I was listening to an interview with Seth Godin and he brought up some interesting points about productivity.
First, he defined productivity as:
Productivity is an economic measure of how much you output per hour for the amount of time and resources you put in.
The UK has been talking about a “productivity puzzle” for a number of years. In 2014, the Bank of England said that labour productivity was very weak, around 16% below where it should be.
There are two main hypotheses on why this is the case:
Companies are holding off on firing people because they believe that demand will return, but as there is less demand right now, they are making less per person as a result.
Companies are investing less money into their businesses, meaning that workers are working with old tools and so can do less.
But, I wonder, is this missing the way in which work is changing.
A lot of the work we do now is knowledge work. We can’t build better machines to think better. We just have to start learning how to become more effective at doing the thinking work we need to do.
For many people in the workforce still getting used to digital technology the changes are overwhelming. There is a torrent of stuff coming at them, emails, twitter, video – all kinds of things that just take up time.
We still try and manage the complex work involved in businesses that do knowledge work by having meetings, talking to each other, spending hours moving around in cars to meet people face to face.
How is that productive? While you are doing all that talking and moving, nothing is actually being done that is of any use to anyone.
One company is doing things differently. Automattic runs its billion dollar company with no offices.
Automattic is a totally distributed company, so everyone works from wherever they are in the world. It could be a coffee shop, it could be their home, it could be a co-working space. We hire people regardless of where they are.
The “Automattic creed” states that communication is the “oxygen” for a distributed company.
Matt’s view is that skill in writing represents clear thinking. If I can become a better writer, perhaps I can become a better thinker.
The first few explanations of blockchains that come up when you search for the term seem incredibly complicated.
So, what is it and why should you care? Here are some notes to help.
Blockchain is the technology that makes the virtual currency Bitcoin possible.
It has created the ability for people to create a currency and buy stuff with it without going through a bank, completely bypassing the existing financial system.
For example, if you want to agree a contract with someone, buy a house or just pay for a snack, you are agreeting a transaction with someone else.
To seal the deal, you will have to hand over some money, or sign a piece of paper. That is the evidence the transaction took place.
The records of that transaction are kept in banks, land registries and big paper files. When you want to transfer money or property, you ask the bank to send money or hand over the deed to another person.
The problem starts when record keeping is bad or can be hacked. If you live in a country where land records can’t be found, or can be lost easily, then you could lose your house.
It’s the same with many other transactions: contracts can be faked; bank accounts can be hacked and the amounts modified.
So the key to keeping things safe is recording them in a safe place.
So, if you could take the information that you want to keep safe, create a way of encrypting it so that it can’t be changed, store that in a place where it can’t be deleted and be able to always prove which piece of information is right and which is wrong, then you would have a more secure system.
In essence, this is what Blockchain does. It creates an unbreakable code that is updated with careful rules that mean that information is much safer than before.
Some people think that this will change everything about the way in which we transact with each other, from money to contracts and more.
Others think that this is such a radical change which creates an entirely new way of recording what you own that it could take years to be accepted.
Over 2,000 years ago, people used clay tablets and sticks to record who owned what.
Blockchain pretty much helps do the same thing now.
These 6 charts will help you structure the way in which you interact with data – and help you get insights in a systematic way.
1. Time Series
Much of the data you will analyse will have an order in which it was collected.
The Time Series chart is the way in which you get a first look at the data.
A simple line chart will tell you how something is changing over time. Is it:
This chart is the one you use when you want to talk about trends and patterns.
A histogram tells you how frequently a value appears within a range.
This is the basis of the well-known “bell curve”.
In any data set, a large number of values will be close to the average.
A small number will be outliers at the lower end or the upper end of the distribution.
A histogram helps you understand the shape of the data by asking questions like:
Does it look normal?
Is it skewed in some way?
Are any values isolated?
Are there odd peaks?
Does it fall off like a cliff?
The shape of the distribution tells you a lot what could be happening.
In energy data, a peak at the wrong time could alert you to equipment being left on.
A well-controlled system might have a sharp rise at exactly the time all your equipment is switched on.
3. Pareto chart
A Pareto chart is the basis of the “80:20” rule that says that (roughly) 80% of the effects come from 20% of the causes.
If you order the causes from largest to smallest, and draw a line that shows you the cumulative percentage, you will be able to quickly identify the factors that matter.
You can then focus on fixing the problems caused by these factors, and that will have the most impact on your operations.
For example, if you identify three pieces of faulty kit that uses most of your power and repair or replace them, you will have more impact than carrying out 20 maintenance jobs that have a small impact.
The Pareto chart helps you focus and direct your efforts on the things that really matter.
4. Scatter plot
A scatter plot shows you the relationship between two factors. Are they linked, or is there no connection between them?
The main purpose of a scatter chart is to help you understand the relationship between cause and effect.
For example, the temperature outside affects some organisations more than others.
If you have a commercial building, a cold day will probably result in you increasing your energy usage for heating.
A factory on the other hand, where most of the energy is used by process equipment may not be dependent on the weather at all.
A scatter plot will help you to identify the relationship between factors and make sure that you draw the right ideas about cause and effect.
5. Rank chart
A pie chart is almost always the wrong thing to use to show data. Instead, a rank chart gives you much more insight.
A rank chart is a bar graph, sorted so that the largest item is on the top and the smallest at the bottom.
You can draw attention to the item you want to show by highlighting it in a different colour.
This helps you show the relationship between items or between one item and the rest.
This means you can say things like:
Things are about the same
One thing is more or less than the others
6. Control chart
The control chart is a little used chart, but probably one of the most useful.
A control chart is created by adding two lines around a time series or run chart.
These lines are calculated by the amount of relative movement in the data, worked out using standard deviations or a similar method.
The purpose of the lines is to tell you when one of changes in value is statistically significant.
Why does this matter?
J.P Morgan, the famous American financier, was once asked what he thought the stock market would do today.
His answer – “It will fluctuate”.
Values go up and down. Too many people think they have to explain every variation, but this is hardly ever useful.
The thing you need to figure out is which bits of the series is noise, where values are simply fluctuating like they did in the past and will do in the future, and which bits are signal – indicatnig something different is happening.
The control chart gives you a way to do that.
When the line chart goes above or below one of the control lines, something significant has happened.
For example, in a manufacturing process, perhaps something was moved unexpectedly, or a fault occurred and the power went off.
A control chart lets you only act when you need to – and lets the “voice of the process” tell you when something is happening that is unusual and needs to be looked at in more detail.
These charts can be used in the following ways:
Time series charts to understand the trends in the data.
Histograms to understand the shape of the data – is it normal or is something odd going on?
Pareto charts to focus on the things that matter.
Scatter plots to connect cause and effect.
Rank charts to compare items with others.
Control charts so you can take action only when something significant happens.
There are more references in the books mentioned at the start of this post, but mastering these 6 charts is a first step towards carrying out good data analysis.
Battery storage systems are one of the most anticipated technologies in the energy market at the moment. But will they save you money and how do you put together a business case?
These are my notes from a podcast by Barry Cinnamon of Cinnamon Solar from May 2016, along with some additional research and comments. The whole podcast is well worth listening to and you can find it here.
First, what do we mean by practical? A practical system has to first be affordable, and second be useful. Above all, this means it must save you money.
In the United States, there are around 450 battery storage systems in homes and around 5000 commercial installations. Germany, on the other hand, has over 25,000 installed systems.
Policy makes a difference when it comes to battery storage
Are you an organisation that needs to report on its environmental and social performance? And is this exercise simply another regulatory burden or does it help you succeed in the marketplace?
This post looks at the state of sustainability reporting in the world and what needs to be done to make sure that the value created by sustainable companies is fully recognized by investors and financial markets.
Assessments of corporate sustainability have been around for decades. RobecoSAM, a leading investment specialist, questions over 3,400 companies every year on the economic, environmental and social factors that contribute to their success.
The Dow Jones sustainability indices are based on RobecoSAM’s methodology. So, how well does the sustainable index do when compared to the rest of the market?
Not that well, it turns out. Since 2012 the S&P 500 index is up 85% while the Dow Jones sustainability world index composite is up 30%.
It might not just be about performance, but you could have gained almost 3 times as much by not worrying about sustainability.
Not everyone is interested just in financial returns.
Some organisations such as churches and environmental groups may not want to invest in anything that they see as “bad”. This might include alcohol, tobacco and guns. Some may include or exclude nuclear power depending on how good or bad they see that technology.
Some investors see a future where companies that have sustainable practices will do better than those that don’t. For example, socially responsible retailers might be expected to take market share from those that don’t demonstrate such behaviour.
Other investors might see certain sectors as being more exposed to risks from climate change. For example, they might want to avoid banks that hold stranded coal plants or insurers that have flood risk liabilities.
Still other investors may simply prefer sustainable companies to non-sustainable companies as long as the returns don’t diverge too much from expected market performance.
Sustainability is increasingly mainstream
1300 organisations controlling over $59 trillion in assets have signed up to the United Nations Principles for Sustainable Investment.
Some of the largest companies in the world including Google, Walmart and Apple are taking significant steps to make their operations and supply chains more sustainable.
A crucial element of sustainable development is the use of robust sustainability reporting frameworks.
In the United Kingdom and Europe some companies and many public sector bodies have a mandatory requirement to report on the environmental and social impact of their organisations.
The legislation is designed to not be onerous, using existing systems and data collection where possible and leaving it to the discretion of the companies to choose what they include in their annual reports.
Internationally the number reporting standards is increasing
The Global Reporting Initiative (GRI) is the oldest such standard and tries to bring in a common language so organisations can communicate their economic, environmental and social impact and help stakeholders understand more about them.
The GRI standards are interrelated documents that help companies prepare a sustainability report focused on material topics in a form that follows the reporting principles set out by the GRI.
There are three main problems with existing sustainability reporting.
First, there is confusion over what is meant by sustainability. Does it cover just the carbon impact of an organisation’s operations or should include its supply chain? Should larger organisations be held to a more stringent standard?
Secondly, what are investors looking for? Not all investors are the same and is it possible for one single report to meet the needs of different types of investors?
Thirdly, the way in which metrics are calculated have methodological weaknesses. Given this, is it appropriate to compare companies on the basis of the metrics reported or do investors need to carry out more investigation?
It is worth understanding the types of investors out there in more detail
Socially responsible investors will invest in sustainable companies and exclude “bad actors” from their portfolio on principle, even if they have to accept worse returns.
Investors looking for a social return on their investment will take factors such as the community benefit of projects into account in addition to the financial return on investment.
Investors looking to avoid risk will tilt their portfolio towards companies that they feel will not be disadvantaged by the impact of climate change.
Investors looking to green their portfolio will choose, all else being equal, sustainable companies instead of non-sustainable companies.
Finally, investors looking to profit from a decarbonised economy want to select sustainable companies that they feel will outperform the market.
How should organisations appeal to these different kinds of investors?
Many ESG metrics are based on reputational measures such as feedback questionnaires or social media research. Could organisations use more operational measures that allow for better comparisons?
Most companies focus on the impact of their operations measured in terms of their carbon emissions. It may be better, however, to focus on whether products and services contribute to sustainability. In other words, is their carbon handprint bigger than their carbon footprint.
ESG metrics are almost invariably backward looking. This might mean some companies are excluded because of their history.
For example, Volkswagen is currently under pressure for its role in diesel emissions fraud. The company, however, will have to radically transform itself in order to recover from the scandal and may actually be a good choice from a sustainability point of view in the future.
It is still hard to see any clear links between the sustainability metrics collected by organisations and their success in the marketplace. Are organisations collecting the right information?
There is still much research that needs to be carried out to determine which metrics are material and will link sustainability and organisational performance.
Finally, investors may need to select metrics that are appropriate for the kind of investing philosophy that they follow. A broad approach may be less effective than a narrow one where a set of robust comparable metrics are used to evaluate similar companies.
Make sure the data is good
Effective data collection underpins good sustainability reporting. Wherever possible data needs to be based on measurements rather than assumptions, and should be verified.
To be useful, data needs to cover a long enough time frame so that patterns and trends can be identified.
Where there is missing data, as is often the case, methods used to fill gaps must be transparent and robust.
It may be necessary to normalise data before it can be compared. Once again, the method used to transform the dataset must be robust and transparent.
Finally, updating information once a year may not be sufficient for investors. It may be necessary to provide guidance and enter information sooner, for example using quarterly reporting.
In summary, as more companies commit to becoming more sustainable there will be a greater need for good quality sustainability reporting.
Investors and financial markets will pay more attention to good reports and should reward companies with greater success in the market.
The irreversible momentum of clean energy (sketchnote)How can President-elect Trump make the right policy decisions on clean energy? An article by a sitting President may help.
President Obama is thought to be the first sitting US president to author an article in the high profile peer reviewed journal Science.
In the article, President Obama argues that the global momentum towards taking action on climate change is now irreversible.
The science is clear but opinion is still divided
Carbon dioxide and other greenhouses cause higher surface air temperatures, disrupting weather patterns and acidifying oceans.
Some policy makers and influential stakeholders still do not agree, however, and in the short term that continues to be a problem for a number of economies, not least the United States.
Climate change policy could slow down or be reversed under a new administration if staffed by climate change skeptics.
This is not a good economic move. Taking action on climate change is good for business.
Cleaner economies benefit from increased:
The United States has grown its GDP by 10% since 2008 while emissions from the energy sector have fallen by 9.5%.
Ignoring carbon pollution, on the other hand, could result in economic damages annually of 4% of GDP, or between $340 – $690 billion lost in federal revenue every year.
This is without taking into consideration the impact of catastrophic events or the impact of climate change on economic growth.
Policies that encourage investment and innovation in clean energy are delivering results
President Obama’s administration has encouraged fuel economy, appliance standards and building standards that will cut over 10 billion tons of carbon by 2030.
Major corporations are setting challenging targets. Alcoa and General Motors are working to reduce their energy intensity by 30% and 20% respectively by 2020.
Clean energy creates jobs. 2.2 million Americans now work in clean energy, compared with 1.1 million in the fossil fuel supply chain.
The energy supply system is being transformed
Coal is being replaced by natural gas as the primary method of generation. Low cost gas is displacing coal and, despite problems with methane leakage, is a cleaner generation technology.
Plummeting renewables costs are ramping up the capital inflows into projects supporting wind, rooftop solar and utility scale solar, supported by public policy measures.
Battery technology could help squeeze even more power out of existing and new installations.
Major companies such as Google and Walmart are committing to sourcing 100% of their energy from renewable sources by as soon as 2017.
110 countries making up 75% of global emissions agreed to take action at Paris in 2016
For the first time the United States and China, along with other major economies, agreed to set out ambitious climate policies that would be transparent and accountable.
Delivering on this commitment would increase the changes of limiting temperature increases to under 2 degrees by 50%.
Countries will set national policies and companies will respond by innovating, creating new technologies, jobs and export markets for clean products and services.
Over $1bn has been committed by investors to support clean energy breakthroughs.
Countries that pull out now are going to miss out economically.
What will happen next?
A new policy direction will emerge under a new administration.
Will it be science based, building on the global consensus on the evidence for climate change and the need for action?
Or will it roll back policy and stop funding for clean energy and technology?
We will know more over the next year.
The long term trend, however, for global policy over the next few decades is unlikely to reverse as countries move to creating low carbon economies in order to reap the benefits and avoid the damages from climate change.
Pressure to cut transport energy emissions will only increase
Vehicle emissions make headline news, with Volkswagen pleading guilty to criminal charges in the US and agreeing to pay fines of $4.3 billion (£3.5 billion) as a result of committing vehicle emissions measurement fraud.
The company may end up paying more than $20 billion in the US alone. It still doesn’t know how much it will pay in Europe or elsewhere.
Pressure to cut transport emissions will continue to grow as a result of the Paris agreement.
The need to stop climate change will mean governments continue to use policy, regulation and the tax system to improve air quality and cut emissions, especially in large cities and metropolitan areas.
London’s congestion charge zone has been in place for nearly 14 years, raising over £2.6 billion and reducing traffic volumes by 10%.
The lower the emissions, the lower the rate of income tax paid by the owner or driver.
Fleet managers are in a unique position to cut costs by improving the energy efficiency of their fleet, avoiding both external charges such as taxes and congestion charging and lowering operating costs of their cars, vans and heavy goods vehicles.
Start with an audit
Many organisations still don’t have a good record of the number of vehicles they have and how they are being used.
Some of the information should be in recent ESOS audits although the data may be getting stale a year on from the compliance deadline.
You need to collect data that lets you understand how your transport energy emissions are distributed among:
company owned or leased cars,
cars where the drivers receive a cash allowance to operate a car,
grey fleet cars, where drivers receive mileage payments for using their cars for business use.
Heavy goods vehicles
The data you need will include vehicle details, fuel receipts and mileage logs.
If you don’t have a system to collect this information already, the data is likely to be patchy and require cleansing before being analysed.
Understand how you use transport in your organisation
How do vehicles help you carry out your company business?
Do you have a large number of staff commuting to work in central offices?
Do you have a large number of small deliveries, or a small number of large deliveries?
Do you operate a just-in-time system or a milk round?
Understanding this requires analysing the transport data you have in your organisation and have collected during the audit.
You may see patterns in how mileage is racked up. You may see where the opportunities are in reducing or eliminating mileage.
You may also start to see where the barriers are in your organisation.
Departments may not want you messing about with their journey planning and vehicle purchases.
Individuals may be concerned about how your data will affect their own positions.
In many organizations vehicles are a seen as a symbol of status, with increasing vehicle allowances as people progress upwards in the organization.
The key thing is being able to see where the opportunities might be for changes in fleet composition and usage that could lead to cost savings for the organization.
You will not be able to get leadership buy in without being able to show the cost savings that are available from increasing fleet energy efficiency.
Get the leadership team to set and commit to targets
The leaders in the organization need to see cutting transport emissions and costs as a strategic imperative, setting and committing to targets.
It set a challenging target in 2007 of improving fuel efficiency in the UK and Ireland by 35% by 2015.
It nearly got there, reporting a 33% reduction in 2014/15, but where would it be without a target to aim for?
Once you have targets in place, the very next step is to set up a robust monitoring and verification system, including telematics and tracking.
Without an easy to use data collection system that can be updated quickly an energy efficiency campaign can lose momentum and start to slow down.
You need to communicate and keep people informed
Transport policy in companies can be a very sensitive issue.
The top people in the organization often have the biggest and least efficient vehicles.
Asking them to support you in reducing fleet emissions is going to be a personal issue for some of them and the people that report to them.
But cutting transport emissions is good business for the organization and will cut costs in taxes, congestion charges and expenses.
The impact needs to be managed fairly so people can see the need and reasons for changes in policy.
Fleet energy managers need to be good marketers, communicating and informing the people in their organization of how the work they are doing will impact and improve conditions for colleagues, suppliers and customers.
Get on with implementation
Make it easy for people to decide when and how to travel by putting a travel hierarchy decision tree in place. Could you do any of the following:
Make it easier to work remotely and from home?
Cut the payments you make that incentivise people to drive instead of sharing cars or using public transport?
Make pool cars available?
Improve route planning and schedule trips for when congestion is light as idling is a major source of emissions.
Encourage audio and video conferencing instead of travelling to meetings?
Major changes such as buying a transport monitoring system or investing in telematics will need you to pull together a business case.
Are you making sure that all the costs of transport are covered in these cases and not just the operating and fuel costs?
A full business case may include a life cycle analysis that means low emission vehicles become a more sustainable option for your business.
As you go forward, buying the right vehicles and using them more efficiently will help you transform your fleet and reduce emissions, eliminating unnecessary mileage, making the most of public transport and conferencing solutions, and cutting costs for your business.
The pressure to improve transport energy emissions will be a particular challenge for fleet managers who need to think about the carbon impact of their operations in addition to fleet purchases and journey planning.
Improved data and analytics will help make the case, guided by a clear strategy from the leadership team, with fleet managers in a position to make real and lasting cost savings for their organizations.
2017 is nearly here and working on your organization’s energy management plan is key to making sure you reduce consumption and emissions this year.
Planning can take time and effort, but is well worth your time.
When done properly you will set your organization on the right course to achieving your energy management goals this year.
Energy management is a complex activity that involves taking action from the plantroom to the boardroom. Energy mangers need to understand technology, budgets, finance, planning and strategy in addition to emissions targets, corporate social responsibility and financial reporting.
Success in effectively managing this complex area will only come from detailed planning and preparation. To be useful an energy management plan needs to be:
Relevant: The plan must focus on areas that are directly applicable to the kind of organization you work in.
Realistic: The plan needs to be achievable with the resources and capabilities you have in place.
Useable: To be of any benefit at all, the plan must be a useful document that can guide your actions day to day.
A good energy management plan is like a map, helping you show people in your organisation where you are heading and the best way to get there.
That’s why we created this comprehensive guide with free templates to get you up and running for 2017. It contains everything you need to create an annual energy management plan including checklists and questionnaires to get started.
Smart meters are becoming a reality, and increasingly meters will be built into the equipment we buy.
Large energy using devices, such as air conditioners and chillers will be able to feed data directly into building management systems.
2. Leadership from corporations
Businesses see that going green is good business.
Not only do you cut costs, consumers are changing from passively buying to actively engaging with brands and companies that show they are committed to creating social value.
3. Unsubsidized renewables
The costs of solar energy have dropped to the point where they are comparable to fossil fuel generation without subsidies.
The business cases for green energy look increasingly viable without subsidy.
4. Professional energy managers
The need for professional energy managers has been recognized for some time, but with the roll out of energy efficiency legislation in Europe, the number of energy managers has exploded – which is good news for business and the public sector.
5. Energy management software
The number of software packages that support energy management continues to grow.
These packages cover a range of applications from energy usage analysis to energy market tracking – and 2017 will see even more of them.
6. Wavering governments
Recent elections and referendums could potentially lead to less government support for renewables and carbon reductions.
The momentum built up over the last decade needs to be sustained by businesses and social enterprises.