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Hypercompetition and Hybrid Economy: How to Save Capitalism?

Financial Times Lexicon defines hypercompetition in a following way: ”A situation in which there is a lot of very strong competition between companies, markets are changing very quickly, and it is easy to enter a new market, so that it is not possible for one company to keep a competitive advantage for a long time”. (See http://lexicon.ft.com/Term?term=hypercompetition). Many economists have noted that hypercompetition leads markets to unstable conditions. Theories of general equilibrium in markets and automatic stabilization of markets do not hold, if markets are in unstable conditions. Richard A. D’aveni introduced this concept to scientific discussion of company and corporate theories. His book “Hypercompetition” is a classic book in the international management literature. One key statement of his book was that competitive advantage can no longer be sustained.

Hypercompetition results from the dynamics of strategic maneuvering amongst many competitors. It is the condition of rapid escalation of competition based on price-quality positioning.

Corporations and companies want to use other tools to compete under conditions of hypercompetition. They do not want to start price wars. In such conditions corporations want to be Cost & Quality (C-Q)-leaders or followers. They may want to create Timing and Know-How (T-K)-Value chains and build new efficiencies. In some case they may rely on Strongholds (S)-Core or on Distinctive Competencies. Deep pockets strategy is based on the availability of financial capital. (see http://blogs.msdn.com/b/archetype/archive/2006/07/24/677222.aspx).

To escape disastrous price wars, modern companies try to occupy different locations on the price like brand strategies, offering mass customization, quality axis, using micro-marketing, and shifting strategies based on the changing anatomy of industry trends.

To sum up, new arenas of hypercompetition are:

  • Cost & Quality (C-Q),
  • Timing and Know-How (T-K),
  • Strongholds (S), and
  • Deep pockets (D).

Hypercompetition is emphasized on several occasions – in particular, in the creative economy in the context of organizational development. Success is based on the fast changes in hypercompetitive business environment. Agents and leaders must change rapidly and understand and internalize weak signals in their decision environment. For a company to stay alive and competitive it must very innovative. It mean that a company delivers novel and advanced products and services for which there is little or no equal in the marketplace. Commodity differentiation and branding are key aspects of hypercompetition.  Hypercompetition is focused on is new ideas, inventions and innovations.

Now many experts have started discuss about hybrid economy. What is hybrid economy? How it is connected to hypercompetition? A hybrid economy is any type of local, state, or national economic system that involves a more or less equal focus on two or more different types of economy.

This hybrid economy model is a relatively common structure that has been utilized in many different settings over the history of humankind. For example, in traditional agricultural society there were exchange and storage economies. Some examples of a hybrid economy may include a creative economy, a military-industrial based economy, a university-industry based economy, or hybrid economy based primarily on a mix of business and government. Thus, there are various forms of hybrid economy. New forms of hybrid economy include typically e-business and internet economics.

These forms of hybrid economies are not fitting well to pure exchange mechanisms of market economy. The reason for the existence of hybrid economies is that they promote stable systemic mechanisms than market economy or unstable hypercompetition.  The element of public good is typical for hybrid economies. We can even claim that in the future we need more elements of hybrid economies to make capitalism work better. If we want that capitalism delivers benefits and positive values to everyone, there is need to develop more innovative patterns for the hybrid economy. New forms of hybrid economy can also include dynamic elements of social innovation.

The transition to a hybrid model of competition does not mean that the market would disappear, and markets would not be relevant for transaction mechanisms. This is something that should be emphasized. Also hybrid economy is based on competition. Hybrid competition is a very important new element in the global hypercompetition. Hybrid competition is also connected to good governance systems and to trust of democratic agencies and institutions.

We can take a number of reasons why the hybrid competition has risen and continues to rise as an important part of people´s and organizations´ wealth creation processes:

• Globalisation and its associated cultural interactions;

• The penetration of the Internet and related digital networking;

• Digital technology innovations (Web 2.0, Web 3.0 and Web 4.0 etc.);

• Pressures and unstable processes of  the hypercompetition;

• Ubiquitous r/evolution, the Internet of Things and other digital forms of evolution like Cloud Computing and Big Data), and

• Co-creation (co-creation processes) with the growing economic importance.

The global economy means a new division of labor in the world. Workplaces are lost in some countries and regions and in some other places people are creating new jobs.

Frequently asked question is what kind of new work places can be created after old work places are lost? One obvious answer is: “Something else”. People have always developed something else after the loss of permanent jobs. The big problem is that it may take too much time to find new jobs, if we do not make systemic changes to the postmodern societies.

If we rely only on the hypercompetition and market mechanism, our societies will be very unstable and cause a lot of social losses. If we really can develop new social innovations and new forms of hybrid economy, we can expect that social and economic transition processes will be faster, less unstable and cause less welfare losses.

Today we must allow multiple stakeholders to negotiate over how to attain a desirable future. Developing new innovative forms of hybrid economy will require new forms of dialogue and debates. The only option is not unstable hypercompetition, which mostly delivers benefits of exchange and markets unethically and unequally.

It is worth of underlining that people create their economies and systems of governance. It is worth of noting that in capitalism people are allowed to think freely. These two things are relevant if we want to save capitalism and re-invent it as a dynamic form of global governance.

Further reading:

Anderson, Theresa Dirndorfer (2011) Beyond eureka moments: supporting the invisible work of creativity and innovation. Information Research. Vol. 16, No. 1., Web; http://informationr.net/ir/16-1/paper471.html

D’aveni, Richard A. (1994)  Hypercompetition. Managing the Dynamics of Strategic Maneuvering.  Web: http://books.simonandschuster.com/Hypercompetition/Richard-A-D’aveni/9780029069387

Florida, E. (2001). The Rise of the Creative Class. New York, NY: Basic Books.

Howkins, J. (2001) The Creative Economy. London: Penguin Books.

Howkins, J. (2009) Creative Ecologies. Where Thinking is a Proper Job. St Lucia, Queemsland: Queensland University.

Lessig, Lawrence (2008) Making Art and Commerce Thrive in the Hybrid Economy. London: The Penguin Press.

Palmer, Tom G. (Ed.) (2012) The Morality of Capitalism: What Your Professors Won’t Tell You. Ottawa, Illinois: Students For Liberty & Atlas Network Jameson Books, Inc.

Wolff, Richard D. & Barsamian, David (2012) Occupy the Economy. Challenging Capitalism. Chicago: Haymarket Books.

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The Boho Bottom Line

Inarguably are we entering a new era where all kind of measuring based on the means of the industrial age are passé, and not only that. They can be pernicious as well. An old saying claims that you get what you measure and that is quite true – we have been measuring beans and coins and that is what we’ve got, lot’s of money somewhere marked with a minus and somewhere else with a plus. Funny thing is that actually the beans and coins game has ended up as a minus sum game as the global debt shambles is out of control.

Companies CSR efforts have not resulted in radical betterings partly perhaps because they are used merely as tools for PR.

In 1994 John Elkington suggested Triple Bottom Line approach where the companies bottom line should be expressed three dimensionally: people, planet & profit. The idea faded away with cost cutting being the main priority for businesses.

An interesting discussion about Shared Value is going on and leading us once again to discuss capitalism and it’s benefits and flaws. Prof Michael Porter presents a positive view while John Elkington is a bit dubious.

Why is the discussion of the bottom line and capitalism so important for the modern Bohemians and BohoBusinesses? We do not believe that money is going away as a tool for exchange. As Prof. Tom G. Palmer says: money is an tool for dignified exchange of products and services. As a creative worker I more than agree with Tom’s statement, bartering can be satisfactory for some time but in the long run it brings about dissonance between people. Well, and does not contribute to the society in form of taxes neither.

When thinking about the new solutions for businesses to contribute to the common global good we  cannot and should not forget the people’s and companies pursuit to win and by so means create profits that can be invested in new endeavors for development and better lives.

Therefore we see that the Bohemian way to look at sustainable business, BohoBusiness, is the win*win(+win). In this equation the partie’s create multiple wins and also cause beneficial impacts to third parties. In other words we are not denying the creation of wealth, profitable business and the thriving of individuals, teams and organizations but we suggest they along with their strategies and actions strive to find ways to contribute to the society and the planet as well, not only as individual companies but as a part of partnerships as well.

In the win*win(+win) way we believe that the Bohobusinesses can take CSR, Shared Value and TBL into their strategies, tactics, operations and daily actions. The win*win(+win) provides also the artistic and innovative Bohemians an ethical scheme to look at their work also from the point of view of profits and on the other hand for the economics and material oriented a way to take the +win as a part of their paradigm.

Actually the +win is the key to great victories and profits in the more and more robotizing world. The deals between partners are often times such that they do not require broad and creative intelligence. Seeing the future, the planet and the needs of humanity on the other hand require such abilities to conceive that the robots are hardly getting there yet in some decades.

Besides, we are here to have fun, enjoy our lives, our families, to work with passion, to connect and cooperate with others. We all have unique talents and skills. It is our birthright to live up to our best selves. This is to win and with win*win(+win) we can multiply the joy and make life and business a co-thriving journey.

All set up for a win*win(+win) session at The Helsinki Music House.

Towards A New Capitalism In The World Of Bohos

Think about yourself walking in a thick jungle. In a jungle where the branches, bushes, lianes and the thick undergrowth makes your progress hard. Bristling with fear and anxiety you bulldoze your way forward with a help of sticks and knives. The knowledge that there might be dangerous beasts lurking among the vegetation doesn’t make your race any easier. You must constantly be prepared to attack and protect yourself.

Now imagine, that the jungle is finished and you entered a deciduous forest. The vegetation is still lush but not stickingly thick. However you keep your knife and stick ready and from time to time you cut a low hanging branch. And you are hoping that you’d get out of the jungle one day.

You are not ready to adopt the new environment even though you are in the middle of it. You are in deciduous woods clamouring for a change in the jungle.

We are so used to live depending on one big truth. To believe in one big truth. Not necessarily because it would be the only one but because it makes our lives easier.

The world has changed from a space divided with frontiers to a boarderless web of people. Different truths and ideas can wander freely and meet people also there, where the one truth nepotism has selfishly built isolated societies.

The discussion about the morality of capitalism is a sign of the change that is already going on. A crowd of people has left the jungle capitalism and moved into a grove of new economics. Yet many cry “it’s a jungle out there”, dangerous and hard.

”Capitalism is a system of cultural, spiritual and ethical values” says professor Tom G. Palmer in his book “The Morality of Capitalism”. Yes. And the mission for the people is to create for that system a content that serves the highest purposes of the human kind. Then capitalism can be a system where the right to ownership and the freedom to make agreements in the spirit of free will can be realized.

Marc Luyckx Ghisi a professor of Future Studies from Belgium says “Truth is in the empty center of the common table around which all cultures are sitting on an equal footing. Women and men are also equal. The urgent scope of life is to care together for our survival. But the main goal in life for everyone is to reach the center, the “divine light” or the “absence of light”. And the more you approach the center, the less you can define what the illumination is. You are only able to experience it. And nobody owns or controls this “empty” truth. It is impossible.” The nature, animals and plants are part of this consciousness and thus respected.

The truth, the light in the middle of the world-table, is a common emotional experience that the value that the individuals bring to the table creates something big and meaningful when it is integrated into the common flow of values.

This is the new world we are living in. Call it transmodern or post-post modern or a world of people, without definition… I kind of a world where “… the value grows by mobilizing the energy and capacity for invention of the people in an unprecedented scale, so that wealth is created to a common man…” in Tom’s book the sentence begins with the word “capitalism”.

Why do we need words? We need ideological vehicles so that we can realize in what kind of woods we are walking in. The word capitalism is difficult to accept for many. It is loaded with heavy accusations  but perhaps it is the right word when we seek for a vehicle to express the economics of this new world.

But if capitalism has made damage to people’s souls then we need to find a new vehicle to describe the system of freedom, spiritual values, the uniqueness and talent of the individuals, creative projects of societies, tribes and movements, holism without reductionism in the name of economics, wealth building without exploitation and robbery. “Substituting power with persuation and envy with achievements” says Palmer. Yes. Palmer emphasizes that capitalism does not include greedy exploitation and robbery because they lack the element of mutual free will.

My credo is ”we are built to win”. A human being is endowed with unique potential and her/his life is a work of art that we all must respect. The world is simultaneously a collection of talents and a shared, cooperative performace, “a concert of a globalized planet” *, where each and every one adds value with her own talents and uniqueness. In a cocreative process an awesome tapestry with thick value is formed combining the spiritual and the material. The economy is a part of that performance and that, the economy,  must be made to serve the human kind with the understanding that everybody is important and equally valuable.

Professor Bjorn Wahlroos talked about India. He reminded that it is not that long time ago the news we heard from India were those of famine. Nowadays we are hearing more and more good news from India. About flourishing businesses, great universities and exciting innovations. When the economy grows there will be space to handle other issues as well, human rights for example.

It would be unwise to push capitalism aside because of the greediness that has ruined it’s good parts. We need creation of economic value so that we can continue to develop well being of both people and the earth. But the capitalism must change. It must see that people have come out from the jungle.  I’ll quote John Mackey who was interviewed by Tom G. Palmer:

”Capitalism is a source for value. It is the most awesome tool for cooperation. This is the story we need to tell. We must change the way we approach it. From the viewpoint of ethics we need to change the description of capitalism so that we can show that capitalism is about creating shared value, not for some but for all. If people would see capitalism as I do, they would love it as much as I do.”

*) The great concert of the globalized planet”, Mario Vargas Llosa,  in Palmer’s book.

Tom G. Palmer, ed., Morality of Capitalism, 2011.

“We are built to win” you can find also from Mike Babcock’s book Leave No Doubt

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