Posts Tagged ‘commons’

The future belongs to those who give the next generation reason for hope.
~Pierre Teilhard de Chardin (1881-1955)

Humanity has been innovative since the discovery of fire. But does curiosity and discovery embrace responsibility and avoid mishaps or catastrophes? Are there many of you who remember the triple calamity in Japan on March 11, 2011? A large earthquake triggered a major tsunami. Both of these major forces, earthquake and tsunami, were devastating to several seaside prefectures. Each prefecture had established neighborhoods that were several hundreds of years old. Thousands of its citizens died in this event. Nature’s forces hit those communities like never before. Wreckage and debris washed away from Japan that ended up on the western coast of the United States. This was clearly a devastating global event.

But the natural forces were compounded by the meltdown at the Fukushima Dai-ichi nuclear plant. This single event shut down a major facility and drastically restricted electric usage across Japan for the first time in 42 years. Japan is facing a scenario that modern societies have been wary to confront. What impact does the nuclear industry have on the economy of a nation? What are the risks when you have so much dependency on nuclear generated energy? What are safer or better choices for an energy policy and how can current policies be modified and implemented?

The Fukushima Dai-ichi plant is in a high seismic zone, and more vulnerable to natural disasters like earthquakes or tsunamis. The International Atomic Energy Agency (IAEA) had expressed concern about the ability of Japan’s nuclear plants to withstand seismic activity. What lessons could be extracted from this calamity? Are they universal lessons that should be applied in other countries, as well?

Read what the Japanese scientists and engineers are attempting to create to resolve radioactive emissions in their water supply. As Albert Einstein once said; “We can’t solve problems by using the same kind of thinking we used when we created them.”

The future is our’s to create. The consequences of this disaster did not end with by rebuilding. Generations will be affected by radiation and others will die from its impact. We have other energy choices, depending on local resources. Sustainability is the holistic business model for the 21st century. So one major lesson is: we must be smarter to resolve issues when high technology meets Nature.
Jarvis Business Solutions, LLC
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Lead Smart, Endless Opportunities when Sustainability is driven by Lean Six Sigma

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A polar bear swimming

Climate change, by itself, is probably the most important megaforce that could directly impact all other environmental issues. According to KPMG; “Predictions of annual output losses from climate change range between 1 percent per year, if strong and early action is taken, to as much as 5 percent a year–if policymakers fail to act.”

Consider taking the test below to gage your awareness and understanding of global climate change:

Think you know the odd effects of global climate change? Take our quiz.

Climate change conjures images of long, hot summers, melting ice caps and stranded polar bears. But as the weather gets stranger, so too does its effects on the environment, sometimes in the oddest of ways. How well do you know the signs of change?

, Contributor to The Christian Science Monitor

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Southern Hemisphere of Earth (Lambert azimutha...

Written by Matt McGrath, Science reporter for BBC World Service, published November 1, 2012. The commission was considering proposals for marine reserves in two critical areas of the Ross Sea.

Governments meeting in Australia have failed to reach agreement on new marine protected areas for the Antarctic ocean. They have deferred a decision until July 2013 when all the relevant science will be considered. Environmental groups have expressed deep concern about the lack of consensus on how to develop a network of protected zones.

“This responsibility, and this failure, rests with all the members.” ~ Jim Barnes, Antarctic and Southern Ocean Coalition

They blame Russia, China and Ukraine for blocking agreement. For the past two weeks the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) has been meeting in Tasmania.

What has the CCAMLR accomplished previously?

  • CCAMLR has established just one Marine Protected Area in the Antarctic so far.
  • They have designated 11 priority areas in the Southern Ocean from which most MPAs will be created.
  • Governments have set a goal of extending protected areas to ten percent of the world’s oceans

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Daniel Goldstein makes tools that help us imagine ourselves over time, so that we make smart choices for Future Us.

Today, we have many sources of information and knowledge. That is true for topics surrounding Corporate Social Responsibility, Sustainability, Business Transformation, etc. I have discovered some very good videos that are supported by the Creative Commons (CC) license and comply with the Digital Millennium Copyright Act (DMCA). For more information, please go to originating sites for more information (TED, YouTube, and other  web sites). We hope you enjoy these videos and share with your friends and colleagues.

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Yochai Benkler explains how collaborative projects like Wikipedia and Linux represent the next stage of human organization.

Today, we have many sources of information and knowledge. That is true for topics surrounding Corporate Social Responsibility, Sustainability, Business Transformation, etc. I have discovered some very good videos that are supported by the Creative Commons (CC) license and comply with the Digital Millennium Copyright Act (DMCA). For more information, please go to originating sites for more information (TED, YouTube, and other  web sites). We hope you enjoy these videos and share with your friends and colleagues.

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Those working at capacity, professionals most likely prepping to leave
by Neli Esipova and Julie Ray, Nearly 50 Million Worldwide Planning to Migrate Soon, Gallup, February 24, 2012


These findings, and others highlighted in the new report, “Gallup World Poll: The Many Faces of Global Migration,” are based on a rolling average of interviews with 401,490 adults in 146 countries between 2008 and 2010. The 146 countries represent more than 93% of the world’s adult population.

Potential migrants in the Middle East and North Africa were the most likely worldwide to say they plan to leave their countries permanently in the next 12 months. While more than one in five adults (21%) in the Middle East and North Africa overall said they would migrate permanently to another country if they had the chance, one in six of them said they were planning to do so in the near term.

Twelve percent of potential migrant adults in sub-Saharan Africa said they are planning to move to another country permanently in the next year, while 10% of potential migrant adults in the Americas said these were their plans. In all other major regions, the percentage planning to move is in the single digits.

The Most Educated, Those Working at Capacity, and Professionals Prepping to Leave
The people countries would most like to retain or attract — those with high levels of education, professional workers, and those already employed at capacity — are the most likely to say they are making preparations to migrate such as applying for visas or residency and purchasing tickets. This may partly reflect their greater likelihood of having the means to move, but still provides insight into who is motivated to take the necessary steps.

While education makes a significant difference among those preparing to leave, it makes little difference among those who say they are planning to migrate. Among those planning to migrate in the next 12 months, those in the most educated group are nearly twice as likely as those in other education groups to say they are actively preparing to leave.

Those who are employed at capacity are the most likely to say they are making the necessary preparations to move. Although the underemployed are often the most likely to say they would like to migrate permanently and say they are planning to go, they are actually the least likely to say they are taking steps to migrate.

Worldwide, those whose work falls under the “professional” category, which includes professions such as lawyers, doctors, managers, business owners, and office workers, are more likely to desire to migrate than those who are “not employed” or those whose work falls into a category other than “professional.” A majority (54%) of “professionals” who are planning to migrate in the next year say they are actively preparing to move.

Bottom Line
No one factor explains why some people only dream of migrating, while others go. Many factors can influence the situation. Potential migrants’ personal circumstances such as their finances, health, family situation, and their job status can keep them home or push them out the door. Migration policies — or lack thereof — can also create so many roadblocks to leaving or entering a country that potential migrants become discouraged. Yet Gallup’s surveys show millions are actively preparing to leave their homelands for good — and it is often the best and brightest that their homelands would like to see stay.

For complete data sets or custom research from the more than 150 countries Gallup continually surveys, please contact SocialandEconomicAnalysis@gallup.com or call 202.715.3030.

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Cows on Selsley Common. With so much land to r...

Image via Wikipedia

Should Sustainability principles be applied to embracing the Commons and how can that be applied to the Financial Service Industry? First, we need to provide clarity to Sustainability principles, second, elaborate on ”The Tragedy of the Commons”, and last, examine how we can apply those lessons of ”The Tragedy of the Commons” to the Financial Service Industry. What does that have to do with Sustainability and what are the implications to the Financial Service Industry?

Sustainability Principles
Basic principles for sustainability can be drawn from six leadership principles: awareness,  optimization, differentiation, strategies, talent and transparency.  Each area revitalizes your organization, promotes integrity and institutionalizes sustainability as a key foundation for your corporate philosophy, as well as, promoting smart decision-making processes for survivability.

•    Awareness: Learning how to adopt Sustainability principles to produce a corporation’s awareness of resource consumption like carbon, water, and electricity in order to run their businesses in compliance with  existing regulations.
•    Optimization: Organizations often use this increased awareness to optimize their processes, compelled by financial benefits through cost savings and increased productivity.
•    Differentiation: Companies often leverage Sustainability principles to differentiate their products and services to the market. Companies often acknowledge sustainable features or components in their products and services.
•    Strategies: Creating an isolated sustainability strategy will promote failure. Sustainability strategies must be woven into overall corporate strategies, like quality management strategies, to reap true tangible benefits.
•    Talent: Brand image promotes adoption of Sustainability principles, which in turn, often attracts higher-quality talent that aligns to prospective personnel values, as well.
•    Transparency: Build brand value through setting, keeping, and communicating sustainability promises to all stakeholders, including customers. Integrity based communication, incentives, and visible commitment to Sustainability and Quality will be your linchpins to address stakeholder and shareholder requests, and a push for cost reductions through greater efficiency.

Adopting sustainability principles should be integrated into all leadership roles throughout the enterprise. Whether looking from a sustainability view, which monitors external influences on the organization, or managing internal performance, which monitors internal variation and waste, organizational leadership can correlate internal and external influences from major functional organizations and capture tangible benefits from Sustainability and Quality methodologies.

The Commons
”The Tragedy of the Commons”, was first published in the journal science in 1968, by an American ecologist by the name of Garret Hardin. The tragedy of the commons is a metaphor of avoiding over-exploitation of common resources.The tragedy of the commons portrays a scenario in which multiple individuals, when acting independently and in their own self interests, can unwittingly deplete a shared resource, even when it is not in anyone’s long-term interest.

Years later, this model was labeled ”Hardin’s Commons Theory”, and was frequently cited to support arguments for sustainable development, fusing economic growth with environmental protection, and effects on numerous current issues (i.e., global warming). The example is based on the hypothetical situation based in medieval Europe. The herders of the community share a common parcel of land and are able to graze their livestock. It is in the herders best interest to acquire more cows, to increase their personal wealth. Overgrazing the Commons produces an environmental impact on the Commons. Damages are shared by the entire group, and without addressing the problem, the Commons could be depleted, destroyed or made useless to all herders.

This metaphor illustrates the argument that free access and unrestricted demand for a finite resource ultimately reduces that resource through over exploitation, either temporarily or permanently. This is because the benefits of exploitation to individuals or groups are motivated to maximize the use of the resource, while the costs are borne by all those who use resource. The depletion of the resource is based on three primary factors:

•    Number of cows that consume resources,
•    Consumption rate of their usage, and
•    Relative robustness and regeneration of the Common’s environs.

From the article, there were a number of different lessons to be learned in the scenario, but one of the most important were the recognition of strategic factors in the Commons dilemma. An often studied strategic factor is the timing of the usage of the resource. In this scenario, all the herders used the commons in a random order. The first herders were identified as leaders and they felt entitled to take more than their share. The next group, called followers, interpreted the behavior of the first players who felt more entitled and took more. In sequential play, individuals didn’t adopt a first come first serve rule. Another strategic factor is the ability to enhance reputations. Research found that people take less from a common pool in public situations than in anonymous private situations. Last, the most significant strategy is recognizing sharing of the limited resource to meet the needs of all, not just the individual.

Other examples of Commons:
•    Commercial fishing in international waters that do not accept stewardship rather leans on a mindset that believes no one will know who over-exploited the fish population
•    Taxation where everyone would be better off if all paid their fair share, there is an opposing view to an incentive to cheat when working around the “system”
•    Pollution of atmosphere and oceans, the owners rely on “proving” their responsibility and adhere to global warming concerns
•    Internal accounting systems that subsume a large percentage of the funds into overhead and  do not reflect successful accountability, nor reflect actual tangible benefits from transformation
•    Forests that are harvested only to be replaced by single specie tree replacement or other plants that do no augment soil erosion, soil nutrients or other environmental needs
•    Internet “boundaries” that are not ubiquitous in terms of privacy safeguards, financial security of accounts, personal identity theft, acquisition of individual data that formerly was considered “private or personal” and other hacking activities and threats

Sustainability in the Financial Service Industry?
So, what does that have to do with Sustainability and what are the implications to the Financial Service Industry?According to a recent Gallup poll: “Americans continue to express low levels of satisfaction with the way things are going in the United States, rivaling the lowest Gallup has measured in the past 30+ years. That dissatisfaction probably reflects Americans’ economic anguish, and the prospects for considerable improvement in satisfaction are not great unless the economy improves significantly.”[1]

That poll reflects that most Americans are concerned about the U.S. economy in general, unemployment or loss of jobs, and dissatisfaction with government and politicians. These three issues are most probably key variables in public opinions and measuring customer satisfaction. In the post Great Recession period, brand-name of financial corporations, and in particular, the reputation and trust of the Financial Service Industry are at historic lows.

Currently, financial organizations are aware of their competition in the marketplace, both domestically and internationally. However, sustainability principles recognize that any market (e.g., “common”) is a limited resource that must managed in a “sustainable” way for long-term usage. Many corporations learn how to adopt sustainability principles to improve their products, services, brand image and re-establish trust and integrity. The Financial Service Industry would be wise to learn from their successes.

The Financial Service institutions, likewise, will need to recognize transparency as a tool for integrity building. Financial leadership must recognize and be compliant in existing laws and regulations, improve relationships with customers, acknowledge their unique stewardship role in the economy, and ensure pragmatic policies to current survival needs without jeopardizing those needs of future generations.

Financial institutions are adept to optimizing their products, processes, and services, but not in terms of a sustainability framework. Currently, financial emphasis is often placed only on profitability through market growth, acquisitions, new products or services, cost savings and increased performance. However, accountability of maintaing a “healthy” marketplace is lost in today’s financial practices.

Differentiation is a key incentive for most corporations who elect to implement Sustainability.  Sustainability, based on committed stewardship, reflects executive leadership’s dedication to eliminating waste and over exploitation of resources. Strategies affecting brand image or often successful and appeal public environmental concerns. Sustainability principles are a pathway for the Financial Service Industry to recapture integrity and build trust. Those institutions that choose to succeed, will reap benefits based on market and product differentiation.

In many cases, strategies for financial institutions may continue to loan monies to corporations for sustainability improvement, but those institutions are neither seen as leaders in sustainability, nor practice the strategies and policies to promote sustainability. It is ironic that their customers have demonstrated that sustainability strategies indeed work, but Financial Services are reluctant to adopt their customer’s approach to a triple bottom line. Sustainable corporate strategies embrace the concept of planet, people, and profit. But at this time, financial institutions are not proactively involved in sustainability, nor reap its benefits.

As in many other industries, the Financial Service Industry will benefit by attracting new talent oriented to sustainability. However, that industry must recognize the benefits of change and translate those benefits into tangible assets. New talent, based on shared interests of sustainability practices and philosophy, could open new products and services for those institutions and extend current markets and create new ones. New “blood” in an organization has the potential to expand services through creative alternatives seen through the lens of stewardship.

Transparency is needed to align the banks back to their community. Traditional leadership roles for the financial institution have not promoted customer loyalty, nor has it addressed issues generated by other stakeholders and shareholders. In a Sustainability Transformation, financial leadership will be obliged to address transparency and embrace that idea when founded on corporate integrity, driven by strong leadership ethos. Rebuilding trust in the public’s opinion, through transparency, will be a major critical success factor for the Financial Service Industry.

The effort to rebuild trust must begin with bank leadership, then flow through a bank’s employees to customers, the public, lawmakers, and regulators. Every interaction matters. If bank leaders and employees do not demonstrate that they trust their own bank, other stakeholders never will. Because the process of rebuilding trust with the public starts with the bank. Gallup recommends that bank leaders make rebuilding employees’ trust in banks their No. 1 priority. That involves taking these essential steps:
•    Involve managers and employees in the process of reviewing, recasting, and restating the mission and purpose of the organization.
•    Start with the top 100 managers and cascade the new mission down to the front lines.
•    Align managers on your bank’s brand promise and the points of difference between your bank and your competitors.
•    Create metrics to map trust and brand message alignment with key constituencies, including leaders, employees, customers, and regulators.[2]

Commons Governance
Historically, the Financial Service Industry has been regulated through government acts, and financial penalties to ensure market stability, avoid misuse of funds, insure protection for individual accounts and regulate behavior in the financial sector. The Commons, in this scenario, is  regulated by legislative authority that also institutionalized punitive damages for encroachment. So, the Commons has historically has used these alternative types of control:

•    Government Regulation: This is obviously a common solution, but one business frequently try to avoid, as perceived as punitive, instead industries often seek “self-regulation”. This is especially true of the Financial Service Industry.
•    Financial Penalties: Penalties such as fines are also potential solutions, but enforcement is often costly and inefficient. The usual approach is to penalize polluters, rather than the whole industry. In this case, polluters are persons or institutions who willingly manipulate or over-exploit markets (whether by sub-prime lending practices, derivatives, real-estate investment, canceling important audit information, manipulating regulatory agencies, robo foreclosures, limiting loans for small businesses, etc.).
Other forms of laws and regulation changes precipitated the Great Recession. Previous U.S. legislation (i.e., Glass–Steagall Act of 1933) segregated industry services in the 1930s, only later to be repealed by the Gramm–Leach–Bliley Act (a.k.a., Financial Services Modernization Act of 1999). Some of the barriers removed affected the market among banking companies, securities companies and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company.

The Dodd–Frank Wall Street Reform and Consumer Protection Act implements financial regulatory, passed as a response to the Great Recession, and brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. Dodd-Frank represents a significant change in the American financial regulatory environment affecting all Federal financial regulatory agencies and almost every aspect of the nation’s financial services industry. Financial Service Industry leaders continue to balk at these regulations, although banks continue to make billions of dollars in profits.

What are some other possible solutions of the commons in the Financial Service Industry? Historic solutions are not the only alternatives. Other modern solutions include a variety of examples utilized by other industries and briefly describe their respective effectiveness:
•    Collaboration: In this solution the users of the commons recognize that they are independent and work collectively to manage the Commons in a “healthy manner”. This solution promotes continuous innovation and that element may be one of the driving forces of continued self-regulation and success.
•    Financial Incentives or Subsidies: This is the opposite of penalties. However, some critics claim businesses should not be paid “to do the right thing”. In today’s clime, this approach may not politically justified nor a serious option given rising governmental indebtedness and distrust in the Financial Service Industry.
•    Technological Solutions: Technology is often part of a solution to the commons, they rarely eliminate the entire problem altogether and could be considered as another factor to bind the solution together.

The Financial Commons has had recessions, panics and depressions for centuries and consequently fosters instability and commercial risk that is a current threat and threatens the future. Today, we live in an integrated global economy where one national downturn impacts and affects other connected economies. We are no longer insulated by geography. Information flow is instantaneous over the internet. At issue is how to transform wasteful self interests into recognizing broader needs for long-term sustainability. We must have a viable Financial Commons for our current needs without sacrificing resources for future generations.

Don Tapscott, who was recently honored and ranked 9th in the Thinkers50 2011 awards,  summarized the current financial debacle; “Companies need to act with integrity — not just to secure a healthy business environment, but for their own sustainability and competitive advantage. Increasingly, firms that exhibit ethical values and candor have discovered that they can build trust with customers, employees, shareholders and business partners. This makes them more competitive and profitable. … If Wall Street does not adopt these three principles (Integrity, Transparency, and Embracing the Commons) and change its core modus operandi, it risks having its license revoked.[3]”

[1] M. Jones, Jeffrey; U.S. Satisfaction in 2011 Ranks as Second Lowest Since 1979, December 22, 2011, http://www.gallup.com/poll/151700/Satisfaction-2011-Ranks-Second-Lowest-1979.aspx, Retrieved: 2 January 2012
[2] Wood, John and Berg, Paul; Rebuilding Trust in Banks, Gallup Managment Journal, August 2011, Retrieved: 02 January 2012
[3] Tapscott, Don ; “Three Principles for a New Wall Street”, Reuters.com, Posted: 10/20/11, Additional note: Don Tapscott was recently honored and ranked 9th in the Thinkers50 2011 awards, the definitive global ranking of management thinkers.

Source: Jarvis Business Solutions, LLC, © 2012, For services: www.JarvisBusinessSolutions.com

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First, let us start with a baseline and read a well articulated article from Don Tapscott for a New Wall Street. Be mindful that I want to discuss two other points:

  1. How should Sustainability principles be applied to Embracing the Commons.
  2. What does that have to do with Sustainability and what are the implications to the Financial Industry?

Three Principles for a New Wall Street

Posted: 10/20/11 02:07 PM ET, Don Tapscott article; “Three principles for a new Wall Street”, Don Tapscott was recently honored and ranked 9th in the Thinkers50 2011 awards, the definitive global ranking of management thinkers. Read what he has to say,  Reposted from Reuters.com

Protesters set up the “Occupy Wall Street” base camp in New York a month ago because the location epitomizes the economic forces that control the U.S. and global economies. As one sign read: “This is not a recession. It’s a robbery.” To many it feels like just that. The financial services industry is in desperate need of reform. Many bankers have behaved as secretive corporate titans serving only their own interests, and insist the devastating consequences are not their fault. They are failing to fulfill their obligations to society — in some cases, even to shareholders — and a growing number of critics view the day-to-day behavior of the financial services industry as unacceptable. If the industry doesn’t initiate reform from within then it will eventually have more extreme reform imposed from outside.

In 2008, the routine gambles of Wall Street almost brought down global capitalism and yet, so far, nothing fundamentally has changed. Restoring long-term confidence in the financial services industry requires more than individual banks changing their behavior or even governments intervening with new rules. The industry needs a new modus operandi, where all of the key players (banks, insurers, investment brokers, rating agencies and regulators) adopt the three facets of collaboration: integrity, transparency, and embracing the commons.

Integrity. Trust is the expectation that the other party will act with integrity — be honest, considerate, and abide by its commitments. To re-establish trust, the financial services industry needs to have integrity as part of its DNA. But the cavalier manner in which many banking executives violated integrity was stunning. For example they sold sub-prime mortgages to people who could never make the payments; bundled them into securities and convinced rating agencies to classify them as AAA, and insurance companies to insure them. They then sold these to unsuspecting investors. They violated all the values of Integrity. Everyone in the process suffered and the global economy was sent into a tailspin.

The 2008 meltdown and the Euro crises we face today illustrate how interconnected our world has become. Organizations must be much more aware of what is going on around them. It’s important to know the behavior of others and the potential impacts of the actions of distant third parties. If there is anything Wall Street should have learned from the mess they created it was that business cannot succeed in a world that is failing.

In everything from motivating employees, negotiating with partners, disclosing financial information, or explaining the environmental impacts of a new factory, companies and other organizations must tell the truth, be considerate of the interests of others, and be willing to be held accountable for delivering against their commitments.

Companies need to act with integrity — not just to secure a healthy business environment, but for their own sustainability and competitive advantage. Increasingly, firms that exhibit ethical values and candor have discovered that they can build trust with customers, employees, shareholders and business partners. This makes them more competitive and profitable.

Transparency. One of the reasons companies have to have integrity is that they operate in an unprecedented, hyper-transparent world. Customers use the Internet to help evaluate the true worth of products. Employees share formerly secret information about corporate strategy, management and challenges. To collaborate effectively, companies share intimate knowledge with one another. And in a world of instant communications, whistleblowers, inquisitive media, and Google, citizens and communities routinely put firms under the microscope. So if corporations are going to be naked — and they really have no choice in the matter — they had better be buff.

But the financial services industry has a history of being opaque and secretive. One Goldman Sachs executive told me off the record: “We’re a very private company. The less people know about us and pay attention to us, the better.” In commenting on the U.S. government fraud charges against Goldman, Roger Martin, dean of the Rotman School of Management at the University of Toronto said, “Sadly for Goldman, transparency is not an attractive option. The better Goldman does in explaining exactly what its business is, the more outraged regulators and the public will be.”

If Wall Street had been fully transparent during the past decade, the sub-prime debacle would not have occurred. In the future, investors, rating agencies and insurance companies should be able to ‘fly over’ and ‘drill down’ into securities such as Collateralized Debt Obligations and analyse the underlying assets. With full data, they could readily assess the payment history, and correlate information such as employment histories, property values, location, neighborhood pricings, delinquency patterns, and so on. Potential investors will quickly realize the CDOs‘ junk status and refuse to buy. Since banks wouldn’t be able to offload sub-prime mortgages, they wouldn’t create them in the first place. The industry needs to resolve, immediately, that it understands that sunlight is the best disinfectant.

Embracing the Commons. Wall Street reform requires restructuring of the industry. Wall Street companies need to overcome their obsession with proprietary ownership of their intellectual property and learn to share certain information. For example, the banks currently have upwards of a trillion dollars of “toxic assets” on their balance sheets. Since no one knows the true value, the assets have created so-called “zombie banks” that won’t lend money to entrepreneurs. Because 80 percent of new jobs come from companies 5-years-old or less, the inability of startups to borrow money is a huge impediment to job creation.

How can the banks value these assets, dispose of them and get back to normal? They should be sharing the information — essentially placing risk management in a commons. Think risk management Linux style, which is completely feasible and affordable in a digitized world. For instance, the Open Models Valuation Company is using the web to create a global community of experts dedicated to establishing credible valuation and risk assessments for credit securities and contracts such as CDOs and other derivatives.

Craig Heimark, an industry veteran and one of the founders of Open Models, likens it to the scientific peer-review process: “In the scientific world when people publish something, they don’t just publish their results, but also the steps in the process, their methods and assumptions so that they can be vetted by others.”

Exposing complex financial instruments to the vetting of thousands of experts could help restore trust in banks, kick-start venture capital, unfreeze the paralysis of lending markets and lay the foundation for a new and stronger financial service industry.

The paramount role of banks is not to create shareholder value and enrich their executives. They exist to provide a safe place for people and organizations to store their money and get credit. They exist to execute myriad transactions, make capital markets and are central to our economy. We charter them with a license to operate so that they can perform these functions, but the recent repeated crises show they have violated their pact with society.

One of the most popular signs in the Occupy movement is “Nationalize the Banks.” If Wall Street does not adopt these three principles and change its core modus operandi, it risks having its license revoked.

Source: Jarvis Business Solutions, LLC, © 2011, For services: www.JarvisBusinessSolutions.com


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