It is a thanksgiving time. Who else deserves a greater thanks than the farmers who feed the ever-growing world population of 7.5 + billion people. In fact, the thanksgiving festivities began in the United States as a gesture to thank the Native-American peasants who shared their lands and crops with the new immigrant settlers. At the outset, let me start this article with the ancient Tamil poems which extolled the virtues of farming.

"They alone lead a life who live by farming; the rest of all follow a subservient existence". (Sage Valluvar - Thirukural)

"Farmers form the linch-pin of the world, for they support all the rest who cannot till the soil". (Sage Valluvar – Thirukural)

Such acclamation was quite apt then; yet now more relevant than ever. Despite the critical nature of this sector for the mankind, agriculture is now facing serious doldrums across the world. Ever since the industrial age began, farmers had become an easy target for sarcasm, scold, and sacrifice. Farming sector in general had become forfeited, forgotten, and frivolous. Philosophers, professors, pandits and politicians are alike when it comes to blaming the farm sector for all the social evils or brandishing programs & policies that would squeeze out any savings that would accrue to farmers. For many a self-styled economist, any support to farming is a drain on the economy. It has become almost a fashion to find fault with farmers for all economic malaise. For all said and done; For all theories of economics espoused and practiced; Whether in America, Asia or Africa, the Farming is unhealthy and Farmers are in poverty. The data presented here will speak for themselves. For the sake of quick comparison, some data from the industrialized United States (where the average farm size is around 200 acres) and an emerging economy- India (where the average farm size is less than 25 acres) presented in this article.

It is apparent why farming sector experienced more turmoil than any other business or industry throughout the history in any society. Farming is synonymous with "being human", and it is the oldest industry forming the core of human civilizations from time immemorial until the dawn of the industrial revolution. Without the tax revenues and grain collections from the farmers no great civilization that flourished to tell the story of human accomplishments would have come about. Whether large or small, throughout history farm owners wielded great influence on Monarchs by creating the base for the aristocracy and the core of military organizations. No wonder, the power base engendered by the farming sector became the cause of consternation as well as a conduit for political control, especially - whenever a nation-state experienced the anxiety of expansion or the depression of destabilization resulting from wars, invasions, coups, and the civil unrest.

Although traditional peasantry organizational structure helped the farmers to accumulate some wealth, except for the large-scale land-owners, agriculture in general was not a profitable enterprise throughout the medieval times. With the advent of industrial age, however - due to mechanization, use of fertilizers, modern transportation, storage, and large-scale irrigation - the crop productivity increased several-fold, loss and wastage reduced greatly, seasonal fluctuations in both demand and supply were effectively managed and thus farming turned into a lucrative affair. However, the profitable growth of farming did not last for a long-time. Although colonial trade opened the markets for agricultural commodities throughout the world and enabled the farmers to bring new crops and farming techniques from distant lands, the surplus production and competition for foreign markets resulted in colonial wars and political revolutions destabilizing the life on the countryside in many countries across the world.

Ever since the farming turned into a commercial enterprising activity with the rise of corporate farming, now the farmers have to compete with other industries driven by enormous growth and modern technologies. Farming was no match for industries such as automobiles, steel, oil and textiles for attracting investments, sustaining consumer spending, or retaining manpower. With little room to differentiate their produce, under heavy competition induced by surplus supply and commoditization, irrespective of the critical nature of the farm output, farmers could never get the right prices for their crops.

Although modern technologies, state-of-art trading methods, and globalization has sustained the growth and productivity, agriculture in general has not been a profitable industry except for large scale corporate Agri-businesses that are tied to food processing and biotech firms with their differentiated or branded food products. In the heavily industrialized western world, now agriculture accounts for less than 10% of GDP and 5% of employment. (See the above data charts for certain critical trends reflecting declining farm income in the United States).

Despite the average farm size in the western world is still healthier at about 200 acres per family-farm, for past five decades, the agriculture is on a steady decline due to lack of incentives with the ever-falling unsustainable crop prices, uncertain weather conditions, reduction in subsidies, loss and bankruptcies, and not being able to attract or retain the man power. Moreover, now the Agri-sector faces the brunt of international trade wars and disputes because of the small margins, surplus production capacity, and the dependence on the global markets for their revenue streams. Traditional farming families are leaving the lands in hordes. The number of farm bankruptcies in the United States for example is on a steady rise year after year for past few decades.

On the Eastern side of the world, agriculture has been on a serious trouble for past 3 centuries. Due to colonial taxation, famines of catastrophic proportion, wars and wanton destruction of cultivable lands and neglect of irrigation infrastructure, agriculture in many Asian countries has not been an attractive enterprise for past few centuries. With no financial incentives, lacking modernization, and dilapidated irrigation infrastructure, farming was not a happy profession. Although land redistribution, crop-insurance, and modernization programs envisaged by the post-colonial democratic governments have helped increase the agricultural productivity and food supply enormously, farming has not been financially attractive in these nations. Although still farming accounts for 30 to 50% of the GDP of many eastern nations, it is still a traditional family affair. The role of corporate sector is practically none. (Following are charts depicting some trends in Indian Agriculture economy).

Due to property divisions among siblings the generation after generation, the average farm size in many Asian countries is less than 25 acres which is practically financially unsustainable without modernization, new irrigation and

energy infrastructure, and subsides and state support for better crop prices. Debt ridden farmers committing suicide is a common tragedy routinely reported in many eastern-bloc Agri-dominant economies. With the advent of

liberalization and globalization, governments slashing subsidies, loans, and support prices for crops, and economic institutions and ministries subscribing to free-market capital efficiency theory ideals have forced the already dying agriculture to compete with the exponentially growing mighty industries and trade sectors. Small farmers stand no chance in this economic environment - with no other option other than leaving the rural areas to big cities in search of new livelihoods. Such a sorry state of affairs is not only weakening the financial well-being of a large population base, but also has become a perennial source of political and economic instability affecting the growth of other potential industrial sectors.

The data trends tell the obvious story. Farming is in distress. Farmers are in sadness and farm workers are suffering. Money supply and cash inflow to agricultural sector has declined. Obviously, this is one major factor undoubtedly that has stunted the growth of economies in both the developed world and emerging nations. Whatever the economic logic one would attribute to the current policies of both the developing economies and industrialized nations, without enough farm output, food supply for the rest cannot be sustained which can dramatically impact every nation irrespective of the state of economic life- cycle or the stage of growth a nation is in. It is quite apparent that everyone will be in trouble sooner or later, if the agricultural crisis is not amicably solved at both global and national level. Given the interdependence of economies, decline in the farm employment and Agricultural GDP, world economy and international relations can experience uncertainty and destabilization. Farm sector should be freed from both the frenzy of free markets and the frozen state machinery. Farmers should neither be subject to the torment of state controls nor be thrashed by mean market competition.

Some humble suggestions and observations. On the positive side, keeping the farm sector surplus oriented and making farmers happier will help boost the economic growth in several other sectors. Surplus money flow and savings are not going to make farmers into billionaires; rather will keep the sector incentivized to sustain the agri-output and productivity and flood the markets with produce to keep the prices affordable for the majority. Keeping the farm workers healthier through investments in their healthcare and quality of life will reduce the cost of farm produce. Surplus and safety-nets in agriculture would enable the farmers to withstand the fluctuations in farm prices and sustain the losses due to crop failures or other climate uncertainties. Farm surplus and agricultural profitability will attract younger generation toward farm lands and agricultural employment. Investments and modernization will naturally entail nourishing crops and healthy people. A renaissance in agriculture will occur with the combination of traditional wisdom of farming families and modern science from Universities.

The money supplied to agrarian economy in the form of loans, subsidies, price support, irrigation & infrastructure development or any "tacit Keynesian programs absorbing the cost of pension funds, healthcare, and basic necessities" will not only grow the agrarian economy and retain employment in rural areas, such moneys will always flow back into the treasuries of banks, insurance companies, oil and energy companies, and the construction industry. Most important of all, the healthy rural economy will reduce the population growth in cities grown unsustainable and would bring people back to their native communities equipped with modern education, good health-care, and the state-of-art technology.

References: 1) U.S. Farm Income Outlook for 2019, Congressional Research Service, https://crsreports.congress.gov R45697 (April 16, 2019)

2) Center for Monitoring Indian Economy Reports.

Everyone talks about GDP. Economists of all sorts care about GDP. From a layman to the lover of economics, from a Globetrotter to a Geopolitical Strategist, GDP is a "go-to metric” to compare and examine the size and strength of nation-states. Despite its popularity, GDP is a misnomer and does not effectively capture what it is supposed to.

GDP (Gross Domestic Product) is one of the most extensively used measures of an economy’s output or production. It is defined as the total monetary value of goods and services produced within a country’s borders in a specific time period — monthly, quarterly or annually. GDP is considered an accurate indication of an economy's size by most economists and policy makers. The GDP growth rate is often advocated as the single best indicator of economic growth. GDP per capita is believed to be in close correlation with the trend in living standards over time. The Nobel laureates Paul A. Samuelson and economist William Nordhaus observed, “While GDP and the rest of the national income accounts may seem to be arcane concepts, they are truly among the great inventions of the twentieth century.” In their popular book on the subject of Economics, they praise the ability of GDP concept to present an overall picture of the state of the economy. GDP allows policymakers and central banks to judge whether the economy is contracting or expanding, whether it needs a boost or restraint, and whether a threat such as a recession or inflation clouding an economy.

GDP can be calculated either through the expenditure approach (the sum total of what everyone in an economy spent over a particular period; GDP = Consumption + Investments + Govt. spending + (Exports – Imports) or the income approach (the total of what everyone earned). Both should produce the same result. A third method – the value-added approach — is used to calculate GDP by industry. Notwithstanding the method employed for its calculation, GDP measure is primarily an aggregate monetary value of all economic output in a Nation. That means, most of the components included in the estimation should reflect the market prices of the respective economic outputs in various sectors. Apparently, the GDP estimates are supposed to reflect the volume of transactions/units outputs multiplied by their respective market prices in a given period. Of course, we also know that these total estimations are adjusted for inflation or deflation indices in reference to a base year to calculate the real GDP.

I would like to draw your attention to the limitations of GDP measure based on the following premises and address why we need to exercise caution in applying GDP to examine the emerging economy like India.

First, the market prices of many products and commodities do not reflect the real cost of production or the quality of the products, for the reason, marketing and pricing strategies in many industries are not really tied to the demand or cost (supply) factors, rather based on political, competitive, global, and long-term strategic interests. In short, prices may be overstated or understated not reflecting the real or intrinsic worth of the labor and other costs of factors of production. For instance, in several critical sectors of the economy like metals, agriculture, manufacturing, and electronics the prices have been declining steadily for the past few decades. Such declining prices might be due to over-capacity forcing the price wars, intense competition, trade wars or expanding global market size resulting in scale economies. Many industries have delivered tremendous volume of product output despite mounting losses. See the price trends of Electronics.

Even if the GDP estimations are adjusted with a inflation or deflation index, the estimate will not adequately reflect the price declining effect on the economic / volume output. Moreover, in recent decades, inflation does not appear to be stemming from the economic/production activities that account for employment, infrastructure and value creation in a society - rather mostly arising from speculative economic activities in industries such as real estate, stocks, and other financial services. Whatever the reason, if the prices are steadily falling while the output volume is rising in many critical sectors, what will be the net-effect on national GDP? What are the implications for policy making? May be, the real production and value creation activities are being undervalued and under-represented - which is a central problem arising due to inefficient markets.

In contrast, however, the rise in oil price may stunt the growth of an economy and have adverse consequences to several other sectors. Please see the chart of oil prices vs US GDP growth trends. The bottom chart depicts India GDP Vs Crude oil prices. Whenever the oil price goes up GDP gets stagnant.

Second, the GDP measures and growth rates are not addressed in light of the sectoral differences in terms of the volume of outputs /transactions or their respective periodic growth rates.

Third, often the GDP figures of nations are compared on the basis of US. $ value (after adjusting for purchasing power parity), since US Dollar is a dominant global currency. Such comparisons, neglect the power of volume of economic transactions within several critical sectors of a Nation. Within many emerging economies, the economic transactions in several industries do not enjoy premium prices because of the quality issues, inability of the products to reach global markets, or the stage of economic evolution is such that low price is the inescapable predicament. Thus, when we read, US GDP - $20 Trillion+, China GDP - $10 Trillion +, India - $3 Trillion and Australia - $ 2 Trillion - we have to exercise caution here. Do these numbers really capture the true size of the respective economies? For instance, consider the economies like Canada and Australia with populations less than 50 million people. How would these economies rank in parity with Nations such as India - a highly industrialized economy with 1.25 billion people? One can presume that India and Chinese economies can be several folds bigger and stronger than what the GDP figures would suggest (in terms of US $). For instance, in 2019, about 3 million cars and 21 million motorcycles sold in India - a figure comparable to any big industrialized economy.

that mounts due to mere speculative growth of assets value, consumer gratification, perfume-packaging, and credit card burden - from the GDP estimates, one would arrive at a different picture on the size, strength, stability, and soundness of an economy. One can surmise, even the GDP estimates of the mature American economy would not accurately reflect the true value and strength of the US economic output.

In light of the above observations, the recent misinterpretations and misapprehensions about India’s GDP are addressed here.

There is much a write and talk about Indian economy and its growth rate in recent times based on GDP statistics. Do such data, economic indicators and the opinions based on these numbers have any significance for a growing diverse economy like India? In my opinion, for most people, for most sectors and industries, and for most part, they are practically irrelevant in the long-term.

The data and interpretations of GDP and its growth rate on a short-term basis like quarterly or monthly has only relevance for short-term investors in money and stocks....and such information has no relevance at all for long-term investors and the whole economy in general especially diverse and self-reliant diverse economy like India.

However, I would like to express a caveat: Such short-term analyses and policies based on economic numbers and their quarterly fluctuations primarily catering to the interests of short-term investors will have adverse impact on the whole economy in the long-term....

1) First, the GDP numbers are subject to many biases, miscalculations, and misinterpretations, because they don't capture the sectoral or industry differences in terms of their respective volume of transactions and growth rates. For example, the steel, cement, and appliance sales have been growing at the rate of more than 10% per year in India...but the actual prices in these industries have not been rising in line with the inflationary trends...prices might be constant or even declining, despite heavy demand and volume growth, due to competition and spending power limitations of the consumers. In this context, GDP growth figure will appear smaller...probably, even much smaller after adjusting for inflation...

2) India is a diverse economy... Tribal, rural, agrarian, industrialized urban, real estate driven cosmopolitan and so on....No standardized or aggregate data would ever present a good complete picture of the whole economy. More than 50% of the economic activities and transactions (rural, tribal, agrarian sources) are neither driven by stock markets and fiscal investment policies nor dependent on their performance...On the contrary, the financial markets, cosmopolitan real estate markets tied to the global economy are dependent on the economic well-being of the rural, agrarian and tribal economies within India.

3) Quarterly numbers would not make any sense for a large nation like India which is subject to seasonal, yearly and geographical variations in terms of growth. Like North-South divide and East-West divide. Although it is agreeable that some measures taken by the current government like demonetization, GST and tax policies might have affected the purchasing power and in turn growth a little bit - not because of any policy error but due to poor implementation, if the govt. quickly implements policies and instruments (some tacit Keynesian measures) like health insurance, crop insurance, farm subsidies, irrigation, and rural infrastructure investments that will promote food production, construction, and development, Indian economy will easily rise above 10%.

4) Sales data from leading industries such as steel, oil, automobiles, motorcycles, construction, electronics, and appliances all suggest a growth about 5 to 20%. I guess, after taking into account their secondary and tertiary effects on the whole economy, India could be easily growing at a rate of more than 7%.

5) Spending for defense, space research, state-of- art technology, healthcare, public infrastructure, agriculture, and irrigation development generating growth opportunities for indigenous production capabilities should not be a cause of concern (like inflation); rather such govt. spending would be a source of advantage for everything in the economy in the long-term. In fact, it will result in higher quality of life, better standard of living, and help sustain the currency value. In this light, Moody's rating or IMF ranting should not be a major concern for policy making.

6) What I am saying is.. the actual production volume of goods and services and their long-term growth matters...more than the monetary and inflation-adjusted measures of GDP.. Of course, it does not mean inflation should not be contained. By maintaining adequate production and supply in critical sectors, and by sustaining the purchasing power, there should not be any major concern about economic growth.

7) If the savings, especially retirement savings are vested into the stock market with the guarantee of reasonable returns and effective governance, most of the public firms and Indian economy overall would not have to worry about the growth at all. Of course, on any ground, market value of such retirement funds should not be allowed to go bust in the guise of bear markets or volatility. Even American stock market - with all its inefficiency and the speculative blunders – is primarily sustained by retirement savings pouring into the market month after month in the form of mutual funds. (About $1.5 T flows annually from retirement accounts alone into the US stock market)

8) Can you believe data presented in the adjacent Chart?

This is because, we have the tendency to look at data like GDP in terms of US $, because of its power in global trade. The dollar based GDP numbers can be fundamentally wrong and might lead to misguided policies. There is a saying in economics - one can get more bang for the buck...The Indian GDP figure in US dollar term does not get the real picture....that is the volume of transactions....Given the limitations stemming from quality issues, price latitude, and global reach of Indian goods & services....the price based, dollar based comparisons of Indian GDP with that of economies like US or Canada cannot tell a complete story of the full potential of Indian economy, businesses or is people. Once the quality of infra-structure and economic transactions increase, Indian economy will soon hit high numbers and be ranked on par with big league.

Finally, Does GDP need to really grow-big in terms of money value? If most of the population is happy and self-content with simpler healthier life...Think about it...

Strategy has been a most fascinating topic for thought, discourse and action. From the dinner table and chess-board to a team-sport and corporate suite and for those at the echelons of power, politics and warfare - Strategy is considered Bread and Butter. Throughout the known history, Strategy has been quintessential to the survival and success of key players pursuing - political, entrepreneurial, corporate or military endeavors. Despite its origin in the military parlance, 'strategy as a school of thought and practice' has permeated the planning meetings and budget sessions across all layers of the society.

Originally known as the 'Art and Science' of orchestrating the military ploys to gain advantage or as 'unique collection' of idiosyncratic styles of army leaders in the conduct of warfare, now, the 'strategy' has become almost second nature to the business executives, political consultants, business CEOs, and corporate board members... to formulate business decisions for securing advantage over competitors or ensure investment-returns.

From a business and economic perspective, 'strategy' has been defined in many ways: 'unique and consistent pattern(s) in a stream of decisions to achieve the intended mission', 'competitive moves and tactics to outsmart the rivals', 'securing and sustaining competitive advantage in terms of profits or market share', 'accomplishing quality and technological supremacy', 'shaping the rules of the game or industry by establishing first-mover advantages or creating alliance-based or network-driven industry dominance', and quite importantly 'revolutionary or disruptive tactics to break the barriers of advantage established by the rivals.'..and so on..Oftentimes, Winning the Competition happens to be a core theme in strategy.

Yet, the success of a modern business these days demands an effective global presence which naturally calls for cooperation between businesses and Nation-States. Achieving results in the global market very much depends on the foreign policies and international relations of respective host-nations within which firms operations are embedded. The foreign policy and international relations in reality - another complex strategic dimension - is beyond the scope and capability of many business corporations.

Strategy within Nation-State Contexts: Evolution of Competition and Cooperation

All along the history of economic or political institutions or business organizations, 'tangible resources', have always been the critical factor in the forethought and hindsight of the strategic planners. For instance, 'land' has been both the primary means and ends of both the conflicts and stratagems all along the past 3 millenniums of recorded history: Grabbing more land, border disputes or venturing into unknown frontiers in search of habitable resourceful land was the predominant foreground for strategy thought and action.

Military invasions, wars of catastrophic proportion, horrid and grisly genocides, despicable enslavement of tribal people and anarchic political turmoils have all been the final outcomes of land-based competition ever since man came out of forest dwelling. And the quest for land grabbing is still continuing through the modern times often disrupting the human progress, global peace, and harmony among nations. Technologically stronger nations have already started staking their claims in Arctic, Antarctic, and are even trying to raise their flags in Mars.

Subsequently as the world entered the medieval and colonial-trading phases of the history, a new type of competition emerged. This time it was in search for gold, mines, oil & mineral resources, and all forms of tangible resources like cattle, horses and even people for achieving the cost advantage or wealth which resulted in long mortal battles among tribes and nations that are continuing even today in some pockets of the world.

In the pre-industrial era, amassing land-based resources required large army, lethal power, massive equipment, high speed and stealth which were engendered by the canons, horses and elephants; whereas now those advantages are sought through naval, nuclear, and aviation technologies. In addition to military strength, political games and civil disruptions, destabilizing the peace, strength and governance formed the core of strategies. From the iron age to medieval religious crusades, colonial trade wars through ideological conflicts and cold war times of the recent century - land based resources seem to have occupied the central place in competition. This tendency has no end in sight - as it appears. Jiddu Krishnamurthi, a modern philosopher, proclaimed such a state of affairs - a glorified tribalism.

Along the search and conquest for material wealth, another form of competition was shaping up across continents. This competition was not for material resources, rather competition for "who got the 'right truth' or 'who got the truth right'. With the arrival of ideas for emancipation, enlightenment, progress unlimited or reaching the abodes of god or the gates of heaven for salvation from birth and sin, now men began to "compete for the minds" of other men. Religious or spiritual doctrines, and political ideologies like democracy, capitalism or socialism were the ideas that prophets, philosophers, preachers and professors carried on their shoulders as "truth" for solving personal or social crises and sold them as "solutions" to the economic problems of poverty, famines, and scarcity. A deeper analysis of the history would reveal to us that more people have been killed in the guise of search for right god or competition for political truth than by natural disasters or disease or famines. While the ideological conflict or theocratic rivalry has not yet come to an end, they have however created a perennial existential threat for the entire humanity with all sides brandishing the most destructive weapons one can imagine.

Whether we prefer competition or not, it has become quite evident now that none of the ideologies, doctrines of truth or god, nor economic and political institutions, nor the weaponry could solve the most common challenges ever faced by human kind. Although modern science has enormously contributed to reducing the human sufferings from the poverty, disease, aging and injuries, humanity is still facing the worst dangers resulting from competition. We have not even solved the problem of premature death among children, let alone winning over the sword of death hanging over all life or accomplishing our quest for conquering the nature. No philosophy yet has answered the very basic question of the purpose of life or planetary existence beyond narrating a biological/reproductive sense for the origin of life or painting an evolutionary tale for the emergence of intelligent, conscious, and conscientious human being. Neither philosophy nor science can unequivocally clarify our question on the purpose of life in general or more specifically answer the reasons for birth, existence and death cycle.

As nature had preordained both the 'competitive' and 'cooperative' designs as evolutionary processes right from a single-cell organism to the most complex human kind, life in the modern world is yet being shaped by a range of choices between a mortal combat to the highly sophisticated form of cooperative endeavors among clans, peoples and civilizations. While nature's evolutionary or strategic designs mostly operate on the basis of "chance factor" or "optimal search" for the sustainability of an organism, yet human designs and strategies are quite often shaped by cognitive and psychological desires rather than optimality or sustainability. Sheer ego, greed, illusion of control, myopic rationalization of an idea or a system, false pretense, cognitive bias or even sheer stupidity of those at the helm of affairs often determine the decisions. The studies on human cognition and information processing have shed a great deal of knowledge on the fallacies of rationality and debacles due to emotions in human decision making.

Many a time, our political and competitive actions are guided by 'charade and pretense' of "what we think and do is right, and that we are the custodians of ultimate truth" - Such a line of thought cannot be attributed to the "chance factor", nor can be substantiated as the "optimal choice". Based on past historical evidence, one can assert that most of the competitive actions, sooner or later, have resulted in a "lose - lose" negative outcome for all the parties in a conflict without generating any permanent advantage for any side. In most situations, over the long-term, the borders that separate the conflicting parties disappear with new problems appearing in the horizon that can affect all the parties.

The colonial trade, competition for wealth and resources, and the supremacy of nationalism that resulted in two world wars cost the humanity 50 million young lives with no advantage to any one nation in terms of worthy land or precious resource. Astonishingly, the same nations within the next few decades after the wars had come together to solve the major economic and human crises experienced by all of them. Without allowing for mutual exchange of products, access to markets and resources, nations could not sustain their growth or economic stability in recent times. Inter-dependence and coopetition (simultaneous competition and cooperation) have become a new order promising progress and growth for all nation-states. (At this juncture, we are not sure what would be the outcomes of BREXIT to EU, and the World-at-large).

Teleologically speaking, the organizational boundaries (scope of decision frames) within which human choices are made - like tribe, ethnic group, nationality, religion, ideology or political system have turned into unrealistic, unsustainable Utopian ideals; They are rather limiting our options. The decision to retain independence or compete is subject to limitations depending on the context, common threats, resource scarcity, the order of arbitration and the common challenges such as the natural catastrophes. If there is an order and efficiency arising out of competition, it could have helped the humanity to limit the most pressing problems. History suggests that Competition however does not seem to lead us to a systemic optimality or efficient equilibrium of the economic factors.

Rivalry and Strategy in the Business Context

From the early times, businesses have been shaped with an amoral (value-neutral) imperative that the only purpose of business organization is to increase owners wealth by competing vigorously and outsmarting the rivals. With self-interest as the centripetal force to take all potential sales and profits away from the markets, the sheer monetary and profit goals have eclipsed the lofty social and humane ideals of organizations. Because of a historically reinforced notion of the 'self-interest seeking guile' as the basis for success in a free market, most businesses suffer from a social perception of ‘caveat emptor or buyer beware’ . In the global context, this notion is highly pronounced resulting in more frictions which further stunt the business growth.

Competition is quite an obvious force produced by the laws of nature. All of us recognize the importance of outsmarting the rivals to secure more customers and profits. However, reducing business strategies to mere short-term quarterly profits or competitive advantage in terms of better than competitors' ROE (Return on Equity) has robbed the human spirit and social significance of businesses. Mere profit outlook of strategy had sucked the spiritual and creative vitality out of organizations, and turned several large companies into mere metallic and concrete cans of robots, computers, and machine tools. Given the extant challenges, yet, the firms are under even more pressure to bring high returns to shareholders, because now the savings of the most of the society are channeled into public firms in the form of stocks, bonds, and loans and there is intense competition to attract this money.

From a profit maximizing perspective, however, a firm's ability to outsmart the competition still matters in most industries, and it enables a firm to secure more economic advantages than rivals or other industries in the market place. Here, of course, we have to remind ourselves that within any national economy, no company can continue its success and profit growth for ever. Because intense rivalry, resource scarcity, market saturation, declining industry life cycle, disruptive technologies, and antitrust regulations - the challenges arising out of systemic, confounding and interdependent nature of industries across an economy will naturally constrain a firm's independent, isolated growth. Often, mergers are recommended as a way out to escape the problems of competition. In reality, large integrated firms soon turn into unattractive and risky behemoths suffering from organizational inertia and size related dysfunctions. General Electric and GM are classic examples of size-crisis.

As industries mature, the emergent unfavorable conditions will not only affect individual firm efficiency, but also the overall systemic optimality of the entire society. The way modern stock market operates is a great illustration of how systemic economic-inefficiency and resource drainage can occur due to unhealthy competition among firms for financial resources. Of course, it does not imply that firms need to collude or form cartels to gain bargaining power over customers or merge to create hierarchies to achieve efficiency. Firms can simultaneously compete and collaborate by functioning as a formation or school of fish enhancing the efficiency of individual entity as well as the economic optimality of the whole collection. The collaboration can be exercised within a value chain, across industries, or among competitors. If firms learn to cooperate, the profits or subsidies can be rationed among them to avoid the unhealthy competition.

However, we can be optimistic about the growth-horizon of many businesses across industries because now they are operating beyond their national borders and their growth is not constrained by the rivalry. Both consumption, production, and ownership of businesses are now transcending the national borders allowing for growth and expansion; Yet, the global expansion depends on the cooperation among nations and firms. If nations and firms operate under the principles of give and take - trustworthiness, reciprocity, safety-net, social responsibility, and exercise due-respect for the political sovereignty and stakeholders rights, there is no limit for growth.

The point what I am trying to drive home through this article is that the "material-based economic competition has natural limits in strategy" for securing lasting advantage in any business. In the guise of free-market competition, when the financial markets and a few firms drive a system with a promise to deliver 40%+ profitability in a year (like hedge-funds), a majority of firms and industries (for example traditional agriculture, manufacturing even automobiles...) within the same system will go bankrupt because they can never be able to match such a high-profit goal nor can retain their investors base. (Please read my LinkedIn article "To Turn the Porter's Nail on its Head" on the skewed long-term profitability of American Industries).

Mere profits cannot be the whole means and ends of a business organization; Along the same line of thought, mere economic gains cannot be the core strategy of a national government. Competition is certainly not the only best choice to achieve economic gains. Businesses have much larger role to play in the greater scheme of life, society, economics and our planetary existence. Given the necessity of global growth and interdependence for national markets to sustain business, organizations need to think beyond competition and profits, and ought to shape their strategies in terms of social exchanges - trustworthy relationships, reciprocity, power sharing, quality of life, safety-net, equitable distribution of critical resources, and shared governance.

Winning the love and trust must be the core of a long-term strategy. Organizations working for securing a lasting legacy will give the whole emphasis on winning the mind, enthralling the heart, and building a safe-quality-world for all. Businesses making cognitive, emotional, and visceral connections to life in general are essential strategies for sustaining the humane character of the corporations. Given the 'perceived injustice' about the global trade among many developing nations, to be successful in a global business environment, firms need to build more trust-equity - which is more valuable than the market equity or brand-equity in dealing with diverse stakeholders in global markets. A Business firm can build high trust-equity - if it can effectively demonstrate that its actions are non-opportunistic and trustworthy, and that it has the competence to deliver what it has promised without failing, and work toward benefiting the humanity in general. A trustworthy firm will rather demonstrate the motto "Veritas-Uirtus-Sinceritas" that is, truth, excellence, and honesty.

Concisely speaking, "Strength of a Strategy is its Moral Intent"

(Please refer to my other LinkedIn articles on Trust-Equity, profitability, market inefficiency).

If you throw a question "What makes the world go around?" For several people the response would be Love… For some modern thinkers the answer would be Knowledge… For a few noble-minded men, Justice will be the solid answer…For almost all, the most practical answer would be the Stomach… Whether Love, Knowledge, Justice or the Stomach, to make the world go around, humanity cannot evade the preordained burden of Energy. Given the size and survival demands of the growing human population, Without Energy modern humanity cannot persist let alone prosper or break new paths to the frontiers in Mars or Moon. Even the most ubiquitous and powerful Money cannot buy some critical energy sources.

Energy can easily account for 25 to 50% of the cost of most of the products and services that we consume on a daily basis. Food, Transportation, Communication and Heating and Cooling essential for living cannot be produced and delivered without energy. Rising Energy cost can escalate inflation, stagnation, or trigger all sorts of economic and social malaise. The words 'growth' and 'development', and 'modern civilization' would not make any sense without the abundant supply of energy. Recent economic and financial crises the world has witnessed can be primarily attributed to "Energy Cost" and the further escalation of crises was arrested by containing the energy prices. Those who control energy sources can enjoy tremendous competitive advantage. The shortage of energy will stunt the growth of the entire human kind.

Whether you call it a ‘greater inheritance’ or the ‘gift of nature’, we are bestowed with abundant resources of vast amounts of energy. Humanity has so far successfully coped with the energy demands needed for the progress. However, the bad luck is that these resources are limited, expensive, and often unsafe. Now we are faced with the predicament of the insatiable energy needs on the one hand, and the limited and depleting energy sources on the other hand.

Man cannot escape his stomach... Nor can he afford to eat his stomach.

Utilizing the limited, depleting, expensive or unsafe non-renewable energy sources, however has its limitations. We now know for sure there are costs of externality... the cost of damage, destruction to our health and habitat, and the degeneration that energy production and conversion have caused to the environment, civilization, and the future of whole planet itself with our relentless curiosity, unquenchable thirst for convenience and comfort, adamant faith in machines, and of course the insatiable greed and quest for prosperity.

Nor man can afford to spend his entire effort toward expensive energy inputs to sustain his survival or meet the necessities of modern living such as travel, communication, material comfort, and leisure. When it is too cold, we need the heat and warmth. When it is too hot, we desperately seek the cooling. Given the vast amount of energy required to sustain the modern living, humans cannot pedal their way out to power the machines that provide these comforts. Human-kind is condemned to live like the Ants and Bees within colonies with the surplus food saved for the rainy and uncertain times. I doubt we can ever step backward to the early hunter-gatherer life. Unless we create and conserve energy and its critical sources, humanity can experience major calamities.

If animals cannot adapt to the environmental constraints, they would go extinct and we may not notice it for a while. If plants and trees don’t survive, the planet will surely become unlivable. We humans cannot accept this stalemate of extinction that nature has imposed on us. Humanity cannot free itself from all the wretchedness that dogs the modern world like hunger, thirst, poverty, wars, famine, climate and environmental degradation, hard labor so on....and can save the planet and life within it with least effort if we cannot find the ways to overcome the limits of energy.

How do we create materials with the least amount of inputs and energy...how do we live without spending or wasting the precious limited and expensive resources...in essence how do we create systems that will beat the laws of thermodynamics and energy...that means creating the dis-entropic systems with the efficiency ratio of (output / input) equal to or greater than one...meaning creating near-perpetual machines if not "the perfect perpetual machines" like that of our planet...which has been revolving and rotating on its axis for at least a few billion years without any external energy or intervention.

If we can learn from the plants & trees, and planetary movements and harvest energy out of the cycles of natural phenomenon without utilizing the physical non-renewable sources for production, conversion, and consumption of thermal or electrical energy the world of free energy or cost-free energy is not a distant dream.

Invisible Quantum machines, Omni-present Chlorophyll energy, Ever-present Geothermal radiation, Unceasing Ocean waves, Unstoppable Solar rays, Ever-winding Planetary motions, Universal Electromagnetic waves, Mammoth Magnetic forces, Gigantic Gravitational pulls may hold the answer for this quest. While our intelligence may open up the new avenues for the creation of such machines and technologies toward easy-cost-effective-energy, our culture and convents should continue to invent smart systems that are earth-friendly and energy-wise if not entirely energy free.

From the market point of view, these investments and efforts are not going to be highly profitable nor would yield the market capitalization that financial world would expect on a short-term basis. Although economists have observed that markets and businesses driven by the demand compulsion would endogenously commit their investment and effort toward innovating new renewable sources of energy, the reality is that it is only half-truth. Even though businesses have worked hard to improve the energy equation for growth and profitability, they have been hesitant to seriously invest toward the new frontiers of energy. Rather, a lot of path-breaking energy innovations have emerged out of the Universities and Government research labs which operate on the non-profit motives.

Not only new-age technologies would help, but also the design of modern organizational, political, and business systems which can support the creation of dis-entropic energy systems benefiting the planet and humanity. Governments should free themselves from the compulsions of the market and monetary mechanisms when it comes to spending for the greater causes of humanity – such as Energy - which is a most fundamental driver to sustain the human existence in this planet and beyond.

(See for example, the budget constraints have resulted in cutting the funds for clean energy research)

https://www.cnbc.com/2018/01/31/trump-again-seeks-to-slash-funding-for-clean-energy-in-2019-budget.html or

After, all said and done, Man has to feed his family...Nations have to feed their people...In the process of feeding and fulfilling the population’s needs with products and services, we cannot evade our quest and thirst for the safe and sustainable energy. Hence, Nations and Peoples cannot confine their quest for energy independence by profitability pressures or being complacent with the finite non-renewable resources. We should quickly unfasten ourselves from the cobwebs of contingencies that perpetuate both the conspicuous consumption and profit-driven markets constraining our innovation potential. Our political, economic, and educational institutions should try to unleash the imaginations of the young minds with unconstrained supply of financial resources - which for sure will leverage the sources of infinite energy and make us energy free, and free of energy cost.

If you throw a question "What makes the world go around?" For several people the response would be Love… For some modern thinkers the answer would be Knowledge… For a few noble-minded men, Justice will be the possible answer…For almost all, the most practical answer would be the Stomach… Whether Love, Knowledge, Justice or the Stomach, to make the world go around, humanity cannot evade the preordained burden of Energy. Given the size and survival demands of the growing human population, Without Energy modern humanity cannot persist let alone prosper or break new paths to the frontiers in Mars or Moon. Even the most ubiquitous and powerful Money cannot buy some critical energy sources.

Energy can easily account for 25 to 50% of the cost of most of the products and services that we consume on a daily basis. Food, Transportation, Communication and Heating and Cooling essential for living cannot be produced and delivered without energy. Rising Energy cost can escalate inflation, stagnation, or trigger all sorts of economic and social malaise. The words 'growth' and 'development', and 'modern civilization' would not make any sense without the abundant supply of energy. Recent economic and financial crises the world has witnessed can be primarily attributed to "Energy Cost" and the further escalation of crises was arrested by containing the energy prices. Those who control energy sources can enjoy tremendous competitive advantage. The shortage of energy will stunt the growth of the entire human kind.

Whether you call it a ‘greater inheritance’ or the ‘gift of nature’, we are bestowed with abundant resources of vast amounts of energy. We have so far coped with the energy compulsions of the progress successfully. However, the bad luck is these resources are limited, expensive, and often unsafe. We are now faced with the predicament of the insatiable energy needs on the one hand, and the limited and depleting energy sources on the other hand.

Man cannot escape his stomach... Nor can he afford to eat his stomach. Utilizing the limited, depleting, expensive or unsafe non-renewable energy sources, however has its limitations. We now know for sure there are costs of externalities... the cost of damage, destruction to our health and habitat, and the degeneration that energy production and conversion have caused to the environment, civilization, and the future of whole planet itself with our relentless curiosity, unquenchable thirst for convenience and comfort, adamant faith in machines, and of course the insatiable greed and quest for prosperity.

Nor man can afford to spend his entire effort toward expensive energy inputs to sustain his survival or meet the necessities of modern living such as travel, communication, material comfort, and leisure. When it is too cold, we need the heat and warmth. When it is too hot, we desperately seek the cooling. Given the vast amount of energy required to sustain the modern living, humans cannot pedal their way out to power the machines that provide these comforts. Human-kind is condemned to live like the Ants and Bees within colonies with the surplus food saved for the rainy and uncertain times. I doubt we can ever step backward to the early hunter-gatherer life. Unless we create and conserve energy and its critical sources, humanity can experience major calamities.

If animals cannot adapt to the environmental constraints, they would go extinct and we may not notice it for a while. If plants and trees don’t survive, the planet will surely become unlivable. We humans cannot accept this stalemate of extinction that nature has imposed on us. Humanity cannot free itself from all the wretchedness that dogs the modern world like hunger, thirst, poverty, wars, famine, climate and environmental degradation, hard labor so on....and can save the planet and life within it with least effort if we cannot find the ways to overcome the limits of energy.

How do we create materials with the least amount of inputs and energy...how do we live without spending or wasting the precious limited and expensive resources...in essence how do we create systems that will beat the laws of thermodynamics and energy...that means creating the "dis-entropic systems" with the efficiency ratio of (output / input) always greater than one..meaning creating near-perpetual machines if not "the perfect perpetual machines" like that of our planet...which has been revolving and rotating on its axis for at least a few billion years without any external energy or intervention.

If we can learn from the plants & trees, and planetary movements and harvest energy out of the cycles of natural phenomenon without utilizing the physical non-renewable sources for production, conversion, and consumption of thermal or electrical energy the world of free energy or cost-free energy is not a distant dream.

Invisible Quantum machines, Omni-present Chlorophyll energy, Ever-present Geothermal radiation, Unceasing Ocean waves, Unstoppable Solar rays, Ever-winding Planetary motions, Universal Electromagnetic waves, Mammoth Magnetic forces, Gigantic Gravitational pulls may hold the answer for this quest. While our intelligence may open up the new avenues for the creation of such machines and technologies toward easy-cost-effective-energy, our culture and convents should continue to invent smart systems that are earth-friendly and energy-wise if not entirely energy free.

From the market point of view, these investments and efforts are not going to be highly profitable nor would yield the market capitalization in the short-term that financial world would expect. Although economists have observed that markets and businesses driven by the demand compulsion would endogenously commit their investment and effort toward innovating new renewable sources of energy, the reality is that it is only half-truth. Even though businesses have worked hard to improve the energy equation for growth and profitability, they have been hesitant to seriously invest toward the new frontiers of energy. Rather, a lot of path-breaking energy innovations have emerged out of the Universities and Government research labs which operate on the non-profit motives.

Not only new-age technologies would help, but also the design of modern organizational, political, and business systems which can support the creation of dis-entropic energy systems benefiting the planet and humanity. Governments should free themselves from the compulsions of the market and monetary mechanisms when it comes to spending for the greater causes of humanity – such as Energy - which is a most fundamental driver to sustain the human existence in this planet and beyond.

(See for example, the budget constraints have resulted in cutting the funds for clean energy research https://www.cnbc.com/2018/01/31/trump-again-seeks-to-slash-funding-for-clean-energy-in-2019-budget.html or https://www.washingtonpost.com/business/economy/white-house-seeks-72-percent-cut-to-clean-energy-research-underscoring-administrations-preference-for-fossil-fuelsv/2018/01/31/c2c69350-05f3-11e8-b48c-b07fea957bd5_story.html?noredirect=on&utm_term=.bf2c2479b0d6)

After, all said and done, Man has to feed his family...Nations have to feed their people...In the process of feeding and fulfilling the population’s needs with products and services, we cannot evade our quest and thirst for the safe and sustainable energy. Hence, Nations and Peoples cannot confine their quest for energy independence by profitability pressures or finite non-renewable resources.

We should quickly unfasten ourselves from the cobwebs of contingencies that perpetuate both the conspicuous consumption and profit-driven markets constraining our innovation potential. Our political, economic and educational institutions should try to unleash the imaginations of the young minds with unconstrained supply of financial resources - which for sure will leverage the sources of infinite energy and make us energy free, and free of energy cost.

"Noblest is the Justest" - Aristotle

“It always seems impossible until it is done” (Nelson Mandela),

“Arise, awake and stop not until the goal is reached” (Swami Vivekananda)

Link to the article:

In the beginning was the “word” professes scriptures. Words have laid the foundation for all thought systems across the world. Words charged with utmost meaning turn into a literary work that can stand the test of time. Words manifest in many forms – axioms, parables, metaphors, stories and hymns – and form the basis of our culture, organizations and socio-economic-political systems. Religions have spread and political institutions are built with the stories and fables of mystical legends and deeds.

Words not only connote the objective phenomena that determine our lives, but also assist in the creation and enactment of the novel, imaginative or subjective ideals that shape our lives and provide meaning to our existence. In fact, the very purpose and meaning of the human existence are often governed by words and the subjective worlds that we construct with words. Words constitute the cognitive capacity – an important trait of biological order – which differentiates humans as superior and sentient in comparison to other lives on the planet. Consistent positive communications shape thoughts, behaviors and help transform individuals and organizations, and are known to greatly foster progress, change and success (Armenakis and Harris, 2002, 2009; Elving, 2005; Lewis, 2011; Marshalk, 1993; Morgan, 2006; Weick et al., 2005).

Words expand the cognitive and physical spheres of human activity, and can induce the needs and desires, and thus drive us to seek, design or pursue the products, services or lifestyles. Take for instance, the subject of “affinity” – we have abundant number of words to express this principal dimension of human relationship: love, compassion, affection, kindness, kinship, friendship, motherhood, brotherhood, fraternity, partnership, companionship and compatriotship; each word, however, takes on a new dimension bestowing the foundation for a variety of ideals, values and forms of associations. Several classical and modern philosophical works have reflected upon how words can help us imagine and create a world of new institutions and phenomena – be they are subjective or objective – that give us meaning and happiness (Cornelissen et al., 2015; Luchte, 2007; Oizerman, 1981). Similarly, organizational scholars have traced how expressive communications play a central role in the creation, diffusion and change of institutions that govern collective thoughts, intentions and behaviors (Berger and Luckmann, 1966;Searle, 1995). Seen in this light, words have potential to create quite distinct thought worlds and organizational systems and thus can expand our cultural sphere.

Figurative and metaphorical communication can be of great help in conceptualizing the abstract and vibrant changes emerging in the market-place. Markets are quite dynamic with a constant rendering of complex market segments, novel product configurations and uncommon patterns of consumer behaviors. Through right metaphors, managers can provide contextual verbalization required to capture the complex configurations or emergent outliers. As dynamic industry and market changes are often unobserved or overlooked, communication charged with provocative axioms and metaphors can play a critical role in sensitizing the managerial cognition so that the emergent social phenomena can be effectively captured for managerial analysis and decision making (Muthusamy, 2008; Newberg and Waldman, 2012; Simon, 1993; Weick et al., 2005).

From the communication and sense-making perspectives, first, we discuss the role of positive communication in terms of genuine, considerate expression of words, axioms, stories or metaphors in the functioning of organizations and markets. Second, we narrate how managerial communication involving positive stories, metaphors or axioms nurtures the social capital necessary for organizational change by spawning the shared cognitive-linguistic domains. Further, we examine the empirical link between the positive communication and organizational transformation by a two-fold analysis of survey data collected from 174 management professionals who have recently undergone the organizational change episodes such as restructuring, re-engineering, TQM adoption or new strategy implementation. The survey elicited responses on the extent and content of literal and metaphorical communications echoed by the leaders/managers during the change episode, and whether these discourses had the transforming effect on the organization in terms of resolving conflicts, overcoming resistance to change or implementing a new strategy.

With the content analysis of narratives containing metaphors, axioms and stories reported by the respondents, we unravel the underlying clusters of organizational and socio-cognitive dimensions associated with organizational transformation and demonstrate how transformation is manifested through considerate communication of positive words.

To read the full article:

One of the central tenets of management and strategy is to increase firm profitability and in turn enhance share-holders wealth. This is what we have learned and been instructing to the would-be managers in business schools across the world. The world of management in terms of research, education and practice revolve around seeking, disseminating, and practicing best methods of managing manpower, raw material, suppliers, resources, capital, knowledge and technology to increase their productivity and in-turn enhance overall returns to invested capital and profits to shareholders.

Despite the achievement of remarkable sophistication in practice through several decades of research and dissemination of management techniques, businesses and industries one after other, however, are displaying increasing disconnect between the management/organizational antecedents and performance outcomes in terms of profitability - return on assets, return on sales, return on invested capital, and return on equity (ROE). Speaking of pragmatism, established management thumb-rules and practices are having lesser impact on firm performance and speaking academically the validity of management constructs and theories is becoming questionable.

Right from the days of industrial revolution, no stone left unturned by management scholars in search of sources for greater profits. You name it: scientific management of men, incentive designs, human relations and motivation techniques, training and specialization, CEO/Top management team compensation (stock options), organizational designs, TQM, maneuvering industry structure and competition, raising barriers to entry, innovation, competence building, mass production-now-mass customization, dynamic capability, and speed so on.

While there is no doubt management education have added tremendous value to the world of practitioners enhancing the quality of products, employee productivity, consumer surplus, and more importantly shareholder returns over the span of 5 decades from 1950s to 1990s. However, in recent times, the validity of theoretical connections between the management practices and intended performance has become ambiguous.

The organizational population appears to be facing a new state of demand, cost, competition and profit conditions, but their governance and strategies don't seem to reflect a good adaptation to these new conditions. The traditional industries like steel, automobiles, and industrial goods manufacturing that have seen the full life cycle of growth, maturity, and shakeout in the past 100 years are experiencing slow growth despite increases in population and global reach. The new age businesses such as computers, software, and pharma on the other hand, although realizing high growth due to globalization, automation, low-cost and outsourced production methods, the profitability and returns to invested capital are showing chaotic patterns and seem to be on a slow decline in recent time. And interestingly, the profitability performance of the Fortune 1000 firms – the wealthiest in terms of sales, assets and profits don’t seem to be stable, and their wealth creation does not correspond with their size.

Since the performance vary with respect to industry, we tested the relationship between performance and firm size in each industry.

In many industries, in addition to firm size and age, the Price-Earning Ratio (P/E) is negatively associated with performance ratios. This finding supports the argument that governance in many firms seem to be short-term focused giving more attention to the market value of the firm rather than intrinsic performance measures such as ROIC, ROA or ROE. On the other hand - one can speculate - market is not efficiently making investment allocation either. Please see the tables for financial performance in Banking, Electronics & Electrical manufacturing, and Software Companies over two decades (as test cases).

"It is apparent that for any firm these ratios will not be increasing or decreasing continually in one direction, nor they remain at the same level. They tend to fluctuate year to year, However, cumulative firm averages need to stay at a healthy level".

As a case in point, 2008 financial crisis experienced by entire global economy and particularly construction, real estate, steel, automobiles and manufacturing may be a culmination of this trend. The crisis experienced by GM, CITI Group, Lehman Brothers, AIG can be considered the tip of the iceberg. Not surprisingly, small cap and medium cap firms (Firms with less than $10 billion in market capitalization) seemed to have withered the storm and have performed relatively better than large cap firms.

Several factors can be juxtaposed as rationale for the trend which is posing challenges to business academe and the profession of management. Following are some rationale:

1) Global competition: Rise of competition among companies from leading economies as well as those from emerging economies.

2) Volatile industry life cycles, Shortened product life cycles, and disruptive new technologies reducing product life span.

3) Volatile financial markets and currency markets with unquenchable thirst for higher profits in the shortest time-frame forcing firms to seek quick short term gains rather than long-term sustainability.

4) Rise of bureaucratic complexity from both within and without for large corporations resulting in reduced effectiveness of business strategies and organization improvement methods.

5) Dynamic border-less markets that seem to be always looking for something new, and their insatiable quest for high quality and variety.

6) Possibly, industry environment and organizational climate across sectors have become entropic causing randomness, volatility, and in turn displaying disconnect between practice and performance. We will discuss a set of factors that have resulted in entropy and atrophy both within and without the industrial corporations in another section.

7) Markets, especially financial markets have reached a threshold of inefficiency due to the rise of untenable demand for abnormal returns in shorter terms and improper resource allocations fashioned by speculations and inducements; on the other hand, firm governance have become short sighted trying to meet the untenable market demands. Take for example, the role of hedge funds impact on the firm governance. We will discuss a set of conditions that have exacerbated the market inefficiency, and caused harm to firm governance and national economies in another section of this article.

8) Corruption and capricious practices that afflict the corporate boards and political layers across nations. This is altogether a different topic deserving a separate chapter.

9) Rise of agency costs and increased mistrust between board and stakeholders.

10) Cost of regulatory compliance and increased scrutiny from activist groups.

"In addition to industry life cycle, economic, technology, and national contexts, some of the very factors what academicians have identified as the source of profits maximization - such as economies of scale, size advantage, consolidation, financial engineering, and mergers or acquisitions – might have contributed to the ephemeral nature of profits and thus have triggered a crisis for management and strategy".

When we talk ‘Strategy’ in business, our conversations readily gravitate toward market-equity. Then, we try to trace the forces that assist or jeopardize the market-value. Quite logically, we are concerned about ‘competition’, ‘costs’ and ‘profits’ mostly harnessing the rational side of our brain seeking utilitarian or materialistic gains. Naturally, we muse over ‘outsmarting rivals’, ‘winning market share’, ‘maximizing profits’ and ‘minimizing costs’ or trade-off between costs and returns.

Yet rarely does it occur, strategy is all about securing ‘Trust-Equity’. We heard about Brand-Equity. What is trust-equity? Is it an ‘asset’ that one can buy and sell in the market? Can money acquire that? Would market-equity complement trust-equity? The answer to these questions depends on what the organization is trying to accomplish with the resources what it carries? Trust-Equity of an organization is based on its trustworthiness which can be explained as an agglomeration of its perceived integrity and competence, and the extent it is willing to share resources and governance among its stake-holders.Whether a business entity or an institution of economic and cultural significance, trust-equity is the foundation for its presence now and will be the pillars of its future.

"An Organization's Trust-Equity grows, when it demonstrates trustworthiness through resource commitment, integrity, benevolence, and competence to critical stake-holders through its products, services and shared-governance".

“A firm is said to have high (or low) Trust-equity, when its stakeholders value its reputation or status more (or less) based on the extent of its trustworthiness”.

From a shareholders perspective, market-equity is vital. No question on that. However, steering the entire organization toward the market-equity target is an invitation for trouble. While market-equity will mostly sail along the trust-equity, nevertheless, the loss of trust-equity will readily cause the market-equity to nose dive. Studies demonstrate that 'trust', rather 'lack of trust' can cost billions. It has been estimated that the social trust – a product of trustworthiness of economic institutions and businesses - can impact as much as 0.50% (half-a-percentage) of yearly economic growth in many nations.

Due to loss of trust-equity, market values of many firms have undergone permanent erosion to the tune of several hundred billions. Take for instance, the value of BP Oil Corporation and its returns to equity before and after the infamous oil spill. Despite its steady sales revenue, profit and dividend performance, BP’s stock has yielded much lower returns compared to its competitors. Primarily because of the ensuing settlements, cost of damages, penalties and impending law suits and due to erosion of trust, a large number of shareholders have fled.

It is understandable that accidents do happen and that they cannot be completely avoidable in certain high risk heavy industries. More than the oil rig explosion accident, the exposed cause of neglect and safety procedure violations cost the reputation of BP heavily and resulted in law suits and hefty penalties. What were the blind spots that resulted in strategic blunders at BP.

According to the commission that did investigate the causes of the BP oil-rig explosion, “The loss of life at the Macondo site on April 20, 2010, and the subsequent pollution of the Gulf of Mexico through the summer of 2010 were the result of poor risk management, last-minute changes to plans, failure to observe and respond to critical indicators, inadequate well control response and insufficient emergency bridge response training by companies and individuals responsible for drilling at the Macondo well and for the operation of the Deepwater Horizon,”

The commission's study goes further than previous reports, citing several violations of federal regulations as factors. Among them were violations of laws that required BP and its contractors to operate in a safe manner, to take measures to contain oil and gas for the protection of health and the environment, to conduct reliable tests of well pressures and to notify federal regulators of changes in drilling plans (New york Times, September 14, 2011). (Please see the chart below comparing stock performance of oil companies in comparison with BP; BP’s stock deviating drastically downward from the rest of the industry.

How does a company build its trust-equity?

Organizations seeking trust-equity will give the whole emphasis on winning the mind, enthralling the heart and securing a lasting legacy - the most valuable thing to do, although most difficult thing to accomplish, because money or material wealth alone cannot buy these results.

While material wealth can be of great help in winning a legacy, however, it has been time and time again established that compromising ethical norms, violating social promises, damaging environmental health without bearing the cost of replenishment or repair, not giving-back to those who initially offered wherewithal or disrespecting the hard-work will not help sustain the market value in the long-term, let alone reputation or trust-equity. Business in general suffers from a social perception of ‘caveat emptor or buyer beware’ with the reinforced notion of 'self-interest seeking guile' as the basis for success in the free market.

A firm can achieve high trust-equity, if it can effectively demonstrate that its actions are non-opportunistic and trustworthy, and that it has competence to deliver what it has promised without failing, and that it will work toward benefiting the humanity in general. A trustworthy firm, rather will demonstrate the motto of "Veritas-Uirtus-Sinceritas" that is, truth, excellence and honesty.

In this light, Quality and safety are the most critical starting points. Firms that have built a reputation for high quality products enjoy advantages in terms of high sales growth and market share, high customer satisfaction and in turn gain reputation for technology and industry leadership. The story of steady erosion of market share and serious financial crisis experienced by U.S. automakers for past 3 decades is a good illustration of how reputation for quality (or lack of it) can impact the businesses positively or adversely from all sides. Troubles due to quality can range from product returns and recalls, damages and lawsuits demanding compensation and penalties, loss of market share, low employee morale, and loss of investor confidence. On the other hand, foreign auto makers, Toyota, Hyundai-Kia, and Nissan have gained substantial inroads into all US auto market segments and have established their global leadership in automobile product design and production technology.

Like Quality, safety records of corporations have deeper reach across the society in establishing a positive reputation and gaining societal recognition for "Great Corporate Citizenship". Industrial accidents, consumer/product safety failures, and reports of consumer injuries have serious consequences for the companies future market growth and financial performance. Creating a safe work environment and delivering dependable and safe products helps develop a harmonious rapport with stakeholders.

Shared governance with the inclusion of significant stakeholder groups such as customers, employees, creditors, shareholders and communities in company decision making for enhancing transparency and power-sharing is a critical feature of trustworthy companies. Although right to information acts, transparency regulations, and the free access to information available through internet have reduced the bureaucratic distance between people and the business institutions, however, the level of distrust between corporate bodies and the citizens has been steadily increasing. Now, the public trust over financial institutions and business systems is at an all time low.

Enhancing trustworthiness through shared governance and transparency at every level within the corporate organizations is a primary challenge facing business leaders now. This is a real solution to reduce information asymmetry and the bias so as to avoid friction and conflicts with media, government, regulators and stakeholders. Shared governance and transparency can be augmented by increased inclusiveness and representativeness of diverse stakeholders in decision making bodies/boards.

In addition to demonstrating shared governance, genuinely working toward stake-holder engagement, empowerment and caring will tremendously help build a company's trust-worthiness and in turn trust-equity. Companies that have secured strong social trust had worked beyond economic, competition or profit motives and tried to secure ‘trustful’ relationship with their stakeholders. Trust-equity of a company strengthens the internal character of organization and its external market status.

According to Civic 50, a community engagement initiative between Points of light and Bloomberg LP honoring the 50 most community-minded socially responsible companies in the United States each year, community involvement of corporations boosted their employees morale and engagement, aligned their purpose with profit, and enhanced their reputation and status among stakeholders. Civic 50 reports that there are four ways companies contribute to community engagement and stakeholder empowerment.

First, Investment, How extensively and strategically the company applies its resources to community engagement, including employee time and skills, cash, in-kind giving and leadership. Civic 50 companies – including Caesars Entertainment, Comcast, Hasbro, Hewlett-Packard (HP), PwC, Toyota Financial Services and UnitedHealth Group – find that employees who participate in community engagement initiatives score higher on morale, engagement, pride and/or productivity than employees who don’t. HP, for example, has data showing that employees who participate in community engagement efforts have 13% higher morale than those who don’t participate.

Second, Integration: How a company’s community engagement program supports business interests and integrates into business functions, or how it “does well by doing good.” More than 80% of Civic 50 companies connect their community engagement work to key business functions, including marketing/PR, sales, skill-development, recruiting or diversity and inclusion.

Third, Institutionalization: How the company supports community engagement through its institutional policies, systems, and incentives. 78% of Civic 50 companies have a formal structure to seek input from U.S. community leaders, such as a survey, focus group or community meeting. 50% of Civic 50 companies include community engagement as a formal written component of employees’ performance reviews.

Impact: How a company performs in comparison to other firms in terms of the social and business impact of its community engagement program. Increasingly, companies are measuring what matters as a result of their corporate philanthropy and civic engagement, focusing their efforts on measuring outcome goals over activity or outputs. For example, 64% of Civic 50 companies track outcome measures for their community grants, and 36% track outcome measures for volunteering.

Following are examples of how companies have earned a good reputation and social trust through stakeholders engagement, empowerment and caring.

• Western Union’s employee performance objectives – which are the basis for professional evaluations and bonuses – include a “Social Ventures” objective, which reinforces each employee’s commitment to using business assets to deliver business and social results. Such objectives can range from developing a new product that benefits a societal cause, to sourcing from socially responsible vendors to incorporating community commitment information into an external-facing sales deck.

• As part of its Code-Green program – the company’s environmental sustainability strategy – Caesars Entertainment collects data on a monthly basis from each business unit on how employees are implementing and integrating Code-Green initiatives into their work. With aggressive goals set for energy, water, and waste, it is important that every employee makes an impact. With this data, managers are aware of the leaders and laggards and can drive action and empower employees by prioritizing actions. The culture’s friendly competitive spirit encourages managers to challenge each other to do better – and create an environment where every employee is able to make a difference.

It is increasingly becoming vital for companies to share responsibilities with governments in addressing citizens political voice, public health, road safety, and quality of life. Companies expanding their societal role are rewarded with brand recognition, market appreciation and sound financial returns.

As per Civic 50 report, nearly 80% of Civic 50 companies have taken a national leadership position on a social issue like ending hunger, texting and driving and strengthening STEM education. Many companies invest in issues related to their own operations and are, therefore, often in a unique position to contribute lasting solutions.

• Through the provision of healthcare solutions to the large and richly diverse U.S. population, Aetna has significant experience with the effects of inequality in health care. Aetna has taken a leadership role in addressing these inequalities. In 2002, for example, Aetna developed policy on genetic testing and nondiscrimination that became the model for the industry. In 2008, it worked with legislators to help pass a more meaningful mental-health parity law that allows for better coordination of coverage for physical and mental health care services. Aetna was an active voice throughout the health care reform debate of 2009 and 2010. Indeed, the efforts of Mark T. Bertolini, Chairman, Chief Executive Officer and President of Aetna, have earned him recognition as one of the 10 most influential leaders in the industry by ModernHealthcare.com.

More than 80% of Civic 50 companies connect their community engagement work to key business functions, including marketing/PR, sales, skill-development, recruiting or diversity and inclusion. General Mills’ Box Tops program empowers consumers to help their local schools purchase computers, books, playground equipment and other items of need. Parents and students earn cash for their schools by clipping box tops from their Cheerios, Betty Crocker or other General Mills products. Two-hundred forty General Mills brands have helped 90,000 schools earn more than $600 million since the program started in 1996.

• ConAgra Food’s Child Hunger Ends Here campaign increases consumer awareness of child hunger and provides an easy way for them to help. Nineteen ConAgra Foods brands, including Blue Bonnet and Hunt’s, featured the Child Hunger Ends Here pushpin on packaging. Shoppers could enter the provided code at ChildHungerEndsHere.com to trigger one meal donation to Feeding America.

Harvard Business School research found that companies with more community engagement practices significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.

• Academic research has shown that, for firms in industries that are highly sensitive to consumer perception, community engagement is associated with subsequent sales growth.

• Market research has found that 59% of Americans are more likely to buy a product associated with a corporate-nonprofit partnership.

• Market research also reveals that 56% of Americans will travel an extra ten minutes out of their way to purchase a product that supports a cause they care about and that 71% are willing to pay more.

References

1Kropp, Brian. “Maximizing the Effectiveness of Corporate Volunteer Programs” (webinar). CEB. July, 2014.

2Korschun, Daniel, C.B. Bhattacharya, and Scott D. Swain. “Corporate Social Responsibility, Customer Orientation, and the Job Performance of Frontline Employees,” Journal of Marketing, May, 2014.

3 Deloitte, Deloitte Volunteer IMPACT Survey, 2011.

4 Deloitte, Deloitte Volunteer IMPACT Survey, 2011.

5 Eccles, Robert G., Ioannis Ioannou and George Serafeim. “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance." Harvard Business School Working Paper, 2011.

7 Baruch, Lev, Christine Petrovitis and Suresh Radhakrishnan. "Is doing good good for you? How corporate charitable contributions enhance revenue growth" in Strategic Management Journal, Sept., 2009.

8 Cone, Inc. "More than three-quarters of Americans say a nonprofit-corporate partnership makes a cause stand out" in Trend Tracker, March, 2010.

9 Do Well Do Good. The Do Well Do Good Second Annual Public Opinion Survey Report on Cause Marketing, 2012.

10. M. Senthil Kumar., 1992. Toward a Social Corporate Policy, Industrial Engineering Journal of India 21 (9), 9-12

11. Muthusamy, Senthil Kumar & MA White. 2005. Learning & Knowledge Transfer in Strategic Alliances: A Social Exchange View, Organization Studies, Vol. 26 (3): 415-441.

Where does your Firm stand in comparison with U.S. public firms?

How does your firm's history of yearly financial and performance ratios look like?

Where these numbers are heading for your firm?

How do we explain the declining trend in terms of Profitability Ratios?

Why there is a disconnect between Firms Assets, Sales Revenue, Market Capitalization and Profits?

Above graphs based on the data of U.S. Public companies from 1970 to 2013. From 1142 firms in 1971 to 3400 firms in 2013 were examined and the averages for each financial year plotted.

Can you speculate on the reasons for this trend?

Several factors can be juxtaposed as rationale for the trend.

1) Global competition!

2) Volatile industry life cycles! Disruptive new technologies!

3) Volatile financial markets! Short-termism?

4) Rise of bureaucratic complexity!

5) Dynamic markets looking for something new always!

6) Has the industry environment become entropic causing randomness and volatility?

How is your company doing? How are you weathering the disruptive industry storms? Is your firm geared for the change? New Strategies?

Your Opinions are Welcome!

Strategy has been extensively addressed as unique positioning (cost leadership, differentiation, segment focused), gaining value addition through size and scope choices (diversification, integration) or process (operational effectiveness: TQM, building competence/capabilities). However in recent times, in many industries, the product quality, production capabilities, brand value, and product prices have leveled off among competitors, and almost all competitors and their offerings are at the value frontier or even beyond. Such a state of competitive parity has reduced the uniqueness among product or service offerings often resulting in head-on-collision among competitors. While incumbent firms are challenged by the complexities arising out of their big size and the market dynamism, the new entrants are finding the industry barriers almost insurmountable.

New business landscapes demand that competitors must try innovation across the value chain, or combine the production, marketing, service and distribution activities in idiosyncratic and agile configurations of modular units capable of delivering multi-pronged business strategies. Loss of GE's dominance and market leadership in home-appliances business and its eventual divestment from that industry is a case in point to think about the competitive challenges within a leveled-off-field packed with equi-capable rivals. Whirlpool, AB Electrolux, Osram Licht AG, Bosch & Siemens, Sears, Godrej, Haier, Samsung and LG all have become equally formidable players in this industry catering range of products across the entire value frontier. While companies that could not create cross-industry innovations are losing their turf to price wars, those capable of accomplishing radical innovations in product design combining smart phone technologies (wifi, touchscreen), computers and electronics into appliances, such as Samsung and LG are making big strides in this industry.

In light of the new competitive challenges and dynamic market landscape, Shoaling strategy offers a new synthesis of state-of-art management practices advancing new perspectives on how a firm's value chain can be strategically configured to stretch the resources and build creative formations to grow the business and counter competition with multi-pronged strategies.

"Shoaling or School of Fish Strategy is a strategic design or configuration of the organization's value chain and assets as smaller, dis-aggregated and dispersed units through modularity, franchising, alliances, teams, and ownership-sharing to create competitive formations and reach markets far and wide". "Shoaling Strategy fosters sustainable growth, learning economies, innovation, agility and speed while reducing cost and investment risk".

Main features of Shoaling strategy include:

"Shoaling strategy can be implemented through different mechanisms at different levels within a company depending on the corporate and strategic objectives. Shoaling design can be practiced as corporate governance, organization structure, at product or business unit level, for production organization or alliance and franchise management, or as a collection of brands, units or companies."

Nucor, one of the largest US steel makers, runs approximately 200 operating facilities throughout North America. Most of these facilities are located in rural areas, capitalizing on the high work ethic of the residents there. A multi-billion-dollar firm, yet with 95 people working at its corporate headquarters and surprisingly few layers of management from the CEO to the front-line worker consists of 90 businesses that operate independently, but compete collectively. It resembles a family of small firms as compared to a large corporation. Its managers have a high level of discretion to run its facilities and meet the needs of their customers.

Google, Alcoa, and HP are setting a new trend in splitting their structure and corporate governance as a shoal of small companies. Although 'shoaling form' resembles traditional SBUs, the strategic intent, function and process within 'shoaling or school of fish strategy form' are quite different from that of SBUs." Google, for instance has restructured the entire corporation into a collection of companies under the holding company called Alphabet. Alphabet includes the following entities: A smaller company called Google that includes the company's core businesses and products "search, ads, maps, apps, YouTube and Android and the related technical infrastructure."Other businesses, "such as Calico, Nest, and Fiber, as well as its investing arms, such as Google Ventures and Google Capital, and incubator projects, such as Google X, will be managed separately from the Google business."

The organizational structure of Kyocera Ceramics, Japan offers an interesting example of how a large global corporation of the size of 70,000 people with $15 billion revenue can be designed as a collection of small, customer focused business units. Kyocera’s organization structure is known as Amoeba management system or Inamori way developed by its founder Kazuo Inamori, has more than 3000 amoebas (small units), with each unit empowered to operate independently at the same time encouraged to collaborate with other amoebas to achieve synergy and profitable growth. Kyocera believes that this style of management spurs market agility, enhances customer service and entrepreneurial drive, and has helped the company to effectively manage dynamic technology environments.

Dynamic business environments, diminishing returns to assets, and high risk contexts are forcing firms to reconfigure their strategy, value chain and organization. Shoaling or school of fish formation offers a new framework to redesign the corporations to meet the challenges of the new millennium.

From the investment angle, If a large public firm is sliced into smaller firms with many listings as independent units, however the units brought under unifying brand or inter-locking board of directors or another holding company for the purpose of control and synergy, this will help realize the benefits of both integration and diversification on the one hand, and can yield higher returns to individual stocks of the sliced units on the other hand. Indirectly, it is equivalent to issuing many stocks (even new IPOs) for one large well established public firm. Of course, to get the maximum benefits of dis-aggregation and shoaling strategy, individual entities and their stocks still need to be identified with common brand or a coordinating group. Given the high volume of capital that flows into stock market expecting quicker returns, it won't be a surprise if each of the smaller unit stock will gain much higher returns than they would under one larger firm stock when they are brought under common brand or board or holding company.

For further reading and case studies on school of fish or shoaling strategy, please visit www.schooloffishstrategy.com ; If you like the article, please share it with your network.

We have heard a lot about Mergers, and their triumphs and travails. For every successful merger, there are two failures. While immediate gains of mergers are reported and celebrated, the long-term quagmires and value erosion caused by mergers are scantly examined. For four decades, corporate world witnessed a big spell of merger mania with the claims of quick growth, consolidation, scale economy, and raising industry barriers. CEOs gained their eminence or lost their reputation based on their mergers gamble.

Academic research on its part mined the mergers data into large expanse of knowledge juxtaposing the contexts and mediating factors beneath the victories and vicissitudes of mergers. Overall, the mergers have not worked-out well for most firms. Certainly, shareholders have lost their bets in the long-term in most cases. Expected yield did not occur in many mergers and research data attest to these facts for sure.

As a redaction and new strategy, however, now many large companies are dis-aggregating their assets before pursuing any new merger decision. Slicing the firm as smaller independent entities or organizing the corporation as shoaling formation is creating more value for shareholders. Given the high volume of capital that flows into stock market expecting quicker returns, it won't be a surprise if each of the smaller unit stock will gain much higher returns than they would under one larger firm stock provided they are brought under common brand or board or holding company. Some large firms have already moved to take advantage of this trend by creating more investment opportunities by splitting their firm. Following HP, Alocoa, Google, now another Fortune 500 company, Danaher Corporation split into two corporations with interlocking board structures.

D.C.-based Danaher Corp., a conglomerate billed as “a global science and technology innovator” that earned more than $20 billion in revenue in 2015, has begun the process to splitting into two.According to The Washington Post, the company began formalizing the split last week, with Danaher shareholders receiving one share of the spinoff, named Fortive Corp., for every two shares of Danaher. Danaher (NYSE: DHR) owns 40 businesses around the world and has long kept a low profile in the region. It was profiled last week in the Washington Business Journal as one of the region’s largest and most inconspicuous companies. Analysts said the split will likely allow the two companies to be more nimble in their growth strategies, according to the report.

With the split, Danaher will keep its life sciences, diagnostics, dental, water quality and product identification segments, while Fortive will take on test and measurement, industrial technologies and petroleum segments. After the split, Danaher will become New Danaher.

Fortive will be headquartered in Everett, Washington. It will begin trading July 5 on the New York Stock Exchange under the symbol FTV, according to The Washington Post.

Danaher was conceived in 1984 by brothers Steven and Mitchell Rales after a Montana fishing trip. While on a tributary of the south fork of the Flat Head River, a stream that was called the Danaher, the brothers envisioned a manufacturing company modeled on the Japanese concept of kaizen, which means “continuous improvement.” They later charted their plan from a business that already existed, transforming a real estate investment trust into a conglomerate that would acquire companies with “high performance potential” that needed a boost.

Danaher restructured in 1989, and made its first $1 billion in revenue in 1995. Thomas Joyce is the current company president and CEO. It clocked in at No. 133 on the 2016 Fortune 500 list. Both Rales brothers will own about 6 percent of Fortive after the split, according to the Post. Steven Rales, Danaher’s chairman, will be a director at Fortive. Mitchell Rales, chairman of Danaher’s executive committee, will be a board member with Fortive. Following chart depicts the gains to shareholders after the split.

"Times have changed!, Scale economy is waning! Knowledge-era has come to stay! It has become inevitable for companies to continually adapt to dynamic markets and technologies!"

In this new business context, small and medium size companies need not fear the market share advantages of large firms, if they can configure their strategy and value-chain organization in modular arrays. Whereas large companies cannot be complacent either about their size and scale advantages, because they are compelled to operate in nimble ways more than ever. As we are witnessing in recent restructuring of companies like GE, HP, Intel, and Google, firms are finding strength in dis-aggregation and reducing asset concentration.

A comparison of scale economy sharks and school of fish strategy is given in the following table. (Reference: www.schooloffishstrategy.com)

Shoaling strategy is a new framework for building smarter enterprises that are nimble, swift and that can challenge the large rivals. A “Shoaling Strategy” - also referred to as disaggregation here – that will enable firms to operate in a synchronized manner like the school of fish to concurrently achieve scale economies as well as market responsiveness is proposed in this article. Shoaling strategy, on the one hand reduces the opportunity cost of not exploiting emerging market opportunities, and on the other reduces investment risk that accrues due to large-scale integration. There is a traditional saying in business that “Big Fish Eats Small Fish” which suggests that a firm’s large scale will ensure higher returns and competitive advantage over rivals. A shoaling strategy, on the contrary, challenges this notion with a contention that “Quick Fish - albeit smaller - can eat Large Fish”. Main premise of the argument is that a shoaling strategy (school of fish) to organize value chain will be most effective way to accomplish competitive advantage without large scale investment commitment.

"Key Points:

Shoaling can be considered a unique business strategy, because it enables a large firm to operate with the nimbleness of a smaller firm or it can allow small firms to effectively rally their resources against large rivals.

Shoaling strategy, on the one hand reduces the opportunity cost of not exploiting emerging market opportunities, and on the other reduces investment risk that accrues due to large-scale integration.

Shoaling form enables multi-pronged competitive strategies permitting a firm to develop unique or optimal strategy for each rival it encounters in the respective market or region.

Shoaling among small firms as a constellation will enable them to raise finance in the stock market and get listed as a portfolio of competences. This strategy will decrease organizational inertia and offer the resource heterogeneity to sustain innovations.

Following data are self-explanatory evidence for the failures of large corporations in knowledge economy. A comparison of beer firms pursuing shoaling vs integration strategy is provided. Also comparison of small cap, mid cap and large cap stocks is provided in support of how size dis-aggregation will be more effective than scale integration.

Please visit www.schooloffishstrategy.com for research articles and case studies on HP, Google, Nucor, ALCOA, and Kyocera Ceramics.

Reference: Senthil Kumar & Parshotam Dass. 2014. Toward a smarter enterprise: Disaggregation and dispersion for innovation and excellence. Competitiveness Review Vol. 24 No. 3, 2014: pages 211-239.

Growth is a central and significant process for any organism or organization. Growth is attributed with so many adverbs and adjectives. Growth Rate, Growth Pangs, Growth Dependence, Growth Crisis, Growth Plateau..and so on...Growth comes in many forms as well; Gradual, Exponential, Leaps and Bounds, Organic, Vertical, Horizontal, Out of Control, and so on..Of course, there is physical growth, spiritual growth, growing taller, growing wider, growing inclusive, growing for all, and so on...

Growth is a necessity in many cases. Growth is shunned by some. Growth is a challenge and predicament for several. One of the problems is that growth often does not go along with development. Because growth and development are two completely different phenomena. Growth and development either can go hand in hand or just go diametrically opposite.

A business in the interest of making profits: whether for getting returns to investors, or maximizing shareholders wealth, or for basic sustenance, needs to grow in terms of size, productivity, profitability, market share, and for power, legitimacy and reach and so on...Organizational growth can either lead to wealth, happiness, joy of achievement and cooperation; or it can result in entropy, enmity, ennui, atrophy, and disorder and chaos. Both are possible outcomes of growth.

Historically, politically or economically speaking, growth is time dependent, path dependent, or space or resource dependent. Time dependent means growth follows a pattern of time periods. Any organism or organization can grow within the time bounds or periods only. Of course, - all along the history, genetic evolution, or economic or political changes - breaches have occurred throughout history; like sudden breaks or lapses in the time and growth pattern. Like for example - punctuated equilibrium or political revolution or technological innovation - resulting in a new pattern of growth.

Growth is often path dependent. The future course of change and evolution is dependent on the path traveled. One cannot deviate from the trodden path at ease. Often observed 'as fate ordains'. None of the living organism or species can escape the genetic structure that has been given to it by its ancestors. To our knowledge, mutation or observable evolution has happened either by accidental/volitional cross pollination, breeding, or due to aberrations such as diseases or congenital disorders, or artificial experiments. What determine the physical and cultural traits of Eskimos, for that matter most tribal populations? and will they exhibit different patterns of growth and change in economic or political organization? Yes, indeed. In the technology world, there is an interesting story of how width of horse's back determined the railway gauges, carriages, and in turn the size of NASA rocket boosters placed on the railways 150 years later.

Obviously, growth is also space and resource dependent. Within the planet, capabilities of organisms are bound by space and resource munificence. More space and resource munificence, more growth easy. Like, many areas of continental United States prior to 1900 were uninhabited open space. Any sooner can run as far as he can and stake claims of 1000s of acres. We can see how modern United States or Canada could build million miles of highways for past 10 decades without much legal challenges or costs, Which is almost impossible in other countries.

As a living organism, an individual's growth is determined both by the self and environment. Human life is shaped both by freewill, and time, path, space and resource constraints. Can humans defy the dependence and shape their own future the way they wish? May be to some extent in some areas. But for most part, we are time, path, space and resource dependent. So while planning and measuring growth, we have to be systemic, comprehensive and balanced.

All said and done, individual growth has to be steady, balanced, time bound, right proportions, and healthy. In this light, can we shape our own future? Can modern Science, Economics, and Politics will pave the way for such a future. If human growth is mishandled for any reason, what we witness would be degeneration and disorientation for sure. What ever growth brings, we have to achieve both standard of living and quality of life for here and now, as well as into the future ...

Same thing can be said about organizations - whether profit-making, non-profit, government, or educational - the notion of growth requires a profound evaluation. However, in the organizational world, often growth can be triggered, expedited or even ended without much consequence. Growth in business is sought in many ways: new investments, mergers, takeovers, chaining, acquisitions, shoaling and alliances. If the growth is not managed correctly, firms appear to be losing their center of gravity, and experience crisis after crisis. Growth has to be meticulously planned, managed and controlled.

Organizations can grow big in terms of assets, revenues, profits, or geographical expansion, however, they need to sustain their balance, resolve inherent contradictions, seek cooperation, and be sustainable and harmonious with environment and stakeholders. Not surprisingly, recent evidence suggests that growth of corporations have reached a point of entropy and atrophy. Large firms are becoming unsustainable and out of control. Growth variables: assets, employees, revenue, profits, and market capitalization are not strongly associated with each other for large organizations. Organizational growth also needs to be evaluated on a multi-faceted criteria of its potential to enhance synergy, quality of work life, 'disentropic' resources, societal causes, and sustainability.

While seeking growth organizations should not insist too high a uniformity and conformity to enhance scale advantages. Homogeneity of organizations can result in entropy, attrition, and turf-wars within and without. Growth through diversity and resource heterogeneity has inherent advantages of balanced and harmonious growth. Resource heterogeneity through shoaling and alliance constellations, rather than complete merger, can lead to dis-entropy, innovation and continuous growth. There is an Indian mythology "Bakasura Demon"; Bakasura having grown too big, could not contain his appetite, and eventually turned into cannibalistic creature and ate his own limbs. And we cannot afford to eat our own limbs in search of growth, and should stop eating our own stomach.

Finally, Spiritual, Sustainable and Balanced Growth for One and All matters the most..Are we learning to grow better?

Best regards, Senthil Kumar, PhD.

Firm Profitability - Does it really matter for shareholder return or ROE (return on equity)?

Firm Profitability - Does it really matter for shareholder return or ROE (return on equity)? Does this question sound oxymoron or antithetic? Not really. On the contrary, evidence has surfaced that Returns on equity - the shareholders equity in balance sheet - is not really directly tied to firm's profits, assets or net income. And a higher stock gains can be achieved, when stock investors are smarter and faster to execute their stock-buy & sell at the right time and speed. Notwithstanding what the conventional wisdom is, the disconnect between profitability and long-term ROE is becoming the hard truth in a modern stock market, while smart investors can achieve better return through active trading.

Then, where does the gain come from for an investor? Instead of arriving at the value of a stock based on actual or potential profits, now it appears more and more the stock prices are arrived purely on "speculative-ability"...there lies the jackpot; and this is really not 'profit' 'per se', but a bonanza for creating the capacity for a stock to make marginal gains on a hour-by-hour or day-by-day basis rather than waiting for dividends and stock-value appreciation of the assets. In other words, there is nothing like pay back period or long-term ROE in stock investments anymore..It is only how much one would gain marginally in pay back minutes or days to maximize the wealth. Actually, it appears continual short term trading would yield more returns than keeping the stock to realize the rents from the stock investments. Before the recent stock market crash in China in 2015, it was reported that short-term traders made 7 times more returns than long-term investors.

Then, from the management point of view, the profit advantage for shareholders does not emerge out of management efficiency or productivity or operating margins or profitability, rather arise out of the capacity of the ticker to yield marginal jumps on any given time scale. In this light, What will be the most valued competence of the firm or management to fetch higher returns to shareholders.. especially for those investors who are ever-ready to roll the dice on a short-term basis rather than willing to wait for the long-term results? that will be, the ability to sustain marginality or taking advantage of volatility. A deeper analysis reveals that markets are now displaying a pattern of volatility appeared to be a systemic pattern in marginal ebbs and flows of stock trades and their respective prices.

These observations substantiate the fact that by and large stock prices are not arrived on the basis of the random aggregation of judicious asset pricing by a large body of shareholders (known as random walk model). This not only discredits the market efficiency (MEH-Market Efficiency Hypothesis) argument, but also reinforces the notion of systemic variance in the movement of stock prices - which may relate to both marginality and volatility. Now, the corporate governance is naturally inclined toward seeking the triggering levers rather than seeking efficiency, innovation, profitability or real growth to fetch higher returns to shareholders.

That is, by promoting investment cues, how to take advantage of marginal ebbs and flows or volatile swings and mainly catering to the ever fleeting investors. But the long-term investors would not see much gain unless the stock delivers high dividends on a continual basis. The widening Price-Earning ratio of S&P 500 firms, which doubled from the 75 year average of 17 to 40+ in the last ten years.

Several factors can be said to provide the inducements for this trend...

1) Continually increasing investment flows (nearly 3 trillion dollar worth of new investment flows each year; and most of these are retirement savings of the middle class working population channeled through institutional investors). These money have nowhere-else to go ending in stocks inflating the stock prices and price-earning ratio.

2) Reduced number of investment choices; that is more and more investment flows to fewer and fewer firms. Due to consolidation, buyouts, mergers, failures, the number of public companies have declined from 8000+ in 1990s to 5000+ in 2015.

3) Large firms not able to generate and distribute the long-term returns in steady and stable ways.

4) No incentive for keeping the investment in the same firm for long-term.

5) Reduced connectivity between firms and original stock or equity-holders.

6) Imperfect market conditions: Information asymmetry, overload, and biases...

7) More importantly, the declining associations between firm size, asset size, and market capitalization for Fortune 1000 companies and more so for Fortune 100 companies (due to global competition, diminishing returns to scale and share value, unsustainable size and structure). Given that substantial amount of investments are tied to the Fortune 1000 firms, (about $45 Trillion) multi-trillion dollar investments at high risk.

Will this short-term buy-&-sell trend further increase the volatility? Should the long-term investors like retirement stocks and mutual funds also play the short-term trading game to maximize their returns? If long-term institutional investors too join short-term trading, won't it further exacerbate the volatility? Can there be any incentives designed (by regulations, corporations, dividends policy, tax policy) to reduce the volatility? Can the erosion and loss of value due to volatility be eliminated or reduced by designing some kind of systemic buy or sell schema (some thing like LIFO and FILO - Last in first out or first in last out in a gradual manner)? Often, we see regulators trying to shutdown the market to stop the melt-down. Rather there should be systemic methods designed to avoid the quick erosion of value - such as the mortgage crisis that eroded trillions of dollars of value triggering a global economic melt-down. These are the questions for the government, stock exchange regulators, and institutional investors - who carry the hard earned savings of the millions of working people.

Caveat: Of course, profitability matters. The objective of the article is to highlight the increasing disconnect between stock market reaction and how much profits a firm actually makes. When a firm can just meet the bare minimum profits and show however high growth, it is highly likely that stock markets will respond to it more favorably. On the other hand, when a firm keep accumulating assets without meeting the bottom-line, then it carries the risk of going down like Tyco along with then CEO Dennis Kozlowski. (https://en.wikipedia.org/wiki/Tyco_International).

However, whether in the presence or absence of anti-trust laws, right sizing / structuring of firm's assets is quite significant for achieving high growth. In this light, firms need to proactively slice their assets and operate like a school of fish rather than a large shark. Case studies on Nucor, HP, Google, and Samuel Adams are available in the website: www.schootegy.com)