I like going after the fundamental intellectual frames that shape our views of reality. This piece by Dominic Barton, the global managing director of McKinsey & Company, focuses on two of them:
- We can believe in the power of market efficiency, but need to stop thinking of it in simple, dogmatic terms. Instead, we need to understand how markets are efficient – and how to make them even more efficient.
- We need corporate governance that will focus on long-term value creation; not just short-term quarterly profits.
Oh, and speaking of good governance, Jeffrey Hollender follows up on an Andrew Sorkin piece in the NY Times, asking some tough questions about why the boards of director at large corporations like Apple, Xerox, Johnson & Johnson, and Alcoa have boards with directors, disgraced for various reasons such as bribery, poor management, etc.
- Andrew Sorkin’s New York Times piece provides the details.
- Jeffry Hollender’s piece elaborates with three attributes for good governance.
My personal experience running a mission-driven consulting organization is that governance is absolutely critical in determining how management is held accountable and that it is an extremely powerful tool. When wielded with responsibility, it can create great good. But often, especially in large corporations, the interests of the board of directors can become too interlocked with those of top management, and the real oversight power of governance is watered down to be completely ineffectual.
On a different note, as many of you know, I am fascinated by new organizational structures, especially ones that run more like loose networks rather than big, bureaucratic hierarchies. That’s why I find this new service called Shared Productions quite interesting.
The basic idea behind the service is a kind of demand aggregation, so that small retailers and other businesses can pool their orders together and be able to source from overseas suppliers that would normally require much bigger orders; the kind formerly only feasible to big box retailers.
I spent part of my junior year in college working for a trading company in Japan. In a way, this is just an evolution of the old-fashioned trading company – a high-tech, modernized version, with inventory management software being a core aspect of what they do, I’d guess.
Once again, technology blurring organizational lines and creating “organizational permeability.”