How to Keep Ahead of Sustainability's Twists and Turns | SUSTAINABILITY, ENTREPRENEURSHIP, AND THE FUTURE OF VALUE

Sustainability, Entrepreneurship, and the Future of Value with Eric Lowitt

I want you to close your eyes for a minute. Think of the word "sustainability." What images come to mind? Trees, grass. Perhaps the color green? Now think about sustainability and your business. What issues are most pertinent to your organization's performance?

Maybe you considered risks. Or opportunities. Perchance did you think about issues of social equality? Of child labor or anti-corruption? Or how your organization could sharpen its competitive advantages by working more closely with local communities?

Over the next five to 10 years a certain breed of organizations will complete an impressive double play: They will both embrace sustainability deeper and outperform financially their peers. If we had the benefit of racing ahead a half-decade to reflect on these organizations' successes, we'd marvel at their ability to evolve with, if not slightly ahead, of sustainability's twists and turns.

And what would these twists and turns be? While no one has the benefit of a crystal ball that sees the future in HD, the lack of such a crystal ball should not hold one back from making educated guesses either. Here are three changes to your conception of sustainability that your organization should consider today in order to increase the likelihood that it will continue to succeed over the next five to 10 years.

1. The Sustainability Movement within industry will morph into the Restorability Movement. This will be a sign of the Movement's success.

Conventional wisdom suggests industry is working through the third wave of environmental and social sustainability. The first wave occurred in the 1960s and 1970s. The next occurred around 1990. Both of these waves failed to lead to lasting change in corporate settings. Companies did not connect sustainability with core business activities and values during the previous two waves.

The current wave will be different. Today informed companies are investing financial and human capital to integrate sustainability into their DNA. In the future, talking about one's sustainability initiatives will seem out of step with the market as a whole. As an analogy, consider how often companies tout their quality levels these days. Or their internet capabilities. Not often, if at all. Organizations by and large have integrated such capabilities into their DNA. So it will be with sustainability.

As the Sustainability Movement fades, a new wave of environmental and social goals will emerge. Progressive organizations will shift their focus from a stance of 'Do less harm' to 'Do more good.' This shift will be typified as the Restorability Movement. Many organizations have found ways to earn economic returns from reducing their environmental impact, creative organizations will find ways to make money by restoring ecosystems to pre-industrial conditions.

2. The Sustainability Movement will combine with previous imperatives, such as globalization and the internet. New distinctive capabilities will emerge as a result.

A business imperative is a new circumstance in the economic environment that requires radical changes in a business's operations at every level. If changes are not made, the business cannot continue to create value consistent with previous levels; in extreme cases, the business cannot survive. Between the end of WWII and the dawn of this third wave of sustainability, industry faced four imperatives: quality, business process reengineering, globalization, and the dot-com.

Each imperative impacted the way business created value. Value first migrated to companies with high product quality levels, then businesses with quick turnaround times and high service levels, then global reach, and eventually multiple distribution channels. Some companies made adjustments early; others took time to catch up to these early adopters. Eventually the hotness of each imperative cooled. Left in their stead were a set of new capabilities.

Today many of these capabilities are intertwining to both complicate and simplify industry's sustainability response. For example, on the complicating side of the equation, a corporate misstep in a distant region of the globe can quickly become viral news via social media.

Companies that will succeed tomorrow will find ways to combine sustainability capabilities with capabilities developed in response to previous imperatives. Some companies are already responding this way. GE, for instance, is using social media to crowdsource smart grid innovations from around the world. The ability to intertwine newer capabilities will emerge as a lever of competitive differentiation and ultimately outperformance of peers.

3. The basis of industry competition will shift from company versus company to corporate network versus corporate network.

The Sustainability Movement is leading to the adoption of multi-stakeholder approaches to address environmental and social challenges. Several companies have developed venture arms to fund and guide investments in renewable energy. Given the scale and unique local challenges of such investments, the more successful venture organizations have partnered with industry, private equity, and local community entities to achieve their investment goals.

As more of these multi-stakeholder approaches take root, companies will forge new bonds with previously strange bedfellows. Talent and intellectual property will be shared, perhaps even among competitors. Organizations seeking to either compete or collaborate with these companies will find that they need to deal with network dynamics, not just individual company dynamics.

In the process, one of the business models of yesterday will reappear, albeit in a modified fashion. Competitive corporate networks will emerge, borrowing a page from the traditional keiretsu model of business groups in Japan. Instead of being bound by cross-stock ownership, however, these corporate networks will be bound by cross-IP ownership, fortified by values and goals held in common.

Companies are crafting multi-year strategies to adapt to and embrace sustainability. The companies that stand the test of time will be those that create capabilities to constantly evolve their sustainability strategies as the sustainability movement itself evolves. Considering the above three trends today will help organizations steer their strategies through sustainability's coming twists and turns.


Eric Lowitt is a student and teacher of strategy and sustainability – how companies grow, innovate, and become more agile by embracing sustainability. His first book on the topic, The Future of Value, will be published by Jossey-Bass, a Wiley imprint, in October 2011.

Learn more about Eric Lowitt at EricLowitt.com and follow him on Twitter @EricLowitt

For more information, please visit Eric's TNNWC Bio.

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How to Keep Ahead of Sustainability's Twists and Turns | SUSTAINABILITY, ENTREPRENEURSHIP, AND THE FUTURE OF VALUE

KALÖN WOMEN: Common IRA Mistakes

Guest Author: Ronit Rogoszinski

In the last two months we discussed living within your means and the different strategies you can employ to help you achieve your financial goals. One of the most asked about goals is saving for and preserving retirement savings. Today I will review the 5 most common mistakes I’ve seen clients make in setting up their retirement savings accounts and the eventual transfer of those assets upon their death.

Failing to Complete an Indirect Rollover Within 60 days
You have only 60 days to redeposit funds withdrawn from a retirement plan, including amounts withheld for taxes, to another qualified retirement plan or risk losing the tax deferred status of the investment. What that means is that if you are to “move” your IRA, for example, from one bank to another bank’s IRA, a DIRECT rollover means the account owner requests that the custodian of the receiving account “collect” the funds from the institution currently holding the account. This is also referred to as Trustee to Trustee transfer. The INDIRECT transfer means that the individual personally transfers the funds from the qualified account in one institution to another qualified account at a different institution, usually in the form of a check payable to the IRA owner. If the funds aren’t deposited in the new institution within 60 days of the distribution date, taxes and any associated penalties will be due.

Suggestion: Whenever possible choose DIRECT rollover or transfer between the two institutions.

Spousal Continuation Mistakes

• When one of the spouses passes away, the surviving spouse has the option to treat her late husband’s IRA as her own, or roll the IRA over into her own IRA. Sometimes that may not be the best option.

• When the surviving spouse is under 59½ and needs income, there is no 10% penalty on distributions from the IRA kept in the deceased spouse’s IRA.
• When the surviving spouse is older than 70½, doesn’t need income now, and her late husband was younger than 70½, she may keep his IRA in his name. This will allow her to delay mandatory distributions from his IRA until the deceased spouse would have turned 70 ½ had he not died.
• Finally, (please confirm this with your accountant), if the applicable federal estate tax exemption has not been fully used, the surviving spouse may want to “disclaim” rights to a portion of the IRA up to the amount of the applicable exemption.

Suggestion: Consider all possibilities before you choose how to take over your deceased spouse’s retirement savings. Once the decision is made it cannot be reversed.

Failing to Name a Beneficiary

Whatever you do, don’t make this mistake!! Unlike many other properties, IRA’s don’t pass by a will; they pass according to the terms of the IRA Beneficiary Designation Form. Therefore, this document could be one of the most important estate planning documents. Here’s what can happen if you overlook it or neglect it over time:

• The default beneficiary will generally be the owner’s estate.
• This most probably will cause the loss of the “stretch” option and spousal continuation options discussed previously.
• The distribution will have to be done lump sum or within five years after the death of the owner. Note – if the IRA owner was older than 70½ when he passed away, the estate may continue to take distributions over his life expectancy as if he had not died.
• This may also cause the IRA to have to be probated which adds cost, consumption of time and a public process, all which could be avoided by an updated Beneficiary Designation Form.
• Income tax rates are usually higher when IRA’s are paid to an estate, costing additional dollar lose to the account’s value.

Suggestion: Name a beneficiary on your IRA account! You should also name a contingent beneficiary in case the beneficiary predeceases the owner; this ensures that the IRA assets don’t pass to the estate and ultimate probate.
Failing to REVIEW and UPDATE Beneficiary Designation Forms

As we just discussed, the named beneficiary on the designation form is entitled to the assets of the IRA. Therefore, you need to review the designation form at least annually or upon life events such as birth or adoption of a child, marriage, divorce or death of a family member. Not reviewing and updating the document could lead to an unintended member of your family inheriting your assets upon your death. Also, please note that if your grandchildren are named as beneficiaries, make sure the value of the IRA and any other assets passing to the grandchild do not exceed the applicable generation-skipping transfer tax. To the extent that it does, there could be additional taxes due. Please consult with your tax advisor.

Suggestion: Set up a reminder to review beneficiary designation form annually and update according to changing circumstances in your life. This will ensure unintended beneficiaries from inheriting your IRA’s.

Beneficiaries Fail to “Stretch” the IRA

Should a beneficiary liquidate the inherited IRA too quickly, it could result in immediate taxes due and prevent the assets of the IRA to provide possible long term income. The stretch feature of an inherited IRA has certain advantages:

• Beneficiaries may spread tax liability over their lifetime.
• The undistributed IRA assets will continue to be invested in a tax deferred manner, even as distributions are occurring each year.
• Additional IRA assets can be accessed as needed.

Suggestion: If maximizing the stretch feature is important to you make sure the beneficiaries know the rule and explore the option before taking possession of the IRA’s assets.

There are additional issues to be reviewed and discussed regarding IRA's. You will have to tune in next month to learn about the next group of mistakes IRA owners make in setting up, managing and ultimately passing their retirement assets on to their heirs.

Ronit Rogoszinski has been helping individuals and professionals understand the world of finance and wise personal money management for over twenty years.

A graduate of Queens College’s Scholars Program, Ronit holds FINRA Series 7 and 66 registrations through LPL Financial and is New York State certified in Long Term Care Insurance. As the proud mother of four children, Ronit understands firsthand the demands we all have in our fast paced lives. Yet her calm, personal and relaxed nature help to put her clients at ease while remaining focused on the job at hand – realizing and bringing them closer to their financial goals.

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KALÖN WOMEN: Common IRA Mistakes

KALÖN WOMEN: Women as Savvy Investors - Yes YOU!

Guest Columnist: Ronit Rogoszinski

With 80-90% of women ending up managing their own finances at some point in their lives, becoming a savvy investor can never start too soon.

Understanding your role and clarifying your goals are the first steps in taking charge of your finances. It is so important to understand that you are responsible for your money not anyone else. I speak with women all the time who feel that their ignorance of money and finance disqualifies them from ever asking questions or taking on an active role in managing money. Granted, initially it may be an overwhelming task, but like anything else in life, one step at a time, in a forward motion gets you going and keeps you going towards reaching your goals.

So what am I here to share with you today? I wanted to give you some insight as to some of the first steps you should take in becoming a savvy investor. As I mentioned before you need to understand the role you will play in this process and the goals you want to achieve. Your role may very well be a passive one in managing your finances. If you have a spouse, an advisor or someone in the family who has managed your money for you, that’s fine. However, you should ask questions and request to become more involved in understanding the strategy and focus of the account. Don’t take no for an answer! I hear this all the time “I am made to feel so stupid when I ask questions” or “I don’t understand the answers so why ask the questions”. Ahh!! This is your money; this is your financial future. If you are made to feel incompetent or the individual lacks patience in teaching you – fire them! Obviously, if it’s your spouse or your uncle that may be hard; however what I mean is, explain that you want to better understand the strategy of the account and if they can’t respect your wishes, find an advisor you’re comfortable with and start your own portfolio. The goals for this account will matter greatly and so an honest conversation with the individual you are hiring should establish the parameters of how the funds will be invested. An ongoing relationship that allows you to learn in an open manner is priceless, so respect the person you’re working with by setting rules and roles for both of you to follow.

As you expand your involvement, here are some topics you must discuss and know from your spouse or the person managing your family’s finances, if you have been passive all these years. Ask what your net worth is. This measure that takes the total value of your assets (what you own) and subtracts from it the total value of your liabilities (what you owe) should be positive and growing. You will also want to know where all the investments are being held and who do you need to contact in an emergency to access these funds. Do you and your spouse have life insurance? In which case again, where and who do you need to know? Before I go on I will tell you ladies that most men do find this line of questioning very intimidating and may get quite irate from it. Others will be totally relieved that you are finally taking some action in protecting yourself in case they can’t take care of you. Be prepared that the response you may get may not be what you expect it to be.

I strongly encourage women of all ages to get involved and start by taking the first steps towards becoming a savvy investor by asking questions, looking over what you already have and finding someone you are comfortable talking to in helping you on this learning curve. It’s never too late to get going.


Ronit Rogoszinski has been helping individuals and professionals understand the world of finance and wise personal money management for over twenty years. A graduate of Queens College’s Scholars Program, Ronit holds FINRA Series 7 and 66 registrations through LPL Financial and is New York State certified in Long Term Care Insurance. As the proud mother of four children,

Ronit understands firsthand the demands we all have in our fast paced lives. Yet her calm, personal and relaxed nature help to put her clients at ease while remaining focused on the job at hand – realizing and bringing them closer to their financial goals.

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KALÖN WOMEN: Women as Savvy Investors - Yes YOU!

Trust in the Connected Financial World

By Rob Peters

Financial Services Editor

As I write this article, IndyMac Bank, a large and active mortgage specialist was seized by federal regulators, in the third-largest bank failure in U.S. history.

Today maybe more than ever, we as individuals, business professionals, and corporations must keep commitments to our families, customers, partners, employers. And even government regulators.

With all the turmoil in the banking industry, it has become very clear a new approach is required to continue the flows of capital across the United States as well as the world.

In this interconnected world, when “commitments” are not kept they have a tsunami effect on financial services and economies across the globe (that we have seen the last 12 months).

Fannie-Mae and Freddie Mac, the two stockholder-owned, government-sponsored mortgage companies, whose functioning is critical to efficient functioning of the U.S. housing market, are facing a severe crisis in confidence. As both these entities have received infusions of fresh financial capital, it is even more important that Fannie Mae and Freddie Mac receive a large dose of “Relationship Capital”.

Banks selling complex mortgage loans to individuals who clearly do not understand the “fine print”. - - WHERE IS THE TRUST?

Investment Banks selling Collateralized Debt Obligations (CDO) to Investors who clearly did not understand the risk of these pools of capital. - - WHERE IS THE TRUST?

A laissez-faire government environment which created a long-term environment of “cheap” money created this mortgage “bubble”. -- WHERE IS THE TRUST?

And YES, even Individuals who took on 0% down-payment adjustable-rate-mortgages that they did not understand and probably new that that they would be faced with a problem in the future, but chose to grab the dream of home ownership NOW. -- WHERE IS THE TRUST?

I propose a new path to take for the future.

We as individuals, corporations, financial services firms, and government agencies need to develop and follow a code of behavior in this interconnected relationship capitalistic world.

The choices and actions we make effect our community, country, the world, and future generations not even born yet.

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Trust in the Connected Financial World