Tag Archives: economy

2014 Drucker Forum: Have we reached a turning point?

There was so much discussion at the 6th Annual Global Peter Drucker Forum last week that it is difficult to find a place to start. In fact, this could be said also about the theme of this year’s forum: The Great Transformation.

Where do we start in a world that is constantly changing, where markets are in flux and industries can be redefined in a matter of a couple of years? Are companies like Apple, Google, Uber, Zappos, Amazon, the new norm? What about the role of Government and Education?

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The answers to these questions cannot be tightly organized into a bullet list or an action plan. The reason being is that leadership in times of transformation is dynamic and there is a need to balance the fact that challenges/competition/disruptions exist while embracing a sense of optimism and belief in what managers (who Drucker called “society’s leadership group”) can help create and deliver.

Who said leadership was easy?

Perhaps one place to start is with Clayton Christensen’s talk. He spoke about growth and the fact that we need to explore new ideas of growth – not the ideas that economists would have us believe or what investment bankers use to measure growth. No, Christensen talked about growth in terms of innovation. At the Forum he described three types of innovations:

  • Market Creating Innovations

These innovations make products or services more affordable or accessible. A computer, for example, has moved from mainframe, PC, to smartphone.

  • Sustaining Innovations

These innovations help margins improve and help make good products even better. They don’t necessarily create growth because they are replacing in nature.

  • Efficiency Innovations

These innovation “do more with less” – sometimes eliminating jobs in order to free up cash flow.

One takeaway from the Forum is that these innovations must be in balance in order for an economy to work well. One action is that free cash should be used in market creating innovations in order to truly create worthwhile value for the organization, stakeholders and communities. This is a challenge because, as Christensen pointed out, our current metrics that we use to base investment decisions (like Internal Rate of Return) will tell us to keep being more efficient.

If we are living in a time of great transformation, efficiencies alone will not help us. Efficiency must be balanced with market creating and sustaining innovations. We need more people to have access to innovations, more people employed to deliver on those innovations and for our economies to grow.

It comes back to the leadership question: how do we build an organization that can change as fast as change itself? How can we embrace change while knowing that we still can do better and that change is continuous? Perhaps it is in balance (economists and nutritionists will tell us this!) or perhaps it is simply shifting our focus towards building a self-renewing organization – one that is always renewing how it connects, engages, and provides purpose to people – rather than building organizations that only deliver value to shareholders.

EMC

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Global Competitiveness – Why we should care

The World Economic Forum (WEF) has published its 2013-2014 Global Competitiveness Report. You can find the report here in a number of languages. How did the Latin American region fare and why should we care? Let’s take a look at what “competitiveness” is and its relation to doing business.

The WEF explains:

We define competitiveness as the set of institutions,

policies, and factors that determine the level of

productivity of a country. The level of productivity, in

turn, sets the level of prosperity that can be earned by

an economy. The productivity level also determines the

rates of return obtained by investments in an economy,

which in turn are the fundamental drivers of its growth

rates. In other words, a more competitive economy is

one that is likely to sustain growth.

Competitiveness is based on a number of factors; economists have studied for hundreds of years what makes an economy able to foster growth and sustain it. The competitiveness landscape, as revealed in the WEF’s report, is important to business because it provides insight into what drives productivity and prosperity in 148 economies. It helps us understand how our investments will do and what we might want to look out for so we can mitigate against it. It tells us what challenges or “wins” we might expect when doing business in the studied economies.

In an upcoming blog post I will highlight the findings related to competitiveness in the Latin American region.

Enjoy the rest of the week!

EMC

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