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Posts Tagged ‘strategy-as-practice

systemic risks: too big, too complicated or too central?

Duncan Watts had an article in the Boston Globe last week (hattip: Karl Bakeman) looking at how the network structure of the banking industry might have amplified the financial crisis.  Watts comments:

Traditionally, banks and other financial institutions have succeeded by managing risk, not avoiding it. But as the world has become increasingly connected, their task has become exponentially more difficult. To see why, it’s helpful to think about power grids again: engineers can reliably assess the risk that any single power line or generator will fail under some given set of conditions; but once a cascade starts, it’s difficult to know what those conditions will be – because they can change suddenly and dramatically depending on what else happens in the system. Correspondingly, in financial systems, risk managers are able to assess their own institutions’ exposure, but only on the assumption that the rest of the world obeys certain conditions. In a crisis, it is precisely these conditions that change in unpredictable ways.

He suggests that regulators assess a company’s network position and take action to ensure systemic viability:

On a routine basis, regulators could review the largest and most connected firms in each industry, and ask themselves essentially the same question that crisis situations already force them to answer: “Would the sudden failure of this company generate intolerable knock-on effects for the wider economy?” If the answer is “yes,” the firm could be required to downsize, or shed business lines in an orderly manner until regulators are satisfied that it no longer poses a serious systemic risk. Correspondingly, proposed mergers and acquisitions could be reviewed for their potential to create an entity that could not then be permitted to fail.

This is a very interesting idea.  But it also raises a number of intriguing questions worth fleshing out in a little more detail:

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labels matter: unpacking posner and florida (by way of arendt)

Richard Florida and Richard Posner are guest blogging for Andrew Sullivan this week.  They each use their first posts to engage in the politics of labeling, identification and categorization.

Posner’s post is a typically thoughtful expository on why the current crisis should be labeled a “depression.” He rejects the prevailing definitions of recession and depression in favor of an alternative that comes pretty close to the notion of a “deep crisis” as it’s employed by Fligstein, Powell and others: a depression is a downturn that undermines fundamental assumptions about the forces that shape the economy. Recessions, in contrast, correct imbalances, but they don’t fundamentally alter underlying assumptions. Of course, by this definition you can’t really tell if you are in a recession or a depression while it is occurring. It’s not, in that sense, ‘objective’ since you can only tell if you were in one retroactively.

But striving for objectivity would miss the point of arguing over a label. At a moment of heightened uncertainty, the contest over the label is as important as its content (if not more). At this uncertain moment, people don’t quite know how behave.  Should I assume the world will “get back to normal” once things settle down and therefore just hunker down until it blows over? Or, should I be prepared to make some significant adjustments in the way I conceive of my role, my identity and my behavior because the world is going to look significantly different on the other side? Should the government stand back and let the economy work itself out? Or, should the government provide clarity and shape the system in fundamental ways? The answer depends on which label you subscribe to. If Posner’s definition gains widespread acceptance, it suggests one course of action in response to uncertainty over another. It also suggests that the Obama administration is right to take drastic measures because if it doesn’t influence the world that results from this crisis, someone else will.

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Written by seansafford

May 18, 2009 at 10:39 pm

“us” and “them” in strategic management

Saku 

Throughout my academic career, I have been a member of a community of scholars, who label themselves “Strategy-as-Practice” (it has also been called “activity perspective”, “micro-strategizing” and other things but this label seems to have stuck.) It all started when I stumbled into the EGOS conference as a fresh PhD student and noticed that among this group of people, I could pursue my interest in micro-sociological issues and philosophy and still do research on strategy (those interested in what strategy-as-practice, see www.strategy-as-practice.org, as well as here, here, here and here).

The S-as-P group meets at various conferences and meetings during the academic year. There is a PDW at the Academy next summer, a working group within the Strategic Management Society, and many other occasions. For me, a special event each year is the Annual EGOS conference, and its subtheme on S-as-P. Not only is EGOS a great conference – for me it is always the event where our org studies community celebrates the privileged position we are in, doing science for a living. The sub-theme is where my career as a scholar began.

This evening, I am faced with the daunting challenge and priviledge to start drafting the proposal for a the S-as-P theme for the year of 2009. I thought that maybe it would be fun to share some of my early ideas with you.

Individuals in strategic management

For me, the really fascinating thing about strategy work in organizations have been people: people at all levels of the organization. How they find roles in strategy processes (this was the topic of my PhD), how they formulate collective intent, or how they get included or excluded from strategy work (our forthcoming Org Sci paper). Organizations do not make or implement strategies, people do. Read the rest of this entry »

Written by smantere

November 10, 2007 at 10:32 pm