Most Recent Leoletter from Fred K. Two Wake Up Calls The traditional playbook calls for companies to ommoditize and exert maximum bargaining power on suppliers to drive down prices---even when purchasing from small businesses or subsistence-level farmers. More recently, firms have been rapidly outsourcing to suppliers in lower-wage locations. Today some companies are beginning to understand that marginalized suppliers cannot remain productive or sustain, much less improve, their quality . . . As suppliers get stronger, their environmental impact often falls dramatically, which further improves their efficiency. Shared value is created. ---Michael E. Porter and Mark R. Kramer In his April 2011 newsletter. Jeremy Grantham, an economic investment counselor, suggested that we have reached a "Time to Wake Up” regarding our investment decisions, since the “Days of abundant resources and falling prices are over forever.” He summed up his analysis of our new future by reminding us that “The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.” Among the bullet points he used to summarize the future we must now “wake up” to, are: * The rise of population, the ten-fold increase in wealth in developed countries and the current explosive growth in developing countries have eaten rapidly into our finite resources of hydrocarbons and metals, fertilizer, available land and water. * Now, despite a massive increase in fertilizer use, the growth in crop yields per acre has declined from 3.5% in the 1960's to 1.2% today. * The problems of compounding growth in the face of finite resources are not easily understood by optimistic, short-term-oriented, and relatively innumerate humans (especially the political variety). * The fact is that no compound growth is sustainable. If we maintain our desperate focus on growth, we will run out of everything and crash. We must substitute qualitative growth for quantitative growth.