thenewconstructs’s blog

“3M earnings helped by swine flu mask sales”

“Bottled water global sales to cross $85 billion by 2011”

The entire family had been looking forward to the Disney World experience, and we were all excited on the plane trip from India to Florida. My daughter Samvitha, who was 8 at that time, was especially eager. But almost as soon as we landed, she took ill. This was a few years ago, at the height of the SARS epidemic, and my wife and I were very concerned.

Our daughter was bedridden our entire week in Orlando. She suffered no lasting problems – beyond the disappointment of not getting to meet Mickey and Goofy and go on the many rides – but I often think about her illness today when I exit a plane with breathing difficulties or read about the threat of the H1N1 swine flu epidemic.

From the beginning of time, we humans have taken clean air and water for granted. No more, especially in densely populated areas such as the cities in India where movie theatres, shopping malls and schools have been closed to stop the spread of the flu. Whether in the enclosed space of an airplane or in a crowded market, we are right to worry about air quality. And water quality, too: just look at the increase in demand for bottled water all over the world in recent years.

These concerns over air and water – the most basic necessities of life – are leading us to think in new ways about what is valuable in our lives. Adam Smith talked about the paradox of value, also called the diamond-water paradox. He made a distinction between “value in use” and “value in exchange.”  The things that have the highest value in everyday use, such as water, often have relatively little value in the commercial marketplace. Conversely, things that have the highest value in exchange - such as diamonds - have little practical value in terms of use.

Over the last two centuries, the Industrial Age, with its focus on scale and efficiency, has centralized agriculture and farming, bringing prices of food down quite significantly. But this is not without its costs. According to Bill McKibben in “Deep Economy,” concentrated agriculture makes us sick on a fairly regular basis.

Seventy-six million Americans fall ill annually from food-borne illnesses, 300,000 are hospitalized and 5,000 die. For instance, the cheapest way to raise hogs is all in the same place; one worker can take care of tens of thousands of animals. But this concentrates their waste in one place. Instead of being useful fertilizer to spread on crop fields, that concentrated waste becomes a toxic threat – and increases the chances of swine flu.

While it is fortunate that countries like India do not have this level of concentrated farming, globalization makes up for it. We are affected by the H1N1 threat in the same way we have been affected by the sub-prime crisis and the financial meltdown.

It is time to step back and take stock. As we look at reinventing our fundamental constructs, our idea of economic value needs close inspection. Should we start valuing what’s really valuable to our lives on this planet rather than what just makes us feel good or look good?

Should our decisions on centralization and decentralization be driven by considerations of what drives true value, rather than just efficiency? How global is too global – what global governance mechanisms do we need when we deal with systemic and globally interrelated issues like pandemics, recession etc.? These are but a few questions that we will dialog on this site.

The New Constructs is an initiative to examine our beliefs and assumptions - about life and living - that we need to reinvent in order to create a more inclusive and sustainable world. It is an opportunity for each one of us to connect, collaborate and co-create the world that we will rebuild for posterity. Please feel free to comment. We look forward to your active participation. Join the discussion on Facebook. Follow us on Twitter.

“Success is a journey, not a destination.” - Ben Sweetland, author.

As humans, we have a need to be successful in our own eyes and in the eyes of society. Our definition of success – or more accurately, society’s definition of success – is what drives our behavior. If we need to change the way people think and act in the Connected Age, we need to redefine success.

Adam Smith, the father of modern economics, declared that if every individual operates out of his own self-interest, an ‘invisible hand’ will ensure the good of the society as a whole. This has been the fundamental premise of free markets and capitalism for over two centuries. The sheer simplicity of having one basic measure of success – money — has enticed mankind to focus on wealth creation and economic prosperity. Personal wealth, market capitalization and GDP have been the dominant measures of success driving individuals, corporations and governments.

On reflection, Adam Smith was only partially right. The persistent pursuit of self-interest has helped a billion people on this planet tremendously. However, it has also left a billion people in penury and the environment in distress. It has widened income disparities and left even the rich unfulfilled in many ways.

How many famous people are rich in money, but poor in terms of love, happiness and health? The disproportionate emphasis on material growth overshadows the basic human need for all-round development – physical, emotional, intellectual and spiritual. The focus on money makes people dull, unimaginative and boring.

We need to rethink financial wealth as the primary measure of success. How, then, do we measure success? In Emerson’s beautiful words “To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and to endure the betrayal of false friends; to appreciate beauty; to find the best in others; to leave the world a bit better, whether by a healthy child, a garden patch, or a redeemed social condition; to know that even one life has breathed easier because you lived; this is to have succeeded“.

To me success is about living life fully – exploring, experiencing and enjoying the possibilities – including the challenges – that life throws at you. It is about life-long learning with the curiosity of a child. It is about loving and caring for as large an extended family as your heart can encompass. It is about connecting and collaborating with people across the globe, sometimes remotely, to make a valuable contribution by leveraging each others’ innate talents.

Corporations need to rethink, too.  Our current paradigm assumes that corporations exist primarily to enhance shareholder value. Indeed every board is exhorted to represent shareholders by maximizing their returns. Executives are granted stock options to make sure they share the goal. Without a larger purpose and/or adequate controls, small wonder that the business world has been dominated by unbridled corporate greed, blind pursuit of growth at great risk to the enterprise, and the ensuing financial meltdown leading to the overnight demise of bastions of the corporate world. Shareholders, employees and the entire economy has been left in shambles.

Perhaps it makes more sense to think of companies more like living organisms. In his book ‘The Living Company,’ Arie de Geus says: ”Like all organisms, the living company exists primarily for its own survival and improvement: to fulfill its potential and be as great as it can be”. De Geus and his team of corporate planners at Shell studied why the average Fortune 500 corporation survives for less than 50 years while some companies, like Nokia, have flourished over centuries.

In sharp contrast to a ‘soulless’ economic entity that exists for the sole purpose of enhancing shareholder value, the Shell researchers found that the ‘living’ company has a strong sense of identity and purpose and is able to learn, adapt and contribute in tune with changing times. Size and profitability were not major factors for the long-surviving companies. Neither was maximizing shareholder value.  

Companies, like people, need more than pure growth. They need well-rounded development. Corporations have the ability to survive, contribute and develop over hundreds of years given the right vision, leadership and direction. Like people, they need to have soul. They need to have character. And they need to have a conscience.

For companies to become immortal institutions, they need to have a clear purpose in terms of their relevance and contribution to the world at large. Gandhi said, “No deserving institution ever dies for lack of support”. The key, then, is for companies to become deserving in the context of the world.

At the level of nations, using GDP / GNP as a measure of success has probably distracted governments from their real purpose: to secure the rights and freedoms of individual citizens. Governments do not create wealth. People do. The role of government is to provide good education, health care, infrastructure, security, and law and order to all its citizens, thereby giving them a platform to flourish as individuals. Governments have to focus more on the bottom 20% of their citizenry, providing a leg up in terms of development and growth.

As Confucius said, “In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of”. Global consensus and widespread adoption of an appropriate alternative to GDP along the lines of the Index of Sustainable Economic Welfare, Gross Happiness Index or the Genuine Progress Indicator would go a long way in reorienting governments to their core purpose.

Interestingly, President Sarkozy has endorsed the recommendations of a committee of economists he had set up on going beyond GDP to an Index of National Achievement that includes environment, equality and contentment measures.

In a country like India, many of the intended beneficiaries of government support programs never receive their due because of ‘leaks’ in the system. It was appalling that, recently, 5 families died of starvation in Bihar, simply because the dealer – claiming shortage of food grains – refused to supply them grains against their BPL ration cards. This is but one example of a system, rife with corruption, that uneducated and downtrodden villagers are unable to confront.

The business of government is complex. It will be worthwhile for the Government to focus on benefit delivery to the common man, eliminating all bottlenecks in the process, rather than opening up several fronts to ‘stimulate growth’. Development, rather than growth, should be the mission of governments.

Mankind has paid scant attention to the well-being of the planet. We have not come up with any measure of success to preserving the planet for future generations. We need to develop new measures of success to protect our children and their children, to make the world a safe and healthy place for them to live.

Perhaps we – as a world – need to think about living off our income rather that our wealth. We need to think about how to maintain bio-diversity, and ensure ecological balance and sustainability. We need empowered institutions at the helm of affairs of this world, institutions that are chartered to conceptualize and implement programs that will ensure the longevity of life on this planet.

The New Constructs is an initiative to examine our beliefs and assumptions - about life and living - that we need to reinvent in order to create a more inclusive and sustainable world. It is an opportunity for each one of us to connect, collaborate and co-create the world that we will rebuild for posterity.

Please feel free to comment. We look forward to your active participation. Join the discussion on Facebook. Follow us on Twitter. Please share. Stay active, stay engaged.

Imagine that the official length of a meter changed day to day – 80 centimeters today, for example, and 115 centimeters tomorrow. And that every country had its own measure of length – say the meter in India and the yard in the US – and the conversion rate between the yard and the meter again varied from day to day. This confusing jumble is what we have been living with for the past 38 years with one of the most important facets of our lives – money.

Being in a global business where more than 90% of our revenues come from outside India, the company that I run bore the brunt of these vagaries last year. We were suddenly poorer by more than $25 million dollars (almost 10% of our revenues), just because the pound sterling eroded in value against the US dollar. While our revenue in the UK grew in pound sterling (something our UK teams were proud of), it declined significantly in dollar terms (which made our CFO quite unhappy).

Our modern currency and exchange rate system was agreed upon by 44 countries in 1944. All currencies pegged their values against the US dollar, and the US government agreed to exchange dollars for gold at a standard rate of US $35 per ounce. In 1971, President Nixon took the US off the gold standard, leaving every currency literally floating – with no inherent value.

Money, our measure of value, was left with neither constancy nor consistency. Instead of being worth something real – a certain amount of gold – the world’s dollars, pounds, pesos, rupees and other national currencies were worth only was someone was willing to pay for them in another currency.  

That all happens today on the international foreign currency exchange, a vast market that operates around the clock around the world and produces trillions in profits for banks and their traders. Under the guise of providing liquidity and price discovery, banks and other financial institutions set arbitrary values on the different currencies – and then profit by buying and selling currencies as the prices shift up or down.  

Why should a loaf of bread or a textbook cost more in one country that another? The International Monetary Fund uses an index indicating Purchasing Power Parity, which compares the value of world currencies in the real world. The PPP shows how some currencies are undervalued against others – not because they are really worth less, but because bankers and traders say they are.  

A key premise we want to debate is whether we, as humanity, are valuing the truly valuable. The question now is whether the way we measure value has any basis? What would the world be like if currencies were actually valued according to their Purchasing Power Parity?  
Will the world be a better place if we had a single global currency – similar to the gold standard of the past or the Euro of recent times? These are but a few questions that we will dialog on this site.

The New Constructs is an initiative to leverage Connected Intelligence in realizing the Connected Age. Please feel free to comment. We look forward to your active participation. Join the discussion on Facebook. Follow us on Twitter.