together, the level of risk becomes really high. I believe if players and coaches were able to see visible, quantifiable indicators of this risk – we would have fewer injuries. I certainly wish my coach had this type of data.

Great post Zach – I’ve been following this closely and you did a great job of touching on all the major issues.

Specifically focusing on one of your first recommendation, I think you may have highlighted ESPN’s hubris. Shows like SportsCenter are what made ESPN, but as you said they are becoming less and less valuable. We consume media in such a variety of ways and there is so much great content out there – it is really difficult for ESPN to differentiate in sports commentary or any other non-live sports media. They need to be willing to pull the plug on anything – even if that thing is what vaulted them to greatness.

I too think their partnership with Tencent is a really smart one, and likewise what they have done with MLB digital. ESPN needs to leverage their considerable capital advantages and invest heavily to own as much of the live-sporting event viewing process as they can.

Where I have doubts is in ESPN’s ability to stay ahead of the curve and “solve the puzzle of individualization and customization to maximize the user experience and consumption process.” The Tencent and MLB deals are helpful, but I am still uncertain as to how ESPN will be nimble or innovative enough to meet consumer demands and when it comes to content and user experience.

On November 20, 2016, RobD commented on Cisco and IoT, from hype to reality :

Great stuff Andres. Cisco seems to be one of those companies that people have written off in recent years with the advent of cloud, mobile etc., but their leadership in the IoT stack is encouraging. From a security perspective, they are one of the only players offering services that are somewhat in line with the risks in the IoT environment.

That said, by nature of what they do, Jasper has the potential to be a cyber-security nightmare for Cisco. The immense interconnectivity that Jasper offers certainly creates lucrative opportunities for monetizing and integrating a company’s assets. It also essentially creates a centralized cyber vault that if breached, could result in devastating amounts of data being compromised (or worse devices being hi-jacked). I wonder how Cisco is thinking about mitigating these risks, how they are communicating these risks with the wireless carriers, and who else they are partnering with to protect Jasper’s data.

While I don’t think anyone has figured out an effective measure of team chemistry (the completed passes data to me is more basically a measure of good offense and may not correlate with strong chemistry), I don’t think it is out of the realm of possibility. I believe that more teams will start to use analyses like the one talked about in this Wall Street Journal article

Digital analysis of intangibles will of course be met with resistance, but I agree with your intuition that it is certainly plausible – and probably fairly imminent.

On November 20, 2016, RobD commented on M-Kopa: Disrupting African Retail Banking :

Interesting post. I really appreciated how you clearly laid out the context and the transferable lessons. In terms of the challenges they will have outside of Kenya, I think it is still a very worthwhile endeavor to continue executing to where you reach critical mass in Kenya – and then reassess how to make it work elsewhere.

In terms of the solar kits, who does M-Kopa work with to provide them? Are the kits all produced internally? It would be interesting to see if advancements in solar technology can enable M-Kopa to offer more power generation capabilities and thus transfer this up the “wealth pyramid without absorbing overwhelming costs.” I am admittedly uninformed on solar technology and whether this is even plausible.

On November 20, 2016, RobD commented on Rolls-Royce: Embracing IoT on a wing and a prayer :

Interesting stuff Mitch, I particularly enjoyed the storyline / context you gave us on this industry and Rolls-Royce. It’s amazing how a company’s public perception never really paints a full picture of what they do. Rolls-Royce is well known for their elegant and incredibly expensive cars, but underneath that there is an organization that builds all types of engines – with an exceptional engineering history and a focus on lowering costs through efficiency and innovation.

I think the focus on efficiency and energy consumption is a smart bet, because as you laid out the airlines are being squeezed from every angle and the competition is intense. As you mentioned, RR cloud computing and analytics baked into their engine offerings, RR has the potential for different types of revenue streams. Helping airlines with fuel consumption, predictive maintenance, and flying best practices will certainly give them an edge in such a competitive landscape. But I’m interested to see what kind of a financial impact they think this change in the business model will have.

I’d also be interested to know how this impacts the structure of their organization and their business focus. Will they start hiring whole new cohorts of employees (i.e. data scientists, cyber-security experts, energy specialists)? Additionally, will the extension of their business model have any effects on their engineering/manufacturing prowess? Clearly the moves they are making are necessary from a strategic standpoint, but can they execute them without deviating from what they do so well traditionally?

On November 7, 2016, RobD commented on Rebuilding a Reputation :

Really enjoyed this. I think you have correctly identified Pharma as being in a unique position – they are industry consistently under fire yet they are also in greater position to make an impact on quality of life than any other line of business.

It seems like Merck is taking some legitimate steps to reduce their carbon footprint, and to leverage their core business (developing and distributing medicine) as a way to help mitigate climate change. The skeptic in me is both impressed and concerned by how quickly Merck developed Ebola and Zika vaccines. While this is a clear indication of how capable an organization like Merck is when they take an “all-hands-on-deck” approach, it is also could be an indication that we can only expect this type of effort in truly dire situations.

When it’s business as usual, will Merck continue doing things like the rest of the Pharma industry? Mapping this to sustainability, how can we tell that Merck sees climate change as a “pressing issue?” I know they are a business and profits are their ultimate compass, but I just wonder how much more they could be doing.

On November 7, 2016, RobD commented on HSBC: Role of Banks in Sustainable Financing :

Great article

Really like how you pointed out that as the main suppliers of capital to the world, banks have the opportunity to really impact climate change through their core business operations.

To the point of developing an ability to assess long term environmental risk, i’ll be interested to see how objectively the banks think about this, and whether their deep ties to Big Energy (or Big Anything) hinder their ability to effectively price this risk.

It’s great to see the investment HSBC is making into sustainability projects and research. This could end being a major differentiator for them. I wonder if they are doing so because they truly believe these investments will reap long-term benefits, or if they see it as a loss leader or a PR initiative. I am skeptical that many banks hold the long-term vision to make hefty investments in sustainable projects until it is blatantly apparent that they must do so.

Great article CB

As the largest hotel company in the world, Marriott is in a unique position to have a significant impact on Global Climate change. However, as you said, with their position of ultimate strength in the market, what would be their incentive to do so? Major corporations rarely act out of the “goodness of their heart” (although Marriott may be an exception here), but I would argue that Marriott absolutely needs to be at the forefront of their industry in terms of sustainability to keep its position as top dog.

The hospitality industry is changing dramatically due technological advancements and the explosion of the sharing economy. Companies like AirBnB have already started to negatively impact hotel revenues (and I assume are part of the reason for some industry consolidation). While the current impact of AirBnB on a behemoth like Marriott is probably negligible, Marriott needs to be wary of future changes and a collective confluence of other factors (climate change included). As consumers become more cognizant of convenience and sustainability, competition will only become fiercer (and now Marriott has a whole new subset of competitors). Marriott needs to be on the cutting edge of customer service, reliability, efficiency, and sustainability in order to hold its position. I’d be interested to see how (or if) Marriott is thinking about reinventing the hotel-stay experience, and whether improved sustainability practices is part of that reinvention. The shift to LED lightbulbs was a good one, but more than just changing lightbulbs and shower heads, how can Marriott adopt more sustainable practices that drastically reduce consumption AND costs?

I’d also push on the measurement metrics that Marriott releases. A 13% reduction in GHG emissions sounds nice, but what was the baseline? How does Marriott compare to the competition on a hotel by hotel or even unit by unit basis?

I liked what Avatar said above about Wal Mart taking on greater responsibility in effectively bullying the rest of their supply chain to adopt more sustainable practices. With a ton of cash and ton of influence, how can Marriott steer the rest of the market to follow their lead?

Remember what Spiderman’s Aunt said Craig, “with great power comes great responsibility.”

On November 7, 2016, RobD commented on BP: what should we expect? :

Really enjoyed this post.

I think you point out a very fascinating tension between the wealthiest and most developed nations, who have spent the last century consuming massive amounts of energy (and continue to do so), and the restrictions that may be placed on other nations which may not be at the same stage of development or may not be able to afford the precipitous rise in energy costs. It is because of this fact that I believe oil majors, AND countries like the US are responsible for finding cleaner, more efficient, and more inexpensive ways to provide energy to the rest of the world.

I liked the part about BP investing in climate change research, however I wonder what checks they have put in place to ensure this is truly unbiased. It reminds me of research recently done by the National Football League in the U.S. on concussions. Concussions threaten to conflict with the NFL’s business, and many argue that the research they are doing is biased and controlled.

On November 7, 2016, RobD commented on While We Wait on Human Psychology, Let’s Find Another Way :

ADA seems to be banking on the fact that while the strictest regulations have been turned down, more compromised regulations will probably follow. Additionally, many states have their own regulations which are imposed (hence only 40% still having significant emissions), so there is still a large market for them. ADA’s greatest value prop is that they provide a much more carbon-efficient way to remove Mercury. They are also vertically integrated in that they source and deliver the raw material for the activated carbon.

I do however, agree with your reservations about the long term viability of the business model. Eventually we will get to a point where there are fewer coal plants and hopefully less application for the capture of Mercury. The point of the “Third Way” thesis is that there are a number of opportunities for businesses like these to prop up and be very profitable for shorter periods of time.

Great analysis Satoshi. I really appreciate how you have identified the underlying causes for Mitsubishi’s stagnant foray into renewable energy sources, and how you listed possible solutions for the company to overcome these issues. Like you said, I think this common problem of “optimizing for your ongoing business” is one that almost every major corporation faces in one way or another (not just in energy). Often times, these companies fail to see old growth cycles slowing down because the business is such a cash cow and any new growth cycle could be seen as “cannibalistic”. Consequently, many companies struggle to remain relevant when a certain area of their business is reinvented.

I really liked all the recommendations you presented for Mitsubishi. Maybe they could do some combination of 2 or three (i.e. carve-out but keep as a subsidiary under the same management and impose different investment criteria).

I was also wondering if you found or have heard of any companies that have struck a healthy balance between earning stable revenues from fossil-fuel power generation with growing revenues from renewable power projects? If not, this really could be a serious opportunity for Mitsubishi. Maybe they could even begin investing some of the cash generated from their traditional power businesses into building their renewable energy business (sounds crazy, I know).

Interesting post that is exceedingly relevant to our current lives. Somewhat reminds me of the dilemma that Ikea faces. I wonder if Starbucks has been considering purchasing desirable growing land (similar to Ikea purchasing forest acres).

For such a large company with a massive supply chain and sustained growth, there are a lot of tensions with reducing emissions footprint (as you have pointed out). I too commend Starbucks for their commitment to working with and helping farmers, as well as sourcing “ethically” grown coffee. You mentioned that you would like to see them invest a lot in R&D to find ways to grow coffee in dryer and warmer clients, and you mentioned some of the innovation they are already pursuing with novel growing techniques. I wonder what (if any) impact of these modified crops could have? Are there any potential externalities to producing fungal-resistant crops or crops that can grow outside of their natural climate?

One other thing Starbucks could consider is synthetic alternatives to coffee altogether. I assume this would receive hefty opposition across the board (myself included), but Starbucks has the wallet and the brand equity to at least explore this option… and they shouldn’t take anything off the table.
Many studies have shown coffee to have positive health benefits (including this recent Harvard one) –>
And I think most people consider coffee to be favorable to any non-natural caffeine alternative. That said, caffeine is the focal point of people’s decision to drink coffee. If it no longer becomes economical to supply caffeine naturally, other alternatives may become more attractive.

Really interesting analysis.
One of my favorite movies (CaddyShack), has a famous scene where the protagonist gets in an argument because he has raised the price of coke (in the caddyshack) from 25 cents to 50 cents – the buyer believed this to be an outrageous price for a Coke. That movie was released in 1980. It would be interesting to look at data from the last 30 years to see where Coke prices have gone relative to average household consumption or household income. My hunch is that one day in our lifetime we will pay close > $5 for a bottle of coke, but your right that day may come sooner or that price may be even higher when accounting for possible climate-induced externalities.
I’d also be interested to see what Coke (and competitors) are doing by way of product / supply-chain innovation. You mentioned a few interesting ideas (keeping inventory at room temperature until sale), using more efficient/sustainable energy sources. One thing I know they have created is the Coca-Cola Freesyle Machine –>
This machine has all the ingredients to make 127 flavors of Coke products through one fountain. I’ve seen it at a few restaurants and stadiums. I assume these machines are very capital intensive but inevitably become more efficient from a raw materials standpoint (think most of these drinks have some mixture of the same ingredients). However, I’m not sure it is more energy efficient – but maybe there is a version of this that will increase efficiency and sustainability? Maybe they can also create a version that bottles the beverages in real-time?
Great post.