fortune--2020-11-21--Why China keeps returning to a questionable theory about its COVID-19 outbreaks

For months now, cities in China have tied fresh outbreaks of COVID-19 to imported frozen food, despite scientific evidence that suggests such goods are unlikely to spread the disease. Now, the mainland’s trade partners are pushing back on China’s protective measures against frozen food contamination, such as excessive screening of meat imports.
“China’s most recent COVID-19 restrictions on imported food products are not based on science and threaten to disrupt trade,” the U.S. Department of Agriculture said this week. When Chinese authorities find traces of COVID-19 on food packets, it can lead to a blockade on that particular exporter or an unofficial boycott of the produce, jeopardizing revenue.
On Wednesday, China Foreign Ministry spokesperson Zhao Lijian pushed back against the U.S. complaints calling them “groundless and unreasonable” while also calling China’s testing of frozen food imports “reasonable and justified.” But the U.S. isn’t the only one with gripes.
Several major food exporting countries, led by Canada, complained at a World Trade Organization meeting this month that China’s screening procedures amount to “unjustified restrictions on trade,” according to Reuters.
China has been investigating the potential for COVID-19 to be imported along with frozen food shipments since June, when an outbreak in Beijing was traced to a frozen fish stall at a wet market. The suggestion that coronavirus had found its way into the mainland on fish packets sparked a boycott of Norwegian salmon imports, even as Chinese authorities downplayed the risk of infection.
Since then, at least 10 cities across China say they have found traces of COVID-19 on the packaging of frozen food imports. Often the discovery prompts a dramatic lockdown of the city in question, as China operates a near zero tolerance approach to outbreaks.
But while China keeps finding COVID-19 on its food imports, there are few reports of other countries experiencing the same. And China’s insistence that it’s importing the virus through food is helping bolster a theory that the original outbreak in Wuhan’s fish market was imported too.
In August, New Zealand investigated whether an outbreak traced to a worker at a cold chain logistics company could be linked to frozen food imports, but authorities found no evidence that the virus had arrived in a frozen container. Meanwhile Taiwan, which imports some $11 billion of agricultural goods a year, has gone over 200 days without a single case of COVID-19.
Laboratory tests have shown that the coronavirus can survive at least 14 days in sub-zero temperatures—so it is feasible for traces of the virus to survive weeks-long voyages in frozen food containers. But epidemiologists say the risk of outbreak from frozen food packages is low because the virus has to enter a person’s body to infect them, so proper hand washing practices should be enough to prevent it.
But China is going a step further; it introduced new sanitization protocols for frozen food shipments last week. The guidance, released by the National Health Commission, calls for frozen food packaging and the vehicles transporting them to be disinfected before the goods are unloaded.
Meanwhile, Chinese customs authorities continue to test frozen food shipments.
Under Beijing’s central regulations, if a single positive coronavirus result is found on an exporter’s products, authorities can suspend shipments of its goods for a week. If an exporter gets three positive tests, its shipments can be suspended for a month. But exporting countries argue that Chinese authorities never share evidence of the contamination, according to Reuters.
Most recently China’s eastern city of Jinan claimed it found COVID-19 samples on beef imports from New Zealand, Bolivia, and Brazil. Days later New Zealand Prime Minister Jacinda Ardern disputed the report and said her government had “been advised” that Chinese authorities had simply found traces of COVID-19 on Argentinian meat imports in the same cold storage facility as Kiwi imports.
“This is incredibly important to New Zealand. We are confident that our products do not, and are not, exported with signs of COVID on them given our status as essentially being COVID-free,” Ardern said. New Zealand on Friday reported three new cases of COVID in the past 24 hours.
Authorities in Jinan said they tested 7,500 people who may have come in contact with the contaminated imports and found no positive cases.
China’s reported findings of COVID-19 on frozen food imports, however, have fueled a theory that the initial outbreak in Wuhan—generally thought of as ground zero for the COVID-19 pandemic—was also imported via frozen food.
The majority of Wuhan’s first coronavirus patients were traced to the Huanan Seafood market and, according to China’s nationalist tabloid Global Times, “COVID-19 patients were concentrated among frozen seafood vendors at Wuhan’s Huanan seafood market.”
Beijing has long argued that while it was the first country to document an outbreak of the novel SARS-COV 2 virus, COVID-19, that doesn’t mean the virus necessarily originated there. Certainly, some reports have found evidence that COVID-19 was circulating outside of China before November last year, when China claims to have found its first coronavirus case.
Just this week, The National Cancer Institute in Milan issued a report that found COVID-19 was likely circulating in Italy as early as September last year.
How the virus occurred in Italy in the first place is still unknown. Details around the outbreak in Wuhan are still largely unverified too. The World Health Organization dispatched a team to China in February to investigate the early spread of the virus, but the probe did not identify the virus’s origin due to reported concessions the WHO officials made to Beijing.


fortune--2020-11-21--Corporate whistleblowers can now collect more reward money

Robinhood co-founder steps down as co-CEO , leaving Vlad Tenev as sole chief ahead of a rumored IPO

New rules mean corporate whistleblowers can get even more money as a reward from the Securities and Exchange Commission, potentially millions more—and get it faster.
While the very biggest rewards could be reduced under the new rules, they can still be staggering. In October, just weeks after adopting the new rules, the SEC awarded an anonymous whistleblower $114 million—by far the biggest award in the whistleblower program’s eight-year existence. Telling the government about corporate malfeasance can still make you rich, and some people think that’s a problem.
The Dodd-Frank law established the program, which can pay whistleblowers 10% to 30% of the amounts the SEC collects from actions it takes based on “original information” supplied by an individual. SEC fines can be huge, and so can the awards. In June, the SEC paid its then-biggest award ever, $50 million, to an individual who reported the overcharging of clients for currency trades at Bank of New York Mellon (the SEC never discloses the names or other details of awardees, but the identity of this one became public). The previous record was a $39 million bounty in 2018; that same year, two people shared a $50 million award. The SEC program can also pay awards “arising out of the related actions of another agency.” The recipient of the recent $114 million award got $52 million from the SEC case and the rest from a separate agency’s case.
Most SEC awards aren’t nearly that big. About 75% of them are $5 million or less, and those are the ones that will be faster and potentially bigger under the new rules. Many whistleblowers and the lawyers who represent them have complained that getting the money can take years. So now the SEC has established a default award at the top of the range: 30% of the amount collected, in cases where the resulting award would be $5 million or less. If there aren’t any “negative Award Factors”—for example, the whistleblower’s participation in the violation being reported—the Commission won’t spend time deciding the amount and will quickly pay out a 30% award. “The determinations have been mired in delay,” says Erika Kelton, a Washington-D.C.-based lawyer who represents whistleblowers. “This could really expedite things.”
But for the big money—if you don’t consider $5 million for an individual tipster big money—the Commission is tightening the rules. Until now, the amount of an award was based on two criteria: the significance of the information provided and the tipster’s continuing cooperation and assistance. Now the Commissioners will also consider the amount of the award itself, meaning they could reduce the amount if it just seems too big. “They’re changing the rules,” says Kelton. “That’s a big black box and a concern for our clients.”
Is paying such giant bounties a good idea? Jane Norberg, chief of the SEC’s Office of the Whistleblower, certainly thinks so. “Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors,” she says. And big awards may be necessary to incentivize tipsters, who are protected by federal law against retaliation by their employers but nonetheless may lose their jobs or become pariahs in their industry.
Still, “offering financial incentives for whistleblowing has a lot of problems,” says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware and a longtime member of corporate boards. “I believe in whistleblowing. I think it’s effective. But the way they’ve structured it [at the SEC], you discourage the whistleblower from going internally first.”
In the wake of corporate scandals over the past 20 years—Enron, Volkswagen, Wells Fargo—many companies have established compliance programs that encourage employees to report bad behavior to a special compliance office or even directly to the board of directors. Unlike calling the SEC, however, that won’t earn them a dime. Which would you choose? Elson says the SEC program “is really detrimental to compliance programs.”
The irony is that big corporations and the SEC both want to encourage compliance. But in the real world, blowing the whistle is risky, and individuals balancing risk against reward will most likely keep going to the SEC—perhaps now even more so.


fortune--2020-11-21--How Fujifilm pivoted fast to capture a key piece of the COVID treatment market

You usually think of ultrasound machines as the devices used in hospital radiology labs to produce images of the fetus in pregnant women, or pinpoint damage from heart attacks. But one of the biggest advances in the fight against COVID-19 is repurposing portable, battery operated, bedside ultrasound scanners to instantaneously show which organs are hit by the disease, and display digital images of the ravages to the heart, lungs or kidneys. Those super-quick damage checks are fast-tracking the formerly slow walk of COVID patients from the ER to the ICU.
In the early days of the pandemic, hospitals were relying on full-body CT or CAT scans that took an hour or more to identify if and where a patient might need life-saving treatments. “Patients were dying in the machine, or in a resuscitation bay before we knew where the problems were,” says Dr. Diku Mandavia, chief medical officer at FUJIFILM Sonosite, the unit of the Japanese document processing and healthcare giant that’s the world’s market leader in point-of-care ultrasound gear. “COVID-19 is so dangerous because it’s a multi-organ disease. Point-of-care ultrasound is like a flashlight inserted into the body. In the instant it takes to turn on a flashlight, you can survey all the organs and blood vessels.”
In early September, the FDA cleared Sonosite’s devices for aiding in the diagnosis of COVID-19 afflictions, and today, its machines are getting never-before-seen mileage zipping around ERs and ICUs from one newly-admitted patient to the next. The pandemic has helped make the scanners-on-wheels––also produced by such rivals as Philips and GE––as the fastest-growing segment in the medical imaging industry. Dr. Mandavia, who likes comparing Sonosite devices to staples in your garage toolbox, says that “for fixing COVID-19, they’re the hospitals’ Swiss Army knife.”
FujiFilm Sonosite PX Ultrasound System. Courtesy of FUJIFILM Sonosite
Today’s Sonosite modules are about the size of an open laptop, and weigh about ten pounds. They’re typically mounted at chest-height on a metal column attached to a 4-wheel base. Some super-miniaturized models are hand-held, so that a physician can move the scanning “needle” in one set of fingers, while reading the monitor held in the other hand. Those compact units are a world apart from the first cumbersome versions that Mandavia encountered. After graduating from med school in rural Canada, the young physician in the early 1990s took his first job L.A. County + U.S.C. Medical Center in downtown Los Angeles. “It was an urban battlefield, in some ways the same kind of battlefield we’re seeing for COVID,” he recalls. “It was the height of the gang epidemic. We had knifings, shootings, car accidents. It was like a wartime MASH unit.” When patients arrived suffering from internal bleeding, the only option for finding where the bleeding came from was running them through a CAT scanner. The imaging took so long, he recalls, that victims would die before doctors could determine the right operation to perform, foreshadowing today’s crisis.
At the time, ultrasound machines were huge, weighing about three hundred pounds, and limited to the radiology departments. “We tried moving them around, but they were the size of refrigerators,” says Mandavia. To make matters worse, the probes would break every week, sidelining the machines for days at a time. But in 1999, L.A. County got the first compact device that could speed through hospital corridors and provide the quick imaging that Mandavia sought. The Sonosite 180 originated from a Department of Defense grant for production of a portable ultrasound unit rugged enough for battlefield use. The big breakthrough was going from analog to digital by deploying ASIC chips, enabling Sonosite to create the first miniaturized, battery operated device.
Mandavia saw huge potential in spreading the use of scanners to diagnose a wide range of life-threatening conditions. Throughout the 2000s, he advised Sonosite on developing new models, and in 2009, joined the manufacturer full-time as chief medical officer. “We saw the benefits of miniaturization and bringing it to the bedside,” he says. “You think about babies and radiology, but not operating rooms or EMS transfers or use in helicopters. It was making the units smaller and reducing the cost that brought them to so many other specialties.” That versatility would pay off in the COVID crisis.
Diku Mandavia, CMO of FujiFilm Sonosite. Courtesy of FUJIFILM Sonosite
In 2012, Fujifilm purchased Sonosite for $995 million. The deal was a landmark in the Japanese giant’s $9.5 billion, two-decade-long expansion in the U.S. Fujifilm has also made three major acquisitions in contract manufacturing for biologics. It’s currently partnering to produce two drugs for combatting COVID-19: a Novavax vaccine at its facilities in Texas and North Carolina, and an Eli Lilly therapeutic, developed in collaboration with the Gates Foundation, at its complex in Denmark. All told, healthcare now accounts for $4.6 billion of Fujifilm’s total sales of $21.2 billion.
The nearly ninety-year-old icon retains a strong presence in document processing and digital cameras. But Fujifilm saw the collapse in film coming early on, and diversified into expanding areas such as cosmetics and medical imaging. As a result, it now boasts sturdy growth and a $30 billion market cap. Its reinvention-on-the-fly stands in sharp contrast to the collapse of its one-time rival in film, Eastman Kodak.
Mandavia first received word of the mobile units’ effectiveness in fighting COVID from abroad. He got part of his intelligence on the COVID front lines, since he still works part-time as an ER physician at LA County + USC. “If you flash back to January and February, we had very little information in the U.S. on how serious the disease was,” he says. “Seldom in modern medicine have we faced something that’s not in the textbooks and baffles the experts.” But since Sonosite devices are plentiful in hospitals worldwide, Mandavia started getting reports from the outbreak’s first targets. “We were hearing from doctors first in China, then in Italy, that they were using point-of-care machines to image the lungs, heart, and blood vessels of patients struck by COVID-19,” he says.
The news from Milan, ground zero in Europe for the pandemic, that came over social media and emails to Mandavia from physicians on the ground, underscored the newfound power of ultrasound. “Hospitals in Milan were getting hundreds of COVID patients at a time,” recalls Mandavia, “so they couldn’t put them through CAT scanners.” Instead, doctors and nurses improvised by using a combination of ultrasounds that expose damage to the organs, and pulse oximetry that deploys a sensor attached to a finger for measuring oxygen levels in the blood, to triage the severely ill from the less-sick patients.
“That told us we had a new use for the devices,” says Mandavia. In the Spring, orders for Sonosite machines surged, especially in Europe.
He notes that widespread use of the portable units makes hospitals far safer for the staff. “Constantly transferring patients from ICUs to radiology means lots of trips through the hallways where they can spread the virus so that doctors and nurses risk catching COVID,” he says. “With the portable devices, we can do the scans right at the patient’s bedside as the devices go from ICU bed to ICU bed, so the patients don’t need to move around nearly as much throughout the hospital.” Shifting to point-of-care imaging also frees up CAT scanners for essential uses such as identifying bone fractures, tumors or cancers. Every time a COVID patient goes through a CAT, the hospital staff must spend 30 to 40 minutes cleaning the machine to ensure it’s virus-free. That requirement shrinks the hours-a-day it’s scanning patients and generating revenue.
A COVID side effect plaguing hospitals: Administering the standard general anesthetics put operating room staff at risk, since the process requires running an airway tube down the patient’s trachea. Hospitals are cutting back on the elective surgeries where they make most of their money out of fear doctors and nurses will catch COVID from putting the airway tube place. Once again, ultrasound provides a solution, the use of nerve blocks in place of general anesthesia. “The scanner looks through the skin and to see the nerves, so that the anesthesiologist can pinpoint where to put the needle and inject the anesthetic around the nerve,” says Mandavia.
Mandavia describes the array of images that flash on the monitor during a COVID screening. “The devices show how well the heart is pumping,” he says. “They also signal kidney failure.” A crucial function is flagging blood clots that regularly threaten COVID patients’ lives. “The monitor shows clots in the blood vessels and in the legs that can go to the heart and kill you, and that need to be detected fast,” he adds. The images also guide physicians on where to precisely place the catheter that sends blood transfusions or drugs preventing cardiac-failure to the heart. “The catheter is like a plastic straw that goes into the neck and down the jugular vein into the heart,” explains Mandavia. “Ultrasound enables the doctor to pinpoint where the vein is, and where the catheter should go.”
Mandavia warns that the resurgence in COVID cases signals that we’re entering a scary new period. Hospitals must greatly boost capacity to handle the big surge to come. City parks may once again be sprouting tents sheltering makeshift ERs and ICUs. “When the wave hits, you can’t lug a CAT scanner to a tent, but it’s easy to use point-of-care ultrasound devices that weigh little and work on batteries,” he says. The innovation born of gang violence in L.A. is now combating a new wave of killing that’s as fast-moving and unpredictable as it is deadly. Fortunately, to every corner of a hospital overrun by COVID, the new mobile weapon can rush as well.


fortune--2020-11-21--Hawaiian paradise controlled by billionaire Larry Ellison is hit hard by COVID

Larry Ellison controls just about every part of Lanai, a Hawaiian island that for months was shielded from the ravages of the coronavirus pandemic.
As Covid-19 swept across the U.S. mainland in the spring and summer, Lanai didn’t have a single case. Its 3,000 residents avoided mass layoffs while tourism plunged, protected by the billionaire who owns 98% of the island.
Now, the gorgeous paradise, about 2,500 miles southwest of Los Angeles, is confronting a tough reality.
Ellison’s two Four Seasons resorts, which employ nearly a quarter of the island’s residents, laid off or furloughed almost all workers in August. Some employees returned last month for a reopening to tourists — which was then followed by a wave of virus infections. More than 100 people tested positive for Covid-19 in the last two weeks of October. Four have been helicoptered off because Lanai’s lone hospital isn’t equipped with a critical care unit.
“They’re going through what we went through in March and April,” said Michael Shea, chief medical officer of Maui Memorial Medical Center, who visited Lanai on Nov. 2 with two employees of the Centers for Disease Control and Prevention. “They can see it in the news, but actually experiencing it was a little different.”
The pandemic is roiling an area almost entirely reliant on Ellison, the world’s 12th-richest person and a lavish spender on luxury real estate. Over the years, the Oracle co-founder has amassed multiple Malibu homes, a Southern California golf course and a handful of historic mansions in Rhode Island, not to mention several superyachts. But his 2012 purchase of Lanai stands apart because it’s not just a private property or business, but home to thousands of people who have little say in many aspects of the island.
Ellison, 76, owns Lanai’s two hotels, a luxury wellness resort and is the main employer of almost all of the working residents. The 140-square-mile island, with only one school and no stoplights, is sustained by tourism to his swank properties. That means viral outbreaks both there and on the mainland risk longer-term economic pain for its inhabitants.
Representatives for Ellison at Oracle and Pulama Lanai, which oversees much of the island, didn’t respond to several emails and phone calls requesting comment. A spokesperson for the Four Seasons Lanai declined to comment.
Quick Response
The upside to having billionaire ownership is that the response to Lanai’s coronavirus outbreak has been uniform and well supplied. Ellison has donated testing supplies and invested in the hospital, while leaders at his company have directed the response in tandem with local government.
More than 4,000 tests have been conducted on the island — exceeding the number of residents — largely thanks to the kits donated by Ellison, said Maui Mayor Michael Victorino, who also oversees Lanai. He last week eased lockdown measures after new infections started to slow.
Still, residents are nervous, Shea said. While the Four Seasons is set to open again Friday to those who can produce a negative Covid test, new outbreaks are possible. If hotels close again, it’s unclear if Ellison will keep employees on the payroll. Unlike in most U.S. towns where frustrated residents can hold local officials accountable, there is little transparency about plans for the island, which is largely run by Pulama Lanai. (In Hawaiian, Pulama means to treasure or cherish.)
“The people who are laid off, they’re terminated and it’s harder for them to go to other jobs because there are no other jobs on the island,” said Alberta de Jetley, a longtime resident who founded Lanai Today, a monthly newspaper that she sold to Pulama Lanai in 2019.
The May cover of Lanai Today gives a sense of the loyalty some locals feel toward the billionaire. The headline “A Grateful Community” is laid on top of a photo of four residents holding up a homemade sign that reads “Thank you, Mr. Ellison!” At that point, nearly two months into the state lockdown, Ellison told the roughly 1,200 employees of his three companies there — Pulama Lanai, Sensei and Four Seasons Lanai — that he’d pay them through May. He ended up doing so through July.
Ellison has gained residents’ favor by investing in the island, said Gabe Johnson, a farmer who was recently elected as Lanai’s member of the Maui County Council. Prior owner David Murdock — who took control of the former pineapple plantation through his purchase of Castle & Cooke, once part of what is now Dole Food Co. — put little money into the island, Johnson said. Calls to Dole requesting comment from Murdock, who is on the board, weren’t returned.
“The town would be a little bit dilapidated or things would start running down,” Johnson said. “When Ellison bought, it was kind of a nice refreshing change.”
‘No Brainer’
Since purchasing Lanai, Ellison has remodeled the hotel and opened his wellness retreat alongside a hydroponic farming venture, Sensei Farms. He also owns the island’s main grocery store, Richard’s Market, as well as much of the housing stock. That means keeping Lanaians financially secure is in his best interest.
“I rent an apartment from the company, I used to work for the company, I used to shop from the company’s store,” said Johnson. While his farm is one of Ellison’s rare competitors, he appreciates that Sensei is providing employment outside of the tourism industry. For him and other residents, the pandemic has brought home Lanai’s need to diversify its economy.
“It’s kind of a no brainer,” said Butch Gima, a longtime resident and social worker on the island. “When they shut down the hotels, there was no work, no people coming in here and no people coming up to the city and patronizing the businesses.”
The problem with shifting the economy is that it requires the buy-in of Lanai’s billionaire owner. Gima said several years ago the island tried to create an economic charrette, or master plan, but it ultimately halted the process because Pulama Lanai didn’t want to participate. He is hopeful that residents can find remote work for companies like Google or Amazon, which wouldn’t necessarily require Ellison’s cooperation.
“If you’re going to have brick-and-mortar businesses, then yeah, Pulama will be involved because they own all 98% of the land,” Gima said. “But if you’re going to do web-based, internet-based types of businesses, then you don’t necessarily need brick-and-mortar establishments and you can work out of your home.”
For now, Lanai is tentatively getting employees back to work. Victorino, the mayor, said he’s grateful to Ellison for all he’s done, including paying full wages to the Four Seasons’s employees for months. Maui County has one of the country’s highest unemployment rates, but Lanai has largely been shielded from that pain.
“We welcome help from the outside,” Victorino said. “They’re there to make our working class better off for what we have to go through being so isolated in the middle of the Pacific Ocean.”
After the initial outbreak, Lanai has had no new coronavirus cases since Nov. 5. The island will be the test site of a new application called AlohaSafe that will alert people if someone they’ve been in contact with tested positive for Covid-19. If it works there, it will be launched state-wide, Victorino said.
The island was chosen as a pilot site, he said, after a request from an important entity: Pulama Lanai.


fortune--2020-11-21--Who’s liable when a self-driving car collides with another vehicle?

A white Tesla Model 3 sedan pulls away from a stop sign, beginning a wide left turn.
“Oh my gosh,” whispers the driver, whose hands hover above the steering wheel as the car moves on its own. The vehicle is controlled by Tesla’s Full Self Driving software, technology that Tesla says will eventually be able to drive cars without human involvement.
But suddenly, there’s trouble. “Oh. Oh!” a passenger shouts, as it becomes clear that the car is about to drive itself into a parked Ford.
The driver, an FSD “beta tester” named Brendan McGowan, quickly seizes the wheel, narrowly avoiding a collision. “Jeeeeeeezus,” he exclaims.
McGowan’s video of the incident, recorded in Auburn, Calif. on October 26, is just one of many new glimpses of FSD in action since the technology was made available for testing by some Tesla customers in October. Although FSD has had some impressive moments, near-misses like this one highlight a largely unanswered question: When a driverless car slams into you or your property, who do you sue, and who pays up?
Is the person behind the steering wheel responsible – even if they weren’t touching it? What about the developer who built the software? Or is it the car’s manufacturer—or maybe the supplier that made the car’s navigational cameras—that are liable?
The question has taken on new relevance in recent weeks. In addition to Tesla’s FSD rollout, Alphabet spinoff Waymo has deployed truly driverless vehicles in Arizona. A recent report from Waymo disclosed that Waymo vehicles were involved in 18 accidents in 2019 and 2020, and avoided several others because a human safety driver intervened.
Of course, autonomous driving technology is still being refined, and eventually it’s expected to drive more safely than humans. But experts agree that no such system can completely eliminate accidents.
The question of liability has been somewhat muddied by marketing hype. Despite the name of Tesla’s “Full Self Driving, it’s not yet an autonomous driving system. As with similar technology from Cadillac and Volvo, FSD is considered an advanced driver-assistance system, or ADAS. These automate some elements of driving, such as lanekeeping, but drivers still have ultimate responsibility for what happens when they’re behind the wheel. In fatal accidents involving supervised autonomy systems, U.S. regulators and safety investigators have repeatedly placed blame on human drivers who weren’t watching the road.
When truly driverless cars hit the road, responsibility will shift from drivers to vehicle makers and software designers. But experts don’t expect comprehensive legislation laying out the new order.
Instead, liability for robotaxis or automated tractors will be determined as courts through the courts, based on using existing law to the new facts of specific incidents.
“The answer to who’s liable is going to be, ‘It depends,’” says Bryant Walker Smith, a University of South Carolina law professor who studies liability and autonomous vehicles.
The same process shaped how we think about liability for human drivers. For instance, Smith says that in the 1930s and ‘40s, some accident victims struck by hired taxis tried to sue the passengers rather than the drivers. That approach has largely disappeared because it was rejected by courts.
Smith says that judging liability in individual accidents involving self-driving vehicles should come down to several well-established legal principles. At the highest level, autonomous vehicles will be subject to ‘vicarious liability,’ the idea that companies are responsible for the actions of their employees and the quality of the products they produce.
“Did a wheel fall off? Was a stop sign miscoded [in the system]? Did the LIDAR fail?” says Smith, referring to the laser-based radar used by many autonomous systems. If an obvious hardware or software failure caused a crash, a vehicle’s manufacturer would probably end up being liable.
But many accidents involving human drivers are caused by subtler failures of judgment, and Smith expects courts to use a handful of formulas to evaluate how the technology responded. The first, he says, will be: “Did this system perform as well as a competent human driver? If not, that’s going to suggest there was a defect.”
That standard may be applied to a system’s overall performance rather than its actions in a specific situation. The U.S. National Highway Traffic Safety Administration set the table for that criteria in 2017, when it touted the overall safety benefits of Tesla’s Autopilot system while clearing the system of fault in a fatal 2016 crash.
Second, Smith says, courts assessing liability will look at whether a specific system performs as well or better than a comparable system. That’s already a key measure in automotive recall and safety-monitoring programs.
Finally, Smith hopes courts will adopt one novel legal test when evaluating self-driving cars: “Did the system perform better than the last one that caused this harm?”
The ability to constantly learn, after all, is one of the core features that promise to make robots safer drivers than humans. Rather than relying on one person’s experience (or their slow human reflexes), autonomous systems will learn from data gathered by thousands of other vehicles. That technological promise aligns with the legal principle of ‘foreseeability’—the question of whether a civil defendant should have predicted a particular risk.
“Once something has happened, it has been foreseen,” says Smith. The makers of autonomous systems, he argues, shouldn’t “get to make the same mistake twice.”
Auto manufacturers are as concerned with their reputation as with straightforward legal liability, though. Automakers have long competed on safety, and they’re still out to win the battle for autonomy. But they’re also collaborating on safety standards for the systems through the Automated Vehicle Safety Consortium, which includes Ford, GM, Toyota, Uber, and Lyft.
“Underpinning a lot of the work that the consortium has done is the assumption that ultimately the manufacturer is responsible for the behavior of the system,” says Frank Menchaca, an executive at SAE, a professional organization of auto engineers. That concern about responsibility and reputation helps explain the caution of a Ford or Daimler compared to a company like Tesla.
According to Greg Bannon, who oversees autonomous-vehicle policy for AAA, it will take “years” of court decisions involving truly autonomous vehicles to create consensus about liability between industry, law enforcement, courts, and insurers. That consensus will allow more claims to be settled without lengthy legal fights.
The greatest legal clarity, though, may come simply as more truly driverless vehicles hit the road, with clear messaging that no human driver is in control – or responsible for the vehicle’s actions.
“It’s at that point that the company is making a promise to the public that the user does not have that [driver] role,” says Smith, the University of South Carolina law professor. “And that the company is driving through its technology.”


fortune--2020-11-21--The biggest problem with capitalism? Not enough capitalists

The recent election gave voice to millions of Americans frustrated with their economic circumstances—a concern that predates the devastation wrought by COVID-19. On one side are the blue-collar victims of deindustrialization who, as in 2016, voted for Donald Trump. On the other side are young college graduates struggling to get ahead who, unable to vote for Bernie Sanders, plumped for Biden.
Whatever their political leanings, a vast number of Americans have lost faith in capitalism. A May 2020 JUST Capital and Harris poll found that only 25% of those surveyed agreed that “capitalism works for the ordinary American.” Doubts about capitalism are not limited to the U.S. In a 2020, pre-COVID Edelman survey of 34,000 individuals across 28 countries, 56% of respondents agreed with the statement that “capitalism as it exists today does more harm than good.”
Capitalism is charged with being fixated on shareholder returns, myopically short term, inherently monopolistic, antidemocratic, amoral, rootless, and bad for the planet. But these indictments confuse the concept of capitalism with its implementation.
Capitalism is simply a tool—one that channels savings into investment and rewards risk-takers. Blaming capitalism for its misapplication is like blaming sex for overpopulation, teenage pregnancies, and sexually transmitted diseases. We can address these problems without all becoming celibate.
So it is with capitalism. You don’t have to be a Marxist to believe we need more vigorous antitrust enforcement, higher standards of environmental accountability, more incentives for people to buy and hold their investments, and stronger laws aimed at preventing tax avoidance and corporate interference in politics.
Yet as sensible as such measures might be, they fail to address what many see as capitalism’s most egregious fault—its failure to equitably distribute the rewards of economic growth and prosperity.
While investors and entrepreneurs have done exceedingly well in recent years, the salaries of ordinary workers have stagnated. The rich have become richer, and the poor poorer. The relative decline in the fortunes of mid- and low-income workers has exacerbated social divisions, fueled the fires of populism, and convinced millions of young people that socialism is their best hope.
But what if the problem is not too much capitalism, but too little? What if the problem is that we have too many wage slaves and not enough owners? At the time of its founding, America was a “republic of the self-employed,” as Roy Jacques put it in his wonderful book, Manufacturing the Employee.
Today, nearly two and half centuries later, a vast majority of Americans still share the dream of working for themselves. In one poll, 77% of millennials said they hoped to start their own business. Sadly, though, the rate of new business creation has been declining in recent years, while the percentage of Americans who work in companies with more than 1,000 employees—41% in 2019—has been growing. For millions of individuals at work, the entrepreneurial dream seems out of reach.
Yet our research suggests they shouldn’t give up hope. A small group of vanguard companies have proven that it’s possible for every employee to enjoy the fruits of ownership—for everyone at work to be a self-managing “micropreneur” blessed with autonomy and a shot at the brass ring.
Consider Nucor. With annual revenues of more than $22 billion, Nucor is America’s most innovative and consistently profitable steel maker. The company is organized into more than 75 autonomous divisions that operate independently but compete collectively. Each division is a self-contained business with a P&L that’s entirely free of corporate cost allocations.
Nucor trains every employee in the economics of the steel industry, and its hyper-empowered operating crews take the lead in business development, customer service, product innovation, process improvement, and cross-plant coordination. Frontline employees participate in a generous bonus system that rewards teams when they boost capital efficiency. Base pay is about 75% of the industry average, but once a team’s output exceeds a threshold, typically 80% of the plant’s rated capacity, the bonus plan kicks in.
The incentive threshold is fixed and gets adjusted only when capital investments increase the rated output of a particular piece of machinery or the entire plant. Since the only way to increase their bonus is to produce more steel for a given amount of capital, team members have a powerful incentive to “sweat the assets.” In practice, this means using their ingenuity to shrink costs, speed up workflows, and search for ways of producing higher-margin products.
To keep employees free of bureaucratic meddling, Nucor has chosen not to centralize functions like R&D, sales, marketing, strategy, safety, engineering, compliance, and purchasing. It also has about a third as many managers per capita as its major competitors. Nucor’s headquarters, for example, has just 100 staffers—about 10% of the number who work in the head office of Nucor’s next biggest U.S. competitor. Nucor’s general and administrative expenses hover around 3%, or roughly half that of the industry average. As a plant leader put it, “At Nucor, being a manager is the least noble thing you can do.”
The trust Nucor’s leaders place in their frontline teammates pays big dividends—for shareholders and employees. Nucor’s return on capital exceeds industry norms by 50% and its revenue per employee is a whopping three times the industry average. In return for this performance, Nucor’s factory workers earn significantly more than their peers. They also enjoy a high degree of job security. One of Nucor’s most famous mottos is “Do your job well today, have it tomorrow.” The company has never laid off employees at its steel mills, a remarkable feat in a highly cyclical industry that shed 40% of its employees in the last decade.
Haier, the global home appliance leader, is another case study in workplace capitalism. (Disclosure: with Haier, we co-host an annual conference on the future of management. We’ve also co-developed a free online course for management innovators).
With 45,000 employees in China, Haier has divided itself into more than 4,000 microenterprises, or MEs. These include roughly 200 market-facing MEs that design and sell appliances, and thousands of distribution and “node” MEs that sell R&D, manufacturing, marketing, and HR support to internal customers. Market-facing MEs contract with nodes for critical services, and each contract contains a clause that links payout to the success of the final product in the market. In this way, every employee’s pay is tied to market outcomes.
As self-governing businesses, MEs are guaranteed “three freedoms:” the freedom to set direction; the freedom to hire, fire, and organize as they see fit; and the freedom to distribute rewards within the team.
As with Nucor, base pay at Haier is modest, but when employees hit ambitious “leading targets,” they have the chance to multiply their income several times over. Employees are also able to invest their own money in their ME, and can receive a hefty dividend when certain targets are met.
Zhang Ruimin, Haier’s pioneering CEO and chairman, describes the goal of Haier’s unique management model as “giving every employee the opportunity to become their own CEO.”
Other companies that have built a league of owners include Stockholm-based Svenska Handelsbanken and Vinci, the fast-growing French infrastructure firm.
As these and other companies demonstrate, the recipe for turning employees into capitalists isn’t complicated. Key ingredients include:
Dividing the organization into small operating units that coordinate activities via internal contracts or peer-to-peer networks
Upgrading the commercial and general management skills of frontline employees
Giving employees accountability for a full-fledged P&L, rather than for a hodgepodge of top-down “KPIs”
Empowering employees to make meaningful business decisions and ensuring they have control over the key variables that drive performance
Granting employees a significant financial stake in the performance of their businesses
Dramatically shrinking corporate staff groups and the ranks of middle managers
This recipe, if consistently applied, yields a highly energetic workforce, above-average compensation, and a business that can beat all comers, both foreign and domestic.
That more companies haven’t adopted this winning formula isn’t the fault of capitalism, but of bureaucracy—a 150-year-old mash-up of military command structures and workforce engineering that underpins virtually every large-scale organization on the planet.
Here are some defining features of bureaucracy:
Power is vested in positions
Authority trickles down
Senior executives set strategy
Resources are allocated at the top
Big leaders appoint little leaders
People are slotted into roles
Managers assign tasks and assess performance
Staff functions set rules and enforce compliance
Employees compete for promotion
Compensation correlates with rank
With its authoritarian power structures and rule-choked processes, bureaucracy is a caste system that empowers the few at the expense of the many. It stratifies organizations into thinkers versus doers—executives versus employees—and in so doing, squanders vast quantities of human initiative. Slotted into narrow roles, immobilized by petty rules, and regarded by their superiors as mere “resources,” millions of employees have been deprived of the opportunity to develop their entrepreneurial talents; they’ve never had the opportunity to work with colleagues in a business that feels like it’s theirs.
Surveys tell us that only one in five employees believe their opinions matter at work. Only in one in 10 feel they have the freedom to experiment with new methods, products, and solutions. These sentiments are backed up by data from the U.S. Bureau of Labor Statistics, which calculates that 70% of jobs in the economy require little or no originality—a fact says nothing about the abilities of the individuals in those jobs, and everything about the tendency of managers to treat employees like semi-programmable robots.
Moreover, data compiled by Great Places to Work shows the only one in five of the reporting companies pay out bonuses to frontline workers—and these are, reputedly, the most progressive U.S. employers. More generally, across the economy, non-production-based bonuses, such as profit sharing, amount to barely 2% of total compensation.
As long as the vast majority of employees are denied both autonomy and upside, the bounties of capitalism will continue to be narrowly distributed. To change this, every organization needs to commit itself to building a top-to-bottom culture of ownership. This is the secret to turning dead-end jobs into get-ahead jobs, to upgrading wages across the economy, and to ensuring that capitalism works for everyone.
Gary Hamel is a visiting professor at London Business School and co-author of Humanocracy: Creating Organizations as Amazing as the People Inside Them. He is co-founder of the Management Lab, an organization that builds technology and tools to support breakthrough management innovation.
Michele Zanini is co-author of Humanocracy and co-founder of the Management Lab.


fortune--2020-11-22--Meet the sisters self-funding a sustainable footwear brand, creating shoes that ‘celebrate every wom

Meet the sisters self-funding a sustainable footwear brand, creating shoes that ‘celebrate every woman’s step’

iPhone ’ s new ‘ orange dot ’ feature warns you when an app is listening

This is an installment of Startup Year One, a special series of interviews with founders about the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.
Julie Kuo is a second-generation Asian-American and cofounder of the Los Angeles-based, female-founded sustainable footwear brand, Avre, alongside her sister, Connie. Both of the Kuo sisters learned the ins and outs of the shoe business early on, growing up in their family’s footwear company, East Lion Corp., which produces the Qupid line of accessibly-priced fashion looks. They witnessed first-hand the sacrifices and battles their parents had to encounter to grow their company into the multi-million dollar business it is today.
With their own brand, which launched earlier this year, the Kuos are also championing multiple social causes, striving to make their voices heard when it comes to women’s empowerment. Even the brand’s nam Avre—an acronym for “authentic, versatile, responsible, empowered”—embodies the brand’s platforms.
Fortune recently spoke with Julie and Connie Kuo to learn more about their business, the lessons learned, the hurdles overcome, and plans for next year.
The following interview has been condensed and lightly edited for clarity.
Avre cofounders and sisters Connie and Julie Kuo. Photographs courtesy of AVRE
Fortune: What inspired the launch of Avre? Who is your target audience?
Julie: The desire in wanting to support woman from all walks of life and to be able to do this in a sustainable way all while being able to give back to our community was what inspired my sister and I to launch Avre. The very footing of each Avre shoe is to recognize and celebrate every woman’s step. Our family has been in the footwear industry for over 35 years and we understand women’s passion and love for footwear.
Understanding how certain manufacturing practices were damaging to our planet, and learning about recycled threads both Connie and I realized there was an opportunity to show the world they could have beautiful shoes that was also good for mother earth. We partnered with Repreve, one of the world’s leading certifiable recycled fibers. All of our shoes are specifically made with these threads made of recycled PET (Polyethylene terephthalat) water bottles and in doing so we not only reduce waste filling up our landfills, but emit fewer greenhouse gases and conserve water and energy in the process.
Our target audience is empowered women who want to take a proactive approach of living and knowing that the choices they makes as consumers can affect the world in a positive way. Being mindful and aware and making the changes in life for a sustainable future to help protect the earth for many generations to come makes all the difference.
Being a minority woman in business isn’t easy and to be taken seriously and earn the respect of peers in a male dominated industry has been a battle, Kuo shares. Courtesy of Avre
Retailers have taken quite a hit during the pandemic, so it must be daunting to launch a company of any kind, let alone an apparel or footwear brand, right now. What has it been like opening a direct-to-consumer business during a pandemic?
Julie: We are a business-to-consumer footwear business, and having to operate and run during a pandemic has definitely had its challenges. The normal way of marketing and creating brand visibility has been very challenging for us as a new brand as one of our major ways of introducing the brand was through social events.
With social gatherings not being allowed as well as people limiting contact in order to stay safe, some of the activities we had planned to build brand visibility had to be postponed. We’ve had to rely heavily on social media and organic growth with audiences falling in love with the message and our designs once they’ve received the shoes.
What has it been like to work with supply chain partners and develop the initial collection?
Connie: We’ve been very fortunate with our supply partners in having a great relationship that has stemmed from years of working together from East Lion. We have always been pioneers in wanting to bring in new innovative ways to explore footwear. It is what led us to Avre, and that mindset was established long ago with our supply partners.
Therefore, the transition to push our supply partners to open their minds to try newer technologies, methods, and practices has been a much easier process than others. Don’t get me wrong—we still deal with hesitation and push back. But we’ve established our goal since the beginning, and having that clear and direct communication has helped us to continue push Avre forward.
According to the National Association of Women Business Owners, there are a total of 12.3 million women-owned businesses in the US. Of these businesses, 64% of the businesses started last year by women were started by women of color. Courtesy of Avre
That said, what has it been like to secure funding for Avre? Is it primarily self-funded, VC-backed, or some mixture of both?
Julie: Funding for Avre is all self-funded by my sister and I.
Post-pandemic and five years down the road, where do you see Avre in the market?
Connie: We want to create Avre into a lifestyle brand in which we can incorporate not only footwear and fashion, but other products that have to do with health. We would expand this line to be inclusive of everyone in the family—mom, dad, and child. We would also love to incorporate and support more social programs that align with who Avre is.


fortune--2020-11-23--The K-shaped holidays: The affluent are spending more as the poor cut back

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Low-paid service workers were the most likely to see their jobs cut during the pandemic. That lopsided economic blow has created something of a K-shaped economy, where the poor are worse off while the affluent, in many cases, are seeing their net worths increase thanks to a record stock market.
But is the uneven COVID-19 economy translating into a divided holiday season? To find out, Fortune and Civis Analytics teamed up to survey 10,063 adults in the U.S. between September 11 and November 9.*
As a whole, holiday spending should look a lot like 2019. Among all U.S. adults, 29% say they plan to spend more on holiday shopping this year, 30% plan to spend less, and 41% plan to spend about the same as they did last year.
But the top line figures don’t tell the whole story: While 46% of families earning $150,000 or more are increasing their holiday spending this year, only 22% of families earning $25,000 to $50,000 are planning increases.
Among families earning $150,000 or more only 20% plan to cut back on holiday spending this year. Meanwhile, 40% of families earning $25,000 to $50,000 are planning to spend less this year on holiday spending.
The financial strain at the lower rungs of the economic ladder won’t go away time soon. The reason? Many of these lower paid jobs have yet to return. Look no further than the 16.3% unemployment rate for leisure and hospitality jobs, a sector dominated by lower-paid service jobs. That compares to the national rate of 6.9%, according to the U.S. Bureau of Labor Statistics.
*Methodology: The Fortune-Civis Analytics poll was conducted among a national sample of 10,063 adults in the U.S. between September 11 and November 9. The findings have been weighted for age, race, sex, education, and geography.


fortune--2020-11-22--She’s pushing a green, digital, diverse future. And this CEO doesn’t care who the president is

When Helle Østergaard Kristiansen joined the Danish energy trader Danske Commodities a decade ago, the executive admits it was something of a different world.
“First of all, the energy market was not as liberalized as it is today. The production side was very, very different,” she says. “Because we didn’t have the renewable mix we have today.”
Margins were higher, because the competition was lower. The trading was different: more conventional, less digital. Now, she says, almost all the trading at the 16-year-old company is automated.
The staff has changed, too—away from conventional traders, and towards PhDs in software engineering. A third of the company is in IT, Kristiansen says, and the average age is 33. And what was then a small company in the coastal city of Aarhus is now part of the Norwegian energy giant Equinor.
That acquisition happened in February 2019, Kristiansen’s first year as CEO. She is now spending her second year in the midst of a pandemic and an economic crisis.
Despite the challenges of the pandemic, Equinor has been busy. The company became one of the first legacy oil giants to aim for near net-zero emissions by 2050, and officially said they would aim for net zero earlier this month. It’s a commitment other European majors, including BP and Shell, have also made this year.
Danske Commodities, which trades gas and renewables markets across 39 markets, including the U.S. and Australia but mostly in Europe, is now in the ever-evolving business of trading a deeply complex, finely balanced power market, with all the fluctuations of wind and solar power that entails, across an entire continent.
It also expanded to the U.S. last year, with a new office in Stamford, Conn. to facilitate its expansion into trading in U.S. energy markets.
As the votes were tallied for the U.S. election and Europe went back into lockdown, Kristiansen spoke to Fortune about managing through a crisis; how lockdowns shape energy patterns; and how U.S. politics will—and won’t—affect the expansion of renewable energy.
This interview has been condensed and edited for clarity.
What has surprised you this year about how to lead a company through a global pandemic?
In a positive way, it has surprised me how much we can operate from a distance. That has been going surprisingly well. We haven’t seen a slowdown in our activities. It’s not unusual to do 14,000 trades in a day. And when we sent people home, I asked to have that statistic everyday on how many trades we’re doing—just to have an overview—and I could see that nothing changed there.
Of course, one of the things that we have to adapt to is, how do you innovate when you’re not together? How do you collaborate? And so one of the things I’ve done is that I have insisted on business as usual, but also accepting that there are things we need to do differently. And also, as a management team—communicate clearly, and also show that you care. And definitely show that you try. I think it’s okay to fail as long as you show that you have tried.
Earlier this year, the national grid in the UK told Fortune about the radical shifts in energy consumption they experienced in the early days of the pandemic. How have you seen energy consumption patterns shift this year?
Our business model is very much about prediction of production and consumption, and then we have various models and products around these two factors.
Normally, consumption has been fairly easy to predict because you know the history, the consumption patterns—you know how a normal Tuesday is in Germany, for example. The production side, with all the renewables coming into the market, is increasingly difficult to predict. And that’s where we have our competitive edge—with analytics, scientists, methodologists—that are very good at predicting weather patterns, and how it’s shifting into the production.
But with this pandemic, it’s suddenly the consumption side that changing a lot. We can, for example, see that a normal Tuesday in Germany suddenly has a consumption like a Sunday—we at least saw that in the first close-down. We saw that it changed very, very fast—the consumption side—and then we saw [in the summer] that it stabilized. And then coming back from the summer vacation, it increased rapidly, faster than we had predicted, and now we see that it’s going down again, as the countries are closing down.
If Biden wins, what does this mean for your business model, and for your ability to expand in the U.S.?
For us, it’s good if there is a green agenda. Investments in renewables would be good for our business model. In that context, it would, of course, be good if it was Biden that won the election. I would, however, say—and we have seen that also the last four years—that it’s more the states which have their own agenda. And I believe that no matter what, that will also be the case in the future… So, the states are also driving their own green agenda, [regardless of who] is the president.
Will non-U.S. companies be the ones pouncing on those opportunities?
This market has grown to be very, very competitive. And that also means that if you’re starting from zero now, you have to put in a huge investment to be on par. So I think the competition in the U.S. will be international.
You have a huge presence in the U.K. in offshore wind. How will a post-Brexit world impact your company?
We have prepared for it in any way we can. So [that means] broker agreements, clearing banks. We have fuel setups, bilateral counter-parties. We made sure that we can act [either] under a hard Brexit, or no. And then there is the last part where you’re trying to prepare for the unknown unknown. Because the challenge is, for example, around how do you transport power between the continent and the U.K.? We know that it can’t be the current rules, but no one has decided the future rules.
So here you’re preparing. You know that something is going to happen, but you don’t know what. But at the same time, we also believe that that could give us some opportunities. It’s not good for market efficiency. But at least for a trading company—I can’t say that it won’t give opportunities. But of course, it’s strange to be in a situation very, very close to a potential hard Brexit, where you don’t know essential things like that.
Are there risks to the security—or the stability even—of the U.K.’s energy supply as a result?
I don’t think we will have that situation. I think it’s more interesting for us— what will be the investment appetite for renewables in the U.K. in the future, if they are standing alone? What will the subsidy schemes be? How will the investment appetite be, and things like that? And that’s more long term.
At this point, are politics even a threat to the adoption of renewables?
I think years ago, they were very, very vulnerable to political decisions, because you needed subsidies to make them profitable. I think today, the movement is there—because it can compete with other [kinds of] production. That way it will continue now—despite political agendas.
The press have been quick to mention you’re one of the few women in the executive ranks of energy trading. What do you expect for the future of women in your industry?
Honestly, I don’t think it has changed a lot. It has never been a challenge to me to be a woman in the energy sector, but I think I’ve also been in very, very good company. This discussion about women in the energy sector is very much about talent. I think we will, over time, compete with other sectors as we are becoming more and more digital, and so forth. I saw a survey from Boston Consulting saying that worldwide, the energy sector only has 22% female employees. For us as a sector that’s a challenge—that we don’t tap into the whole pool of capabilities and qualification, and only a part of it.
It is, of course, a focus for me. I want to have access to the best talent—the whole talent pool—that’s for sure. We try to do a lot in DC [Danske Commodities] to improve this. As one example, we have introduced paid parental leave [for both men and women]. And that’s not cheap in a company with an average age of 33, and 78% men. But it is a part of recognizing that if you sit in front of women or men, it shouldn’t matter. You’re not afraid that they would go on maternity or paternity leave.
We also are very much focused on our job ads. Because previously, it has very much been in the wordings, like “doing what it takes,” “go the extra mile.” Which is not maybe very appealing to a female trader. Now we focus much more on describing what qualifications they need. That’s actually the fantastic part of being part of a trading company. It’s very much about qualification, and you’re measured on your results, nothing else. For female candidates, it should be an interesting sector to join: you’re part of the energy sector that is moving so fast, it’s so important for the future of every one of us.


fortune--2020-11-22--Women in finance have to ask for promotions. Men don’t

Far fewer women than men are promoted in the finance industry unless they first ask for seniority, a sign of institutional gender bias, according to a new study in Australia.
The survey of 2,000 finance industry professionals showed 76% of men were offered a promotion at least once without requesting it, compared with 57% of women. The study was compiled by lead researchers Ardea Investment Management and Australian National University in conjunction with industry experts.
The findings provide “evidence of that culture that things come to men without asking,” said Bronwen Whiting, who worked on the survey and is a senior lecturer in applied statistics at the university. “It can’t all be on women to act differently to fix it.”
Australia is among the countries that can claim some success in tackling gender inequality. For example, a report by consultancy Kearney this year showed Australia tops the U.K., U.S. and India for the proportion of female parliamentarians and women board members in its top 100 firms. Yet the latest survey’s results show ongoing gaps, including the fact that male fund managers on average earn more than twice as much as female counterparts.
Male quantitative research analysts are paid 43% more than women, and men in compliance roles received an additional 76%, based on 2019 data. Official Australian figures put the overall gender pay gap at 14%. In the U.K., the gap in financial services is well over 20%, according an analysis of government data.
The Ardea-Australian National University study found that women asked for pay increases and promotions at the same rate as men, and when they do so, there was no difference between the genders in terms of receiving them. Yet the gap appeared when companies took the initiative with promotions.
“One of the arguments put forward as to why women are paid less is that we are too agreeable,” Laura Ryan, head of research at Sydney-based Ardea, said in an interview. “Looks like we are being assertive, but if we are not we definitely miss out. Gender is a strongly significant factor in determining salary.”


fortune--2020-11-22--Flee the city, keep your salary? Not so fast say more employers

It sounds like the perfect arbitrage opportunity: Leave your crowded city for a bigger place in the ‘burbs, but keep your big city salary.
But now, a new study by global advisory firm Willis Towers Watson shows that many employers aren’t necessarily planning to let you keep your full paycheck if you move. The survey of 344 employers in North America showed that nearly 20% of employers are “setting pay levels by first determining the market value of an employee’s skills and then applying a geographic differential based on where the employee is located.” However six in 10 employers say they will continue to pay remote employees the same as in-office employees “no matter where they work.”
While Twitter has been on the forefront of decentralizing it’s workforce (and paying them in part based on where they live), other tech companies have recently taken a similar path. Facebook made headlines this spring when it announced that starting in January 2021, “employee compensation will be adjusted based on the cost of living in the locations where workers choose to live. Facebook will make sure employees are honest about their location by checking where they log in to internal systems from,” according to the New York Times. Bloomberg reported in September that employees at VMWare who chose to move could also expect pay cuts. “Employees who worked at VMware’s Palo Alto, California, headquarters and go to Denver, for example, must accept an 18% salary reduction, people familiar with the matter said. Leaving Silicon Valley for Los Angeles or San Diego means relinquishing 8% of their annual pay, said the people, who asked not to be identified discussing internal policies.”
But the movement towards “pay localization” can be fraught as well. For instance, what if a company opened up jobs to workers spread out around the country, and women or applicants of color began to be hired at a higher rate? Would the company still pay its San Francisco-based employees more, even if they were disproportionately male or white?
Some also question whether the narrative about people “fleeing cities for good” will hold up once the pandemic is under control or there’s a vaccine. Jonathan Miller, who writes a popular newsletter about New York real estate told Fortune‘s John Jeff Roberts this summer that he thinks the flight from big cities is real—but it won’t necessarily stick. “He likens what’s happening with COVID-19 to events like the Lehman Brothers collapse in 2008 and the 9/11 attacks. Those events likewise triggered a flight from New York, but only a temporary one; many of those who left returned in a year or two. Miller expects a similar phenomenon to occur with the pandemic.”
That may be one reason many employers are still grappling with how to manage remote work policies. The Willis Towers Watson survey found that 37% of companies “don’t yet have a formal policy or set of principles to manage the arrangements, although 60% of those currently without formal policies are planning or considering adopting a formal policy by next year. Nearly two-thirds (64%) of those with policies are planning or considering revising them this year or next to adapt to the changing nature of where work gets done.”


fortune--2020-11-22--COVID put electronic trading to the test. It’s never buckled, Goldman Sachs says

Elizabeth Martin is betting on engineers to automate trading but not necessarily to make things faster.
Goldman Sachs Group Inc.’s global co-head of futures and equities electronic trading says that the ‘Flash Boys’ era of the past decade has ceded some ground to customizing trading for clients.
“I’ve never in my career bet against innovation or smart people being able to make things faster,” she says. “There will be some amount of improvement in speed and latency but in terms of the differentiated drivers of what a broad base of clients need in order to deliver execution for them, it’s less important, because most of the big scale providers offer those services.”
Martin, a 20-year Goldman veteran, relocated to London three years ago and oversees the Wall Street bank’s electronic stock trading business. Martin spoke with Bloomberg about the pandemic, the future of finance and zipping around the city in her sports car. Her comments have been edited and condensed.
How did electronic trading perform during the pandemic?
We had days in March where globally markets were turning over close to $1 trillion per day. And doing so pretty seamlessly. In the U.S. in particular, circuit breakers were triggered multiple times throughout March and helped to stabilize the equity markets.
If we have more electronic trading in future it shows that even in times of very high volatility the market can safely handle that.
Will markets get faster?
Over the past 10 years it’s been about speed and scale to some degree. Now it’s much more about reach, stability and customization. Technology is a hugely important part of what we do. If you think about the next leg of electronic trading, it’s about finding different ways to automate workflows.
To the brokers of the future a lot of the value for clients comes from being able to integrate across all points of the trading life-cycle from the blotter to parent orders to child orders.
And machine learning?
We are using machine learning to analyze all possible data that’s available to characterize stock behavior, like every quote and every trade to classify stocks into various clusters.
We look at six to seven different sets of stock attributes and group them based on ease versus difficulty to trade in order to optimize execution. We do this across more than 40,000 different stocks every day.
How have trading floors changed?
Going back 20 years we used to have hundreds and hundreds of traders manually trading stocks by voice. Over time that has moved to far more engineers. If you looked at our equities trading floor early this year, you had a very integrated experience to deliver trading services. Clients want it to be seamless from onboarding to order entry to execution.
In electronic equities trading we are five-to-one engineers to salespeople. That whole group is really present on the floor to solve problems for our clients on a daily basis. Our new London building that opened last year really let us put that vision into practice.
Its trading floor has our operation teams, technology and engineering teams surrounded by the core of our trading business.
What about in the work-from-home era?
We’ve been able to recreate the same sort of virtual community that we had on the floor. On a client call when I look at the nine boxes on Zoom there’s likely to be a few client facing people, a few people from operations and people from engineering teams.
We have engineers that are focusing on everything from quant modeling to how we build our algos and trading systems to how we access markets electronically and book and settle trades.
Where are your engineering hubs in Europe?
Stockholm will increasingly be part of our engineering footprint across Europe. We moved into a new office there two years ago and in a post-Brexit environment we are closer to our clients. Warsaw is our other main hub.
We’ll certainly be growing our presence in Warsaw and Stockholm as we try to attract the best engineering talent.
What does finance look like in the future?
What we’re seeing is more vertical integration of services whether it be market makers getting closer to clients through broker-dealer activities or exchanges increasingly getting into data services and analytics or Regtech.
It’s a very regulated industry. Personally, I think regulators will continue to have a strong view on how we use certain leading edge technologies. I cannot imagine having a conversation with regulators and telling them that robots were deciding how to access the end market. That fundamentally breaks the supervisory responsibilities around market access.
Will the industry be more gender balanced in the future?
We have hired into roles in trading that are historically dominated by men. More than half of campus hiring into those trickier jobs have been with women this year.
In the engineering space where we compete for talent with some of the big tech firms, being able to provide a much more flexible working environment through the pandemic is accretive to the overall quality of the job.
How did you advance?
Particularly in the earlier parts of my career I didn’t have as many senior role models who were women or mothers, which is important to me because I have three kids. But I definitely sought out a broad group of sponsors and many of them were men.
The other thing that I did is take some risk in my career. I’ve always tried to have a view of where I was trying to go two years down the line and then stretched myself to acquire the skills to get there.
What do you do for fun?
I’m always up for being outside near water or mountains. I love the mountains, I love to ski. I like to go fast.
I also get that high by driving a little sports car around London trying to keep to the speed limits here. I have a Mini John Cooper Works. It’s a lot of fun to drive.


fortune--2020-11-22--Prohibitionist dogma has no place in government alcohol guidance

Imagine you’re at a friend’s party. You finish nursing your first beer and casually reach for a second. Everyone immediately stops and stares. Your friends start whispering to themselves, wondering if they should stage an intervention.
Ridiculous and unjustified, right?
Wrong—at least according to new draft guidance from the U.S. Department of Agriculture (USDA), which nonsensically recommends that men have no more than one alcoholic beverage per day.
For decades, the government has urged Americans to drink in “moderation.” Historically, that has meant up to two drinks per day for men and one for women.
This differing advice results from physiology, not sexism. According to the National Institute on Alcohol Abuse and Alcoholism, “alcohol resides predominantly in body water, and pound for pound, women have less water in their bodies than men. This means that after a woman and a man of the same weight drink the same amount of alcohol, the woman’s blood alcohol concentration (BAC, the amount of alcohol in the blood) will tend to be higher.”
Based on decades of scientific evidence collected around the world, this advice has been a key reference point for consumers, health care providers, and alcohol researchers like me.
But in July, the USDA released a draft report overturning this decades-old, evidence-based guidance. Officials proposed setting the limit at just one drink per day for both men and women.
This change is based on shockingly flimsy grounds. In fact, the USDA advisory panel acknowledged in the report that “only one study examined differences among men comparing one versus two drinks.”
Yes, that’s correct: The panel is relying on just one study to radically change the U.S. government’s 30-year guidance on moderate drinking for men. The panel also made broad-brush statements like “risk increases above zero drinks” and “alcohol is an unhealthy substance.”
That kind of moralizing would gladden the hearts of 19th-century prohibitionists, but it has no place in modern, evidence-based dietary guidelines. Alcohol use disorders among men have declined over 30% between 2009 and 2019, according to the National Survey on Drug Use and Health.
It’s telling that the advisory panel describes its proposal as “aspirational”—which is to say, not science-based. Nor is it realistic. Who but a prohibitionist would consider having more than one drink per day to be alcohol abuse?
This change isn’t merely academic. It’ll have significant real-world consequences. Health care practitioners refer to dietary guidance when conducting screening and brief interventions for their patients’ alcohol consumption.
We can’t seriously expect physicians to have meaningful discussions about alcohol abuse if the threshold for concern is having a couple beers at game night or more than one glass of wine at a dinner party.
Of course, alcohol abuse is a serious problem for some people. And impaired driving remains a major issue.
However, the vast majority of adults who drink do so in moderation. Providing evidence-based guidance to inform their drinking is critical.
The proposal to redefine “moderate” drinking for men is not supported by the latest research and scientific evidence. Government guidance on alcohol consumption that lacks credibility will be widely ridiculed and disregarded, undercutting the effectiveness of the USDA’s official dietary guidelines.
David J. Hanson is professor emeritus of sociology at the State University of New York at Potsdam. He has specialized in alcohol research throughout his career.


fortune--2020-11-23--How Trek Bicycles has kept a great culture rolling in a fast-moving 2020

Trek Bicycles has had to navigate very different bumps in the road from most organizations this past year.
While companies in many industries have weathered severe declines in revenue, Trek and other bicycle sellers have seen sales take off amid a pandemic that prompted people to avoid public transportation, skip indoor “spin” classes, and seek family friendly outings—like bike rides.
Demand that is doubling or tripling compared to 2019 is a good thing generally. But the bike boom has put unprecedented pressures on Waterloo, Wis.-based Trek to keep employees and customers healthy as well as to keep busy staffers from burning out. What’s more, the racial reckoning spurred by the murder of George Floyd has prompted Trek to take stock of an industry that has lacked diversity.
The company has responded with a combination of new safety protocols, higher pay, new employee recognition programs and a new commitment to racial inclusion. Trek also has continued to conduct “pulse” surveys to closely monitor the employee experience. That standing practice has enabled the company to learn and pivot quickly in a year when the challenges have popped up one after another, says Mark Joslyn, the company’s vice president of HR and IT.
“We’re never satisfied,” Joslyn says. “We’re always looking for a better way.”
With its nimble, people-first response to a difficult 2020, it’s not surprise Trek is a Fortune Best Workplaces in Retail list winner this year.
Retailers with a great culture to offer
To determine the list, Fortune partnered with people analytics firm Great Place to Work to analyze anonymous survey feedback representing more than 900,000 employees working in the retail industry in the United States.
Grocery store chain Wegmans Food Markets ranked first in the large-company category of the list, followed by auto seller CarMax, Publix Super Markets, Recreational Equipment, Inc. (REI) and grocery store chain Nugget Market.
Employees responded to more than 60 survey questions describing the extent to which their organization creates a “Great Place to Work For All.” Eighty-five percent of the evaluation is based on what employees say on Great Place to Work’s Trust Index survey about their experiences of trust and reaching their full human potential as part of their organization, no matter who they are or what they do. Great Place to Work analyzes these experiences relative to each organization’s size, workforce make up, and what’s typical relative to their peers in the industry.
The remaining 15 percent of the rank is based on an assessment of all employees’ daily experiences of innovation, the company’s values, and the effectiveness of their leaders, to ensure they’re consistently experienced. To be considered, companies had to meet the Great Place to Work-Certified standard.
Racing to keep up with demand
Trek is in high gear these days, and has been for the last three or four years. During this period, the bike maker has expanded its workforce to meet changing customer expectations, sell into more global markets, and service a growing retail business. At this point, 60% percent of Trek employees work in the United States, with the remainder in 25 countries across the globe.
Trek conducts “pulse” surveys to closely monitor the employee experience. That standing practice has enabled the company to learn and pivot quickly in a year when the challenges have popped up one after another, says Mark Joslyn, the company’s vice president of HR and IT. Trek Bicycle Corporation
Trek’s U.S. independent retailers and own stores were classified as “essential businesses” when the COVID-19 pandemic hit earlier this year. And as demand for bicycles soared, Trek leaders and employees moved quickly to create safety protocols. For example, the company launched curbside and home delivery options for bike sales and servicing.
Trek also took steps to reward employees handling high work volumes. It accelerated a plan to raise its national minimum wage to $15 per hour. It also introduced an “Above and Beyond” bonus of up to $500 for front line workers such as mechanics, sales associates, and workers in its distribution and manufacturing centers. An even more lucrative “President’s Award” was launched, giving employees up to $1,000 for living out the company’s “Non-Negotiables”—values that include “Have Good Energy,” “Think Global,” and “Give Back.”
Then there are the “Boxes of Awesome.” These are care packages sent weekly from the Wisconsin headquarters to operations across the company, Joslyn explained. At first, the boxes had items often in short supply, such as toilet paper and masks. More recently, they have included food items to surprise and reward teams.
Reexamining cycling and social justice
In the wake of the murder of George Floyd, Trek has taken a hard look in the mirror and at an industry that has historically lacked a conscious effort to include people of color. The company announced a series of initiatives that include scholarships for young cyclists of diverse backgrounds to participate in high school mountain biking through the National Interscholastic Cycling Association. Trek also committed to opening bike stores in communities of color. And it launched a diversity training program.
Central to the training was establishing a common vocabulary around issues of race and inclusion, Joslyn said, “so we could have better, more productive conversations about these topics.” What’s more, the training extended across borders, including Trek’s global employee base.
“This issue is not just a US thing,” Joslyn said. “This training needed to become available for employees around the world. They care. They all have room for massive improvement in their countries.”
Taking the pulse of employees’ experience
One way Trek has kept track of what their employees care about is through regular “pulse” surveys. In contrast to some organizations that conduct employee surveys just once a year, Trek will survey its entire workforce or portions of it on multiple occasions throughout the year.
The company has continued this approach in 2020. It used Great Place to Work’s Emprising survey tool to create custom questions related the pandemic, such as how well employees felt Trek was ensuring their safety and well-being during the COVID-19 crisis.
The pulse survey practice not only has enabled Joslyn and his team to stay attuned to employee sentiment during challenging times, but also troubleshoot problems and solve them quickly. For example, he says, one pocket in the IT department saw survey scores drop suddenly earlier this year. The team’s leader looked into the decline, discovering that a process change hadn’t been communicated effectively to all staffers. Once the issue was addressed, scores on the team rose again.
“They solved the challenge within weeks,” Joslyn says.
Here was a problem that might have festered for months and eroded morale at a typical company. With its culture of listening, Trek steered right around the potential pothole.
On a roll
In anything, Trek as a whole is pedaling faster and more smoothly than ever. In 2020, 89 percent of employees call the company a great place to work—an improvement from Trek’s score in 2019.
Joslyn says one key to the company’s success has been learning other Best Workplaces, including those in fields like technology, hospitality and healthcare.
“Most of the time, the better way isn’t in our own industry,” he says.
A willingness to improve by exploring new terrain—that’s just how Trek rolls.
Click here to see the full 2020 lists: The 15 Best Large Workplaces in Retail and the 5 Best Small and Medium Workplaces in Retail.
Ed Frauenheim is the senior director of content at Great Place to Work. He is co-author of A Great Place to Work For All.


fortune--2020-11-23--Brainstorm Tech is particularly timely this year

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
For a decade, Fortune assembled some of tech’s smartest minds in Aspen each summer to discuss how technology is changing the world. This year we had to skip, for obvious reasons. That was unfortunate, because the pandemic has only accelerated the head-spinning pace of technological change.
Next week, we will gather the usual gang for a virtual version of Brainstorm Tech, and dive into those extraordinary changes. The year-end timing could not be more appropriate, as all of us are trying to understand how the sweeping changes of the past year will reshape the future.
On hand for the discussions will be Stewart Butterfield, CEO of Slack, which has emerged as one of the leading tools to enable virtual collaboration; Aaron Levie, CEO of Box, who is not just a founder but also something of a teacher-philosopher for the new world; Dan Ammann, CEO of Cruise, who is at the leading edge of one of the biggest life-changing tech developments, self-driving cars; Julie Sweet, CEO of Accenture, which is helping Fortune 500 companies adopt to the profound sweep and speed of change; and Jennifer Tejada, CEO of PagerDuty, and Todd McKinnon, CEO of Okta, who are helping companies adopt their technology platforms to the new world of distributed work. Other CEOs on tap: IBM’s Arvind Krishna, NYSE’s Stacey Cunningham, Under Armour’s Patrik Frisk, UiPath’s Daniel Dines, Rakuten’s Mickey Mikitani, and Google Cloud’s Thomas Kurian.
I’m sorry to have missed the annual bike ride up to Maroon Bells. But other than that, next week’s virtual event looks to have all the captivating content and networking opportunities that Brainstorm Tech always provides—and more. While attendance is by invitation only, there are a few virtual seats left. Apply here or shoot me a note. More news below. And check out our picks for the 21 best stocks to buy in 2021.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
AstraZeneca results
AstraZeneca has announced good results for its candidate coronavirus vaccine, which was developed alongside the University of Oxford. The vaccine has an efficacy rate of 90% under one dosing regimen, and 62% under another—the average is 70%. Fortunately, the more effective dosing regimen also allows for more people to be vaccinated, as the original dose is a half-dose. Also of note: this is a more traditional vaccine type than the ones developed by Pfizer/BioNTech and Modern. Fortune
Alibaba regulation
Alibaba Group CEO Daniel Zhang has welcomed China's draft rules that are aimed at cracking down on monopolistic behavior by online giants. Industry "development and government supervision is a relationship that promotes and relies on each other, so that platform enterprises cannot only develop well themselves, but also serve the sustainable and healthy development of the whole society," said Zhang, a few weeks after Beijing cancelled the IPO of Alibaba affiliate Ant Group. Reuters
Fourth wave
Hong Kong has entered a fourth wave of the coronavirus pandemic, blowing up its plans for a "travel bubble" that would have allowed people to fly quarantine-free to Singapore. Hong Kong economic chief Edward Yau: "In light of the situation in Hong Kong, I think it’s the responsible way to put this back for a while, and then sort of relaunch it at a suitable juncture." Fortune
Google complaint
A group of publishers and advertising technology firms has urged the U.K.'s antitrust regulator to pursue Google over a planned privacy move that they say would affect their ability to track people as they use the web. Google is set to roll out the "privacy sandbox" technology in Chrome next year, effectively replacing third-party tracking cookies with a series of interfaces giving advertisers access to information about the performance of their ads. Bloomberg
AROUND THE WATER COOLER
Facebook and Biden
Facebook is hoping to cozy up quickly to the Biden administration by pushing users to get a COVID-19 vaccination, and to share content related to the Paris climate agreement. Handily, Facebook's chief lobbyist is Nick Clegg, who had a good relationship with Biden when the former was the U.K.'s deputy prime minister and the latter the U.S.'s vice president. Financial Times
Dividends resume
Some large U.S. companies—Kohl's, Marathon Oil, Darden Restaurants, Estée Lauder—have started paying dividends again, after halting them to hoard cash earlier in the pandemic. Moody's chief economist Mark Zandi: "Multinationals are beginning to exhale…The resumption of corporate dividend payments is an encouraging sign that executives believe that the pandemic will soon be behind us." Wall Street Journal
Black Friday
Consumers are increasingly anxious about the prospect of hitting Black Friday sales in enclosed shops and malls, according to a Deloitte survey. This is the first of Deloitte's pre-Thanksgiving surveys in which more consumers said they were planning to shop online than in stores. CNBC
Social responsibility
At Fortune's action-packed Investor Roundtable (other stories here, here and here) panelists noted that funds specializing in ESG investing kept buying when other investors were selling off their stocks earlier this year. Ritholz Wealth Management CEO Josh Brown: "A lot of old-school portfolio managers scoff at it. Like, who cares how a company treats its employees? When you talk to investors in their twenties and thirties, they care so much." Fortune
This edition of CEO Daily was edited by David Meyer.