new concepts im amazed with

SURGEON GENERAL'S WARNING: MANAGEMENT DISCUSSION THAT MAY BE EXTREMELY BORING.

there are some new concepts in management that i found fascinating in their simplicity:

cap and trade

These systems draw on the power of the marketplace to reduce emissions in a cost-effective and flexible manner. In practice, cap-and-trade systems create a financial incentive for emission reductions by assigning a cost to polluting. First, an environmental regulator establishes a “cap” that limits emissions from a designated group of polluters, such as power plants, to a level lower than their current emissions. The emissions allowed under the new cap are then divided up into individual permits—usually equal to one ton of pollution—that represent the right to emit that amount.

Because the emissions cap restricts the amount of pollution allowed, permits that give a company the right to pollute take on financial value. Companies are free to buy and sell permits in order to continue operating in the most profitable manner available to them. So, those that are able to reduce emissions at a low cost can sell their extra permits to companies facing high costs (which will generally prefer to buy permits rather than make costly reductions themselves).

from Catalyst, April 2005

i find this very interesting. you put a cap to something because of its negative consequences. but such things are justified as, perhaps, necessary evils in the business (carbon emissions). this cap is then divided among different companies (polluters) as permits. companies who need more 'permits' (because they pollute more) could 'buy' the permits from others who need less (a marketplace). polluters, in essence, become financially burdened to continue to operate. meanwhile, companies who pollute less are 'rewarded' financially, being able to sell their permits. there is now a real financial motivation to reducing pollution or emissions! Power of the Marketplace!

im now looking at other ways by which the concept could be applied, in other 'necessary evils' of operations.

opt out rather than opt in

this is a small part of the book 'nudge' (which i still have to get a copy of...) the book deals with 'choice architecture'. my understanding: how systems are set up that make us choose one option over the other, almost unconsciously. one example is as simple as 'opting out' rather than 'opting in'

we have all encountered checkboxes where the default setting is not to participate ("Check the box if you want to donate charity.") such a default setting encourages non-participation, according to their study on behavioral economics. but by simply reversing the default option (set to participating: "Check the box if you do NOT want to donate to charity.") response rates were significantly higher because of this reversal!

Check the box if you do not want a date with piolo pascual... (binakla na naman - hehehe)

and similar to the first concept, im now looking at how to put this in operation...