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18 Jan 09

A User's Guide to 21st Century Economics - Umair Haque - HarvardBusiness.org

Umair Haque's Jan.7/09 piece, self-explanatory title. Lots of great ideas - and something about the reference to "symmetrical competition" made me think of Greg Lynn's rejection of symmetry in architecture (to maximize resources) and also of how waste is a major 21st c. trope.
QUOTE
Where do new rules come from? Here are five questions every decision maker should kick off 2009 by asking - and five results summarizing some of the new rules we've learned over the last year at the Lab.
UNQUOTE

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umair_haque harvard_business analysis economics symmetry

20th century business isn't fit for 21st century economics. Yesterday's businesses were built for a world of overconsumption, artificially cheap production, symmetrical competition, and macroeconomic stability. That was yesterday. Today, the herd of industrial-era dinosaurs is going to be mercilessly culled - unless they can evolve to fit a radically altered economic environment.
Where do new rules come from? Here are five questions every decision maker should kick off 2009 by asking - and five results summarizing some of the new rules we've learned over the last year at the Lab.
9 more annotations...
- What is the role of marketing in a world where consumption must slow?
  
  In the 20th century, marketing was the pusher of a consumption addiction
- companies who create perceived value are significantly less profitable and more vulnerable than companies who are rethinking marketing to create real value
- What is the role of distribution in a world where consumption, savings, and investment will accelerate in volatility?
  
  In the 20th century, advantage was attained by seizing or building distribution channels.
- value chains built on inert channels are significantly less profitable than value chains built on circuits - two-way channels, where context flows in one direction, and goods in the other.
- What is the role of production in a world where consumption becomes savings?
  
  In the 20th century, economies of mass scale led giant, evil corporations to a cost advantage. The flipside was a world of homogeneous, mass-made widgets overflowing from bleak exurban shelves.
- companies who can rescale production at the micro-level are disproportionately more profitable and powerful.
- What is the role of strategy in a world where the game is no longer about winning more consumption than rivals?
  
  In the 20th century, strategic thinking helped players "win" wars fought against rivals - the most strategic player "won" the greatest relative share of consumption (market share, mind share, etc).
- What is the role of innovation in a world where greater investment will flow to reinventing moribund industries?
  
  In the 20th century, innovation was about processes, products, and services:
- higher-order innovation - business model, strategic, and management innovation - is associated with significantly more powerful and durable value creation.

09 Dec 08

How To Be a 21st Century Capitalist - Umair Haque

Haque makes a case similar to "Natural Capitalism"'s - if you capitalize what's currently expended (as a negative externality, say), you attach "real" value to it.

Some interesting points/ questions, too:
QUOTE:
Capital deepening is the foundation of next-generation value creation. Why is capital deepening so important? The reason that capitalism can destroy the world is that most of the world doesn't exist in an economic sense. And so when we capitalize rainforests, endangered species, community, the foregone opportunities of the poor, our own well-being - then they will finally have value: they can finally be priced, and so the fatcats of the world won't be free to destroy them with impunity.
(...)
Today's so-called capitalists are anything but: mostly, they're charlatans, impostors, and poseurs. But today's most radical innovators are revolutionary, ironically enough, because they are learning to be genuine capitalists once again - capitalists in the 21st century sense of the word. They are discovering how to create value by growing new resources composed of social, natural, human, and cultural capital. By doing so, they are pumping new blood into capitalism's failing heart.
UNQUOTE

The bit on capital being a consensus is also thought-provoking.

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umair_haque capitalism economics

So here's what 21st century capitalism looks like.
20th century capitalism, in other words, marginally valued pure financial capital too highly, while marginally valuing human, natural, social, and cultural capital at zero - or, at the limit, negatively.
8 more annotations...
- Reigniting global growth depends on deepening the global capital base.
- Capital deepening is the foundation of next-generation value creation.
- The reason that capitalism can destroy the world is that most of the world doesn't exist in an economic sense. And so when we capitalize rainforests, endangered species, community, the foregone opportunities of the poor, our own well-being - then they will finally have value: they can finally be priced, and so the fatcats of the world won't be free to destroy them with impunity.
- Next-generation businesses are built on next-generation assets.
- Next-generation businesses are critical because next-generation assets are the key to rebalancing capitalism's toxic value equation. Bailing out the same old assets, building roads to nowhere, or subsidizing overconsumption - none of those are necessary or sufficient to reignite global growth. Ultimately, only next-generation assets can redefine how productive capitalism can be in the 21st century.
- Capitalize something. Here's one of the commandments of next-generation business: capitalize something. That's how a new generation of entrepreneurs will kickstart next-gen businesses and make their fortunes.
  
  Today's so-called capitalists are anything but: mostly, they're charlatans, impostors, and poseurs. But today's most radical innovators are revolutionary, ironically enough, because they are learning to be genuine capitalists once again - capitalists in the 21st century sense of the word. They are discovering how to create value by growing new resources composed of social, natural, human, and cultural capital. By doing so, they are pumping new blood into capitalism's failing heart.
- Capital is a consensus.
- Want to capitalize something? Start a movement and build a consensus. Capital is formed when people are willing to agree that something has value.

10 Nov 08

Obama's Seven Lessons for Radical Innovators - Umair Haque

As usual, a brilliant essay by Umair Haque on Obama's win and what business can learn from it in terms of innovation.
QUOTE
Barack Obama is one of the most radical management innovators in the world today. Obama's team built something truly world-changing: a new kind of political organization for the 21st century. It differs from yesterday's political organizations as much as Google and Threadless differ from yesterday's corporations: all are a tiny handful of truly new, 21st century institutions in the world today.

Obama presidential bid succeeded, in other words, as our research at the Lab has discussed for the past several years, through the power of new DNA: new rules for new kinds of institutions.
UNQUOTE

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obama umair umair_haque management innovation business_model

1. Have a self-organization design. What was really different about Obama's organization? We're used to thinking about organizations in 20th century terms: do we design them to be tall, or flat?

But tall and flat are concepts built for an industrial era. They force us to think - spatially and literally - in two dimensions: tall organizations command unresponsively, and flat organizations respond uncontrollably.

Obama's organization blew past these orthodoxies: it was able to combine the virtues of both tall and flat organizations. How? By tapping the game-changing power of self-organization. Obama's organization was less tall or flat than spherical - a tightly controlled core, surrounded by self-organizing cells of volunteers, donors, contributors, and other participants at the fuzzy edges.
2. Seek elasticity of resilience.
10 more annotations...
- What happened when McCain attacked Obama with negative ads in September? Such attacks would have depleted the coffers of a 20th century organization, who would have been forced to retaliate quickly and decisively in kind. Yet, Obama's organization responded furiously in exactly the opposite way: with record-breaking fundraising. That's resilience: reflexively bouncing back to an existential threat by growing, augmenting, or strengthening resources.
- 3. Minimize strategy.
- 4. Maximize purpose. Change the game? That's 20th century thinking at its finest - and narrowest. The 21st century is about changing the world.
- Bigness of purpose is what separates 20th century and 21st century organizations: yesterday, we built huge corporations to do tiny, incremental things - tomorrow, we must build small organizations that can do tremendously massive things.
- And to do that, you must strive to change the world radically for the better - and always believe that yes, you can. You must maximize, stretch, and utterly explode your sense of purpose.
- 5. Broaden unity.
- Obama intuitively understands a larger truth of next-generation economics. Unified markets are what a world driven to collapse by hyperconsumption is desperately going to need. We're going to need not a hundred different kinds of razors - and their spiralling costs of complexity and waste - but a single razor that everybody, from the slums of Rio to the lofts of Tribeca, is overjoyed to use.
- 6. Thicken power.
- 7. Remember that there is nothing more asymmetrical than an ideal.
- That seventh lesson is the starting point for tomorrow's radical innovators - because it's the thread that knits the others together. And it's where you should start if you want to use these seven rules to start building 21st century institutions - whether businesses, non-profits, social enterprises, or political campaigns.

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