Schlagwort-Archive: Economic

Time of radical change

In everyday life we benefit from the facts we know and for which we have developed a repertoire of behaviors. Depending on our disposition, changes unsettle us more or less. In order not to be too surprised by upcoming events, we try to foresee the future and prepare ourselves for it. For this purpose, we consider correcting variables that we otherwise perceive rather randomly. This foresight establishes connections that consist of smallest influences. These ideas suggest accuracy due to their fine granularity. However, there are times when the changes are not only visible in the subtleties, but in the major upheavals. If then many far-reaching transformations happen at the same time, we are in a time of radical change.

We now seem to have arrived in such a time. Therefore we take a brief look at the PEST effects, wherein simultaneous changes become visible.

  • Political effects
    The virtualization of the world has made political borders disappear. The delimitation is no longer between left and right, but between extremes and normals or between different religions or between cultures. The old motto is simple: We are right, the others are wrong. From any point in the world, it takes one click into a region, where completely different rules and laws apply. The view through the window of the screen feels actually harmless, since you still seem to be in your own legal sphere. So you can order something abroad, but as soon as the delivery crosses the border, your national laws apply. As a result, certain goods are no longer allowed or additional customs duties are incurred. In addition, between countries and within regulated economic zones, other regulations are applied which can only be understood by experts. Although such rules affect everyone, they are negotiated and adopted behind closed doors, as TTIP has shown (thanks to Trump, negotiations should pause at the moment). Besides the economy, politics has far-reaching authorities, which are justified by nothing more than an election. As long as the power blocks of the world are in competition with each other, autocrats can question and terminate the agreements at any time. What is needed is a recognized, contemporary, global coordination center.
  • Economic effects
    Since the photo Earthrise that was taken by William Anders on December 24, 1968, we should be aware that we live in a finite system. Such a closed system cannot grow without supplying energy from its environment or another system. And yet today, decision-makers are still trying to exploit other countries by levying taxes, influencing exchange rates or playing all kinds of restrictions as trumps. The national pride that is abused for it, which drives the population into competition with the rest of the world, endangers peace and revives old conflicts. If economic success is based on the loss of others, decision-makers should be aware that there are no others in ONE world. This means that the monetary system gets unified, the distribution of labor and income ensures the survival of all, and that the reasons for making business are rearranged. Growth is not a real goal for a closed system, but viability.
  • Socio-cultural effects
    The world has become more comprehensible and accessible. At the same time, this proximity creates a new diversity with often contradictory perspectives. The forces that dominated world affairs for a long time have gradually shifted towards the emerging regions of Asia and Africa. A simple example is the new Silk Road, which is in the process of replacing the established routes of the economy. It enables China to globally position its well-educated people, who are held together by a value system that has been proven over thousands of years and who are equipped with a historically founded self-confidence. This upheaval, which has been visible for years, is shifting the focus from the Atlantic to the Pacific, replacing the fabric of the last seventy years. The societies that have been exploited for centuries for the benefit of the old world are breaking away from old habits and swinging the pendulum towards the south and east. We are experiencing the first socio-cultural effects with the increasing revival of the nation and the hysterical measures to seal oneself off with trade barriers to the outside. The existing rules no longer apply and the new ones will be made elsewhere. Companies, NPOs and NGOs as well as global institutions have to reorient themselves.
  • Technological effects
    Forty years after the introduction of the PC, information technology (IT) has permeated all areas. Simultaneously, a network was created that allows us to be connected to any point on earth with a single click – as long as the required electricity and access to the network are available. The current wave of digital transformation is nothing more than an additional attempt to increase the importance of IT – Big Data, Artificial Intelligence, Augmented Intelligence, Automation, Robotics, 3D Printing, etc. Whereas in the past it was lamented that the workforce was forced to work under inhumane conditions, today the same groups complain that automation in the production of goods and services robs them of their livelihoods. The new designs are too concerned with the tools, instead of creating holistic solutions, which continue to provide people with opportunities to make a living. Virtualization, i.e. the representation of the material world in the computer, creates completely new possibilities for doing business. Above all, easy access to markets for everyone, wherever they are, needs a new understanding of work. Old skills are replaced by previously little-known ones – from executing an activity to monitoring; from processing knowledge to generating it; from evaluating data to interpreting it. This upheaval affects everybody. The skills and abilities need to be re-educated so that everyone can be involved in this upheaval.

Bottom line: We don’t need fine-tuned measuring points to recognize that we are in a time of upheaval that is turning everything upside down. The large upheavals are visible to the naked eye. The new division of the world no longer suits the given societies. The computer and networking make the foundations of the old economic activity obsolete. This changes the way the economy operates and the masses of workers are worried about how they will earn their money tomorrow. At the same time, politicians get stuck in the dilemma of global or national politics, which makes the right wings to lure out from behind the stove. The Every-man-for-himself will evoke the danger of international conflicts, which can even destroy the idyll of the Western world. The First World War brought weapons of mass destruction. The Second World War brought nukes. The Third World War is probably happening for a while in virtuality – who would believe that only Russia uses computers to destabilize? What else does it take to notice the upheaval? This means for ALL participants that they have to deal with these changes. Companies that currently have no answers to these radical changes and do not actively prepare for them, act irresponsibly. New approaches are needed for politics, economics, society, and the use of technology.
Now  I S  the time of radical change.

ProCons of networks

Increasing volatility, uncertainty, complexity and ambiguity (VUCA) can no longer be mastered with the rigid structures of the past. Collaboration takes place across borders, wherever you look. The related structures are constantly changing and subsist on self-organizing actors who build, use and eventually resolve the necessary relationships. The result is a more or less dense network. Aside from today’s needs, where everything is just one click away, there are some arguments in favor of and against the use of networks.

The following ProCons affect not only networks but all types of communities.

Pros

The benefits cover more than just the economic interests of the companies.

  • Competence advantages
    The network draws its strength from the purposeful connection of resources and capabilities. The participants‘ intrinsic motivation provides the network with a long-term advantage ahead of other forms, which on the one hand require a lot of setup time and on the other hand never have comparable access to this amount of competencies.
  • Information advantages
    The actors provide a lot of information. This includes experience and knowledge about different markets, customers, products, technologies and, above all, business processes. By sharing this information (push vs. pull), they reach all network participants at a relatively high speed.
  • Resource advantages
    The actors already provide a variety of resources – material and immaterial goods and especially people. Contrary to other forms of organization, the network offers an adjustable openness that makes it possible to expand resources faster. Just the use of these resources of the actors provide means that otherwise would have to be procured with much effort. In addition, this tool is usually better suited that is brought by the craftsman.
  • Social advantages
    Getting to know like-minded people is a huge advantage for the actors. The sense of community offers an environment in which you can expect more pleasant working conditions and a trustworthy cooperation due to the same interests.
  • Economic advantages
    Looking at the entire network, there are many savings for the company. Cost advantages arise when the actors already bring additionally to their commitment many resources that do not need to be purchased. The combined competence accelerates the business and reduces the risks. Practicing self-organization in a network avoids delays caused by a hierarchical structure with its long decision-making and communication paths.

Cons

Against networks speak especially apparent extra efforts, unpredictability and the difficult control.

  • Time
    Even with all the advantages, networking requires active involvement of its members. The open procedures and the lack of centralized control require other efforts of the participants, which are perceived at first glance as additional expenses. However, much higher overall savings can be made for the company.
  • Redundancies
    Even with a lot of engagement in disseminating information, there can be more double work in the self-organized network than in a tayloristic organization. The lack of control can lead to a competition for the best idea that would be wasteful.
  • Increased communication effort
    The multiplicity of actors increases the coordination effort, which can even not be avoided with agile approaches. New insights and experiences simply have to be shared, absorbed and processed. This effort is the price for a lot of advantages.
  • Cooperation issues
    Of course, because of the variety of characters, there will not only be sympathy, but also antipathies that can burden collaboration and trust and eventually lead to an increased need for mediation. This makes team building an important exercise.
  • Lack of control
    A strong driver for the formation of a network is the intrinsic appeal for each participant. Leadership could quickly disturb. At the same time, a network also needs a direction. Without centralized control, the network might take longer to reach an agreement.
  • Information loss
    The open structure of a network and the frequent participation of individual members in different networks automatically lead to the leakage of information. Lack of secrecy could endanger the network.

Bottom line: Although many aspects speak against creation and participation in a network, you have to face the fact that a VUCA world creates new conditions that function in a way that cannot be covered by traditional approaches. The competence, information, resource social, and economic advantages are arguments for the use of networks. At the same time, appropriate measures have to minimize the risks.