Bringing Platt Perspective into focus and admitting my ambition for it – some thoughts at 700 postings
The word weltanschauung comes from the German words welt (world) and anschauung (view) and is defined in either German, or in English as a borrowed word, as meaning “a comprehensive conception or understanding of the world.” A weltanschauung is generally posited as explaining, or encompassing some specific standpoint. Basically, a weltanschauung is a world view that seeks to offer an overarching explanatory framework and perspective for some large area of understanding or experience.
This is my 700th posting to Platt Perspective, and I was not planning until recently to make special note of this particular numerical milestone. But a recent conversation with a friend about this blog and what I am doing with it has prompted me to reconsider. And I want to both briefly outline something of this conversation here, and discuss a little of my thinking coming out of it, as to where I see this blog going.
My friend and colleague is a teacher, and a writer of text books, and his approach was very simple. I should in effect carve up Platt Perspective, mining it for content and topic areas for writing some number of books. I should use the postings as first draft entries, and document them with references and correct them as to writing style according to a standard, academic format to produce a (loosely connected) set of text books, from which I would derive royalties as an author. And I would winnow out and set aside, if not discard anything that did not fit into my specific book-organization plans.
That approach is very nice, and I am sure it would be worthwhile doing, but it overlooks a few details that are important to me. The first is that I see everything I have been including in this blog as connecting together to form a single, perhaps wide ranging narrative. And the second, I wish to write about here. And in a fundamental sense I gave away that point with my opening paragraph, above.
I have the audaciously ambitious goal of seeking to outline at least a rough, first draft version of a weltanschauung for the 21st century for businesses and marketplaces, and for the people who work in them and collectively comprise them. But my ambitions do not simply stop there. I see the emergence of our all the time and everywhere connected ubiquitous computing and communications capabilities as marking a fundamental turning point in human history, and I seek to map out at least the first tentative steps in that ongoing process.
touching on the emerging context that this will play out in, and my
seeking to offer tools for helping individuals as they experience all of this change in the global marketplace.
Platt Perspective is a rough draft at best, quickly written and in a real sense organized as it grows – organically. But it is an attempt at drafting a widely comprehensive snapshot, and of where we are now and where we are going. Information and its co-creation, storage, distribution and use, and its conversions from data to knowledge throughout this, are all central to the changes I write of. So to cite one more crucial topic area I have sought to address, I cite my Macroeconomics and Business directory. And yes, some of my directories at this point are still virtually empty stubs and placeholders that I expect to expand upon.
That is, among other reasons why I have written of expanding this blog at least to the 1001 postings count in overall scale, in reaching what I refer to as the Scheherazade number. That number of individual stories offered her room to in effect weave a comprehensive picture with her Arabian Tales and my thought is that the same would probably be enough for me to at least begin bringing my intended weltanschauung into something of a focus too.
So for now I will simply keep thinking, writing and posting and put off any selective redactions and more polished drafts for possible future endeavors – whether that would be for print or entirely for online. If I really am writing this for the 21st century that would probably mean online by default. Meanwhile, I have a great many more specific postings and series in mind, and tomorrow I will be posting number 701.
The preceding 12 postings in this series have attempted to examine the same fundamental set of changes that are developing in the global marketplace and for all businesses, each variously focusing on this through the lens of a different and distinct perspective. These perspectives were selected for inclusion because they individually and collectively seem to coordinate with major areas of focus for students pursuing a business degree, and as such collectively offer a somewhat comprehensive vision. I know that I have left some important points of focus and perspectives out of this, and do not claim comprehensive completeness. I picked a dozen perspectives, at least in part as it is a convenient round number and because I see it as being large enough while hopefully reducing repetition to an acceptable minimum.
One of the ongoing series I have most actively posted to in this blog is my Guide to Effective Job Search and Career Development. I write in this context that while there are many reasons current unemployment rates are so high and why they have remained so high as our current recession tapers off, one of them is an already emerging set of changes in the overall marketplace. What would be considered short term problems of limited liquidity and greater risk may be an immediate driving force here, and global outsourcing and automation may be important but they all have to be viewed, longer term as connecting into a larger context of more fundamental change. This is not just theoretical speculation, but change that directly and even forcefully impacts on individual employees and their families, individual businesses, and their customers and suppliers, and individual marketplaces and communities.
I am going to shift back to focusing on my other ongoing posting series for now but I will come back to this.
In a fundamental sense, the entire series I have been assembling here on reexamining the fundamentals has been about change, and a complex of changes that are already beginning to make themselves felt, and for employees and those in job search and for businesses, for suppliers and customers and for those who focus on legal systems and for all frameworks that businesses operate in and across entire marketplaces. But this posting is going to focus on a very specific type of change – change mandated not by choice or according to pre-planned and more convenient schedules but change that is thrust upon a business. Stating that, I have to admit the change I have been writing about in this series and this second, more business-specific conception of change have a lot in common with the primary difference being one of scale.
People generally think of change management as taking place within an organization as it seeks to step back from approaching disaster and out of the already problematical. The postings that I have been writing in this series have addressed the issues of rapid evolutionary and even revolutionary change in entire marketplaces and economies. And that is where the individual business enters in as a meaningful level of consideration. Businesses that cannot change and keep up with the changes in their environment, and both for potential problems and for potential opportunities face the need for that more traditional sort of change management if they are to remain competitive and survive, let alone thrive.
As I write this I find myself remembering a turn of the century passage I read many years ago (end of 19th and beginning of 20th in this case) about horses. The writer lived in New York City and as such had to traverse its streets, still heavily trafficked by horse drawn wagons, and he did a study examining city records as to the numbers of horses and wagons in use and how those numbers had been steadily increasing. And he concluded that at the rate things were developing, by 1950 (I think I have the year right), every street in the entire city would be many feet deep in manure, curb to curb and in fact building front to building front. Of course the horse drawn wagon was long gone from those streets well before that year and only tourist-oriented horse drawn carriages that mostly operate within Central Park and a few other select areas still remain. I relate this as a cautionary note to any predictive discussion, as anyone who seeks to find a valid linear projection forward in time, or even an anticipatable nonlinear projection can find themselves remembering manure.
But the topic here is change management, and at the risk of sounding quaint within a fairly short span of time, I will address that here, and how some of the changes in business context that are coming will change what constitutes valid change management and even just within the single organization.
Given the unexpected directions that technology can take with new and breakthrough products and services, there is one general point I can suggest with at least some confidence as a predictor for future success.
• The business that has a type and level of flexibility to quickly and cost-effectively move into new value chain opportunities and that can rapidly develop new sources of value through them will thrive.
Similarly, the company that strategically plans and executes as a stand-alone and one-against-all venture will find itself being outcompeted as the value chains it competes with assemble core strengths that no one business could match and still keep their efforts and expenditures in focus.
By this criteria, I would predict that long term a company like Apple, recently listed as having higher marketplace valuation than Microsoft will have difficulty retaining that position in the marketplace. They have traditionally taken an approach of having to control everything, and this has definitely not always been to their benefit. So their early desktop computers were much more user-friendly, with easy to learn and even intuitive user interfaces, but Microsoft with its DOS command line and ugly screens still prevailed, and came to dominate the software market. In this I point out by way of analogy that where Henry Ford did not invent the car, he did invent the modern assembly line for building them and in ways that made them affordable to the general public. Bill Gates and his partners, similarly, did not invent the operating system or software, but they realized that computer hardware could do nothing without them, so focusing on that one area could lead to greater efficiency in dominating and coming to define the modern desktop computer. Microsoft did not try to be all things to all people. Apple did, and I do not see that changing. And in the future they will not just be competing against agile and creative single companies, but rather with networks of companies organized to compete with and take market share from them.
By the same criteria, I would predict a company like Li & Fung to thrive as they are organized with a strategic focus on developing collaborative shared value and with rapid refocusing of resources to meet rapidly developing and evolving opportunities. They are literally redefining the modern supply chain in doing this.
As a final thought this posting has focused on both a developing context where change management might become needed, and a direction that effective change management would have to lead a business.
The next and last posting in this series, at least for now is going to attempt to tie together a range of points made and suggested through the immediately preceding 12 and this.
I have written several times in this blog about negotiating and about contexts where negotiating skills and a negotiator’s approach offer significant value. See, for example:
• Job Search 15 – Negotiating the Compensation Package and When To Do This for a job search example from the job candidate’s perspective, and
• Negotiating What You Can Offer as a Hiring Manager in Building and Maintaining Great Teams for a posting on this from the hiring manager’s side of the table.
Just considering these two postings, much of what I have written so far in this blog has had at least one basic assumption in common, though. When a job candidate and hiring manager reach sufficient agreement that they find themselves meeting face to face to discuss a possible job opportunity, they have already established that they have a lot in common. In this case, they probably both share experience and interest in a single industry and type of job. They probably both share if not direct hands-on experience in a same skills set, at least a shared interest in a same functional area. There are a lot of opportunities for unearthing differences, but the focus and from both sides of the interviewing table is to establish a greater level of similarity than of difference and to resolve any differences that may serve as impediments to a decision to hire.
When business is conducted globally, this same basic desire to find common ground and to reach successful deals may still apply and it usually does, but potential differences can become a lot more varied and unexpected, and complex too, and from cultural and language differences if nothing else.
Sticking to the job search example, as started with above, a job candidate from the Northeastern United States and from New York City is going to have different cultural expectations and will hold different automatic and (generally) unexamined cultural assumptions as to normative behavior and response, than would a hiring manager from Sakaiminato, Japan and they in turn would have different expectations and tend to take different approaches than this New Yorker would. It is not that either is better or worse, but rather that they can be different. A New York City oriented senior manager may take what appears to be a more hands-on approach in directly dealing with the candidate while their Japanese counterpart may spend more time observing how this candidate interacts with others on their team, and may as such hold a more ambiguous position in the hiring process as this candidate sees things.
Perhaps the single greatest potential for a need for change in the negotiating process, at least that I currently see is a need for greater awareness of the possibilities for disconnects and misunderstanding, and in both goals and priorities, and in the process of discussion and in both directions. The more global your reach in your business dealings, the more opportunity you face for developing your business and for creating new and emerging business opportunities, and for all you deal with. At the same time, the more care you need to take, and even before you reach a point where legal documentation and formalisms enter the picture.
And in this case, the Japanese hiring manager may have gone to school at the University of Chicago and be fully familiar with and comfortable with American negotiations and your networking contact who helped arrange this meeting for you may be a lot less familiar with the possible differences and disconnects and be unable to give your effective tips and pointers.
As a final thought to add here, negotiations and negotiating skills and approaches connect into all of the postings I have been adding to this series – they all deal with negotiations and the negotiating context. So this really is one of the core topics for this developing series.
Reexamining business school fundamentals – business law in a rapidly changing collaborative and competitive context
Two quotations come to mind for me as I start this posting: “the law is an ass”(Charles Dickens, as spoken by Mr. Bumble in Oliver Twist) and “the first thing we do, lets kill all the lawyers” (William Shakespeare, Henry VI Part 2, Act 4. Scene II as spoken by Dick.) The law is, by its very nature reactive so in any rapidly changing context, it is always well behind the curve – except when new law is written proactively in an attempt to get ahead of that curve, or current law is interpreted proactively by (activist) judges and then law always seems to be proactively marching off in the wrong direction. Consider the Digital Millennium Copyright Act and some of its unanticipated consequences in that context. That said, while reactive law may have its problems, it is far better than proactive law and either would be better than no law at all, where all efforts to create order and consistency on a societal basis were ad hoc and where there were no standards or benchmarks for determining the boundaries of acceptable behavior.
Two areas of law that for rate of societal change are perhaps among the furthest back behind the curve are the law of contracts and agreements, and intellectual property law with copyrights and patents – together forming much of business law. And legal standards and rules of law functionally define these business processes, and the reactive quality of law and difficulty in keeping law addressing current needs and opportunities and current issues requiring adjudication become very important.
I find myself thinking of two core issues as I consider this. One of them is the need to be able to monetize information – a topic I have touched upon repeatedly throughout this blog and most recently in this series (see Macroeconomics and Business.) The other issue, very closely connected to that, is in the collision between current case law and current business context where proprietary information and information processing (algorithmically set as software) and pressures to maintain a proprietary approach come into direct competition with open source and public domain.
My goal in this posting is to posit a conjecture, which I identify as such as I have not (yet) done anything like the necessary case study analysis to refute or validate it.
Platt’s Innovation Driver Conjecture:
• In a closed innovation society where businesses in effect exist as islands of expertise and performance in the market spaces they carve out to compete in, proprietary protection of intellectual property equates directly with strength in securing and maintaining market position. This becomes essential for offering a unique value proposition needed for long term success.
• In an open innovation society where businesses are surrounded by valid and important sources of business intelligence and other information of monetizable value, and where organizations need to connect strongly into supply chains and value chains to succeed and thrive, free exchange of business intelligence and particularly of enabling information becomes crucial to success. Here, the value chain that can more effectively exchange business intelligence among its members, crucial to the flow of mutually created value is going to out-compete its less nimble and more barrier ridden competitors. And overt barriers to information flow where crucial information is simply denied to necessary business partner organizations can in effect kill the entire value chain and stop all participants in their tracks.
I will add two more points here to further clarify the issues involved. The first is that value chains can form, mature, evolve and then fade in significance to their partner members and disappear, and they do and will. I cite as a reference in this context:
• Fung, V.K., Fung, W.K. and Wind, Y. (2008) Competing in a Flat World: building enterprises for a borderless world. Wharton School Publishing.
as presenting a compelling case for the modern, flexible supply chain. Value chain partners, as a defining feature will come and go and businesses not so connected today may be tomorrow and even where they are competitors now, and by virtue of participating in competing value chains if nothing else. So a business ecosystem comprised of individual companies and organizations, and collections of them organized into value and supply chains cannot simply be viewed as proprietary with the walls still in place – just moved out a bit to include some immutable set of specific vetted partner businesses.
Business law, and in both its contracts and agreements, and in intellectual property law is going to have to catch up to a new context and a new set of needs, where certain information is shared, but other information is held confidential – and personal and personally identifiable information for specific customers and potential customers definitely falls into that category. And new approaches for storing and sharing this information will be needed. And even now this information flows through emerging value chains, and as an example consider any online business that uses a third party service provider such as PayPal to manage its online payment systems.
The second point I would add is that businesses and groups of businesses can push to include business intelligence and knowledge developed from it into the public domain as a blocking action, to keep competitors and potential competitors from carving out proprietary domains that can be used as competitive barriers. What realistically can even in principle be declared proprietary and locked in through patent or by other means is rapidly changing at the very least, and for a lot of reasons, not just limited to the technology state of the art.
The law is an ass. I have to add, of course that the ass is a valued and capable draft animal even if it can be stubborn and even if it can demand that it go in the wrong direction at times, or not at all. Think of this posting as an acknowledgment with a specific contextual focus on the ongoing need for that next ass 2.0, with a matching nod to the fact that this will always be needed.
Reexamining business school fundamentals – human resources and managing personnel in an interconnected business context
I have been writing recent postings on the fundamentals from a very specific perspective of how the context that businesses exist and function in is changing, and in the direction of closer connection and collaboration as a route to gaining and keeping market share. I have already posted 22 times up to now in my ongoing series HR and Personnel so I have already spelled out some of the types of detail that would go into this series for this topic, and I cite a three part series on Making Human Resources Relevant (see postings 4 through 6) in particular here.
It is one of the core responsibilities that HR has, to help the business it supports find, secure and retain the people it needs on-staff to fulfill its mission and priorities and to meet its ongoing strategically assessed goals. This means technical and skills fit and matching the requirements to that level that would appear in a well written job description. It also and sometimes more importantly means corporate culture fit and searching for the people who current employees and the business can work with productively, and without conflict or discord.
Requirements in mindset and approach can be harder to assess, and certainly where contact and opportunity to assess is as limited as an interview, which can be stressful for reasons not related to the job requirements or the applicant’s ability to meet them. But this is important.
To cite a perhaps trivial example, a CIO or even a CEO who would be perfect for managing the stresses and uncertainties, and the lack of structure of an early stage startup may very well not the best person for later when the business is settling down into a more set pattern of structure and organization and with an emerging corporate culture. The C level executive who would thrive then and even as a best fit for that position at that stage may very well lack the personality and attitude to get the business initially launched and even if they do have the hands-on skills they would be expected to provide for that.
When the value that a business can develop and the opportunity it can create for its own success depend less on its functioning as if in isolation, and more as a member of a business ecosystem and business community, different operational processes and systems become necessary, different corporate cultures offer greater value in organizing the business towards achieving commonly held goals, and different personalities become best fits, and for a range of positions.
An effective HR department has to be aware of this need for at the very least evolutionary change in hiring and candidate selecting processes, and in managing staff retention for the people that their company most needs to keep and who their competition would most want to take away.
I have written several times now of value chains and business ecosystems. Businesses need the right people and they need to know what that means, in terms of being able to identify these people, and that is becoming a changing target for any HR department to strive for.
I am sure to come back to this in future postings.
There is an open area in physics that I find myself thinking about when the general topic of economics comes up. On the one hand there is the theory of quantum mechanics, with its statistical models of matter and energy – of particles and waves of both sorts and how they interact. On the other there is the broad brush stroke theory of gravity. They operate on very different scales that are difficult to find a bridge between, and they are mathematically defined in terms of different metrics, and with systems of equations that do not seem to readily connect, at least without introducing new levels of complexity in the form of overarching theory. In this, there are several competing overarching theories that have been actively under development. String theory comes immediately to mind as one of this set that has become part of the popular vocabulary. The problem is that so far no empirically determinative phenomenon has been found that would unequivocally help us to determine which of these theories if any is correct as a predictive, descriptive model of reality, and even just within the variations on string theory if that in fact were to prove to be correct.
Modern economic theory is multiple-option and at both micro and macro efforts but more than that, the clusters of alternative approaches and theories that would be proposed for predictively, descriptively modeling economic systems at micro and macro levels do not connect together as a single overarching system – any more than quantum physics and gravitational theory do. Similarly, any validated overarching theory that would connect these two realms would have to be grounded in a specific empirically significant context that would provide reality check evidence in support and refutation of alternative theory proposed.
Mesoeconomics is a neologism that dates back to the 1980’s as a proposed bridge between the otherwise incommensurables of microeconomics and macroeconomics. Like a proposed bridging theory in physics, validation of the mesoeconomic concept would require a very specific empirically observable economic problem that could not be addressed at either the macro or micro scales alone, but would rather require tools and approaches from both – plus bridging framework concepts and tools.
When business and the economy takes place at the level of the individual company or organization with all else viewable as simply being its outside context and monolithic, or alternatively at the macro scale where any individual business or organization simply merges into a more anonymous aggregate context, and when that works as an effective conceptual framework, gap and all then any mesoeconomic theory will remain just a marginalized curiosity. When business and economic context and ongoing business and financial reality make that gap apparent and a problem for not being addressed, mesoeconomics becomes both viable and necessary as an actively developed approach. And I come to the concept of the value chain and to the increasing complexity of our supply chain systems and the compulsion to bridge this gap comes from increasing due diligence and risk remediation challenges that any individual business member of one of these networks faces. And this pressure to develop a valid mesoeconomic theory comes from a need to fill gaps that our dichotomous and gap-separated current approach cannot address.
There is a metaphor of an 800 pound gorilla in the room that everyone ignores because no one wants to have to deal with it. Part of the reason why we have so many alternative economic theories, and certainly at the macro level is that there are so many 800 pound gorillas in any room that economists would look into.
I pick up on one of them that has become something of an organizing issue for a number of my postings here in this blog, and not just in my series on Macroeconomics and Business. No one seems to know how to unequivocally set value for business intelligence, trade secrets or proprietary information, when these resources can in fact contain the vast majority of actual value that a business or organization holds – and not its wastebaskets and desk sets and other physical assets that can be monetized for resale or replacement values and costs.
Business intelligence is difficult if not impossible to set value on because so much of its value rests in whether and how other organizations could use it, and with use radiating out through organizational networks through value chains and supply chains – and directly into that middle ground that microeconomics and macroeconomics alone fail to cover.
And I further propose that it is precisely the immediate here and now requirements of our emerging ubiquitous computing and communications context, and the business opportunities and market spaces that creates, that make this important as a practical matter. We do need to be able to determine the value of information as a monetizable class of entities. Otherwise we find ourselves setting valuation on our businesses based on what may be more the window dressing than the core sources of value they contain and represent. I see this as both an issue worth reexamining, in light of earlier attempts to develop a true mesoeconomics, and an open issue that will have to be addressed in this 21st century and soon in that.
The next posting in this series is going to turn to issues of Personnel and Human Resources in a globally interconnected business context.
This is a posting about Generally Accepted Accounting Principles (GAAP) in its varying nationally standardized forms, and International Accounting Standards (IAS), also called the International Financial Reporting Standards (IFRS) to use its more current name. I find myself thinking of one of Akira Kurosawa’s movies, Rashomon as I write this and how the same basic events are turned into four differing narratives as to what happened and how, but with each supposedly accurately describing the same empirical reality. Microeconomics as a hands-on practice and this movie with is multiple visions of reality have a lot in common.
The United States has its version of GAAP and so do many other countries (e.g. Canada) and every country that seeks to set a standard for accounting and financial reporting seems to have a GAAP standard that it at least officially adheres to.
GAAP as formally defined and standardized in the United States is developed and maintained by the Financial Accounting Standards Board (FASB), Canada formally manages its GAAP through its Accounting Standards Board (AcSB) and the United Kingdom also has a body set up to manage its GAAP standards called the Accounting Standards Board though its acronym is ASB. Many countries codify their GAAP standards into law and usually into their common law.
There is an international body that seeks to resolve differences in this: the International Accounting Standards Board (IASB). This organization seeks to provide an overall framework of standards and interpretation of GAAP for international commerce, which it organizes and presents as their International Financial Reporting Standards (IFRS). This is an independent, privately funded organization based in London, UK and it only offers nonbinding suggestions and recommendations. Both historically, and currently, the IASB is an influential voice in the international accounting and microeconomics community, but that is all it is. And presumption of standards convergence notwithstanding, there is no active, comprehensive move underway for the world in general to adapt a North American or any other single unifying approach to GAAP as a consistently followed standard (see for example http://accounting.smartpros.com/x57688.xml.)
What are the implications and consequences of this as our global economy becomes more and more enmeshed and interdependent with more and more significantly complex supply chains and value chains that can and do cross virtually any national boundary?
A professional economist could, I am sure write virtually endlessly on this but I am not an economist and I am only writing a blog posting here so I want to focus on one issue, that I would argue informs all of them. Disparity and disconnects in standards and practices creates opportunity for uncertainty, of a nature that can and will raise due diligence concerns and that should call for risk remediation efforts and on the part of any business that sees its value and its stream of value received as dependent on the global marketplace.
A simple and perhaps fascicle rejoinder to that would be that our shared and increasing reliance on online and ecommerce forces a measure of international consistency and reliability, but from the user interface and the user experience side of ecommerce, we as customers, personal or business, deal primarily with specific and individual businesses when we do business online, that we directly make our product and service purchases from.
Back-end standardization through adaptation of financial and accounting XML and XLST standards may help to coordinate terms used, but a set of GAAP standards is more than just a vocabulary. I would argue that pressure to coordinate and reconcile national and regional GAAP differences will not necessarily come primarily from need to standardize financial transactions per se, at least at this level. I see the real pressure to develop systems uniformity and global standardization as coming from a growing need to find ways to consistently, reliably monetize information and across any and all national and regional boundaries, and whether information on individual consumers, anonymous demographic information, or any other type of business intelligence. That is, after all, the developing coin for organizing value chains between organizations and our current standards do tend to leave business intelligence, no matter how crucial to the organization, out of consideration when organizations are evaluated for their monetizable valuation.
I have written a bit on this in my occasional series, Macroeconomics and Business and I am sure to come back to this again and not just tomorrow when I turn to a more explicitly macroeconomic context in this series on reexamining the fundamentals to pose a question.
Reexamining business school fundamentals – business ethics and communications in a multicultural context
Ethical behavior resides at the core of what it means to be an organized society, and ethical norms and restrictions, like moral norms and restrictions are taught us from early childhood in our becoming members of our communities and of our society as a whole. But not everyone recognizes let alone adheres to the same standards and even when we do, different people can make different ethics-based decisions – the information we have available for making decisions is not always complete or consistent, among other things. So ethical standards and by that I mean ethically motivated restrictions have been established into law and in a variety of contexts where trust is imperative.
One area where this comes up and primarily through breach of trust and of law is in the ethical guidelines that by law govern the behaviors and decisions of government employees and elected governmental officials. The other area where ethical guidelines and principles are more frequently legislated into law is in business and in conduct in the marketplace.
So far this discussion could be as local in context and application as behavior between businesses within a small and perhaps even insular local community. But one implication and effect of our increasing globalization of reach is that any real world business can and probably does deal significantly, even if not always directly with businesses and customers everywhere. If we do not sell directly to a global community our customers who we enable with our products and services do and so do our suppliers. And the more far-reaching and interconnected our dealings with customers and with other businesses in our supply and value chains, the more likely we are to encounter opportunities for confusion and disagreement on ethical standards, and certainly where that means legally defined and mandated standards.
As a perhaps extreme, but nevertheless common example, behavior that might simply be viewed as good, if vigorous business practice in one country and culture may be seen and even legally defined to be bribery or the taking or offering of kickbacks among other things, elsewhere.
This creates tremendous opportunity for us to fall into traps and avoidable problems, and these are the ones that can just keep on growing as it is not just our current behavior that counts here. It is also our ongoing business practice and decision making history that can come back to confront us – and both in the countries and cultures where this behavior may be acceptable and even expected, and in others (e.g. our own and where we live and our business in headquartered) where it is not.
I find myself thinking back to experiences I have had and seen working in third world countries, but there is room for disparity of approach and in definition of the accepted and acceptable even just within the most developed world where they have had the most opportunity through volume of business and through treaty to resolve the differences.
This may sound to be an easy to state but unrealistic approach, but my approach and based on the experiences of my career and those of others I have worked with is at least conceptually very simple.
• Follow the dictates of your moral and ethical sense and your conscience.
• Follow the norms and the legally mandated restrictions and opportunities of your own country and culture.
• Follow the norms and the legally mandated restrictions and opportunities of the countries you work with and within.
• If a given action or decision would be disallowed by any one or more of these standards consider it ethically questionable and act accordingly.
Does this mean you will loose business opportunities? Yes, of course it does, but this also means you will not be setting yourself up for having business dealings from your past hanging over your head and waiting to be dropped into your present, and probably under the most damaging possible circumstances. In this, short term business successes with long term and essentially unending negative potential consequences are rarely if ever really worth it.
Now the problem becomes one of instilling this approach throughout your organization and as both policy and as a matter of your underlying business culture, so you can be less likely to get blind-sided by some short sighted colleague in over their head.
The next posting in this series will look into an issue from microeconomics as this field connects into doing business in a global setting.
Reexamining business school fundamentals – supply chains and value chains as drivers of sustaining value
I have probably used the terms supply chain and value chain hundreds of times so far in this blog, and across a range of series I have posted to within it. I start this posting by pointing out two simple facts. One of them is an observation that many have made, and certainly in an international business context that problems always arise when people are using the same terms but with different meanings, connotations or underlying assumptions attached. The other is that I have at least occasionally cited a more standardized meaning for “supply chain” as I did above, with a link to the Wikipedia article on this term, but that there is no corresponding term for “value chain” provided there.
This posting seeks to address two issues:
• Clarifying more precisely what I mean when I use the term value chain and
• Linking this definition to that of supply chain and in terms that would make sense in the context of our increasingly interconnected marketplaces.
A value chain starts with a network of businesses and organizations that work together in connected and overlapping market spaces with connection through shared provision of good and services. A value chain defines and describes this network in terms of value created and distributed, between its connected nodes and across the network as a whole. From a value chain perspective, the network is in fact defined by this creating and distribution of value. In this, a value proposition gains that value in the hands and in the eyes of the customer receiving it as product or service, so a value chain is also a network of parameters that determines and specifies what value is in and across that grouping of organizations and the business ecosystem they collectively comprise. And the entire network is diminished and value across it as a whole becomes limited where there are weak links and the exchange of recognizable, meaningful value is broken.
Supply chain systems are frequently defined in terms of meeting seven specific principles [see Anderson, D.L., Britt, F.F. and D.J. Favre. (1997) The Seven Principles of Supply Chain Management. Supply Chain Management Review.]
1. Segment customers according to the product and service needs of distinct groups and adapt the supply chain to meet the needs of these groups profitably.
2. Customize the logistics network to the service requirements of these customer groups and so as to facilitate this profitability.
3. Track market signals and align demand planning accordingly across the supply chain so as to maintain efficiency in forecasting and to optimize asset allocations.
4. Differentiate the product closer to the customer and speed conversion across and throughout the supply chain.
5. Manage resources strategically to reduce overall costs.
6. Develop a supply chain-wide technology policy that supports multiple levels of decision making and that provides the transparency into product and service flow, and organizing information for optimizing this.
7. Develop and adopt channel-spanning performance metrics for determining collective and individualized success in identifying and meeting customer needs.
In a richly globally interconnected, business ecosystem context viewing supply chains as value chains adds an eighth principle to this list:
8. Monitor value developed across the network and optimize your value creation capabilities for nodes you directly connect to, in order to optimize value received in turn from your participation in the network.
And as I point out in Some Thoughts on the Co-Evolution of the Internet and Globalization as a recent posting, this can be crucial if your business is even going to be effectively included in the supply chain at all.
The next posting in this series is going to look into business ethics and communication in this widening business context.