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Oaxaca

Hello Rick. Actually your suspicions on growth being driven by small business (in the US)are not only valid but also fact. The Kauffman Research Foundation recently released a paper "that put simply, shows that without start-ups, there would be no net job growth in the U.S. economy."
See http://www.kauffman.org/research-and-policy/the-importance-of-startups-in-job-creation-and-job-desctruction.aspx

++++++

Hello John,

Really enjoy reading your work. Your statement;

"This pull approach seeks to develop scalable pull platforms that amplify our ability to draw out the people and resources when we need them and where we need them."

..is an area I've been working on for some time which I've described as "Fractional Work, The Next Small Thing"
http://winningbysharing.typepad.com/oaxaca/2007/02/fractional_cons.html

Odesk.com is probably the best example right now and could well become "an eBay for work".

IBM's recent announcement that it will lay off around 300,000 employees and shift to an 'on demand' workforce model should be taken very seriously because they realise that value can be created by any means necessary, no longer dictated by organisational relations, boundaries and out dated labour models.


tartle

The Red Queen effect only plays out positively if you are running in the right direction. Getting the vector right requires 'thinking'. I remember sitting in a bankrupt aeroengine company [that 40 years on is one of the top global aero-power providers] and being told we could have as many people as we liked to start work on a better engine (for Boeing as it happens). Our boss said "no, I want to sit with my 3 section managers (I was one) and figure out how we do it faster and better." Two weeks later we started to ask for support services to get their act together and collaborate/coordinate and we did our project almost right first time and in 1/3 less time.
So to get out of this incredible mess I suggest we need to think for a while and then move, in what we think is, the correct direction and be prepared to change the vector (slow down, move north, speed up on the turn, etc.). It is that OODA effect again.

pankit

I completely agree. Recover? not too soon...
here's my take - supported with facts

I see dead companies...

http://witstroll.wordpress.com/2010/04/16/i-see-dead-companies/

Darrell Kent

Hi John,

I really thought the last two posts were unfair.

I'm just a regular guy trying to make my way in the (as you point out, increasingly competitive) world - your book is proving to be of tremendous help.

There often aren't easy answers. Feeling sorry for oneself - and blaming the parasite class - I suspect will be the answer for few if any.

Richard Leon

I think it's fascinating to see words like 'passion', 'change', 'creativity' and 'pull' coopted into an Orwellian newspeak where they mean - well, who knows what they're supposed to mean now.

Obviously, it's Very Important, whatever it is. But equally, it's clearly not what they've meant for the last few centuries in English like what she is usually spoke.

I realise this is SOP for the upper levels of corporate industries, which are fundamentally driven by drama, self-importance, perpetual crisis and superficial egotism, and not so much by the ability to do a job quietly and well.

But that's no reason to make the rest of us suffer through this kind of nonsense.

Oh, and *please* learn to write English.

"Small moves, smartly made, can in fact set big things in motion. To pursue this path, though, we will need a sense of direction, harness different forms of leverage and deploy platforms that can accelerate the pace of change."

You realise that's almost entirely empty of any real meaning, don't you?

I suppose it reduces to 'Hire me to tell you to do clever stuff which only I understand and you don't.'

Not a bad strategy in a market economy where everyone is a brand and we're all synergistically competing with each other.

But still. Meh.

Ormond

One more smart guy makes up a concept to hide the real reason for the failure of Return on Capital.

The answer is, of course, as Darwin would predict, that the aging and static system of capitalist engorgement on the output of the lower/working classes is a form of parasitism. Look for financialisation as a form of bunco game, rather than a real output optimisation technique.

This article is puffery and fraud, onanism of the parasite class.

Carmen Medina

As Rick Burnes suggests, there are many ways you can have economic growth even as the return on assets for corporations declines. The fact of the matter is the world economy has grown 3-4 times in size since 1965 and while Asia is the largest share of that growth, the US was no piker. The new economy developing around the principles of Pull also gets captured in economic indicators.

Mike Speiser

I just started reading your book, so this comment is based only on this post.

When the world goes through significant technological transitions, might capital get "stuck" in the last generation's industries / companies for too long -- only after persistent economic under-performance finally getting freed up to pursue better uses? Is it reasonable to expect some extended period of inefficient allocation and the pain associated with these inefficiencies before we have the will to get rid of the old and bring in the new?

Do you know if the same ROA compression has existed in previous transitions in the US? Internationally?

I love the idea of pushing (or pulling) decision making down to where knowledge exists rather than destroying knowledge by pushing it up a hierarchy. But perhaps this is as much about capital inertia as anything else?

Dticoll

John,

I think your analysis on the downside is powerful, essentially that technology and innovation inevitably exert deflationary pressure, and that information technologies are more powerful in this respect than physical technologies. It's probably occurred to you, JSB and Lang D. that Marx pretty much predicted this a long time ago.

What I find harder to grasp is how knowledge flow and pull will change this. I can see why this would be true in the case of an individual firm that takes a lead in these new of achieving productivity. But as these techniques inevitably become generalized across the economy the impacts on margins and returns will spread. Unless you believe that a handful of monoliths will rule these roosts. What we are seeing today is a lot of both. Massive deflation in specific markets (like media) and quasi-monopolies like Google and Apple that have managed to capture point positions.

This raises some questions:
- is the dominance of these quasi-monopolies sustainable?
- if so, don't they do so at the expense of ROC across the rest of the economy (which means that average ROC will continue to decline)
- if not, won't average ROC decline anyway, as the methods of the knowledge-stock pioneers become generalized?

George

It's good to see someone make this connection. One area that I cover in my blog has to do with open innovation. Companies are engaging in this practice in order to identify what the market really wants as opposed to dictating what the market needs.

Michael Gusek

This is going to be one wild ride...

Geriatric Command and Control holding on to the 1950's Game Theory Intelligence model like an addict being told to give up their God Smack...All supported by an aging centralized Reductionist infrastructure and an inflated Baby Boomer vote.

Will we survive? Stay tuned for the next episode of "Regaining Balance in the System"!

Rick Burnes

What if, as many hypothesize, a recovery is being driven by small businesses? The return on assets for public companies may not be recovering, but it could be that smaller companies are generating quite a healthy return -- in fact, anecdotally, I'd say it's far easier for small companies to position themselves to take advantage of knowledge flows, and thus begin to grow.

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