The transformation of Porters strategic mind from Shareholder Value to Shared Value Bridging the sciences of economics, strategy

and cybernetics
Qeis Kamran, BA, MBA-GM, MBA-PPM, MBL- HSG, LLM- Candidate

Content
First- hand Porter Porter is not fast food, nor is strategy Porters great achievements Porters greatest short-falls Where is Porter going Where does the journey of strategy go Conclusions

Michael Porter 1979- 2012 Founder of Competitive Strategy

competition = competition for profits

Porters Five Forces Model

Porters Universe
Economics

Porters vision derived from economics

In essence, the job of strategist is to understand and cope with competition. Yet competition for profits.

Porter a journey of strategy in three decads

http://www.youtube.com/watch?v=GZCmWkQuyPc http://www.youtube.com/watch?v=z2oS3zk8VA4&feature=results_main&playnext=1&list=PL217F70EF5D34D789

Deutschlands lteste betriebswirtschaftliche Hochschule, die Handelshochschule Leipzig (HHL), hat am 23.01.2008 die Ehrendoktorwrde an Dr. Thomas Middelhoff (Vorstandsvorsitzender der Arcandor AG) und Prof. Michael E. Porter (Harvard Business School) verliehen. In applying for 437m ($611m) in states aid, the company had tried to present itself as a hapless casualty of the credit crunch and ensuing recession. Yet the firm's problems predate the global economic crisis and are, in many respects, the creation of its former boss, Thomas Middelhoff, a celebrated executive who once headed Bertelsmann, a media group, and who left in February, breezily insisting the firm was in good health. (The Economist June 2009)

Bankruptcy 09.06.2009

Porter (1979, 2008, 2012)

In essence, the job of the strategist is to understand and
cope with competition. Often, however, managers define competition too narrowly, as if it occurred only among todays direct competitors. Yet competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants, and substitute products. (Porter, 1979-2008)

Kamran Ph.D proposal

What is the next major question which needs to be
answered by the grand strategist competing in a rapidly changing world? What is the next major force affecting the organizations ability to compete or lets put it differently, what is the primary concern of all strategists? Is it maybe the understanding of reality? Or coping with the growing ubiquitously complexity and the unpreventable change? What is challenging strategists from both the scientific and the practical side so much that even by the consideration of experience curves, we still accept failure and collapse of our institutions as a part of an excuse of dysfunctionality of management called financial crisis? (Kamran, 2009)

Kamran Ph.D proposal

The Five Forces Model is a strong description of
organizations competition forces and how the mastery in coping with these competitive forces shapes the competitive positioning of the firm; the Porters model has withstood the test of time, peers and scientific reviews. It has shaped and still does shape the curriculum of most business schools especially all MBA programmes around the world since decades.

But the latest economy- down- turns and the turbulences

have proven that profound strategies and models need a new and a fresh approach. (Kamran 2009)

Kamran Ph.D proposal

All the collapsed banks, financial institutions and other
larger organizations used the strategy lessons and models taught in the elite business schools and have used these materials by the high potentials they hired from the Ivey league business schools but they have still collapsed. And this has caused a chain reaction damaging the strongest and largest economies.. (Kamran, 2009) The author intends to reduce the current gap between the scientific and the practical environment of the field, while enhancing its scientific depth and practicability for the creation of viable organizations, healthier business environment and successful societies. (Kamran, 2011 a)

(Porter, 2012)

Shared Value

Adam Smiths invisible hand: Self-interested demands will result in a socially efficient allocation.

(Kamran, 2011a) Publication Management by Deception

Our governments act more for the benefits of corporations than on the behalf of the environment and the society. The author emphasizes that there is an academic institution, on whichs shoulder a heavy burden is laid, and which needs to wake up and organize itself as whole and train the future managers as the only real safeguards of tomorrow, as (Drucker, 2007) rightfully observed. (Wittgensten,1989) observed we have to set on the fallacy and convey it to the truth, which means we have identify the routs of all delusion, otherwise the knowing of the truth does not help us, if something else has taken its place. The solution was given to us by (Darwin, 1859), who claimed: Only the organisms that are fit will survive. We have to define fit for our corporations and our academia. This fit can and must only be designing an organizational conscious system, embedded to maintain the ethos of the organization not only for its own survival (Beer, 1972) but for the survival of the environment in which it needs to be embedded in to exist. (Kamran, 2011a) (05. April.2011)

Introducing Robert H. Franks Theory

The Darwin Economy: Liberty, Competition, and the Common Good Robert H. Frank 2012 Winner of a Bronze Medal in the Axiom Business Book Awards in the category of Economics Finalist - 2011 ForeWord Reviews Book of the Year Awards in the Business & Economics Category

15. August 2011

Introducing Robert H. Franks theory on Darwin

Who was the greater economist--Adam Smith or Charles
Darwin? The question seems absurd. Darwin, after all, was a naturalist, not an economist. But Robert Frank, New York Times economics columnist and best-selling author of The Economic Naturalist, predicts that within the next century Darwin will unseat Smith as the intellectual founder of economics. The reason, Frank argues, is that Darwin's understanding of competition describes economic reality far more accurately than Smith's. And the consequences of this fact are profound.

Indeed, the failure to recognize that we live in Darwin's

world rather than Smith's is putting us all at risk by preventing us from seeing that competition alone will not solve our problems.

Charles Darwin: Traits are selected because of their impact on the reproductive fitness of individuals, not groups.
Traits that benefit individuals often work to the disadvantage of groups.

Bionics

Gaining access to mates

= a positional good

Minimizing the risk of death from predators

= a nonpositional good

The laws of viability lie at the heart of any enterprise. So too do human beings. (Beer, 1985)

Organism

Bionics

Organization

Capitalism is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems Porter 2012
In a number of respects the US now resembles an emerging country more than the advanced economy it was some decades ago. Its industrial base is largely gone, sold off or off-shored, and its public infrastructure is in visible despair. Because of the severity of the real estate collapse, parts of its housing stock are being abandoned and once thriving neighbourhoods are now slums. But it is in the politics, even more than in the economy that the chaotic conditions of some emerging economies most clearly prevail. John Grey

Kamran 2011 (published 2012 b)

The new globally trained manager will have additional skills and his concerns for the company would exceed the data of the last quarter. He might need to make some choices, which will cause temporary pain, but with long term successful results for the company. He will need to apply universal laws of organizations survival and would manage by his holistic approach.
The problem of our Western strategy is reductionist, not viable and military oriented in terms of describing and coping competition. It does not embed what is required from a strategy, where the primary objective is survival. The real competition for the new world is economic multi-polarity, political turbulences and uncertainties, organizational structure, civilization and culture run economic revolution, ubiquitous change, and man-made environmental catastrophes, as we rightfully may observe as complexity.

Porter (June 2012)

1996

2009

Jobs Strategy

Cutting the crap about strategy

Journey
S T R A T E G Y

Plan

Action

C O M P L E X I T Y

How Crises Emerge

Blue Ocean

IC

Porters Hyper- competition model

Porters Value Chain

http://www.youtube.com/watch?v=0pm0Y5K4tO0&feature=related

I think the next century will be the century of complexity. Stephen Hawking January 2000

Complex-trategy
Structure does not follow the strategy

Structure is the Strategy

Kamran, 2012 unpublished work

Beers VSM Theory

Family- tree organizations model vs. Beers VSM

Porters Diamond

Ashbys Law - Only variety can absorb variety

Beers VSM
System 1 Opertions System 2 Coordination System 3 and 3* Control of Internat
Structure System 4 External Control Systm 5 Meta- management

Designing organizational conscious system

Society Stakeholder Nature Technology Economics Norms Resources

HR

/+

Cluster

Information Ethics Shareholder value

Innovation
Environment & Ecology

Government
Holistic