Evolution of Evaluating Values

By: Shahab Sabahi, Policy Analyst in Energy Security and Policy Research Group

Empirical  evidence shows how social evolution changes worldviews and motivations in societies [The World Values Survey www.worldvaluessurvey.org ]. According to the results there are cross-national differences which are robust and enduring, and they are closely correlated with a society's level of economic development: people in low-income societies are much likelier to emphasize traditions than are people in rich countries. These values surveys demonstrate that the worldviews of people living in rich societies differ systematically from those of people living in low-income societies across a wide range of political and social norms. The differences run along two basic dimensions: traditional versus rational values and survival versus self-expression values.

Traditional societies emphasize religion, respect for and obedience to authority, and national pride. These characteristics change as societies become more rational.

 The shift from survival to self-expression values is linked to the rise of postindustrial societies. It reflects a cultural shift that occurs when younger generations emerge that have grown up taking survival for granted. Survival values give top priority to economic and physical security and conformist social norms. Self-expression values give high priority to freedom of expression, participation in decision-making, political activism, environmental protection, gender equality, and tolerance of ethnic minorities, foreigners, and gays and lesbians. These values create a culture of trust and tolerance in which people cherish individual freedom and self-expression. These attributes explain how economic growth, which takes societies from agrarian to industrial and then from industrial to postindustrial, leads to democratization. The unprecedented economic growth of the past 50 years has meant that an increasing share of the world's population has grown up taking survival for granted. Mass priorities have shifted from an overwhelming emphasis on economic and physical security to an emphasis on subjective well-being, self-expression, participation in decision-making, and a relatively trusting and tolerant outlook.

 

Pollution, Made in China. Should customers be blamed too?

By: Shahab Sabahi, Policy Analyst in Energy Security and Policy Research Group

A question ran through my mind when I came across an article on Climate Change. It may find interest of you too.

However the discussion on Climate Change runs out of steam and is overshadowed by some overwhelming and pressing today-challenges. The challenges range from preserving regional security and defusing conflicts to mending flaws in the economic structure. But it is worth, just a touch, revisiting the responsibility of air pollution from a realistic economic perspective.  

China is now the world's leading contributor to greenhouse gas emissions, and its largest cities are choked with some of the worst smog on the planet. However a large share of China's pollutants is generated during the manufacture of goods for export and destined to other countries [the journal Proceedings of the National Academy of Sciences (PNAS)].

In the study, researchers found that, in 2006 alone, about a fifth to a third of China's air pollutants—which include sulfur dioxide, nitrogen oxides, and carbon monoxide—were associated with the production of goods for export, and that about a fifth of those amounts were linked to the production of goods for the United States.

The PNAS study places responsibility for China's pollution. But the goods are produced to satisfy demand of consumers who live somewhere else. The question one may raise “whom should be blamed for air pollution emissions?”. Do both producing and consuming nations have share responsibility for emissions generated during the production of export goods?

In a broader view, I think we should put responsibility on those also who are consumers as well as those who produce emissions. Electricity generations and goods productions do not occurred – in the first place there are demand and places where those go. That is the demand side and we should take into account the demand aspect. Perhaps a consumer-based way of looking at pollution is better than just looking at who's producing it.

THE EVOLUTION OF THE STRATEGIC THINKING

By: Shahab Sabahi, Policy Analyst in Energy Security and Policy Research Group

This short theme is an attempt to introduce the evolution of the strategy paradigm to provide input for encouraging further discussion to better understanding the concept of strategic thinking and strategy.

 Phase -1

The first phase in the evolution of the strategy paradigm involved “basic financial planning” in the 1950s where the typical planning focus for the firm was the preparation of the financial budget with a time horizon barely beyond 12 months. These organisations tended to exhibit strong strategies however these strategies were rarely documented. The success of the organisation was dependent on the quality of the CEO and the top management team and their knowledge of products, markets and rivals (Gluck et al, 1980). In the literature Drucker (1954, p. 77) drew attention to this issue arguing that it is the role of top management to address the key questions with respect to strategy: “What is our business and what should it be?”

Phase - 2

The second phase of “forecast-based planning” in the 1960s resulted in organisations embracing a longer time horizon, environmental analysis, multi-year forecasts and a static resource allocation as the firm responded to the demands of growth (Gluck et al, 1980). Important contributions to the evolution of the strategy literature were offered in this period by Chandler (1962), Andrews (1965) and Ansoff (1965). In particular Andrews (1965) and Ansoff (1965) were the first writers to address explicitly strategy content and process. Chandler’s (1962) contribution from an historian’s perspective explained the development of large corporations and the way their administrative structures changed to accommodate the demands thrust upon management as a result of business growth. Chandler (1962, p. 13) offered a broad definition of strategy which did not distinguish between strategy formulation and content noting: “Strategy can be defined as the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.”

 

Phase - 3

In the 1970s there was a move to the third phase of “externally oriented planning” in response to markets and competition as strategic planning enjoyed the peak of its popularity. Planning in this form included a thorough situation analysis and review of competition, an evaluation of alternative strategies and dynamic resource allocation (Gluck et al, 1980). Prescriptive techniques for strategy were at their peak at this time with the planning school dominant (Mintzberg, Ahlstrand and Lampel, 1998) and numerous simplified frameworks for strategic analysis were put forward mainly by industry consultants. These frameworks included the Experience Curve, the Boston Consulting Group’s (BCG) portfolio matrix and the Profit Impact of Marketing Strategies (PIMS) empirical project.

 

Phase - 4

In the 1980s firm’s embraced what became known as the strategic management phase - the fourth phase - being the combination of the firm’s resources to achieve competitive advantage. This phase included:

1.      A planning framework that cuts across organizational boundaries and facilitates strategic decision making about customer groups and resources.

2.      A planning process that stimulates entrepreneurial thinking.

3.      A corporate values system that reinforces managers’ commitment to the company strategy (Gluck et al, 1980, p. 158).

The strategy process came to be increasingly performed by line managers with occasional assistance from internal strategy experts operating in fewer numbers compared with the past. Initiatives in the field were driven by unprecedented levels of change and complexity confronting organisations (Prahalad and Hamel, 1994) as firms endeavoured to keep pace with environmental developments. At this time there was also a shift from quantitative forecasting to greater use of qualitative analysis (Stacey, 1993). The focus became establishing the firm’s mission and vision for the future, analysis of customers, markets, and the firm’s capabilities (Wilson, 1994).

 Phase - 5

By the mid-1980s it was evident that the changes in the evolution of strategic planning into strategic management were not leading to significant improvements in strategy implementation. In addition, at this time there was apparent a greater sense of the importance of organisational culture and internal politics in the strategic management process (Wilson, 1994; Bonn and Christodolou, 1996). The ineffectiveness of the strategic management process led many experts in the field to emphasise the need for strategic thinking - the fifth phase in the evolution of the paradigm. In this context Stacey (1993, p. 18) observes: “…that although the procedures and analytical techniques of modern strategic management may not be of much direct practical use, they do create a framework for strategic thinking and, it is assumed, managers who think strategically are bound to act more effectively in dealing with the future." That the strategic management process provides a framework for strategic thinking is an important foundation in attempting to conceptualise strategic thinking.”

The evolution of the paradigm from strategic planning to strategic management into strategic thinking reflects the economic, technological and social changes that have taken place since its inception in the mid 1950s, especially since 1984 (Aggarwal, 1987; Prahalad and Hamel, 1994) with higher levels of environmental uncertainty evident placing greater demands on the strategy process in organisations. Indeed, the day-to-day challenges of management bring forth issues that test established frameworks, policies and procedures within organisations designed to deal with them. The major task of managers is to determine when to apply these established frameworks, policies and procedures and when to ignore them and develop new solutions. Strategic thinking facilitates this process (Stacey, 1993).

Subjective knowledge: the Swing of Rationale - Emotion

By: Shahab Sabahi, Policy Analyst in Energy Security and Policy Research Group

What is the nature of knowledge? How does the mind acquire knowledge?

In the sphere of policy design and the clash of objectivity-subjectivity, it has been always a crucial question to answer “What do we really know?”   

Formerly academia thought of what we call “natural science” an offshoot of Descartes division of the universe in matter and spirit, while it dealt only with the former. Therefore, the study of the mind and its affairs should either fall in the spirit category or; for the sake of remaining objective-oriented; should assume that they behave like classical objects, and possible quantum effects should be negligible.

The quantum theory, though, provides a ground to understand the development of knowledge; it is based on a series of complex mathematical formula which one may find it hard to follow and apply.

An alternative explanation, which is formulated upon the evolutionary theory, gives a preliminary picture to who may have a quest to crack the nut of the knowledge mystery.     

If we assume that a similar law of evolution is responsible for all living phenomena, from the creation of species to the immune system, and we admit that mind is one of them, and then a possible scenario emerges, which is compatible with the latest neurophysiological findings.

Thoughts are continuously and randomly generated, just like the immune system generates antibodies all the time without really knowing which ones will be useful. Thoughts survive for a while, giving rise to minds that compete for control of the brain. At each time, one mind prevails because it can better cope with the situation. Which mind prevails has an influence on which thoughts will be generated in the future. In practice, a mind is the mental equivalent of a phylogenetic thread (of a branch of the tree of life). We are conscious, by definition, only of the mind that is prevailing.

In ancient times the minds generated chaotically were simply yelled to the "rational" apparatus of the brain, which would act as the mediator with the environment: it would translate "illusions/visions" into actions. The result of actions into emotions, and emotions would either reinforce or weaken the mind in control. Emotions would select the mind.

This is more evident in children, who explore many unrelated thoughts in a few minutes: whatever the various minds produce. Later, the adult is better adjusted to select "minds" and does not need to try them all out. The adult has been "biased" by natural selection to recognize the "best" minds.

EU Energy Security and its implication for Ukraine

By: Shahab Sabahi, Policy Analyst in Energy Security and Policy Research Group

One could think of various reasons for the recent Ukraine tension, but certainly wining political control over the Eurasia faultline isn't the only driving force for Russia's offensive stance, as the coincidence of last year’s energy agreements, between Kiev and the giant energy companies, with the commencement of the conflict is unlikely to be considered a random accident.

According to the U.S. Energy Information Administration Ukraine has Europe’s third-largest shale gas reserve at 42 trillion cubic feet. While for years the giant energy companies have been pressing for shale gas development in Britain, Poland, France and Bulgaria there has been considerably less opposition in Ukraine, a country that has been entangled in gas disputes with Russian in recent years. Gazprom annually supplies more than half of Ukraine’s gas demand, and about 30 percent of Europe’s. Russia has often used this as political and economic leverage over Kiev and Brussels. This leverage, however, came under challenge in 2013 as Ukraine took steps towards breaking its dependence on Russian gas.

According to the New York Times, Chevron signed a 50-year agreement with the Ukrainian government to develop oil and gas in western Ukraine on Nov. 5, 2013, just a few weeks before beginning Kiev’s unrest. The quantities of gas production can probably go beyond Ukraine’s gas needs and the left over can export by 2020. As Reuters stated that the deal for Ukraine and Europe would be a step towards more energy independence from Russia.

It’s in the Donetsk Region, in eastern Ukraine, that Shell signed, in January 2013, a 50-year profit sharing deal with the government of Ukraine to explore and drill for natural gas in shale rock formations.

In another occasion, in autumn 2013 Ukraine’s officials were in negotiations with an ExxonMobil-led consortium to explore for hydrocarbons off Ukraine’s western Black Sea coast. On Nov. 27, the Ukrainian government signed another production-sharing agreement with a consortium of investors led by Italian energy company Eni to develop unconventional hydrocarbons in the Black Sea. In Crimea, giant energy companies including Chevron, Shell, ExxonMobil, Repsol and even Petrochina have shown interest in developing its offshore energy assets. In 2013 these companies have greatly expanded their exploration of the Black Sea off the Crimean peninsula. Perhaps one of Russia’s motivations for annexing Crimea was to ensure that Gazprom will remain in control of Crimean offshore energy assets in addition to ensuring the continued use of Crimea as host to Russia’s Black Sea Fleet.

With much invested of these giant energy companies including those of Russian and the west they are deeply entangled in the Ukrainian crisis. Most likely they will firmly stand to make a profit from these contracts signed by the previous Ukraine’s government and that will influence the geopolitics of Eurasia and Ukraine’s future more than other factors in place.