Porter on Bloomberg on the Economy
In my original thesis I highlighted the work of Professor Michael Porter of Harvard University. Back in 2004 Porter was decades beyond his heyday of the late 1970's and early 1980's. Writing a number of books with title's like "On Competition" he set the tone for the focus on strategy in business. For some reason he was quiet since that time, however I am beginning to see more of him, particularly in the newer media like blog's and podcasts.
In the appendix to the thesis, under the section entitled "Analysis of the Software Development Industry" I used Porter's Five Forces analytical tool. The five forces consist of:
- Threat of substitute products.
- Rivalry among existing competitors.
- Bargaining power of suppliers.
- Bargaining power of buyers.
- Barriers to entry.
The ultimate substitute to the development of software is the use of human resources to fill in the demand from the business. This relegates people to the mundane jobs that are best handled by computers. The future will see people doing one of two jobs. Those that computers can't do, or physical labor and those that computers can assist in. The higher value added tasks of statistical analysis and decision making.
This analysis and debate also doesn't consider what is necessary from the point of view of what makes the best software, the users. That is why it so important that you join this community. The "Community of Independent Service Providers" are key to the long term sustainability of the People, Ideas & Objects software. The software and services will go hand in hand to making the oil and gas producer profitable. Is it now more important to own the producing oil and gas asset, or is it the software and associated services that make the oil and gas property profitable? That is the question potential members of this community should ask and is indeed the importance of this project.
What does Professor Porter have to say about the economy and business today? He is being interviewed at the World Economic Forum in Davos, Switzerland by Tom Keene of Bloomberg News. Keene asks the Professor what grade the current crop of bank management would be assigned.
"Oh god, this is worse then failing. This is incomplete, this is you don't graduate, this is a catastrophe. This is asleep at the wheel, that's inexcusable."He also suggests that the source of our current economic difficulties is a result of the lack of leadership and mentoring in the finance industry. Where the wisdom that should have been applied was missing which permitted;
"This is a situation where innovation ran ahead of the capacity of the organization. Innovation ran ahead of the regulatory framework."We run the same risks in oil and gas. If we continue as we are, the retirement of the brain trust in the energy industry will leave society with similar economic difficulties in the future oil and gas industry. This is doubly dangerous as the industry modus operandi continues to ostracize those with ideas. We need to be working together to build a better and more productive oil and gas industry and heed the call that this current economic situation, brought about the mismanagement by the banks, is indeed innovation running ahead of the regulatory framework.
The remaining part of the interview has Porter discussing the health care situation in the United States. It is particularly interesting that the problems within the health care industry are close to the difficulties in oil and gas. The motivation and misalignment of costs and revenues has the Doctors in the U.S asking if there is something better they could be doing. Porter suggests that organizational changes and innovation will be addressed and is being addressed to resolve these issues.
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