Long-term good for R&D, Patents and Profits

A recent study shows how long-term focus pays off. This study concentrated on switching the CEO compensation to longer-term. From that point forward, what happened, on average to several things related to the performance over time.

Great study was by Flammer and Bansal (2016) and summarized in the WSJ, CEOs should focus on the long term, a study says. Although the study is coming out soon in the Strategic Management Journal, you can find it here.

The researchers selected companies that were long-term focused based on those companies that had a long-term compensation package presented to the board that was narrowly approved. The narrowly approved implies that this was a bit of a surprise to the executives resulting, potentially, in a paradigm shift toward longer-term focus. The board voting was reviewed from 2005 through 2012 so that there would be room for performance analysis.

There are many positives related to long-term focus all around. Companies with a long-term focus do better all around (profits, net profit margin, sales, stock price, etc.). Those long-term focus had a statistically significant improvement over the longer term (2 years and longer). Interestingly, they had a small dip insignificant dip in the short term.

Longer term companies spend more money on R&D, got more patents, had more patents that "flopped" and had more patents that were "hits". Flops and hits were based on the citations of their issued patents. Lots of citations means hit, not very many means flop. That has issues, but seems acceptable (unless you want to do a market analysis of the patented technologies).
They also did a analysis of exploratory vs. exploitive. This was based on 80% vs 20% of the patents citations being internal to the company. So if lots of citations in my current patent refer to my own prior technology then it is a incremental, exploitive patent. They used a log scale on the number of patents, so a 0.568 correlation could be extrapolated on a logarithmic scale! A 57% correlation meaning that the decision to go long-term-centric resulted in a 57% positive change in the patents. Because they argue a cause-and-effect, they are an argument for causal correlation.

Hits and flops of patents is interesting. First, the patent needs to be more disruptive (exploratory) and new to the company. Then the number of references to the patent were reviewed to see if it gets an abnormal amount of citation activity citing it. Flops would be exploratory that get very low citations. They first combined both hits and flops and indicate that total as a share of all (exploratory?) patents. This is statistically correlated at R-squared of 0.571. Trying a lot results in lots of failures and hits.
Note that the number of flops and the number of hits were statistically correlated: 0.457 and 0.427. This is very interesting, if you aren't trying, then you aren't innovating. In this case, long-term focus means that you are trying and getting a good splattering of both. (They use the methodology here of Azoulay et al., 2011)

Verdict. Boards should focus on long-term for compensation. This means that they have to be willing to take lesser profits in the short term.

There are also very strong correlations to the KLD factors, collectively and all four components: employees, environment, consumers and society.
Verdict. Corporations should focus on sustainable, long-term targets for goals and for compensation.

They have some limitations to this study, but they also combine it with good literature support for long-term-centric management practices. And minimizing the principle-agent problem common to executive compensation.
We want everyone highly motivated by the long-term, sustainable success of businesses (& not-for-profits & Gov)...
Anything else is, well, short-sighted!

References
Azoulay P, Graff Zivin JS, Manso G (2011). Incentives and creativity: evidence from the academic life sciences. RAND Journal of Economics 42(3): 527–554.

Flammer, C., & Bansal, P. (2016). Does a long-term orientation create value? Evidence from a regression discontinuity. Strategic Management Journal. doi:10.1002/smj.2629

First Solar Achieves World Record 18.6 % Thin Film Module Conversion Efficiency | Business Wire

First Solar Achieves World Record 18.6 % Thin Film Module Conversion Efficiency | Business Wire:

Wow.

The technology is really moving up. FirstSolar's thin film is really working its way up. That means you can produce more power with a smaller foot print. Or produce much more power with a bigger footprint.

Very cool to see solar gaining on wind (and, of course, non-renewable sources of power).

'via Blog this'

Building a Business Plan: The basic components video, and IP too.

Building a Business Plan: The basic components - YouTube: "

Here's the basics about a business plan by yours truly, Dr. Elmer Hall, President of

Strategic Business Planning Company. We help develop the plans that every business needs(tm).

"
A business plan helps to plan out the future of the business and estimate its profitability. Also, as the company grows quickly it may outgrow itself. That is, you can fund the growth with profits, but if you exceed that rate then outside funding will be needed. Look at the sustainable growth rate model in finance.

This is the basics of a business plan, but we modify a basic business plan to accommodate Intellectual Property protection (read, sustainable competitive advantage). As you watch Shark Tank to see how venture capitalist think, you will see how seriously important intellectual property is to the success of a business -- and the likelihood of a shark investor taking a BIG bite of the action.

A business plan would likely include these component, as shown in the video, and then have some modification to show the (potential) strength of the IP. We call this IP-centric plan a Patent Business Plan., or for larger companies an IPplan.

Look at the Patent Primer to get an idea of the various aspects of IP and how to build a strong patent competitive advantage.

• Patent Guide 2.0 & Patent Primer 2.0: http://www.lulu.com/spotlight/SBPlan
• (Primer 2.0 Kindle eBook: www.tinyurl.com/IPPrimer2e) 

As it pertains to environmental sustainability -- triple bottom-line planning -- look at discussions over at www.SustainZine.com. The plan here would be a specialized business plan we call a Sustainability Plan. This would be a business plan that also maps out moving to full zero foot print over time: say 5, 10, 20 years, depending on the business/industry.

'via Blog this'

BioLite BaseCamp Stove | Turn Fire into Electricity by BioLite — Kickstarter

BioLite BaseCamp Stove | Turn Fire into Electricity by BioLite — Kickstarter:

I love it. But only 62 hours to get in on the KickStarter offer. They are at twice goal with $800k+ and 3,000 backers.

Yes, it was DARK in Miami, when Hurricane Andrew came through South Miami/Homestead on August 24, 1992. Well, afterwards really. It would be weeks before most of us would get power. So bar-b-q grilling was the norm. That was not quite as much fun after a week or two without baths and without air conditioning. Little or no ice and warm drinks. Muggy and humid.

You did want to cook, obviously, but all the heat from the grill was the last thing we needed.

But a really cool cooking stove popped up in New York. A tiny stove the burned wood (or charcoal) and produced focused head for cooking. No need to cook the cook too.

This technology works wonders in countries where there is little or no electricity, and wood is often scarce, and the smoke from open cooking causes some of the world's worst health issues (probably only exceeded by water/sanitation).

You gotta see how far the technology has come. This is a BIG stove, relatively, that generates electricity (USB power) and has battery. It has an internal fan, to fan the fire so it can produce some serious heat possibilities -- especially given the ability to focus the flame.

This version comes with an LED light so you can see what's cooking at night.

As they say, this is the first version of the BaseCamp that is crowd designed. When you jump in on the crowd funding at KickStarter (BaseCamp) you will get a free carrying case.

You also get the warm-fuzzy feeling of knowing that this technology will save millions and millions of lives in energy starved countries.

All very very cool.

Keywords: Crowdsourcing, crowdfunding, genius of crowds, kickstarter, invention, sustainability, renewable energy, health,
'via Blog this'

Patent Trolls Threaten Green Innovation · Environmental Management & Energy News · Environmental Leader

Patent Trolls Threaten Green Innovation · Environmental Management & Energy News · Environmental Leader:

There is a lot of discussion about "patent trolls" and the impact they have on various industries.

Here is the argument about the impact they have on the innovation in "green" technology. This is really the case for all new technology and all new industries, but the argument is about the major impact the trolls have on smaller organizations in the fledgling green technologies.

Much if not most of sustainability, however, is the practice of ancient technologies like organics (manure) and energy efficiency.

Hmmm...???

Keywords: patents, Patent Troll, green business, sustainability,
'via Blog this'

Why Won't Yahoo! Let Employees Work From Home? - Businessweek

Why Won't Yahoo! Let Employees Work From Home? - Businessweek:

Boy Mayer is gonna cause a lot of shake here with the everyone-has-to-travel-to-work policy.

Apparently (Today Show) she now as a nursery set up next door to her office for her new convenience. That helps new parents, maybe, but not the ones with kids in school or those people who live a longer way from the office.

But Mayer is shaking it up.

There has long been the debate about the down side of work-at-home (WAH). And a tech leader like Yahoo  might just be a place to face-to-face interaction that is lost from WAH.

But, I fear that making everyone drive to work is a major setback to telecommuting efforts that are so very beneficial to the efforts of sustainability.

Studies show that the true costs of telecommuting are far closer to $40,000 per year than to the $5,000 cost of gas. Most of that savings goes to the employer. Closer to $45,000 if you want to include the less-tangible costs of externalities such as infrastructure and greenhouse gases (GHGs).

Key words:  WAH, telecommuting. Work-at-home, sustainability, carbon footprint, GHG, teleworking, remote working, time shifting.
First posted at www.SustainZine.com. Repeated here.
'via Blog this'