Tag Archives: review

Surviving disruption through paranoia

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Joshua Gans’s new book [amazon_link id=”0262034484″ target=”_blank” ]The Disruption Dilemma[/amazon_link] is aimed at business readers. It takes the famous Clayton Christensen analysis [amazon_link id=”142219602X” target=”_blank” ]The Innovator’s Dilemma [/amazon_link] – a change in the competitive landscape that even a well-managed business might not survive – and sets out the possible strategies the defensive firm might successfully deploy. In doing so, Gans argues that the original disruption story is too simplified, and there are different kinds of challenge, some more threatening to incumbent survival than others.

[amazon_image id=”0262034484″ link=”true” target=”_blank” size=”medium” ]The Disruption Dilemma[/amazon_image]

As Gans points out, ‘disruption’ has become an over-used term, so he is specific about addressing fundamental shifts in the landscape. Where Christensen and many of his successors have focused on defences against the demand side of disruption where a new entrant offers a product to a niche group of customers, Gans is interested in the supply-side, when the disruptions  use an entirely new technology or approach to production. For this means the incumbent businesses find it very hard to respond. To do so effectively means completely redrawing the fundamentals of how they produce their product or service. The book advisers readers not to worry about ‘demand side’ disruptions but to focus their efforts on how to prepare for a ‘supply side’ event

Counter-intuitively, one of Gans’s defensive strategies is to run a highly integrated organisation that is in the habit of working on a sequence of innovations – which runs contrary to the usual advice to ‘disrupt yourself’ with some kind of skunk works. This is the dilemma of the title: if you run a highly integrated business, then you can’t try the independent unit option. The other strategies are: ensure you have some unique complementary assets (something [amazon_link id=”019828988X” target=”_blank” ]John Kay[/amazon_link] has always emphasised); and don’t tie your corporate identity to your technology.

This all seems sensible advice and the case studies cited are very interesting. I have to say, though, that although Gans concludes than [amazon_link id=”1861975139″ target=”_blank” ]Andy Groves[/amazon_link] overdid the paranoia – “academic research and market experience demonstrate that the fear of inevitable and imminent disruption is unfounded” – I’m not so sure. Or at least, labelling management in a time of technical change as ‘disruption’ might well be exaggeration, but it doesn’t meant the job of managing a business is easy. Stuff happens all the time, and the really difficult decisions need to be made when the stuff has started happening but your business is still doing fine. Paranoia seems the right attitude.

Even for the non-paranoid and possibly over-relaxed, this is a nice, concise overview of the disruption debate and possible responses. It is firmly rooted in proper research, the best kind of business book.

A philosophical diversion

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It was a holiday weekend so I indulged myself in a little philosophy: Patrick Baert’s [amazon_link id=”0745685404″ target=”_blank” ]The Existentialist Moment: The Rise of Sartre as a Public Intellectual[/amazon_link]. Regular perusers of this blog will know I recently outed myself as a teenage existentialist, in reviewing Sarah Bakewell’s excellent new book [amazon_link id=”B017IGPTDQ” target=”_blank” ]At The Existentialist Cafe[/amazon_link]. Bakewell explains (and critiques) the philosophy, and sets it in the context of wider philosophical currents. Baert explores a few years in French history, those of the German occupation during World War 2 and the immediate post-war years, to explain why existentialism and why Sartre in particular struck a chord with the public and become so influential.

[amazon_image id=”0745685404″ link=”true” target=”_blank” size=”medium” ]The Existentialist Moment: The Rise of Sartre as a Public Intellectual[/amazon_image]

It is fascinating in its exploration of why writing came to be seen as so central to French national identity and why Sartre was particularly adept at using writing about politics to appeal to the French public at that time of national defeat and subsequent rebuilding. So, oddly, although Sartre and De Gaulle were poles apart politically, both played an important part in rebuilding the nation’s sense of cohesion and dignity.

Baert’s final chapter has some general reflections on the role of public intellectuals and writing as a performative political act. He argues that the generalist public intellectual of Sartre’s type cannot exist in modern social contexts, but have been replaced instead by public intellectuals with expert domain knowledge. Sartre wrote about social and economic issues with no knowledge of the facts or the social science, and nobody would get away with that now. I’m not sure I buy the argument about the perfomative character of people who pontificate about the economy, at least not in a straightforward way, but having said that, there’s some appeal (to a writer) in the idea that words are sufficiently powerful to shape social reality. Man the keyboards!

Upward bound?

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Lynsey Hanley is much younger than me. She cites often in her new book [amazon_link id=”1846142067″ target=”_blank” ]Respectable[/amazon_link] Richard Hoggart, and an intermediate generation of working class writers who made good via grammar school, who are much older than me. The continuity of experience, theirs and mine alike, is striking. The specifics have changed over the decades since Hoggart’s [amazon_link id=”0141191589″ target=”_blank” ]The Uses of Literacy[/amazon_link] was published in 1957, but Britain remains a firmly class-based society, with the (im)possibility of social mobility mediated through the education system. Having spent decent amounts of time in the US and France, I think they are equally class-bound, and maybe only Scandinavia is really different (although actually the OECD adds Canada and Australia to its list of socially mobile countries). However, the exact mechanics of keeping people in their place differs.

[amazon_image id=”1846142067″ link=”true” target=”_blank” size=”medium” ]Respectable: The Experience of Class[/amazon_image]

Hanley wrote an excellent book, [amazon_link id=”1847087027″ target=”_blank” ]Estates[/amazon_link], about growing up in a large council estate in outer Birmingham. [amazon_link id=”1846142067″ target=”_blank” ]Respectable[/amazon_link] takes up the story with her personal experiences of a working class education, and the lack of quality and lack of ambition for pupils in her first schools. I found the sections of the book where she describes her personal experiences the most interesting, partly because her reaction to her culture shock was so different from mine (my journey was a more ‘conventional’ social mobility story of 11 plus-grammar school-Oxbridge). I went from a northern working class household where we hardly ever had meals out, ate plain food at 5.30pm for our evening meal, had holidays in Blackpool B&Bs or Butlins holiday camps, had never been abroad to an Oxford college stuffed with southerners who had been to posh schools, listened to classical music, and knew how to tackle an artichoke. Although it was a shock, I relished it. Hanley is far more equivocal about her climb into the middle class, and seems to have felt the deracination as a far more painful process. She argues that upward social mobility leaves the individual permanently anxious in both kinds of context.

This contrast in our attitudes made the analytical parts of [amazon_link id=”B01AU5V9OA” target=”_blank” ]Respectable[/amazon_link] less compelling for me, but Hanley has many interesting observations about how monstrously hard it is for working class children to gain access to the privileges the middle classes take for granted. She is particularly astute about the lack of autonomy that goes with lack of confidence. And also on the fear – the fear of the ‘respectable’ working classes about falling downward which manifests itself as disdain for ‘chavviness’ or casual racism, and the fear of the middle classes about all of the lower orders. (This echoes the emphasis Julia Unwin places on the emotional role of fear in her excellent book [amazon_link id=”B00MX0ZW7Q” target=”_blank” ]Why Fight Poverty?[/amazon_link])

[amazon_link id=”B01AU5V9OA” target=”_blank” ]Respectable[/amazon_link] is also very strong on the ideological use of the idea that all an individual child needs to do is to work hard and behave well to get on, as if individual responsibility can by itself overcome embedded social structures. However, Hanley appears to argue against the idea of early intervention in some families, and free nursery care or extended hours at school, whereas I’m persuaded that, given the family context some children experience, this is absolutely the right thing to do – even if it would of course be great to be able to sort out the thicket of social, economic, health and crime problems experienced by poor families in poor areas. One point on which I wholly agree with her, though, is in marking the use of the phrase “these people” with a red flag. (“A characteristic feature of such pronouncements [about the fecklessness of the underclass] is the use of the phrase ‘these people’. ‘These people’, over there, are not and cannot ever be people like us.”)

Even if your own experience has been different – or especially if it has – [amazon_link id=”1846142067″ target=”_blank” ]Respectable[/amazon_link] is a terrific read. There are too few writers who can describe working class life with any authenticity, and this book gives real insight into why Britain is so socially stratified.

Beautiful business

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I’m a big fan of small books – this is the era of the extended essay.They fit in a pocket or bag easily, and are just the right length for a moderate train/tube/bus/plane ride.

I’ve just been sent a lovely example in Alan Moore’s [amazon_link id=”1907974288″ target=”_blank” ]Design: Why beauty is the key to everything[/amazon_link]. It is, as one would expect, well, beautiful. It aims to inspire readers to create whatever they create better, whether that’s chairs or websites or a digital start-up. Each piece of advice is a page or two. The book starts with some general principles – why beauty matters, what the right mindset is to design things well. The second part then sets out 14 specific practices, grouped under the headings ‘persevere’, ‘connect’ and ‘aspire’. Two appendices look at business examples, axe-maker Gränsfors Bruk and Yeo Valley Farms. It sounds counter-intuitive to think of businesses being beautiful, certainly when the news is full of rather ugly examples, but it makes sense in this context.

There isn’t a big theory, rather a collection of insights that are intended to add up to a ‘beauty in design’ way of thinking. I’m not usually a fan of how to advice books but I have to admit this one made much sense to me and is simply a wonderful (small) object.

[amazon_image id=”1907974288″ link=”true” target=”_blank” size=”medium” ]Do Design: Why Beauty is Key to Everything (Do Books)[/amazon_image]

Power and economics

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My esteemed colleague Adam Ozanne has written a very interesting, short book on the strange absence of the concept of power from mainstream modern economics. The book, [amazon_link id=”1137553723″ target=”_blank” ]Power and Neoclassical Economics[/amazon_link], argues that the fact that economics ignores power in social relations has also affected other social sciences, especially political science, as they have adopted techniques and approaches used in economics.

[amazon_image id=”1137553723″ link=”true” target=”_blank” size=”medium” ]Power and Neoclassical Economics: A Return to Political Economy in the Teaching of Economics[/amazon_image]

What explains the lacuna? Adam dates it to, first, the marginalist turn in economics in the 1870s, which started the process of abstracting from the particulars of reality into formalism; and then to the ordinalism of the 1930s and Lionel Robbins’ insistence that ‘positive’ and ‘normative’ economics could be separated. The new welfare economics of the 1950s finished the job. Indeed, Arrow’s famous impossibility theorem seemed to conclude that we can’t say anything practical about social choice. As the book puts it: “It must seem strange to non-economists that economic and social choice theorists have dug themselves into such a deep hole (though a very tidy, immaculately constructed hole) that they cannot even distinguish between rich and poor, but that appears to be the case.”

However, as Adam points out, an alternative interpretation of Arrow is that the actual social ordering that emerges is a function of the exercise of power (and in a way Sen has made the same point in saying other kinds of information apart from individual utilities can enter the story). The book goes on to argue that the fact that mainstream economics has nothing to say about the distribution of income and wealth is an important part of the explanation for cynicism about the subject – both among the general public and students like our university’s active and enthusiastic Post-Crash Economic Society.

The final chapters of the book discuss how power might be incorporated into economics. It notes that there are signs of stirrings in the ‘New Political Economy’ of economists such as Tim Besley and Torsten Persson and the institutional economics of others such as Daron Acemoglu and James Robinson. Adam suggests an interesting definition of power in economics as an analogy with force in physics, a dynamic that moves the social outcome in the direction of specific groups. He reinterprets classic social welfare functions as ‘political economy functions’ in a way that means they can be used in conventional general equilibrium approaches. His approach can be incorporated into co-operative game theory, a bit of the toolkit economists should feel comfortable with.

The book concludes: “Most economists are in denial about the relevance of power to economics and their own ability to fully address, let alone answer, the For Whom question so long as they neglect power. This is reflected in the textbooks they write and the teaching they offer students, and has not changed even though the sub-prime and eurozone crises of recent years provide clear evidence of the failure of many of their models, in particular dynamic stochastic general equilibrium (DSGE) models. ….. [T]here are grounds for believing that students and the wider public are increasingly disenchanted by what is on offer.” He continues that the normative and the positive need to be distinguished but that economists cannot and should not ignore the former.

I very much liked the book – ie. warmly agree with the general argument. Surely one of the longer-term outcomes of the crisis will be – must be – to turn economics back to political economy. I’ll be thinking more about the specific means of incorporating power in economics that the book suggests; it certainly looks promising.

My one (quite major) reservation about this book is its price (currently [amazon_link id=”1137553723″ target=”_blank” ]£34.45 on Amazon[/amazon_link]). The publicist explained to me that it’s a series intended to be read as e-books, but the Kindle price is still £30, and this for a 110 page book. Piketty’s 700-page [amazon_link id=”B00I2WNYJW” target=”_blank” ]Capital in the 21st Century[/amazon_link] is less than £20 in hardback! So come on Palgrave, do your bit for economics by reducing the price and testing the elasticity of demand. Meanwhile, everyone will have to order it from the library.