Power of Information Asymmetry– Business of- Lemons: Seller Vs. Buyer Scale of Transparency…

A ‘lemon’: No, it’s not about citrus fruit, it’s about problems that arise in markets when there’s ‘information asymmetry’. Asymmetric information occurs when seller has more, or better information than buyer… When consumers are unable to fully assess, due to lack of information, things that they are buying– there is always a chance they are going to get a ‘lemon’…

The ‘lemons’ problem theory was described by George Akerlof in 1970 paper titled: The Market for Lemons: Quality Uncertainty and Market Mechanism, for which George Akerlof, Michael Spence, and Joseph Stiglitz jointly received the Nobel Memorial Prize, in Economic Sciences in 2001…

Their research centered around the ideas of asymmetric information… and they used metaphor of ‘lemon’ as it related to poor-quality and pricing of used-cars… Akerlof challenged the consensus of the time, and he used the term– ‘perfectly competitive general equilibrium model’, in which competition makes it impossible for seller (or buyer) to set or influence the price of goods…

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In the article Information Failure by Richard H. Cass R. Sunstein write: It can be argued that markets work best (more efficient) when information is perfect and is evenly shared by all parties in a transaction. Hence, asymmetric information is an economic problem because one party can exploit their greater information or knowledge… There are many examples of information failure associated with economic transactions, e.g.; Job applicant, who fails to reveal full information about their work skills… Estate agent seller, who does not disclose all relevant information about piece of property and possible problems… Cigarette manufacturer, who does not inform smokers of true health risk of smoking… Buyer of financial product, who is unaware of the true level of risk… Seller of a pension, who misleads purchasers about the financial value of the pension…

When parties to a transaction are ignorant (lack information) of certain aspects of the transaction, e.g.; quality of the goods they are buying, they often just make a decision just based on price– a buyer may assume that goods are of poor-quality, if price is low… or, assume that goods are of high-quality, if price is high… When George Akerlof analyzed the problem he associated it with pricing used-cars, which he called ‘lemons market’– a ‘lemon’ is a derogatory term for a poor quality used-car. However, the lemon’s problem has many wider implications in terms of understanding information failure in markets, generally… Hence, whenever there is information failure there is the possibility that the markets will become ‘lemons markets’…

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In the article Information Asymmetry: Empowering Consumers by Grace Nasri writes: Until recently– and even depending on the market– there has been an unbalanced distribution of information between buyers and sellers– merchants have long-held the advantage… With full information over consumers, they’ve had the power to set prices and hide crucial information about products and services, leaving buyers at the mercy of sellers…

Consumers had few resources for unbiased information, where they could go to find average prices for goods and services in markets– from real estate and autos to careers and travel. This information asymmetry negatively affecting consumers, business, competitive market in general… Consumers often must make decisions based on partial information… Too often, the only information consumers have is information provided by the same merchants, who were trying to make the sale– biased and incomplete…

Consumers would often end-up paying far above true value… Worse, some hapless buyers ended-up with ‘lemons’, a term coined to describe used-cars found to be defective only after they had been purchased… At the same time, honest businesses that sold quality products at reasonable prices would often lose out to manipulative counter-parts who masked sub-par products with big-budget marketing ploys and slick Ads… An efficient market depends on buyers making rational decisions, and buyers can only make rational decisions when they have equal access to the same information as sellers (and reverse is true for sellers)…

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In the article End of Asymmetric Information by Alex Tabarrok and Tyler Cowen write: Market institutions are rapidly evolving to a situation where very often buyer and seller have roughly equal knowledge… Technological developments are giving everyone who wants it access to the very best information, e.g.; product quality, worker performance, matches to friends and partners, nature of financial transactions, and among many other areas…

However, with increased advancements in technology, asymmetric information has been on the decline as a result of more people being able to easily access all types of information, especially with Internet and social media… And there are growing number of companies that see the ‘business of information’ as an outstanding opportunity… and they are beginning to shift the balance of information asymmetry back to the consumers… This shift toward a more balanced distribution of information benefits both consumers and business alike…

In the article Buyer Still Beware by David Auerbach writes: Technological developments are giving everyone who wants it access to the very best information… However, what many people fail to observe is that ‘the very best information’ is not 100% pure but cut with inferior data ranging from unreliable accounts to deceitful garbage… The problem is not even noisy signals per se, but too many signals… According to Tabarrok and Cowen; a lot of economic theories about asymmetric information, while logically correct, have been rendered empirically obsolete… But have they?

For example; recently asymmetric information has become a flash point in the health care wars– economists and policymakers debate what it means when patients know more about their health than insurance companies… when doctors know more about medicine than their patients (or insurance companies), and when nobody knows what’s wrong with many of patients in the first place… More generally the Internet has caused society to experience a transition from a scarcity of signals to a surfeit of signals.

More information means more good information, but also more bad information… The amount of information available on any given transaction can be more than a single person or agent can possibly process… We are now in a world where there is vastly more to know, yet most people’s cognitive capacities remain what they were in the Stone Age…

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In the real world, everyone is not equally in the dark– in every situation some people usually know more than others… According to Thomas G. Clark; the claim by some experts that information asymmetry ‘is on the decline’ when in fact the opposite is true and that information asymmetry is now more prevalent than ever, and that it can be seen as the root cause of the global economic meltdown… The rise of digital technology hasn’t just improved capacity of the individual to access valid information, but it’s also greatly increased capacity for agents to produce deliberately asymmetrical information…

According to Rafael Hurts; Internet empowers some consumers; but some consumer are marginally literate; some are innumerate; some are naive; some are stupid; some are just beginning to develop dementia… According to Suw Charman-Anderson; the simplest of information asymmetry problems has many names, e.g.; some call it, ‘price transparency’ or simply ‘transparency’…

But this over simplifies and undervalues the problem, since just having transparency does not always mean that you get the best deal…

Dark Side of Creativity: Divergent Thinkers More Dishonest Vs. Convergent Thinkers: Managing Dark Side of Innovation…

Creativity is valued as one of the most important qualities that a leader can have, yet research has shown that while creative people are skilled at coming up with new ideas, there is also a dark side to their divergent thinking…

According to William Lee Adams; a growing body of research suggests that there is merit to the assumption that– madness, dishonesty… may lurk where creativity lies… According to Francesca Gino and Dan Ariely;  series of experiments have demonstrated that a creative personality and a creative mindset may promote a person’s ability to justify any bad or unethical behavior, which suggests that there might be an association between creativity and dishonesty…

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Psychological research has begun examining the dark side of creativity, and it has already turned-up some interesting findings, e.g.; creativity isn’t all upside– creative individuals are more likely to be– arrogant, good liars, distrustful, dishonest and maybe just a little crazy, or some call it– unusual or eccentric…

In study by Lynne C. Vincent and  Maryam Kouchaki; creative people just don’t think outside the box they believe they deserve a bigger box than others, and as result they often behave counter to acceptable norms. Hence, researchers suggest that leaders must better understand the creative process, and more important understand behavior characteristic’s of creative (or divergent) thinkers, and define and enforce what is considered to be acceptable behavior for everyone in the organization, for both– creatives and non-creatives…

In the article Dark Side of Creativity: Original Thinkers Can be Dishonest by Francesca Gino and Dan Ariely write: The ability to generate novel ideas and think creatively about problems has long been considered important skill for– people, organizations, society… Creativity is the foundation for business success; it creates exciting products, services… which in turn generates jobs. Divergent thinking enables organizations to solve difficult problems so that they can better cope with– advantages, opportunities, technologies, and rapid changes of a highly competitive global economy… Business and society needs new inventions, new solutions to old issues, novel business and social programs… and organizations need to adapt to the ever-changing consumer preferences and business environments…

However there is a dark side with creativity: In several studies participants with creative personalities who scored high on a test measuring divergent thinking tended to cheat more… researchers are suggesting that this dispositional creativity enables divergent thinkers to justify dishonest behavior… the study results also suggests that individuals who work in more creative positions are more morally flexible… Hence, the overall study results suggests a linkage between creativity and dishonesty, and between creativity and rationalization…

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In the article Value of Divergent Thinking by Arun Kottolli writes: Convergent thinking is a natural process for most people… People are often forced to think in terms of conformity, or what is known as convergent thinking. Convergent thinking generally means ability to engage in activities that don’t require much creativity. Whereas  rather than endorsing conformity of an organization or society, the ability to think divergently (divergent thinking) gives an individual or organization the opportunity to be creative in devising a solution and catalyst of change…

The term ‘divergent thinking’ was coined by Joy Guilford… divergent thinking is the ability to conceive many ideas, to produce unusual and original ideas, and to take an idea and elaborate variants of the idea… Not all ideas generated by divergent thinking are no necessarily correct or even workable; the ideas may be fanciful, outlandish, impractical and even absolutely wrong…

In a typical business scenario, the normal practice is jump into a final solution as quick as possible… But this limits the options and it often relies on past experience and almost never considers the– new, untested ideas… Divergent thinking on the other hand, forces people to think of all possibilities and in that process generate new ideas or solutions… Another way to look at the value of divergent thinking is to look at competitive markets; when two companies are competing their product lines often are very similar, so if one wants to outsmart the competition, then one must think of ideas that are dramatically different then that of the competition… Business success (or even social change) is highly dependent on the execution of creative ideas or divergent thinking…

In the article Does Creativity Have a Dark Side? by Tomas Chamorro-Premuzic writes:  Creativity involves disrupting status quo and doing things differently. But if you are OK with the existing order of things, you will have no incentive to change, and if you see things like everyone else, you probably are not creative… However, there is a down-side to creativity; recent research suggests that creativity increases a person’s likelihood to cheat– the more creative you are the more likely you are to fool not just others but also yourself…

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In the article Do Companies Want Creative Thinkers or Problem Solvers? by Leticia McCadden and Alyssa Brow write: Companies are constantly grumble that they do not have enough creative thinkers,  schools try to teach it, and job-seekers almost always mention it on their resumes… However, when business leaders say they want creative thinkers, they often mean they want problem-solvers… According to Johnny Taylor; business wants to innovate and solve problems so they can attract customers… Hence,  it’s less about the theoretical, education-based concept of thinking, and more about the business of developing better, different solutions for customers…

So while companies say the need creative thinkers to grow and thrive, but what they really mean is they need more problem-solvers… According to Jim Clifton; to grow and prosper business, more often than not, needs people who are problem-solvers… so next time the business says it needs a ‘creative thinker’– stop and think; the business might actually need a ‘problem-solver’, rather than a ‘creative thinker’…

Creative people by definition are divergent thinkers, which means that they break ‘rules’– they break rules so they can construct new associations between previously unassociated elements… According to Jenna Rodrigues; majority of people conform to the world as it exists, whereas divergent thinkers see the world in ways that many others cannot– they seek problems, conceptualize solutions… that others don’t even find to be problematic.

dark AAEAAQAAAAAAAAMrAAAAJDg4NWYwZGVjLTQ2Y2QtNDliNi1hMmQzLWY4ODUzNGVmY2ExYgDivergent thinkers may behave and talk like the convergent thinkers that surround them, but they constantly challenge assumptions that are the foundation for the world as it exist… When set in the right context, thinking divergently enables organizations to more effectively embrace, implement change… It’s never too late to start thinking differently. Everyone holds the power to use imaginations as a tool to innovate…

The imagination is a creative gift and once it’s allowed to run wild– through divergent thinking… you have the basic tool to change the status quo… while at same time managing the dark side of creativity…

Curse of Darwinism: Companies Must– Evolve or Dissolve, Disrupt or Die, Thrive to Survive: End of Business as Usual

As Charles Darwin cautioned: It’s not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change… According to Simon Caulkin; we live in time of ‘digital Darwinism’, an era when the impact of technology, on business and society, is constant with varying but inevitable degrees of both– evolution and revolution…

The effect of digital Darwinism is real and it’s enlivened though changes in business– its customers, employees, partners… and it impacts most markets, both as they– emerge and develop… It’s a different business world– with connected homes, self-driving cars, robotics, social media, and more data produced in one day than in the entire history of humankind… Technology is spear-head that penetrates– markets, industry… Now most companies, at some level, are technology companies..

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There is a fundamental shift in how organizations operate; the focus has moved from products and services, to experiences and outcomes… According to Priyanka Sangani; organizations no longer control the conversation… technology is changing everything and if you’re not using technology to the best advantage someone else will, e.g.; an interesting observation– if you don’t build the ‘thing’ that kills Facebook, someone else will… also Facebook says that– ‘things’ that don’t stay relevant don’t even get the luxury of being disrupted, they just disappear…

Many businesses just promote the ‘trappings’ of change when, in fact, a bold digital strategy is needed. To succeed business cannot afford to just look at the coolness of the technology du-jour; they must innovate and create exciting new products, companies… Old rules of business mostly do not apply any longer, and traditional approaches to business mostly do not work…

In the article Darwin’s Lessons for the Corporate World by Morgan Witzel writes: Few thinkers have had quite the same effect as Charles Darwin. His theory of evolution is so powerful and compelling that it’s an orthodoxy, and it affect how people think about many aspects of life…. Not least is the way people think about, and do business…

The so-called Darwinism plays an important role in shaping of people’s understanding of economics, markets, organizations… For example, business people often speak in terms of– ‘adapting’, ‘evolving’… to meet conditions in a changing ‘environment’… When companies fail, it’s easy to explain it in Darwinian terms; they failed because they are- – weak, less fit, did not adapt… it’s Darwin’s theory of ‘survival of the fittest’… that means some companies are simply, selected out…

Darwin’s theory re-enforces the notion that business is a jungle, a harsh environment in which only the strong can adapt and survive– or so the thinking often goes… But do Darwinian ideas about business have any real grounding in Darwin’s own theory? The answer is largely, No.  According to Geoffrey Hodgson and Thorbjorn Knudsen; Darwinian ideas have been applied to economics ‘in crude form’, but there is no single model or axiomatic system which gives it validation…

Darwin’s theory rests on 3-simple principles: Variation, Selection, Replication or Inheritance… In business people sometimes talk of an organization ‘inheriting’ characteristics in the same way that a person does, or having an ‘organizational DNA’ as part of the cultures… Organizations do not have genes, nor is the methodology of business evolution– comparable to ‘replication’…

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In the article Digital Darwinism by Greg Black writes: Darwin’s theory of evolution has greatly influenced not only the natural world but also the business world… Simply put, the concept of ‘evolution’ means– a constant change that increases the rate of survival… And according to Darwinians, everything on the planet must go through this process, including business… There is even an official term to address precisely that, i.e.; digital Darwinism… Digital Darwinism is the adoption of ‘innovation’ as the source of survival, and adapting it to emerging trends… It’s the key to survive and thrive in the face of rapid technology change… In a nutshell, business must keep-up with the times if it wants to survive…

The business world is highly competitive, it’s a brutal environment in which only those that can adapt fast enough can survive… Nevertheless, the possibilities for change and improvements are all around, and business must take advantage of them… Remember, it’s not those who have the– oldest, biggest… but those who ‘adapt’ the fastest prosper… In the words of Darwin; It’s not the strongest of the species that survives, nor the most intelligent that survives; it’s the one that is most adaptable to change…

In the article Distorted View of Survival of the Fittest by Giles Hutchins writes: In business, survival of the fittest depends more on adaptation and collaboration, than competition… Innovation, flexibility, agility, collaboration… are the core to the evolutionary journey of business… These are driving forces that provide resilience and regeneration within an ecosystems… According to Michael Braungart and William McDonough in the book ‘Cradle to Cradle’: popular wisdom holds that ‘fittest survive’– the strongest, leanest, largest, perhaps the meanest– beats the competition… But in healthy, thriving natural systems– it’s actually the ‘fitting-est’ who thrive…

So how does business go about shifting from the prevalent mindset of ‘reductionism’ and ‘maximizing short-term profit’, to a world-view that has energetic and full engagement with markets, customers… that is symbiotic not carcinogenic? In other words, how does the prevalent approach to business break the devastating illusion that it’s separate from nature? The more you grapple with business challenges, the more you realize that it’s nature’s patterns and qualities that inspires the evolutionary approaches for business success…

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In the article Digital Darwinism by insights.sparktivity.com write: Disruptive technology and societal shifts are forcing business to re-imagine themselves; and the new motto has become– change or die… The idea of ‘change or die’ can be summed up by the term: digital Darwinism… Digital Darwinism is when technology and social change  evolves faster than business’ ability to adapt… In fact, it becomes  ‘death to the unfit’, rather than ‘survival of the fittest’… In a rapidly changing environment– being ‘fit’ means being ‘agile’. In business  ‘agile’ means– nimble, responsive, innovative, flexible, quick to adapt to change… 

Today’s businesses are under a lot of pressure not just to ‘keep-up’, but ‘to keep-fresh’, to innovate, to integrate the next new thing… The basic idea of ‘agile’ is to enable business to more effectively engage customers– to test and adapt based on actual customer use, to end-up with a better, a different outcome… Being agile is changing the game, it creates a new landscape where only agile companies survive… But business must also embrace transformation– re-imagining the way they do business…

Darwin’s ‘On The Origin of Species’ was published over 150 years ago, in 1859… Its insights about natural selection in plants and animals offer lessons that can provide guidance for coping with business challenges today… Darwin observed that species survived when changing environments by making adaptations to their new realities… Each adaptation required experimentation to create new traits…

According to Ronald Heifetz and Marty Linsky; when an organization tries to adapt, it steps out of its familiar mode of existence which had worked thus far, much as a plant or an animal species does by random mutation. The new mode may help or hinder an organization– since not all adaptations work in the long run… Some survive and thrive, many fail, and still others just die off…

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Darwin understood there was no such thing as change for change’s sake. The secret to surviving and thriving was to match the adaptation to the context… Which means that an organization must have a critical mix of diagnostic and matchmaking skills. The ability to read their internal capabilities and the external marketplace, and then match them to products, services…

The challenge of enabling organizations to adapt is hardly new, but adapting to today’s digital reality is completely new… Hence, some organizations will survive and thrive, and some will perish… Following Darwin’s lessons won’t make the situation any less risky, but it might improve the odds…

 

Cardinal Business Rule: No Surprises– Business More Predictable, More Manageable… Manager’s Golden Rule…

‘No Surprises’ is the cornerstone of business management… Ultimately, it’s best for management, it’s best for employees, it’s best for customers, it’s best for the team… Surprises are the unexpected, unfavorable (or sometimes favorable), variances from expectations…

According to Don McAlister; management is about planning, control, integration of processes that transforms knowledge resources of an organization into new knowledge sets that provide value for customers… Management success relies on adequacy, relevancy, predictability, and consistency in the flow and transformation of this knowledge… It’s management’s responsibility to anticipate and minimize ‘surprises’…

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‘No Surprises’– it’s a recurring theme in management… According to Michael D. Watkins, Max H. Bazerman; ‘No Surprises Management’ (NSM) is term long associated with the idea that the best way to succeed is not to ‘surprise’ people, especially bosses. It’s best to inform the boss (and others who have need to know) as soon as possible for such things as; expected shortfalls in performance, changes in tactics, new information impacting a business, and the like… The intent is to flag potential issues early so that remedies can be developed to solve or mitigate the issues… Often employees tend to cover-up or reluctant to risk carrying bad news up the chain of command, making a bad situation even worse… The ‘No Surprises Rule’ is a corollary to the Golden Rule: Do unto others as you would have them do unto you…

In the article Top Principles for Business Relationships: No Surprises by Joshua writes: In business you should strive not to surprise anyone… Not surprising people means telling them what you know and share information that is relevant to their interests… If a decision affects someone, try to involve them in the decision-making process or, at least to tell them about the decision as soon as you know it affects them… If you have a meeting with more than one person with information that could surprise any of them, do your best to share that information with each of them one-on-one before the meeting… Meeting time is for teamwork not for surprises; don’t ambush people…

‘Surprises’ make great movies and TV like drama to create situations, but in business it’s ineffective and destroys relationships, teams, companies… It means responsibility for sharing information and involving people in decisions; it means building teamwork and dependability… It can be hard at times because it forces people to share information with other people, even though you might feel ashamed about sharing… Usually feeling shame imply you did something counter-productive in business… so applying this principle keep things manageable…

In the article No Surprises Management by Tomas Kucera writes: ‘Surprise’ is arch-enemy of good management. If there is a single thing that shows a dysfunctional organization it’s when the management is surprised… When management is ‘surprised’ it means that open communication within the organization is broken… It means that management has not created an environment where people are open and trusting to share concerns…

 It means management must build ‘culture of trust’ where entire team is empowered with open communications to both give and receive feedback on all issues that might impact the organization… It means ‘No surprises’. Often people know about problems, or issues, or situations… but don’t realize that others also needs to know… When this happens it’s usually an indication of a more serious problem– lack of open communications– people are afraid– to speak-up, take risks, make mistakes… the signs of a ‘closed’ workplace environment…

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In the article What Customers Really Hate by Geoffrey James writes: There are many very different types of businesses, but many of them have one thing in common; they all tend to spring unpleasant surprises on customers after the customer has bought product, e.g.: With banks, it’s surprise of extra charges and fees; with airlines, surprise of delays and cancellations; with cable/telcom providers, it’s surprise of incomprehensible bills with unexpected price increases; and with social networking sites, it’s surprise of discovering that they’re violating your privacy… In all of these cases, you probably signed a contract (perhaps just by clicking through– ‘I Agree’) that warned you that those surprises might occur… However, what you needed to know was probably buried in pages of legalese: Who has time to decipher that?

Indeed, the companies in question are assuming and hoping that you won’t bother to (or are unable to) figure out what’s really in the contract because if they made it explicit, you might buy (or spend your time) elsewhere… In other words, ‘consumers hate companies’ that try to bullsh*t them into buying what they are trying to sell: People hate that… If there is any rule that’s true in business; it’s that everyone hates ‘unpleasant surprises’, especially after being handed a line of bullsh*t… So if you want loyal customers to sing your praises, always let them know exactly what they are buying before they buy– tell them the truth– even if that means that they might go elsewhere: That’s a policy of ‘No Surprises– it’s the most important rule in business…

In the article No Surprises: Key to VC Relationship by Satya writes: In the VC (venture capital) business there is a running joke about; the ‘Oh-shit’ meeting– it’s the first meeting  that takes place after an investment has been made. That’s when all of the bad news that was hidden during the due-diligence process gets uncovered and the VC is faced with the reality of the business for the first time (as well as founders having their reality check).

Typically when VCs partner with a business in support of the founders’ vision, they expect to share-in all the information– good, bad, ugly…  And they expect to share-in it well before they invest in the venture… But bad decision are made, bad hires get hired, product releases fall flat, revenues don’t materialize… So the key to a successful business relationships between founders and VCs is one simple rule: ‘No Surprises’…

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‘No Surprises’ means that everyone has the same information at the same time so that they can react as cohesive team: The ‘No Surprises’ rule must apply to all sides, equally. ‘Trust ‘ is fundamental in business and the ‘No Surprises’ rule keeps the foundation of trust, pristine… So do yourself a favor, when talking with– management, employees, investors, partners, suppliers, stakeholder… establish a ‘No Surprises’ rule for all sides, and avoid the– ‘Oh-shit’ meeting… and that allows you to develop great long-term relationships…

 

 

China Great Gambit: Spending $1Trillion to Build Hugh- New Silk Road: Bold Strategy or Grand Ruse…

China’s plan for a New ‘Silk Road’, also known as ‘One Belt, One Road’ (OBOR), consists of a network of trade initiatives that extend over land and sea through Asia, Europe, Africa… it’s the most significant global economic initiative in the world today, and it’s not getting the attention it deserves from Western media.

The initiative is gigantic and its hope to lift the value of cross-border trade to $2.5 trillion within a decade… President Xi Jinping has channeled nearly $1 trillion of government money into the project. He’s also encouraging state-owned enterprises and financial institutions to invest in infrastructure, construction abroad…

China’s web of trade would span over 60 countries that are home to 4.4 billion people, which is more than half of the world’s population… Further, the initiative would interact with economies representing more than 40% of the world’s GDP. The initiative is broken into a land component, known as ‘Silk Road Economic Belt’, and a sea component, called ‘Maritime Silk Road’. The ‘Belt’ will consist of a number of corridors connecting China to far reach of Eurasia by road, rail… The ‘Road’ will involve development of ports and shipping routes connecting Chinese harbors to Europe and South Pacific…

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According to Vikram Mansharamani; funding this massive program is not trivial… There are number of institutions on hand to support the funding of China’s grand vision… First, Beijing started a $40 billion ‘Silk Road Fund’ that has already helped fund a hydroelectric power project in Pakistan and invested in a liquefied natural gas project in Russia… Second, there’s the newly created, $100 billion Asian Infrastructure Investment Bank in which China controls 26% of the votes. Lastly, China Development Bank announced that it would invest a stunning $890 billion dollars in over 900 ‘One Belt, One Road’ projects across 60 countries…

The Silk Road is far more than just trade; it offers a widespread exchange of knowledge, learning, discovery, culture… For the world at large, the ‘Road’ is monumental; the massive project holds the potential for a new renaissance in commerce, industry, discovery, thought, invention, culture… which could very well rival the original Silk Road… However, its outcome is far from certain…

In the article New ‘Silk Road’ Could Alter Global Economics by Robert Berke writes: China is building the world’s greatest economic development and construction project ever undertaken: It’s a New Silk Road… The project aim is to revolutionize a change of the economic map of the world. It’s also seen by many as the first shot in a battle between east and west for dominance in Eurasia… The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The ‘Road’ will extend more than 8,000 miles, creating an economic zone that extends over one-third the circumference of the earth…

The plan envisions building– high-speed railroads, highways, energy transmission and distributions networks, fiber optic networks… Cities and ports along the route will be targeted for economic development… An equally essential part of the plan is a sea-based ‘Maritime Silk Road’ (MSR) component, as ambitious as its land-based project, linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean… When completed it will connect three continents: Asia, Europe, and Africa… The chain of infrastructure projects will create the world’s largest economic corridor, covering a population of 4.4 billion and an economic output of $21 trillion…

As part of the financing of the plan, China announced the launch of an Asian International Infrastructure Bank (AIIB), providing seed funding for the project with an initial Chinese contribution of $47 billion… China has invited the international community of nations to take a major role as bank charter members and partners in the project… Members are expected to contribute, and additional funding from international funds, including; World Bank and investments from private and public companies, local governments… Some 60 nations have signed on to become charter members including; 12 NATO countries that are among AIIB´s founding member states, including; UK, France, Germany, Italy, Netherlands, Luxembourg, Denmark, Iceland, Spain, Portugal, Poland and Norway… along with Australia, S. Korea and New Zealand… and many Silk Road and Asian countries…

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In the article Mapping China’s New Silk Road Initiative by hoexer writes: When China’s President Xi Jinping laid out his plans to establish a new ‘Silk Road’ across Central Asia in 2013, he was doing more than invoking China’s distant past… Instead he was sketching out new direction for Chinese trade and investment, one that aims not only to improve China’s links with Europe but also to facilitate China’s macroeconomic priorities and integration in the global economy.

However this is a very bold plan and it face many serious challenges, e.g.; even though the proposed expanded trade route into Europe might seem like a ‘win-win’, from business perspective, the benefits are not clear-cut… According to Jonathan Silver; the ‘New Silk Road’ is the sort of strategic policy initiative that generates little in the way of obvious and direct tangible benefits… So while business would generally welcome the potential benefits, most would only take a direct interest in the concrete results, as they arise…

In the article China’s Bold Gambit for Trade with Europe by Julie Makinen and Violet Law write: For two years, President Xi has been talking up the sweeping strategy– known as ‘One Belt, One Road’ or OBOR– on his frequent trips abroad, while lining up financing plans at home and enlisting participation of state-run and private companies… With its  grand ambition some observers compare this new endeavor to U.S.‘s Marshall Plan to rebuild Europe after World War II, a game-changing effort that revolutionized trade and recast many long-standing relationships… It’s expected to cost 10 times more than the Marshall Plan, for which the U. S. spent the equivalent of slightly more than $100 billion in today’s money…

According to Christopher K. Johnson; with these initiatives China seeks to reinforce the emerging global narrative that it’s moving to the center of– global economic activity, strength, influence… According to Markus Taube; the initiatives will strengthen China‘s economic, diplomatic leverage in Europe and provide a political and diplomatic counter-weight against U.S... The more you might think about (the strategy), the more it makes sense… But others are more skeptical, saying China’s lofty language around ‘One Belt, One Road’ masks myriad questions about how much money will be spent on the projects and where, and who will benefit… According to Ian Storey; it’s generated a lot of buzz but no one is quite sure what it actually means…

In the article China’s Great Game: Road to New Empire by Charles Clover, Lucy Hornby write: After two decades of rapid growth, China is again looking beyond its borders for investment opportunities and trade, and to do that it’s reaching back to its former imperial greatness of the familiar ‘Silk Road’ metaphor. Creating a modern version of the ancient trade route has emerged as China’s signature foreign policy initiative…

According to Valerie Hansen; it’s one of the few terms that people remember from history that does not involve hard power… and it’s precisely those positive associations that the Chinese want to emphasize. If the sum total of China’s commitments are taken at face value, the New Silk Road is set to become the largest program of economic diplomacy since postwar reconstruction in Europe covering dozens of countries with total population over 3-billion people…

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The scale demonstrates a grand ambition and significance as a way of defining China’s place in the world and its relationships… According to Anna Bruce-Lockhart; there are strong commercial and geopolitical forces at play here; first among them is China’s vast industrial overcapacity– mainly in steel manufacturing, heavy equipment– for which the new trade route would serve as an outlet…

As China’s domestic market slows down, opening new trade markets could go a long way towards keeping the national economy buoyant… According to Nadège Rolland; this is not an economic project it’s a geopolitical project– it’s very strategic… Moreover, by striking up economic and cultural partnerships with other countries, China is hoping to cement its status as the dominant player in world affairs…

According to Jin Liquin; many countries will verbally support the ‘One Belt, One Road‘ projects, but before they invest any resources they must be convinced that these initiatives will– promote growth and provide tangible returns for their investments…

Insanity of User License Agreements: We All Just Click- I Agree, But Many Don’t Know, Understand– What They ‘Agree-To’…

Let’s be honest, no one really reads the ‘End User Licensing Agreements’ (EULA) or ‘Terms and Conditions’ (T&C) when you are downloading software, apps, accessing  websites… typically you just scroll down and click– ‘I Accept’.

According to Mikko Hyppönen; the biggest lie on the Internet is– I have read and agree to the EULA… To prove the point, a company conducted an experiment– they buried a ‘herod clause’ in the EULA, which said that if you agree to these terms– you shall assign your first-born child to this company for the duration of eternity’.. six people clicked– ‘I Agree’…

So they either didn’t read the EULA  or they  want to get rid of their first-born…  Most people just skim over the EULA verbiage and deal with the consequences of blindly signing with– I Agree…

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However it’s important to note that when a company presents you with its terms and conditions prior to an installation, your click on the ‘I Agree’ box is just as binding as signing your name on the bottom of a paper contract… According to Andrew Alleyne; you are accepting a set of legal terms and conditions, and by clicking the ‘I Accept’ button you are entering into a contract…

According to Omri Ben-Shahar; it’s a century-old practice of having ‘informed consent’ as underpinning of modern business practices… when the user is presented with an EULA or T&C they are warned… and the company can absolve itself of legal responsibility for any issues that might arise… hence by failing to read and understand the terms of an agreement the user can sustain serious liabilities, if something goes wrong…

In the article Clicking ‘I Accept’ is Same as Signing Contract by Drew Hasselback writes: There are disclosures everywhere from the apocalyptic warnings about possible side effects that run on pharmaceutical ads to oxymoronic warnings on consumer products, such as; when a peanut butter label warns you the jar may contain nuts… According to Barry Sookman; many of these contracts hold-up in court, even though most people don’t reads them, it’s basic contract law… The court says there are two types of online agreements:

(1) ‘clickwrap’ agreement is a type of contract that is widely used with software licenses and online transactions in which a user must agree to terms and conditions prior to using the product or service. The format and content of clickwrap agreements vary by vendor… However, most of clickwrap agreements require consent of end users by clicking– ‘OK’, ‘I Accept’ or ‘I Agree’ button on a pop-up window or a dialog box, and 

(2) ‘browsewrap’ agreements, where the online terms are posted on the bottom of the webpage. The hallmark of a browsewrap agreement is that a user can use the site or services ‘without visiting the page hosting the… agreement or even knowing that such a webpage exists… Because the user is not required to express their assent as a condition of proceeding, enforceability of the latter types of agreements depend on whether a user has actual or constructive notice…

In the article EULA Dangerous Terms by Annalee Newitz writes: Millions of people are clicking ‘I Agree’ buttons that purport to bind them to agreements that they never read and that often run contrary to federal and state laws. These dubious ‘contracts’ are, in theory, one-on-one agreements between manufacturers/vendor and each of their customers. Yet because almost every computer user in the world is subjected to the same take-it-or-leave-it terms at one time or another, EULAs are more like legal mandates than consumer choices…

They are in effect changing laws without going through any kind of legislative process. And the results are dangerous for consumers and innovators alike… It’s time that consumers understood what happens when they click ‘I Agree’… They may be inviting vendors to snoop on their computers, or allowing companies to prevent them from publicly criticizing the product they’ve bought. They also click away their right to customize or even repair the devices they purchased… According to Agustín Reyna; no matter what you call them, it’s a contract…

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The ‘common sense’ advice is simple: always read any user agreement before signing it… According to Joanne Lezemore; it’s really important for people to ‘understand’ all the terms and conditions before signing on the dotted line… While all user contracts are subject to the unfair terms in most contract regulations, this doesn’t mean you can challenge a clause just because you– didn’t know it was there, or you think it’s unfair…

If it’s clearly written you are bounded by it… Most often online shoppers click the ‘T&C box’ to confirm they have read it, but in many cases they have not actually done so… Don’t assume that these users agreements are all like– each company has its own version and each website is different… hence make sure you read it, understand it, and you know exactly what you are agreeing to…

In the article It Pays To Read License Agreements by Larry Magid writes: OK, let’s be honest; you don’t read EULAs: How do I know? Because hardly anyone does. When you download and install software, you are usually in a hurry to take advantage of whatever it offers, and the EULA is just one more thing to spend time on, and you are not just talking about a couple of minutes– some of these ‘End User License Agreements’ are 2,550 words, or longer (that’s seven printed pages)…

Many EULAs can be very deceptive, e.g.; when you take time to read them, you will begin to realize that you have probably given the company permission to install other unintended software or apps… that collects certain non-personally identifiable information about your Internet behavior… And according to many agreements, it will probably includes; URL addresses, web log data, search information you conducted on the Internet, online ads visited…

OK, so what’s the harm in collecting non-personally identifiable information? After all it’s done all the time… But there is a big difference between collecting non-personal information about what visitors are doing on your own site… and tracking– URL addresses of Web pages you view, web log information about Web sites that you visite… According to Parry Aftab; most EULAs do hold-up in court as long as they are reasonably clear… The courts have said that when you click on something that says– ‘I Agree’ then its legal consent… But there are exceptions, e.g.;  when agreement is incomprehensible, unclear, vague… then it may be unenforceable…

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However, the fact that a EULA might not be legally enforceable is of little solace because it’s being enforced on you whether you like it or not. Once the program is installed on your computer or smartphone, the damage is already being done and it doesn’t even matter if the contract that you agreed to is invalid… Simply by using your computer, you’re upholding your part of that contract by giving-up your information…

Although the courts have ruled on the legality of EULAs, there are still many grey areas… In the mean time, it’s ‘user beware’… A click of the mouse, like a stroke of a pen, can get you into a heap of trouble: Be careful, be aware, and read those EULAs…

We the People in Crisis: Govern Of the People, By the People, For the People Is Meaningless Rhetoric…

On the brink of the presidential election, it might be useful to examine the state of the U.S. Democracy and the role of ‘We the People’… The most striking lesson from contemporary U.S. election campaigns is how vast and growing the distance is between the rhetoric of politicians and pundits, and the actual deepening, immense, largely ignored problems that afflict ‘We the People’...

The billions of dollars spent on dubious and manipulative advertisements that are only rivaled for the idiocy of ‘news media’ campaign coverage… which serves primarily to insult people’s intelligence, rather than expose the truth. Even more problematic is mainstream politics, which is increasingly irrelevant to the real issues that the nation faces… or perhaps more accurately, it’s mainstream politics that is the major contributing factor to the real issues the nation faces…

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Whatever happened to Abraham Lincoln’s; government of the people, by the people, for the people… According to Gilens, Page; the preferences of the average person appears to have only a minuscule, near-zero, statistically non-significant impact upon public policy… In other words, statistics say that your opinion– ‘We the People’– literally does not matter… The data is clear that U.S. is sliding steadily into oligarchy, mirrored in both the substantive effect on policy and in distribution of wealth…

An oligarchy is a system where power is effectively wielded by small number of people… Members of the oligarchy usually includes; well-connected and politically powerful– people, institutions, trade unions, lobbying groups, business groups, special interest groups… Researchers have found that government policy follows the directives set-forth by these groups much more often, than the average citizen… According to E.J. Dionne; the U.S. is failing and it needs a better ‘We the People’…

In the article This Isn’t What Democracy Looks Like by Robert W. McChesney writes: Capitalism and democracy have always had a difficult relationship. The former generates severe inequality and latter is predicated upon political equality… Capitalist democracy therefore becomes more democratic to the extent that it’s less capitalist… According to John Nichols and Robert W. McChesney; U.S. is better understood by the rule of money rather than the rule of the people… it’s a U.S. form of plutocracy; it’s ‘Dollarocracy’, which  means that those with the most dollars get the most votes and have the most influence… Dollarocracy is so dominant and so pervasive, that it’s accepted as simply the landscape people inhabit…

The notion of– ‘you get what you pay for’ applies in spades to spoils of government, and the tens of billions of dollars spent by corporations, institutions, special interest groups… on lobbying, public relations, campaign donations… and now dollarocracy is a large part of the overall economy. According to Larry Bartels, Martin Gilens, Jacob Hacker, Paul Pierson; the interests and opinions of great bulk of ‘We the People’ have virtually no effect over the decisions made by government.

According to Joseph Stiglitz; the more divided a society is in terms of wealth and influence, the more reluctant the wealthy are to spend money on the people’s common needs… The wealthy don’t need to rely on government for parks or education or medical care or personal security– they can buy all these things for themselves. And in process they become more distant from ‘We the People’ losing whatever empathy they may once have had…

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In the article U.S. is a Constitutional Republic ‘not’ a Democracy by Daneen G. Peterson, Ph.D. writes: How often have you heard people refer to U.S. as a ‘Democracy’? And, when was last time that you heard U.S. referred to as a ‘Republic’? There is a very good reason that the ‘Pledge of Allegiance’ refers to the country as a ‘Republic’ and there is a very good reason that the ‘Declaration of Independence‘ and the ‘Constitution’ do not even mentioned the word ‘Democracy’… The Founders were very knowledgeable about the issue of democracy and feared a democracy as much as a monarchy…

They understood that the only entity that can take away the people’s freedom is their own government, either by being too weak to protect them from external threats or by being too powerful and taking away people’s freedoms. They knew the meaning of the word ‘democracy’, and the history of democracies; and they did everything in their power to prevent having a democracy… In a republic, the sovereignty resides with the people. In a republic, one may act on his/her own or through his/her representatives when he/she chooses to solve a problem. The people have no obligation to the government; instead the government is a servant of the people and obliged to its owner– ‘We the People’– but many politicians have lost sight of that fact…

George Washington, Alexander Hamilton et al… knew it and feared it, and they lived to see those fears through the blood, violence, and terror of the French Revolution… They were familiar with the excesses of democracy and though they sought the virtues of democracy, they created a political system specifically designed to shackle its vices… They held Rome as their model, not Athens… and they created a Republic, which is a synthesis of three forms of government, i.e.;  dictatorship/monarchy, oligarchy/aristocracy, democracy… They combined the virtues of each of these separate political systems, and while trying to mitigate their weaknesses…

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In the article U.S. in Crisis Mode, and We’re All Complicit by Jim Sleeper writes: The political election news is all about Trump, but the crisis that has made his victory isn’t about Trump… It’s about ‘We the People’ and what is happening in the U.S.– no populist  rhetoric of democracy can hide the truth that– what’s ‘happening’ to the people is– what’s ‘being done’ to the people’. If you believe that then the people  are complicit because, after all this is democracy, where sovereign people have free-will to choose. But are ‘We the People’ as sovereign as we think, or are we caught in a spider’s web of; 800-numbered, sticky-fingered pick-pocketing machines, including; most news media that bypass people’s brains and hearts on the way to their lower viscera and wallets…

Why do people put-up with the casino-like financing, predatory lending, omnivorous marketing, deft political blame-shifting… and ‘We the People’ let them grope us, titillate us, intimidate us, addict us, track us, indebt us, and sell us illusory escapes that leave us too ill to bear the sicknesses or their cures… Instead, we point fingers, fists and even guns at people who are really no more guilty than us. Or we blame the inexorable tides of globalization and technological upheaval…

We excuse or worse, even adore the real villains and when we do that, we are complicit… And here we are; conservatives blame liberals for summoning ‘movements’ that turn ‘We the People’ into ‘takers’… Liberals blame conservatives for turning ‘We the People’  into stupefied consumers and mobs. And each side is only half right; they are right only about how the other-side is wrong… Let’s stop listening to such one-sided thinking…

In the article What Is the Role of the People? by Edwin J. Feulner, Ph.D. writes: The stirring opening words of the Constitution proclaim that it’s the work of ‘We the People’… In the Declaration of Independence, the people announce that they are sovereign and free… In the Constitution, they defend this freedom by creating a unique government that derived its just powers from the consent of ‘We the people’. But what is the role of the people? According to John Adams; the first role– the first duty– of the people is to ensure that they remain– virtuous and free… According to Thomas Jefferson; it’s the manners and spirit of the people who preserve a vigorous Republic…

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The Founders placed great hopes in the Constitution, but they knew–‘no piece of paper’ can preserve liberty: That duty rested ultimately with ‘We the People’… The role of the Constitution is to restrain and to check, not to guarantee . The words of Declaration of Independence and the design of the Constitution can inspire, but on their own they cannot preserve the democracy (or even the republic, if you will): Only ‘We the People’ can do that…

According to Ronald Reagan; freedom is never more than one generation away from extinction. ‘We the People’ have the obligation to pass the inheritance of freedom on, unimpaired, to the next generation… The true role of ‘We the People’ is to ensure that ‘we’ and ‘government’ stay true to those principles… with fair and balance ‘free press’ and  ‘open ballot box’: ‘We the People’ created this Republic and ‘We the People’ must preserve it…

Managing ‘Entropy’ in Business: A Demon That Slowly– Erodes, Disrupts, Destroys Organizations…

Murphy’s Law is well-known and it states; anything that can go wrong will go wrong, and a corollary version claims: left to themselves, things tend to go from bad to worse…

Entropy’ is the phenomena that makes all things go from bad to worse, if left unattended… Unless new energy is constantly inserted in a structure, a business, an organization…  it will eventually, and inevitably fail…

According to Walter E. Requadt; entropy is the ultimate natural law and it’s the reason, e.g.; paint peels, hot coffee turns cold, hot pans cool down, gasoline explodes, tires blow out, cream mixes in coffee… If an organization is to survive in an increasingly competitive marketplace, the organization must continuously adapt its environment– this requires continuous renewal… which means managing its ‘entropy’…

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All ‘things’ follow downward trends governed by nature’s law– to disorder, to erosion, to chaos… and that includes organizations… For organizations to be successful, managers must have the foresight, willingness to anticipate the effects of change by periodically reviewing and revising their strategic positioning, i.e.; mission, markets, competitions… or they will  fail…

This means the mitigating factors that impacts performance, such as; rigidity, control,  bureaucracy, confusion… or, factors that cause friction, such as; bullying, manipulation, intimidation… or, factors that prevent workers from being productive, such as; micro-managing, short-term focus, job-insecurity, risk-aversion, silos… Entropy, if left uncheck, will destroy an organization…

In the article Leadership Must Overcome Entropy by Wallace Henley writes: Entropy is ‘state of sustained decay’…  According to Stephen G. Haines; all business problems conform to laws of inertia– the longer you wait, the harder the problem is to correct… Organizational entropy is tendency for any system to run down and eventually become inert… Think about an organization you’ve either been part of or known about that began with a flash, grew with speed of the expanding universe, reached dizzying heights and even stayed up there awhile, then declined and are now inert… They fell into ‘state of entropy’ because they did not correct ‘decay’, and then failed to overcome entropy that followed, inevitably… When an organization is in entropy they are just one step away from free-fall failure…

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In the article Organization Entropy by Grant Goddess writes: Organizations are like a pendulum– apply ‘energy’, i.e.; investment, management, accountability, governance… and the pendulum begins to swing, gears start to turn and work gets done… And as long as ‘energy’ is continuously applied the pendulum will continue to do work, but when you stop applying energy to it, it will slowly expend all of its existing energy and come to full stop… The key for successful organization is to understand that to keep the pendulum swinging it takes continual application of ‘energy’, or the motion will stop…

Some entropy are unavoidable, e.g.; inefficiencies, shrinkage… but these are usually shrugged off as ‘cost of doing business’. While some entropy  are avoidable, e.g.; incompetence, bad management… Hence, the challenge for an organization is to find areas of decay, and reduce or eliminate them… And by doing so, less energy is needed to keep the pendulum swinging– longer, stronger…

In the article Entropy In Organizations by Ari-Pekka Skarp writes: Entropy is found in all situations, it’s a law of nature and it says; that all things have a tendency towards a ‘state of disorder’ from a ‘state of order’… In other words, all things deteriorate over time if left unattended… Hence, if you think about a ‘working process’ you should not make the mistake of thinking that a ‘process’ can actually govern people’s behavior…

Processes don’t use people, people use processes. This means that a working process is subject to change by actual behavior of workers. No matter how specific, measurable, actionable, rational, time-bound… a process is, workers will always try to adapt a process to their behavior, which may negatively impact the organization’s desired outcome… In practice this means that organizations must be in continual development…

In the article What Is Entropy in Business? by Kathryn McDowall writes: Organizations are either organic or bureaucratic in nature… Organic organizations invite innovation and creativity while seeking continuous open engagement with the environment in order to thrive… Whereas, bureaucratic organizations operate in a mechanistic closed style that is subject to entropy… Entropy occurs in organizations when the mechanical works of the bureaucracy break down as a result of– specialization, apathy, carelessness, lack of pride…

A major cause of entropy in the bureaucratic environment involves expectations that individuals will follow routine orders and adhere to an organization’s rigid structure. This means that workers initiatives are discouraged, and workers should only do what is expected of them, and no more…

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Eventually workers in bureaucratic organization become mindless and unquestioning because they depend upon the structure of the system to justify their actions… Entropy in the mechanistic organization eventually causes workers to become rigid in work and behavior and resistant to change… Entropy in an organization is reduced by workers’ greater participation in developing process and their involvement in decision-making… Workers are the front line; they deal with– customers, suppliers, partners… and are better able to determine their changing needs… and workers’ involvement develops a sense of ownership in the organization and it helps to develop greater job satisfaction…

In the article Managing Complexity and Entropy by Julian Birkinshaw write: It goes without saying that companies are often very complex organizations… Although complexity is a natural outgrowth for many successful companies, it’s also difficult struggle to avoid negative side-effects of ‘unintended consequences’ of complex organizational structures. Often these complexities manifest themselves in very tangible ways that can seriously impacts the very survival of an organization, e.g.; from inefficient systems, unclear accountability, to alienated and confused workers, to incompetent and unethical leadership… The result is that an organization is running very fast just to stand still… while entropy is slowly eroding at its core to eventual failure…

Leadership must be proactive with sharpen-focus to keep ‘entropy’ at bay… This involves continual organizational renewal and revision, e.g.; periodically eliminating layers of management, getting rid of old bureaucratic process that are no longer fit purpose… It means– providing workers with a clear, compelling reason to achieve an organization’s objectives. It means– refreshing the management team, engaging workers, making entire team explicitly accountable for outcomes, collaborate with suppliers, engage partners, and open dialogue for new ideas, innovation. Organizations are their own worst enemy, they are by design– ‘entropic’…

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Much of the activities that organization take is about simplifying things, e.g.; delayering, decentralizing, streamlining, creating stronger processes for ensuring alignment… in simple language: as organizations grow and prosper they typically become– insular, complacent…  Management is more often focused on avoid mistakes, securing their own position than worrying about organization’s health, well-being… and the signature brand of the organization becomes one of– inefficiencies, under-performance, lack of direction… also, workers become– detached, disengaged, uninterested… and the organization becomes aimless, inert…

According to Peter Drucker; 3-things occur in most organizations: Under-performance, Friction, Confusion… then that is a 4th; ‘Entropic’…

Brexit Redux– Doomsday, Panic, Armageddon, End-Of-World: Or, Overblown–Non-Panic, Panic; Non-Crisis, Crisis…

BREXIT Wins: Government Resigns, EU Convulses, Gold Soars, Markets Panic, Rivers of Blood! Fire from Sky! Plagues of Locust! Collapse of Civilization! Triggering of Super Shemitah! Or, Not: Now that everyone has come out of their bunkers– everything is still the same, nothing has changed…

At this point, all that has happened is a non-binding, advisory referendum won by over 1 million votes… The UK vote was largely an opinion polls where; 51.9% (17,410,742) voted to ‘Leave’ the European Union (EU), and; 48.1% (16,141,241) voted to ‘Remain’… Since it’s a non-binding referendum, economic experts are urging people to take deep breath, and using the famous British saying; ‘Keep Calm and Carry On’

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According to Chris Gaffney; this is more of political crisis than financial, and that makes this much different from Lehman Brothers going under in 2008– It’s not a liquidity crisis; but it’s still a big deal… The claims about ‘end of Western civilization’ and the worst crisis since the Cuban Missile crisis, are obviously absurd… However, if the UK actually beings the exit process by invoking Article 50 of the Lisbon Treaty to formally leave the EU, then it’s more than a non-binding referendum– it’s for real and it will probably rattle markets all over again… In the interim, British pound will probably continue to trade at discount rate until there is more clarity about whether or not Brexit will actually take place…

In the article Brexit Effect: Signals Amidst the Noise by Aswath Damodaran writes: It’s easy to get caught up in the crisis of the moment but there are general lessons from Brexit, e.g.: No one should listen to the experts: There probably has never been an event where experts were all so collectively wrong in their predictions and so completely ignored by the public… Economists, policy experts, and central banks all inveighed against exiting EU, arguing that is would be catastrophic but their warnings fell on deaf years as voters tuned them out… Furthermore, it’s painfully clear that many of the so-called economic experts have lost creditability due to their insufferably pompous behavior, and head-in-the-sand prognostications…

Narrative beats numbers: In the Brexit debate it seemed to many that the ‘Leave’ side had the more compelling narrative (i.e., return to old Britain, which voters found appealing), whereas the ‘Remain’ side argued that this narrative was not plausible in today’s world, and its counter consisted mostly of numbers (i.e., the costs that Britain would face from Brexit)… Looking ahead to similar referendums in other EU countries, it’s highly likely that the same dynamic will be repeated, since few politicians in most EU countries seem to want to make a full-throated defense of being Europeans first…

Democracy can disappoint: The parallels between political and  business governance are plentiful, and Brexit has  brought  to surface the age-old debate about merits of direct democracy… While some (mostly on the winning side) celebrate the power of free will, and others (mostly on the losing side) confirm that general population should never be trusted to make reasoned judgments on the future, and the vote is vindication of their fears.

In business governance, this tussle is being continuously played-out, between those who believe that shareholders, as the owners of public businesses, should control outcomes; at one-end… and those who argue that incumbent managers and/or insiders are more knowledgeable, hence they should be allowed to operate unencumbered; at the other-end…

There are many in the business world who will look at the Brexit results and cheer for the Facebook/Google model of business governance, where shares with different voting rights give insiders control in perpetuity… While others argue strongly for business democracy and against entrenching incumbent managers… and hence it’s inconsistent to find fault with the British public for voting for Brexit.

In democracy, people will get outcomes they might not like and throw a tantrum (as some in the Remain camp are doing) or threaten to move to Canada, or Switzerland… which is crazy… You may not like the outcome but as a political consultant said after his candidate lost an election; ‘people have spoken– the bastards’…

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In the article What Lessons Can Business Learn from Brexit? by Dawna Jones writes: Business can learn a lot from Brexit, and so can political decision-makers. While analysts and forecasters weigh-in on what happens next, now is a good time to reflect and learn from the Brexit experience… The decision to stay or leave the EU is a very complex mash-up of politics, geopolitic, economic, social entanglement.  Voting made the decision look simple; but it’s complicated, e.g.; some experts say media failed to communicate what was really at stake, which opened process for political campaign style politics… And be as it may, there are lessons that business can learn from Brexit, e.g:

Business Lesson: Choose the Best Tool for the Task… By definition, voting is binary: ‘Leave’ or ‘Remain’… Binary decisions attract emotional responses, and information isn’t always necessary for strong opinions to be form… And when cognitive bias, any one of a hundred and fifty distorting perception of reality, are added to the mix; the effect is that the decision, using voting, isn’t based on information but on emotion. Brexit became a vehicle for the emotionally disenfranchised to declare their feelings– as one 92 year old blind senior did when asking; Which box is OUT (Leave)?

To avoid dividing nations internally, requires use of collaborative decision processes better suited for complex issues… While it’s hard to imagine any business using a company-wide vote to make strategic decisions, it’s easy to imagine a decision being treated as a binary choice or, worse, to forge ahead using only one option… Hence, unless integrated into the decision-making mindset is the discipline to step back and reflect and see a wider view… then decision-making is working with only narrow field of view, and that is very risky…

Business Lesson: Fear Vs. Hope and Aspiration… Fear, anger, and isolation forged the Brexit outcome; emotions are powerful… Many who voted ‘Leave’ feel disenfranchised by current economic conditions (much larger systemic issue), and the lack of trust is a key undercurrent… and without broader perspective, impact of real choice is beyond view…

Business has, for the sake of keeping it simple, largely operated under the assumption that emotions have no place in the workplace. Oddly, managers who lack trust in their own abilities confuse– fear as a management style to control performance, behavior of ‘subordinates’. In contrast, where trust is instilled it becomes the emotional engine for initiating, sustaining a culture of innovation. Without trust, failure is punished; without failure, learning is impossible…

Business Lesson: Shifting from Duality to Unified Thinking… Voting when applied to an intense emotional issue results in duality: ‘We’ Vs. ‘They’. Then the discussion is focused on; who is ‘right’ and who is ‘wrong’… In the end, everyone loses because the collective health of a community is not factored in. Triggered by the binary nature, Brexit reeked of duality thinking... Early on before vote results were out, one ‘Leave’ proponent pointed to rally of the pound as evidence that the ‘Leave’ were ‘right’; it was a short-lived celebration before the pound tanked…

In Brexit, blame is stronger than vision by far; the real vote was for what was or wasn’t wanted, not for a future that supports the economic and social health of Britain. The ‘We Vs. They’ dynamic should ring some bells in business where executives, management have become distanced from what is going on in their business, otherwise known as ‘the gap’ between management and employees…

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According to David Jones; there is reason not to panic about Brexit– just do the very British thing and put– the kettle on/make a cuppa/ brew/have a paned… There seems to be an ongoing social media frenzy which sadly will only increase the divides and incites further fear, hatred… Brexit is unchartered territory so you might as well make the most of the ride and grasp opportunity where you can…

Whether or not EU is the right vehicle for Britain to achieve a future-minded form of governance is not the question. The question is: How can outcome of Brexit (what ever it might be) create– better economic, political, social future for all people– British, Europeans…