8 Session 2 Socio-Economic Systems North End

8/18/2019 8 Session 2 Socio-Economic Systems North End

1/46

Business and Global Society

HULT INTERNATIONAL BUSINESS SCHOOLMBA Class 2: Socio Econo!ic Syste!s:

Sta"e#olde$s% Institutions and Go&e$nance'$o(esso$ )oanne La*$ence

1


2/46

'lease include you$ co#o$t% tea! nu!be$ *#en

*$itin+,

CASES% ISSUES: Inst$uctions -osted,

O.ce Hou$s: A(te$ eac# class% in t#e (acultyo.ces, E,+,% //:01/2:/3 4:114:4 o$ by a--t,

Teac#in+ Assistants:

5icto$ B$iceno: &b$iceno21/6alu!ni,#ult,edu C#$is A$!st$on+: ca$!st$on+21/6alu!ni,#ult,edu

2

House"ee-in+

mailto:[email protected]:[email protected]


3/46

Do all the readings before starting assignments.

Read the instructions so you know what is expected andthe rubric so you know how it will be evaluated.

When looking at issues, “unpack” them cascade issues,starting with the largest. !akes it easier to analy"e,explain.

How you approach analysis, issues as important as whatyou recommend.

3

#ips


4/46

Due the last class$ it is a paper and presentation.%teps relate to the course$ e.g,

De&ne the 'hallenge (%D)s*

+dentify the industry, organi"ations that make up thesystem needed to address it.

Develop a framework, process using the course tools 'larify the potential impact

+dentify next steps◦ More detailed instructions posted this week.

4

7inal -$o8ect: C$eatin+ an Inte+$atedSyste! to C$eate S#a$ed 5alue


5/46

)lobali"ation evolution, pros, cons, issues.

urpose of -usiness solutions, not ust pro&ts

/thics how you do things $ moral absolutism vs.relativism

0eadership doing the right things..

5

Session /:Ta"ea*ays


6/46

T#e Le+al Test

T#e Mi$$o$ Test

T#e 7ol"s Bac" Ho!e Test

T#e Ne*s-a-e$ Headline Test

T#e '$ecedent Test

T#e 9S#oe on t#e Ot#e$ 7oot Test

6

*convincing oneself an act is defensible when it really is

just an easy way out or serves one’s own purposes*

'e$sonal Tests to A&oidRationalisation


7/46

Inte$national Standa$ds o(Conduct

Human Rights

Labour

Environment

Anti – Corruption

Goal: Eliminate Poverty7


8/46

“ It would be self-defeating (and thereforehighly unlikely) for rms to sell unsafefood and drugs, fraudulent securities and

shoddy buildings. It is in the self-interestof every businessman to have a reputationfor honest dealings and a quality

product …” 1lan )reenspan, 'hair of the 2% 3ederal Reserve, 456789::;,

writing in 45;<

Sel(Inte$est as 'ositi&e ;$i&e$


9/46

7!" agree that we now live in a #eputation $cono%y& a %ar'etplace

where who you are %atters %ore than what you produce(

(Reputation Institute 2!")


10/46

1

In t#e

World Economic Forum Annual Meeting: Jan 20-23, 2016

“For over four decade, t!e World Economic Forum" miion #im$roving t!e tate of t!e %orld # !a driven t!e deign and

develo$ment of t!e Annual Meeting $rogramme&

'!e Annual Meeting in (avo-)loter remain t!e foremot

creative force for engaging t!e %orld" to$ leader incolla*orative activitie focued on !a$ing t!e glo*al, regional

and indutr+ agenda+, %%%&%eforum&org


11/46

=#y do so!e societies >ou$is# and ot#e$s decline?

=#at $ole do +lobal% national institutions -lay in t#e successo( a count$ys de&elo-!ent?

=#y does -at# de-endent !atte$ *#en *e tal" about

institutional de&elo-!ent? =#at is systems thinking? =#y *ould *e include it in a

cou$se on Business and Society?

=#at is +o&e$nance% and *#o and *#at is a sta"e#olde$?

Case: India 21/4

11

Session 2: SocioEcono!icSyste!s Study uestions:


12/46

“The root cause of economic divergence

Between rich and poor countries is that their

institutions vary in their levels of eciency. These

dierences lead to dierent decisions !eing made. "society#s $nstitutions and %rgani&ations are$nterdependent ”.

3rom =ictor 1beid in “$nstitutions' $nstitutional (hange and )conomic *erformance

!"# "$% %&"'%* + I*#I##I+* and#!%I$ $+%* I /+$ 0+#$/1

12

=#y a$e so!e count$ies $ic#%ot#e$s -oo$?


13/46

'$otect Ri+#ts DLand% labo$ % "no*led+e and#u!an

Re+ulate t$ansactions costs

Establis# $ules D*ei+#ts and !easu$es

'$o!ote Inno&ation

'$o&ide incenti&es

◦ 3rom =ictor 1beid in “$nstitutions' $nstitutional (hange and )conomic *erformance

13

Role o( Go&e$n!entInstitutions


14/46

Costless t$ansactions

C$eate co$$ect !ental !odels

Collect and s#a$e in(o$!ation

MaFi!ie -$ots

88883rom =ictor 1beid in “$nstitutions' $nstitutional (hange and )conomic*erformance

14

Institutions as E.cient:Assu!-tions


15/46

>nce committed to a path, very hard to change ?igh costs of change

0earning e@ects

'oordinating

1daptive /xpectations

If the institutions are the rules, andorgani2ations are the teams, how can theteams win1 !ow do they work within the rulesto change them13rom =ictor 1beid in INSTITUTIONS% INSTITUTIONAL CHANGE% and Econo!ic 'e$(o$!ance

15

Institutions as 'at# ;e-endent:7iFed Mental Models?


16/46

-- .tern%an& Systems Dynamics

;o *e #a&e an o&e$ly si!-listic!ental !odel?


17/46

Syste!s and syste!s t#in"in+


18/46

1

=#at is Syste!s T#in"in+?


19/46

“a grouping of parts that operate together for a common

purpose.” 8 Aay 3orrester, rofessor /meritus of !anagement in %ystem Dynamics at the !+# %loan %chool of!anagement.

“the a!ility to see the world as a comple+ system' inwhich we understand that “you can#t do ,ust one thing”and that “everything is connected to everything else…-ystems ynamics is fundamentally interdisciplinary…

/ %ternman, in -ystems ynamics Modeling

1!

Syste!s and Syste!s T#in"in+


20/46

2

Syste!s a$e AllEnco!-assin+


21/46

Le+al Et#ical

#ystems are inherently multi$%a&ete'

#EEPLE


22/46

“*ystems dynamics analy2es how feedback processes in a system generate or alter patterns of behavior. #he system mayinclude decision-making procedures, work

and process 3ows, attitudes and perceptions, and product quality .” Marshall and Brown' in The -trategy of -ustaina!ility

hat are some of the more speciccomponents of dynamic systems1

22

Syste! Co!-onents


23/46

'onstantly changing #ightly coupled

)overned by feedback

Bon8linear

?istory8dependent

%elf8organi"ing

1daptive

#rade8o@s

'ounter8intuitive

olicy8resistant

%ternman, in -ystems ynamics Modeling

23

Syste!s dyna!ics: Co!-leFityc#a$acte$istics

#ime8delayed%tocks and Cows

3undamental attributionerrors

0everage points

1utocatalytic loops


24/46

Syste! (eatu$e: ;elays

W!+ doe

t!i !a$$en.


25/46

Syste! (eatu$e: Causality


26/46

eter %enge ( min*

httpEEwww.mutualresponsibility.orgEscienceEwhat8is8systems8thinking8peter8senge8explains8syst

ems8thinking8approach8and8principles

26

# i i (

http://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principleshttp://www.mutualresponsibility.org/science/what-is-systems-thinking-peter-senge-explains-systems-thinking-approach-and-principles


27/46

4. 1 very deep and persistent commitment to Freal learning.G

9. -e prepared to be wrong. +f it was obvious..weGd be alreadydoing it. %o +Gm part of the problem . +f +Gm not prepared tochallenge my own mental models, then the likelihood of &nding

non8obvious areas of leverage are very low.


28/46

“When you are confronted by any complex socialsystem, H..you cannot ust step in and set about &xingwith much hope of helping.

#his reali"ation is one of the sore discouragements of

our century . !eddle with one part of a complex systemfrom the outside without the almost certain risk ofsetting o@ disastrous events that you hadnGt counted onin other, remote parts. $f you want to 0+ something youare 0rst o!liged to understand . . . the whole

system. . . . $ntervening is a way of causing trou!le…” . . 8- ewis #homas 6+n 'eddling5

2

Syste!s T#in"in+ and 9Meddlin+


29/46

-- .tern%an& Systems Dynamics

T#e unco!(o$table $eality: A ne*!ental !odel

Syste!s T#in"in+ as a '$ocess


30/46

/, ;E7INE THE 'ROBLEM% OB)ECTI5E

2, I;ENTI7J THE 5ARIABLES De,+,% STAKEHOL;ERS

0, ;ESCRIBE HO= THE 5ARIABLES BEHA5E O5ER TIME

4, I;ENTI7J THE LINKS BET=EEN THE 5ARIABLES

, I;ENTI7J THE GA'S IN THE SJSTEM

, I;ENTI7J THE LE5ERAGE 'OINTS

, ;ETERMINE THE ACTIONS STE'S

, TEST THE MO;EL

!arshall and -rown, The -trategy of -ustaina!ility1 " -ystems *erspective,

Syste!s T#in"in+ as a '$ocess

3


31/46

/ro% .tern%an& Systems Dynamics


32/46

Syste! (eatu$e: Inte$action eects

Does alcohol use

dampen stress or

magnify it?

Causal loop 'iagrams are used to depict the co%ple0 relationships

a%ong syste% variables and allow analysts to test co%peting perspectives

esire eed to

#ela0

)

–

lcohol se

–

i%e edicated to

rin'ing

)

)

–

–

verall 8uality of

9ife


33/46

hy does it matter1

#he most comple7 systems are so-called6socio-technical5 systems with many*#%%% stakeholders.

8

https:www+youtube+co%watch;v


34/46

34

EFe$cise: T#e Blac"out o( 2110

https:www+youtube+co%watch;vhowhat co%prised the syste%;

>hat seemed to cause the blac'out;

>hat were so%e of the underlying issues;?an you s'etch a @causal loop’ diagra%

Allustrating so%e of the variables within the syste% and

their i%pact;

>hat %ight you do to prevent it in the future;

https://www.youtube.com/watch?v=nd3teNgUq8Ehttps://www.youtube.com/watch?v=nd3teNgUq8Ehttps://www.youtube.com/watch?v=nd3teNgUq8E


35/46

BREAK

35


36/46

36

“ A fundamental $rinci$le of +tem

d+namic a+ t!at t!e tructure of

t!e +tem give rie to it

*e!avior/&&

>hat does this i%ply;

-- /ro% .ter%an& Systems Dynamics Modeling

Case Study: India 21/4:


37/46

=#y did India +$o* so slo*ly? Has its-olitical syste! #el-ed o$ #inde$ed t#ecount$ys +$o*t# -$ocess? Ho*?

=#at #as been t#e +o&e$n!ents

$elations#i- to business? =#at 9-at# doyou t#in" its +o&t institutions sta$ted on%

and *#e$e a$e t#ey #eadedI

37

Case Study: India 21/4:C#allen+es o( Go&e$nance


38/46

What are examples of politically8driven policiesand their economic e@ectI

3

7o$ e,+,% 'olicies and Eect


39/46

'$io$ to /P4 B$itis# in>uence

/P4 /PP/ 'lanned Econo!y and

'e$!it Ra8

/PP/ Balance o( -ay!ents c$isis3 ne*nance !iniste$: IM7%

=o$ld Ban"% =as#in+tonConsensus”

3!

SituationQConteFt : Ti!eline

Econo!ic ;e&elo-!ent and t#e =as#in+ton


40/46

INTERNAL STABILITJ 7iscal ;isci-line TaF $e(o$! Inte$est Rate Libe$aliation

IM'RO5E 'RO;UCTI5ITJ Secu$e '$o-e$ty Ri+#ts ;e$e+ulation and '$i&itiation 'ublic s-endin+ D#ealt#% education

ETERNAL STABILITJ

Co!-etiti&e EFc#an+e Rates Re!o&e T$ade ba$$ie$s DT$ade Libe$aliation

4

Consensus: A Syste!s A--$oac#?

/PP0 O d


41/46

/PP04 G$o*t# $ate su$+es ($o! / to !o$e t#an

2114 'olicies% la*s: Ri+#ts to In(o$!ation% C#ild$en%Ru$al E!-loy!ent Act

211 7i&e Jea$ 'lan Ta$+ets /1 +$o*t#

211 IndiaUS Nuclea$ 'act3 Sti!ulus 'ac"a+e

21/4: Still $an"ed /04 on ;oin+ Business list: *#y?

=#at a$e t#e ba$$ie$s to business?

41

/PP0 On*a$ds

Indias Syste!: 21/4 Ba$$ie$s to Business


42/46

Co!-leF licensin+ 7o$ei+n ;i$ect In&est!ent $est$ictions In>ation D/13 (ood /0 In($ast$uctu$e

Ene$+y Education and Healt#ca$e 7ood Secu$ity Re+ional dis-a$ities and instability%

&iolence Secto$ ;i&e$sication

42

India s Syste!: 21/4 Ba$$ie$s to Business

I di 21/4 B i S t


43/46

A+$icultu$al : !ost -eo-le e!-loyed% /4 to G;'3slo*est +$o*t# D2

Se$&ice: 2 e!-loyed3 1 G;' De,+,% GE

Manu(actu$in+: 00 o( G;': labo$ as co!-etiti&ead&anta+e,

Is it possible for India to achieve double digit 9:

growth and inclusive development1 !ow1 !ow can theirchallenges;barriers be addressed as an entire system1

43

India 21/4: Business Secto$s

# t 4 i bl i i I 'i * E


44/46

In'ia*s e&onomi& su&&ess

Relations +ith China

Relations +ith Pa,istan

Popular support %or globali-ation

an' e&onomi& liberali-ation

#tan'ar' o% living

Publi& health

E'u&ational levels

Labor pro'u&tivity

.oreign 'ire&t investment

#o&ial stability

Energy availability an' &ost

/aste 0 pollution

Availability o% lo+$&ost labor an'

other resour&es

Labor &on'itions 0 empo+erment

Environmental 'amage

Current government poli&ies

1uality o% international relations

broa'ly

.I poli&y 3 regulations Globali-ation an' e&onomi&

liberali-ation

#ystem 4ariables riving In'ia*s E&onomy

ebrief: ?reating a .yste% iagra% for ?hina’s $cono%yEFa!-les:


45/46

ebrief: ?reating a .yste% iagra% for ?hina s $cono%y

GovernmentPoli&ies

In'ia*s E&onomi&

#u&&ess

E'u&ation

Publi&

Health

#o&ial

#tability

E&onomi& an'

5ilitary

Competition +ith

6ther Countries

7

Labor Pro'u&tivity

#tan'ar' o%

Living

Popular #upport

%or Globali-ation

an' Liberali-ation

.oreign

ire&t

InvestmentEnvironmental

amage

Pollution0/as

te

Availability o% Lo+$

Cost Labor an'

Resour&es

Globali-ation

an'

Liberali-ation

EFa!-les:


46/46

Documents

8 Session 2 Socio-Economic Systems North End