Skip to content →


Learning to recruit better (3/3)

The project cycle in recruitment is amazingly long.  A job opens up, documents are drawn up and approved, advertisements go out.  We rarely have a chance to change the process while it is in mid-flow; and in any case, that may be illegal.

But what can we learn by thinking like a marketer?  Are we just learning to tweak our advertisements?  Are we learning more about our people, i.e., our market?

The key ideas in this phase revolve around a concept that is really difficult to grasp.  Markets are organic and we need to think about them as it they are ‘alive’ and ‘talking back to us’.  We not only learn about them but we grow through our conversations with them as they do in turn.  But they are influenced not only by us but by other people too.  Herein lies the catch and three goals.

  1. We listen to what the market is saying back. Do we get phone calls asking for more information?  And what are applicants interested in?
  2. What did applicants already know about us and who around them prompted them to call? Are we learning more about the market and personas?
  3. Do we see “welcome” in this group and what is the market pulling us to do?

How can we think about this procedurally?

Anticipate the patterns of calls and questions.  At the start of a recruitment cycle, we should write down whom we expect to call and the questions we expect them to ask.  Is our sense of who will take an interest and when they enter and leave the application process getting updated?

Anticipate the community around the job.  At the start, write down whom we think is interested in this job.  Which mentors and patrons will notice the job and pass it on?  Who is actively watching the recruitment channels and who was alerted by a colleague?  What are we learning about the community around the job?  If you asked callers a question such as do you have colleagues who are applying, what would they say?  Above all, ask if they knew the job was coming up before you advertised it?  Is the job part of wider community or are you trying to forge a relationship with the community?

Anticipate your role in this living thing called the market.  As you listen to the question people ask, then you develop a sense of whether you are part of their world or whether they are applying because you offered a job. We often look for this information, arrogantly, in selection.  But what you are trying to establish in recruitment is whether your recruitment is talking to an established need or if you are having to stimulate that need.  Are we already part of a community?  Did applicants know this job was coming up and did they know because someone told them but because “of course” the job was coming up because there is an internal logic to their community of which we are a part?  Importantly, it also follows that this community, being ‘alive’ is always changing.  We should be getting a sense of this ‘living creature’ and understanding that our relationship with it will change.   Recruitment is not just doing some set piece tasks; it is an expression of this relationship and the next time we recruit, we be going through the entire process again because the market has changed, as have we.

Will a marketing mindset be helpful to you?

Recruiters exist to bridge an organisation with the outside world but most are simply on the periphery without a good sense of what the organisation does and so focused on their commissions that they don’t think very much at all about the community behind the labour supply.  But if you want to write better advertisements and achieve good placements more quickly, that paying some attention to the essential marketing character of recruiting might help you.


Leave a Comment

How to manage the recruitment process (2/3)

In the academic world, it is the norm to give a contact number of the future line manager who is expected to take calls and talk around the job.  It is amazing how often, though, said contact person is away.   What should applicants read into that?

In the non-academic world, I remember inviting candidates around to look over the job themselves.  Technically, this is called a realistic preview, but it made an enormous impression that they were being taken seriously.  Indeed, I also worked for a university who invited shortlisted candidates in for a week. They were put up in a hotel. Anyone and everyone who wanted to interview them could in addition to the formal interviews.  And candidates were run around the town to see everything that interested them. Sometimes it was schools; sometimes it was the beach.  Their questions were answered.

Are there formal ways to think through our interaction with applicants?

Core value proposition.  What is the core value of the job and how does it relate to the applicants’ core problem that we defined earlier?   Immediately, we see that skipping steps in our homework will cause a problem!  We do need to understand our people as well as the job!

Hook.  Having identified the core value proposition, how can we express it in the simplest terms?

Time to Value.  How quickly will the applicant experience value? What is value to the applicant in the application process?  Now here is a tough one, though probably because we spend so little time thinking about this, we can quickly identify points that would annoy them!  Where is value for them in the recruitment process?  Perhaps helping them find the information they need to make an informed decision?

Stickiness. Who begins this process and who wanders off?  And most importantly, on a 2×2 who arrives whom we sincerely believe might benefit from an employment relationship with us?  And who are we losing?  But specifically, what is that we are doing that helps applicants sift themselves?

Will a marketing mindset help you?

If I am utterly honest, I see so few people manage their entire application process that I would be hesitant to call it.  And if the previous exercises to think through the job and advertisement had not been done, it would be difficult to think clearly about the process.

Leave a Comment

How to write a good job advert (1/3)

Recently, some academics complained to the big academic job board,, that an advertisement for a lectureship contained exactly one sentence that was useful to the job applicants.   We know that our job advertisements are often bad.  But in truth, most of us have no idea how to fix them.

I think the trick, which I put here for you to consider, is to remember that selection is about prediction but recruitment is about securing supply.  It is marketing.  We want to catch people’s attention but we also want them to pre-select and arrive as marketers put it, pre-qualified.  There is no merit in attracting lot of applications when you only have one job.  It wastes your time and it makes a lot of enemies.  But how do we achieve the twin goals of being noticeable and being useful?

Some marketing terms

Were we to be marketing the latest £1bn FMCG product, we might think in terms of {Category, Personas, Problems, Motivations}.

Category.  In recruiting, we probably assume that Category is just “a job” but we will probably return here to answer the question – what category of product does the customer put you in?  In other words, what would be their alternative if they weren’t using your product?  Gather your competition and you will have some idea of the category, or set, in which you fall.  Sometimes you are surprised by what people would be doing if they weren’t working for you/

Persona.  Who is likely to be interested in this job?  Where have they come from?  Where are they going to?  Who are they taking with them?  Simply imagine candidates that you would very much like to apply and write down who they are – though keep this private because to do it well you must draw out of your imagination details that will be illegal if they remain part of the system. So, if you imagine yourself recruiting a young male, write it down. Then later you can challenge yourself to imagine recruiting a young woman, an older woman or an older male.  Your task here is not to finalise the system but to begin to walk in the shoes of your applicants and to learn too what assumptions you make about them.

Problems.  Now imagine the issues that your applicants have with your category – that is you and your competition (and your competition might be a gap year!).  What questions are candiates likely to ask, not just you, but other people privately?  What are they googling?  What issues have come up with previous incumbents?  I remember being asked by a very senior person where the printer was.  It really irked him that he had to waste time running around to find his stuff.  This was not central to his competence but it pointed me to factors that he was taking into consideration.

Motivations.  What is the motivation behind these problems?  Why are these problems important to the audience?  In the case of the printer, the person wanted to be efficient, didn’t want to do administration and wanted to be respected?  Maybe these are traits I don’t want and I can signal that in the advertisement.  Or maybe, these are traits that I do want and I can indicate the ‘state of the plant’ in the advertisement.  In recruitment, money and location is important.  And so too is not lying about these.  It is amazing how often recruiters do.

Will taking a marketing mindset help you?

I know a lot of recruiters who just can’t be bothered. They don’t really understand the jobs they are filling. And forgetting that they have two audiences, concentrate mainly on what hirer wants.  That is of course, their judgement.

My experience of using marketing in recruitment is that both we successfully fill jobs, and on the first pass.  Moreover, the number of applications plummets by an order of magnitude. We get better replies and we get fewer replies.   We satisfy both our audiences: the hirer and the applicants.

With this little bit of homework, which is quite enjoyable to do, particularly in a group, we write better job advertisements.


Leave a Comment

Design by design!

Engaged design

Design . . .  should be elegant and pleasing.   It should also be functional and achieve its purpose.   Most importantly its purpose should be our purpose.

Engaged design in New Zealand

New Zealand has a strong tradition in design and a temperamental inclination  to engagement.   Well-worn jokes include the No 8. wire used to fix anything and everything on the Kiwi farm and the Kiwi dislike of large organisations.  A British general is reputed to have commented that Kiwi troops do not salute much.  His Kiwi counterpart replied, “but if you wave they will wave back.”

Tradition of design in New Zealand

Kiwis are articulate though about their design and their participation.   The Britten Instituge supports community activity and has an accessible, unpretentious,  list of design principles to bring people together.

“It is not innovation that matters, it is agreement. And we might need innovation to reach agreement.”

Design in Europe

I am very interested in reconciling the two bodies of knowledge that Western thought likes to keep apart if not regarding them as competitors.

Positive psychology promotes our engagement with life and of work with our engagement!  Yet we must make money too and the world is about to get very much more competitive for those of us in United Kingdom.  I have far more visitors to this blog to manage a small server than I do because someone wants to be happy!

What we want from design today?

Can we reconcile the holistic, engaged Britten approach to technical work?  I would like to try.



Leave a Comment

Alternative corporate tax regimes

We all know by now that the likes of Google, Amazon and Starbucks pay very little corporate tax in the UK.

  • We know that our corporate taxes tend to be low though they are not as low as Ireland’s and Sweden’s.
  • We might also have an intuition that corporate taxes are a significant part of GDP. We would miss them if we didn’t have them but .  .  . they are only about 3% of GDP. Surprised?

What is even more surprising is that though our corporate taxes are low, they are a larger part of our GDP than in Germany, say. My first thought was, ah good, we set individual corporate taxes low but gain on the aggregated. But of course earning more from corporate taxes than Germany is just a reminder that we earn less from more productive sources. So perhaps not hurrah for us.
So what are the issues surrounding corporate taxation? The issue that energises us at the moment is the crafty use of tax law and corporate structures to lower tax liabilities. Academic accountants are proposing various different ways of taxing companies and here are my notes below.

Cash-flow taxes

Instigator: Meade Report
Core idea: Tax net cash flow rather than profits.


  • Abolish deductions for depreciation and interest payments.
  • Deduct investment expenditure when it occurs.

Spelled out:

  • Investment becomes a current cost.
  • Sales of capital costs are treated as any other cash inflow.
  • Both loans and interest payments are not subject to tax (similarly to equity injections and dividend payments)
  • Trading transactions are taxed; not financing operations


  • Does not apply well to banking trading operations
  • Other countries would still be making distinctions between debt and equity

Variant: “R+F”

  • Tax borrowings as cash inflows and treat payments of principal and interest as deductibles
  • Would apply to trading operations of banks

Follow-up question:

  • VAT on financial services
  • Allowance for Corporate Equity (ACE)


Instigator: IFS Capital Taxes Group (1991)
Core idea: Provide explicit tax relief for the (imputed) opportunity cost of using shareholder funds to finance the operations of a company
Comparison with other methods:

  • Allows for 100% allowance for equity-financed investment not provided for in cash-flow methods
  • Equates to allowing the interest cost of debt-finance in ‘standard’ corporate taxation


  • The normal return on equity-finance investment is removed from the corporate tax base


  • Calculate the closing stock of shareholder funds at the end of the previous period
  • Opening stock + Equity issued – Equity repurchased + Retained profits
  • PV of a stream of tax payments will not depend on details of deprecation schedule
  • Opportunity cost is the risk-free (nominal) interest rate

Comparisons with personal taxation:

  • ACE compares with RRA (rate of return allowance)
  • Cash-flow proposals compare with EET treatment of savings
  • Reduce rebates and carry-forward provisions by aligning timing of tax payments with actual returns


  • Retains much of existing tax structure
  • Taxes the excess over nominal rates of return
  • Debt and equity financing equivalent in PV terms and in relation to tax timing provided depreciation schedules are realistic
  • Taxes only become liable when returns exceed a normal rate of return
  • But if taxing rents taxes effort and risk?
  • To implement, only need to specify how the equity based evolves over time and the nominal interest rate

Comprehensive Business Income Tax (CBIT)

Essential idea: Tax the interest on debt financing in the hands of the debtor, i.e., tax corporate profits after depreciation but before interest.


  • Raises required RoR for both debt and equity financing
  • Hugely increase tax in banking and financial services that currently deduct their interest payments
  • CBIT effectively taxing returns to debt and equity at the corporate level.


  • Increasingly, limited interest deductibility across borders to stop subsidiaries in high tax regimes borrowing from parent companies in low tax regimes
  • Increasingly, limit deductions for financing foreign operations are exempt from local tax

Comparisons with other systems:

  • ACE and cash-flow taxes change the tax base and exclude normal returns on savings (which are taxed at a personal level)
  • Cash-flow taxes are close to the expenditure treatment of personal savings
  • ACE is similar to RoR Allowance on personal savings.
Leave a Comment

Struggling with generativity?

The brilliance of psychologists

The best skill that you will learn as a student of psychology is to “operationalise” fuzzy ideas.  In plain language, we beceome brilliant at writing questionnaires.  What is an extravert? Someone likes going to parties. And so on.

Warmth is less valued

The skill that you will not learn as a student of psychology is to “encourage” or “enthuse” others.  You might have thought when you started your studies that that is what psychologists do. Sadly, warmth and connection will be beaten out of you as sin of “measurement error”.

And what of generativity?

So you may be really struggling with the idea of “generativity”.  At least know that you are in good company.  We all have to relearn what is means to help others see possibility and goodness, connection and meaning, in their lives.

Generativity step-by-step

To help you understand the meaning of generativity, as it plays out in our lives, here is a letter that seems to have entered the web via Harvard.

And as a good psychologist, note the elements:

  • The impact of chance on our lives
  • The effect of cutting away on defining who we are
  • The constant effort to broaden-and-build, nonetheless
  • The richness of connection to others to whom we are loyal and dreams we hold sufficiently dear to work at night and day
  • The vulnerability to the disloyalty and treachery of others whom we love and causes to which we have devoted the best years of our lives

And then poetically

And then read the whole.  The poetic quality of language is important.  I was never particularly poetic.  Sadly learning to operationalise didn’t particularly help.

Read the original and then take that step of thinking generatively about your lives and the lives of those you touch.


Leave a Comment

Some people talk such guff about education

People talk such guff about education.

In brief, you want an organized map of the field, a reason to want to explore the map, money and time to put into the effort, and someone patient enough to guide you and respond to your reactions.

You also want to break your learning into reasonable chunks.   You need to work little and often to be able to concentrate and to think out how new information connects to what you already know and believe and your activity needs to be a judicious mix of time with your tutor, time working with others and time working alone.

Have I written any thing similar?


Leave a Comment

Why entrepreneurs succeed: don’t forget the third reason

Reason 1 : Obstacles may not really be obstacles

What really drives entrepreneurs?  In short, they look around and say “I can do this better!”  You and I see a constraint or barrier and see it as fixed.  An entrepreneur says:  “This can go.  I can take it away. I can ignore it. I could use it as a vaulting-horse and jump over it.”

Reason 2 :  Organize to take the profit

What makes a successful economic entrepreneur is that they also notice that they can rejig the working arrangements and take the profit themselves:  “All the better for making me better off!”

Reason 3:  Don’t forget reason 3

So, entrepreneurs are “in” the game and they see an opportunity.  Then, they notice how to rearrange the game to seize the opportunity for themselves.

But, they don’t stop there.  They do something else that is critical to their success.  They rally people to help them win.

Entrepreneurship is competitive.  Even if entrepreneurs are not about to bring their old industry or business to its knees, they are going to become more important than their former colleagues and bosses.  A certainty of entrepreneurial life is that whomever is going to lose out or become less important than them will fight back!

Make sure people are better off with them than against them

And, so it should be.  Why should others stand back and give up their right and impulse to compete! This is why rallying a team is so important to entrepreneurial success.  In essence, an entrepreneur wants to make sure people are better off with them than against them.

This is the skill that psychologists can help teach entrepreneurs.

  • We will let you spot the opportunity in the business that you are in.
  • We will let accountants help you figure out the business structure and financing.
  • What we do is help you learn that all important skill:  to build a team where people are better off with you than against you!


Power as Practice: A Micro-sociological Analysis of the Dynamics of Emancipatory Entrepreneurship
David Goss, Robert Jones, Michela Betta and James Latham
Organization Studies, 2011, 32
[Downloadable from David Goss’ homepage at Surrey]

One Comment

Baffled by bankers’ bonuses? Read agency theory

I am writing this post, as is my wont, to record some notes from a paper I read:

Azevado, R.E and Akdere, M.  (2011). Examining Agency Theory in Training and Development: Understanding Self-Interest Behaviors in the Organization.  Human Resources Development Review, Volume No Not Known, 18 pages. If you want a copy, both authors are presently at the University of Minnesota.

I read the paper because agency theory is the theory behind the big bonuses that are provoking so much controversy.

The application of agency theory to Training is new and nothing to do with bonuses.  But I wanted to tidy up my own thinking about agency theory and if you do too, I’d recommend reading Azevado and Akdere’s paper.  They explain the basic precepts of that school of thinking very well.

I don’t like agency theory and I wanted to pinpoint exactly why I think it is misguided.  I’ve boiled my objections down to three essential points:  the distaste agency theorists have for self-interest, their belief in a zero-sum game, and their belief that the world is so static and unchanging that any one person knows best.


Adam Smith said:

“It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest”.

Some people are sincerely concerned about self-interest, and like the far left, so are agency theorists.

Personally, I am delighted that the self-interest of the butcher, the baker and the brewer leads to a butcher, a bakery and a pub on the high street. I believe in caveat emptor (buyer beware) but I am not panicking that the butcher, the baker and the brewer might from time-to-time charge me 1p too much.

I also don’t panic that today the butcher tries to sell me something that he is trying to ‘move’.  Provided he has taken my self-interest into account and sold me something to fit my needs, we are ‘square’.

I get my needs met now. I get my needs met over the long term because his shop stays open.  And my business does better because he can buy from me!

(Funny that – the last female butcher that I met was my own grandmother.)

Generativity vs zero-sum gains

Agency theorists begin with an assumption that if I pursue my self-interest, then I am not pursuing yours.

Or at least, they believe that inherent in belonging to an organization is the need for the organization to ask me not to pursue my self-interest in some form or another.

It certainly is the case, for example in a soccer game, that I shouldn’t pass the ball to the opposition on purpose, or showing off to my mates in the crowd and not pay attention to the game.

But why should my self-interest be sacrificed as a matter of principle or practice?  If we need to sacrifice anything, let’s compromise and make sacrifices all round.  And wouldn’t it better to put our efforts into making a business environment which is rich enough for us all to pursue our self-interest?

To take a simple example, does it matter if I am miner, metallurgist, engineer, accountant or diamond cutter, provided that all of us work together to mine the diamonds safely and sell them profitably to people who want them?

I’ve found that where people stand on this point is fairly key to their choice of work and choice of organization.  Some people want quick returns. They really don’t believe an organization is more than the sum of its parts.  So be it. We’ll help them go where they need to go.

Those of us who don’t believe that life is zero sum game should stay away from organizations run in terms of agency theory. We will hate them.  And we need to put our money where our mouth is. We have to make our own organizations as good as we want them to be – and successful commercially.

‘Gap’ thinking vs positive management

Agency theory seems tremendously old school to me in the notion that there is a right way to do things and that someone somewhere knows what this right thing is.

Now there are definitely wrong ways to do things.  There have to be things we wouldn’t countenance no matter what.

Expertise is also real. And it takes time, a long time to learn.  Indeed, good organizations arrange themselves so that people can develop expertise and learn from each other.

But the idea that we know the whole answer and we can insist that people do things our way is very unrealistic.  If it was ever possible, it is not possible in today’s world where we rely on networks of experts.  We each bring our own perspective to a problem and we are richer for it.

Returning to agency theory, if no one knows what the best answer is until we have discussed, how do we evaluate whether our agents are pursuing our interests vigorously?

Worse, if we do not allow the room to work out what our interests are, haven’t we built into the organization the very thing that we fear most – that our agents withhold information that is valuable to us?

So in short, these are my three objections to agency theory.

I think self-interest is good, not bad.  We want people to think about their self-interest because we will have a healthier, sounder and more resilient organization (and economy).

I don’t see the world as a zero-sum game. I don’t see the world as a cake to be divided up.  At best I see the world as having no cake until we’ve baked it.  And there are cakes and cakes. Real wizards will make us a cake even when the ingredients for their favourite recipe are not available.

I don’t think we know upfront what our self-interest is.  Good organizations are forum where negotiations and bargaining lead to mutually prosperous ventures.

How does any of this help me understand bankers’ bonuses?  Well they are mystery, to be sure.    Agency theory is not standard organization and management theory but to turn away from thinking that captures attention with promises of large rewards, we need not only an alternative but an understanding of the thinking itself.  Do read Azevado and Akdere’s paper.  I found it helpful even though, or possibly because it was about the less emotive topic of Training.

One Comment

5 steps to understanding the global value chain

In today’s world, trading systems are global and with their global reach, they are complex.  Each of us has to find our niche, and the big question is how do we “insert” ourselves into a vibrant and rich value chain.

  • How do we access the chain?
  • How do we compete successfully?
  • How do we capture gains in a way that we can grow and become more competitive?
  • How do we take part and take part gainfully?

We aren’t interested in every value chain in the world, but for those that fascinate and attract our attention, we want tools to understand who does what and how to find our place.

  • We want to describe what we make in this value chain and how we make it.
  • We want to think geographically about where everything is.
  • We want to know how the chain cooperates within itself and how it makes sure everyone does their part well and reliably.
  • We want to know how we relate to other value chains and in particular how we honour our obligations to be good citizens in every country where we work.
  • And how is our value chain changing?

These are notes I made from Global Value Chain Analysis: A Primer.  They should be helpful when you are thinking ahead about thorny issues of developing a supply chain.  Once you have the basics, they it would be best to go back to the original source at Duke University.

 #1 What do we make in our value chain?

Our value chain includes everyone who is in it – from people who think up ideas, to people who supply raw materials, to the people who make things, move things and sell things to the people, yes, who pick up the waste and recycle what we throw out.

We map out everyone in the system, initially simply, and then in more detail showing what each person needs and use and what they get back in terms of wages, profits and new possibilities.

#2 Where does everything happen?

Value chains are global but the different parts of the value will happen in different places?  Where?  Can we show the value chain on a map?

And is there a good reason why things happen in any place?  Are the natural resources there?  Do they have a long history in making what is made?  Is the market there?  Are transport lines particularly good?  Does the government give the players special privileges?

What are the opportunities for capturing parts of the value chain and moving them elsewhere?  And who else is looking at the value chain seeing the same opportunities for themselves?

#3 Who has the power  in the network?

Sometimes it is easy to spot a big player like Walmart who dominates the entire chain?  Knowing the ‘type’ of chain that we are in also helps us learn from chains in other industries that we might think are different but are organized in the same way.

  • Price-driven Markets.  Is what we are producing so basic that our buyers do not have a say in what we produce? They buy what is there based on availability and price?  The consumer petrol (gas) market is an example.  There is no difference in buying from BP, Mobil or Shel
  • Order-modulated Businesses.  Do we deliver to customers exactly what they ordered but along the lines of simple combinations of orders as we do with a menu in a restaurant?  Do we offer our customers choice but within a fairly simple range so that cost of taking orders and conveying them to production is fairly low when spread over all our customers?  And equally, is it fairly cheap for our customers to switch to another business that offers a similar service?
  • Relationship Businesses.  Do we need to understand quite a lot about our customer’s needs?  Does it take time to listen to them and do our costs fall dramatically as we get to know them?  Equally, do customers prefer to work with someone who knows them well and work problems out rather than switch to someone else?  Do we have the same relationship with our suppliers?  Do we know what they are particularly good at making and do we prefer to work with them for their special expertise?
  • Captive Networks.  Is our value chain dominated by one buyer on whom we all depend?  Does the dominant buyer pretty much dictate terms?  Does the dominant buyer have the capacity to compensate for our dependence on them with secure contracts and other assistance such as ‘extension’ workers who will help us improve our operations?
  • Hierarchical Governance.  Is work in our value chain so complicated that it has to be completed within a single company structure run by managers experience in co-ordinating the intricate work in that sector?

Governance structures do three things: they express power differentials – who depends upon whom, they provide mechanisms to coordinate ourselves for our mutual prosperity, and they define relative profit margins within our value chain.   Our natural inclination is to manoeuvre ourselves in to a better position and we will do so whenever we can.  So as with political government, good governance is not static and rigid.  It is dynamic, it is aware of shifting sands and it is fair.  Nothing ruins a business relationship faster than the sense that the spoils are divide unfairly.

Sometimes we dismiss governance as ‘politicking’ and sometimes, it is.  But it is as important as doing the work. It is every changing and we are doing business at a time when the rise of the BRICS and the growth of IT and web technology is changing business models.  We need to pay attention and see where our value chain is going.

 #4 PEST Analysis

The relationship between our value chain and the wider world can be thought through using a standard PEST analysis.  In each place where any part of value chain operates, what are the political, economic, social and technological issues and how are these changing?

#5 Making our value chain

Everyone taking part in our value chain is there to make a living and the best living they can.  Hopefully, it is well governed and we can be competitive and innovative without destroying each other and destroying our value chain at the same time.

But the prosperity of the entire value chain does change in time and so does our position in it.

At first, obviously we know little about the value chain. But we can learn about the chain as a whole. We can park out the parts that we do know. And we can mark out who else knows what.

And we can be particularly alert to the best order of learning more and learning about the governance of the chain.

The best example of taking over a value chain was the move by Indian IT firms into software.

At first, we might be able to bid easily for repetitive work.  Then we can gradually increase our skills to handle more difficult work that commands a higher price.

Some sectors are well documented and we can even get government statistics to understand how the value chain works.  In others, we have to resort to special reports and even proxy metrics.  The important thing is to keep paying attention and to keep learning.

  • What are the entry points into this value chain?
  • What are the paths from entry points to more commanding positions?
  • When and how do people broaden their command of the value chain?
  • When and how do people specialize because it is profitable in both the short and long term (20-50 years) to do so?

There are three neat tricks to anticipating where a value chain will go.

  • Layout the present chain so that you can see what is going on
  • Do a 4×4 with the pest analysis showing the interactions of economic and social drivers and social and economic drivers, and so on.
  • And then consider the local education policies.  The labour market has very low elasticity – which means it is slow to respond. Simply, it takes a long time to train people. If the local industry is not well organized about bringing people into the work force and training them 10, 20 and even 30 years ahead, then people will not be available. Correspondingly, when they have the skills, they are motivated to drive change.

Thinking about global business and managing future prospects

So that is it in nutshell.

    • What? (from what into what)
    • Where? (from where to where)
    • Who? (who does the work and who has the dominant voice?)
    • Why? ( why are people in this business and not another – PEST)
    • What’s next? (what is changing and what will change in the next 10-20-30-40-50 years?)
Leave a Comment