Everything about the shooting and aftermath in Ferguson, Mo. is contentious, with battle lines drawn on whether it was murder or self-defense, whether the grand jury process was fair or botched and whether there are separate law enforcement systems for blacks and whites. But one thing about Ferguson is incontrovertible: Police […]
For most people, the journey into the world of marketing starts on the wrong foot: with the misleading proposition that marketing is the process of communicating value to consumers, thereby satisfying their needs and wants.
Rooted in the economic argument that markets are what you get when supply meets demand, this standard definition of marketing is deeply engrained in the popular imagination.
To address this problem, I dedicate every first marketing lecture to making chocolate bars.
Here is my official chocolate bar recipe (the full recipe is of course a well kept secret):
Place cocoa and butter in a processor and mix until they form a paste. Fill a pan about ¼ full with water. Then place the bowl on top of the water. Put the chocolate paste in the bowl and then heat until liquid. Put the mixture back in the processor and mix till smooth. Then warm the milk to room temperature. Add sugar, flour and milk and mix well. Pour the mixture into molds and place it in a fridge till they become hard.
What do we experience when we turn the MBA classroom into a chocolate factory?
Making chocolate bars requires a fair bit of effort on our part. For instance, milk is creamy and cocoa is sweet but no creamy and sweet chocolate will appear unless we convince our ingredients to connect. And so we do things to them: we mix them, heat them up, press them into a form, and cool them down.
Plus we need some tools to do this: bowls, pans, mixers, molds, fridges.
So what’s the true power of chocolate?
This question guides the second part of the chocolate lecture.
Here are three takeaways:
First, chocolate teaches us a lesson about connectedness.
A simple piece of chocolate is actually an entry point into an entire network of people and things. It spans ingredients, continents, and biographies. It links logistical and supply chain networks to biological, ecological, and emotional concerns. It bridges sustainability and labour rights with expectations on romantic dates. It evokes midnight snacking rituals, obesity, and family togetherness.
Second, chocolate sheds a different light on value.
In order for chocolate to retain its value, the network must be held together. All ingredients must constantly enact their ascribed roles. Milk must thicken, bars must crunch, truck drivers must deliver, fridges must cool, consumers must crave…
And third, chocolate gives us a better definition of what marketers actually do.
Marketers do not merely communicate value.
They assemble value by nurturing other peoples’ and things’ capacity to interact.
Marketers make chocolate.
Day after day and against a backdrop of constantly changing conditions.
And now take the pieces out and munch away!
Are “old economy” corporations embarking on a jihad against their own overweight or chronically ill employees just to save a few dollars in insurance? Incredibly, the evidence seems to suggest they are. The president of the Business Roundtable (BRT), John Engler, is having a private sit-down Tuesday 12/2, at which the BRT may threaten to “switch sides” in the ongoing Affordable Care Act (ACA) debate.
All this fuss is over a part of Obamacare that disproportionately grates on CEOs: not the expense of covering children until they are 26, not the arbitrary 30-hour cutoff point for “full-time work,” not even the requirement of providing insurance at all. No, this fuss is over: workplace wellness programs.
For the uninitiated, those are programs – that perhaps 90 million Americans are subject to – in which human resources (HR) executives “play doctor,” by hiring vendors to ask employees intrusive questions, poke them with needles, send them for checkups, and browbeat them into attempting to lose weight. The impetus for Tuesday’s meeting is that the BRT is upset because recently the Equal Employment Opportunity Commission (EEOC) has been filing suits against companies, most recently Honeywell, that allegedly give employees (and sometimes their spouses) an ultimatum: submit to our medical tests or pay fines up to $4000. Mandatory medical examinations violate the Americans with Disabilities Act, which the EEOC enforces.
Needless to say these wellness programs are highly unpopular, so unpopular that companies have had to triple the financial incentives and penalties since 2008 to a whopping $594, just to keep participation rates from falling. At two organizations, Penn State and CVS, employees have revolted against their programs.
But all that fuss by the BRT, all those unpopular programs, and all this spending are justified because the rest of us are subsidizing overweight and chronically ill employees, right? Wellness programs will save all of us money by making these people better off, right?
Wrong. First, companies only spend about 4% of their healthcare budget on medical events, like heart attacks, that are even theoretically avoidable through wellness programs. Because these events are so uncommon (heart attacks in the commercially insured population are a 1-in-800 shot, and most of those can’t be prevented anyway), the cost of the wellness programs overwhelms any possible reduction in these medical events to the point where saving money is mathematically impossible. (Wellness vendors still pretend to save money, but essentially every savings claim is transparently made up.)
Second, and more importantly, wellness can be hazardous to your health. Workplace wellness programs generally require far more screening than accepted guidelines recommend. Overscreening generates “false positives,” leading to expensive, uncomfortable, unnecessary and possibly hazardous treatment for conditions that don’t exist. HR departments often require routine checkups even though routine checkups for asymptomatic adults are not recommended by the Journal of the American Medical Association itself. And fines or rewards for losing weight incentivize binging prior to the first weigh-in and crash-dieting prior to the subsequent ones, activities that are far more hazardous than simply being overweight.
And yet the BRT, representing the majority of large old-economy American companies, has decided to confront the President over workplace wellness. In particular, they want the Administration to call off the EEOC dogs, so that companies can punish noncompliant workers with impunity, pushing the wellness provision of the ACA to its limits. (The ACA wellness provision itself was modeled after the Safeway wellness program and is often called the Safeway Amendment. Safeway originally claimed massive savings from it but later admitted the program didn’t exist at the time the savings were claimed.)
This complete disconnect between the data and the demands can be explained only one of two ways:
(1) The CEOs who comprise the BRT have been duped into thinking wellness saves money because they aren’t bright enough to google for themselves and learn that it doesn’t
(2) The CEOs who comprise the BRT are VERY bright and have figured out that the only way they can seriously manage their healthcare costs is by scaring off unhealthy workers. (It is not legal, of course, to fire someone outright for being overweight or chronically ill.)
Let’s examine each. As to the first, these people didn’t get to the C-Suite by simply accepting information that their vendors tell them, especially when it’s quite easy for their accountants to tally up their company’s heart attacks and related events (since self-insured companies pay separately for each hospitalization) to see how rarely these “wellness-sensitive” events occur. And they also must know that, as with the tobacco industry years ago, an industry fails the sniff test when its only defenders are people who profit from it.
In support of the second hypothesis, these CEOs must recognize that forced wellness programs are embarrassing and demoralizing for overweight employees, likely causing some otherwise loyal and productive workers to quit. (A sizable minority of CEOs are themselves overweight and know how hard it is to keep weight off, even when they have the flexibility of a corner office schedule instead of the competing and insatiable demands of an hourly worker with a long commute and kids at home.)
Both explanations make no business sense, though the second at least passes the harsh test of Scroogian economics. Even so, there must be some reason why large corporations have chosen to fight this particular ACA battle, other than to preserve the right to harm their own employees and bank accounts.
“Under-promise and over-deliver” is a concept politicians would do well to master early in their careers. The three pipeline companies currently trying to ram through their projects in the face of massive protests have gotten the concept, but in reverse. Enbridge, Kinder Morgan and Transcanada Pipelines have all trumpeted the creation of thousands of jobs their star-crossed projects would create, but a closer look reveals the massive scale of their over-promising and under-delivering.
Enbridge boasts of the creation of 3,000 jobs at the peak of construction of its Alberta-to-B.C. Northern Gateway pipeline, but the Canadian Centre for Policy Alternatives says the pipeline will create 1,850 construction jobs per year for three years and a “handful of permanent new jobs” when complete.
Robyn Allan is an experienced economist who writes extensively about the oil industry. She says Enbridge’s estimates are actually based on a dodgy-sounding ‘person-years’ of employment during construction, and the peak of construction only lasts three months. Person-years of employment are often used interchangeably as jobs, but they are not jobs. They represent a full-time equivalent of one year of employment.
Allan has harsh words for the deception;
“Enbridge has misrepresented Northern Gateway to the public and the project is neither needed nor is it in the public interest. The project represents serious economic risk to the Canadian economy… From a public policy standpoint, Canada is being outplayed.” She has little patience for the oil interests who “deliberately mislead, misrepresent, and obfuscate in order to exaggerate benefits, deny the costs and underplay the environmental risk. We are told half-truths, we are made false promises, and since our needs and concerns are inconvenient we are viewed with contempt.”
Kinder Morgan wants to expand the capacity of its 1,150-kilometre Trans Mountain Pipeline between Alberta and Burnaby, B.C. They are trying to do survey work on Burnaby Mountain that involves drilling 250 metres into the mountain to test whether they can tunnel through it to drastically increase the flow of diluted bitumen from the Alberta oil sands. Protesters have been in their faces since day one. Over 100 protesters have been arrested to date, including environmental activist David Suzuki’s grandson Tamo Campos. Suzuki himself showed up on the mountain on Nov. 23 and roared at the Mounties in a voice hoarse with emotion; “My grandson was dragged across the line and was arrested! I’m disappointed and it grieves me because of the respect we have for you.”
A report by Simon Fraser University says operating the expansion project would create only 50 direct full-time jobs in the province. The proposed new pipeline would triple the capacity of the system from the current 300,000 barrels per day to at least 890,000 barrels per day. The new pipeline would exclusively carry heavier oils such as diluted bitumen, which are far more corrosive than regular crude and very difficult to clean up in the event of a spill.
Kinder Morgan is the biggest pipeline company in the U.S. CEO Richard Kinder is the 110th richest man alive with a net worth of $8.2 billion. For the record, it’s Kinder as in “kindergarten” not as in “kinder, gentler.” While Kinder Morgan makes about $70 million a year off the Trans Mountain pipeline, Canada only gets about $1.5 million in tax revenue.
TransCanada Pipelines is another over-promiser/under-deliverer. Their proposed Keystone XL pipeline stretches over 1,897 kilometres between Alberta and oil refineries on the Gulf coast of Texas. Because the proposed pipeline crosses the Canada-U.S. border, the State Department is the responsible agency. The State Department’s March 2013 review of the project stated outright that the pipeline will spill oil. Not “may” but “will.” The same review estimates that it will create only “a handful” of permanent, operational jobs in the U.S and 2,500 to 4,650 temporary jobs.
A New York Times editorial in March 2013 sought to hold President Obama to the promises he made in a speech on the pipeline: “A president who has repeatedly identified climate change as one of humanity’s most pressing dangers cannot in good conscience approve a project that — even by the State Department’s most cautious calculations — can only add to the problem.” It recalled Obama’s hard-line stance on global warming that so gladdened environmentalists: “…in his State of the Union address, President Obama pledged ‘if Congress won’t act soon to protect future generations, I will.'”
On June 25, 2013, the president showed his bold words weren’t just rhetoric. Obama told students at Georgetown University that he refuses to “condemn your generation and future generations to a planet that’s beyond fixing.” He hinted, for the first time, that approval of the Keystone XL pipeline might not be a slam dunk, and for climate change-related reasons. “Our national interest will be served only if this project doesn’t significantly exacerbate the problem of carbon pollution,” Obama said.
So let’s do the math here: three pipelines stretching 4,197 kilometres, generating tens of billions of dollars in profit, the vast bulk of which will leave Canada, for 228 permanent jobs at Enbridge, 50 at Kinder Morgan and 35 at Keystone XL. That’s 14 jobs per kilometre. A word to the wise — don’t leave your day job.
This is an excerpt from Trevor Greene’s new, self-published book, co-written with Mike Velemirovich, There Is No Planet B: Promise And Peril On Our Warming World.
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