2% GST to fund - Low Carbon Incentive Scheme - Your say

Would you support:

• 2% extra GST to pay for and encourage clean transport and clean green power produced, or
• a carbon tax on petrol / new cars / electricity to encourage green power and transport.

Add your comments below (or here), to add to our Garnaut review submission - due 11.04.2008.

Please add demographic [eg age, sex, location, income], and contact (if you wish).

1 page summary of proposal (pdf) [Update 11/4]: Final Garnaut Submission (pdf) [Update: 18/4] Included in The Australian Top 50 Ideas for 2020 Summit here #28

1 page Petition flyer (pdf) Full petition to print (pdf)

Thank you.

Richard Ferrers

Innovation Researcher

University of Queensland

Research Fellow, Centre for Global Innovation and Entrepreneurship

University of Melbourne

Low Carbon Incentive Scheme

I have been reviewing the Garnaut Emission Trading Scheme (ETS) Discussions paper, and am concerned of the potential failure of this policy to encourge low carbon (C) technology development as part of writing my Implications chapter of my PhD thesis (www.valman.blogspot.com).

I would encourage you to comment on my DRAFT submission (brief) below, and the attached key documents, from Garnaut, Foxon (Imperial College) which is excellent [technological lock in, technology trajectory], and Rayner (Nature - thanks ANDREW).

While the submissions are not due until next week, I am seeking comments from industry (Holden, Toyota, Electric vehicles mfger), consumers (my PhD interviewees), Govt (Vic summit 04.04.08, and QG), and academia (yourselves). This is an early draft, and I will insert innovation references, from my thesis in the next few days and recirculate. But thought a brief, but early draft would give you more time to comment.

I am sure you will be all very busy, and hence PhD students can give such matters more time, but I would encourage you to participate in this important process. Each generation has its problems to address, and I believe, for now, ours is climate change.

Any time and comments you could contribute would be much appreciated.
Thanks and regards
Richard Ferrers
University of Qld/Melbourne

Here are the four problems I see with the ETS, encouraging low C technology (also below):

Firstly, the ETS will encourage incremental innovation in power stations, and transfer from coal to gas, however it will not encourage radical or disruptive innovation, which is likely to come from small firms operating outside of the power and car/oil industries. Disruptors who do not hold C certificates have less incentive from the ETS to innovate.

Secondly, disruptive innovation can decrease the value of C certificates, giving certificate holders an incentive to resist such technology to protect the value of their investment in C certificates.

Thirdly, oil companies who purchase certificates, rather than petrol consumers, to keep the ETS simple, are more likely to pass C prices onto consumers, than to create or buy low C technology, which is outside their competencies, and would reduce their profits.

Fourthly, to protect their C lock in, the coal and oil industries have incentive to undermine the processes, and distract funding away from other low C technologies eg QLD $900M clean coal investments vs $26M Centre for Low Emission Technology, VIC $187M Energy technology innovation strategy (including $103.5M clean coal) vs $12M for renewable energy support fund,

Please see my suggested solution, a Low Carbon Incentive Scheme outlined below.
Thank you...

-----Original Message-----
From: Premier of Victoria [mailto:no-reply@premier.vic.gov.au]
Sent: Wed 02/04/2008 15:23
To: Richard Ferrers
Subject: Share Your Ideas

Thank you for your email to the Premier. A response will be sent to you as soon as possible.
Richard Ferrers
5/83 Park St
St Kilda West 3182
r.ferrers@business.uq.edu.au
03 9534 4830
0422 268 061

Idea:
Goals to transition to a low Carbon (C) economy:
- low C transport
- low C power
- low C exports
- low C workforce

The emission trading scheme (ETS) is a good start to get C prices into products, but greater incentive is needed to encourage success in low C technology, if we want to do so fast. The ETS is likely to take perhaps some 10-15 years to achieve this.

Some problems exist with the ETS encouraging low C technology. Firstly, the ETS will encourage incremental innovation in power stations, and transfer from coal to gas, however it will not encourage radical or disruptive innovation, which is likely to come from small firms operating outside of the power and car/oil industries. Disruptors who do not hold C certificates have less incentive from the ETS to innovate.

Secondly, disruptive innovation can decrease the value of C certificates, giving certificate holders an incentive to resist such technology to protect the value of their investment in C certificates.

Thirdly, oil companies who purchase certificates, rather than petrol consumers, to keep the ETS simple, are more likely to pass C prices onto consumers, than to create or buy low C technology, which is outside their competencies, and would reduce their profits.

Fourthly, to protect their C lock in, the coal and oil industries have incentive to undermine the processes, and distract funding away from other low C technologies eg QLD $900M clean coal investments vs $26M Centre for Low Emission Technology, VIC $187M Energy technology innovation strategy (including $103.5M clean coal) vs $12M for renewable energy support fund,

Therefore, to avoid these ETS problems, I suggest a Low C Incentive scheme, which collects funds and pays low C users and producers to encourage such use and production. Funding should be not at the expense of other government services (revenue neutral), and should encourage market solutions to low C needs. But the incentive should be paid 50% to producers and 50% to consumers to reward both parties.

Funds could be raised through a levy on petrol prices, and electricity bills. But consumers have told me, during a process of consultation, that this could place too heavy a burden on already stressed households. This could be a transitional arrangement (say two years) to be replaced by a broad ranging, but small, consumption tax. A level of 2%, added to GST, and collected in the same way, and with the same rules, could be collected by the ATO, then forwarded to the Carbon Bank (see Garnaut) for distribution to low C users and producers. Low income families would be protected as food would not be levied. And at a low 2% the impact would be slight on individual transactions. Also, business would not be levied, only consumers, reducing political issues, in selling the scheme to business. At 2%, funds of around $1B per month could be raised. Significantly ahead of Victoria\'s $200M action plan or Qld $900M investment in clean coal over ten years.

Payments should be made for results, not for R&D, so low C MWh of electricity would be paid from the fund, up to 50% of capital costs. Low C vehicles would be paid for out of the fund eg Toyota Prius, if they save 50% over normal vehicles.


Each month, receipts would be balanced with payments, so the fastest developers of low C technology were paid, starting a low C development race - a gold rush. Unspent receipts, would go to other C offset, such as planting trees, a portion could be saved (say 40%) for low C loans to buy solar heating, or fund low C R&D. A small proportion could fund R&D alone (say 20%), and administration (say 5%).

Funding could also come from sales of C certificates.

The fund should be spent on low C power (1/3), low C transport (1/3) and compensation to workers transitioning from high C to low C jobs(1/3). An incentive to leave high C jobs (say $10,000 per year of service, payable from fund in month of leaving or pro rata from funds available) and for employers to take on workers from high C jobs (say $10,000, payable half on hiring, and half on one year anniversary), into low C industries (ie receiving incentive payments).

See full details in submission to Garnaut review (April 11).
Richard Ferrers
Innovation Researcher
University of Queensland
Centre for Global Innovation and Entrpreneurship
University of Melbourne

DRUID Conference - Copenhagen, first Value Management Results paper

Hello all,


The first results paper on Value Management has been submitted to the DRUID conference in Copenhagen (June 2008) - www.druid.dk .

See paper on related website - thejoie.com.

Any comments appreciated.
Richard

Draft results release Nov '07 - another brick in the wall

See draft results (Release III) on Value Management:

Problem:
Generally, why do some innovations succeed and others fail?
Why the delay between invention and market acceptance of an innovation?
Specifically, and in depth - how do consumers understand the value in new technology?
And generally, how do consumers behave to assess, and communities make technology assessment decisions?

Recent Technology Impact - Explaining takeup of broadband, digital television, 3G mobile.
Practical Impact - Impact on marketing of technology, impact on understanding process of innovation.
Policy Impact - Australian election debate about political intervention in stimulating takeup of broadband by consumers.

Release II

Value supposed as explanation for innovation success, and spread of new technology.
Value defined as personal, subjective ascertainment of costs, benefits and risks.
Impact: Need for value management; tools: value trajectory, value conversation

Release III

What is value?
How does value work?
What should marketers, innovators, policy makers do about consumer value?
What is value?



Figure 1 - Value in action - the simplest view: Value as a black box.

In Figure 1, value is a mediator between information and consumer action. Action includes inaction or waiting, and value assessments are stored in attitudes, that can lead to future action.





Figure 2 - Opening the black box of value. Value comprises several interacting concepts.

Value was found to be very multi-faceted. Over 80 value elements were found that compete against each other to assess value. These were compressed into 12 value dimensions. Four of these dimensions were agreed by 100% of interviewees. The remaining eight dimensions, were noted by between 1/3 and 2/3 of interviewees.

Value Dimensions are a continuum of opposites, with one end of the dimension increasing value, and the other end decreasing value. Value is sensitive to new information, and new information is assessed as to its impact on value dimensions, leading to a new value assessment. Some people prefer one end of the dimension, while others may prefer the other end. For instance, some prefer new things, others prefer what they know already, and don't like to change. Some people may take different positions for different things. Some prefer simple, others complicated. But value dimensions compete with each other - simplicity and function, price and reliability, beauty and community, privacy and knowledge.

Key Dimensions:
Function Price Time / convenience Service / reliability
Other Value Dimensions: (from most to least common)
Learning / new Emotion Need Simplicity / Complexity
Duty Power / Freedom Connection / Community Beauty / aesthetics

Further questions:
How does value work? ... to follow

What should you do about value? ... to follow

Virgin Broadband I - Value assessment in action

My Phd thesis results are in Draft 2, and will be released here shortly.

But, the technology I am studying 3G, I bought into last week Thursday. My wife picked up a Virgin Broadband 3G modem, to replace our home phone and give us 4Gb of broadband. This is our experience.

Product/Service: Virgin 3G $60 - all local and STD calls (not mobile), 4Gb broadband at 500k speed download, 300k upload, shaped to 128k thereafter. Includes wireless modem. No installation costs. 24 month contract. 30 day trial period, without contract. (www.virginbroadband.com.au)

The good.
-----------
1. Phone works fine. New number.
2. VBB gave us a free mobile sim, so we can call that mobile for free. Inserted into my phone and tested the phone no problems. Rang our family to let them know our new temporary number.
3. Left our old landline plugged into the answerphone. Have been getting calls there but no messages. I think it is screening sales calls. YAY!
4. Day 2 - Broadband worked fine on LAN. Downloaded 100Mb. No wireless set up yet.
5. Modem remembers all our calls.
6. Website where Virgin users talk about their experiences and help each other fix things. A Virgin rep is there too, gives his email out and fixes things. Might have to sign up.
7. This is a 30 day trial, so $60 for one month is low risk if completely bad.

The bad.
--------
1. Logging in on Day 1 - web page got stuck validating the sign in. It was only the email address, and I agree. How hard can that be.
Rang the helpline. No answer after 15 minutes- gave up. Emailed helpdesk.
2. Day 2 - Couldn't get wireless to work.
3. Day 2 - About 5pm Friday. Broadband stopped working, and for the rest of the weekend couldn't get it to connect. BOO!
4. Spent nearly an hour waiting for helpdesk to answer the phone. Gave up around an hour.
5. Stopped into Virgin shop, and guy said we are just sales. Call helpdesk. But might be too many people using broadband.
6. The manual says my mac needs 10.4 whereas the brochure says only MACOSX.
7. The manual only gives setup for MAC airport, not my USB wireless modem. Might have to ring the DLINK helpdesk.

The ugly
--------
1. No broadband from Fri 5pm to Mon. Only offpeak access ie during the day.
2. Can see wireless network, but can't get to internet through it. Complicated by no broadband.

Solutions
----------
1. Need faster access to helpdesk. An hour with no answer is too long to wait.
2. If outages, need to know about it eg text my free mobile.
3. Need troubleshooting guide. This can go wrong, and this fixes it.
4. Needs to work. A full network is no good. Need compensation when service not provided.
5. Maybe provide dialup as backup

Stay tuned as the story unfolds.
Richard

Beyond Innovation Management - towards Value Management (for MINT)

Preliminary results from a PhD thesis on Innovation - Unlocking 3G Consumer Value - The Australian Opportunity - University of Queensland, and University of Melbourne
researcher.

Richard Ferrers (r.ferrers@business.uq.edu.au)

In searching for an answer to why does innovation fail, and why does an innovation take so long to become accepted generally, an initial focus was on the effect of pricing strategies. But an increasing focus on the individual consumer, led to a consideration of value, a subjective perception, rather than price, an objective measure. Initial data collection, and analysis has led to some preliminary findings to explain how consumers understand the value in a new technology - the current research question. The implications of the results has led to the concept of Value Management.

VALUE MANAGEMENT - treating consumers as individuals - beyond segmentation - a new
explanation for innovation adoption and success

The study of how innovations spread has been in progress for some sixty years, and some of the theories to explain innovation adoption are in their fourth decade, for instance, adopter categories was developed by Rogers in 1962, and the Bass model of technology adoption (1969) which models technology spread based on the percentage of innovators (normally around 3%), and the rate of imitators (around 30%).

Using more recent ideas, derived from postmodernism and phenomenology, which looks beyond scientific, one right answer, and based on a grounded theory study (Glaser and Strauss 1967), of how consumers understand the value a new technology, a new perspective has been developed called Value Management. The study involves in-depth interviews with Australian consumers of 3G mobile internet and phone technology. The theory is being tested with three case study companies - an innovative wine retailer, an electric vehicle designer and retailer, and a textual analysis software developer. The theory developed as part of this study, will be compared with major innovation theories including Rogers (2003), Bass (1969), Christensen (1997), Anderson & Tushman (1990), Moore (1991), Bijker (1995), Agarwal & Bayus (2002), Golder and Tellis (1997), Kim and Mauborgne (2005), and Gourville (2006).

What is value?

Value Management proposes that consumers adopt a new technology when individually they see value in making the change. That decision (defining value) is a personal, individual, unique assessment of costs, benefits and risks, reflecting individual circumstances that lead to the purchase decision, choice or attitude, or other action. Assessing value may not lead to a purchase, but it may, for instance lead to passing positive or negative messages on to the social network of the consumer. The assessment of value takes time and as such has a cost. This cost is part of the assessment of value. Value exists where the benefits and the risks that the benefits will be achieved amply exceed the total costs of acquiring the benefit, including the cost in time to make the assessment.

The implication of this definition of value is that value is a moving target. Value moves with new information and experiences, Value moves when our social network delivers that information or we encounter information in the media. Value also degrades over time. While we are continually showered with more information, older information becomes less valuable as it goes out of date. Value is affected by our past decisions. Value is not measured except in attitudes and action. Value causes purchasing.

Implications of Value

Only consumers assess value. Innovators make value offerings, but consumers decide in their individual situation, if value exists for that innovation, for them, there.

Thus, businesses, and innovators need to enter a dialogue with consumers to determine where value is created for the consumer. Customers need to brought metaphorically inside the business, to co-create valuable offerings. Greater dialogue needs to be undertaken with the consumer.

Consumers need to be able to make a value assessment before they will purchase.
The more complex is the pricing structure of a value offering, the more difficult it will be for a consumer to assess the value. Inability to assess the value, will often lead to not purchasing. Thus prices with fixed and variable components require consumers to estimate their usage, for instance call minutes, downloaded megabytes.

Value Management

A possible definition for Value Management is dealing with consumers, through communication, knowledge provision and strategic offerings, to maximise the value to individual consumers of value offerings, for the pursuit of acquiring value for shareholders. In a sense, consumers are seen to be within the boundary of the organisation, and thus their value is something to be managed. Rather than creating products to offer to consumers, management discovers what consumers value and delivers value offerings to consumers. It becomes important to make it easy for customers to assess the value of a value offering. Thus a business becomes more like a family, with the consumers within, than a castle with the consumers like peasants outside the castle walls.

Several business processes suggest themselves to manage the value relationship with a consumer -

1. The Value Conversation - getting close to customers;


2. The Value Trajectory - understanding customers don't act immediately on their value assessment, but that they remember their assessment, and as more information adds to the assessment, a threshold may be crossed leading to action - either a purchasing decision, or expressing a positive or negative comment to their social network;


3. The Value Lifecycle - value is continually assessed, even after purchase, and messages are still passed through to the consumers social network - positive and negative on the value experience, including repairing, replacement, alternate competitor offerings (or announced future offerings), and complementarity eg using a memory card in a digital camera and music player; and


4. The Value Management System - what would a coherent system look like? Future work is required here.

Implications of Value Management

Businesses will need to assess the value of Value Management. They will need to find the time to make this assessment, and will only adopt the innovation of Value Management if the benefits in their circumstances will justify the time to understand what Value Management is and means. Businesses will enquire of their social network to assist in making the assessment. A risk for business is that a competitor may see the Value of Value Management, where you do not.

More at http://www.thejoie.com.au/phd/
 (now offline - see www.thejoie.com)

- Unlocking 3G Consumer Value - the Australian Opportunity.
Your comments are welcome by email or on http://www.valman.blogspot.com/.

References:

Agarwal, R. & Bayus, B. L. (2002). The market evolution and sales takeoff of product innovations. Management Science, 48, 8, 1024-1041.

Anderson, P. & Tushman, M. L. (1990). Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly, 35, 4, 604.

Bass, F. M. (1969). A new product growth model for consumer durables. Management Science, 15, January, 215-227.

Bijker, W. E. (1995). Of bicycles, bakelites, and bulbs : toward a theory of sociotechnical change. Cambridge, Mass.: MIT Press.

Christensen, C. M. (1997). The innovator's dilemma : when new technologies cause great firms to fail. Boston, Mass.: Harvard Business School Press.

Glaser, B. G. & Strauss, A. L. (1967). The discovery of grounded theory: strategies for qualitative research. New York: Aldine De Gruyter.

Gourville, J.T. (2006). Eager Sellers and Stony Buyers. Harvard Business Review, 84 (June), 6, xx-xx.

Golder, P. N. & Tellis, G. J. (1997). Will it ever fly? Modeling the takeoff of really new consumer durables. Marketing Science, 16, 3, 256-270.

Kim, W. & Mauborgne, R. (2005b). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant Boston, MA: Harvard Business School Press.

Moore, G. A. (1991/2002). Crossing the chasm : marketing and selling high-tech products to mainstream customers (Rev. ed.). New York: Harperbusiness Essentials.

Rogers, E. M. (2003). Diffusion of innovations (5th ed.). New York: Free Press.

First industry Value Management document - released for comment

Announcement:

WineShop short review of Value Management for industry comment released today.

Thank you WineShop (not their real name) for assisting with your comments.

This is the commencement of the value conversation about Value Management.

Can these ideas be helpful to industry?

I look forward to your comments.
Regards
Richard