Counter Feitcures

Why Great Leaders Don't Make Predictions About Things They Don't Know

2016-06-27T02:23:00.002-07:00

Us humans don't like uncertainty.

Trying to predict where the economy is going. Needing to know what the weather's going to be like next week. Guessing whose going to win Wimbledon.

The need for certainty is understandable. As highly cognitive creatures, our imaginations can easily run wild. It's easy to get overly excited or become despondently fearful. Without a strong degree of certainty in our lives it would be almost impossible to get anything done.

So in order to try and develop uncertainty in this highly complex and often uncertain world, we make our own predictions about what will happen.

But there's one big problems with predictions.

They're very difficult to get right.

To maximise our chances of trying to make accurate predictions, it's essential to have strong expertise and knowledge of the circumstances in question. That's why top institutions always look to find guidance from the best experts in a particular field. Rather than forming loosely created opinions, they identify, listen and trust the judgement of experts.

Important predictions should be left to those who know what they are talking about.

Unfortunately, in many cases often the opposite is true.

If we're brutally honest with ourselves, most of us have strong opinions about almost everything. In many cases we're often more than willing to try and predict almost anything.

Whose going to win the election. What the effect of Brexit will be. How the new high profile football signing is going to perform next season.

But great leaders are different. In ten years as a recruiter having worked with several high performing leaders, I can say with confidence that the best leaders rarely try to predict things they know little about. They realise the responsibility they have and rarely stray outside their own expertise.

Here are some reasons why great leaders don't make predictions about things they don't know.

It's better to ask and expert

Everyone has an opinion.

Opinions only take a few seconds to create and with a little bit of research and enthusiasm, it's easy to sound convincing.

Yet hardened, real-life experience is much harder to find. And the value of this expertise is often much more valuable.

Great leaders understand that specialized expertise directed towards specific problems is the definition of their power. In order to predict circumstances accurately it's best to listen to small numbers of impartial specialists rather than even a large amounts of strong "opinions".

Not only does this improve the likelihood of success but also save time, energy and confusion.

Great leaders trust experts.

It can effect others

Leadership is a big responsibility.

In fact, the more a leader considers their followers, the better the leader they usually are. That's why they only comment on things they are knowledgable about, since they appreciate the significance it may have on others.

One of my well known clients is the CEO of a very well known FTSE company. He's renowned in international business for his leadership skills and ability to aspire others. I once asked him what he felt was the biggest reason for his success and his reply was instant:

"Sticking to what I know. It's the only way to build credibility with others".

Great leaders understand that people look up to them. Especially during times of emergency. Hence they realise the importance of having credibility with their followers and only making decisions based on sound analysis.

Otherwise people will see straight through them.

Great leaders act responsibly.

It can be better to see how things play out first

But perhaps most importantly, there's also one other big reason why the best leaders don't make predictions too hastily.

It's because often there's no reason to do so.

You see the problem's with making predictions is that often it's almost impossible to be right. Often situations are so complex and reliant on so many external factors that no prediction can be accurate. Even with the best experts and analysis results are simply too unpredictable.

Great leaders understand that rather than spending endless time trying to play God and trying to predict the future, its usually better to focus on actually doing. Focussing on the circumstances in hand and doing the right thing at the right time. They realise that in this increasingly connected world, uncertainty is now a part of every day life. With business models, economies, civilisations and technologies continuously being uprooted and disrupted, the simple truth is that no one can predict what's going to happen.

Great leaders focus on actions rather than predictions.

Conclusion

Anyone can make a prediction.

But accurate ones can only come with hardened expertise.

Great leaders believe that rather than trying to forecast a prediction on everything, its better to focus on what they know. To only comment on subjects they have expertise in, and to make predictions carefully.

It's the only way to build credibility with others.

Do you make predictions about things you don't know?

China Has High-Performing Companies–It Just Needs a Lot More of Them

2016-06-27T02:22:00.000-07:00

The team at the McKinsey Global Institute has just published its latest door stop of a report on China’s economy, focusing on the trade-off between investment-driven and productivity-driven growth.

The good news for casual readers is that looking first at the supporting exhibits (which give the key insights visually) and then the executive summary, you can quickly and clearly get the picture.

Bottom line: More productivity-driven growth is good. Easy to say, harder to do. Success requires a myriad of company-specific actions, including investment. The good news is that in almost every sector the best-performing Chinese companies are performing at productivity and profit levels close to international peers (the report focuses on comparisons with the US).

So the challenge is not so much to invent new models in China, but to spread the best models rapidly across industries. I have confidence this is happening in sectors dominated by private companies, little confidence that it is happening in the state-dominated sectors.

The productivity journey is not a new journey for many Chinese companies, it is one they have well underway. Just one indication is that more than one-quarter of all industrial robots sold world-wide in 2015 are operating in Chinese factories today.

What stood out to me in the report’s analyses:

How high a share of total corporate economic profit (i.e. returns over cost of capital) goes to the finance sector in China. This can’t be healthy.
That 2.6% of total consumption in Thailand results from Chinese tourism, 1.6% in South Korea. Just brings to life the scale of Chinese international tourism.
How the cost of employing someone (all in costs) has risen year on year on year in double digits. No wonder companies are looking to substitute capital for labor.
How the concentration of income and wealth in the top few is holding back consumption growth in China.
Chinese banks have enough reserves to handle the coming banking crisis.
Top-performing Chinese companies in almost every sector perform as well as the best American peers.
How domestic many very large Chinese companies still are. The “go out” initiative has a long way to run. Although I do think it is unlikely that the suggestion that China export more steel products is going to happen.

Depending on your interests there are some great analyses to pick from.

As always, the answer will be somewhere in the middle. Parts of the Chinese economy will see productivity rise sharply, as it is already doing today. Parts of the state sector will continue to over invest. And there will be consequences that need to be handled, particularly in the displacement of workers.

If productivity rises fast in agriculture – what are the displaced workers (still over 25% of China’s total workforce) skilled to work on instead? If robots (or factories moving abroad) displace tens of millions of workers in a few years, what will the former assembly line workers do? What will the former bank clerks do when their employer aggressively adopts the report’s recommendation to digitize?

There is a follow up opportunity to quantify these second order impacts and create an action list on how to address them.

The only important thing for me that was missing from this current report was a synthesis of how Chinese business and government is doing on the recommendations today. Are they pointing in the right direction? How fast are they travelling down the right path? Of the $5 trillion in extra GDP and household income the report says, respectively, that China could generate by 2030, how much is China on track to capture today?

In China’s more complex and diverse economy of 2016, there are going to be many companies doing all that the report recommends and likely just as many doing none of them. Few of the individual recommendations in the report are entirely new, however their comprehensive integration may be. The enduring value of this report is in creating a policy and action “to-do” list that the MGI team can continue to track China on over time and tell us all just how well China is doing.

Therefore, I would like to ask the team to publish regular follow-ups that give their assessment on how China is doing at the overall productivity-driven level and on the specific recommendations. Is China a 7 out of 10 or a 2 in focusing on productivity over investment? By sector? By privately-owned, by state-owned companies?

As always, great analysis that raises as many questions as it answers. Take a look.

How the Hokey Cokey made me sad to be a Londoner #Brexit

2016-06-27T02:20:00.002-07:00

It was the tone of voice I think. The fact they have always viewed themselves as politically more intelligent than you and I. Someone to raise their voice in a debate, someone with an education exceptionale and parents wealthy enough to spend their years learning the ins and out of running a country. Or maybe it was the way in which they posted rant after preach on why we should remain in the EU. Yes, I am talking about the remain voters - the Innies. And they made me ashamed to be a Londoner this week.

For me what was most profound was the divide within our own country. The stark division between the educated elite and as one pro-remainer described them, ‘the unintelligent’. Then there was the age divide as the young accused the old of ruining their future whilst taking sad-face selfies and tweeting their woes to Justin Bieber.

Lets not forget that the UK is also a community, just as Europe is, and clearly the majority feel affected enough, poor enough and underprivileged enough to have had enough. This deserves respect, not disdain. Shock and trauma can bring out the worst, but from the losing side emerged a deep hatred towards the ‘others’ of Britain that has always been simmering away. These self-xenophobic attitudes rarely come out in daily life - I suppose they have never had the chance because they come from the people who get their own way.

I found myself asking just why were the Remain camp so uncontrollably angry? So much so that millions of people are serious about London leaving the UK. ‘But we’re the intelligent ones?! We’re the ones who have the good jobs. How dare they have gone against us, those disgusting, bigoted, xenophobic, moronic, island-minded fools!’

Lightning is always an omen. Shakespearean and chaotic, Brussels, Berlin and London all had dramatic storms on the night the votes were counted. But they weren’t loud and brash - to me they rumbled ominously as the violet forks shattered the sky. Most significantly, there was uber-intense lightning over the white cliffs of Dover. I wonder if that will be mentioned in the history books whilst we’re all arguing on Mars.

For those interested in astrology this indicated an intense alignment with the planet of change, anarchy and innovation - Uranus. For everyone else it symbolised one of the most dramatic moments in modern history.

People are often afraid of change, but there is no need to spread fear and hate. Yes, there was a murder in the lead up to the referendum, but this person was suffering from one of the main problems the UK has failed to address - poor mental health. Another problem the privileged fail to understand and something we’ve brushed under the carpet for far too long.

To be privileged means to be healthy, wealthy and secure - in mind, body and belongings. I’m sorry to those I offend, but I will always choose democracy, fairness and freedom over free travel to Ibiza, extra cash and a corrupt and broken system.

Data still suggest the world is getting better

2016-06-27T02:19:00.000-07:00

When I published Abundance: The Future is Better Than You Think in February 2012, I included about 80 charts in the back of the book showing very strong evidence that the world is getting better.

Over the last five years, this trend has continued and accelerated.

This blog includes additional "Evidence for Abundance" that you can share with friends and family to change their mindset.

We truly are living in the most exciting time to be alive.

By the way, if you have additional 'Evidence for Abundance' (Charts, Data, etc.) that you've encountered, please email them to me at data@diamandis.com.

Why This is Important

Before I share the new "data" with you, it's essential that you understand why this matters.

We live in a world where we are constantly bombarded by negative news from every angle. If you turn on CNN (what I call the Crisis News Network), you'll predominantly hear about death, terrorism, airplane crashes, bombings, financial crisis and political scandal.

I think of the news as a drug pusher, and negative news as their drug.

There's a reason for this.

We humans are wired to pay 10x more attention to negative news than positive news.

Being able to rapidly notice and pay attention to negative news (like a predator or a dangerous fire) was an evolutionary advantage to keep you alive on the savannahs of Africa millions of years ago.

Today, we still pay more attention to negative news, and the news media knows this. They take advantage of it to drive our eyeballs to their advertisers. Typically, good news networks fail as businesses.

It's not that the news media is lying -- it's just not a balanced view of what's going on in the world.

AND because your mindset matters A LOT, my purpose with my work and with this blog is to share with you the data supporting the positive side of the equation and to give you insight to some fundamental truths about where humanity really is going...

The truth is, driven by advances in exponential technologies, things are getting much better around the world at an accelerating rate.

NOTE: This is not to say that there aren't major issues we still face, like climate crisis, religious radicalism, terrorism, and so on. It's just that we forget and romanticize the world in centuries past -- and life back then was short and brutal.

My personal mission, and that of XPRIZE and Singularity University, is to help build a "bridge to abundance": a world in which we are able to meet the basic needs of every man, woman and child.

So, now, let's look at 10 new charts.

For more, I encourage you to read my book Abundance: the Future is Better than you Think, or apply to join me at Abundance 360 here.

More Evidence for Abundance

Below are 10 powerful charts illustrating the positive developments we've made in recent years.

1. Living in Absolute Poverty (1981-2011)

Declining rates of absolute poverty (Source: Our World in Data, Max Roser)

Absolute poverty is defined as living on less than $1.25/day. Over the last 30 years, the share of the global population living in absolute poverty has declined from 53% to under 17%.

While there is still room for improvement (especially in sub-Saharan Africa and South Asia), the quality of life in every region above has been steadily improving and will continue to do so. Over the next 20 years, we have the ability to extinguish absolute poverty on Earth.

2. Child Labor is on the Decline (2000-2020)

Child Labor on the decline (Source: International Labor Organization)

This chart depicts the actual and projected changes in the number of children (in millions) in hazardous work conditions and performing child labor between 2000 and 2020.

As you can see, in the last 16 years, the number of children in these conditions has been reduced by more than 50%. As we head to a world of low-cost robotics, where such machines can operate far faster, far cheaper and around the clock, the basic rationale for child labor will completely disappear, and it will drop to zero.

3. Income Spent on Food

Income spent on food (Source: USDA, Economic Research Service, Food Expenditure Series)

This chart shows the percent per capita of disposable income spent on food in the U.S. from 1960 to 2012.

If you focus on the blue line, 'Food at home,' you can see that over the last 50 years, the percent of our disposable income spent on food has dropped by more than 50 percent, from 14% to less than 6%.

This is largely a function of better food production technology, distribution processes and policies that have reduced the cost of food. We're demonetizing food rapidly.

4. Infant Mortality Rates

Infant Mortality Rate (Source: Devpolicy, UN Interagency Group for Child Mortality Est. 2013)

This chart depicts global under-five-years-old mortality rates between 1990 and 2012 based on the number of deaths per 1,000 live births.

In the last 25 years, under-five mortality rates have dropped by 50%. Infant mortality rates and neonatal mortality rates have also dropped significantly.

And this is just in the last 25 years. If you looked at the last 100 years, which I talk about in Abundance, the improvements have been staggering.

5. Annual Cases of Guinea Worm

Guinea worm cases (Source: GiveWell, Carter Center)

Guinea worm is a nasty parasite that used to affect over 3.5 million people only 30 years ago. Today, thanks to advances in medical technologies, research and therapeutics, the parasite has almost been eradicated. In 2008, there were just 4,647 cases.

I'm sharing the chart above because it represents humanity's growing ability to address and cure diseases that have plagued us for ages. Expect that through technologies such as gene drive/CRISPR-Cas9 and other genomic technologies, we will rapidly begin to eliminate dozens or hundreds of similar plagues.

6. Teen Birth Rates in the United States

Teen birth rates (Source: Vox, Centers for Disease Control)

The chart above shows the dramatic decline in the number of teen (15 to 19 years old) birth rates in the United States since 1950. At its peak, 89.1 out of 1,000 teenage women were giving birth. Today, it's dropped under 29 out of 1,000.

This is largely a function of the population becoming better educated, the cost of birth control being reduced and becoming more widely available, and cultural shifts in the United States.

7. Homicide Rates in Western Europe

Homicide rates in Europe (Source: Our World in Data, Max Roser & Manuel Eisner)

The chart above shows the number of homicides per 100,000 people per year in five Western European regions from 1300 to 2010.

As you can see, Western Europe used to be a very dangerous place to live. Over the last 700+ years, the number of homicides per 100,000 people has decreased to almost zero.

It is important to look back this far (700 years) because we humans lose perspective and tend to romanticize the past, but forget how violent life truly was in, say, the Middle Ages, or even just a couple of hundred years ago.

We have made dramatic and positive changes. On an evolutionary time scale, 700 years is NOTHING, and our progress as a species is impressive.

8. U.S. Violent Crime Rates, 1973 - 2010

U.S. violent crime rates (Source: Gallup, Bureau of Justice Statistics)

In light of the recent terrorist shooting in Orlando, and the school shootings in years past, it is sometimes easy to lose perspective.

The truth is, in aggregate, we've made significant progress in reducing violent crimes in the United States in the last 50 years.

As recent as the early 80s and mid-90s, there were over 50 violent crime victims per 1,000 individuals. Recently, this number has dropped threefold to 15 victims per 1,000 people.

We continue to make our country (and the world) a safer place to live.

9. Average Years of Education, 1820-2003

Average years of education (Source: Our World in Data, Max Roser)

I love this chart. In the last 200 years, the average number of 'years of education' received by people worldwide has increased dramatically.

In the U.S. in 1820, the average person received less than 2 years of education. These days, it's closer to 21 years of education, a 10X improvement.

We are rapidly continuing the demonetization, dematerialization and democratization of education. Today, I'm very proud of the $15 million Global Learning XPRIZE as a major step in that direction.

Within the next 20 years, the best possible education on Earth will be delivered by an AI, for free -- and the quality will be the same for the son or daughter of a billionaire as it is for the son or daughter of the poorest parents on the planet.

10. Global Literacy Rates

Global literacy rates (Source: Our World in Data, Max Roser)

Along those same lines, the extraordinary chart above shows how global literacy rates have increased from around 10% to close to 100% in the last 500 years.

This is both a function of technology democratizing access to education, as well as abundance giving us the freedom of time to learn.

Education and literacy is a core to my Abundance thesis – a better-educated world raises all tides.

Again, if you have other great examples of abundance (charts and data), please send them to me at data@diamandis.com.

We live in the most exciting time to be alive! Enjoy it.

Join Me

This is the sort of conversation we explore at my 250-person executive mastermind group called Abundance 360.

The program is highly selective. If you'd like to be considered, apply here. Share this with your friends, especially if they are interested in any of the areas outlined above.

P.S. Every week I send out a "Tech Blog" like this one. If you want to sign up, go to Diamandis.com and sign up for this and Abundance Insider.

Why Humility is an Unfair Advantage

2016-06-27T02:15:00.000-07:00

During my research on the VC emotional cycle, I came across several posts and threads trying to teach entrepreneurs on how to use FOMO to generate investor interest.

While most such posts and threads never directly encourage bad behavior, it brought back vivid recollections of some of the choicest encounters I have had with entrepreneurs and other investors.

A lot of entrepreneurs seemed to have bought into the idea that they can hustle their way towards the closure of a deal by manipulating a VC’s intent through their words and actions.

Image source

This post is a throwback to a few examples of such encounters and the undesirable outcomes they create.

Ignoring Reality

During a pitch meeting last year, I questioned the Founder on the likelihood of the target audience adopting his solution. For some reason, he responded to this question by letting me know that he knew the Partners at all large VC funds on a first-name basis. (In most cases, such claims tend to be bogus, to the extent that the said Partner has never even heard of the Founder or his company).

In what I thought was a demonstration of my patience, I repeated my question,verbatim. For my effort, I received a lecture on how VCs needed to support business models that were original and disruptive.

He could not have made it simpler for me to (eventually) say No to him.

Why ?

Because by ignoring my question, he demonstrated that he neither had an answer to my question, nor did he have the humility to accept that fact.

No VC wants to work with an entrepreneur who does not have the humility to accept and improve upon what is not good.

Entrepreneurs aren’t the only ones with Wannabe Elitists in their midst though. At a start-up networking event, I walked up to a gentleman, introduced myself, and requested his credentials.

His response was : “I am an Angel Investor.” Period. (No names or organization details were forthcoming)

I then asked him which companies he had invested in. He answer rather sheepishly that he had not yet made an angel investment, but was “eager” to invest.

In what was perhaps injudicious on my part, I congratulated him in advance for when he would become an angel investor.

Both these examples reminded me of one of my favourite quotes by the authorAyn Rand in Atlas Shrugged,

“We can ignore reality, but we cannot ignore the consequences of ignoring reality.”

Arrogance of Experience

A few months ago, we invited a pitch from a company that operated in a highly crowded space (By most accounts, most spaces are overcrowded these days). One of the Founders of this company also held a very senior position at a start-up that has always managed to be in the news.

When we asked him how his firm would stand out against the over-funded competitors, he laughed and let us know that he had “created” a “team of over 1000 employees” at his previous firm and knew “how to build a business”.

Perhaps he had not heard that the “team” he had “created” was a tiny faction of what it was, abandoned by the very individuals who had started the company. Perhaps he was not privy to the opinion that most of the many investors in the company already considered it a write-off.

In our heads, where would such founding teams rank when we compare them to repeat Entrepreneurs who have delivered outstanding exits in the past as well as Partners & senior leaders of global firms, who, in their pitches to us, have had the humility to acknowledge the uncertainty in the future and the likelihood of failure ?

Rudeness

Another day and another pitch at the coffee shop I frequent the most. The entrepreneur was taking me through his long journey, trying to emphasize how he had learnt how to embrace failure and respect people who struggled to achieve their aspirations.

Right at that moment, we were being served coffee & biscuits by a waiter who knows me well by now. For some inexplicable reason, and to my great disgust, the entrepreneur began mocking the waiter’s accent by loudly repeating “Biscoot” again and again. He broke out into a hearty laugh over what he had just done.

I tried my best to hide the fierce scowl that wanted to reveal itself. I am not sure if I was successful.

The waiter was from a small village in Orissa and always insisted on speaking in English to improve through practice, even when Hindi would have been the easier option.

After the meeting, he asked me why I had to meet such rude people. I couldn’t find a convincing answer.

So much for the entrepreneur who respected everyone’s struggles and aspirations.

But why would such a show of rudeness be a deal-breaker ?

Apart from the fact that conversational decorum and politeness are now considered hygiene for anyone’s likability (and not just the likability of an entrepreneur), let us think about the startup’s early hires.

Employees that join a startup during its early days invariably do so at salaries that are significantly below market standards, and need to be provided with enough non-monetary “feel good” factors to stick around, a fact that startup founders would do well to constantly remind themselves of.

Entrepreneurs who tend to treat people “below” them in a condescending manner will most certainly not be able to attract or retain the best talent, and that makes them unworthy as investment prospects.

Is there any evidence to support the assertion that the best entrepreneurs stay grounded ?

Two recent personal experiences make me believe that the answer is an emphatic Yes.

The entrepreneur I was scheduled to meet (at a cafe), called me as he entered the cafe so that we could locate each other. As soon as we met, he apologized. Since he was on time, I could think of no reason for him to be sorry. When I asked him about it, he said that he should have looked me up on social media before the meeting, so that he would not have had to call just to locate me. (Since then, I have been dreaming of the day an Uber/Ola driver will apologize for calling me about the pickup location)
The second entrepreneur welcomed me into his office by saying that he enjoyed my articles and looked forward to discussing them with me (At that time, I had written only a few). During the meeting, he brought out specific examples and anecdotes I had written about and wanted to know about my upcoming posts. I could not have been more flattered.

To appreciate why I was so taken aback by these two displays of politeness and humility, here is the complete perspective :

Both these entrepreneurs had sold their respective companies for over $100 Million in deals that remain highly celebrated. Their reputation therefore, is widespread and well-established (They have nothing to prove to me, or anyone else).
They had nothing to gain from meeting me (At least nothing directly or in the short-term). Neither of these meetings was a pitch. In fact, it was I who reached out to them, requesting an audience.

I am convinced now that their extraordinary success did not happen in spite of their humility, but because of it.

In fact, over time, I have observed that humility is the essential hallmark of the best entrepreneurs — The ones who are the most likely to appreciate the value of feedback, recognize the uncertainty of future challenges, and who are capable of building a work-environment that values respect and empathy.

If you are an entrepreneur looking for an unfair advantage that puts you in the league of the best, give humility a chance.

You might be surprised by how badass it is

This engineer-turned-toy maker is growing her startup when most are scaling back. Here’s how

2016-06-27T02:11:00.001-07:00

While studying mechanical engineering at Stanford, Debbie Sterling was shocked by how few women were in her classes. In an effort to encourage more women to join the field, Sterling decided to launch a startup that would tackle the problem from the ground up — literally.

Sterling’s company Goldiblox is a children’s toy company known for its main character Goldie, the world’s first girl engineer to be marketed to kids. Since 2012, Sterling has sold more than 1 million construction sets with the hopes of getting girls interested in engineering at an early age. The numbers are bleak — just some 14% of engineers worldwide are women — but Sterling thinks her brand stands to have an impact. That’s why Goldiblox announced last week that it is scaling the company beyond toys into chapter books as well. Partnering with Random House, Goldiblox will launch a series of books about Goldie and her friends in early 2017.

Last week I attended the Global Entrepreneurship Summit at Stanford along with Sterling, where we caught up on how Goldiblox is going, her new partnership with Random House and the issues facing female founders today.

Edited excerpts:

Caroline Fairchild: Give me a little background on how Goldiblox started.

Debbie Sterling: Ever since the beginning, I wanted to build a global franchise around empowering girls. I don’t want to think of it as the anti-princess movement, but more the more-than-princess movement. I studied models like American Girl and Disney princesses and those franchises that really built these pop culture icons that influence girls at a young age. The way they do that is multi-platform. They have toys, apps, bed sheets, dolls and lifestyle items. They completely encompass a young girl’s life. I wanted to do the same thing, but instead of it being a princess, I wanted to make it about inventing, making, engineering and coding. A lot of times those big companies that have these big properties, they can spend four years getting everything ready. But as a startup in my living room, that wasn’t an option. I started with a construction set because of my mechanical engineering background.

CF: It sounds like you are growing a lot right now at a time when most people are talking about a slowdown in startupland. Why are you scaling across product lines now?

DS: What we have been able to do in the last four years is create this amazing brand that moms love. That is really hard to do. The brand stands for something so much greater than toys, so transitioning into other platforms because of the strength of the brand has been a natural next step for the company. In order to grow into these other platforms, we don’t have to do it ourselves. It’s about finding best-in-class partners who can do it justice. The Random House partnership is a licensing deal. We don’t need extra capital to do chapter books because Random House is investing in the books and we get the royalties. In a time when things are slowing down, because of this powerhouse brand we’ve built, we can grow without a lot of capital investment.

CF: Was it hard to give up some control?

DS: We still get to keep the creative control over the characters, which was really important to me. Goldie is never going to have a tiara, ever. Random House found the most amazing author who is a children's book author and a mechanical engineer. We went through so many authors before we found her. We have been developing character bibles for the past four years, so she is going off of those. The stories, though, bring it to life.

CF: What’s the biggest challenge you are working through right now?

DS: One of the biggest challenges is getting more awareness amongst kids. We’ve done a good job of marketing to moms, but kids are notoriously hard to market to. The holy grail is when you have a brand that kids love and moms approve of and not many brands have that. Lego has that, for example, and I think we have that to, but what we don’t have multi-million dollar marketing budgets to spend on national television commercials. We can’t afford to do that. The biggest challenge is that we are competing against the mega-huge princess, pony and fairy companies that are bombarding girls. We are all fighting for their attention.

CF: So why do you think you’ll still win?

DS: Girls today are different today than they were in the past. These girls are empowered, and they love inventing and making stuff. The play patterns are shifting as well; these girls are more digital and they are entrepreneurial. They are not wanting to be confined by the limiting gender stereotypes of the past. What our brand is offering is very different than all of the old. We are not just trying to sell them crap. We really care. We really want to empower them and encourage them and make them feel proud of it. Long term, I think that is going to win.

CF: We are at the Global Entrepreneurship Summit at Stanford. What’s been the most compelling thought that has come out of the discussions today?

DS: I just got out of a panel around crowdfunding and angel investing. It was a packed room of entrepreneurs from around the world, and I feel really lucky that I live here in Silicon Valley and I was a Stanford alum. I had so many great advantages. I look at the stats of the lack of capital going to women and the lack of women entrepreneurs, and it bothers me and is something I want to change. But at the same time, the people in that room were women and they were all speaking up and they want to know who is investing in women and where to go. It was so great to be there and be one example of success. I hope I inspired these women to stick with it. You have to have a lot of grit. You can’t give up at the first no or the hundredth no. You have to keep going for it.

#Brexit Will Fail... For [at least] Ten Reasons

2016-06-27T02:07:00.000-07:00

British PM David Cameron's spectacularly ill-conceived referendum on EU membership is highly unlikely to lead to actual Brexit. Here are ten reasons why:

The terms of the referendum were incorrect, from inception.Foremost, simple majority is far too small to provide potential Brexit leaders the kind of political cover that they need to carry out such a difficult shift in policy. Parliamentary procedure typically requires asupermajority -either 2/3, 55% or similar- for any decisions that fundamentally affect governance. For this reason alone, the British parliament could, and probably should, set the vote aside. In fact, a petition to require a supermajority, as well as 75% turnout, has gathered more than three million signatures as of this writing, far exceeding the threshold for consideration by Parliament. (Ironically, that petition was conceived by aLeave campaigner.) The supermajority standard is not arbitrary: substantial changes in governance are inherently difficult; hence leaders need (and should indeed want) a clear and overarching mandate. Lacking a supermajority, leaders tend to face no-confidence motions on a routine basis.
After the vote, PM Cameron made it clear that he will pass the task of triggering Article 50 (concerning secession from the EU) to his successor. As noted by many, this is a very poison pill, because that successor must thus inherit market turmoil and all of the other short-term effects. It is very unlikely that Leave leadership will retain any reasonable level of public confidence while exercising the Article. Without clear confidence, the new government will fall. Repeatedly.
Numerous details have emerged since the vote, including misstatements regarding NHS financial inputs and [im]migration policy. Galling admissions by Leave leaders such as Nigel Farage will fatally undermine the credibility of subsequent leadership and contribute to (2)...making it almost impossible for a hypothetical Leave PM to actually execute separation from the EU.
The referendum vote isolated London and exposed a very strong regional divide between England (outside London), Scotland, and Northern Ireland. So enormous is the difference of opinion across that border that Scottish independence is again on the table: Scotland certainly wants to remain within the EU. Thus the United Kingdom will formally disintegrate, should Brexit actually occur. That prospect alone is sufficient to turn popular support very strongly against a new, post-Cameron government.
Leave advocates (and some Remain advocates too) have tried to assuage the public's fears by implying that the separation from the EU would take place over ~two years. That is almost certainly incorrect: the markets could not possibly wait for two years for certainty. A two-year period of uncertainty would be fatal to the British economy, and quite possibly the Euro economy as a whole. Hence...
The countries intending to remain within the EU will press for immediate separation of Britain, even as current and new British leadership cry "not so fast." It is clearly in the EU's interest to press for immediate separation, even before various trade and immigration agreements are reached. This is for at least two reasons:- (i) to tamp down market uncertainty; and, perhaps more importantly, (ii) to set a very clear precedent that warns other member states (e.g. the Netherlands) of the consequences of exiting the EU. Britain is to be made an harsh example, to make it difficult for fringe leaders like Geert Wilders and Marine Le Pen to build upon the Brexit result.
Financial markets tend to act in accordance with Newton's Third Law. The British trade imbalance has been cited repeatedly by Leavecampaigners as evidence that the EU needs Britain more than vice versa.However, that trade deficit was computed in terms of pre-Brexit currency. The currency will rebalance, as will the trade, and Britons will find themselves, overnight, with a drastically weaker currency. That will quickly erase the trade deficit and leave Britain in a very weak position.
[Im]migration was given far too little attention in the debates prior to the Brexit referendum. After the referendum, Britons are learning that they have strongly benefited by the [im]migration of many young and educated Europeans to the UK, as well as departure of older Britons to the south. Brexit would cut off critical channels of immigration and leave England with an aging workforce that saps their entitlement accounts. Those seeking good prospects will simply depart England.
The "Norway Model" has been cited as one possible outcome of the referendum. However, Norway is vicariously subject to various EU regulations, even though it has little voice or no in their determination. Such an outcome would clearly be unacceptable to the majority of Britain, as it amounts to taxation without representation.
There are two kinds of immigration into Britain, but Leave campaigners have carelessly lumped them together. It has now become clear that Leavecampaigners have wielded a Trump-esque, xenophobic ploy to block certain kinds of immigration (ahem) rather than present a rational economic strategy concerning immigration as a whole. In actual fact, Britain desperately needs the inflow of young educated talent from other parts of Europe, and that will be crimped off, should Britain actually leave the EU. In fact, record numbers of Britons have already applied for Irish passports, in the hours and days following the referendum. They will consider immigration to Scotland as well, should a second Scottish referendum occur and succeed. The result would be an exodus of youth, at a time when post-Baby-Boom Britain can least afford it.

In summary, numerous very difficult obstacles remain, any of which are individually sufficient to block or at least delay Brexit. However, a delay would be financially fatal; the markets will demand clarity, immediately. The onus is now firmly upon PM Cameron's successors to spell out a mechanism to resolve all of these issues on an expedited schedule - and they will certainly fail.This leaves Britain with two options: (i) that Parliament sets the referendum aside, and/or (ii) a second referendum requiring a supermajority is announced.

BREXIT Tech: It’s Complicated

2016-06-27T02:05:00.002-07:00

The impact of BREXIT is so vast that we may never fully understand its effect. I’m not a political pundit, so I’ll leave the politics of BREXIT to others. Technology is the core focus of my advisory practice, and our solutions group builds digital products for some of the world’s leading multinational corporations. Through that lens, I offer some thoughts about the near-term impact BREXIT will have on the tech sector and make a few educated guesses at the outcome.

Privacy

The EU and the United States have been trying to reach an agreement about data transfers and personal information. The EU struck down “Safe Harbor” a while back, and there is ongoing negotiation on a replacement called “Privacy Shield.”That negotiation has not been going well. The EU wants to exercise very strict regulatory control over the flow of data in, out and around the EU. By itself, this has been bad news for top-tier, US-based, multinational tech firms and all businesses that need to turn data into action in order to compete in the global economy.

BREXIT will impact privacy regulation in at least three ways:

1. As a lame-duck member of the EU, the UK will not be able to add its weight to the regulatory discussions. As an EU member, the world’s 5th largest economy (now 6th because the British pound got hammered that hard by the BREXIT vote) had a loud voice at the table with Germany and France, which want far stricter controls on EU data flow. The UK’s voice of reason on the subject of EU data flow is now silent.

2. The UK’s data policies are sure to differ from the EU’s, so now every company that wants to collect data in Europe will have to comply with the data policies of both the EU and the UK. This will add an extra layer of administrative expense that will likely be passed on to consumers.

3. Even with BREXIT, the UK will have to comply with the EU’s data policies if it wants to move data freely between itself and the EU. To be sure, BREXIT was a victory for digital sovereignty, but now the UK’s sovereign data policies will have to be brought into alignment with the EU’s. Can it be done? Of course. How long will it take and how much will it cost? Unknown. But one thing is for sure: BREXIT is an expensive, time-consuming blow to the globalization of the Internet.

The Yellow Brick Road to Europe

For the start-up community, London was the Yellow Brick Road to the entire EU. As the financial capital of Europe, London was the perfect place to start your start-up. You had easy access to a diverse workforce, and you instantly had the whole EU as a marketplace.

BREXIT will impact investment, funding and the Yellow Brick Road to Europe in at least three ways:

1. London will no longer be a clear choice for start-ups. For many, Berlin, which has a thriving tech community and relatively easy access to capital, will now be a much better choice. It has a diverse workforce and access to a much larger market. This will be especially true for financial technology start-ups.

2) The EU’s Digital Single Market initiative will not include the UK, unless the UK negotiates its way back in. This will have direct and significant economic impact across the whole of Europe and will affect the bottom line of every tech company that was hoping to have a single set of rules for all 28 EU countries.

3. While it is generally true across every aspect of post-BREXIT business, political and economic uncertainty significantly increase the risk of starting and growing a business in the UK.

Data Roaming and 5G

Hopefully, the UK will be able to make a deal with the EU to continue the relatively new legislation that entitles EU citizens to very affordable data plans and cheap (or free) mobile minutes and txts. Data roaming across country boundaries is remarkably expensive and having to navigate additional international phone plans adds friction to the doing of business. Additionally, 5G, the next generation wireless network is on the horizon. Now, two different standards bodies will have to agree on the use of spectrum (the frequencies used to carry its radio signals) and other technical details. This is not fatal by any means, but it will add time and expense, which in turn will slow the progress of high-speed communication in the UK and the EU.

Direct Economic Impact

In 2015, Tech City UK published a report titled Tech Nation: Powering the Digital Economy. At the time of the report, over 1.5 million people were employed in the tech sector, and more than 300,000 of them worked in London. Importantly, the report stated that the “digital economy” grew one third faster than the entire UK economy. This should not be news to anyone. The tech sector is growing worldwide, and certain sub-sectors are growing at breathtaking speed.

Without the free movement of labor, the UK will have to “home grow” the tech talent pool. Great news in the long run, but in practice, HR is the hardest part of the tech business. Foreign-trained, foreign-born, immigrant talent may be controversial, but world-class coders, product designers, engineers and data scientists come from all over the EU. Now, they will need special visas to work in the UK. With so many excellent tech jobs in Berlin, Munich, Madrid and Paris, will it be worth it? Human beings usually take the path of least resistance.

Time Will Tell

I understand that more than 52 percent of the voters firmly believe that BREXIT was the right thing for the UK. Maybe they are right. None of the problems listed here are insurmountable (although the this list is woefully incomplete). They can be solved with time and money. Which is exactly the point. How much more time and money will be spent to fix the parts that were not considered by those who voted leave?

According to @GoogleTrends, “What is the EU?” was the second top UK question on the EU since the #EURefResults were officially announced. The first was, “What does it mean to leave the EU?” Clearly millions of Britons voted with their hearts and not their heads. I’ll leave you to draw your own conclusions.

The #Brexit Effect on India, Speculation on Rajan’s Successor And Other News

2016-06-27T02:02:00.001-07:00

Brexit and India: This weekend, the world was still getting over the shock that was Brexit. After UK voters unexpectedly voted for Britain's exit from the European Union, the question here was what that will do to India. Economists say the already fragile global economic recovery will receive another jolt, that does mean that some ripples will be felt here as well.

That means Indian technology companies, especially IT services, are in for a some rough times. Auto and component companies, which export to the UK, are another group that may be worrying. Local financial markets will naturally catch a cold when the global markets sneeze, although weaker oil prices may be a bonus. While the government has left no stone unturned to reassure investors that India is relatively insulated, the worry sweeping the globe after this vote will reach us in one way or another; hopefully it will be short-lived.

Another interesting story to watch out for is Tata Steel’s sale of its UK business. Potential buyers would have, no doubt, worked Britain’s steel trade with Europe as one of the factors, so there’s a big question mark on what will happen now.

***

Some interesting reads on Brexit and India:

#Brexit Simplified. Story of David Cameron trying to fix leaky taps
Brexit tremors provide opportunities as market regains normalcy
A Brief Take on Brexit and Emerging Markets

For more, follow our UK channel

***

Who After Rajan? The latest thinking in the government is that RBI Governor Raghuram Rajan’s successor should be an economist and not a bureaucrat. Of the five names under consideration, three are former chief economic advisors and three are former deputy governors.

***

Investment sales: You may soon be able to buy mutual funds on Amazon or Flipkart. SEBI and AMFI (the mutual fund lobby) are set to allow e-commerce companies to sell mutual funds. While it looks like a no-brainer, it’s also a new move for both SEBI and the e-commerce players, and should lead to more investors in funds. Another step towards financial inclusion.

***

India’s NSG Bid: India’s attempt to enter the elite Nuclear Suppliers group may have failed as China opposed its entry, but members have agreed to meet again later this year, which means the story is not entirely over. It does put India’s plans to increase the share of nuclear power versus fossil fuels in jeopardy. Meanwhile, India is set to join the Missile Technology Control Regime today.

These Things Will Make You Much Happier

2016-06-27T01:58:00.003-07:00

These Things Will Make You Much Happier

here’s enough advice on happiness floating around out there to make your head spin. Yet, this is understandable, as everyone is different. What makes one person happy might make another miserable.

In the face of so much contradictory, and often subjective, advice, what are you supposed to do if you want to live a happier life? Just forget about all that subjective advice and focus your energy and attention on science-proven facts.

“Happiness is not something ready made. It comes from your own actions.” – Dalai Lama

UCLA neuroscience researcher Alex Korb has spent a great deal of time studying the effects of different happiness strategies on the brain. His findings have a lot to teach us about what actually works when it comes to boosting happiness.

Korb’s research demonstrated that your thoughts—and the emotions you feel in response to those thoughts—have a profound impact on surprising areas of your brain.

Guilt and shame, for example, activate the brain’s reward center, which explains why we have such a strong tendency to heap guilt and shame upon ourselves. Likewise, worrying increases activity in the prefrontal cortex (the rational brain), which is why worrying can make you feel more in control than doing nothing at all.

Gratitude creates happiness. I’m not advocating worry, guilt, and shame as the path to happiness. The illustration shows why we tend to succumb to thoughts that fuel these emotions. The real neural antidepressant is gratitude. Gratitude boosts levels of serotonin and dopamine—the brain’s happy chemicals and the same chemicals targeted by antidepressant medications. The striking thing about gratitude is that it can work even when things aren’t going well for you. That’s because you don’t actually have to feel spontaneous gratitude in order to produce chemical changes in your brain; you just have to force yourself to think about something in your life that you appreciate. This train of thought activates your brain to make you feel happier.

Labeling negative feelings dilutes their power. There is an amazing amount of power in simply labeling your negative emotions. In one study, participants underwent fMRI scans of their brains while they labeled negative emotions. When they named these emotions, the brain’s prefrontal cortex took over and the amygdala (where emotions are generated) calmed down. This effect doesn’t just work with your own emotions; labeling the emotions of other people calms them down too, which is why FBI hostage negotiators frequently rely on this technique.

Making decisions feels good. Similar to naming emotions, making decisions engages the prefrontal cortex, which calms the amygdala and the rest of the limbic system. The key is to make a “good enough” decision. Trying to make the perfect decision causes stress. We’ve always known that, but now there’s scientific research that explains why. Making a “good enough” decision activates the dorsolateral prefrontal areas of the brain, calming emotions down and helping you feel more in control. Trying to make a perfect decision, on the other hand, ramps up ventromedial frontal activity—which basically means your emotions get overly involved in the decision-making process.

It helps you to lend a hand. Taking the time to help your colleagues not only makes them happy but also makes you happy. Helping other people gives you a surge of oxytocin, serotonin, and dopamine, all of which create good feelings. In a Harvard study, employees who helped others were 10 times more likely to be focused at work and 40% more likely to get a promotion. The same study showed that people who consistently provided social support to others were the most likely to be happy during times of high stress. As long as you make certain that you aren’t overcommitting yourself, helping others is sure to have a positive influence on your happiness.

Our brains are wired for touch. Humans are social animals, to the point that our brains react to social exclusion in the same way that they react to physical pain, with activity in the anterior cingulate and insula. Similarly, our brains are hardwired to interpret touch as social acceptance. Touch is one of the primary stimuli for releasing oxytocin, which calms the amygdala and, in turn, calms emotions. There are even studies that show that holding hands with a loved one actually reduces the brain’s response to pain. You might think that’s bad news for people who are socially isolated, but studies show that a massage increases serotonin by as much as 30%. Touch reduces stress hormones, decreases the perception of pain, improves sleep, and reduces fatigue.

Bringing It All Together

Kolb’s research highlights just how amazing the brain is, and he summarized his findings succinctly when he said, “Everything is interconnected. Gratitude improves sleep. Sleep reduces pain. Reduced pain improves your mood. Improved mood reduces anxiety, which improves focus and planning. Focus and planning help with decision-making. Decision-making further reduces anxiety and improves enjoyment. Enjoyment gives you more to be grateful for, which keeps that loop of the upward spiral going. Enjoyment makes it more likely you’ll exercise and be social, which, in turn, makes you happier.”

Do you think these tricks might work for you? Please share your thoughts in the comments section below, as I learn just as much from you as you do from me.

ABOUT THE AUTHOR:

Dr. Travis Bradberry is the award-winning co-author of the #1 bestselling book, Emotional Intelligence 2.0, and the cofounder of TalentSmart, the world's leading provider of emotional intelligence tests and training, serving more than 75% of Fortune 500 companies. His bestselling books have been translated into 25 languages and are available in more than 150 countries. Dr. Bradberry has written for, or been covered by, Newsweek, TIME, BusinessWeek, Fortune, Forbes, Fast Company, Inc., USA Today, The Wall Street Journal, The Washington Post, and The Harvard Business Review.

If you'd like to learn how to increase your emotional intelligence (EQ), consider taking the online Emotional Intelligence Appraisal® test that's included with theEmotional Intelligence 2.0 book. Your test results will pinpoint which of the book's 66 emotional intelligence strategies will increase your EQ the most.

Brexit Blues: What Happens Next?

2016-06-27T01:34:00.003-07:00

It’s official: UK voters decided to leave the European UnionWhat happens next? As noted in Brexit Q&A, the “Leave” win means that the UK government must decide when to invoke Article 50 of the Treaty of Lisbon, which outlines the legal process by which a state can withdraw from the EU.

. Brexit was a seismic and unexpected result, which caught global investors off guard (more on that later). The big question:

Prime Minister David Cameron announced that he would step down in October and suggested that the next Prime Minister should initiate the Article 50 process. Once it does, the withdrawal negotiations would begin. At a minimum, it would take two years, but that time frame could be extended by unanimous agreement among the remaining 27 member nations. During the process, the UK would obey EU treaties and laws, but not take part in any decision-making.

The biggest issue is how trade would be handled between the EU and the rest of the world. According to law firms Davis Polk and Sullivan and Cromwell, two powerhouses that advise multinational corporations, there are three basic options for the UK’s exit, based on existing models. Leaders of the Leave movement did not advocate a specific alternative during the campaign, so it is unclear which model they will follow.

Total exit: the UK leaves the EU and does not continue to benefit from any part of the single market. The UK either relies solely on the rules of the World Trade Organization (which include rules governing the imposition of tariffs on goods and services) as the basis for trading with the EU or negotiates a new bilateral trade deal with the EU.

The Norwegian model: the UK leaves the EU but joins the European Economic Area (EEA). The EEA is made up of 28 EU member states and three countries, which are not EU member states (Norway, Iceland and Liechtenstein), and extends the free movement of goods, services, capital and persons beyond the EU to those three countries. Under this arrangement, the UK would not benefit from or be bound by the EU’s external trade agreements. It would have to make significant financial contributions to the EU and continue to allow the free movement of persons, two of the Leave camp’s main criticisms of EU membership.

The Swiss model: the UK leaves the EU and does not join the EEA, but enters various bilateral agreements with the EU to obtain access to the internal market in specific sectors, rather than the market as a whole. Switzerland has negotiated a large number of sector-specific bilateral agreements with the EU and has access to some parts of the single market, but is excluded from the single market in some major sectors (for example, the financial services sector).

BREXIT impact on US companies: The choice of model will impact US companies that have a large presence in the UK. One sector in particular that is left hanging is financial services, because under the “Total Exit” or “Swiss” models, there would be no right for UK-authorized firms or individuals to provide financial services in the EU on a “passported” basis. This is critical because most US financial institutions currently use a UK-authorized person and/or entity to provide financial services elsewhere in the EU. Without passporting, the companies would need to obtain authorization from a EU member state by either establishing an authorized branch or subsidiary in that state.

Loss of passporting would create legal, compliance and infrastructure headaches, not to mention steep costs to US firms. Additionally, many US banks make London their hub across the pond because of the access to talent, support services and the use of English as the global language for financial services. So while many Wall Street operations and legal departments are scouting locations in Dublin and Frankfurt, they are hoping that they will not have to move the majority of their people and offices.

MARKET REACTION: At 1:00am, when the referendum results were becoming clear, the first thing I did was to look up when US stock market circuit breakers are triggered. At that time, the British pound sterling tumbled to its lowest level since 1985, US stock futures were getting crushed and the mad dash to safe assets like US treasuries, German bunds and gold was under way. The news from trading desks across the globe was that unlike in 2008, there was no liquidity crisis and markets were functioning fairly well.

At the end of the trading day, the damage was not too bad, considering the magnitude of the news. US stock markets were down 3.5 to 4 percent, Treasury bond prices jumped and yields fell; and gold added 4.6 percent. The action in the UK and Europe was instructive: the UK FTSE 100 index fell 3.1 percent, boosted by export-driven companies that would benefit from a weak Pound. The larger FTSE 250 index fell 7.2 percent, its worst one-day drop percentage fall since Black Monday in 1987.

Meanwhile, European exchanges also slumped. The German DAX fell 6.8 percent and the French CAC-40 fell 8 percent. Investors are clearly worried about the impact of the BREXIT on the European economy and likely understand that a protracted and nasty divorce could push the EU into a recession.

CENTRAL BANK TOOLBOX: Over the past eight years, amid the financial crisis, worries about Greece and a generally sluggish economic recovery, global central banks have been able to soothe markets with interest rates cuts (sometimes going negative) and unconventional tools like bond buying (“Quantitative Easing”). This time around, though, the central bank toolbox may come under pressure. Global interest rates are already close to zero and bond buying may not do the trick if the BREXIT shock causes individuals and businesses to shut down and do nothing for a while.

That said; the next Federal Reserve occurs July 26-27 and if the cloud of EU uncertainty has prompted a further sell off in stocks, a rise in the US dollar and general mayhem around the globe, don’t be surprised if Janet Yellen and company reverse course and explicitly say that the central bank is not going to keep raising rates and would consider undoing last December’s hike and launching QE IV, if conditions worsen.

Frexit, Italeave, Czexit: Some economists and traders are concerned that because the world was not prepared for BREXIT, there could be a domino effect, whereby other nations will choose to leave the EU. Even a coordinated central bank intervention could not fight off the power that a fraying EU might create throughout the world.

And now, the weather: After talking to a number of traders, economists, bankers and analysts, it is clear to me that very few of them thought that BREXIT would occur; as a result, they are still in a bit of shock. While Friday was not terrible, the short, intermediate and long-term implications of BREXIT are simply unknowable. Like the weather in London, it looks we will be forced to live with lots of clouds, occasional storms and hopefully, a ray of sunshine.

Soil the law of return

2016-06-27T01:30:00.001-07:00

The thin mantle of Soil that covers our Earth is what feeds and nurtures us. We are innately and inextricably connected to soil for our survival, for like humans it contains the universal life-force without which we would not survive. Only a fertile soil contains the billions of amazing and diverse creatures and microbes, from earthworms to fungi, which provide the energy that drives our food systems.

A square metre of good healthy rich soil can contain up to 7 billion living organisms which are the “workers” in the “factory” of soil. It is this soil that yields healthy plants which cleanse our air, produce our oxygen, feed us and our animals, and is the most important resource of every farm, smallholding and suburban home.
Improving and maintaining the fertility of the soil is the central focus in Natural, Ecological, Biological, Sustainable and Organic farming.

Feed the soil, not the plantFeeding the crop begins with feeding the soil first, for the plant has been designed to feed itself- hence no human assistance or intervention is required in the wild. As long as soil fertility is measured only by the crop yields, awareness about the soil will remain low. Soil in this context is just a medium where plants grow and is a base to apply plant fertilisers, normally in a chemical format- and the resultant food crops are low in nutrition and vulnerable to pests and disease.

A quote from Gary F. Zimmer in his book ‘The Biological Farmer’:
“Agronomists and soil scientists have written that at least 16 elements are needed to grow plants, and the productivity of a soil can never be greater than the plant food element in least supply. Soil is a complex mixture of several components, capable of supporting plant life. Typical soils contain minerals, water, air, organic matter & living organisms. Not all the minerals are available to plants at one time, as most in typical soil are “locked up” in the molecules of the mineral particles, and this is the Biological farmer's secret. Through soil structure changes, large root systems and biological activity, the farmer can help nature release some of those tied up minerals. You need to make these nutrients “exchangeable” or available to the roots of the plant, because nutrients interact and an excess of some elements can cause a shortage of others, even though it appears there is enough on a soil test”.

The Law of Return states that nutrients removed, must be returned in the quantities taken away, in order to maintain a balanced ecological state and fertile soil.

Agro-chemical farming misses the boat
Agro-chemical farming methods return at best 3 or 4 nutrients (fertilizers in a chemical format) into the soil. (NPK mostly- foliar feeds do not count) The other 13 plus are eventually removed totally, and are missing in the “food” grown there.

A quote from ‘The Soul of Soil’ by Grace Gershuny and Joe Smillie:
“The basic aim of ecological soil management is to provide hospitable conditions for life within the soil. Sustainable agriculture aims to protect the soils ability to regenerate nutrients lost when the crops are harvested- without dependence on “off-farm” fertilizers. This depends on the diversity, health and vitality of the organisms that live, grow, reproduce and die in the soil. Through the activities of these soil microbes the basic raw materials needed by plants are made available at the right time, and in the right form and amount.”

In my view the most important replenishment actions are:

Application of rich compost/organic fertilizer full of diversity replacing those nutrients taken away. The plant decides how much to take up and when.
Intercropping and companion planting brings diversity, supplies carbon, fulfills an integrated pest management role, provides a green mulch which keeps soil cool and moist, and outcompetes weeds.

- Alvin Horne, Compost Matters Pty Ltd (compostmatters.com.au)Improving and maintaining the fertility of the soil is the central focus in Natural, Ecological, Biological, Sustainable and Organic farming. This is the foundation on which we have built Compost Matters as a leading supplier of cutting edge, cost effective composting solutions for everyone. Compost Matters recognises the importance of the carbon cycle and the significant contribution our industry makes through organic waste resource recovery and beneficial re-use of composted and further processed organics.