Category Archives: IERG

CHICAGO’S NEW SOUTH SIDE

Brazil from WikipediaThe City of Broad Shoulders is looking to the south. South of 119th street. South of Springfield. South of Mexico. Way south

They’re looking to Brazil where GDP is 6th worldwide and growing. And consumer confidence?  Up.  Infrastructure investment?  On the rise.  Interest rates?  Decreasing. Unemployment?  Only 5.6%.

And Brazil encourages business growth: An open-door trade policy. Aggressively lower tariffs.  Lower taxes. Their complex regulatory environment is getting easier to navigate.  Not surprisingly, international investment is moving to Brazil.

IERG

IERG

This is the 2nd International Forum of IERG — The Intenational Executives Resouces Group—a one-of-a-kind organization—a not-for-profit group made up of volunteers—senior business executives from around the world whose careers have been enriched by broad experience in the global arena.  And no economic mumbo jumbo at this conference.  Everything’s solid.  Everybody comes away with a better understanding of what it takes to do business in Brazil

Brazil is the world’s 5th largest economy and Illinois’ fifth-largest export market.  In 2011, they bought more than $2.55 billion of our goods and we could do a lot more.  Even our politicians are taking junkets there. 

Think of it as Chicago’s new SOUTH South Side.

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SPEAKERS:

  • The honorable Paulo Camargo, Consulate General of Brazil in Chicago 
  • Ernesto Ramon, former CEO, Dow Chemical in Brazil 
  • Michael Ross, VP & General Manager, Encyclopaedia Britannica
  • Dr. Yara deAndrade
  • Roland Dietz, Chicago Chairperson, IERG

MODERATOR: Bruce Montgomery, Executive Producer, IERG

LOCATION: The Chicago offices of Baker & McKenzie

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Brazil ClubIERG logo.

This summary is adapted from an article by Brazil Club with permission of IERG.  For the full text, go to – http://brazilclubusa.com/blog/chicagos-business-with-brazil-forum-a-success.html

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Brazil Club –  http://brazilclubusa.com/index.php

IERG –  http://iergonline.org/
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GO TO PART 2 – WHERE IS CHINA’S STEVE JOBS?


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Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2012 John Jonelis – All Rights Reserved

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THE STORY BEHIND BIG DATA

John Jonelis

Big DataThere’s a lot of buzz about Big Data these days. By Big Data, we’re talking Big Mountains of Data. The manipulation of this resource will change the world and do it soon. I hear plenty of lofty goals for the benefit of mankind but destructive ends also seem likely. So what can we expect? I’m here to pass along the short version in plain language.

Tonight we’re treated to speakers from Oracle, CABI, and Narrative Science – a business that grew out of the artificial intelligence labs at the University of Chicago and Northwestern.

Pound for pound, Chicago’s MIT Enterprise Forum is always dense with PhDs and Thought Leaders. I spot a VC in a room dominated by businessmen, academics and MIT alumni. Josh London from Wellter moderates this high-powered session.

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Distilled Data

Louis Nagode – Oracle

Louis A Nagode

Louis A Nagode … jaj

Louis Nagode is a self-proclaimed geek, but he’s world-renowned, with 30 years of business intelligence under his belt. When he talks Big Data, he’s thinking an aggregate of an enormous bulk of worldwide information—ultimately all the knowledge in the world. He says we’re creating data at a phenomenal rate. In the next 2 years we’ll create more data than ever existed before. The key to using it, according to Nagode, is distilling it down to useful information. He breaks it down into four “Vs”:

  • Volume—(How do you process it all?)
  • Velocity—(How fast does it change?)
  • Variety—(How do you make use of it?)
  • Value—(How do you make sense of it?)

The big question is this: Can we use Big Data to reduce workload for people, manufacturing, and other altruistic purposes? The next two speakers give concrete answers to that.

Nagode talks about alternatives to databases—alternatives like HDFS, the distribution of data across multiple computers around the globe. That’s data that can be harnessed.

Oracle Logo

To sift out what we need to know he uses a map-reduce pipeline. Look it up if you want, but it boils down to this: You no longer need a structured query language like SQL. Bottom line, it’s getting a lot easier to use data. Let’s move on and see just how easy this gets:

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From Data to Story

Kristian Hammond – Narrative Science

Kristian Hammond - JAJ

Kristian Hammond … jaj

Hammond built the artificial intelligence lab at both the University of Chicago and Northwestern. Now he’s built a Chicago company that takes numbers and symbols and communicates the hidden insights in a more human form. Let me put it more directly: He transforms Big Data into words and narrative. In other words, STORY!

Numbers require expert analysis. Graphs help visualize numbers but we’re still looking at only an 8% penetration. Stories, on the other hand, are highly accessible. They communicate beyond data and tell you things you can’t see. After all, narrative is the way we’ve communicated as long as we’ve been human.

His system produces a short narrative that tells your company the pertinent facts, then gives a summary—A SUMMARY OF WHAT YOU CAN DO THIS WEEK TO MAKE YOUR COMPANY BETTER. We’re not talking about overseas labor knocking this stuff out—no, machines are doing it using artificial intelligence!

Narrative Science Logo

Hammond gives an example of a food chain using corporate analytics. The data says that sales of Reuben sandwiches are down. The STORY gives the company easy-to-understand and actionable recommendations, something like this: “Reuben Sandwiches are this week’s weakest menu item with average sales of 136.7 units. Bringing sales up to norm means $7.2MM in added revenue overall. This requires only 6 more sales per store per day.” Now that’s useful information that people can understand and act on.

According to Hammond, people have forgotten the business reasons for data. By telling them the business side in Story, the data becomes immediately useful. As he puts it, “Story is the last mile in Big Data.”

What about education? His system give feedback on an exam with advice on how to improve a student’s performance: “In physics, you need to focus on the Theory of Relativity. Look back to Chapters 5 and 6 of the text.”

How about a sector report for stock analysis? Or a seasonality report for commodity analysis? Why not pull down the Twitter data of all the speakers at a conference and give it out as written analysis? What about a data-driven narrative for media? Turns out that’s a natural. Hey, this could put me out of business!

So how does it work? They analyze nuance and word choice 200 ways plus adjectives and adverbs. They match the client’s written “voice.” They can generate different styles using the same machine. According to Hammond, “Any data, any story, we can do it.”

Now let’s look into using Big Data on a grand scale:

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Use it for Good

Roland Dietz – CABI, IERG, Focused Connections Partners

Roland Dietz - JAJ

Roland Dietz … jaj

Dietz showed us Big Data in use on the world stage. His organization predicts infestations in plant or animal populations worldwide.

They can show a farmer what might happen to his crop. To do that, they combine data from around the world on climate, soil composition, movement of materials, markets, and many other sources. This model is open source. The data is freely given and freely distributed.

The profit is in what they do with Big Data. As he put it, “We start with tons of information, then identify its significance. That becomes our competitive edge.”

CABI Logo

For example, let’s say you track the movement of a pest that destroys coffee plantations. You know the various soils, plant densities, climates, population centers, and topography worldwide. With this, you can predict where the plague will spread.

Some governments don’t want to join CABI, but the group has done good work, even in Korea and Pakistan. When countries see that the organization isn’t political, they accept them. Some are restrictive about what they share because they don’t understand the consequences. But when they find out some of the unexpected benefits of Big Data, they open up.

Big Data at Emmi Solutions - JAJ

Big Data at Emmi Solutions … jaj

Takeaways

  • Constant Change—The ecosystem is non-linear and always in flux. Using Big Data means doing analysis in real time.
  • Analysis—Data without an expert is useless. But just like any science, you come up with a theory based on the data. Then you test it. The scientific method is very much alive and well.
  • Opportunities—The biggest opportunities identified so far are in healthcare, world agriculture, education, and evidence-based decision making in business.
  • Privacy—This is a huge question that needs to be answered. More and more, people accept constantly observation. But how is the data used? If, for instance, a telecom company has significant insight into YOU, do they keep it proprietary? Can an organization publish information on coffee production in Senegal without permission? I suggested that I’d love to get my hands on coffee pest data to gain an edge trading commodity futures.
  • Ethics—Turns out, these speakers aren’t the ones to address this issue.  “It’s above my pay grade,” said one. But might not Big Data be used for evil purposes? A member of the audience suggested the specter of ethnic cleansing. Like nuclear power, the possibilities for both altruistic and destructive goals seem endless.

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Contacts

Louis A Nagode—

Oraclehttp://www.oracle.com/us/solutions/index.html

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Kristian Hammond—

Narrative Sciencehttp://www.narrativescience.com/

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Roland Dietz—

Focused Connections Partners http://focusedconnectionspartners.com/

CABIhttp://www.cabi.org/ – a not-for-profit international organization that improves lives by solving problems in agriculture and the environment.

IERGhttp://www.iergonline.org/ – (International Executive Resource Group) – A not for profit organization of senior business executives from around the world.

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Josh London—

Wellterhttp://www.wellter.com/ – Enables employees to comparison-shop for healthcare providers.

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The Venue—

Emmi Solutionshttp://www.emmisolutions.com/ – builds patient empowerment solutions for health organizations that measurably impact outcomes. Their offices are a terrific venue for this event. By the way, they’re still looking for talent. Check out this link: www.EmmiSolutions.com/Careers Looks like a great place to work.

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MIT Enterprise Forum, Chicagohttp://www.mitefchicago.org/

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GO BACK TO PART 1 – WHO’S RUNNING THE ASYLUM

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Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.
Copyright © 2012 John Jonelis – All Rights Reserved

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Filed under CABI, Chicago Venture Magazine, Chicago Ventures, Data, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, Financial Markets, IERG, Information, Innovation, Innovation and Culture, MIT Enterprise Forum, MITEF, Northwestern, Oracle, University of Chicago

WHERE IS CHINA’S STEVE JOBS?

IERGAs I heard it –

With the passing of Steve Jobs, we hear well deserved tributes on a daily basis.  But the question, “Where is China’s Steve Jobs,” is a in another category. It captures intense frustration and a strong desire for Chinese entrepreneurship. Where are their innovators? China keenly feels a lack of  intellectual capital building–a process that takes decades. It lacks the established business culture we enjoy in the US. While the need for building is great, the desire for a positive self-image is huge. How do you pass on knowledge to a business person who sorely needs it but cannot accept it because of culture?  The answer may lie in Chicago.  China enjoys a special connection to this city.  This may be an opportunity for our thought leaders to step up.

I cornered the speakers and pointed out that America was once a colony that supplied raw materials to Great Britain, which used those cheap resources to manufacture goods and sell them to our colony and the world. England owned the catbird seat.  Isn’t China that country now?

The answer surprised me. Structural change has altered that dynamic. Manufacturing is now at the bottom of the food chain–it goes wherever labor is cheapest. Like Japan before it, China has already experienced wage growth and is starting to outsource work to places like Viet Nam. Meanwhile, raw material prices are booming. About $500 counts toward the Chinese export of each iPhone when their real participation is only $30 in assembly.

China doesn’t want to manufacture cheap products. It wants to produce quality goods for its own growing middle class. It suffers two structural problems: From a business perspective, the country is like a baby that needs to mature. At the same time, its culture is an old man stuck in tradition.

I’m sitting among international business leaders at an event, WHY CHINA? WHY NOW? hosted by IERG Chicago—the International Executives Resources Group—a non-profit organization that creates and disseminates knowledge and ideas by sharing up-to-date information. Find them at www.iergonline.org

I’m here by special request of MIT and should cover yet another event this same evening, but can’t break away from the compelling, counterintuitive ideas presented here. The view of the city is spectacular, the food is great, and I am always surprised by the candor and warmth I feel when talking with Chinese nationals and those in long association with them. Anyone that deals with these people falls in love with them. I harbor serious reservations about trade with China, but I’ll reserve that for another article and highlight the positives here.

The panel surprises me with their depth and knowledge, and their enthusiasm for Chicago:

  • Bruce Montgomery—“Chicago is the new center for thought leadership.”
  • Elizabeth Harrington—“Chicago is a growth producer.”
  • Ms. Jia Zhao—“Chicago is unique. It’s such a great place to work. It’s the only city in the US that receives young business leaders from Shanghai. No other Chinese city has formed such a relationship, but the Shanghai/Chicago connection is long in history.”  (The quote about Steve Jobs comes from this gracious lady who enjoys a lifetime of profound experiences.)
  • Stephen Markscheid—“China has always been 25% of the world’s population and 25% of the world’s GDP. Get used to it.”
  • Basile Waite—“China has overtaken the US as the largest consumer of energy”
  • Tracy Xu—“Over 70% of the businesses in China lose money, but China takes a long-term perspective.”

Each of these speakers brings a different perspective:

 

Bruce Montgomery

CEO, Wi-Fi Technologies, LLC

Bruce performed ably as moderator. He’s cordial, professional, well spoken, and concise. He knows how to bring out the best in a speaker and how to prepare an audience.  One must assume he’s done this before.  The first speaker is Elizabeth Harrington:

 

Elizabeth Harrington

Executive Director, Chicago-China Economic Development Center.

The US needs to attract 1 trillion in foreign investment in the next five years and the Chinese are now the wealth creators. GDP in the US has grown by a factor of 1.5 in 10 years. China has grown 10 times. The Chinese now have rising wages and spending power.

Reduced wages in the US and the currency gap provides an opportunity for us. For 20 years, foreign investment has gone into China. Now China is investing. 30% is in M&A, in areas like Energy, especially clean tech, which they need so badly, as well as Metals, and Real Estate. The residual investment goes to Industry. Only 9% goes to the US because they perceive us as protectionist. Investments are typically under 10M and usually much less. The target is small businesses and the method is long-term relationship.

Investors Take Note–China needs to re-deploy from US Treasuries to private companies. Chicago is in a unique position to seize Chinese outbound investment in both Real Estate and M&A. President Hu said Chicago is the best place to invest. We have a diverse economy. We are the headquarters for 30 of the Fortune 100 companies and the Chinese like to work with their peers. New York, on the other hand, is primarily financial. LA is a port city and big in entertainment.

Chicago is Key–Despite many blunders, Chicago has worked hard to be business friendly. We are a city of immigrants. We believe in free trade. Even with a history of machine politics, we’re all about business. As a result, we have five of the most successful Chinese companies in the Chicago area, including the only one to that attracted Warren Buffett’s investment dollars. Contrary to popular opinion, we have a deep culture of innovation and China wants to acquire high technology and innovation. Chicago has great universities, a good workforce, and it’s a livable city. We have financial services in the CME and CBOT, We have education in Northwestern University, the University of Chicago, the University of Illinois, and other top schools. Our logistics is amazing. You can travel to any other major city in the US in one day and get back for dinner. Health Care is strong with Abbott Labs, Baxter, and the Biotech Conference. Our service industry is alive with legal, banking, and consulting. We also have ongoing programs like the Chicago-China Friendship Initiative

Chicago helps visitors find the right people and engage them in the business community, then we stay connected for the long-term to make sure they are successful.

 

Ms. Jia Zhao

Attorney at Baker & McKenzie

She now calls Chicago home because it’s such a great place to work. With her long history in China, Jia Zhao told some astounding stories. Years ago, China was closed to the world. They decided to send students to learn about US laws. They wanted to know about such concepts as separation of power—could it really be true?

According to Ms. Jia Zhao, this event, titled “Why China? Why Now?” could once have been dubbed “Why America? Why Now?” 40 years ago, in ’72, Kissinger’s announcement of Nixon’s visit gave a big shock to the Chinese people. The US was their number one enemy. Why come alongside us? The Cultural Revolution still smoldered. Jia Zhao held a post in the foreign ministry at the time and attended Nixon’s first dinner in China. This is a woman who has been there and done that.

A Need for Law–China started opening up in the late ‘80s. In the ‘80s and early ‘90s their legal system started to develop. Joint venture law. Economic contract law. Owned enterprise law. Technology contract law. Enhanced compliance. Stricter procedural requirements. Greater supervision of foreign representatives.

Culture Shock–The Chinese find some concepts culturally bewildering: Why should there be a tax deduction for charity? After all, noble deeds should be associated with noble motives. All their business practices reflect a planned economy. Transparency is improving but still an issue. The idea of government serving the people is alien and new and needs to be worked out over time. But the younger people are more open to change and to outside ideas. Businesses are becoming more service oriented. China still has a long way to go. You can find both good and bad. It’s a work in process.

China’s Top Challenges–Finding talented workers and retaining them—this in spite of the huge population. Increasing costs. Internal competition with state-owned enterprises. Intellectual Property enforcement.  Equal treatment. Transparency. Market access in services.   Investment restrictions—they have categories of investment–Encouraged, Restricted, Forbidden.

Jia Zhao offers this guidance to American companies–When negotiating in China, take the time to explain to them why things are the way they are in the US. When you don’t understand something about China, say so. Engage in a strategic, rather than tactical dialogue. China is top-down. The US is bottom-up. Public awareness and the understanding of complex law is new. Develop your business with China on the basis of long-term friendship.

 

Stephen Markscheid

CEO, Synergenz Bioscience, Inc.

China is emerging from the Third World rapidly. They have exceeding Japan in GDP and soon will exceed the US. Over the last 30 years, miraculous growth has been driven by foreign investment. That has produced exports.

Clear Strategy–China’s Five Year Plan makes their business strategy clear. They want to move from an export driven economy to one that manufactures for its own people. They want to build their own brands. They lack the marketing expertise to carry it out.

Trends–Culturally, the Chinese people like to produce and save, while Americans like to consume and borrow.  Our SEC rules require Chinese businesses to have American nationals on their boards. Banks won’t invest in companies that are 100% Chinese run.

 

Basile Waite

Director, Ops-Asia LLC

China’s economy will double by 2020. They will add the equivalent of the UK every year. They’re still dependent on coal and pollution is terrible, but they’re committed to Kyoto protocol and have launched a renewable energy drive. A look at their Five Year Plan reveals their desire for big projects to come online as fast as possible. They want renewable energy to reach 20% by 2020. They want four nuclear plants by 2020 but now realize that’s not feasible.  They lack safety expertise and soft skills.

Opportunities–Their top-down planning changes the way projects get implemented and causes incongruencies. That makes opportunities for Chicago companies. We can fill the knowledge and experience gap.

Hunger for Knowledge–Wind & solar power don’t have all the pieces together. The Government is driving it but the knowledge base isn’t there. China knows how to manufacture but doesn’t know how to grow internationally on their own. They need to partner with foreign companies.

Learning–China has a tremendous capacity for learning. They’re good at building new highways and trains. What they lack are the kinds of knowledge bases that take decades to build. People are driving BMWs with a bicycle mentality. This opens the opportunity to share experience with them.

 

Tracy Xu

Independent Consultant, formerly with AIG.

Tracy offers a young perspective. She finished college in ’93 as English major and never expected to be here in Chicago. When she worked for Chinese government, she found the bureaucracy an obstacle. She worked for the US government to find out what was different.

The Long View–Over 70% of companies in China lose money, but China takes a long-term perspective. One example is A.O. Smith. The company lost money for years. Now it’s the most profitable company doing business in China.  It’s the largest manufacturer of water heaters.

Interesting points

There is no need for insurance in China because the government owns everything.

Wealth has exploded. China is second only to the US in people with over $1M in assets. China has pushed art, rare diamonds and wine to high prices. They bought Chairman Mao by Andy Warhol for $19M. Chinese will buy a downtown condo building in Chicago for cash over a weekend.

The US formed the EB-5 program to attract foreign investment to the US. 70% of all applicants are Chinese. China’s middle class is rising and more demanding of services and education.

The educational system has not yet reformed. When people graduate, they need a re-education to business reality. This creates an opportunity for the US companies to fill a void in services.

Not long ago, China’s people lived in micro government housing. Now, in the metropolitan areas, luxury apartments and single-family houses abound. These units cost twice what they do in Chicago.

A.O. Smith Case Study—The company lost money for years but has now evolved into one of the most profitable companies doing business in China.

10 years ago, all appliances sold at department stores. The company decided not to limit themselves to one distributor.

When making a purchase, Chinese like to gossip to friends. When they buy and when they complain, they want to talk to the owner.

During a price war, A.O. Smith refused to discount their units—instead they consciously decided to be the most expensive producer, but with the best service. The strategy worked. People figured, if they’re so confidence, they must be good.

The General Manager (top officer) is the most important employee in a Chinese company. A.O. Smith found that their American and Taiwanese managers didn’t fit the culture, so they came to China with attitude of learning everything the Chinese way. They finally found the right leader and took him under their wing for two years before putting him in charge.

Chinese companies are getting much more sophisticated. There are plans to buy out US distributors. This is a big opportunity for an influx of money to the US.

 

Conclusions

Intellectual property—many Chinese respect IP but not the ones with tanks. The military itself is breaking the IP laws. Chinese companies are fighting among each other on this issue. They break IP law when they have no economic alternative. The rising middle class and private enterprise are pushing for IP law. An interesting point–Sometimes counterfeit products help promote the real thing.

US companies can’t get patents in China. This is a big problem. Culturally, technology is seen as the legacy and heritage of the common people and should not be hoarded. This attitude is evolving, but is still ripe in the hearts of the Chinese.

Strengths–China is getting strong in Chemistry and Engineering. 800,000 Chinese enter Engineering programs in US universities every year. Once they intended to stay. Now they go back without hesitation. The US is in a depression. China is not.

Human Rights–As an Evangelical Christian, I’m concerned about human rights, so I asked a panelist about the repression of Christians. Response: Persecution is going on because the government has not yet decided which way to go on the issue. Meanwhile, people all across the country are criticizing the government openly—more than we might think—on all sorts of issues having to do with their economic and social lives. There is a great deal of turmoil and everything is in flux. There exists and ever-widening desire for freedom of expression.

That’s what I heard.  What did you hear?

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GO BACK TO PART 1 – CHICAGO’S NEW SOUTH SIDE

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Find Chicago Venture Magazine at
www.ChicagoVentureMagazine.com
Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2011 John Jonelis – All Rights Reserved.

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Filed under IERG, MIT Enterprise Forum