The most profitable unit in Tesla is selling emission credits, not cars. But for the emission credits business to thrive, Tesla has to make cars to earn those credits. Because it makes electric vehicles, it earns credits for not polluting the world. Then, it resells those credits to other car companies which make fossil-fueled cars to stay in compliance.
The Tesla car making business represents the One Oasis in the business while the emission credit unit captures the value through the Double Play strategy.
Eleven states require automakers sell a certain percentage of zero-emissions vehicles by 2025. If they can’t, the automakers have to buy regulatory credits from another automaker that meets those requirements — such as Tesla, which exclusively sells electric cars.
It’s a lucrative business for Tesla — bringing in $3.3 billion over the course of the last five years, nearly half of that in 2020 alone. The $1.6 billion in regulatory credits it received last year far outweighed Tesla’s net income of $721 million — meaning Tesla would have otherwise posted a net loss in 2020.
What is your business One Oasis? Can you build a Double Play strategy around the One Oasis? Think about these as you begin the 2021 Playbook. Watch my video.
In this video, I challenge us to use the One Oasis Strategy and Double Play Strategy to build business models that will ensure that we capture enterprise value even as we create for customers. Skype creates great value for customers but it has struggled to capture most value; so, Skype remains a sojourner, constantly being passed around by buyers and sellers. Do not be like Skype!
You can also add Apple in this league where the iPhone is now the One Oasis and values are captured from many services. The company returned a huge number last quarter.
Apple closed out 2020 with an exclamation mark, logging its most profitable quarter in history thanks to a surge in iPhone sales and soaring demand for laptops and iPads from remote workers. The tech giant racked up $28.76 billion in profit for the period ending Dec. 31, with $111.4 billion in quarterly sales. Previous fears that enthusiasm was waning for the iPhone proved unwarranted as sales jumped by 17%, with Apple’s decision to delay the iPhone 12 release also creating “pent-up demand.”
[In Tekedia Mini-MBA, we discuss One Oasis and Double Play extensively. If you can, join our next edition, starting Feb 8]
It is a new one: China hasovertaken the United States as the world’s top destination for new foreign direct investment . Also, in 2020, China was the only major economy to grow its GDP. Since 2017, foreign direct investment in the U.S. has been slipping. Of course, if you do not allow China to invest in your economy, that is a default expected outcome.
China overtook the U.S. as the world’s top destination for new foreign direct investment last year, as the Covid-19 pandemic amplifies an eastward shift in the center of gravity of the global economy.
New investments by overseas businesses into the U.S., which for decades held the No. 1 spot, fell 49% in 2020, according to U.N. figures released Sunday, as the country struggled to curb the spread of the new coronavirus and economic output slumped.
China, long ranked No. 2, saw direct investments by foreign companies climb 4%, the United Nations Conference on Trade and Development said. Beijing used strict lockdowns to largely contain Covid-19 after the disease first emerged in a central Chinese city, and China’s gross domestic product grew even as most other major economies contracted last year.
But that is not the message: the message is that China is doing today what actually made America great. China hasinvested in infrastructure and deepened its human capital – “China has 60,000 miles of high-speed rail; America ZERO”.
2) China forty years ago consciously adopted the American Model for economic growth–large sustained public investment in infrastructure and human capital. America has largely abandoned these investments and has already declined significantly (See Alden, Failure to Adjust). China has 60,000 miles of high-speed rail; America ZERO. Europe has several thousand miles. Our infrastructure is rotting and extracts an annual “tax” north of $600 BILLION; we don’t spent enough to fill potholes let along build a modern airport or port. China, India, and Europe have all vastly improved their universities and research centers; America’s have declined and shrunk. America once led the world in both infrastructure and human capital–we are now an also-ran. 1993 America was 1st in college completion rate for that cohort, now ranks 19th or lower, nearly last among all developed economies. And now 28th in publicly funded University based research, behind Slovenia!
[…]
The main purchasing power party in China – Middle Class has been growing rapidly after 2018. The huge amount of educated factory workers gives China a competitive advantage among the international competition. Modern infrastructures and stable social environment bringing more and more foreign investment into China. In 2020, Chinese authorities established a new economic model called “The Inner-cycle”. In the future, China will spend more time focusing on a more openly domestic financial market, new technology, and innovation in order to achieve its vision in 2050 – a fully developed country.
Largely, China did two main things:
It invested in infrastructure and that helped it to improve the efficiency of business systems in the country. With that, productivity has improved, making production largely competitive against most competitors.
It invested in core technical education positioning itself as the manufacturing center of the world. Today, China has young people with top modern skills to work in factories.
If Nigeria does these two things and some others I have noted in thisHarvard Business Review article, we will emerge. These constructs are fundamental if you trace the history of modern societies: nations do not rise faster than their abilities to accumulate and utilize knowledge. In other words, if you cannot create new knowledge, and have the capacity to use it, you will fade. But if you do, you will thrive.
Of course, investing in infrastructure and educating the young people require resources. Nigeria has blown its oil resources, and getting into the building phase at this time of limited resources, in the midst of the expanding population, would be challenging. But if there are ways to make those happen, good things will happen. From roads to energy to healthcare systems, Nigeria has to invest in critical infrastructure. Then following the investments with a revamped technical education will offer a new vista for growth and prosperity.
Having quarterly or yearly reports from the national, regional and global think tanks about socioeconomic and political developments in countries has never been a problem. However, the problem lies with the authenticity of the reports. Political leaders and social actors in developing countries are quick to reject some of the reports on credibility issues. The reports have also been rejected on the premise that they were produced in the developed world. Hence, the reports in the clime cannot adequately project the realities in the developing world.
The Transparency International is one of the global think tanks that has consistently produced Global Corruption Perceptions Index. Like other reports or indexes, the GCPI has been criticised and still been doubted by a number of people, organisations and countries in the world. Since 2012, the best position attained by Nigeria was 144 out of over 180 countries [when ranking approach was used]. When score approach was employed, Nigeria only better with 28 points. In both approaches, the country has consistently been positioned as one of the most corrupt countries in the world.
This has continued to receive mixed reactions from the stakeholders in the Nigerian project. Whenever the index is released, the Presidency does not hesitate to pick holes in the index. This year the TI released the latest index, which positions Nigeria as 149th for the 2020 assessment against 146th attained in 2019. This is not augur well for the Presidency as the spokesperson to President Muhammadu Buhari, Garba Shehu notes that “reality is based on verifiable facts and data. And any evidence-based analysis would prove that whether it is by prevention or punitive measures in recoveries and prosecution, this administration would be rising fast up these rankings rather than standing still.
“Organizations should be factual in their analysis and be prepared to rely on inputs outside of sensational media reports and age-old narratives which have not been updated to reflect today’s reality in Nigeria concerning its globally-respected war on corruption.”
Some social commentators and public affairs analysts believe that the outcome meets the reality despite the presidency’s claims. As the presidency queries credibility of the index and research methodology used by the body, in our experience, some citizens on digital sphere and in physical space are also asking about the link between perception and reality. The argument has been that report or index that uses perception to measure reality cannot be credible. These narratives are examined by our analyst using academic and applied lenses. The piece seeks to draw insights from both lenses and pinpoint them within the context of ongoing conversation around acceptability of the index or not.
In academic and applied researches, concepts and constructs are key to better understanding of the problems being addressed by researchers. These should be well delineated within the context of the problems. Perception as a concept has been defined by numerous academic scholars, especially psychologists, sociologists, political scientists and communication specialists. Generally, perception “is the organization, identification, and interpretation of sensory information in order to represent and understand the presented information or environment.” It has also been described as awareness, comprehension or an understanding of something.
Taking these definitions into the real world, one can say the concept is key to our understanding of people, objects around us and reacting to experiences that emanate from interacting with them consciously or unconsciously. However, to some scholars, perception is not reality. It can only influence consciousness of things [human and objects] around us [see Exhibit 2]. Therefore, outcomes of researches that leveraged perception as a concept need to be interpreted and used with caution.
Exhibit 2: Perception
Theories Behind Perception
Apart from understanding perception conceptually, a research that uses it must also apply propositions or assumptions of theories that align with it. There are many theories of perception. In most cases, cognitive and constructive theories have been used by researchers, at least in the last two decades in the academic community. Cognitive theories have consistently stressed ‘poverty of stimulus’ as a construct that becloud people in understanding reality. In specific terms, the construct denies people opportunity of providing a unique description of the world.
Meanwhile, action-based theories of perception seem to solve this lacuna with the provision of constructs, assumptions and propositions that enable people to see perception from input and output perspectives. This is largely determined by examining interaction with processes that lead to seeing objects or people in positive and negative lenses. In other words, perceptions should start from the general to the specific details of the people or objects.
While defending its methodology, the Transparency International notes that “in order to carry out this quality assurance process, Transparency International reaches out to each one of the institutions providing data in order to verify the methodology used to generate their scores. Since some of the sources are not publicly available, Transparency International also requests permission to publish the rescaled scores from each source alongside the composite CPI score. Transparency International is, however, not permitted to share the original scores given by private sources with the general public.
Each of the sources included in the CPI is standardised to allow for the aggregation into the CPI score. The standardisation converts all the data points to a scale of 0- 100 where a 0 represents the highest level of perceived corruption, and 100 the lowest level of perceived corruption. While most of the underlying CPI sources are also coded in the same direction (with lower scores indicating higher levels of perceived corruption), four sources are scaled the opposite way, i.e. with lower scores denoting lower levels of corruption. For comparability purposes, these four sources are reversed by multiplying every score by -1.”
In this defense, there are issues that need attention. It is clear that the body has closed culture of sources. This is not bad since it is ethical to protect the sources. However, the think tank needs to revisit its methodology. If some sources are expected to be protected, those that do not require the agreement should be used. This is imperative when one looks at the body’s strategic principle and name [The Transparency International], and the insights that emerged from the concept and theories examined earlier. It is also essential that the body considers the outcomes of anti-corruption policies and instruments being used by each economy in its quantification of corruption issues.
President Buhari’s legacy looks cloudy and he is not getting any vibe from any angle. I am not sure he has new ideas for the economy. Possibly, they will just play it out, as the nation looks like it is on autopilot, with no vision to connect the citizens into nation building. Perhaps, it could be that the National Orientation Agency is not doing its job.
Pardon me, I do not honestly understand at this point what his government wants to achieve. During Obasanjo, we could argue that he was trying to liberalize the economy through privatization. Jonathan lost election partly because he lost focus later in his presidency. Initially, there was that effervescence on improving systems and processes to drive Nigeria into a new economic era.
But for Mr. Buhari, he has multiple challenges: insecurity, a battered economy and now a reputation that Nigeria is the den of corruption. Yes, the Transparency International’s Corruption Perception Index (CPI) 2020 has put Nigeria on 149th position out of 180 countries. The nation also scored 25 out of 100 points (the higher, the better).
With this new ranking, Nigeria is just below Guinea-Bissau on the scoreboard of the most corrupt nation in West Africa. That is a second for Mr. President, but I am not sure he would be happy for that one.
Yet, Mr. Buhari is a victim of Nigeria, but as the president, we have to put everything on his feet. The impunity in the Nigerian Judiciary is the biggest issue in the land. Why should it take 15 years to try a former governor for corruption? Why should it take 10 years to try bank looters? I mean, you can go on.
Mr. President, your nation is not healthy – you need to lead.
Comment #1: Prof. Ekekwe, your colleague, Prof Wole Soyinka said discussing the Buhari presidency is not good for his sanity. So, he now prefers to live as if the administration does not exist. Hence like millions of other Nigerians, I have tuned off on the regime.
However, the woeful performance of the regime is the best argument against rotational presidency that makes the grossly incompetent president. Alert was sounded on that grave risk in my “Distorted Federalism and Pervasive Insecurity” serialized by The Guardian in March 2013 ever before the present regime could dream of gaining power. Yet, those who prefer lootocracy to democracy banded together to install the Buhari government.
Rotational presidency is fit only in a confederacy where the incompetence of the central government does not negatively impact the federating units – the presidency is ceremonial. But here in our unitary government the progress of all is hamstrung by a rotational president. That informs the cry for restructuring that is now almost deafening.
My response: Nigeria is not working – everyone is a victim. Like I say, if Yobe has a literacy rate of less than 20% and Imo has 96%, Yobe kids have not been served even if the governor has been rotated in all villages there. Rotating inefficiency is not a solution. The key is building healthy competition and productivity in systems: I support a revamped and restructured economic federalism so that the principle of comparative advantages will work.
I was in Usman Danfodio University a few years ago and saw a GREAT renewal energy project. Those kids could power the north under market systems. But Nigeria slows them just as the ones in south are slowed in their passions. We need to be honest that NG is not working.
Another commenter follow-up: Prof. Ndubuisi Ekekwe, please you are even going too far by comparing Yobe State with Imo State because the two states are not mates. Imo state is 15 years older than Yobe State
Yobe State and Abia State are classmates as they were created on 27th August 1991. On GDP per Capita basis (as of 2007 data), Yobe State have $843 while Abia State have $3,003, in simple terms people in Abia State earn 3.6 times more than people in Yobe State – since this is calculated by dividing the area’s total income by its total population.
But the puzzle is this:
Yobe State have 17 LGA, Population = 2.757 million
Abia State have 17 LGA, Population = 4.112 million
Both States presumably have been receiving the same amount of money from the FG Federal Allocation Money Sharing Scheme since August 1991, so if after 16 years (as of 2007) of receiving the SAME amount of money from FG based on the same number of LGA and even with a lesser population and Yobe State GDP per Capita is almost 4 times smaller than Abia State’s GDP per Capita, then Nigeria is in trouble!
I only picked just Yobe State and Abia State because you mentioned Yobe State. We can run the numbers for other states.
No System can continue to function in this type of mess!
My response: This man, that is a Master’s thesis you just summarized here. Great perspectives and it goes to Tekedia blog under this entry. To add to your point, take those LGAs to UBE (universal basic education) which moves funds via LGAs for basic education. If states were getting the same money (per capital) and one produced 96% literacy and another <20%, has somebody asked where the money sent via UBA to train the kids went into? Ideally, someone diverted the funds, resulting to the outcomes.
Tekedia Institute welcomes staff of Demyhealth Clinic and Genomic Medicine – DCGM to Tekedia Institute. DCGM works in the domains of life science research, pharmaceutical, food and beverage industries providing services in the following areas: setting up of molecular laboratories for clinics, hospitals, medium and complex laboratories, schools, food & beverage industries, and governmental/non-governmental organizations.
We look forward to next month as we co-share and co-learn on the mechanics of businesses systems. Welcome to Africa’s largest business school.
