Future of Sourcing - Capitalism https://futureofsourcing.com/tags/capitalism en Deirdre McCloskey: Are Markets Moral? https://futureofsourcing.com/deirdre-mccloskey-are-markets-moral <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_79.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_79.png" title="Deirdre McCloskey: Are Markets Moral?" class="colorbox" rel="gallery-node-1095-CKPP6p3IErU"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_79.png?itok=BEtNyvaS" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Economist and philosopher<a href="http://www.deirdremccloskey.com/" target="_blank">&nbsp;Deirdre McCloskey</a>&nbsp;has some thought-provoking and highly nuanced takes on innovation and ethics in the commercial arena.</p> <p>How about this for starters: capitalism&nbsp;<em>is</em>&nbsp;innovation, in her estimation. And she contends that capitalism/innovation backed by liberal economic ideas &ldquo;has made billions of poor people pretty well off, without hurting other people.&rdquo; Did I mention she is also controversial?</p> <p>Over her long career she has done some deep thinking on the intersection of economics, markets and morality, as might be expected from her list of titles: Distinguished Professor of Economics, History, English, and Communication at the University of Illinois at Chicago. She is also adjunct professor of Philosophy and Classics there, and for five years was a visiting Professor of philosophy at Erasmus University, Rotterdam.</p> <p>McCloskey laid out the essence of her thinking in&nbsp;<a href="https://www.youtube.com/watch?v=x-rf66RRtx4&amp;feature=youtu.be" target="_blank">this video</a>&nbsp;in which she discusses three of her books that come under the overall theme she calls the Bourgeois Era:&nbsp;<em>The Bourgeois Virtues: Ethics for an Age of Commerce</em>&nbsp;(2006);&nbsp;<em>Bourgeois Dignity: Why Economics Can&rsquo;t Explain the Modern World</em>&nbsp;(2010); and the upcoming (this year)&nbsp;<em>The Treasured Bourgeoisie</em>.</p> <p>The motivation of the trilogy, she says, is to persuade what she calls the &ldquo;clerisy&rdquo;&mdash;the intelligentsia, communicators, shapers of minds, etc.&mdash;that &ldquo;capitalism can be ethical; it can be unethical, and that is a choice we face&mdash;it&rsquo;s not built into the nature of the system.&rdquo; McCloskey&rsquo;s central point is that individuals and organizations &ldquo;can live an ethical life in a commercial society.&rdquo;</p> <p>The modern way to do that, she continues, is to balance life in commerce with the virtues of love, courage, temperance, justice, faith, hope and prudence. Did I mention she&rsquo;s a maverick in a multitude of ways?</p> <p>Where most of today&rsquo;s economists fall short lies in their &ldquo;conception that economics is only about prudence&hellip;<em>prudence only</em>&nbsp;is not sufficient for a truly scientific economics.&rdquo; She argues for &ldquo;humanomics&rdquo; instead. Because the economy &ldquo;depends massively on cooperation, economists need to stop telling people that all that matters is prudence.&rdquo; The other virtues need to be included.</p> <p>McCloskey also insists that unlike what most economists preach, capital accumulation is not what made the modern world&mdash;&ldquo;this is rubbish!&rdquo; It&rsquo;s ideas that matter and &ldquo;how we think of each other&hellip;it&rsquo;s about sociology, not psychology.&rdquo;</p> <p>She argues that the important flaw in economics &ldquo;is not its mathematical and necessarily mistaken theory of future business cycles, but its materialist and unnecessarily mistaken theory of past growth.&rdquo; The &lsquo;Big Economic Story&rsquo; of present times is not the Great Recession of 2007-2009, it is that the &ldquo;Chinese in 1978 and then the Indians in 1991 adopted liberal ideas in the economy, and came to attribute a dignity and a liberty to the bourgeoisie formerly denied. And then China and India exploded in economic growth.&rdquo;</p> <p>McCloskey&rsquo;s moral is that in achieving a pretty good life for the mass of humankind, and a chance at a fully human existence, &ldquo;ideas have mattered more than the usual material causes.&rdquo;</p> <p>Simply put: we become rich by &ldquo;gigantically increasing the size of the pie.&rdquo;</p> <p>There you go! This is highly Vested: the idea is that creating, sharing and expanding value through collaboration and adhering to basic guiding principles will transform our business relationships&mdash;creating the long-term win-win.</p> <p>Agree with all she says or not, McCloskey makes a definite point that we need to &ldquo;abandon the materialist premise that reshuffling and efficiency, or an exploitation of the poor, made the modern world.&rdquo; Rather a new science of history and the economy is needed, &ldquo;a humanistic one that acknowledges number and word, interest and rhetoric, behavior and meaning.&rdquo;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/capitalism" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Capitalism</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/economics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Economics</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/ethics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Ethics</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/morality" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Morality</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/vested-outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vested Outsourcing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Deirdre McCloskey: Are Markets Moral? - Future of Sourcing" addthis:url="https://futureofsourcing.com/deirdre-mccloskey-are-markets-moral"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 13 May 2015 22:19:48 +0000 Kate Vitasek 1095 at https://futureofsourcing.com https://futureofsourcing.com/deirdre-mccloskey-are-markets-moral#comments Michael Porter: the shared value path https://futureofsourcing.com/michael-porter-the-shared-value-path <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_94.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_94.png" title="Michael Porter: the shared value path" class="colorbox" rel="gallery-node-1122-CKPP6p3IErU"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_94.png?itok=Z1FQXopM" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>If you are familiar with the&nbsp;<a href="http://www.vestedway.com/" target="_blank">Vested</a>&nbsp;approach and the books and articles I&rsquo;ve written on collaboration and trust, you know about the importance I place on sharing value in business relationships.</p> <p>You might say it&rsquo;s the way that capitalism will take business and value creation to a new and more sustainable level in the twenty-first century. And it&rsquo;s also why I&rsquo;ve taken much too long to write about the seminal ideas of Michael Porter on this subject in this space.</p> <p>You see Porter, along with Mark R. Kramer, wrote about the &ldquo;big idea&rdquo; of &ldquo;Creating Shared Value&rdquo; in 2011 in a long and highly influential&nbsp;<a href="http://hbr.org/2011/01/the-big-idea-creating-shared-value" target="_blank"><em>Harvard Business Review</em>&nbsp;article</a>.</p> <p>Porter&rsquo;s shared value premise is a natural progression of his career work on company strategy and the competitiveness of nations and regions. He is the Bishop William Lawrence University Professor at Harvard Business School.</p> <p>The HBR article begins by acknowledging that capitalism is &ldquo;under siege,&rdquo; because business is increasingly &ldquo;viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.&rdquo;</p> <p>And even embracing corporate social responsibility &ndash; a widespread trend these days &ndash; is not enough because &ldquo;the more business has begun to embrace corporate responsibility, the more it has been blamed for society&rsquo;s failures.&rdquo; A major part of this problem lies with companies themselves: they are stuck &ldquo;in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimising short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.&rdquo;</p> <p>In a short&nbsp;<a href="http://www.huffingtonpost.com/2012/09/13/solo-sessions-2012-michael-porter_n_1878421.html" target="_blank">video</a>&nbsp;for the&nbsp;<em>Huffington Post</em>&nbsp;World Economic Forum, Porter summarised his ideas on shared value. He says that the basic idea of creating shared value &ldquo;is about actually applying the capitalist model to addressing issues in society,&rdquo; such as hunger, the environment, water and health.</p> <p>It goes beyond the CSR approach that&rsquo;s based basically on charity and fair trade, which Porter asserts is not a sustainable solution &ndash; &ldquo;it&rsquo;s just redistribution.&rdquo; Shared value is a logical progression from CSR, he says, because incomes are raised for everyone, not through charity and by a being a &ldquo;good corporate citizen,&rdquo; but by &ldquo;being a better capitalist &ndash; it&rsquo;s a win-win.&rdquo;</p> <p>CSR was an effort to be responsible by contributing to the community, he continues. The idea of shared value is a much &ldquo;bigger opportunity, it&rsquo;s rethinking how we practice capitalism.&rdquo;</p> <p>In that regard, Porter talks about the three opportunity &ldquo;buckets&rdquo; that benefit all. Firstly, there&rsquo;s the product opportunity, which addresses the many social dimensions embodied in a product, often in relation to customers whose needs have not been served.</p> <p>The second bucket is to look at the value chain and open up new opportunities to save on energy, save on packaging, and actions that companies can employ to provide more beneficial impacts on suppliers that benefit them and their employees. The third opportunity is a &ldquo;cluster,&rdquo; or the businesses and institutions around the company &ndash; &ldquo;the better that ecosystem the better and more effective and competitive the company can be.&rdquo;</p> <p>The idea here, Porter continues, is to &ldquo;get capitalism working not against the interests of society and the community, but actually integral to addressing the interests of society and the community.&rdquo;</p> <p>This, I believe, is where the Vested business model that provides a pathway to implement a trusting, collaborative relationship that creates and shares value for all parties in a business or outsourcing relationship makes those lofty goals entirely possible.</p> <p>As Porter says: &ldquo;Changing the public&rsquo;s attitude to business will be based on what we in business do, what we achieve, what we accomplish. Shared value is a way to get businesses thinking about that question. &ldquo;</p> <p>In a global economy where capitalism is seen as the self-interested scapegoat &ndash; and often rightly so &ndash; for the economic and financial ills that we face, Porter&rsquo;s ideas present a way for capitalism to be the solution, not the problem; the hero, not the villain.</p> <p>To do that, &ldquo;companies must take the lead in bringing business and society back together,&rdquo; Porter says. And the Vested model provides a blueprint for that to happen.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/capitalism" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Capitalism</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/shared-value" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Shared Value</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/vested-outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vested Outsourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/opportunity" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Opportunity</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/value-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Value Chain</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Michael Porter: the shared value path - Future of Sourcing" addthis:url="https://futureofsourcing.com/michael-porter-the-shared-value-path"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 17 Apr 2013 22:31:31 +0000 Kate Vitasek 1122 at https://futureofsourcing.com https://futureofsourcing.com/michael-porter-the-shared-value-path#comments Joseph Schumpeter and “Creative Destruction” https://futureofsourcing.com/joseph-schumpeter-and-%E2%80%9Ccreative-destruction%E2%80%9D <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_110.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_110.png" title="Joseph Schumpeter and “Creative Destruction”" class="colorbox" rel="gallery-node-1139-CKPP6p3IErU"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_110.png?itok=Weze44_x" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>My last two columns on Umair Haque and Joseph Stiglitz have shifted the focus a bit to the adaptations that global businesses face as more and more challenges to the traditional ideas surrounding capitalism and globalisation emerge.</p> <p>This time I&rsquo;ll take look back to a giant economist and political scientist, Joseph Schumpeter, who worried about the stagnation of capitalism and globalisation long before there was even a term called globalisation. Schumpeter, an Austrian-Hungarian-American who died in 1950, was one of the twentieth century&rsquo;s great economic and political thinkers. Among other things, he was a professor of economics at the universities of Bonn, Tokyo, and Harvard. He was also the finance minister of a socialist government in Austria and a staunch defender of capitalism.</p> <p>A central point of his life&rsquo;s work was that capitalism on the world stage can only be understood as an evolutionary process of continuous innovation and &ldquo;creative destruction&rdquo;. This idea is becoming more mainstream with the work of Stiglitz (<a href="http://archive.outsourcemag.com/joseph-schumpeter-and-creative-destruction/articles/item/4207-joseph-e-stiglitz-making-globalisation-work" target="_blank">on making globalisation work</a>) and Haque (<a href="http://archive.outsourcemag.com/joseph-schumpeter-and-creative-destruction/articles/item/4169-umair-haque-the-art-of-being-disruptive-and-constructive" target="_blank">on the need to &ldquo;disrupt&rdquo; capitalism and make way for &ldquo;constructive capitalists&rdquo;</a>).</p> <p>Schumpeter&rsquo;s most popular book in English is probably&nbsp;<a href="http://en.wikipedia.org/wiki/Capitalism,_Socialism_and_Democracy" target="_blank"><em>Capitalism, Socialism and Democracy</em></a>, published in 1942. The book opens with this famous quote: &ldquo;Can capitalism survive? No. I don&rsquo;t think it can.&rdquo; While he was sympathetic to Marx&rsquo;s theory that capitalism would collapse, he veered sharply away from Marx, arguing that it might be destroyed by its success. He borrowed the phrase &ldquo;creative destruction&rdquo; from Marxist thought, and made it famously his own by using it to describe a process in which the old ways of doing things are destroyed and replaced by new, better ways.</p> <p>Capitalism he wrote, &ldquo;is by nature a form or method of economic change and not only never is but never can be stationary&rdquo;. But the problem he saw was that the success of capitalism would lead to a form of corporatism featuring values hostile to entrepreneurial capitalism. Does this sound familiar? As I look at today&rsquo;s emerging version of capitalism and multinational corporation dominance of markets it seems very familiar. Schumpeter also worried that this process would hinder entrepreneurship.</p> <p>But&nbsp;<em>Capitalism, Socialism, and Democracy</em>&nbsp;is more than a dire prognosis of capitalism&rsquo;s future. It is also a defence of capitalism on the grounds that capitalism sparks entrepreneurship. Schumpeter was among the first to lay out a clear concept of entrepreneurship by identifying the distinction between an inventor&rsquo;s inventions and an entrepreneur&rsquo;s innovations. He noted that entrepreneurs innovate not just by figuring out how to use inventions, but also by introducing new means of production, new products, and new forms of organisation. These innovations, he argued, take just as much skill and daring as does the process of invention.</p> <p>Innovation by the entrepreneur, he continued, leads to creative destruction as innovations cause old inventories, ideas, technologies, skills, and equipment to become obsolete. The question is not &ldquo;how capitalism administers existing structures,&rdquo; he wrote, &ldquo;&hellip; [but] how it creates and destroys them&rdquo;. This creative destruction, he believed, causes continuous progress and improves the standards of living for everyone.</p> <p>He focused on innovation as the critical driver of economic change and progress. This seems obvious now but the debate about how best to foster an innovative climate of collaboration continues to the present day. Innovation and continuous improvement are buzzwords in the outsourcing industry but creating a framework for actually making them happen is why I think the Vested Outsourcing business model has arrived in the right place at the right time.</p> <p>Schumpeter&rsquo;s influence on the theory of economic development was enormous. The theory&rsquo;s appeal lies in large measure in its simplicity and its power, characteristics evident when he wrote, &ldquo;The carrying out of new combinations we call &lsquo;enterprise&rsquo;; the individual whose function it is to carry them out we call &lsquo;entrepreneurs.&#39;&rdquo;</p> <p>I really appreciate Schumpeter&rsquo;s ideas on invention and innovation because it is the innovators and entrepreneurs who often make the invention take off and become larger and more useful than the original. The phone and the computer are but two examples of the importance of innovation.</p> <p>And I also like the challenge and the tension implied in the concept of creative destruction.&nbsp; It&rsquo;s disquieting but also encouraging that 70 years after Schumpeter used the term it is needed now more than ever in outsourcing through the Vested model of collaboration, trust, innovation, continuous improvement and sharing value to achieve the win-win.</p> <div style="clear:both;">&nbsp;</div> <div>&nbsp;</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/democracy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Democracy</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/capitalism" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Capitalism</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/collaboration" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Collaboration</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/continuous-improvement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Continuous Improvement</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/socialism" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Socialism</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/trust" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Trust</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/vested-outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vested Outsourcing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Joseph Schumpeter and &amp;ldquo;Creative Destruction&amp;rdquo; - Future of Sourcing" addthis:url="https://futureofsourcing.com/joseph-schumpeter-and-%E2%80%9Ccreative-destruction%E2%80%9D"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 30 Nov 2011 17:00:00 +0000 Kate Vitasek 1139 at https://futureofsourcing.com https://futureofsourcing.com/joseph-schumpeter-and-%E2%80%9Ccreative-destruction%E2%80%9D#comments Joseph E. Stiglitz: making globalisation work https://futureofsourcing.com/joseph-e-stiglitz-making-globalisation-work <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_111.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_111.png" title="Joseph E. Stiglitz: making globalisation work" class="colorbox" rel="gallery-node-1140-CKPP6p3IErU"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_111.png?itok=QXOPhrqu" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>For the most part this series has examined the big thinkers in economics who have influenced the development of modern outsourcing. This week I want to focus on Joseph E. Stiglitz, whose work has the power to influence how companies think about globalisation.</p> <p>Joseph E. Stiglitz, a professor at Columbia University, received the 2001 Nobel Prize (with George A. Akerlof and A. Michael Spence) for his analysis into how markets work with asymmetrical information. Since then, Stiglitz has written and lectured extensively about globalisation and markets with this unsettling message: they aren&rsquo;t working very well, especially in the context of the new realities of the twenty-first century.</p> <p>Stiglitz began making his claims about the need to rethink how businesses and organisations approach globalisation well before the 2008 global economic and financial meltdown. In fact, he has two books on globalisation,&nbsp;<em>Globalization and Its Discontents</em>&nbsp;(2002) and&nbsp;<em>Making Globalization Work</em>&nbsp;(2006). His most recent book,&nbsp;<em>Freefall</em>(2010), recounts the events of the 2008 economic collapse and how its effects still persist.</p> <p>In a 2006 lecture Stiglitz said, &ldquo;Something is wrong with the way globalisation is turning out. It has not lived up to its promises, and the question is what to do about it.&rdquo;</p> <p>Stiglitz points out a critical flaw. &ldquo;The global financial system is not working the way it ought to. Ordinary laws of physics say that water ought to flow downhill. The parallel in economics is that money is supposed to flow from rich countries to poor countries, and risk is supposed to be transferred from the poor, who are least able to bear it, to the rich. But in the world today, things are moving in the opposite direction. To be precise, for the last several years, money has been going from the poor countries to the rich &ndash; the net flow of funds is going in the opposite direction of the way it should.&rdquo;</p> <p>He continues: &ldquo;Meanwhile, the poorest countries in the world are left to bear the risks of interest rate and exchange rate volatility. The result of this has been that, in spite of the fact that economists know a lot more about how to manage an economy today than they did fifty years ago, there have been more than a hundred crises in the last three decades.&rdquo;</p> <p>There is much food for thought for outsource practitioners in Stiglitz&rsquo;s words &mdash; especially as they relate to supply chain sustainability. It&rsquo;s no surprise that globalisation has meant that we have become more integrated and more interdependent. While globalisation brings much value, it also poses challenges in how we need to think (or rethink) existing approaches to globalisation around intellectual property, trade, global financial markets, natural resources and the environment.</p> <p>Stiglitz &mdash; like my fellow researchers at the University of Tennessee working with me on Vested Outsourcing &mdash; says that countries and businesses should move away from the old-school win-lose strategies aimed at rewarding some at the expense of others because it is an inherently unsustainable model.</p> <p>In his book&nbsp;<em>Freefall</em>, Stiglitz points out that The Great Recession and its aftermath &ldquo;is forcing us to rethink cherished views.&rdquo; He asserts, &ldquo;The issue is not whether globalisation is going to change; globalisation will change. The current system simply cannot continue.&rdquo;</p> <p>Powerful words from a powerfully smart man. &nbsp;</p> <p>But what is the answer for change? Stiglitz advocates for more collaboration and win-win approaches. &ldquo;Greater inter-dependence means that we have to act together; we have, as economists would say, extra responsibilities which mean that we have more need to act cooperatively.&rdquo;</p> <p>I agree. &nbsp;</p> <p>In our work at the University of Tennessee, we have seen the most successful outsourcing relationships revolve around collaborative rather than selfish or muscular me-first relationships. You don&rsquo;t have to be an economic scientist to see that institutions and governments have not set very good examples on cooperation and collaboration. Without a true collaborative mindset from institutions and governments, it is very difficult to instill those qualities as a default top-down mindset in the globalised outsourcing, business and finance arenas.</p> <p>If there is any lesson outsource practitioners can take from the global economic collapse of 2008, it is that market decisions based on greed, total self-interest, a knee-jerk aversion to even basic regulation, the constant drive to shift risk and blame while relying on the market to correct itself is not a sustainable model.</p> <p>I submit that those of us in the global business arena have a responsibility to understand what it really means to succeed in today&rsquo;s economic and business climate. I have high hopes that our work at the University of Tennessee, which has established the collaborative Vested Outsourcing framework, will help lead the way to achieving win-win relationships that will leverage the skills and expertise inherent in collaborative partnerships and alliances to create a long-term strategic template for success.</p> <p>The Vested model leverages the best aspects of human relationships&nbsp;&mdash; collaboration, flexibility, honesty, innovation and open communication &mdash; into the outsource business relationship. Those are precisely the qualities that will make globalisation and capitalism work &mdash; or at least work better &mdash; for everyone. &nbsp;</p> <p>Simply put, I agree with Stiglitz.&nbsp; It&rsquo;s time to reboot for the win-win.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/capitalism" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Capitalism</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/financial-crisis" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Financial Crisis</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/freefall" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Freefall</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/globalisation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Globalisation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/nobel-prize" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Nobel Prize</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/recession" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Recession</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/relationship-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Relationship Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/vested-outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vested Outsourcing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Joseph E. Stiglitz: making globalisation work - Future of Sourcing" addthis:url="https://futureofsourcing.com/joseph-e-stiglitz-making-globalisation-work"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 02 Nov 2011 17:00:00 +0000 Kate Vitasek 1140 at https://futureofsourcing.com https://futureofsourcing.com/joseph-e-stiglitz-making-globalisation-work#comments Umair Haque: The art of being disruptive and constructive https://futureofsourcing.com/umair-haque-the-art-of-being-disruptive-and-constructive <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_112.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_112.png" title="Umair Haque: The art of being disruptive and constructive" class="colorbox" rel="gallery-node-1142-CKPP6p3IErU"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Digital_Kate%20Vitasek_Slider%20Graphic%20%281%29%20%281%29_112.png?itok=0OrCi9M0" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Do you suspect that there&rsquo;s something wrong or at least severely amiss with modern capitalism, and by extension the way we outsource, think about value, construct our supply chains and do business? Can&rsquo;t quite put it into words and context? Umair Haque has many thought-provoking insights for you on the subject.</p> <p>Haque is Director of the Havas Media Lab and author of&nbsp;<em>The New Capitalist Manifesto: Building a Disruptively Better Business</em>. He also writes a provocative and entertaining posts for the Harvard Business Review Blog Network.</p> <p>He is no anti-capitalist or Marxist. But he does not like what capitalism has become and would like to see it transformed.</p> <p>&ldquo;I&rsquo;m a staunch believer in capitalism,&rdquo; he wrote in a recent blog item. &ldquo;Yet, I do think &mdash; and after reading the dismal, dreary headlines every day, not to mention checking the value of your 401K, house, job, economy, society, and future lately, I&rsquo;d bet you do too &mdash; that prosperity as we know it might be lazily circling the glowing inner rim of the burbling event horizon of a massive super-galactic black hole. And when it comes to doing much about it&hellip; well, the status quo&rsquo;s pretty much out of options, out of ideas, and running out of time.&rdquo;</p> <p>In recent years, consumers and citizens have become increasingly disgruntled with the implicit contract that governs the rights and obligations of society&rsquo;s most powerful economic actors: large industrial companies, Haque says. &ldquo;To many, this contract seems one-sided &ndash; it has worked well for CEOs and shareholders, but not so well for everyone else.&rdquo;</p> <p>Haque challenges common business beliefs that:</p> <ul style="list-style-type:square;"> <li>Customers are end users (rather than full partners in the work of value-creation and value-sharing).</li> <li>Customers, who&rsquo;ve been ignored, manipulated, locked in, duped, or lied to will nurse their anger in private (rather than join forces with fellow sufferers to publicly shame their persecutors).</li> <li>Employees are human resources first and human beings second.</li> <li>Business is about advantage, focus, differentiation, superiority, and excellence (and not about love, joy, honour, beauty, and justice).</li> </ul> <p>&ldquo;These beliefs are the real threat to capitalism. They are narcissistic and self-indulgent,&rdquo; he says, and grow less attractive and defensible by the day.</p> <p>In short, Industrial Age capitalism needs a reboot for the twenty-first century.</p> <p>If that is the case &ndash; and Haque makes a very compelling argument for this in his book &ndash; then the traditional components of capitalism and prosperity also need rebooting, including outsourcing.</p> <p>Actually, I think of the research and work by the University of Tennessee that has led to the Vested Outsourcing model as a paradigm shift &ndash; or reboot if you will &ndash; of the conventional outsource model for the twenty-first century. I do this for many of the same reasons that Haque outlines when he talks about the need for establishing a sustainable, constructive advantage, based on avoiding harm and establishing collaborative value cycles, rather than constantly pushing for the competitive advantage that plows through everyone in the way.</p> <p>The old notions (Haque calls them &ldquo;cornerstones&rdquo;) &ndash; of what comprised industrial-era prosperity are no longer very relevant &ndash; and indeed are limiting and harmful, Haque writes in his book. The great question that twenty-first century economics asks is, &ldquo;Must profit always require economic harm?&rdquo; According to Haque, the revolutionary and necessary answer is no &ndash; what is needed is a better kind of capitalism &ldquo;built for a tiny, fragile and crowded world: constructive capitalism.&rdquo;</p> <p>He talks about thin value vs. thick value and constructive capitalists able to turn thin value on its head and create &ldquo;thick value&rdquo; instead &ndash; value that matters, value that lasts, and value that multiplies.</p> <p>&ldquo;Think of thick value as value that&rsquo;s meaningful in human terms, reflecting durable, tangible gains, which aren&rsquo;t counterbalanced by the two kinds of economic harm&rdquo; that shifts costs and/or borrows benefits, he says. Thick value is created when companies &ldquo;generate profits by activities whose benefits accrue sustainably, authentically, and meaningfully to people, communities, society, the natural world, and future generations.&rdquo;</p> <p>Thick value minimises harm while maximising authentic, sustainable meaningful value, creating a long-term constructive advantage, as opposed to the more commonplace competitive advantage, in both the quantity and quality of profit.</p> <p>Haque continues, &ldquo;The problem with adversarial, zero-sum competitive advantage is that just because you&rsquo;ve captured a larger share of profit in your industry or sector doesn&rsquo;t mean that pool of profit hasn&rsquo;t been earned by shifting costs or borrowing benefits to begin with: it is little guarantee that the profit you&rsquo;ve earned doesn&rsquo;t stem from economic harm. In fact, your profits may simply reflect thinner and thinner value that is even more artificial, unsustainable, and meaningless than ever. That&rsquo;s the story of Wall Street, Detroit, and Big Food writ large. Only when a firm earns more and higher-quality profit than rivals can it be said to have a constructive advantage.&rdquo;</p> <p>So do any of these new-fangled, insurgent, constructive capitalists exist? Actually, yes.</p> <p>&ldquo;It might surprise you to hear that a new Walmart is shifting from competitive to constructive advantage, through an intense focus on taking both kinds of economic harm out of its enormous, globe-spanning commercial engine. Walmart is learning that, as the world shifts from the economics of a game reserve to those of an ark, competitive advantage is just table stakes.</p> <p>&ldquo;It is constructive advantage that fuels twenty-first-century outperformance.&rdquo;</p> <p>In addition to Wal-Mart, Nike, Apple, and Google are creating more, higher-quality value, and &ldquo;leaping to the next level of advantage,&rdquo; he says.</p> <p>&ldquo;Like a strategic superweapon, constructive advantage threatens their rivals &ndash; like Sony, Yahoo, the Gap, and Target &ndash; that survive by eking out smaller and smaller amounts of low-quality profit, with not just strategic decay, but with institutional obsolescence.&rdquo;</p> <p>Constructive advantage can be thought of as how free a company is of &ldquo;deep debt&rdquo; to people, communities, society, the natural world, or future generations. Constructive advantage says: &ldquo;We don&rsquo;t need to do economic harm to profit; in fact, the less economic harm we do, the more we profit.&rdquo;</p> <p>The challenge for us is to reimagine our role as capitalists and as outsource professionals, to leap to the next level of advantage. Or as Haque puts it, create a new generation of renegades.</p> <p>In Vested parlance, the more we work together for mutual benefits, sharing value and the long-term win-win, the more we&rsquo;ll profit sustainably and constructively &ndash; together. If that means we&rsquo;re renegades, then so be it.</p> <p>And that&rsquo;s the art of being constructive and disruptive at the same time.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/capitalism" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Capitalism</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/customers" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Customers</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/profit" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Profit</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sustainability" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sustainability</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Umair Haque: The art of being disruptive and constructive - Future of Sourcing" addthis:url="https://futureofsourcing.com/umair-haque-the-art-of-being-disruptive-and-constructive"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 12 Oct 2011 17:00:00 +0000 Kate Vitasek 1142 at https://futureofsourcing.com https://futureofsourcing.com/umair-haque-the-art-of-being-disruptive-and-constructive#comments