Saturday, April 24, 2021

Cantillon Effect: The Prosperity Paradigm Perspective

Source: https://en.m.wikipedia.org/wiki/File:CantillonCircularFlow.png

Richard Cantillon was one of the earliest economists who could correctly analyse the flow of money in an economy through cause and effect mechanism. (https://en.wikipedia.org/wiki/Richard_Cantillon) He was the first to recognize the role of entrepreneurs in economy.

 

Cantillon suggested that inflation occurs gradually and that the new supply of money has a localised effect on inflation. He, not only made this observation, but also gained a lot by masterminding the Mississippi Bubble! This priced that the greatest benefit will accrue to the first in the flow while affecting the farthest in the worst manner in largely zero sum economy, which were built by the financial institutions and the predominant but largely nonproductive sociocultural forces!

 

Until recently, the flow of money has been the prerogative of the financial institutions and the respective governments. Largely, all these institutions have been working solely to appropriate the most value benefit at the lowest risk. While this arrangement has been helping the financial institutions and the leaders within these institutions to strengthen their grip on the economy as the time passed. At the same time, all other segments of the economy are getting less benefit while increasing benefit to the financial institutions but the segments down the flow further are losing to the segments prior to them heavily, in the zero sum economies. And due to this circular flow within the economies the disparity between the financial institutions in terms wealth & value has been increasing, exponentially. The disparity gets accentuated especially in the worst times such as the present Covid Crisis the world is going through. 

 

Effectively, till date, the money, hence wealth & economic value, has been in the ever stronger grips of the holders & hoarders of generally nonproductive yet high value assets, since many generations prior to them. The sociocultural forces till date have ensured increased concentration of wealth in the hands of few and most of the times, the money is stuck largely with the least effective & efficient value creating assets. Over centuries, whole world has experienced the worst effects of the Asset Bubbles, while the farthest segments in the economies have been affected by these bubbles. Due to series of such economic bubbles, the lower strata have been affected badly and many times revolted thus leading to chaos and failures. The most productive people and entrepreneurs have been at the receiving side of such consequences for millennia!

 

But, after centuries in human history, we have laid the foundation for the 'money' to be 'created' and 'propagated' right in the midst of entrepreneurs, thanks to cyber currencies! The greatest benefit of this new 'economy', due to Cantillon Effect, is in helping the entrepreneurs to not only create value but appropriate most of the value. In addition, the flow also happens in such a way to benefit the most productive assets, people and institutions the most. This brings the Prosperity Paradigm right in the centre of the economy ensuring not only the greatest value creation engines are created but also help the entrepreneurs to appropriate the most of the value, this encouraging and inventivising the entrepreneurs to create Virtuous Cycles of value & wealth creation and ensuring the faster velocity of flow among the most productive segments in the economy. Inaddition, the most of the high value creators will move up the sociocultural strata to perpetuate the Virtuous Cycles & Ecosystems in societies. Hence the greater benefits of Prosperity Paradigm are enjoyed by most of the people, especially the ones who were kept out of the 'old' economies! Effectively, the whole process driven by Prosperity Paradigm ensures evolution of mankind faster this ensuring the thriving of humanity leading to the predominant position for all of us collectively, in the universe!

 

 

Sunday, April 18, 2021

The Prosperity Paradigm: Cornerstone

Jobs-to-be-Done (Jobs2BDone) Theory was presented with the example of Thick Milk Shakes with Chunks throughout Prof. Clayton Christensen's literature. That is the most wonderful way of identifying the needs & wants of the consumers. This example also emphasizes the rest about the consumers themselves having difficulty in articulating their needs wants, even when they have been already getting satisficed. Though this example highlights leveraging of the available technologies, it is the most apt for diffusion of new technologies. 

Original Image Source: 

https://en.wikipedia.org/wiki/Disruptive_innovation


Disruptive Technologies not only dramatically increase the performances thus disrupting the present markets, they also can do completely new 'jobs' for the customers, consumers and clients. 


Just to give an example, Gordon Moore's Law of doubling the performance of the CPUs every 18 months made PCs to do more new 'jobs' for the end users. The ecosystem driven by the duopoly of Intel & Microsoft relentlessly delivered increasing number of new jobs to be done for the end users for more than 2 decades. And ... in addition, Steve Jobs made the whole ecosystem more challenging, exciting.

 

Interestingly, Sony has been in the forefront of creating new markets by leveraging the available technologies while riding the disruptive technology curves. Steve Jobs finessed the art of creating new markets. This type of Market Creation has greater challenge in identifying the unarticulated needs and then meeting those needs in the most satisficing manner, while building the value chain. The challenge doesn't end there, the Market Makers have to lead & dominate those markets for decades to come by providing the leading edge products for the most underserved markets! 

Jobs2BDone Theory is critical and forms the cornerstone of Prosperity Paradigm for two reasons:

1) The existence of market, the needs & wants of the end users can be highly context specific and are dependent on changing times. And the necessary ecosystems are built for value delivery to the markets in the most optimum manner.

2) The market creation and the necessary ecosystem building can be possible by leveraging the technologies thus Diffusion of Technologies is the way to ensure dramatic value delivery leading to reward sharing by the Market Creators through the ecosystem.


As the humanity evolves at accelerating pace more and more Disruptive Technologies are going to emerge. Presently, we have reached stage of faster adoption of the technologies for the whole humanity facilitated by the latest communication technologies & infrastructure. So we have reached a stage with many disruptive technologies accessible to most of us. The real challenge lies in diffusion of these disruptive technologies unlocking the immense value for the market. The Market Creators are at the barrage point of facing the humongous opportunities. The disruptive innovations unleashed by the Market Creators till date have diffused the disruptive technologies in the service of the humanity. In addition, those innovations have created the necessary infrastructure to facilitate the diffusion of more disruptive technologies to 'do the job' for the humanity. So the new Market Creators are not only leveraging the disruptive technologies to deliver value and thus create the foundation for the forthcoming disruptive technologies. This is how the floodgates of humongous value is opened. And this is the crux of the Prosperity Paradigm.

 


 

 

Saturday, April 17, 2021

Emergence: The Prosperity Paradigm

Prof. Clayton Christensen, through his lifelong, dedicated, focused, intensive work on Disruptive Innovations, has offered the foundation for the Prosperity Paradigm through his last book The Prosperity Paradox. (https://www.harpercollins.com/products/the-prosperity-paradox-clayton-m-christensenefosa-ojomokaren-dillon?variant=32207525511202)

Source: https://en.wikipedia.org/wiki/Disruptive_innovation

He has made a distinct differentiation about Market Creation Innovations deviating from his earlier references to Disruptions. He changes the viewpoint from the nature of the innovation to the opportunity available for the Market Creators, thus changing the whole outlook on innovations. I had been going through Prof. Clayton Christensen’s books as they got published through Innovator’s Dilemma, Innovator’s Solution, What’s Next,... He was a visionary in understanding the impact of disruptive innovations. He not only outlined the effect of disruptive innovations on the existing enterprises; but also offered the solution to the business leaders & managers to leverage Disruptive Innovations to their advantage. He guided, mentored and advised many enterprises and business groups to navigate through the series of challenges right in the middle of multiple disruptive innovations.

 

In recent times, Intel & Microsoft Duopoly, Google, Facebook, WhatsApp, Zoho,... and many organizations have leveraged disruptive innovations to their advantage to grow exponentially at their prime to thrive in their respective markets. While the predominant players in their respective markets had the benefits of the Business Leadership thought leaders, the new Market Creators didn't have the humongous burden of realigning their large organizations in response to the disruptive innovation. With their passion, dedication, deeper understanding of the new technologies, trends, tenets, trendsetting techniques &  tactics, all these Market Creators could scale up well.

Sometimes, I get a feeling that Einstein’s Theory of Relativity offered E=mc². The disruptive revelation at the beginning of the last century presented the hope of almost infinite source of energy. The best scientific, engineering and technological minds started working on unleashing energy. But the projections for Nuclear Energy Generations aren't being met! Nuclear energy generation through both Fusion & Fission is being explored. Both, Nuclear Fission & Fusion have their own challenges, though we have been tantalizingly close to solve!


The Market Creators can identify the Potential New Markets and build them. Value Chain for the New Market, Value Infrastructure with Virtuous Cycles of Value Generation & Appropriation Points by leveraging the Disruptive Innovations.

Recently (in March 2021), I was watching Silicon Valley: the Untold Story. Jan Koum was talking about how everybody innovator is so close to each other. It's a different world altogether, serendipity happens at the speed of light everyday... and overnights! The Startups grow exponentially overnight, it all ends up in a blur! And it's quite possible while everybody is bathing in the blitzkrieg of breakthrough Innovations, nobody has time to review,... And many, including Steve Jobs, headed towards a ‘non-traditional’ breakout. And... it all started from the HP Garage, which paved HP Way, generosity, equability, it’s okay to fail, but not too many times! The narrative here gives a good indication of the dynamics and mechanics of the phenomenon of Market Creation.

Genuine exponential scaling up to attain seemingly Humongous Instant Mass Appeal by leveraging initial encouragement from the aficionados, is the name of the game!

The moment Disruptive Innovation is considered as the Market Creation Innovation, the perspective, in turn, the paradigm changes dramatically & diametrically in the opposite direction! In fact, Prof. Clayton Christensen once spoke about a completely different perspective by the US Military when he presented the Disruptive Innovation idea to them. 

A completely new humongous market opportunity emerges on the back of any Disruptive,... rather, Market Creation Innovation. The greatest challenge lies in identifying the seemingly Non Existent Market, then the greater challenge is competing with Non Consumption. The challenge for the Market Creation Innovator is in first articulating that nebulous uncertain Non Existent Market. The chances of even the conceptually consistent & closest partners buying into the idea of the Humungous Market Creation Opportunity is rather very slim! Steve Wozniak couldn't continue the journey with Steve Jobs, similar was the case of Paul Allen with Bill Gates; similar is the case with Eduardo Saverin with Mark Zuckerberg!


Original Image Source: 
https://en.wikipedia.org/wiki/Disruptive_innovation

The challenge of conceiving of New Market seems just a child's play while compared to the far more complicated, difficult, tenuous and hazier Value Chain. Going forward, the Market Creation Innovators have to ensure that the Value Infrastructure needs to become the Virtuous Cycle of Value Delivery! In addition, the Value needs to be appropriated by the Innovators throughout the exercise of Market Creation, which may take years together at the least and decades together, generally! When we consider the duopoly of Intel & Microsoft in the PC Era, they were fortunate that the IBM PC Architecture & Alliance was built by IBM.... And Intel & Microsite were prescient, market savvy, agile, resourceful, competent, capable and had the long term vision, clarity & stamina to dominate the PC ecosystem for decades! 

The greatest challenge before the Market Creation Innovators lies in turbo-propping the Value Infrastructure through the Value Creating Virtuous Cycles (VCVCs). These VCVCs have to be kept in perpetual motion to prop the Value Infrastructure to rise up to the challenges of the market as the Value Performance of the Market Creation Innovation continues to grow exponentially! The Value Chain needs to rise up to more profitable market and appropriate the exponentially increasing value in equitable manner.

The Market Creation Innovator has to be highly competent, capable, confident and resourceful enough to visualize the shape of the product offerings, acceptability by the markets whom the offerings touch. 




Original Image Source: 
https://en.wikipedia.org/wiki/Disruptive_innovationstent

Please go through the other articles under Prosperity Paradigm Series. This is the second title in the series.




Sunday, April 4, 2021

The Prosperity Paradigm: Twilight

The Prosperity Paradigm: Twilight

Image by Ms. Vasundhara GH

When we look at the evolution of humanity till date, we discover many interesting aspects of it. One prominent characteristic of humanity is craving for not just satisfying basic needs in own life span but also to provide comfort & luxuries for the forthcoming generations! In my view, this unique capability, result of evolution for millions of years, enables us to thrive on the planet, ... and probably helps us to colonize the rest of the universe in future.

Humanity has been on the quest for prosperity since millennia. In that collective perennial pursuit, we, Homo sapiens, have made very significant progress so far. The progress towards prosperity has progressively accelerated till now, punctuated by disastrous downfalls due to natural calamities, wars … and, probably far more frequently, due to sheer collective ignorance, arrogance & incompetence!

The history of different societies, civilisations, cities, states, nations … also indicates intermittent thriving of humanity, not necessarily everybody benefit to the same extent, but definitely, we have collectively moved in positively progressive direction. We have definitive clues about the last few millennia about the civilizations, which shaped our current status. We have very sketchy details of the earlier period, except for the evidences at archaeological sites all over the world including pyramids, Stonehengs, ... various remains of the societies long forgotten. While the last two millennia of humanity can be traced more definitively because of easy access to verifiable multiple recordings.

        Image by Mr. Hrishikesh GH

Right at the beginning of the 20th century, Lord Kelvin pronounced …
Radio has no future. X-rays are clearly a hoax. The aeroplane is scientifically impossible.


Lord Kelvin was echoed by, across the Atlantic by Albert Michelson, a Nobel Laureate as follows:
The more important fundamental laws and facts of physical science have all been discovered, and these are so firmly established that the possibility of their ever being supplanted in consequence of new discoveries is exceedingly remote.

(Source:
Light Waves and Their Uses. By Albert A. Michelson. Published by The University of Chicago Press, 1903, pp 23-25. Albert Michelson was the first American Physics Nobel Laureate in 1907 for measuring the speed of light.

It is a good sign that humanity was on the cusp of flourish and prosperity at the beginning of the last century of the last millennium. It also indicates that, even the wisest of the period were dazzled by the scientific & technological developments for to the Scientific Revolution followed by the emergence of Industrial Revolution. Hence they were quite convinced that further inventions and discoveries were not possible. Those also reflect the mood of the time. The mankind was smugly, with beaming over confidence, was looking forward to glorious days ahead, basking in the glory of the flurry of inventions & discoveries, in addition to the prosperity delivered to the brave & bountiful due to the technological progress.

But we ended having two World Wars within the first half of the last century with the added curse of the global pandemic in the second decade of the last century!

By the end of the 20th century, humanity, all over the world, was pretty much connected in unified pursuit of prosperity with the aim to flourish together, separated due to various barriers, be they,- nationality, culture, polity, society, ...,- but connected through internet, which was originally intended to address the worst situation of complete communication breakdown due to the worst calamity!

By now, humanity has achieved the distinction of thriving over all other species while being aware of the possible threats to our home, Mother Earth. In addition, we have realized our collective responsibility of taking care of Mother Earth, while exploring the potential lifeforms and livable 'Goldilocks' planets, if ever the need arises to colonize.

Recently, I went through Serendipity Mindset, excellently postulated by Dr. Christian Busch. (My review is on http://adventuresinbmterrain.blogspot.com/2021/03/serendipity-mindset-primer-to-sixth.html) Dr. Christian Busch’s timely Serendipity Mindset presents us many ways to identify & leverage Serendipity to our advantage to deliver greater value to the society, to ultimately gain from such value creation. Being a Serendipitor, doesn’t just stop at a serendipitous discovery or an innovation, one needs to have Tenacity & Sagacity to deliver synergetic value by leveraging the network effects facilitated through the social media, both online and offline! I like to go another step forward, which, I believe was implicit that the Serendipitors need to have the prepared mind to size and seize the serendipitous outcomes! The prepared mind of the Serendipitors can only be ready through competence, comprehension, compulsions and more importantly, the Compelling Collective Vision!

In my view, diffusion of all the technological innovations necessitated the formulation of Business Management innovations. The last century saw many management innovations shaping the business world. Evolution of management theories & processes and resultant systems were largely innovative blend of discoveries & inventions in almost all the fields.

If we look at the state of humanity in the first two decades of the third millennia, we have gone through quite interesting times while getting ready for more interesting, rather exciting times!

Recently, I went through Vaclav Smil’s Growth. He has almost exhaustively & comprehensively growth. Two of my insights I like to share from the book are as follow:

1) Everything which can be measured physically & quantitatively had been identified and our thought processes are attuned to this reality hence it's very difficult to collectively (even tools aren't there to measure this!) imagine future growth in qualitative, subjective & creative dimensions. And fortunately, that's where the further progress lies.

2) Certain fields like harnessing nuclear energy have hit the feasibility, viability, safety limits. Hence, we aren't able to achieve the euphoric growth projections in those fields! It's as if we have reached an insurmountable barrier, while we all got struck by a flashlight of infinite inspiration.

Recently, I came across the essay, The Empty Brain by Robert Epstein.

The following quote of the essay, in my view, is the fulcrum and the essence.

Forgive me for this introduction to computing, but I need to be clear: computers really do operate on symbolic representations of the world. They really store and retrieve. They really process. They really have physical memories. They really are guided in everything they do, without exception by algorithms.

Humans, on the other hand, do not – never did, never will. Given this reality, why do so many scientists talk about our mental life as if we were computers?

The insights I gained from the article are as follow:

Collectively, we have been trying to understand the mystery of the universe since millennia. We have been fairly successful, through centuries, in modelling, comprehensively capturing the essence,- of the physical universe around us. And whenever we have broken,- rather we felt ‘we have broken’, ‘new grounds', in understanding the mechanics & dynamics of the physical universe; we have triumphantly moved ahead to model our minds, and the physical representation of our minds, our brains! And in addition, we have limited and chained our minds within the new boundaries. Interestingly, we get ‘encumbered’ within those new ‘breakthrough’ limits!

In my view, we get stuck in a stupor (I'm using stupor for the want of a better word!) for considerable period, especially while enjoying the benefits of the new breakthrough Innovations.
Then we enter into a territory that the emergence of new innovations will hurt us, once we reach ‘singularity’!

In a way, we have crossed those ‘singularities’ many times over millennia until the Renaissance. And afterwards, we have successfully crossed many more singularities, over centuries until the last decades of the last century of the last millennia. In my view, now we have reached a stage wherein we are going to breach, rather self imposed and much dreaded, singularities in decades! This may sound like a bold utterance now. But I'm sure, it may look unimaginative and probably too mild for the posterity! I look forward to that time, which may emerge shortly.

All the thoughts I have gone through above signals a new beginning. Humanity, unbeknownst to itself has entered into intractable path of Prosperity. There is a new paradigm which awaits us. I think this new paradigm before us is Prosperity Paradigm.

And this Prosperity Paradigm is hidden in plain sight in bright daylight because of involuntary inattention to it due to complexities of the stark ground realities and our own encumbrance of our minds because of the dazzling effects and benefits of the preceding breakthrough innovations, all around us.

Image by Mr. Hrishikesh GH