Why do firms exist? Strangely, no-one appears to have asked this question until a 27 year-old economist did so in 1937.
Ronald Coase published his answer in The Nature of the Firm, now considered a seminal text. He studied the circumstances that led entrepreneurs to hire people as employees instead of simply contracting jobs out to traders and came up with the answer we now simply refer to as transaction costs. People are hired when the various associated costs are lower than they would be otherwise.
Here's a similar sounding question, but one that is actually fundamentally different. What is the meaning / the purpose of business?
Coase needed to look no further than economics to explain why firms exist. Their existence is a binary thing. But any question seeking to address meaning and purpose encompasses philosophy, sociology, and politics.
Unavoidably, any answer is framed in terms of ... What's best? What's optimum? Why? How? And for whom?
The answer was in fact framed economically for a long time in terms known as shareholder value, and perhaps Coase's question and answer influenced this blinkered perspective. But we've found and are still finding that a different answer can lead to superior economics, and not just in terms of profitability but in terms of the triple bottom line – people, planet and profit.
Euler Partners' just published its sense Summer 2016 report, The meaning of business. Available here as PDF and also on Medium.com. If you're frustrated with today's typical responses to this question, and / or if you want to build sustainable business, you'll find the report provoking.
Image credit: By Leo Reynolds, CC BY-NC-SA 2.0
The quickest glance at my posts and tweets will tell you two things: (1) we just voted on a multi-faceted complex issue with too little understanding further muddied by the lies pedalled by both sides, and (2) I believe everyone in the UK is better off by our remaining in the European Union.
There's a reason Margaret Thatcher concurred with Lord Attlee in describing referenda as "a device of dictators and demagogues" – the same reason the UK has representative parliamentary democracy and not direct democracy. (If only David Cameron had paid more attention in class.)
Former Deputy Prime Minister Nick Clegg describes the resultant mess as a "debilitating cocktail of hubris, incompetence and dishonesty".
Yet putting the well-known shortcomings of direct democracy to one side for the moment, we must accept that just shy of 52% of voters went to the polling stations last month and put a cross against Leave. The majority has spoken, right?
Neither Leave nor Remain is perfect, of course, yet to my mind the Leave argument is akin to trashing your car because the ride is a bit bumpy, so I find myself asking ... which majority should we be thinking about? Continue reading
On June 23rd 2016, 51.9% of UK voters opted to leave the European Union. I’m writing here to say:
- We made a mistake
- We should have another think about it, and
- The Liberal Democrats might hold the key and not realise it.
UPDATE: Approximately eight hours after my post here, Liberal Democrats pledge to keep Britain in the EU after next election. This is great news. We now just need to persuade the party that they need to run at it on a single-issue basis. By doing so, pro-EU voters can cast a clear vote without other policies clouding the matter, and there can then be no ambiguity in interpreting the vote. This could make the difference between winning and not, and winning by a massive margin. As I write in conclusion to this post, I’m sure the electorate would then thank them in the follow-on election.
Winston Churchill, considered one of the Founding Fathers of the EU, noted that democracy is the worst form of government except all those other forms that have been tried from time to time. It’s wonderful to live in a democracy, and I find it exciting and exasperating, fascinating and frustrating, to be part of the European union of democracies.
A democracy cannot be perfect. The people can make mistakes — of course— and I believe we just made one. A really really big one. Whereas we might change our minds every five years with general elections, leaving the EU is the sort of thing that impacts for generations. Continue reading
An email sent to all my friends and family.
There's no doubting Aristotle was a rare genius. Encyclopædia Britannica calls him the first genuine scientist. And it's amazing that here I am in the 21st Century emailing you (and in fact just about everyone I know with an email address) about the insights of a man born exactly 2400 years ago.
(That's equivalent to someone doing the same for you or me in the 44th Century CE, and I think we can agree on the likelihood of that!)
I read this article on Aristotelian rhetoric / persuasive powers in 2012, and I was so enamoured that I wrote a short blog post on it at the time. In summary, Aristotle concluded that the three most powerful tools of persuasion are:
- Ethos – argument by character
- Logos – argument by logic
- Pathos – appealing to the emotions.
Agency refers not to the intentions people have in doing things but to their capability of doing those things in the first place.
To be able to ‘act otherwise’ means being able to intervene in the world, or to refrain from such intervention, with the effect of influencing a specific process or state of affairs.
Technology must always be a component of agency as tools change our capacity to ‘act otherwise’. And it’s a component that’s all the more pervading and penetrating as the delineation of the analogue and digital dissolves, as ‘the device’ assumes an exo-brain role and as sensory ‘things’ form our exo-nervous system.
Simultaneously, I have a digital self and a self with digital presence.
Simultaneously, this is me and it is my representative, my agent.
Simultaneously, it is core to my agency and must be subject to it. Continue reading
I was interviewed by Rob Smith, Editor, Influence magazine. Published in two parts, May 2016.
What does Influence mean to the public relations business currently? Is it more important since the rise of digital or has it always been at the heart of what it is to be a public relations professional?
You have been influenced when you think in a way you wouldn’t otherwise have thought or do something you wouldn’t otherwise have done. Unfortunately, the English language also has us using the word ‘influence’ in terms of something someone might possess.
I always prefer to work with the first meaning here for two reasons: first, the changing of hearts, minds and deeds is the actual object of interest to public relations professionals (reciprocally of course, more on which later); second, we might quantify the former better than the latter, and indeed many of the better attempts to score influence as something someone might possess rely to a certain extent on that capacity being demonstrated (ie, the former again).
What does this mean to PR practice right now? Well that depends on your flavour of practice, characterised rather usefully at this juncture by Andy Green as simply old school and new school. Continue reading
I'm in Orlando Florida this week with the Workfront team and their partners and customers for their annual Leap conference. It's my privilege to participate in a panel session on the future of work, and to deliver a session with the more grounded title – making work suck less!
As you can see from the stack here, the first too common affront I identify and tackle is what I generally call the 'X steps to heaven' crowd. Those authors and companies proffering clickbait that teases with some relatively short sequence of steps needed to take you from zero to hero – in this context, going from a dysfunctional to awesome organization.
Bullshit. Life is complex and society is complex and all organization is complex, and authors of this sort of crap are either ignorant at best or disingenuous at worst. Complexity is a natural product that cannot be simplified – we can only aspire in this digital age to navigate it more simply.
I then go on to identify the lessons we might learn from Mother Nature, the necessity to sustain mutual value for all stakeholders, and some of the hazards we must avoid along the way, not least corporate surveillance.
Last night we were at the Magic Kingdom, and this evening we're dining at Epcot. Who said work has to suck?! :-)
Thanks for having me Workfront.