Storks, babies and strategy

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Is strategy, like economics “pre-science, like astronomy before Copernicus and Galileo.” (Steve Keen: Debunking Economics )? We laugh at superstitions like“Storks and babies arrive around the same time – storks must bring babies”, but all that is different in most of the strategy science today (and much other social science), is that we use econometrics to ‘prove’ there really is a statistically significant correlation between storks and babies.

Don’t believe me? – If you can bear it, skim through a few years’ ...

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Enjoy low oil prices – for now?

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We have been here before – [1] economic growth drives up demand which [2] raises prices when supply gets tight which [3] makes oil companies/countries rich which [4] makes everyone look for more oil which [5] they eventually discover and start to pump, at just the time when [6] high prices kill the economy, so [7] we get over-supply so [8] oil prices collapse.

It won’t last, of course – eventually [9] production slows as reserves get depleted, and [10] low prices restart growth ...

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Revolt of Economics students

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See Teaching Economics after the Crisis.  J-C Trichet: ECB President “As a policy-maker, I felt abandoned by conventional tools.” (2010).

This may be mostly about macro-economics, but reflects fundamental inadequacies in the underlying science that afflict micro-economics and have poisoned fundamental ideas in strategy. Even the most basic tools, such as the PQ demand-curve, are hopelessly unrealistic depictions of real-world mechanisms, and attempts to adapt them end up like trying to squeeze Cinderella’s ugly sisters’ foot into a dainty shoe. Standard economic models do not deal ...

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Professional staffing challenges

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Working with a “magic circle” law-firm shows interesting twists on the standard challenges of developing staff and experience (see HR gets dynamics with examples and models). Professional firms need ‘leverage’ – many juniors per partner – so would prefer a wide, flat pyramid. But that is only possible for easily replicated services, and smart clients know they can buy those cheaply … so top firms try to offer high-value services, but those depend critically on small numbers of specialist staff.

The trick these and others professional ...

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Supply/demand everywhere

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Working  with public officials in Tyumen region of Russia highlighted the still-wider generic nature of the systems that strategy and policy try to design and operate well. Every commercial business serves customers with products or services and do so using capacity of various kinds operated by staff. Customers drive demand (sales and revenue), there may be a cost-of-goods, and capacity + staff drive the supply the business can deliver at some cost.

The surprise in venturing out of the corporate world into other sectors is how universal these relationships are. ...

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