[FRIAM] complex adaptive business

[Bill Eldridge]

David Breecker wrote:
> Thought this would interest some of you (especially the description of 
> MS's Windows strategy):
>  
> *Creating Strategy in an Unknowable Universe
> *http://hbswk.hbs.edu/item.jhtml?id=5387&t=finance
> <http://hbswk.hbs.edu/item.jhtml?id=5387&t=finance>In his book /The 
> Origin of Wealth/, *Eric D. Beinhocker* argues that a radical new view 
> sees economics as a highly dynamic and evolving system with 
> implications for companies and organizations everywhere. An excerpt.
>  
70 years too late? ;-)

 From my thesis:
Coase (1937, in Foss, et al. 2000) referenced the advantage of a firm 
over the market in leveraging incomplete contracts and managerial 
discretion to provide low-cost controlled experiments. Extending the 
idea, "Suppose that the market, that is, a system of legally independent 
agents and no central direction, was to organize controlled 
experimentation with a complex production system. What would be the 
costs of organizing this, that is, why would there be 'costs of 
discovering what the relevant prices are' in this situation?" (Foss, et 
al., 2000:133). This controlled experimentation has an interesting 
similarity to offshoring opportunities -- low barrier to entry, low 
switching costs, variable labor pools available, reasonable 
infrastructure and resources. Depending on the level of commitment, 
make-or-buy decisions may be required to enter the agreement, or 
"attributes" may be overt or hidden outcomes of the contract or 
experiment itself which gain definition over time using repetition and 
feedback. The company offshoring might not even see itself as 
experimenting -- it may be simply doing business, a practical art in 
which we learn from doing.
....
Edith Penrose in The Theory of the Growth of the Firm (1959) created the 
resource-based theory of the firm (Besanko, 2004). She focused on how 
firms grow and sees the internal usage of resources as services leading 
to productive opportunities (rather than resources in and of 
themselves). Improved usage of internal resources frees up unused 
capability, while the act of producing creates production-related 
knowledge (Best & Garnsey, 1999). Her path dependency was not just that 
situations were based upon past experience -- managers' assessment of 
opportunities were restricted by their experience as well (Hilliard, 2004).
=============================

At the same time, the diverse portfolio approach had horrible results 
when the diversification
was far removed from core competences (Porter's analysis for one). Of 
course Microsoft
sits on hundreds of standards initiatives, waiting for the "right ones" 
to take off. At a higher
strategic level, it becomes more difficult to hedge your bets because of 
the resources involved
and path dependencies - it's hard to be Microsoft and Apple at the same 
time, they're simply
different mindsets.


> And BTW, while I'm recommending reading, Richard Dawkins' new book, An 
> Ancestor's Tale, has a great technical description of what I'll call 
> computational phylogenetics.  I'm struggling through it, but someone 
> out there will actually enjoy it ;-)
> db
>  
> dba | David Breecker Associates, Inc.
> www.BreeckerAssociates.com <http://www.BreeckerAssociates.com>
> Abiquiu:     505-685-4891
> Santa Fe:    505-690-2335
>  
>  
> ------------------------------------------------------------------------
>
> ============================================================
> FRIAM Applied Complexity Group listserv
> Meets Fridays 9a-11:30 at cafe at St. John's College
> lectures, archives, unsubscribe, maps at http://www.friam.org

-------------- next part --------------
An HTML attachment was scrubbed...
URL: /pipermail/friam_redfish.com/attachments/20060620/3adfd88c/attachment.html