Understanding How Public Opinion is Shaped, Measured, Changed, Managed– is Crucial for Enterprise Success…

A wise man makes his own decisions, an ignorant man follows public opinion ~Chinese Proverb… Too often we… enjoy the comfort of public opinion without the discomfort of thought ~John F. Kennedy… Public opinion in this country is everything ~Abraham Lincoln

Public opinion is a largely uncontrollable phenomenon that had the power to make – or break – a company’s reputation and potential for success. While the influence of public opinion is as strong as ever, the practice of public relations has given savvy– businesses, politicians… measured control over how they are perceived by their target audiences and general public.

Public opinion can be defined as the complex collection of opinions of many different people and the sum of all their views or as a single opinion held by an individual about a business, social, political topic… The meaning of public opinion has changed dramatically over time.

The English term public opinion dates back to the eighteenth century and derived from the French l’opinion, which was first used in 1588 by Montaigne. Adam Smith, one of the earliest classical economists, refers to public opinion in his ‘Theory of Moral Sentiments’, but it was Jeremy Bentham, the famous utilitarian Philosopher, who fully developed theories of public opinion…

According to Herbert Blumer; public opinion is discussed as a form of collective behavior which is made up of those who are discussing a given public issue at any one time… Although  reality of public opinion is now almost universally accepted, contrasting understandings of public opinion have taken shape over the centuries, especially as new methods of measuring public opinion are applied to politics, commerce, religion, social activism…

However, according to Ian Welsh; public opinion does not matter– it’s irrelevant. What matters isn’t what the public thinks, what matters are what the public does… Nearly all scholars of public opinion, regardless of the way they may define it, agree that, in order for a phenomenon to count as public opinion, at least four conditions must be satisfied: (1) there must be an issue, (2) there must be a significant number of individuals who express opinions on the issue, (3) there must be some kind of a consensus among at least some of these opinions, and (4) this consensus must directly or indirectly exert influence.

In contrast to scholars, those who aim to influence public opinion are less concerned with theoretical issues than with the practical problem of shaping the opinions of specified ‘publics’, such as employees, stockholders, neighborhood associations, or any other group whose actions may affect the fortunes of a client, stakeholder…

Politicians and publicists, for example, seek ways to influence voting and purchasing decisions, respectively– hence their wish to determine any attitudes and opinions that may affect the desired behavior. It’s often the case that opinions expressed in public differ from those expressed in private. Some views– even though widely shared– may not be expressed at all…

In the article Public Opinion by Daniel Yankelovich writes: Public opinion is not static. People’s views about an issue develop and change over time from disconnected, poorly informed reactions to more thoughtful and considered conclusions, from changeable public opinion to settled public judgment. This process evolves through distinct stages and unless one understands where people are in this process, survey results can frequently mislead.

People often approach an issue initially with strong, emotionally laden feelings and opinions, which tend to be unstable and changeable. People may not understand an issue or problem particularly well. They may not have thought through the consequences of their opinions, and resist confronting realistic costs and trade-offs. The quality of public opinion at this stage is raw and unformed.

However, when people’s views progress… their ideas become solid and stable, and they accept the consequences of the views they hold. When public opinion is fully developed, opinion surveys reveal reliable and stable picture of people’s thinking, picture which accurately reflects their values, priorities, and beliefs…

In the article Are Public Opinion Polls Really Accurate? by ‘thisnation.com’ writes: How many times have you looked at the results of a public opinion poll and wondered if the results were accurate? Who did they talk to? Is it really possible to measure the entire nation’s opinion on something by asking less than one thousand people a question or two? Believe it or not, when conducted properly, public opinion polling is generally quite accurate.

Conducting good survey research, however, is no simple task. To be accurate, survey questions must ask a select group of people– what pollsters call a sample– which is representative of the larger population. The questions themselves must also be good indicators of the opinions or attitudes the pollster is trying to measure and the questions must also be asked consistently from one person to the next.

Public opinion polls must generally be read with caution. Moreover, even accurately measured public opinion is often based on limited or inaccurate information and people are prone to change their minds. Survey research, however, when conducted properly, provides an accurate portrait of the– attitudes, beliefs, opinions, preferences of people…

In the article Managing Public Opinion by Linda Fanaras writes: The psychology behind public relations makes it more valuable than advertising in developing brand identity and garnering brand loyalty. According to the Public Relations Society of America; public relations… is a communications discipline that engages and informs key audiences, builds important relationships and brings vital information back into an organization for analysis and action.

Truly, the primary function of public relations is the development of relationships with target audiences, which will have a positive affect on public opinion. This can only be achieved once preferences, needs, and desires of these audiences have been fully researched and understood.

This research serves as the foundation for both; messaging that resonates with audiences, and developing public relations strategies that deliver positive business results. A quality public relations strategy should include; market and target audience analysis, key messaging, tactics… 

Where the tactics are defined by the benefits to– brand visibility– tailored to the unique needs of the target audience. All tactics should be consistently measured and evaluated, so as to ensure connectivity with target audiences and improve outcomes.  The creation and execution of customized public relations strategy is an essential investment toward the achievement of long-term business performance goals… Public opinion is not the name of a ‘thing’ but a classification of ‘things’.

According to Phillips Davison; the principal approaches to the study of public opinion may be divided into four partially overlapping categories: quantitative measurement of opinion distributions; investigation of the internal relationships among the individual opinions that make up public opinion on an issue; description or analysis of the political role of public opinion; and study both of the communication media that disseminate ideas on which opinions are based and of the uses that propagandists and other manipulators make of these media.

The rapid spread of public-opinion measurement around the world is a reflection of its many uses. Governments have increasingly found surveys to be useful tools for guiding their public-information and propaganda programs and occasionally for helping in formulation of policies. Private businesses and associations have made frequent use of polling techniques.

Most of the surveys done for businesses come under the heading of market, rather than opinion research and are primarily concerned with product preferences, but large numbers of business are also concerned with public issues, such as; government regulation, economic outlook, community relationships… The art of public opinion rests not only on the measurement of people’s views, but also on understanding the motivations behind those views.

No matter how strongly they are held, attitudes are subject to change if the individual holding them learns of new facts or perspectives that challenge his or her earlier thinking. This is especially likely when people learn of a contrary position held by an individual whose judgment they respect. This course of influence, known as ‘opinion leadership’ is frequently utilized by publicists as a means of inducing people to reconsider– and quite possibly change– their views…

Public opinion polling can provide a fairly exact analysis of the distribution of opinions on almost any issue within a given population. Assuming that proper questions are asked, polling can reveal something about the intensity with which opinions are held, reasons for these opinions, and the probability that the issues have been discussed with others. Polling can, occasionally, reveal whether the people holding an opinion can be thought of as constituting a cohesive group.

However, survey findings do not provide much information about the opinion leaders who may have played an important part in developing the opinion. Polls are good tools for measuring ‘what’ or ‘how much’. Finding out ‘how’ or ‘why’, however, is the principal function of qualitative research… Well-run polls may constitute one of the most systematic and objective sources for public information, and means by which journalists, politicians, business leaders… learn what the general public is thinking…

Other things being equal, leaders who pay attention to public opinion will be better able to understand the groups they are trying to influence and better equipped to communicate overall. However, it’s possible for bias to enter into the polling process at any point, especially in cases where the entity commissioning the poll has a financial or political interest in the result or wishes to use the result to promote a specific agenda…

Also, opinion surveys can help the public by stimulating discussion of specific issues, problems… Apparently, the public itself has a lot of confidence in opinion sampling; when asked, in survey, if they think polls are good or bad? 73% said, they are good thing, while 21% admitted they didn’t know. The modern polls are designed to report– they do not usually pretend to solve problems. Whether the public is actually swayed by the results of opinion polls is hard to say.  

Businesses, public officials, media outlets… have increasingly come to depend on public opinion polls to gauge public sentiment. The selection of interviewees by the method of random probability sampling is essential for a good poll– i.e., every person in the population, theoretically, has an equal chance of being selected… But even with random probability sampling the best polls contain a margin of error, which means the results can vary by a defined probability depending on the size of the sample…

Opinion is an active propelling factor. The opinion of people is made up of different views or currents of sentiments… one writer says; when some opinions develop more strength than others (with larger numbers) or more intensity of conviction, then it begins to be called public opinion…

Trillion Dollar Coin– Gimmick, Silly, Absurd, Game Changer: Sounds Kind of Crazy-Stupid… Ultimate Political Folly…

Of course the trillion dollar coin is silly, but what’s even sillier is U.S. defaulting on its national debate...

Trillion dollar coin is a concept that emerged during the U.S. debt-ceiling crisis in 2011, as a proposed way to bypass any necessity for the U.S. Congress to raise the country’s borrowing limit, through the minting of very high value platinum coins. The concept gained more attention by late 2012 during the debates over the U.S. fiscal cliff negotiations and renewed debt-ceiling discussions. After reaching the headlines during the week of January 7, 2013, use of the trillion dollar coin concept was ultimately rejected by the Federal Reserve and Treasury.

According to Gene Owens; the national debt currently stands at $16.4 trillion and some folks were talking seriously about adding a $1 trillion platinum coin into the national piggy bank via a legal loophole. One of the proponents is Paul Krugman, who has soothingly assuring us that a little debt isn’t all that bad… The trillion-dollar coin concept is a byproduct of the battle between those who want to continue paying the nation’s bills by floating debt and those who want the country to cut its losses by refusing to borrow more cash.

Here’s how it would work: The federal government functions under a self-imposed borrowing limit. When it hits the debt ceiling, it faces two options: Increase the debt ceiling or stop paying the bills… Enter the trillion-dollar coin. As Krugman noted, there’s a law on the books allowing the Treasury to mint platinum coins in any denomination it chooses.

The law was intended to allow the minting of commemorative coins, which could then be stashed away among your souvenirs, or sold at market value. But, as Krugman noted, that’s not what the letter of the law says. Conceivably, Treasury could mint a coin in any denomination and slip it into circulation through that loophole. And, Krugman writes, by minting a trillion dollar coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling – while doing no economic harm at all.

So here’s the idea: Take a little bit of platinum, strike it into coin, and engrave the words; ‘United States of America, In God We Trust, E Pluribus Unum, One Trillion Dollars’. Then the U.S. Treasurer could take it to the nearest Federal Reserve Bank, fill out a deposit slip for $1 trillion in cash, and immediately start writing checks on it…

In the article Meet the Genius Behind the Trillion-Dollar Coin by Ryan Tate writes: It was a December 2009 Wall Street Journal article that ultimately inspired the Georgia lawyer known online as ‘Beowulf’ to invent the trillion-dollar coin. Beowulf, a leading contributor to the blog; Monetary Realism explained his thinking this way: If you go through the Federal Reserve, you’re borrowing money. If you go through the Mint, you’re making money. Some of Beowulf’s buddies on Mosler’s blog, whose prodding had helped him come up with the trillion dollar coin idea, in the first place, then fanned out to promote the idea.

According to Beowulf; it really started as a game and there’s really no reason for a trillion dollar coin, it’s kind of sad that it’s gone this far… it was really a group thing… Interestingly, the coin has been embraced by liberals as a useful political hack and rejected by conservatives as absurd and dangerous… The coin hack even surprised and impressed former U.S. Mint director Philip Diehl, who co-authored the law that enabled the platinum loophole in the first place.

‘When I first heard about the idea to mint a trillion dollar coin, I was very surprised’, says Diehl. ‘But because I know that law backwards and forwards, I knew immediately that the guy who came up with the idea was right. It’s an ingenious use of the law to avoid a ridiculous and irresponsible situation, in which the country would be driven to default.’

In the article Everything You Need to Know About the Crazy Plan to Save the Economy by Matthew O’Brien writes:

  • What’s this nonsense about a trillion dollar coin? It’s no joke. At least no more than voluntarily defaulting on our obligations by refusing to lift the debt ceiling would      be. It’s an absurd solution to an absurd problem, but a solution nonetheless…
  • Why does it need to be a coin? And why platinum? We don’t make the loopholes. We just find them. Congress passed a law in 1997, later amended in 2000, that gives the Secretary of the Treasury the authority to mint platinum coins, and only platinum coins, in whatever denomination and quantity he or she wants. That could be $100, or $1,000, or … $1 trillion.
  • Why did Congress authorize these coins? The idea was Treasury would only use this authority for collectible coins, while making a little money for the government in the process. But the law is vague. It only says the Treasury can mint platinum coins in any denomination it wants. So, to infinity and beyond!
  • Doesn’t this violate the spirit of the law? Maybe. But remember, part of the point of creating these commemorative coins was to increase government revenue. The trillion-dollar coin is seigniorage just like  commemorative coins are seigniorage… Seigniorage is the difference between the cost of creating currency, and the value you assign to that currency — in other words, the ‘profit’ governments get from minting money. Even if you don’t find this terribly convincing, it doesn’t really matter. The plain text of the law, not its intent, is what matters. And that means the trillion-dollar coin is almost certainly legal.
  • Would it survive a court challenge? It’s far from clear anybody would have the legal standing to challenge the trillion dollar coin in court. That would at least require a joint resolution of Congress, which isn’t happening, or an investor who can show that not defaulting on our obligations caused them injury.
  • So this might be legal: If you’re still not convinced, just asks Representative Greg Walden, a Republican from Oregon, who’s so convinced it’s legal that he introduced a bill to close the platinum coin loophole.
  • Would we need to come up with $1 trillion worth of platinum to mint the $1 trillion platinum coin? Repeat after me: seigniorage, seigniorage… The entire point of the trillion-dollar coin is it gives us money to pay our bills if the debt ceiling isn’t raised. But it won’t give us any money if we spend an equal amount creating it. Basically, we want to take the smallest amount of platinum we can find and scribble $1 trillion on it. If you think this sounds nutty, ask yourself whether your $100 bill is made from $100 worth of cotton.
  • Why not just create a single $16 trillion coin — scratch that, make it $100 trillion! Now that’s just crazy talk. Let me be clear: Nobody wants to use platinum coins to eliminate the debt. As Paul Krugman points out, there’s a limit to how much seigniorage a government can extract before hyperinflation sets in, and that’s certainly far less than $1 trillion, let alone $16 trillion. The trillion-dollar coin is just a technical fix to the technical problem of the debt ceiling.
  • Do I need to buy some gold bars to prep for the coming hyperinflation? As Joe Weisenthal of Business Insider points out, the biggest fallacy about the trillion-dollar coin is that it will be massively inflationary. It won’t be. If the government quickly spent $1 trillion, that might be inflationary. It would pay for old spending — Now, inflation might go up in the long-term if the Fed doesn’t intervene. That’s because the composition of spending will have changed — more currency, less borrowing — even though the amount has not…
  • Do I have this right: Treasury mints money and pays for stuff with it, and the Fed sells bonds to offset this new money? This sounds kind likeMonetary policy! It’s just a convoluted way of doing sterilized ‘quantitative easing’ (QE). Let’s translate this into English: To simplify a bit, the Treasury would; 1) mint the trillion dollar coin, 2) use it to pay for already approved obligations, and 3) the Fed would suck out as much money as the Treasury mints…
  • Letting the executive usurp control of monetary policy from the Fed seems like a very bad idea– is it a frightful precedent? Yes and no. The consequences could be terrible if trillion-dollar coins become a regular part of policymaking, but monetary-policy-by-executive isn’t exactly unprecedented. FDR grabbed the reins of monetary policy when he took the U.S. off the gold standard in 1933 and announced he wanted prices to return to their pre-Depression level… But the danger, as Ryan Avent of The Economist points out, is if this extraordinary measure became ordinary, or if markets merely feared it might…
  • But wouldn’t this be a political train wreck? Indeed. Cardiff Garcia of FT Alphaville makes the rather persuasive case that Democrats shouldn’t use the trillion dollar coin as a negotiating tactic to increase their leverage in the debt ceiling talks– making a debt ceiling breach more likely. But it does make sense as a form of insurance against the economic carnage a protracted debt ceiling breach would entail.
  • You don’t seriously think this is a good idea, do you? If it’s a choice between defaulting on obligations, and minting a trillion-dollar coin, I say mint the coin.

It’s legal and it’s possible… According to Leigh Ann Caldwell; regardless of what they think about it, economists on the left and the right point out that it’s completely legal. ‘I think it’s deeply wacky but it’s possible’, said economist Jared Bernstein.

According to Douglas Holtz-Eakin; I agree that it’s possible, but I think it’s an incredibly stupid idea. The coin itself does not have to literally be worth $1 trillion: Its common sense: just because there’s a $99 difference in the value of a $1 and a $100 bill, the materials that are used to make them are worth the same. Translation: The trillion dollar coin does not need to be made of $1 trillion worth of platinum.

The coin would have no economic impact; it would not cause inflation: The reason this idea is so out of left field is because the Federal Reserve is the entity responsible for printing money, and every dollar the Fed prints must be backed by Treasury bonds and counted toward the U.S. debt.

But the Treasury’s printing of a trillion dollar coin would not have any connection to the debt. Because it would sit in a vault and not be part of the money supply and not backed by bonds, it would not skew the economic system and, therefore, can’t cause inflation.

But because this coin is sitting in a vault and the Treasury Department determines that it’s worth $1 trillion, but really it is. The trillion dollar coin is purely political – just like the debt ceiling: Because the trillion dollar coin has no impact on the economy, conservatives decry it as political laziness. They say it causes a perception problem that the U.S. is unable to deal with its financial problems. According to Holtz-Eakin; you’re messing with international confidence and that confidence is fragile.

According to David John; this is the typical Washington sophistry… but what is the debt ceiling? Just like the trillion dollar coin, it’s completely created out of thin air. Congress can raise and lower it at will. It’s not steeped in economic basis, but in political gamesmanship. The debt ceiling was created by Congress more than 100 years ago to put some checks on the executive branch.

According to Bernstein; trillion dollar coin is not ideal but it’s better than the potential negative economic impact if the debt ceiling isn’t raised. It shouldn’t have to come to that but it’s a better solution than default… However, regardless of whether you think it’s a good idea or not, the trillion dollar coin would undoubtedly further poison the political well of a federal government whose well is already downright toxic…

 

Public-Private Partnership in Changing World: Nexus between Public-Sector Need and Private-Sector Goal… Value-for-Money…

Public-private partnership is an important option that can be utilized in times of economic uncertainty and in periods of prosperity. There is a nexus between the public sector’s needs and the private sector’s goals. ~Doug Domenech

Public-private partnership is often touted as ‘best-of-both-worlds’ alternative to public provision and privatization. But in practice, they have been dogged by contract design problems, waste, and unrealistic expectations. Governments sometimes opt for a public-private partnership because they mistakenly believe that it offers a way to finance infrastructure without adding to the public debt…

According to Eduardo Engel and others; there is ‘best practice’ to ensure that public-private partnership provides public value, for example; choosing partnership for the right reasons; relying on flexible-term ‘present-value-of-revenue’ (PVR) contracts; implementing good governance practices… Enacting these reforms will help maximize taxpayer value and reduce risks for each party involved in a public-private partnership… Public-private partnership describes a government service or private business venture which is funded and operated through partnership of government and one or more private sector companies. 

These schemes are sometimes referred to as PPP, P3 or P3. PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. Over the past two decades more than 1400 PPP deals were signed in the European Union, representing an estimated capital value of approximately €260 billion. Since the onset of the financial crisis in 2008, estimates suggest that the number of PPP deals closed has fallen more than 40%.  

Today, partnering is the new governance and it continues to evolve, particularly to address new trust environments due to social/economic changes… For more than two decades public-private partnerships have been used to finance health infrastructure. For example; spending estimates on healthcare among the OECD and BRIC nations will grow by 51% between 2010 and 2020, amounting to a cumulative total of more than $71 trillion.

Of this, $3.6 trillion is projected to be spent on health infrastructure and $68.1 trillion will be spent on non-infrastructure health spending cumulatively over the next decade. Health care spending in the U.S. accounts for approximately half of all health spending among OECD nations, but biggest growth will be outside of U.S.

According to PwC projections, the countries that are expected to have the highest health care spending growth between 2010 and 2020 are China, where health spending is expected to increase by 166%, and India, which will see a 140% increase. As health spending increases it is putting pressure on governments and spurring them to look for private capital and expertise…

According to FEMA; there’s no way government can solve challenges of a disaster with a government-centric approach. It takes the whole team... FEMA believes in the value of public-private partnership and has worked steadily to provide tools, models, and resources designed to inspire their creation and nurture their success…

According ‘PricewaterhouseCoopers LLP’: To rebuild crumbling infrastructure U.S. may, at last, be ready to fully embrace public-private partnership (PPP)– many of the country’s highways, bridges, rail lines, ports, and airports have either deteriorated to a state of disrepair or have become increasingly outdated. Public officials are obliged to consider timely, cost-effective alternative approaches to financing, building, operating, and maintaining infrastructure. Long-ignored structurally deficient infrastructure must first be repaired-replaced.

Equally important is the pressing need to replace infrastructure that no longer serves its original purpose. An important concern is identifying sources of short-and long-term funding. One viable option, widely used in Europe and other parts of the world to address infrastructure crises, is the use of public-private partnership…

The Brookings Institution estimates that the ‘American Recovery and Reinvestment Act’ of 2009 authorizes an estimated $126 billion for infrastructure. That’s a good start, but the money can be stretched much further if government agencies partner with the private sector for additional financing. By some estimates, available private capital totals more than $180 billion…

According to Dr. Sotiris Pagdadis; the number could be significantly higher if the government is forthcoming in its desire to forge true strategic long-term alliances with the private sector, and is not just looking for a quick fix to monetize desperately needed projects. 

According to Leonard Shaykin; public pension funds have begun allocating between 1% and 10% of their portfolios to public-private partnership projects… Pension funds currently view PPP investments in a variety of ways– as bond-like, as real estate-related asset, and as simply private equity alternative investment…

Value for money in public-private partnership decisions: Value-for-money (VfM) analysis evaluates future cash flows to determine whether a capital project is best suited to a traditional public-procurement option or a public-private partnership. Conducted by multiple independent third parties with specialized operations, costing, and engineering expertise, VfM assessment measures relative financial benefit. It also provides an audit trail that ensures public transparency. The public-sector comparator (PSC), a major component of VfM analysis, is a hypothetical, risk-adjusted cost estimate for a project, were that project to be financed, owned, and implemented by public sector.

Employing financial and statistical modeling techniques to estimate costs, it provides a baseline measure against which to compare future bids, as well as, a benchmark to measure ‘value for money’. VfM analysis allocates, analyzes, quantifies, and simulates risk to better understand the project’s risk profile: retained risks are retained by the public sector, shared risks are shared by the public and private sectors in PPP option, and transferable risks are transferred to the private sector in a PPP option.

VfM analysis allows well-informed, accurate, full-cost pricing early in a project. It also encourages competition from bidders, who are aware that a genuine benchmark exists that they will have to beat. A requirement for all projects in the UK since the early 1990s, the public sector comparator is now standard practice in much of Australia. However, no uniform global method exists to calculate VfM analysis or simulate the public-sector comparator; standards vary by country… However, despite their many merits, PPP aren’t the optimal approach for every project. In fact, Pagdadis cautions– while the monetized value of the asset itself can be enticing, it should not be the reason to enter a venture.

Public-private partnership are not always completely thought through because states in debt can forge PPP with a ‘trophy’ asset to generate significant cash-up front that can be used to support other desperately needed projects.

According to Pagdadis; this may also encourages states to enter into longer term concessions than they would not normally feel comfortable entering into. The longer the concession period, the more up-front cash they can realize. A public asset in the hands of the private sector for an indeterminate amount of time simply creates unnecessary anxiety.

Public-private partnership introduces significant efficiency and reliability, perhaps the most compelling argument for their use. They are also intrinsically transparent. As such, they have earned a strong reputation for the ability to deliver projects on time and without the typical cost overruns that plague many multiyear infrastructure projects– especially when multiple administrations, each with their own priorities, come and go during the lifespan of a project. In a 2009 study of 114 PPP, the ‘UK’s National Audit Office’ found that 69% were delivered on time and 65% came in within budget.

In Australia, financial advantage of PPP has been well documented. The University of Melbourne conducted a study of 42 traditional procurement projects and 25 PPP and concluded that PPP provide far greater cost certainty. The researchers found that once the contract had been signed, PPP had an average cost escalation of 4%, while traditional procurement projects had a much higher average cost escalation of 18%. To understand the benefits more clearly, consider the PPP project for Canada Line, a 12-mile regional rapid-transit rail line…

Completed several months ahead of schedule in August 2009, Canada Line is the achievement of a private consortium that won a 35-year contract to design, build, partially finance, operate, and maintain the rapid-transit system. It’s the first transit project in North America to be developed as a PPP. The net-present-value (NPV) of the transaction in 2003– when the deal closed– was $1.47 billion. Before deciding to proceed with a PPP, officials studied partnerships in Australia and UK, and conducted ‘value-for-money’ (VfM) analysis.

That type of analysis evaluates future cash flows to determine whether a capital project is best suited for ‘traditional public-procurement option’ or PPP. In the case of Canada Line, the VfM analysis found that the PPP option offered significantly higher value-for-money than public sector procurement.

According to Jane Bird; we were confident that our partner had the necessary experience to manage the risks we assigned… It’s all about education; I can’t overstate the need to continue to communicate and educate on both the government side and the public side. According to the United Nations, good partnership governance is open to much interpretation but overall six core principles have become widely accepted:

  • Participation: Involvement of all stakeholders.
  • Decency: Formation and stewardship of rules without harming or grievance to people.
  • Transparency: Clarity and openness with which decisions are made.
  • Accountability: Responsible to society for what they say and do.
  • Fairness: Rules apply equally to everyone in society.
  • Efficiency: Human and financial resources are applied without waste, delay or corruption, or without prejudicing future generations.

The most successful public-private partnership combines best of public-sector governance with the most valuable of private-sector efficiencies.

According to Darwin Bondgraham: PPP is at least three things: First, re-branding of privatization– the phrase purposefully evokes a win-win scenario involving equal ‘partners’ working toward a common goal. Government leaders have been sold this new kind of privatization as solution to declining tax revenues and borrowing capacity, while private companies claim to offer expertise and capital in spirit of public service…

This worldview, meanwhile, hails private companies and the private profit motive as the bearers of efficiency and fiscal discipline… Second, it can become a private finance initiative, where the government takes advantage of private-sector management skills by awarding long-term franchises to a private-sector partner, which assumes the responsibility for constructing and maintaining the infrastructure and for providing the public service. Third, it can cover– selling of government services to private-sector partners, which can better exploit commercial potential of public assets…

Given the many positive attributes, then why are PPP still in their nascent stage in many countries? For one thing, studies indicate that government officials continue to harbor misgivings and misconceptions that PPP proponents must be prepared to address. Often, the reluctance to consider PPP reflects a lack of understanding of the details, based on a dearth of comprehensive information.

A 2009 survey by consulting firm Halcrow Inc. shows a clear correlation between experience and interest in PPP. While 70% of 75-U.S. state and local officials surveyed know of projects outside their own states, 61% have had no direct PPP experience and don’t understand the terms and benefits. But more than 90% of the surveyed state and local officials with experience with PPP expressed interest in them. Still, three-quarters of officials expressed ambivalence.

Officials with knowledge of PPP cited difficulty of implementing and contracting such projects, while inexperienced officials were worried about losing future cash flow from projects and said government manages projects better than private companies do. Both groups also expressed concern about unacceptable profits made by private businesses at the expense of users, and inexperienced officials worried that private entity might skimp on maintenance and repairs to boost profits…

According to Stavridis and Evelyn N. Farkas; harnessing know-how and resources of corporations, universities, research institutions, and charitable, as well as, development organizations is and will be critical to maintaining policy innovation and effectiveness. Just as we need to invest in education and research to cultivate national competitiveness, we must build partnership leveraging private-sector expertise-capability to enhance both global development and national security.

Business Risks 2013 Global Report: Stay on Top of Uncertain World– Creative Risk-Taking is Essential for Success…

Business risks are the driving-levers of business, and creative risk-taking is essential for success… thoughtless risks are destructive, but perhaps even more wasteful is thoughtless caution which prompts inaction and promotes failure to seize opportunity. ~Gary Ryan Blair

Risks are important part of business and everyday life. Taking wise risks can benefit your business and help you reach and exceed your goals. But, it may be difficult to determine which risks are worth taking, when you’re considering your 2013 projects, investments, plans… For each decision you make, compare the benefits to the potential risk.

Managing risk means thinking through anything that could potentially go wrong in your operation and determining whether or not a control should be used to mitigate that risk. What it all comes down to– is your financial and psychological ability to bear risk.

The rapid increase of complexity is becoming a major concern of 21st-century, i.e., turbulent economy, highly complex processes, organizations difficult to manage… Highly complex business systems are fragile, and can suddenly fail– they are uncontrollable-unpredictable and the enemy of sustainability. Moving from risk management to high complexity management is the new paradigm…

For example, there is– Euro debt crisis, U.S. deficit and debt crisis, slow global growth, unrest in many regions… then add to this the ‘Forum Global Risks 2013’ Report that quite clearly highlights chronic global financial imbalances and possibility of major systemic financial failure– then, these become ‘top 2013 business risks’ facing the global economy. The new reality is a prolonged global economic malaise, particularly in major economies experiencing economic austerity…

International Monetary Fund (IMF) warned that; risks for serious 2013 global slowdown are alarmingly high. It added that this would mean a recession in wealthy nations and serious slowdown in emerging nations. According to Mark Garrett; Europe has entered a 10-year stagnation period, just like Japan did…  Equally, China’s new leadership is clearly worried about the economy. Premier-designate Li Keqiang told China’s National Congress, in November, the period ahead is full of unprecedented risks and challenges.

According to Paul Hodges; as we enter 2013 companies must embark on fundamental change in mind-set and culture. They need to be aware of the risks of major economic disruption and guard against these, as well as they can. But at the same time, they must move beyond short-termist approach of financial markets that created today’s economic uncertainty…

According to Prof Michael Porter; our-field of vision has simply been too narrow and has meant companies have overlooked opportunities to meet fundamental societal needs. Technical and business model innovation is now essential, if companies are to profit from growth markets…

According to Ernst & Young’s 2013 Report; market volatility, pricing pressures, variations in market performance and demanding stakeholders have all contributed to the global economy that encourages competitive drive. And, with drive come opportunity. For that reason, this year’s business risk report looks at both– top business risks and top business opportunities.

As in prior years, we have taken a bottom-up approach, gathering opinions from leading industry-based and academic commentators, across seven global sector groups. In addition, this year, we conducted a second wave of research. This comprised a large-sample survey of companies and governments in 15 countries.

We interviewed a panel of more than 75 sector commentators to identify strategic challenges facing business in seven sectors in 2013. We then surveyed more than 700 leading organizations in 15 countries to discover how companies and governments perceive and are addressing the risks and opportunities that were identified– or in some cases, are struggling to address these challenges:

  • Top Business Risks: Regulation and compliance; Cost cutting; Managing talent; Pricing pressure; Emerging technologies; Market risks; Expanded government role; Slow recovery/double-dip recession; Social acceptance risk/CSR; Access to credit.
  • Top Business Opportunities: Improving execution of strategy across business functions; Investing in process; tools and training to achieve greater productivity; Investing in IT; Innovating in products, services and operations; Emerging market demand growth; Investing in cleantech; Excellence in investor relations; New marketing channels; Mergers and acquisitions; Public-private partnership.

In the article Which Risks Loom Largest for Business in 2013? by ‘The Economist’ writes: Reading reports on risk can have a numbing effect. The more you read the more risks you see; eventually, you succumb to nervous exhaustion. I recently read the publication of two particularly angst-inducing accounts: ‘Global Risks 2013’ by ‘World Economic Forum’  (WEF), and ‘Top Risks 2013’ by ‘Eurasia Group’.

These reports not only provide warnings about dangers that can be avoided through better planning or clearer thinking. They also suggest opportunities-for as they say–it’s a basic law of business that one man’s cliff is another’s ladder. The Eurasia Group’s survey focus exclusively on political risks. Eurasia’s big idea is that the worst risks now come from the emerging world. The rich world has demonstrated that it’s capable of managing risks fairly well– indeed, many rich countries are antifragile (a word that means ‘adept at coping with disruption’ and it’s the title of a book by Nassim Taleb, a scholar of risk).

According to this report; the U.S. could be on the cusp of strong growth, but the emerging world has much less experience of managing volatility or coping with crashes… In our opinion this may be too optimistic about the rich world, e.g., Spain and Italy are hardly antifragile and U.S. is testing the markets’ patience. But it’s true that business folk pay too little attention to political risk in the emerging world (which is likely to account for three-quarters of global economic growth in 2020).

Also, investors often lump very different countries together into a single asset class (e.g., the BRICs). Yet as Eurasia Report makes clear, Russia is much riskier than Brazil: its energy industry is stalling and its middle class is losing patience with kleptocracy. The more the center of economic gravity shifts towards emerging markets, the more business people  must recognize that the emerging world is a horribly complicated place…

According to ‘WEF Global Risks 2013’ Report; global risks are becoming ever more interconnected, and governments must engage the private sector to help them tackle the most serious threats to economies and populations, according to a panel of experts– at the launch of their report on 2013’s biggest global risks. The report survey– 1,234 respondents from business, academia, nongovernmental organizations, international organizations, public sector… and says, that one of the biggest challenges facing companies and countries is the– interconnected nature of risks…

According to Axel P. Lehmann; Risks don’t stop at your factory door… risks don’t stop at national borders; countries must strengthen their risk management approaches… According to John Drzik; governments must invest more in risk management and adopt a multidisciplinary approach to addressing risks…

In the article Five Emerging Risks To Keep An Eye On in 2013 by Andrea Bell writes: Business owners must start thinking about the 2013 risks and be prepared for what the year may have in store. Let’s look at five big emerging risks:

  • Cyber Attacks: Businesses must ensure that they have the most up-to-date security systems, and staff adequately trained in proper data security.
  • Social Media: Social presences can create a number of risks: Misuse can lead to serious reputation damage and data security– accidentally sharing something you shouldn’t, it can be damaging…
  • Climate Change/Extreme Weather: Extreme weather events are more common– business cannot afford to ignore the potential for natural disaster.
  • Economic Stability: U.S. and Europe find themselves in delicate financial positions, at the moment– businesses must consider their financial position and be prepared, if the worst does happen.
  • Something Else: The nature of emerging risks is they come from nowhere. Business must assess and manage risk on an ongoing basis.

In the article IT Risks That Will Crash Your Network in 2013 by Mark Aspillera writes:  A recent study by Gartner predicts that IT spending is going to crest $2 trillion this year. It’s a small increase from 2012′s $1.92 trillion figure, but still a notable one. There are many reasons, but bottom-line is that networks and IT technology are even greater priority for many enterprises going into 2013. IT professionals, in 2013, will have greater power and even more responsibility, especially with economic uncertainty and turbulence, abound, and budgets run lean.

Despite all the ongoing advances in IT tech, however, security and infrastructure dangers are still as much of a problem as they ever were, and look to remain that way for foreseeable future. Here is a handful of prescient threats that IT will be facing in 2013.

  • Bring Your Own Device (BYOD): Key driving factor behind 2013 up-tick in IT spending is the continued proliferation of mobile devices in the enterprise.
  • Social Engineering Slip-Ups: Weakest link in any security plan is the end-user…
  • Bigger, Sneakier Malware: Malware has been around for years, but a particularly nasty strain, the polymorphic malware attack, is set to become more prevalent in 2013.

Economic slow-down still tops the list of the major risks facing business. In light of the current economic global uncertainties, and ongoing Euro and U.S. crisis; there are for the first time several new risks entering the top list, including; business failure to innovate, meeting customer needs, technology-system failure. Moving forward in 2013, businesses must understand their company’s unique range of risks, and it’s essential that they begin to lower their total cost-of-risk…

According to Guy Scott; while it’s difficult to predict which risks will emerge in 2013 and demand attention, we can be certain that successful companies will not be the ones that adopt a ‘wait and see’ approach. Instead they will be the ones that prepare themselves thoroughly to anticipate future needs and undertake the difficult process of finding solutions to address them. They will not just fix what is broken, but view their new circumstances as a portal to the next generation of business opportunity…

According to the ‘Fifth Annual Political Risk Atlas’ by Maplecroft says; situations of societal forced regime change across the Middle East and North Africa, coupled with the prevailing high risk of similar types of regime change in other nations, poses significant risks to business continuity plans. The risk analysis notes– Syria, Libya, Sudan, Yemen, Guinea-Bissau, DR Congo, Zimbabwe, Madagascar, Mali and Bangladesh are potential key flashpoints in the world, and they could impact neighboring countries, as well, spreading risk across the wider regions.

Business risks can emerge in many forms, shapes… suddenly, and companies must be prepared to engage the range of issues that could impact their business…

Knowledge Funnel– Drive Balanced Thinking for Creativity, Innovation, Value Creation: Fuel the Funnel…

As knowledge moves through the ‘knowledge funnel’, productivity grows and costs drops… The knowledge funnel balances the exploration of new knowledge (innovation) with the exploitation of current knowledge (efficiency) that facilitates value creation…

In today’s competitive business environment, organizations must remain nimble, relevant, and responsive. Constant change is inevitable– everything is dynamic. Business decision-makers are challenged with developing new ideas, just to survive and compete.

According to Roger Martin; the knowledge funnel is process that’s followed by many leading business to innovate more consistently and successfully. The knowledge funnel has three different phases: mystery → heuristic → algorithm. Where, mystery stage comprises exploration of the problem, and then transitions to heuristic stage, where a ‘rule of thumb’ is generated to narrow work to a more manageable size. In the algorithm stage the general rule of thumb (heuristic) is converted to a fixed formula, and that takes the problem from complexity-to-simplicity.

According to Martin; there are two forms of business thinking: 1. Analytical thinking– driven by quantitative process, standardizing to eliminate judgment, bias, and variation… 2. Intuitive thinking– focus more on instinct to drive creativity and innovation. Analytical thinking is more prevalent in organizations, because it’s more consistent, easier to measure, and can scale in size. Martin labels difference between a bias for the two schools of thought as the distinction between ‘reliability‘ versus ‘validity‘.

Organizations are much more likely to favor what is reliable because their structures tend to incentivize the advantages of analytical thinking. This means that organizations are often poor at achieving valid solutions because they do not fully take advantage of all three areas of the knowledge funnel, just the two latter stages (heuristics and algorithms).

Martin argues that business is currently missing abductive reasoning. Abductive reasoning is the third form of logic (deductive logic and inductive logic are the other two)… Charles Sanders Peirce described the process of discovery as new ideas that arose when thinkers observed data that did not fit with the existing models. The first step of reasoning is not observation, but ‘wondering’.

In the article Knowledge Funnel: How Discovery Takes Shape by Roger Martin writes: The model for value creation requires a balance, or more accurately, the reconciliation between two prevailing points of view on business today. One school of thought, put forward by some of the world’s most respected theorist and consultants, holds that the path to value creation lies in driving out old-fashioned practices of ‘gut feeling and instinct’, replacing them with strategy based on rigorous, quantitative analysis. In this model, the basis of thought is analytical thinking, which harnesses two familiar forms of logic– deductive and inductive reasoning– to declare truths and certainties about the world.

The goal of the model is mastery through rigorous, continuous repeated analytical processes– judgment, bias, and variation are the enemies. Then the theory goes, if these are vanquished, great decisions will be made and great value will be created. The opposing school of thought, which is in many ways a reaction to the rise of analytical management, is centered on the primacy of creativity and innovation. To this school, analysis has driven out creativity and doomed organizations to boring stultification.

According to some  experts; no good product was ever created from quantitative market research. Great products spring from ‘heart and soul’ of great designers, unencumbered by committees, processes, or analyses. The proponents of this philosophy suggest the creative instinct and unanalyzed flash of insight is venerated as the source of true innovation.

At the heart of this school is intuitive thinking– the art of knowing without reasoning— the world of originality and invention. These two models seem utterly incommensurable; organizations must choose to embrace either– analysis or intuition as their primary driver of value creation. The choice plays-out in structure and norms of the organization.

Organizations dominated by analytical thinking are built to operate as they always have– they are structurally resistant to the idea of inventing-reinventing themselves and their business dynamically, over time. They are built to maintain the status quo. By sticking closely to the tried and true, organizations dominated by analytical thinking enjoy one very important advantage– they can build size and scale, relatively easy. In organizations dominated by intuitive thinking, on the other hand, innovation may come fast and furious, but growth and longevity represent tremendous challenges.

Intuition-biased firms cannot and will not systematize what they do, so they wax and wane with individual intuitive leaders. Neither analysis nor intuition alone is enough. The most successful businesses in the years to come will balance analytical mastery and intuitive originality

In the article Creating Value Across Knowledge Funnel by D. Murali writes: Creating value across the knowledge funnel requires two very different activities. One, moving across the knowledge stages of the funnel from mystery-to-heuristic and heuristic-to-algorithm. Two, operating within each knowledge stage of the funnel by honing and refining an existing heuristic or algorithm...

Successful companies balance exploration and exploitation by continuously looking back up the knowledge funnel to the next salient mystery (or back to the original mystery) and driving across the knowledge funnel, in a steadily cycling process. These relatively few organizations come to be defined by their balanced approach. Whereas, many organizations increasingly rely on algorithm-based, decision-making, decision-support, and get highly skilled at using algorithms to produce outcomes that are reliable; that is, consistent and predictable.

Companies that devote all their resources to reliability lack the tools to pursue outcomes that are valid; that is, that produce a desired result. Indeed, many organizations see no value at all in valid outcomes. Little wonder, then, that those same organizations don’t know how to manage validity-seeking activities to generate lasting business value.

Advances in knowledge emerges from the pursuit of valid results. Highly reliable processes lead to reduction-in-costs and rise-in-efficiency, by eliminating uncertainty. Whereas, organisations that defines themself as being primarily or exclusively in the business of running algorithms is taking a high risk, e.g., they increase the risk of cataclysmic events that occur when the future no longer resembles the past and the algorithm is no longer relevant or useful…

In the article Disruption, Knowledge Funnel, and Learning in New Product Development by admin writes: I recently read an interesting article in Fast Company magazine on a start-up airline called ‘Surf Air’, and its unique business model. Basically it’s the first all-you-can-fly airline: For a flat fee per month, you can fly anywhere they fly, which right now is just four regions in California…

They utilize small, regional airports with no waits and no screening, since the FAA considers them a charter service. The story of this airline illustrates three important aspects of new product development that is worth reflecting: First, the concept of disruption; large carriers, the article claims, are ripe for disruption because of ‘low profits’ being earned from nickel-and-dime passengers, and suggesting that as airline profit goes up, passenger satisfaction goes down.

However, consider the question– is the proposed Surf Air’s model really disruptive or will the airlines, as they have done in the past with upstart carriers, find a way to crush them? It’s possible that Surf Air may avoid that fate by their focus on small regional airports. Second concept can be described as moving up and down the knowledge funnel. All new products start as mysteries, then move to the heuristic stage, and finally companies are able to codify the model into an algorithm. That is certainly where the airline industry is, and what most companies strive for.

Being able to turn a business model into an algorithm provides for reliability of results which is certainly what financial markets reward. Every business needs to balance– need for reliability while developing new mysteries to solve, otherwise competitors will. Of course, this is just what the concept of disruption is all about, and that’s what Surf Air is trying to do.

They looked at a mystery associated with the airline industry, and that led to a new business model. Note: in this case, the mystery is not associated with technology, but with the business model and the market itself. I believe many companies that manufacture highly engineered industrial products, for instance, tend to ignore these types of opportunities, when trying to gain competitive advantage…

Finally, this story illustrates the concept of– iterate and learn when faced with a high level of uncertainty in product development; e.g., Surf Air is starting with a small user base– limited deployment to assess passenger behavior, then they adjust the business model… Whether you are dealing with uncertainty in the business model, or in the technology associated with a new product; iterate and learn is a powerful way to manage the project…

Corporations and organizations must empower and build a culture of creativity and innovation to promote relevancy in today’s marketplace. With all this emphasis on the shift in the way we fundamentally approach business challenges– it’s interesting to note that the focus is placed on thinking about ideas and concepts that do not currently exist, as being the pendulum of scientific management. It’s in this vain that one might argue that the pendulum has surely swung.

Some experts say the 20th century, in essence was all about ‘things that functioned’, whereas the 21st century will be more design focused and interested in making ‘elegant stuff more elegant’, which is ultimately how new ideas are born. Strategy in business is about where to play and how to win– be different and embrace creativity and innovation… 

As Martin’s overriding thesis suggests, which for some may seem radical, is simply; to advance knowledge, we must turn away from our standard definitions of proof – and from the false certainty of the past – and instead stare into the mystery of what could be…

Design Thinking– Strategic Framework for Innovation and Growth or Regurgitation of Old Concepts…

Design thinking runs far deeper than aesthetics…. If you are mapping out a sales strategy, or streamlining a manufacturing operation, or crafting a new system for innovating… you are engaged in the practice of design. ~Bill Breen

Some experts say that design thinking can enrich business and marketing innovation by combining the best of right and left brain thinking. It has the capacity to deliver better ideas, with more relevance… For example; focusing on individuals, moments and journeys in ethnography, insights become deeper; embracing chaos and play in brainstorms, creative teams can explore further; iterating and early prototyping, ideas become real and develop more rapidly…

According to ‘Boston Consulting Group’ report– 7 out of 10 senior executives name innovation as their top priority for growth… However, according to Ben Wood and colleagues; too often the so-called innovation is just rearrangement of  existing offer (a renovation), or it fails altogether. According to Doblin Group; 96% of all new projects fail to meet or beat targets for ROI. Some experts say the answer to wasted investment may come from world of design thinking…

Design thinking is a methodology for the practical, creative resolution of problems or issues…. it’s a form of solution-based or solution-focus thinking that starts with the goal or what is meant to be achieved, instead of starting with the problem. This differs from the scientific method, which starts with defining all parameters of problems in order to define the solutions. Wikipedia definition; design thinking is method and process for investigating ill-defined problems, acquiring data and information, analyzing knowledge, and positing solutions in the design and planning fields.

Design thinking is a creative process based around the building up of ideas and encourages ‘outside the box’ thinking, which can often lead to creative solutions. According to Peter Merholz; not-so-secret truth about design thinking is that a big chunk is actually social science thinking. Design thinkers talk about being ‘human-centered and empathic’, which are methods from anthropology and sociology.

Although, varied disciplinary backgrounds do, in fact, allow people to bring distinct perspectives to innovation, allowing for insights that wouldn’t be otherwise achieved. However, shifting focus entirely to design thinking means you are missing out on other countless possibility. On positive side according to John Miziolek; impact is undeniable when a company like Apple puts so much extra effort into making its products and marketing look ‘cool’, as well as, ensuring its ‘look’ is unified and communicates the level of innovation that an organization prides itself on.

However, very few companies can put that kind of design thinking at top (or even near the top) of their corporate agendas, even though an overall organizational design implementation can provide incredible benefits….

In the article Design Thinking by Roger Martin writes: Design thinking is a balance between analytical thinking and intuitive thinking, which enables organizations to both exploit existing and create new knowledge. Design thinking organizations are capable of effectively advancing knowledge from mystery-to-heuristic-to-algorithm, gaining a cost advantage over its competitors along the way. With that cost advantage, it can redirect its design thinking capacity to solve the next important mystery, and advance still further ahead of its competitors. In this way, the design thinking organization is capable of achieving lasting and regenerating competitive advantage…

Companies tend to be ruled by analytical thinking, however, by integrating the best of intuitive thinking into their thinking pattern– these are typically the thinking pattern of artists and designers– companies can improve their creative skills. Analytical thinkers tend to often see creative people as potentially useful, but also quite scary because they don’t understand how creative people think...

Similarly, creative people tend to often see business people as closed to new and potentially powerful ways of looking at things. As consequence, neither side understands that they need each other’s unique capabilities… Design thinking helps bridge that gap with processes that facilitate communication and collaboration within the group…

In the article Design Thinking by Tim Brown writes: Historically, design has been treated as a downstream step in the development process– the point where designers, who have played no earlier role in the substantive work of innovation, come along and put a beautiful wrapper around the idea. However, things have changed; rather than asking designers to make an already developed idea more attractive to consumers, companies are asking them to create ideas that better meet consumers’ needs and desires. The former role is tactical and results in limited value creation; the latter is strategic and leads to dramatic new forms of value.

Moreover, as economies in developed world shift from industrial manufacturing to knowledge work and service delivery, the innovation terrain is expanding. Its objectives are no longer just physical products; they are new sorts of processes, services, IT-powered interactions, entertainments, and ways of communicating and collaborating– exactly the kinds of human-centered activities in which design thinking can make a decisive difference…

Contrary to popular opinion, you don’t need to behave weirdly to be a design thinker. Nor are design thinkers necessarily created only by design schools, even though most professionals have had some kind of design training…The myth of creative genius is resilient: We have come to believe that great ideas pop fully formed out of brilliant minds, in feats of imagination well beyond the abilities of mere mortals. But in most cases, it’s neither sudden breakthrough nor lightning strike of genius; it’s result of hard work augmented by a creative human-centered discovery process and followed by iterative cycles of prototyping, testing, and refinement.

The design process is best described, metaphorically, as a system of spaces rather than predefined series of orderly steps. Where the spaces demarcate different sorts of related activities that together form the continuum of innovation. Design thinking can feel chaotic to those experiencing it the first time but over life of a project– users come to see that the process actually achieves results even though its architecture differs from the linear, milestone based processes typical of other kinds of business activities…

Many of the world’s most successful brands create breakthrough ideas that are inspired by a deep understanding of consumers’ lives and use the principles of design to innovate and build value. Also, sometimes innovation has to account for vast differences in cultural and socioeconomic conditions… design thinking can suggest creative alternatives to the assumptions made in developed societies…

In the article Design Thinking Is A Failed Experiment by Bruce Nussbaum writes: Design thinking has given the design profession and society at large all the benefits it has to offer and is beginning to ossify and actually do harm. Design thinking originally offered the world of big business– which is defined by a culture of process efficiency– a new process that promised to deliver creativity. By packaging creativity within a process format, designers were able to expand their engagement, impact, and sales inside the corporate world.

Companies were comfortable and welcoming to design thinking because it was packaged as a process. There were many successes, but far too many more failures in this endeavor. Why? Companies absorbed process of design thinking all to well, turning it into a linear, gated, by-the-book methodology that delivered, at best, incremental change and innovation.

Call it N+1 innovation. CEOs in particular, took to the process side of design thinking, implementing it like Six Sigma and other efficiency-based process. Design thinking made design system-conscious at a key moment in time. But it was creativity that design thinking was supposed to deliver, and it falls short…

Business must show healthy organic growth to survive-prosper, and design thinking, for some, can make that happen… According to Tom Post; design thinking is not about magic – it’s about generating practical, value-creating ideas and translating them into real market applications that drive growth.

However, while design needn’t be magic, it’s exasperatingly messy in practice. In large organizations, we tend to value order and control above all else – and we structure our organization and processes to produce it. In business, ambiguity-uncertainty is uncomfortable; we crave predictability and order, but growth is about creating new value, and once we accept the messy reality that behavior is driven by more than economic logic, we have no choice but to accept the messiness that is, in fact, humanness.

So design thinking is messy – there is no way around it. Part of this has to do with the kinds of problems that design is especially good at. These problems are often messy – or ‘wicked’ as ‘Hoerst Rittel’ labeled many problems of design. Wicked (as opposed to ‘tame’ problems) have multiple stakeholders involved – who usually can’t agree on definition of the problem, much less its solution…

According to Glenn Fajardo, John Rehm, & Kal Joffres; design thinking theory is great, but getting to implementation is often difficult. It’s like learning to ride a bicycle, it’s experiential. You cannot learn it just by having someone explain it to you– you have to actually try it yourself to find your own balance.

Also, you must practice it to get better, and increase your understanding by observing and interacting with more advanced practitioners– in this way, it’s social. You enhance your understanding by practicing with peers, sharing perspectives, and giving each other feedback. This learning combination of the experiential and the social means thinking of ‘design as craft’ rather than, design as a codified process or design as an outcome.

According to venessa miemis; design thinking is about interaction between feasibility (what is functionally possible in foreseeable future); viability (what is likely to become part of a sustainable business model); and desirability (what makes sense to people and for people), with an emphasis on ‘the people’ for which the product or service is being designed. So whether you hope to employ design thinking to restructure the culture of an organization or innovating a new product or service, it’s important to remember that it’s more than a set of simple tactics that can be implemented overnight.

It’s more like a new ecology of mind that takes time to grow, adapt, and evolve. It still requires adherence to sound business decision-making, but also commitment to challenge one’s own beliefs about ‘the way things work’ by focusing-on people’s unspoken and unmet needs…

Tax Loopholes– Corporation, Business, Special Interest..: Red Herring– Shifting Burden, Avoiding, Dodging– Political Reality…

The precise point at which tax deductions become– tax loopholes or tax incentives become– subsidies for special interests is one great mystery of politics. ~John Sununu

U.S. corporations, businesses– like many U.S. citizens– exploit every available rule in the tax code to minimize taxes they pay: These are tax deductions, incentives or loopholes… also known as tax expenditures, in the arcane lexicon of budget experts. Tax expenditures have grown significantly since early 1990s, which is a consequence of increasing demand for government programs coupled with resistance to raising taxes. Last year they added up to more than 7% of the nation’s economic output; sizable figure considering that all federal taxes took some 15% of the economy.

The term loophole is derived from loupe which refers to a narrow opening in a wall. This slit-like window or loophole was located in medieval castles, and used to deflect incoming projectiles… According to Eric Epstein; modern-day corporation, business and many other groups exploit loopholes to deflect tax burden. Tax loopholes are provisions in tax law that removes income or assets from taxable situations into ones with either lower taxes or no taxes at all without directly violating law.

According to Eric Toder and Donald Marron; spending-like exclusions or loopholes increases size of the federal government by about 4% of gross domestic product; that’s about $600 billion in hidden spending through tax code, last year alone.

According to Eduardo Porter; just because some tax breaks are inefficient and misdirected does not necessarily mean that the goals they serve are unworthy… it only means there may be more effective ways to achieve government objectives. Utilizing loopholes isn’t breaking law, but circumventing it in a way that was not intended by regulators or legislators that put the law or restriction into place.

However with the fiscal crisis, it’s important to begin an open debate about the purpose, efficacy, and cost of many tax loopholes… But, that is not the same as simply looking for loopholes to close: It’s a debate about purpose of government and how best to achieve its goals…

In the article Big Corporations Use Loopholes by Jia Lynn Yang writes: Many large U.S. companies pay no federal taxes– or even make money through credits and refunds from the government by using an array of tax loopholes and tax breaks… A report by ‘Citizens for Tax Justice and Institute on Taxation and Economic Policy’; examined finances of 280 corporations from 2008 through 2010 and found; 30 paid zero taxes or used loopholes to wind up with negative tax rates. Under the federal tax code, corporations are supposed to pay 35% of their profits in taxes.

But the study found many of the companies used legal tax breaks that allowed them to pay lower rates than ordinary Americans. Powerful business lobby groups, such as; ‘Business Roundtable’, have said they want lawmakers to lower the overall 35% tax rate in exchange for closing some loopholes. Lobbyists frequently cite this rate when arguing that U.S. firms pay more than foreign competitors. Some corporations pushed back at the report, saying it relied on fuzzy accounting.

The report said that 71 of the companies paid effective rate of more than 30% over the three years. But roughly equal number paid less than 10%. The range between industries is wide: Retail and health-care companies, in particular, tend to pay more taxes. These firms usually have less intellectual property that can be shifted overseas to take advantage of other countries’ lower tax rates. The report found they paid an effective rate of 30% over the three years. By contrast, tech companies and manufacturers paid far less…

In the article What You Can Do About Corporate Loopholes by Robert Broens writes: While the official U.S. statutory corporate income tax rate stands at 35% the Government Accountability Office (GAO) estimates effective tax rate is 25.2%. This 10 points difference makes U.S. tax rate competitive with other developed nations. The U.S. Congressional Budget Office (CBO) estimates that U.S. corporate tax receipts for 2011 came in at $181 billion. Using the 25% effective tax rate estimate from the GAO this means U.S. taxpayers are missing out on an annual $71 billion in tax receipts.

There are many loopholes for corporations and cost estimates for the tax payer that fluctuate wildly. The following is just a small overview of the most important and bizarre loopholes: One of the most important loopholes is the deferral of income from foreign controlled corporations. U.S. corporations can leave profits abroad and can defy paying U.S. taxes until they transfer those profits back into the U.S. (repatriation). ‘Credit Rating Agency Moody’s’ estimates corporations hold some $1.2 trillion in cash balances– and stored some $700 billion overseas.

Other loopholes include: Companies can deduct punitive damages (or settlements) from their income; flexible ways of accounting (mostly LIFO inventory system); modified accelerated depreciation schemes (corporate jets can be depreciated faster than commercial airline)… Estimates are 83 out of the top 100 U.S. firms have shell companies in offshore locations with the sole purpose of tax evasion…

On average the 280 companies investigated, in the report of ‘Citizens for Tax Justice’, paid an effective tax rate of 18.5%, or $251 billion in corporate taxes on their reported profits of $1.35 trillion for the three-year period of 2008-2010. When, they should have paid almost double that amount. In 2011 U.S. Federal income tax receipts totaled some $181 billion according to the CBO. The 280 companies, in the report of ‘Citizens for Tax Justice’, paid $85 billion in corporate taxes in 2010 on nearly $488 billion in earnings, for an effective tax rate of 17.5%, half of what they should have paid.

Just this sample of 280 companies should have paid around $170 billion in taxes– somewhere they found $85 billion in loopholes. While there are valid arguments that a tax rate of 35% is very high, their effective tax rate is 17.5%, which implies that small and medium businesses pay a much higher tax rate as their effective tax rate is estimated at 25.2%. Some of the reasoning is that these companies do not have access to expensive consultants, accountants or foreign shell companies…

This is crucial as economists agree that small and medium businesses are critical for getting employment growing again. This distorted tax code creates competitive advantages for the largest corporations and impacts the market place in a severe manner. Clearly, there is room for tax reform…

In the article Corporate Tax Giveaways–Outcry–Profit! by Suzy Khimm writes: Pundits on both left and right were outraged when they realized a whole flotilla of corporate tax giveaways were buried in the fiscal cliff deal; ranging from a tax break for race-car track owners to electric-scooter makers…

According to Matt Stoller; surely a modest hike in income taxes for people who make more than $400k in income would be worth trading-off for the few hundred billion dollars in corporate pork. This is what the fiscal cliff is about – who gets the money…

According to Tim Carney; tax breaks that came out of Senate legislationattracts lobbyists like a raw steak attracts wolves... But the animus against the narrowly targeted tax breaks, known as ‘tax extenders’, could actually help corporations in their effort to land a much bigger prize, than temporary giveaways, i.e., comprehensive corporate tax reform. Neither party, actually, likes the current tax system for corporations, which is riddled with too many loopholes and complexities, and both agree that it should be simplified by eliminating many tax loopholes…

At the same, both parties have promised that such reform would also be accompanied by significant cuts to the corporate tax rate… Republicans want to lower tax rate to 25% and White House says 28%. A comprehensive overhaul would also deal with overseas earnings, paving way for corporations to make the case for transition to territorial tax system that would eliminate taxes on foreign income– holy grail– for multinationals. Both Republicans and Democrats seem to agree that the package should be ‘revenue-neutral’— i.e., overall tax burden on corporations would be the same, just enacted through a tax code that would be simpler and more efficient….

Closing corporate tax loopholes, for sure, sounds good… So good, in fact, that politicians talk about it all the time. According to some experts; loopholes are gaps in tax law that corporations exploit against law’s intent, while others say; that is not the case...

According to Eric Toder; most tax proposals are not loopholes, but incentives… According to David Barrett, CPA; tax professionals work within the tax code to find the best options for their clients to pay least amount of taxes that are legally required. As for tax code, it’s more than 4,000 pages and ever-changing; it’s incomprehensible to the average taxpayer, and so complex that it’s accompanied by 10,000-page document to decipher it… all of that contributes to some of the so-called loopholes.

According to Lougen Valenti; the concept of loopholes is somewhat of a myth– much of this talk is politically driven. What we do for clients is tax planning and giving business advice, not tax loopholes. We help clients plan and use the law to advantage, and contrary to the idea that wealthy clients are simply beating the tax person. Proper tax planning frees up funds for investment, for example; expanding business, hiring employees, investing in product development.

A common  misconception is tax-saving opportunities are only available to the wealthiest… there are countless small businesses that are able to thrive because of tax-saving options available to them. Also, there are plenty of deductions for individual taxpayers, in the middle class, as well. Even though there is little agreement on the level and scope of taxation in U.S.; nearly all participants in the tax debates agree that the system needs fundamental reform–making the system fair, more understandable, easier to navigate…

However, one thing remains clear; the kind of corporate tax reform that both political parties are proposing is ‘revenue-neutral’, i.e., off-setting tax rate by closing loopholes and expenditures; but, that isn’t going to reduce the deficit…

According to Scott Rasmussen, pollsters, says 80% of Americans would favor a simpler tax code, with lower rates and fewer deductions, e.g., flatter, fairer, broader-based system for individual and corporate income. The idea has proponents even among politicians, although it’s fair to wonder whether they actually have the will to act…

Deductions or loopholes are granted to favored groups and those groups, in turn, lobby members to retain, extend or expand their favors: As circles go, it’s not always most virtuous: People are not powerless– they decide who serves in Washington DC; and until they make it clear on– what they want– they get government they deserve.