Posts Tagged ‘strategy’

Is your life ready for VUCA?

We live in a VUCA world: volatile, uncertain, complex, ambiguous.  Are you poised to adjust nimbly to changing circumstances as they arise?  Because while we may not know quite how or when changes will crop up, it’s clear they’re coming—who foresaw oil prices dropping so precipitously, or US political polarization devolving so rapidly and dangerously?

A recent piece by Eric McNulty in Strategy+Business, Leading in an Increasingly VUCA World, offers the best concise overview of VUCA and how to respond that we’ve seen (well, other than in our book!).  McNulty stresses:

VUCA isn’t something to be solved; it simply is. Attempts to simplify complexity, or to break volatility, uncertainty, and ambiguity down into smaller and smaller parts in hopes that each can be decoded and countered will not make them go away — there are too many elements beyond the control of traditional centers of power and authority. It is a network phenomenon and can’t be mastered through industrial age structures and practices.

We absolutely agree.  That’s why we formulated the integrated planning tools laid out in The Resilient Investor, centered on a “map” of our lives that provides a foundation for making clear and responsive choices within this VUCA landscape.  Personal and social resilience is enhanced when we cultivate all our assets (personal, tangible, financial), each of these engaging with our communities, the global financial system, and evolutionary initiatives that are making things better.

McNulty offers three tips for personal VUCA preparedness.  The first two will be familiar to our readers.

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Kids today…changing the investment world!

We were inspired by a recent “open letter” written by Liesel Pritzker Simmons, a young Millennial who was sick and tired of hearing the oldsters bemoaning her generation’s listless ways.  She reminds the financial industry that the great wealth transfer that left baby boomers better off than any previous generation is about to bestow even larger estates on her generation, to the tune of $30 trillion in North America alone, and points to a report from Impact Assets titled, The Millennial Perspective: Understanding Preferences of the New Asset Owners.

But Liesel has her own bugle to sound and we found her core themes to be music to our ears:

  • Stop talking about trade-offs. Like many in my generation, I want to do good and do well; I want profit with purpose. We don’t have to settle for one or the other. I know Milton Friedman didn’t think it was possible. Spoiler alert: Milton Friedman is not our idol.
  • We want to create value, real value. I want my investments to help improve livelihoods for communities. I want to help improve the land we live on. I want to help reduce waste or carbon emissions. Sustainable, long-term financial return can only be generated by improving social or environmental value, not extracting it.
  • We have to broaden our definition of risk. Investors like me are not satisfied with the traditional definition of risk – standard deviation and variability of returns. I think that is way too narrow. Hopefully, we will still be alive in 50 years, and that smog-filled, diabetes-riddled world we are creating sounds awfully expensive to me, regardless of how much my portfolio outperformed its benchmarks in Q3 2014. When we decide not to price in the negative impacts of our investments today, we are creating more risk (that someone will have to pay for) down the road.

And most importantly, let’s finally acknowledge that every investment we make has an impact on the world around us. Let’s make it a good one!

A broader definition of wealth, looking beyond limited views of risk, embracing the effects our choices have on the world—that sounds to us like another resilient investor in the making!

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Center for a New American Dream

The Center for a New American Dream works to redefine what the American Dream means – focusing on the connections between a hyper-consumer culture, quality of life, and the environment. It offers numerous programs and tools to help Americans reduce and shift their consumption patterns. Visit website.

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Green America

The mission of Green America – formerly Co-op America – is to harness the economic power of consumers, investors, businesses and the marketplace to create a socially just and environmentally sustainable society. The website has a wealth of programs and resources designed to educate and empower its readers to take individual and collective action. Visit website.

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Fair Trade Gold and Precious Metals

There are several organizations that work with artisanal and small-scale miners to assure they make a fair living and customers know their gold and silver purchase is not coming with large social and environmental costs. See the following websites for more information:
Fairtrade Gold and Precious Metals: works with two South American groups and several groups moving toward certification in Africa.
Fairtrade International’s Gold program page includes more information on standards, including minimizing use of chemicals, for which miners receive a 15% premium; associated with Fairtrade Gold and Precious Metals (above).
FairMined: A program of the Alliance for Responsible Mining.  Their website appears oriented toward helping jewelers obtain and market fair trade gold.

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