8 session 2 socio-economic systems north end
TRANSCRIPT
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Business and Global Society
HULT INTERNATIONAL BUSINESS SCHOOLMBA Class 2: Socio Econo!ic Syste!s:
Sta"e#olde$s% Institutions and Go&e$nance'$o(esso$ )oanne La*$ence
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'lease include you$ co#o$t% tea! nu!be$ *#en
*$itin+,
CASES% ISSUES: Inst$uctions -osted,
O.ce Hou$s: A(te$ eac# class% in t#e (acultyo.ces, E,+,% //:01/2:/3 4:114:4 o$ by a--t,
Teac#in+ Assistants:
5icto$ B$iceno: &b$iceno21/6alu!ni,#ult,edu C#$is A$!st$on+: ca$!st$on+21/6alu!ni,#ult,edu
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House"ee-in+
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Do all the readings before starting assignments.
Read the instructions so you know what is expected andthe rubric so you know how it will be evaluated.
When looking at issues, “unpack” them cascade issues,starting with the largest. !akes it easier to analy"e,explain.
How you approach analysis, issues as important as whatyou recommend.
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#ips
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Due the last class$ it is a paper and presentation.%teps relate to the course$ e.g,
De&ne the 'hallenge (%D)s*
+dentify the industry, organi"ations that make up thesystem needed to address it.
Develop a framework, process using the course tools 'larify the potential impact
+dentify next steps◦ More detailed instructions posted this week.
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7inal -$o8ect: C$eatin+ an Inte+$atedSyste! to C$eate S#a$ed 5alue
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)lobali"ation evolution, pros, cons, issues.
urpose of -usiness solutions, not ust pro&ts
/thics how you do things $ moral absolutism vs.relativism
0eadership doing the right things..
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Session /:Ta"ea*ays
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T#e Le+al Test
T#e Mi$$o$ Test
T#e 7ol"s Bac" Ho!e Test
T#e Ne*s-a-e$ Headline Test
T#e '$ecedent Test
T#e 9S#oe on t#e Ot#e$ 7oot Test
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*convincing oneself an act is defensible when it really is
just an easy way out or serves one’s own purposes*
'e$sonal Tests to A&oidRationalisation
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Inte$national Standa$ds o(Conduct
Human Rights
Labour
Environment
Anti – Corruption
Goal: Eliminate Poverty7
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“ It would be self-defeating (and thereforehighly unlikely) for rms to sell unsafefood and drugs, fraudulent securities and
shoddy buildings. It is in the self-interestof every businessman to have a reputationfor honest dealings and a quality
product …” 1lan )reenspan, 'hair of the 2% 3ederal Reserve, 456789::;,
writing in 45;<
Sel(Inte$est as 'ositi&e ;$i&e$
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7!" agree that we now live in a #eputation $cono%y& a %ar'etplace
where who you are %atters %ore than what you produce(
(Reputation Institute 2!")
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1
In t#e
World Economic Forum Annual Meeting: Jan 20-23, 2016
“For over four decade, t!e World Economic Forum" miion #im$roving t!e tate of t!e %orld # !a driven t!e deign and
develo$ment of t!e Annual Meeting $rogramme&
'!e Annual Meeting in (avo-)loter remain t!e foremot
creative force for engaging t!e %orld" to$ leader incolla*orative activitie focued on !a$ing t!e glo*al, regional
and indutr+ agenda+, %%%&%eforum&org
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=#y do so!e societies >ou$is# and ot#e$s decline?
=#at $ole do +lobal% national institutions -lay in t#e successo( a count$ys de&elo-!ent?
=#y does -at# de-endent !atte$ *#en *e tal" about
institutional de&elo-!ent? =#at is systems thinking? =#y *ould *e include it in a
cou$se on Business and Society?
=#at is +o&e$nance% and *#o and *#at is a sta"e#olde$?
Case: India 21/4
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Session 2: SocioEcono!icSyste!s Study uestions:
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“The root cause of economic divergence
Between rich and poor countries is that their
institutions vary in their levels of eciency. These
dierences lead to dierent decisions !eing made. "society#s $nstitutions and %rgani&ations are$nterdependent ”.
3rom =ictor 1beid in “$nstitutions' $nstitutional (hange and )conomic *erformance
!"# "$% %&"'%* + I*#I##I+* and#!%I$ $+%* I /+$ 0+#$/1
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=#y a$e so!e count$ies $ic#%ot#e$s -oo$?
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'$otect Ri+#ts DLand% labo$ % "no*led+e and#u!an
Re+ulate t$ansactions costs
Establis# $ules D*ei+#ts and !easu$es
'$o!ote Inno&ation
'$o&ide incenti&es
◦ 3rom =ictor 1beid in “$nstitutions' $nstitutional (hange and )conomic *erformance
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Role o( Go&e$n!entInstitutions
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Costless t$ansactions
C$eate co$$ect !ental !odels
Collect and s#a$e in(o$!ation
MaFi!ie -$ots
88883rom =ictor 1beid in “$nstitutions' $nstitutional (hange and )conomic*erformance
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Institutions as E.cient:Assu!-tions
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>nce committed to a path, very hard to change ?igh costs of change
0earning e@ects
'oordinating
1daptive /xpectations
If the institutions are the rules, andorgani2ations are the teams, how can theteams win1 !ow do they work within the rulesto change them13rom =ictor 1beid in INSTITUTIONS% INSTITUTIONAL CHANGE% and Econo!ic 'e$(o$!ance
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Institutions as 'at# ;e-endent:7iFed Mental Models?
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-- .tern%an& Systems Dynamics
;o *e #a&e an o&e$ly si!-listic!ental !odel?
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Syste!s and syste!s t#in"in+
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=#at is Syste!s T#in"in+?
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“a grouping of parts that operate together for a common
purpose.” 8 Aay 3orrester, rofessor /meritus of !anagement in %ystem Dynamics at the !+# %loan %chool of!anagement.
“the a!ility to see the world as a comple+ system' inwhich we understand that “you can#t do ,ust one thing”and that “everything is connected to everything else…-ystems ynamics is fundamentally interdisciplinary…
/ %ternman, in -ystems ynamics Modeling
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Syste!s and Syste!s T#in"in+
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Syste!s a$e AllEnco!-assin+
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Le+al Et#ical
#ystems are inherently multi$%a&ete'
#EEPLE
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“*ystems dynamics analy2es how feedback processes in a system generate or alter patterns of behavior. #he system mayinclude decision-making procedures, work
and process 3ows, attitudes and perceptions, and product quality .” Marshall and Brown' in The -trategy of -ustaina!ility
hat are some of the more speciccomponents of dynamic systems1
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Syste! Co!-onents
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'onstantly changing #ightly coupled
)overned by feedback
Bon8linear
?istory8dependent
%elf8organi"ing
1daptive
#rade8o@s
'ounter8intuitive
olicy8resistant
%ternman, in -ystems ynamics Modeling
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Syste!s dyna!ics: Co!-leFityc#a$acte$istics
#ime8delayed%tocks and Cows
3undamental attributionerrors
0everage points
1utocatalytic loops
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Syste! (eatu$e: ;elays
W!+ doe
t!i !a$$en.
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Syste! (eatu$e: Causality
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eter %enge ( min*
httpEEwww.mutualresponsibility.orgEscienceEwhat8is8systems8thinking8peter8senge8explains8syst
ems8thinking8approach8and8principles
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# i i (
http://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principles
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4. 1 very deep and persistent commitment to Freal learning.G
9. -e prepared to be wrong. +f it was obvious..weGd be alreadydoing it. %o +Gm part of the problem . +f +Gm not prepared tochallenge my own mental models, then the likelihood of &nding
non8obvious areas of leverage are very low.
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“When you are confronted by any complex socialsystem, H..you cannot ust step in and set about &xingwith much hope of helping.
#his reali"ation is one of the sore discouragements of
our century . !eddle with one part of a complex systemfrom the outside without the almost certain risk ofsetting o@ disastrous events that you hadnGt counted onin other, remote parts. $f you want to 0+ something youare 0rst o!liged to understand . . . the whole
system. . . . $ntervening is a way of causing trou!le…” . . 8- ewis #homas 6+n 'eddling5
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Syste!s T#in"in+ and 9Meddlin+
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-- .tern%an& Systems Dynamics
T#e unco!(o$table $eality: A ne*!ental !odel
Syste!s T#in"in+ as a '$ocess
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/, ;E7INE THE 'ROBLEM% OB)ECTI5E
2, I;ENTI7J THE 5ARIABLES De,+,% STAKEHOL;ERS
0, ;ESCRIBE HO= THE 5ARIABLES BEHA5E O5ER TIME
4, I;ENTI7J THE LINKS BET=EEN THE 5ARIABLES
, I;ENTI7J THE GA'S IN THE SJSTEM
, I;ENTI7J THE LE5ERAGE 'OINTS
, ;ETERMINE THE ACTIONS STE'S
, TEST THE MO;EL
!arshall and -rown, The -trategy of -ustaina!ility1 " -ystems *erspective,
Syste!s T#in"in+ as a '$ocess
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/ro% .tern%an& Systems Dynamics
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Syste! (eatu$e: Inte$action eects
Does alcohol use
dampen stress or
magnify it?
Causal loop 'iagrams are used to depict the co%ple0 relationships
a%ong syste% variables and allow analysts to test co%peting perspectives
esire eed to
#ela0
)
–
lcohol se
–
i%e edicated to
rin'ing
)
)
–
–
verall 8uality of
9ife
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hy does it matter1
#he most comple7 systems are so-called6socio-technical5 systems with many*#%%% stakeholders.
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https:www+youtube+co%watch;v
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EFe$cise: T#e Blac"out o( 2110
https:www+youtube+co%watch;vhowhat co%prised the syste%;
>hat seemed to cause the blac'out;
>hat were so%e of the underlying issues;?an you s'etch a @causal loop’ diagra%
Allustrating so%e of the variables within the syste% and
their i%pact;
>hat %ight you do to prevent it in the future;
https://www.youtube.com/watch?v=nd3teNgUq8Ehttps://www.youtube.com/watch?v=nd3teNgUq8Ehttps://www.youtube.com/watch?v=nd3teNgUq8E
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BREAK
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“ A fundamental $rinci$le of +tem
d+namic a+ t!at t!e tructure of
t!e +tem give rie to it
*e!avior/&&
>hat does this i%ply;
-- /ro% .ter%an& Systems Dynamics Modeling
Case Study: India 21/4:
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=#y did India +$o* so slo*ly? Has its-olitical syste! #el-ed o$ #inde$ed t#ecount$ys +$o*t# -$ocess? Ho*?
=#at #as been t#e +o&e$n!ents
$elations#i- to business? =#at 9-at# doyou t#in" its +o&t institutions sta$ted on%
and *#e$e a$e t#ey #eadedI
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Case Study: India 21/4:C#allen+es o( Go&e$nance
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What are examples of politically8driven policiesand their economic e@ectI
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7o$ e,+,% 'olicies and Eect
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'$io$ to /P4 B$itis# in>uence
/P4 /PP/ 'lanned Econo!y and
'e$!it Ra8
/PP/ Balance o( -ay!ents c$isis3 ne*nance !iniste$: IM7%
=o$ld Ban"% =as#in+tonConsensus”
3!
SituationQConteFt : Ti!eline
Econo!ic ;e&elo-!ent and t#e =as#in+ton
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INTERNAL STABILITJ 7iscal ;isci-line TaF $e(o$! Inte$est Rate Libe$aliation
IM'RO5E 'RO;UCTI5ITJ Secu$e '$o-e$ty Ri+#ts ;e$e+ulation and '$i&itiation 'ublic s-endin+ D#ealt#% education
ETERNAL STABILITJ
Co!-etiti&e EFc#an+e Rates Re!o&e T$ade ba$$ie$s DT$ade Libe$aliation
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Consensus: A Syste!s A--$oac#?
/PP0 O d
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/PP04 G$o*t# $ate su$+es ($o! / to !o$e t#an
2114 'olicies% la*s: Ri+#ts to In(o$!ation% C#ild$en%Ru$al E!-loy!ent Act
211 7i&e Jea$ 'lan Ta$+ets /1 +$o*t#
211 IndiaUS Nuclea$ 'act3 Sti!ulus 'ac"a+e
21/4: Still $an"ed /04 on ;oin+ Business list: *#y?
=#at a$e t#e ba$$ie$s to business?
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/PP0 On*a$ds
Indias Syste!: 21/4 Ba$$ie$s to Business
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Co!-leF licensin+ 7o$ei+n ;i$ect In&est!ent $est$ictions In>ation D/13 (ood /0 In($ast$uctu$e
Ene$+y Education and Healt#ca$e 7ood Secu$ity Re+ional dis-a$ities and instability%
&iolence Secto$ ;i&e$sication
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India s Syste!: 21/4 Ba$$ie$s to Business
I di 21/4 B i S t
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A+$icultu$al : !ost -eo-le e!-loyed% /4 to G;'3slo*est +$o*t# D2
Se$&ice: 2 e!-loyed3 1 G;' De,+,% GE
Manu(actu$in+: 00 o( G;': labo$ as co!-etiti&ead&anta+e,
Is it possible for India to achieve double digit 9:
growth and inclusive development1 !ow1 !ow can theirchallenges;barriers be addressed as an entire system1
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India 21/4: Business Secto$s
# t 4 i bl i i I 'i * E
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In'ia*s e&onomi& su&&ess
Relations +ith China
Relations +ith Pa,istan
Popular support %or globali-ation
an' e&onomi& liberali-ation
#tan'ar' o% living
Publi& health
E'u&ational levels
Labor pro'u&tivity
.oreign 'ire&t investment
#o&ial stability
Energy availability an' &ost
/aste 0 pollution
Availability o% lo+$&ost labor an'
other resour&es
Labor &on'itions 0 empo+erment
Environmental 'amage
Current government poli&ies
1uality o% international relations
broa'ly
.I poli&y 3 regulations Globali-ation an' e&onomi&
liberali-ation
#ystem 4ariables riving In'ia*s E&onomy
ebrief: ?reating a .yste% iagra% for ?hina’s $cono%yEFa!-les:
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ebrief: ?reating a .yste% iagra% for ?hina s $cono%y
GovernmentPoli&ies
In'ia*s E&onomi&
#u&&ess
E'u&ation
Publi&
Health
#o&ial
#tability
E&onomi& an'
5ilitary
Competition +ith
6ther Countries
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Labor Pro'u&tivity
#tan'ar' o%
Living
Popular #upport
%or Globali-ation
an' Liberali-ation
.oreign
ire&t
InvestmentEnvironmental
amage
Pollution0/as
te
Availability o% Lo+$
Cost Labor an'
Resour&es
Globali-ation
an'
Liberali-ation
EFa!-les:
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