The Great Recession changed the landscape at all levels. There is diversity of thoughts and conversations about all of this. Some say that there mus be governmental interventions while others say let the market sort everything out. Certain industry sectors are taking on a more grassroots approach by using collaboration, crowdsourcing and crowdfunding to get individual businesses on a more stable footing.
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Michael Porter-competitiveness and commons
What about the big picture? Competition between countries is certainly not new. Countries wield greater influence when businesses are tied into the local economy. While Michael Porter and his team at Harvard Business School are focusing on making the US economy more competitive, many of their concepts are applicable elsewhere.
The commons, as put forth by Gary Pisano and Willy Shih, is common information such R&D at universities, collaborative projects and companies. Pisano and Shih use Germany, Sweden, Silicon Valley and Boston has examples of industrial commons. Another example of how the commons are used is exemplified by the long-standing partnership between Merck and my alma mater, Emmanuel College. Michael Porter and Jan Rivkin take this idea one step further and include the community where businesses exist because quality of life attracts high quality employees.
Their basic argument (this is highly simplified and it is well worth reading the whole post here) is that businesses are meant to be competitive. They explain that companies are more profitable when they engage in the commons. The business environment is not immune to influence and business leaders can use this influence for both the good of their companies as well as for the good of the local economy. This means that other industries in the commons can use how they interact and/or serve each other. Strikingly, moving beyond one’s own economy doesn’t mean it has to be a loss. Porter and Rivkin explain:
Going overseas often improves U.S. competitiveness by allowing U.S. companies to better penetrate foreign markets through better customer support, adapting products to local needs, and more efficient logistics. Our colleagues Mihir Desai, Fritz Foley, and James Hines have found that U.S. multinationals that expand faster abroad also tend to grow faster in America.
There are concentric circles as competitiveness and the commons overlap. Competitiveness can bring out the worst in companies which feeds cynicism and mistrust. Self-interest poisons political discourse as industries lobby for their own personal wants. Porter and Rivkin point out that this undermines overall US competitiveness. But this could be true in any country. Prosperity is linked to common good and companies don’t have to exploit to be successful.
Do it yourself?
So maybe fostering growth is more of an inner process for each business. Laurence Capron and Will Mitchell take a much smaller view by focusing on how organizations foster growth. (here is a Strategy+Business review of their book) Their recommendation is that companies pursue three strategies: build, borrow and buy. These are the “pathways” of how companies find the necessary resources to grow. Capron and Mitchell begin their book stating that “there is something broken in the way businesses obtain the resources needed to grow” and that they pay less attention to “how” they get the resources than identifying what they need.
- Build-develop the resources internally
- Borrow-collaborate, partner or contracting
- Buy-mergers and acquisitions
Capron and Mitchell state that businesses can identify what they need to foster growth. However, companies are less adept at choosing the best strategy for getting these particular resources. To remedy this, the authors provide the Resource Pathways Framework. After organizations identify what they need, they then ask these questions:
- Are your existing internal resources relevant for developing the new resources that you have targeted for growth? →Build
- Could you obtain the targeted resources via an effective relationship with a resource partner?→Borrow
- Do you need broad and deep relationships with your resource provider?→Buy
Perhaps fostering growth is more of a “do it yourself”. This would alleviate short-term concerns for businesses of any size. This may even assist businesses as they explore alternative funding sources and resource availability.
This is a complex question
It’s easy to focus on startups, small business or Fortune 500. You can assign responsibility to any number of parties. Since the global recovery is slow and facing on-going challenges, will we be creating a brand new world at the ballot box, at work and in our communities?
Where do startups, small business and muti-national/corporations intersect?
The phrase, “the new normal” is used a lot, what examples can you point to that it exists?
If you were a government policy maker, what would be your first focus?
What other programs around the world are promoting national competitiveness?
What alternatives exist for both short-term and long-term growth?
About the author: Elli St.George Godfrey, founder of Ability Success Growth and small business coach/trainer, is the host of KaizenBiz. I’m passionate about business becoming a more human-centered place so I host this chat to connect business ideas and develop people.This passion shows up in my work with my clients. Whether you are expanding in your own backyard or into another country, Ability Success Growth guides established small business owners to unlock the CEO within during times of transition and growth.