Archive for January, 2014

TED Talks: Michael Porter – Why business can be good at solving social problems

Why do we turn to nonprofits, NGOs and governments to solve society’s biggest problems? Michael E. Porter wrote the book on modern competitive strategy for business. Now he is thinking deeply about the intersection between society and corporate interests. While he admits he’s biased, as a business school professor, he has started four not-for-profits, himself. He wants you to hear his case for letting business try to solve massive problems like climate change and access to water.

Why? Because when business solves a problem, it makes a profit — which lets that solution grow.

Can’t view the video? Want to access the interactive transcript?  Click here.

Getting the discussion rolling…

There is much to like in this presentation, and it does a very good job of bridging the terrain that divides social and corporate ventures.

That said, as we reviewed this video, (and in the tradition of Muppet Show hecklers, Statler and Waldorf), Ann and I had a few thoughts:

Would business take on reform of global monetary and financial systems?

Does Porter’s premise that business will resource the solving of society’s biggest problems, out of a profit motive / enlightened self-interest,  scale to all of society’s biggest problems? For instance, why and how would businesses around the world resource a fundamental restructuring of the current global monetary and investment systems?

Many think these systems are fundamentally broken, and at the very least, the systems are reinforcing the wealth divide. So how would that work? Business, by virtue of being able to generate wealth would voluntarily fund a global overhaul of the broken mechanisms of wealth creation and distribution, in cooperation with the worlds’ governments? The same mechanisms that capitalize business growth and fund governments, through taxation? The same governments who rarely agree about matters relating to the global commons – atmosphere, oceans, global warming, nuclear proliferation, etc.?

(I’m picturing the world described in Neal Stephenson’s intense and dark science fiction novel, Snow Crash, in which governments had ceded most of their power to private corporations, organizations, and entrepreneurs operating as nation-states. brrr!)

Will public companies be allowed to move to a longer view of profitability?

On the bright side, Porter gives examples of businesses that are taking a longer view of profitability:

“The deeper work, the new work, the new thinking on the interface between business and social problems is actually showing that there’s a fundamental, deep synergy, particularly if you’re not thinking in the very short run. In the very short run, you can sometimes fool yourself into thinking that there’s fundamentally opposing goals, but in the long run, ultimately, we’re learning in field after field that this is simply not true.”

Glad to hear it, because the last couple of public multinational corporations we worked with had a VERY difficult time making socially-conscious, longer-term investments. The pressure to meet quarterly projections coming from Wall Street, alone, was devastating, forcing them to give up their long-term aspirations or be punished in the short-term as their stock prices fell. It is ironic that the multinational companies that could do the most good may be least able within the existing system.

What do you think?

Ann and I would be fascinated to hear your thoughts on Porter’s video. If you feel moved to contribute to our community’s discussion, we welcome your input on the commentary thread, below.

Thanks for watching!

 

– Ann and Gary Ralston

© 2014 Ralston Consulting Inc.

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HBR: The Big Lie of Strategic Planning

“All executives know that strategy is important. But almost all also find it scary, because it forces them to confront a future they can only guess at. Worse, actually choosing a strategy entails making decisions that explicitly cut off possibilities and options.”

– Roger L. Martin

For those of you in the business of shaping and steering your ventures, but haven’t come across Roger Martin and his work on strategy, you may be well-served to check it out. Martin is the former dean of the prestigious University of Toronto’s Rotman School of Management and an adviser to CEOs on strategy, design, innovation, and integrative thinking. He is a coauthor (with A.G. Lafley, CEO of Procter and Gamble) of Playing to Win: How Strategy Really Works (Harvard Business Review Press, 2013). We’ll have a post on the book, itself, coming up.

This month, Roger Martin’s article, The Big Lie of Strategic Planning, is posted free on HBR’s blog. It touches on common traps leadership fall into as they attempt to develop effective strategy for their organizations, and what to do, instead.

One of the key distinctions Martin makes is that creating a strategy is different – messier, and far less reassuring – than detailed strategic planning. The detailed plan provides the executive with the illusion of control over multiple unknown futures. The downside, as Martin sees it, is that “planning typically isn’t explicit about what the organization chooses not to do, and why. It does not question assumptions.” He continues: “You need to be uncomfortable and apprehensive: True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.”

I would qualify that while some of the symptoms described are specific to middle-market and large organizations (smaller ventures rarely have the resources to over-plan to the degree described), the essence of his advice cuts across all sectors and scale of business.


Idea in Brief

THE PROBLEM

HBR-Cover-Jan-Feb-2014-2In an effort to get a handle on strategy, managers spend thousands of hours drawing up detailed plans that project revenue far into the future. These plans may make managers feel good, but all too often they matter very little to performance.

WHY IT HAPPENS

Strategy making is uncomfortable; it’s about taking risks and facing the unknown. Unsurprisingly, managers try to turn it into a comfortable set of activities. But reassurance won’t deliver performance.

THE SOLUTION

Reconcile yourself to feeling uncomfortable, and follow three rules:

Keep it simple. Capture your strategy in a one-pager that addresses where you will play and how you will win.

Don’t look for perfection. Strategy isn’t about finding answers. It’s about placing bets and shortening odds.

Make the logic explicit. Be clear about what must change for you to achieve your strategic goal.


Source: published both in the January-February 2014 edition of Harvard Business Review pp 78-84, and on the HBR blog, here.


– Gary Ralston

© 2014 Ralston Consulting Inc.

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