The Island of Ablai (Pt. 8)

Previously

Pt. 5 Natural Resources and Manufacturing
Pt. 6 Profits and Expenses
Pt. 7 Setting the Price

Pt. 8 Profits and Growth

I had originally planned to get to supply and demand, but this line of inquiry we are on is just providing so much rich conversation and thinking that I am riding this wave for a little while longer.

Finding Profit
We decided on a price.  The mid-range price won by popular vote.  We had all the pieces of our puzzle ready to go.  We had a brief conversation about money in, and money out.  I tried to ground in their own lives.  When does money come in in your life?  Birthdays, otoshidama, chores, allowance, etc.  When does money go out in your life?  Movies, games, lunches, snacks, presents, etc.

A company is the same.  Money goes out in order to make the product, and then comes back in when you sell it.

Given the numbers below, what is our profit in one year?

(note: our countries currency is called the Bub, and it is modelled on Japanese Yen)

Chairs Sold (10,000 x 10,000)
All Expenses (45,500,000)
Profit per unit (5,450)
Cost per unit (4,550)

A couple of things happened during this math activity.  One of the groups realized that they could just multiply the profit per unit by 10,000 (the total units sold) and get the profit.  Another group took the long way by finding the Sales first (10,000 x 10,000) and then subtracting off the profits.  Another group was confused by the one-year thing, and tried to divide the profit by 365.  They were misunderstanding time, and they couldn't see that all these sales and all of these expenses happened over a longer period of time, and we were analyzing them after it had finished.  Interesting what some kids take as understood, but other groups misrepresent.  It really threw them off.

We eventually found our number.  The knew it was a big number, but they had nothing to compare it to.  They number seems disembodied.  Just a big number with lots of zeros.  I tried to put it into perspective, saying what the average worker in Japan makes in a year, and then comparing it to our profit.  I found a great website that gave us a whole list of salaries (in months but we could easily multiply it by twelve).  They knew that doctors make good money, so to see how much more this was than a doctors salary helped to orient them.

Finally, I told them that as the owner of the company, this profit belongs to me.

They didn't like that.

3 Recommendations
After the shock wore off, I told the kids that I wanted to know what I, as the owner of the company, should do with this money.  They were my employees, and I was asking their opinions.

I tried not to explain too much, or give too many ideas, but in order to help them along, I suggested a couple of options.  I can keep it all for myself or I can use it to make the company bigger.  They needed to come up with specifics on how to do it.  I asked them to think of three recommendations, and make a poster explaining their ideas.

Observations from group discussions:
- It was interesting how it immediately went to their own salaries.  Every group spoke about this first, and every group decided to give themselves a raise!
- All groups noticed that the owner of the company (in this case, me) was making far more money than the people who worked for the company.  Some of them thought this was fair, others spoke about how this was unfair.  One group was dancing around the idea of risk that investors take when they start a company....
- One group got really into it, and was thinking of how to increase profit by decreasing people (using technology), and this led them into issues of health and safety.
- Only one group discussed the need to maintain the high quality of our product.
- All groups realized that if you want to increase sales, you have to increase expenses, buy more machines, hire more people, procure more raw materials.  It doesn't grow without investment.
- All groups were dead-set on growing the company and increasing sales.

It was at this point that the day was about to end.  I realized that all three groups had not even come close to deciding on three recommendations, let alone getting anything down on their poster.  I could have stepped in and pushed them in that direction, but the thinking going on was very rich, so in the end the posters got scrapped.

I realized they were not ready to consolidate their ideas, but rather were still at the point where they needed to expand.  They were not making decisions, but brainstorming issues and talking through understandings.  In essence, we are still tuning in.  Tomorrow, we will take it in a new direction.

But, before they went home, I read them The Lorax.  I didn't say why, I didn't introduce any ideas, I didn't solicit any feedback from the group.  I just read it, and when it was done, I said "see you tomorrow everyone".  I think they have all read this book, but I am hoping that they experienced it differently today.

And they left.

The Sustainability Compass

In order to pick up the brainstorming thread from yesterday, I introduced the sustainability compass.  They had to brainstorm positives and negatives from 4 different perspectives.  Nature, Economy, Society, and Well-Being.  We talked about how difficult it was to make a recommendation when there were so many factors.  One thing was connected to the next and that made the decision very hard.  We used the metaphor of a knot.  I love how they are recognizing the foggy thinking, the difficulty in seeing the answer.  That is life.

I explained that this organizer might help them to separate some of those knots.  Or, it might make them more difficult!  I wanted them to focus on the knots as they worked through this, and reflect if this was helping them untangle, or just causing more tangles.

We needed a question to orient our brainstorming.  I put it to them to come up with the question.  They decided on:

What if we tried to double our profits from last year?

During the process, I would interrupt several times to ask for some reflection.  Not out loud, just quiet meditation.  I asked them to quietly think for 30 seconds about whether or not this activity was tangling or untangling those knots of confusion.

They made some very interesting observations.  Most of their discussion focused on Nature.  This is a positive sign for me, and something I hope this generation carries forward.  It actually filled me with a bit of hope the world.  These kids genuinely care about the environment, and are worried about it.  I hope that feeling becomes a part of who they are, and how they interact with the world as adults.

They also connected businesses to businesses.  If we increase our production, then people who make machines will make more money, and people who cut down the trees will make more money.  Some groups questioned if money was the most important thing.  Should we be focusing on it so much?  One group made a connection to the Lorax, and asked if getting bigger was worth it?  Great thinking all around.

At the end of the brainstorming time, we did a walk around and looked at other groups posters, then we had a class discussion.  Some very interesting ideas emerged:

- they felt more tangled than before and had trouble finding answers
- mostly started with negatives then found the positives
- the Nature section was mostly red, but the other three were mostly blue
- Nature seems to be forgotten about, and there were little positives
- bigger business for us equals more money for lots of people, the connected businesses that make machines, cut trees, carpenters, plumbers, etc.
- HOWEVER, as one company grows, another one might get smaller, which will mean less money for those people
- Is money the most important thing?  How much money do we need?

After this tangling, I asked them if they had to make a recommendation, what would it be?  Something really amazing happened.  One girl said they we should just stay at 10,000 units and not try and grow.  Other kids piggybacked on her idea and said that we shouldn't compete with other companies, and we should be responsible to nature.  Another boy said that instead of growing, we should focus on making our chairs even better quality.  I wish kids ran the world.

My own Personal Choices

To finish this off, we needed to ground it again in their real lives, and bring it back to our central idea.  I wanted them to write a short reflection about how all this fits into their life.  Look at your diagram.  Look at the mess of positives and negatives.  Look at the different perspectives.  Where are you in this space?  Where do you fit?

As a person who lives in this society, what is my responsibility in this great tangle of knots?