Quality of admirable company

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

What company is the most admirable company?

Steadily creating value accounts the most important characteristic of an admirable company. By definition value is attributed to that which preserves more quality life. Now a question rises: “What features account for steadily creating values?” 

Directors and analysts count the common attributes for the most admirable companies as the quality of management / products / services, innovativeness, long term investment value, financial soundness, ability to develop people, responsibility to the community and the environment, wise use of corporate assets. (D. Anginer, University of Michigan 2008)

I believe that we can categorize these attributes in a simple way to describe better an admirable company.

Governance quality shows the most important attribute of an admired company. It is a continually evolving process. It enables a company to adapt itself when the business forces change. It brings a company quality of leadership and reputation which are the important assets that company possesses 

Formulating stable strategy comes the second. It shows the ability for the long run value creations in a company. By stable strategy, I mean a strategy that wisely elaborated based on resources capacity constraints and interests of companies with envisaging the development opportunities.

Stable strategy may require long term investments in human, knowledge and capital. Stable strategy entails effective use of company’s resources. Stable strategy leads companies to create more value options.

Integrity is an important corporate ideal. By integrity, I mean honesty, honour, and reliability. It is the firm foundation of a corporation. It is important to all stakeholders including employees, suppliers, customers, shareholders and the community. Integrity is a reflection of the professionalism and the responsible attitude of its management and employees. By corporate-wide committing to do the right values, every element of the corporation team has the freedom and of course responsibility in return to deal with each other. Integrity creates trust among stakeholders that provides a code of ethics by which the organization’s performance is consistently checked and improved over time. Integrity leads to sound collaboration, joint effort, and solidarity

Besides the fact that admired company should be a profit-making company, it also should speak to the concerns of communities. Thus in my opinion governance quality, stable strategy, integrity and profit making are the most characteristics of an admired company.

Energy Security – reconsidering endogenous energy resources development

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

General notion agrees that economic growth, energy security and climate change are fundamental and interlinked challenges for the world. Having their impacts on human well-being, the clear understanding of their complex interplay has concerned both academics and public policymakers. Society’s and economics’ interest varies across countries and it implies that individual country may take on differently in addressing these interconnected issues. The common belief is that the tension of energy supply and environmental deterioration are the consequence of the economic growth. Modernized economies have long been powered by fossil energy sources. As productions and outputs have been boosted, the use of fossil energy sources has exponentially grown; it has consequently pumped more emissions to atmosphere and intensified Greenhouse Gas (GHG) emissions. Continuous fossil energy use negatively impacts the collective performance of an eco-socio-economic system which is triggered by climate change and the exhaustion of scarce fossil resources. Climate change and foreseeable rising fossil energy prices under increasing demands and increasing production and exploration costs make policymakers think over the serious use of alternative energy sources. If the scarcity of fossil energy and environment degradation are the serious threats to sustainable economic growth, it would be politically a persuasive case to see the development of renewable energy sources as an opportunity. It is a double-edge opportunity; it can cut pollutions in one hand and on the other hand can substitute for additional fossil energy demand thus economic growth remains intact. High fossil energy prices and renewable energy technology advancements will accelerate the substitution process as renewable energy becomes highly competitive and economically feasible.  

Free pollutions from fossil energy use and conventional energy technology lock-in are regarded as the market failures which need policy interventions. Developing endogenous renewable energy sources and other sort of clean energy seems to be a proper solution for tackling simultaneously the interconnected issues. This approach, however, requires heavy investments and changes in energy-economic systems, consumption patterns, and institutions.

 

Harmonizing interests and values: an application for international affairs

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

On May 1st 2012, Janos Martonyi Hungary’s foreign minister gave a quasi-exclusive lecture in the centre for European Study, Chulalongkorn University – Thailand. How Hungary would respond to the forces from the world order shift was the main topic of his lectured. He initially outlined the current world’s powers structure and analyzed the possible shapes of the world structure through evolutionary process. Although he tried to not speculate the future, he ended the lecture with contemplating the possible positions of Hungary in the new world order and supported his hypothesises with the effect of Hungary’s recent foreign policies in regional and national level.

“Value-Based Foreign Policy” was the core of Hungary’s doctrine, Dr. Martonyi’s pointed out. By the “Value-Based Foreign Policy”, he meant that Hungary’s goals would not be selected on an ad hoc basis, but would be a function of the important value sources such as the UN Charter, the North Atlantic Treaty, the Treaty on the European Union and of course Hungary’s constitution.

Commitments are the prime source of values. As the definition suggests, a value-based approach requires policies are formulated within the framework of commitments made at the first place. As the number of commitments rises, policy choices become narrow.

It raises a question and I got it for Mr. Martonyi. How does Hungary harmonize her national interests and values if there would be a conflict between them? Today it is the case of the European Union, from Greece, Italy to Spain. As a competent politician, he answered my question that the value based approach, in the realm of foreign policy,  should not inherently limit Hungary’s relations with countries that do not fully respect the values her country adhere to. He continued that the competition between values and interests would be a perpetual challenge for societies. In effect it means that policy choice again remains a contextual, and values except core values such as human rights, can be altered.     

Concerning international relations, it would be an easy task to rhetorically speak on an international objective, but adopting a collective policy to reach that objective would be hard. Individual nation’s interests and contexts influence nation’s response to policies. Certainly the social structures and relations are manmade and the values (again except the core values such as human rights) are open to reasoned critique about what is the most reasonable to do. Should a commitment to manmade values be treated in completely contextual terms? Or should interests and values be harmonized before thinking about commitments?     

To harmonize interests and values, general practice is to run a pros and cons analysis which is conforming to rationality and reality of the relevant circumstances. If there would not be institutional humps, this approach creates value based interests which would be an optimistic outcome.  Priorities and institutions may cause deeper interests and values divergence which jeopardize the success of the harmonization process.  In fact, commitments beyond the core values, unlike options, bound the ability of adaptation and decrease the resilience level.

So a value-based policy is only a catchphrase, if one misses to recognize the origin of values. It reminds me this quote “G. Kennan believed that language helped make policy and that vague, expansive language would lead to vague, expansive policy” (Ideas Man by Nicholas Thompson)  

Loser and Winner in the game of change

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

One of the recent discussions in the Strategic Planning Society brought forward the old dilemma of the change process and tries to address it however, in my view, in idealistic ways.

The discussion recognizes creation of loser and winner as the trouble of change. And it builds its premises based on this belief. I critique the discussion’s certainty and its proposition and argue that the marginal groups are driving forces of change and crucial to change’s success. The trouble appears when marginal groups become larger and more divided which is so-called polarization.         

Company boards, directors, legislators are presumed to be sane. It requires them to hurt no one when carrying out their responsibility which is to assure their systems steadily progress. Under the strain of change, they should respond, restructure, reallocate the scarce resources, and impose new regulations, to create fresh system resilience. By nature these processes rearrange resources and shatter the previous merit system. These processes create marginal forces (let’s call them winner and loser). The marginal forces are critical in the process of change. Both marginal forces, upper and lower average would be supporting the change, if they remain marginal. The problem appears when a system was polarized at the first place.

After the demise of communist and followed strong conductivity in the world, a polar-free world would be expected. Contrary, all systems are now thoroughly polarized and the question is WHY? (Foreign Affair Jan Feb 2012)

Polarization creates the sense of winner and loser in systems, and it should be addressed   

 In the context when change is inevitable, scarce resources, priority setting comes first. (the dilemma of judgment). What guides one’s decision making process is the principle of economic efficiency and cost-benefit analysis. Efficiency does not speak about distribution. However welfare economic theory posits grounds for working out distribution issue. In the case of change, in the race between efficiency and redistribution efficiency must triumph. In fact winners do not outnumber losers but they organized efficiently and share strong and clear interests along with compromise wherever it is needed (Mancur Oslon)       

Institutions and society's growth

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

How and why do societies grow? What are the consequences of growth? Does growth follow deterministic patterns? Can growth path be imitated in another location with similar results? If so why then some countries are able to achieve economic growth and better standards of living for their populations while others are not. Most of my time has been spent in last two years to do research on this topic with particular focus on role of natural resources, capitals, environment, social institutions, individuals and states and the rule of law. 

These issues concern social scientists Old and  the current economics frameworks has been well identifying sources of economic growth in terms of educational achievements, technology, market organization but hasn’t really dug deeper into why markets are organized differently. Why is it that in some places there is investment into education, or adoption and embracing of new technologies, and in other places there is not? That is the point that economics alone fails to help for searching answers. It requires bringing political economy and institutions in the picture. The major theme that has been keeping me busy right now is to understand the roles of institutions, how institutions emerge, and why dysfunctional institutions arise in different places.

In terms of statistical institution structure and its sources of creation and survival are rather complicated. Social scientists acknowledge elements such as geographic limitations, ecology, weather, natural resources, security problems, etc. which contribute to economic development and growth in much of the world. These scholars are essentially talking about elements that are outside of human control. But history tells us events that humans intentionally changed the course of growth or even initiated it even in the ground of environmental limitation.

So it sounds that to achieve a clear understanding we should examine the roles of institutions and how these social structures can provide leverage and influence in a way that mitigate the impact of various inherent environmental limitations. .

Moral economy does not matter

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

Maha Hosain Aziz in her article in CNN (April 19th 2012), analyzes the causes of Occupy Wall Street movements around the globe. She claims that at various points in the past six months, movements have been fighting for the same cause as the peasant communities of rural Vietnam during the 1930s - the moral economy. She explains that theorists have typically used moral economy rhetoric to explain rural movements where protesters felt their basic right to subsistence was being threatened. In the case of Vietnam, the onset of colonial capitalism in the Great Depression contributed to a food crisis for peasant farmers, prompting significant protests. In effect, an informal contract had been broken between the governing power and the governed involving the individual’s basic right to feed himself. She believes today, a similar “contract” has been broken between governing powers and the governed, thus the main causes of Wall Street Movements were beyond corporate greed and income inequality.

Her analysis and perspective is valid in the context of the Great Depression and the 1930s. Since then, the world has thoroughly got changed. People’s knowledge has advanced and it affected their worldview, perception of world affairs and their rights. The street movements are not just about demanding people’s basic right, such as work, affordable basic goods, and homes. They challenge the government dysfunctional bodies, lousy regulations and ineffective policies. They simply do not trust governments’ corporate –oriented policies.   

Unlike the Great Depression era, there is no a clash of ideologies in the Great Recession time. Now policy making process faces big challenges and should be restructured. Capitalism embraces the culture of change which drives societies toward growth. Some people accept both the joys and comforts of capitalism achievements and challenges posed by those achievements. Capitalism contains the element of creative destruction which creates winners and losers. The gap between winners and losers widen when governments fail to regulate based on facts and reality and instead intervene by giving ill visions and targets which are not inline with society well-being.        

Contrary to Maha, I see the street movements, in different locations, fight their own causes. But what they have in common is “they are fed up with fake government visions”.  

To conceptualize the main causes of the street movements, two macro-questions should be asked “What difference cultural variation would make to capitalism? and Which forms of embedding would be most successful in supporting the street movements' strategies for success in the context of capitalism? (if we admit the importance of economic growth!!)”

Conflict between what societies need and what societies want in our time may be the key barrier. Perhaps moral economy in the context of globalization, integrated markets falls short to provide adequate principles for designing effective global governance and global policies.

Myths, Fallacies, Artifacts in Strategy Development

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

This piece is a part of my discussion on "Creating  body of knowledge for strategy" in Society of Strategic Planning. It just reflects a pure view through the lens of Philosophy of Science. It should not be regarded as an educational expert view. (part of critical thinking development discourse)

To avoid ambiguity, I first make concept clearance and set the context in my discussion and then proceed to make my points which agree with Dr. Pierre's original thought (Myth, fallacies and irrelevant fact of strategies as a pure science).

From an international development perspective (not firm strategy) and the basic platform of philosophy of science, I initially state problems and explain in brief where the contradictories stem from.

1. It fails to draw a fine line between short and long term (cause objectivity). No solid guiding principle for defining short and long range. It causes a conflicting between the short term view (performance) and long term (value creation). If the concept of short/long borrowed from economics there would be a conceptual contrary. (i think that it must be valid even for corporation strategy as it is for state),

2. There is no evidence that strategic planning actually improves performance (only case studies) so it leads to inductive reasoning (probability).More than fifty casualty analysis articles have been published which proposed different methodologies to gauge the contribution of strategic plan in success of a company. Yet consensus has to be reached (Strategic Management Journal)....I agree this is not a fallacy and is progressive debates ....But as i mentioned in my earlier comment the result of debate whatever would be, just acceptable as inductive reasoning (nature of strategy),

3. Strategic planning attempts to control (deterministic) the future by employing forecasting techniques. Strategic planning requires quantitative data which limited in scope, aggregated, and uncertain to be useful in effective strategy formulation (limitation to develop theoretical bases). It stems from philosophical debate between dynamists and progressive advocates. I do not think it could be discussed without settling a common ground for what school of thoughts we would like to subscribe to. (just punching air),

4. Strategic planning frequently focuses exclusively on strategy formulation, the success for implementation rests upon people who had nothing to do with creating those plans (Subjectivity conflicts Objectivity). Strategy, strategic thinking, strategic planning and performance plan etc help to prioritize our actions (a wonderful approach to solve the long dilemma of value judgment) and support efficient resource allocations (through process which are known)However it contradicts Agent-base theory which is used in development of strategy (EU social science journal, if i my mind goes right),

5. To have a robust analysis, analysis should not be synthesis. However strategic planning analysis in its interaction with strategy is often synthesized (if we do not accept dialectic!!!),  

6. Strategic planning is rather a tool of formal analysis while strategy requires creative synthesis. It is another source of fallacies (a reality),

5 and 6 i have personally no problem with dialectic process as way to develop knowledge....But if one subscribes to intuitivist school of thought (philosophy of science) it would have a hard time to convince its research results