Word of the year?

 People are talking a lot about Artificial intelligence - so much, it will probably be 2023's "word of the year". But when talking about AI we usually focus on the algorithms and the outcomes - and don't get me wrong, they are usually amazing in their own ways! But let me whisper you about two dimensions that are usually skipped:

- the first thing is about data. AI runs on data, so the kind and quality of the data you choose to input in the model (whether it is a Marketing CRM, a Chatbot to build trust and superiority on your product or a HR Attrition Predictor,...) will have a great influence on the outcomes from AI. The cleverer the data, the better the outcomes. And data choosing is typically a human input in the model;

- the other thing is that most of AI tools give you predictions. That's their output. But the job is typically not finished there - predictions by themselves are not the end game. It's what you do with them. It's the actions that you (a human) take from those predictions. The predictions enable a better decision making - but the calls are typically still done by you (even if you are incorporating them in a Communication Ecosystem built on a Customer Journey, as an example).

If you are using AI tools, don't underestimate the role of data and decision making. And don't underestimate the importance of human decisions to achieve better results.

Data vs AI

Data vs Algorithm

This is a really exquisite question – in AI (and given resources are limited in the real world) should a company invest in better data or better algorithms? Good question, right?

There is actually a study done by a Microsoft team that looked exactly at this topic – and the conclusion was… that usually (not always), collecting better data ends up being more valuable than investing in better algorithms => it generates better outcomes. The reasoning for this is modern algorithms’ performance differences are relatively small – and smaller than the difference in performance of the same algorithm with more/less data.

So… Data > Algorithm.

Now, a word of caution. There are businesses, where fortunes are made on infinitesimal differences (think about financial trading) – nobody will want to play with a slightly worse algorithm than its competitors…

Who is the leader in grocery ecommerce sales in the US? This is an easy question, right?

It might be, but it's not who you are probably thinking of.

Walmart is the grocery ecommerce sales in the US, with $59Bs projected sales in 2024 (vs Amazon's $41Bs). Actually, Walmart has been the leader since 2019, when it surpassed Amazon's sales and has been widening the gap ever since (source: Insider Intelligence).

It is thought Walmart's physical proximity to the vast majority of the US population has been a driving force behind this trend, as it enables simpler and faster delivery options, like curbside and in-store. Another example (and angle) of the rising importance of phygital...

(quick note - these figures are about grocery ecommerce, if we looked at overall ecommerce in the US, Amazon would still be leader)

Singles' Day 2023

In 1994, Dan Kohn sold a CD for $12.48 through an encrypted website he built himself. That's usually considered the first eCommerce transaction ever done.

Today, 11.11 (Saint Martin's day, by the way), is Singles' Day, the world's biggest eCommerce shopping event, with an estimated global sales level of $157 Billion in a single day, in 2022. This shopping event originated in China and is still mainly a Chinese one (a kind reminder that China is the biggest eCommerce market in the world), though we are starting to see it rippling through to Western markets.

From a $12.48 single pioneer sale to $157Bs in one day, eCommerce keeps on growing, as omnichannel approaches keep on driving sales where people spend time (and an average global citizen spends 6h41m online, daily). I am very curious to see the online sales evolution this year - with a keen eye on today's volume...

Sustainable Blue Economy Investment Forum

"No healthy planet without a healthy ocean" (Peter Thomson) was the key word in last week's Sustainable Blue Economy Investment Forum. It was a pleasure to feel the dynamics and momentum around the sustainable ocean economy!

From the meetings I attended, I took three key insights:
- Everybody is talking about algae (my Korean mother-in-law would love to hear this)! Both as food, energy and material (replacing plastics) source, algae seem to be a key dimension in rethinking the ocean (and overall) economy - maybe one of the "next big things" to watch.
- Markus H.-P. Müller had a really good idea to add a National / Company stock accounting system on top of the GDP flow system we all know.
- And finally Fundação Oceano Azul's (mostly known for the Oceanário de Lisboa and its role in ocean's conservancy) President raised the point that Management Boards are required by Law to manage companies in a responsible and conservative manner - but that we don't see the same framework on Nature's relationship with firms and people.

Carbon Enterprise Value

This is a bit of a geeky post.

I recently heard of Carbon Enterprise Value, a methodology developed by Lime Rock New Energy on the subject of Green House Gases emissions avoidance - and I must say I was fascinated. The basic premise is that carbon emissions avoidance has a greater value (or are more important) the closer they are to the present day - meaning that, as you calculate now how much CO2 (or other GHG) a project avoids being put in the atmosphere, the future emissions are less important than the ones you avoid now. This makes sense (at least under some lenses), because of the inherent risk of any project.

Yes, the concept and calculations are quite similar to the basic (and always reliable) Discounted Cash Flow model used in Finance. So much so that Lime Rock New Energy uses the financial rate of DCF discounting on this new CEV concept - and here lies the biggest question mark of the model, as one may question if it makes sense to use a financial measure (that on itself is quite complex) to discount carbon emissions (a non-financial topic).

Still, the measure and approach seem incredibly valuable. It is a comparable, "easy" to calculate tool that can be used in any GHG emissions avoidance project - and can even be used as part of one's valuation, if you consider the market value of carbon emissions.

Did you know that every single time a website asks you to answer "Click on all the squares that have traffic lights" to prove you're human, you are actually training Artificial Intelligence to identify what traffic lights look like in the real world?

Make things work!

Today, I stumbled (in Chris Wedding 's Impact Newsletter) on a quote that made me think:
- "Pessimists sound smart, but optimists make money" - Nat Friedman.

I would actually say that "optimists change the world" rather than "make money", but the bottom lane stays the same. It's usually easier just to see how things won't work and say it loud, but the true value is to make things work out and make a positive impact.

Encontros com Futuro

Great start of the week in "Encontros com Futuro", an ESG dedicated talks series promoted by REN . Four good takeouts from these days:
- Companies tend to measure their ESG efforts - and not the impact from their initiatives;
- Ultimately it will be people that will make a difference on ESG implementation, both as decision makers and as consumers (thank you Luis Amado), highlighting the importance of emotional engagement at all levels;
- Profit is an important component of a sustainability strategy, or the strategy will dry out pretty quickly (Nuno Moreira da Cruz - who also added that a sustainability strategy is actually THE strategy nowadays);
- And last but not least, a study from Deloitte highlighting that mental health fringe benefits actually have a 5x ROI (and this reminded me of Kindology - be kind to all kinds and their great take on this problem).