Potential Trumps Brains

I thought this Harvard Business Review ("21st Century Talent Spotting," June 2014) take on hiring addresses some of the shortcomings we see in building global teams. Potential now trumps brains, experience, and "competencies" as a measure of success. 

As the article explains, in the past few decades, organizations have emphasized "competencies" in hiring and developing talent. Jobs have been decomposed into skills and filled by candidates who have them. 

But the volatile and complex business environment of the 21st-century, and the fact that the market for top talent is very tight, means that model doesn't work anymore. 

Key to a good fit for a candidate, today, is the ability to adapt to ever-changing business environments and grow into challenging new roles. Potential is more important than experience. 

Five key indicators are suggested for assessing prospective employees: the right motivation, curiosity, insight, engagement, and determination. 

One you've caught the top talent, your job will be to keep them with smart retention strategies and stretch assignments. 

It's a tall order for any hiring manager, but one that will build and retain a successful team.

Fourteen years on...Argentina still needs more time

As the Argentinian soccer team makes preparations to play Holland in the World Cup semi-finals today, it'll take a structured, efficient group to win this match. In the meantime, things at home are much less organized.

I vividly remember being in Argentina when the country decided to stop bond payments and devalue its currency. Seeing raucous parades of citizens in the streets, banging on pots and pans and chanting anti-government slogans was riveting. Kind of like the scene at a World Cup match, now that I think of it.

Fourteen years later, the saga continues...click here to read more about the country's current financial troubles.

Electric cars charge ahead in Atlanta...

The Wall Street Journal said today that Atlanta has become the number 2 major U.S. metropolitan city for electric cars due to a number of incentives including state-provided tax credits, access to charging stations and access to high occupancy lanes even when traveling alone. 

Charging electric car owners a lower rate for off-peak electricity  Georgia Power Co., the primary utility in Atlanta, offers a plug-in charging, off-peak rate of 1.3 cents per kilowatt-hour. The average cost across the nation is 11.88 cents a kilowatt-hour, says the U.S. Energy Information Administration. 

Kudos to Atlanta for "plugging in" early on this energy saving initiative, but the question remains can these green initiatives survive without incentives? Read the full story here: click here.

Nigeria's Growth Explosion - A different perspective

A recent bomb explosion in Nigeria’s capital of Abuja overshadowed some good news about the country. With Africa’s largest GDP, driven by a thriving service and manufacturing sector, Nigeria’s reputation as a fast growing economy should begin to outweigh the problems we read about in the news. 

Traditionally thought of as oil and gas industry-driven, Nigeria’s entrepreneurial spirit is feeding new markets like a dynamic movie industry called “Nollywood” and an exploding mobile telecom sector. Multi-nationals are taking note and investing in the country. With expansion plans by companies such as GE and GlaxoSmithKline, who read more positives than negatives in the commercial landscape tea leaves, Nigeria is poised to take off. 

Predicted to have a bigger economy than Canada’s by 2050, (ref: Goldman Sachs) the country’s middle class is bigger than India’s -- driving a level of consumer spending that is powering unprecedented growth.

Problems remain, but for those who can see past the security issues and struggles with Islamist terrorist groups, a lucrative new market in the midst of economic transition awaits. 

Read more here: WSJ Nigeria

“Optimism bias” and Mega Power Plant Projects

A recent study by Oxford University found that the vast majority of mega dams around the globe are unprofitable undertakings as a result of exorbitant cost overruns. 

As many as three-quarters of mega-dam projects in the Oxford University survey suffered from cost overruns. Analyzing 245 dam projects in 65 countries over a seven-decade time period (from 1934 to 2007), the report found that large projects routinely come in late and over budget. This paints a dismal picture for large scale projects. Why does this happen? Various misrepresentations contribute to this problem and a few are worth noting. 

I like the term used in the study --“optimism bias” -- describing when politicians (most frequently in democracies) make far fetched estimates of the time in which projects can be completed. “Strategic misrepresentation,” another new term I am sure we’ll hear more of, occurs in relation to project promoters, who intentionally underestimate costs in order to increase the likelihood of approval. 

Though the study reviewed hydro projects, I can tell you this problem also applies to other large scale power plant projects including nuclear and carbon capture and sequestration power plants. 

What's the solution? Smaller, more flexible hydroelectric projects that can be built and go online quicker, and can be more easily adapted to social and environmental concerns are less likely to fall prey to the “optimism bias” of project promoters. One country doing this well is Norway. The government encourages small hydro development (plants with an installed capacity of 10 megawatts or less) typically using low head and run-of-the-river technologies. Its flexible approach has yielded substantial payoffs -- 99% of its electricity is produced from water and is highly successful in the country.

Emerging economies as Brazil, China, Indonesia and Pakistan need to take note -- China especially, with its plans to almost double its current hydropower capacity of 250,000 megawatts through a huge dam-building effort. A more flexible approach, with smaller plants and investment can help a developing country from drowning in debt as a result of mega projects.

Read more here: http://sourceable.net/mega-dams-make-for-bad-investments-oxford-study/

Crimean conflict reminds Europe - diversification of power sources is a good plan

European nations who vowed to shut down their nuclear plants and turn to renewables or piped in natural gas to provide their energy needs, may be rethinking that decision as the conflict in Crimea unfolds.

Russia supplies Europe with 14% of their of natural gas consumption (source: Deutsche Bank) and being vulnerable to such a neighbor, who is at best unpredictable and at worst aggressive, is never good a good thing -- especially when you are counting on them to keep your lights on.

A country with a diversified power generation portfolio (i.e. coal, nuclear, gas and renewables) has the flexibility to respond to geo-political events with confidence, able to switch direction when required.

Even before this event, Germany felt the impact of reducing coal and nuclear generation with high electricity costs. They are now importing part of their energy needs from nuclear plants across the border in France.  

Ukraine relies on four Russian-built nuclear power plants (15 reactors) for almost half its electricity and fortunately for that country, they’ve kept them operating consistently during the crisis.  

Read more information here about how the conflict raises prospects for nuclear energy. 

Surging ahead...Colombia’s economy surpasses Argentina

As a result of the recent devaluation in Argentina, Colombia’s $350 billion economy has surged ahead of Argentina to become the third largest economy in Latin America, led only by Brazil and Mexico. 

My wife and I vividly remember the devaluation of Argentina’s currency in 2001. The streets were full of the Argentinian citizens, banging on pots and pans, chanting loud protests against the state of affairs at the time.  The country did manage to recover, but it was a fragile recovery. Argentina is now suffering its second large devaluation in the last 15 years.

Colombia’s ranking is a monumental improvement from the Colombia I knew in the 1980's and 90’s -- then known for its drug violence and civil war. When I was in Bogota last month, I was encouraged to hear the Colombian government is promoting public-private partnerships with global companies for new infrastructure projects in the country. One example is the new, state of the art, impressive international airport in Bogota.  I look forward to watching the county take off. 

Read more about this exciting “win” for Colombia here...click link.

New Rules for Globalization

State capitalism is driving globalization strategies. The playing field has changed and an article from this month's Harvard Business Review says it best--

"Until 2008 going global seemed to make sense for just about every company in the world. Since then, we’ve entered a different phase, one of guarded globalization. Governments of developing nations have become wary of opening more industries to multinational companies. They are defining national security more broadly and perceiving more and more sectors to be of strategic importance, taking active steps to deter foreign companies from entering them and promoting domestic, often state-owned enterprises. Indeed, the rise of state capitalism in some of the world’s most important emerging markets has altered the playing field.

To factor globalization’s new risks into strategy, executives must consider their industry’s strategic importance to the host government and their home government. They can then choose among various approaches: strike alliances with local players, look for new ways to add value abroad, enter multiple sectors, or stay home." Read the full article here:http://hbr.org/2014/01/the-new-rules-of-globalization/ar/1

Emiratisation, A Lift for UAE Energy Sector

During my recent trip to the United Arab Emirates (UAE), I heard a lot of discussion about "emiratising" the workforce there. Most private sector jobs are held by expats, though private companies are required to hire locals. Ninety-five percent of small and medium-sized businesses (SMEs) of a more entrepreneurial bent employ expats, resulting in high unemployment rates for Emeratis. 

In the last year, the government has turned a more focused eye on this problem with two initiatives. First, they are encouraging businesses to hire locals by subsidizing salaries to help compensation equal government sector jobs. Secondly, the government is initiating quotas for hiring of personnel. The hope is, creativity and entrepreneurialism will stay in the country.

Local energy companies, like Al Mansoori Specialised Engineering and the Emirates Nuclear Energy Corporation and multi-national energy companies such as Dolphin Energy, Halliburton, Petrofac, Schlumberger, Total, and Total Tractebel are all trying their best to attract and hire UAE locals with job fairs, recruitment and other ways to connect Emeratis with SMEs. 

Promoting talent from within is critical for any organization, region or country and will be central to the growth and success of the UAE economy. Read more in this article from The National, an Abu Dhabi English language publication. 

Nigeria and its energy industry -- can private industry do it better?

Nigeria’s attempts to manage its vast energy industry resources have been complicated. "From 2000 to 2010, more than 100 refinery construction projects were announced in Africa. Only one was built, according to consulting firm Citac Africa, Ltd and others often fell victim to political interference or high borrowing costs," says WSJ.com.  But now, private industry has stepped in to close the gap. (see article)

This change means opportunity for international energy companies who are chomping at the bit to get into Nigeria's power generation and fuel products industry. Many U.S., Asian and European companies are expanding operations in Africa. In addition, this will also support recent efforts to privatize Nigeria's power plants. It’s an exciting time for the country. Read more in the Wall Street Journal Article, Africa's Richest Man Bets Big on Oil Refinery, Aliko Dangote Set to Spend $9 Billion on Refinery Project as Wave of Consumerism Sweeps the Continent.