The Strategy of the Day?

If you are a strategy officer or a strategy consultant you will obviously deny that strategy could be dead, says Stefan Stern in Financial Times. But how can you have a strategy when there is no way of knowing what the future will bring? Is ‘Be Flexible’ or ‘Keep the ear to ground’ and ‘go with the flow’ the only sensible strategy?

Stern says that in times like these such an ‘adaptive’ strategy is needed. Hm, are these in any way special times? I certainly don’t think so. They are only special to those folks who don’t understand business cycles and thought that the market bubble would expand forever. Those are the managers that went on spending sprees when times were good and now have throttle back by whatever means to make the business survive. Certainly such managers don’t earn the that title.

Stern says, that those managers executing an ‘adaptive strategy’ have to have access to good business data and react to them quickly. That is at best a tactic, possibly no more than a plan that involves getting the data and analyzing it. Strategy has to be a lot more than ‘I will react to business data.’ Good managers certainly don’t need business data to define their strategy.

Lowell Bryan of McKinsey is now saying something that I was laughed at for saying ten years ago: ‘You have to give up the pretence that you can predict the future. Leaders have to intuitively navigate a complex adaptive economy rather than assuming away uncertainty in the annual budgeting process.’ Hey, those were exactly my words. But then I am not working for McKinsey. An adaptive strategy without rigid budgeting seems to be a tough choice for a 100.000 employee enterprise. So I believe that these dinosaurs won’t last because global enterprises are neither innovative nor are they good in using technology. The only capability they know how to use is market domination.

But then the priorities of consumers are changing. They are looking for more quality that lasts, for better service and long term relationships. All elements of business that a cost-cutting, process optimized, mostly outsourced global player has no way of providing. In the end I disagree with Stern when he says: ‘Something like recovery is on its way. You will need a strategy to make the most of it.’

I think we are still failing to recover because we are too focused on strategy and not enough on people and the reality of now.

The Paradox of Thrift

The day that Lehman Brothers collapsed I was in Washington. I sat in front of the TV in a restaurant and said to myself: ‘What I predicted for years is actually happening.’

Over the last year I had many discussions about the reasons for the recession. I am not talking about the financial crisis, because the reasons for that are pretty well known and I have discussed them here too.  Surprisingly, a lot of capitalists are suddenly Keynesian converts and are yelling for the government to step in and do ’something’. Apart from propping up failing banks, the government is called upon to undo the real estate bubble they caused in the first place. Hmm, I always thought that you can’t solve a problem with the means that created it?

There are those who claim that the recession is caused by a lack of consumer confidence and the related ‘Paradox of Thrift’ as described (but not first) by John Maynard Keynes in his General Theory in 1936. Keynes proposed that the excessive saving by consumers in a recession does not lead to increased savings that will make money available for investments, but that the related downturn in the economy actually reduces the amount of savings overall. Therefore the hoarding of cash has to be made unattractive by higher taxation for the wealthy to enable increased government (even deficit causing) spending to revive the economy. While that might sound logical it assumes a kind of market equilibrium and does not really take the time-delayed world market situation into account that did not exist in 1936.

There are numerous other relationships in the economy as a complex adaptive system. The media were playing their part by motivating consumers to act differently. This time around, the banks are in no position to offer more loans and the savings would just prop up their capital rate. Given the lack of confidence in banks and stocks, consumers are buying gold and real estate and thus their savings will not increase bank lending. What about falling prices or deflation in a recession that might stimulate demand anyway, regardless of savings? Why does anyone see a correction of inflated prices as such a problem?

I see large enterprises much more responsible because they reduced cost in expectation of a downturn and thus created the recession from the financial instability.  In the US alone large publicly traded businesses have laid off more than 600.000 well paid employees since last year and are therefore more profitable than before the recession. Consumer confidence and cash is however so low that they can’t afford or don’t trust the stocks and thus they remain low despite that. So am I back to bashing the large greedy enterprises out of principle? No, I never have but I am just pointing out the incompetence of CEOs and the shortsightedness of shareholder value – as did last weeks ‘The Economist’  by the way. It said clearly that for example Bank of America with $23 TRILLION in assets is an unmanageable black box.

So as long as we have those unmanageable behemoths it is up to the government to save us from management incompetence? The problem is that whatever governments do is too late and, given the lack of working causal models, mostly wrong. Most economic theories are based on outdated, non-global economic models. Yes, ultimately the planet is a closed economy too but the national market situations and politics are still different enough and have different time lags and linkage parameters to be predictable.

So should governments not do anything? Absolutely not! That would be the worst of all situations, because not only consumers but also businesses would take a wait-and-see attitude. But if government monetary actions are maxed out (i.e. a near 0% base rate) or further taxation could have dire political consequences, what is it that a government could do beyond accepting the drawbacks of deficit spending?

It is really not that hard! Governments can CHANGE REGULATION! That is cheap and effective. So am I asking for more regulation? No, actually I ask for LESS. Simplify regulation for consumers and SMBs but regulate large businesses to the point that there won’t be an incentive to grow beyond a sensible size. Smaller businesses are nimble and would recreate the free market economy we have lost. Smaller businesses focus more on quality and service and employ more people to that effect. They are also local and outsource much less to Asia. That is more than a taxation or cash-for-clunkers program could stimulate the economy, mostly by creating new businesses, new jobs and thus consumer confidence.

Why in the world is that so hard to understand and accept?

Divine Emergence

(A science fiction short story by Max J. Pucher)

,Who am I?‘ I asked myself. ,Am I God?‘ I was involved in some process of creation but I assumed that a deity would know what it represented.
I watched as the perturbations of zero point energy followed my guiding thoughts. Maybe watching was not the right word, because it was not an effect that was visible to the naked eye. Actually at thirty-three digits behind the decimal point it was around 25 magnitudes smaller than the most powerful electron microscope could see things happening. But that would not be so for long. Soon the wave crests of emerging bosons would resonate together to interact with quarks and the tensors of the field would start to interact from their own restless existence. Right now the part of space I was imagining was like a primordial soup of energy on the loose, ready to jump into any form that felt good.

All it took was minute guiding nudges that were no more than fleeting thoughts. I let those float to existing material items and instantly I could feel the resonance shape the virgin segment of space. The summary effect of the field tensioning under the energy that was drawn into the materialization was very strong despite gravity being the most nimble of all forces.

The most amazing feeling was that of timelessness.

Only when a wave crest turned white with the spray of energy, then I could hear the clock of the universe tick as it swapped over and shed its probability potential by creating reality.

Otherwise it was still.

It was all there. The complete history of the universe and even the vast peaceful quiet before. I could even see the tiny ripple that represented the first clock tick of time that was called the Big Bang for a long time, because scientists lacked the imagination to see that the universe was perfectly balanced and the energy it consisted of was not introduced by a massive explosion. I could simply see that in each tiny segment of space all its energetic tensors always summed up to zero. That was the most powerful law of order and symmetry. No vast sweeping laws that had to be created, monitored and enforced by the powers of the creator, but each energy tick carried the singular divine law of nature in itself like Olympic torchbearers carried the light of the spirit.

I realized that there was now a new power of context in me that allowed me to interpret and understand what places like Olympia and even human beings working as scientists were. Knowledge came to me as I used it, but I was not able to think and search beyond my chain of thought.

My domain of space vortices of energy drew other structures closer and time started to pass as more and more symmetry swept across the whole universe that was still strangely confined to a Planck length. But it was vast and yet infinite as its field tensors shaped as Möbius loops curled back into their own unique universal existence.

The concepts of a human that recognized its own existence settled.

,What is space?‘ I asked. Each choice I had made had timelessly collapsed some wave energy potential and manifested the distance and time that created space.  Not empty but an energetic structure that could be replicated and warped itself into an infinite number of universes that together summed up to zero. The universe was not huge but identical to the smallest building block of itself. When its energy vibration resonated it shed new universal elements. Thus it could endlessly expand without needing new energy.

,I am in the domain of space that I call mine.‘ This was an answer that I had given myself intuitively without explanation of proof. I only knew the concepts of ,me‘ and ,here‘ so that‘s where I had to be. I simply could not be someplace else that I did not know. The answer carried conviction but no plausible proof. I simply knew. That was a good feeling. A shudder ran through me. Feeling was connected with physical bodily existence. Forces suddenly swept over me and tore at my energy limbs.

My space was still emerging in shape and form. Material forms had copied contextual structure from neighboring ones for no other reason than that it was possible and somehow felt good. Rewarding energy flows were the consequence. Shape and structure created stability and repeated waves ran through my domain creating space and time. Matter and its inseparable mirror image twin brother gravity shaped in loops and knots of time-space structure. My domain filled with the opaque condition that called itself material existence. Like a flash I could see a special structure spread out its energetic tentacles. It looked complex in a very familiar way.  It was shaped and formed in a strange knotted and coiled up form that gave stability. It vibrated in the most minute but so immensely pleasing ways, that material structures were drawn to it to join the sequence of events known as life.

,Am I alive?‘ That was clearly the next question and while the answer was an intuitive yes, it seemed as if life had usually a less broad definition.

,Who made those definitions?‘ I asked and they admitted that it just happened without much thought being given to it.

,Who are they?‘ I asked and I answered: ,We are alive.‘

So I was them and we created the context of understanding that made sense to our thinking. I looked around without having the means and therefore I could see it all. Means always have an end and therefore limit the possible context. Only actions that did not try to enforce certain results could utilize a universal power. The more goal focused actions were, the smaller and uncertain was the outcome. A perfectly pinpointed event did nothing. Once I had accepted natural consequence, my powers had become unlimited. I shaped my domain not by having a plan but by enjoying its ability to resonate. The emotional energy of joy triggered a perfect result. It seemed as if the joy about the perfection triggered it, which made no sense in normal causality, but in this timeless universe nothing else was there. Cause and effect are one, like matter and gravity, and each effect is thus a cause.

Endless layers of context had flashed into my domain and once I let go of all my questions the potential of a human being shaped from DNA emerged and settled. It was very familiar. I could the complex contextual information hidden in structures of junk DNA that simply made no sense by itself. It was information that was decoded by the player the emerged from its own DNA. Each DNA player was unique and encrypted with its own code. The domain itself and its resonances between the infinite number of universes was the encryption key. It was ultimately unique and secure.

I had been created from such DNA and I could see the moment of my DNA being spliced from the DNA strand of my parents in numerous replication bubbles along the strand. With relief I recognized the repair function that corrected the unavoidable replication errors due to the uncertainty that created universal order. I felt how the timeless forces of the planets and the stars interacted with the DNA and created an environment that made each person ultimately unique. DNA was just an idea, but the astrological context created unique individuals. I smiled to myself as I recognized that the skepticism that I had held against astrology all my life as a quantum physicists had been wrong …

A final wave of recognition swept over me that answered all my questions.

I was dying and through the timeless void I had been able to watch and shape the moment of my own birth. I had watched my own conscious self take shape as my inner and outer senses coevolved to become me. Now the circle closed and thus held no fear. I realized that my life of searching for answers and honors of scientific recognition had not been in vain. It never is. We all get to see the ultimate answer in our final moment.

Peace, fulfillment and happiness swept through my body as my energy dissipated into the endless orgasm of complete understanding that people wrongly call death.