Strategy, Innovation and Competition

Strategy is what you need when you don't have enough resources. It is the art and the science of the short blanket. For a for profit operation, strategy is mandatory. Costs and expenses eat into profits, so stockholders whant to keep overhead to a minimum and prioritize investments correctly. Now that's the tricky part. Achieving a lean operation is not trivial, but widely feasible. Selecting where to focus the investments for the future is the real challenge.

Some of the most respected authors in management, Drucker and Prahalad, had interesting ideas on how to compete. Drucker said that strategy is knowing what to do today so that there will be a tomorrow. Prahalad thought of competition in terms of dynamic becoming, instead of the more mainstream, textbook approach of static analysis.

To learn and adapt become more important than having the most 'cash cows' or the top quality or cheaper product on the market. Building relationships and creating mutual value becomes more impostant than evaluating bargaining power and squeezing existing value from suppliers or clients. The way I see it there are two possible approaches to the problem of being relevant and getting paid in the future - fighting for it with teeth and claws against anyone who might stand in the way of your firm, or building it in partnership. The 'fight' approach assumes that the value will be given and that everyone else has the same mindset, and if we don't fight, we will lose. The 'build' approach sees value as having no upper limit: The more we are able to produce, the more we all will have access to. Obviously, as in any dichotomy, reality lies somehwere in the middle. We have parts of value being hard to increase (land, commodities supply, talent pool, etc) and other parts being highly variable (technology, relationships - political and social capital...). And we have both types of people: some will fight for limited resources, some will want to create new resources together.

Who do you want to be?

Liquid Sovereignty

The idea that people can unite in assembly and decide for themselves how to organize the 'public thing' [res publica] is not new, but it is revolutionary. The first evidence we have of such an arragement comes probably from ancient Greece, where the elite of land owners established a system which featured division of powers and fast turnover of appointed decision makers, two major tenants of republic management good practices.

The experiment lasted long, but was eventually overruned by Roman Empire troops. Ironically, Rome had, in previous centuries, abandoned monarchy, expelled the king, and started something very simillar to the greek system of governance. Sometime before conquering Greece, it had already turned into an Empire (that is, a republic dominated and ruled by the Army's Commander-in-Chiefe, the Imperator).

Not much changed on this realm with the fall of the western empire and the dawn of the medieval age. Sovereignty was a right of the supreme ruler, who might delegate it to local land barons, but who eventually claimed it all back with the help of the new sprawling commercial centers in the late XIV century and onwards.

It was only in the XVII and XVIII centuries, with the tentative revolution in England, the independence of the United States of America and the French revolution that the greek experiment was revived. This time, it had much broader scope: in principle, any free man could vote. That was the case in Greece to, the perk was the definition of free man: they amounted to about a third of the population of ancient greece. Free meant both native and wealthy: those without income must subject to capital holders. Wages were not high nor reliable, so you either had a lot of (social, monetary, land, political) capital or you were kind of a slave.

Then came universal suffrage. All men and women, no matter their social position, level of education, could vote, as long as they were of age and could draw their own name (literacy has pretty loose definitions, at least in Brazil).

Sovereignty, as defined by the Brazilian constitution, comes from the consent of the people. Even if it has to be presumed (Anyone want to question my authority? - said with a menacing stick in hand - Anyone? Good, we agree on this one... Now, about that speech freedom thing...).

This bit of history gets me wondering. What will come next? Some people believe in the dissolution of the State-Nation, with the rise of organizational citizenship and sovereignty. Meaning we will either be part of a powerful transnational organization or be excluded. I can see some moves in that direction. While the most powerful organizations are national governments, with all that legitimacy, law-making and police enforcement, taxes and what not, and the sovereignty over the nations's land, its business as usual. Watch out for any challenges on those monopolies in the near future.

Anyone remeber the governance regime for colonial India under the Eastern India Company?

Aggregation Mechanics

From micro level decision making to macro level analysis there is a huge gap, which seems to go completely ignored by policy makers.

For instance, The Economist is considering the problems with too low interest rates, pretty common these days, as a compensation for tighter fiscal conditions. The issue of risk taking is raised something around these lines: "Cutting interest rates is supposed [...] to persuade businesses and savers to stop clinging to the safety of cash and instead make riskier investments that help economic growth. It is tricky to judge when this necessary check on undue caution turns into an incitement to recklessness."

Well I for one believe it is an issue of aggregation structure we face right here: the whole of business decision makers is not homogeneous and there is a spectrum of risk perception and tolerance, not to mention information availability and distribution of investment opportunities (they are quite different from a chemical industry to a car rental business, to keep it simple).

I think some work is due on the mechanics of aggregation of autonomous actors if policy making is to make more sense.

A science of success?

The basic premisse behind researching and teaching business management is: scientific method can uncover the right way to do business. This is not too far away from the unspoken premisse behind the grip that economists have over government policies: they claim that their science can tell how to manage society's scarce resources.

How right is that? As far as I know, and I've been studying business management for the last 5 years, there is no empirical evidence backing any of these claims.

Management fads come and go, new gurus rise and than fall, but no permanent advance is made. Granted, business management has improved so much in the last couple of decades. Management as a science is a bit more than a hundred years old, and one can surely see how much the office environment has evolved in this time.

But whose merit is this? Are the management researchers and professors trully creating value? Maybe, the competition alone would drive evolution, and 'management science' is holding it back. Maybe it can and has served as a catalyst? This should be an interesting debate. I will be looking into getting some folks together at my College to get into this, and if it happens, will be reporting results here.

There is so much to argue over, including the sociological context of business, the conflicts between capital and work, between stock holders and managers and external stakeholders. But I won't get into this. Just wanted to rant about how useless business management education can be. On the other hand, I'm neck deep into it, so it would do me well to try and see things in another way: How can my business management education serve me?

What is learning?

'Science' started as an alternative to 'Scholarism'. While the traditional ways in education preached by the ancient books of 'proved wisdom' and focused on making students absorb what was already written, the new scientific way, as proposed by Descartes, relied on experiments and hypothesis formulation and testing. It seems obvious now which one would advance our knowledge and technology the most.

Yet I find hard to understand why the Scholar ethics persists. Society still believes 'teaching' is making children and young adults capable of repeating the mainstream literature on any given area of knowledge and researcg.

Love of writting

I just love writting. This semester I've enrolled in a AV workshop class and guess what? My favorite topic is Screenplay. Bad writting makes me angry, specially if I have to read it. I can't stand a writter who thinks obscurity passes for ingenuity or that he can hide the lack of content, or the lack of grasp on the content, by flooding the text with incomprehensible jargon. It just pisses me off.

As a fan of quality journalism, I just subscribed to The Economist online. And I found a little gem in their site: their style guide. Sorry, dunno if it's available for non subscribers. I guess they should be paying me. Or at least letting me subscribe for free. All the marketing I do for them...

Well, the first text I read about screenplays in my class was rather direct: If you want to write well, you have got to practice. And practicing I am! I guess this is a exercise, right? Writting stuff in my blog? I don't know who reads this. No one probably...

This blog started as an experiment. The theme was never clearly stated and that is good. It was about my metaphysical rantings. But it has a purpose now! It's going to be my training ground for better writting. I wish I had critics here to provide some sort of feedback. Better get started on it. Step one: constant updating. How does thrice a week sounds? Will I be able to assemble a audience based on three-times-a-week-nonsense? Sounds like a challenge to me!

Let's get some readers!

Simplexity and Complicity

We generaly despise prejudice as a vicious attitude, but without prejudice, we wouldn't be able to function in this world. The fact is that our brain takes a number of shortcuts when interpreting the overload of sensorial data arriving for processing every milisecond. We don't take the time to analyse all the nuances of shape and color for every image that reaches our retinas, we just cut and paste everything in a fraction of seconds, throwing roughly-cut shapes into big categories such as, dunno, 'furniture', 'animals', 'plants', 'tools', etc. This is a pretty sweet evolutionary deal: you don't want to reflect on the existence of a tiger when you see one, you wanna have a knee-jerk reaction of getting the hell away from anything that even resembles something that could kill you in no time.

This has, however, made us incredibly dumb when it comes to civilization. When we left behind most of the daily struggle for survival, as a species, we came to face ever more complex and nuanced problems. There is no simple answer on the pressing issues demanding our decisions... We have achieved plenty, but there is much more to overcome. The sheer fact that over a billion people are starving right now, as the food that could feed them is wasted away in richer countries is evidence of our collective dumbness when it comes to societal governance. There is no shortage of examples, but I'm not taking that road right now.

My point, with this post, is: The problems we face are complex and its solutions will be no less intrincate and difficult to dicern and implement. We shouldn't, as citizens, let savvy politicians fool us with oversimplifying, demagogic arguments. What we should do is work together to evercome our differences, and learn to hold on to our principles and values. For freedom is to be able to decide for ourselves what is better based on what we believe is true. Not trying to fool ourselves or any other person, not trying to impose our views, but accepting that everyone sees life differently and that no one has privileges. Anyway, I do hold that those with wider scopes for understanding and action have a greater responsibility to apply it for the greater good and not just to serve themselves a larger piece of the cake.