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I have spoken at length about the first one in previous Snippets. Today I want to address the second. This is important because with a worldview of scarcity people feel compelled to compete; they fight each other for a limited amount of business; they go to war to protect economic resources such as land or oil. Most importantly we try to succeed by controlling scarce economic resources rather than by adding value. In today's world this is simply bad thinking but still world leaders are caught up in it. Think of someone with the initials G.W.B!
A good friend and client got me started on this subject by replying to my last Snippet. He said, In our competition for scarce resources (finance, customers, suppliers, intellectual property, comparative and defensible advantage) we exhibit hunting/gathering and possessing/protection/exploiting behaviours. The rules of the marketplaces in which we work reward such behaviours, and will in time punish those who ignore them. He ended by saying, 'I'm from the food business. There is no unlimited pie.'
This is a person who I respect enormously. He stretches my thinking both as a client and as a friend and in many ways I agree with him. Sometimes I find my Snippets are often unrealistically one-sided; this is a pity because I don't see myself as a one-sided person; but I find myself arguing that way in order to move attitudes towards an often unpopular viewpoint. So don't let me get a way with it. Remember that Snippets are a two-way street. I value your thoughts enormously and I'm really interested to hear from you.
In my work I place significant emphasis on worldviews, because in my experience people will only take actions that are consistent with their current worldview. I have found that when I change their worldview I change their behaviours simply because what they have done in the past no longer makes sense.
This angle is not easy to accept. As business people, nearly everything that we have learnt and all our training has been how to succeed in a world of scarcity. I have just looked up my Canterbury Stage 3 Economics text and the very definition of economics is the study of society's allocation of scarce resources. It's about how we divide up what we already have rather than how we can create more for everybody. It's about how we cut the pie rather than how we create a bigger pie. It's about diminishing returns rather than increasing returns. We have grown up thinking that wealth comes from Land, Labour and Capital; those that have lots are wealthy, those with little are poor. Right?
Wrong! In today's world this is faulty thinking. We need a new working theory of Economics, the old one no longer explains what we see happening. We need to dispel many of the economic theories that are limiting our business success. W. Brian Arthur and Paul Zane Pilzer are far closer to the truth. Pilzer in his book Unlimited Wealth says that technology creates resources and resources create wealth. Lets look at his rationale.
Technology is anything that makes work better. Think of the wheel, or the internal combustion engine, or flight; all these technologies were created by a mind.
For years technology has been so slow to change that we have defined vast historical periods by them. Bronze was better than stone and iron was better than bronze. Both were major leaps in technology. Both were the direct result of someone figuring out how to do something that worked better. Until recently technology changed so slowly that our very identity was defined by the technology we used: Smith, Thatcher, etc. Now technologies are changing faster than ever before, changes occur several times within a single lifetime.
In a real sense technology is creating new resources. In the Stone Age iron, if it existed, would have had no value because the knowledge required to use it had not been thought through. In other words the technology had not been invented. The same is true for oil before the Industrial Age, where it existed on or near the surface of the land it was a major problem that had to be removed. What made oil a resource was the internal engine technology.
As soon as one resource starts to run out someone will come up with a new idea that will lead to a new technology that will redefine our ideas about what the resource is.
The second law can be demonstrated by two of my clients. It seems the energy crisis may not be a problem after all. The first client drills oil. They drill down deeper than Mt Cook is high. With this technology vast new fields are being tapped throughout the world vastly increasing the available supply. The second client is an energy research company and they have come up with a new technology for burning coal without the nasties. It takes a dirty harmful substance and turns it into hydrogen which can be transported easily and burns with only water as a by-product; it's essentially green coal. Clearly this technology will change our whole concept about the usefulness of coal and the value we give it. In other words the new technology has created a new resource.
Resources truly do depend on the technologies of the day. Today some things we previously thought had no value are proving to be the most valuable. Think of wind, sunlight, water; today computers are made out of silicon or sand.
Information is interesting stuff. It becomes more valuable once it's used. It's only useful when you share it with someone else. It grows in value when it's added to and combined with other information. It can be stored cheaply and without deterioration. It can be transported at almost no cost. It's growing faster than any other stuff you can think of, indeed it's growing exponentially. It can be added to almost any product and the result is a far more useful product. Obviously computers and the web are key drivers of this increased speed but so is the concept of small world and our readiness to share and trust each other with ideas and network across boundaries. This brings me back full circle.
The whole economics of information has changed over the last 10 years. The trade-off we once had to make between reach (ability to reach many people with your information) and richness (ability to tailor information to specific end users) has almost disappeared. And the important thing is that this has only just started.
To summarise: minds create ideas that lead to new technology that lead to new resources that lead to wealth. Faster information exchange is driving faster technology growth and this is creating all sorts of new resources and value. As a result in today's world there is a potential for unlimited wealth.
This Snippet is getting a bit long so I'll continue it next week and show you how to succeed in a BIG PIE world.
Helps large organisations be focussed, fast and flexible. Places where people have more meaning, depth and connection.
Expert in Strategy, Structure, Culture and Leadership Development.
One of NZ's most experienced change agents.