Glasnost Comrade!
In the Preliminary Research Report I suggested that western industries would be subject to a demise similar to that which destroyed the former Soviet Union. That the method of organization used in the west was subject to similar difficulties and that it too would cease to provide value for anyone. I provide the following quote from the May 2004 report.
Of note: participants in the Japanese economy have not taken any risks, live in an environment where protection of companies mistakes is mitigated by government policies, and no innovation, failure or economic growth occurs. Conversely, why have Apple and 3M, companies built on innovation, fared better than their competitors? Apple has demonstrated resilience and has come back from near death experiences, and 3M has consistently outperformed others in value generation, on the basis of innovation, for decades.
One of the reasons cited for the former Soviet Union’s economic demise was the inability for the economic system (that propelled them to alleged greatness in the 40’s, 50’s, and 60’s) to accommodate change or innovation. Things were done because that was the way they were done. The lack of questioning and process inefficiencies continued until the system began to collapse upon itself. Are large organizations incapable of reforming and embracing innovation as a means of competitive survival? Enron lead the way with what was heralded as organizational innovation, only to be found criminal and eventually bankrupt. Since then the all time top three corporate bankruptcies have occurred in the United States and many CEO’s have been arrested and organizations shut down due to fraud and other inappropriate actions, a key example being the former accounting firm of Arthur Anderson. What is the cumulative effect of these occurrences, and are these parallel to the experience of the former Soviet Union?
During the past 15 years we have also seen a fundamental change and understanding in the individual’s role within organizations. The trust and commitment of people in their organizations has diminished through systemic and chronic downturns, layoffs, early retirements, pension revocations and brutal downsizing. The emergence of the superstar CEO and escalating pay scales for senior management has had the dual effect of recognizing the value of intellectual talent, and, further eroding the trust and commitment of the staff within those organizations. Today we see Disney, which was one of the greatest companies built on the basis of intellectual property, challenged by key employees and contractual relationships with suppliers and partners. Pixar Entertainment, Jeffrey Katzenberg and the Current CEO are collectively more profitable than the entire capital and intellectual property base of Disney. This dissection of value continues unabated, and essentially unidentified as a detrimental trend to the health of large organizations. Is this the beginning of the identification of this capital dissection, and the beginning of the legal remedies necessary to mitigate insidious devaluation of shareholder trust and value?
The point being that the issues have been obvious for years. Barack Obama heralded in a new era of government as the solution to the ails of society. Regulation, control and taxing alleged abhorrent behaviour is the new norm in western societies. Zero Interest Rate Policies have been implemented to remedy the 2008 financial crisis created by government funding of mortgages to unqualified candidates. In return, in a capital environment where zero is expected in return, asset prices stay at lofty heights. This facade is beginning to be dealt with by the Fed returning to normalized interest rates. We can therefore expect to see, if things progress, the Dow, half its value and the majority of house prices do the same. The quicker the government gets out of the business of trying to manage the economy, and the bureaucrats are removed from the corporate picture the better everyone will be. How will this happen?
It's already happening and in significant ways. First this article from Foreign Affairs is a must read for everyone. Secondly we see in the Republican party, and most specifically in the candidacy of Donald Trump, the anger and movement of the people against the status quo. People, Ideas & Objects are part of this movement in general. We are timely in terms of solving the oil and gas issues. And we are timely in terms of the trends of Information Technology, or the fourth industrial revolution the Foreign Affairs article speaks of. This tearing down of the Cathedral is the necessary first step to implementing the types of changes that will make society much better in the long run. And the reason that it will be successful and positive is that it is in the hands of you and me, and defined by our needs.
The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.