July 15, 2008
It's the Ecosystem, Stupid
Enjoyed the new post from Umair Haque about corporate strategy. Here’s the salient bit:
Perhaps the meaning of competitive advantage, when all the games have been played and the gears of the economic machine have finally stopped moving, is this: privatize benefits and socialize costs.
That might have been sustainable in a disconnected, asset-heavy industrial economy. But it cannot hold in a hyperconnected edgeconomy. When all of us can trade ten billion times a day, if everyone’s simply trying to claim benefits from everyone else, while shifting costs and risks to everyone else, the result is economic implosion.
One of the big deficits implicit in Umair’s critique is long-term thinking. This is almost a cliche by now — the tyranny of quarterly earnings statements, etc., etc. — but that doesn’t make it any less true. Zero-sum strategy gets a quicker return, and often, it feels more like progress. Non-zero-sum strategy takes longer, feels riskier — because you see other people growing too! Jeez! Are they winning? Why aren’t we winning? — but pays out better for everybody in the end.
So the question (which I have not even a single speculative answer to) is: How could we craft markets to better reward long-term, non-zero-sum strategy?