You Can't "Fix" an Embedded Economic System

"The Ouroboros is a mythical animal which swallows itself, starting with the tail. It epitomizes paradox and is a pretty good emblem for US [healthcare] at the moment. Autocannibalism is not something anyone should try at home."

A great passage from Jonathan Guthrie recently in the Financial Times that, while describing the ‘value paradox’ in banking, exposes a cognitive problem management teams across industries confront when trying to make the magic leap to the next growth curve: As a general rule, you can't "fix" an embedded economic system. Its feedback loops -- infinitely recursive, infinitely complex and impossible to decode in a way that lends itself to one-slide explanations, linear strategies or sales into short-attention span theater -- will be in control of things and running the show, buried deep into the bedrock, set in motion decades ago, sustained by systemic (mis)management comfortable buying solutions to “optimize” legacy operating models. 

But if the objective is “radical transformation” and large-scale change, market innovation enabled by technology, it will be simpler to chop the knot and start with new system vision. This is about a new form of strategic power intentionally designed to degrade or displace the status quo in an organized and persistent way.

And the model to learn from is India.

In a little over a decade, the country has built a portfolio of digital public infrastructures that have changed its citizens' lives. And it did this not by trying to repair complexity, but by enabling it and giving it direction, starting with a clean slate, creating an entirely new foundation(s) upon which others can build new economic systems (“ecosystems”).

“The Indian sales pitch is attractive,” says The Economist in its coverage of how India is positioning itself as an enabler of new economic systems to developing countries (see How India is using digital technology to project power). “Starting without legacy systems such as credit cards and desktop computers, developing countries can leapfrog the West. The digital prize, as India has shown, is a means to accelerate connectedness, social-service provision, growth prospects and, ultimately, the building of a state and civic identity. Significant investment is required. But, as India’s example also suggests, it is likely to be cost-effective.”

“The key idea behind DPI is not digitalisation of specific public services,” reads a recent IMF paper. “But rather building minimal digital building blocks that can be used modularly…to enable society-wide transformation.” Central to that vision is the notion of private innovators and firms accessing and adding to the infrastructure, as they do in India. DPI is “infrastructure that can enable not just government transactions and welfare but also private innovation and competition,” says C.V. Madhukar of Co-Develop, a fund recently launched to help countries interested in building DPI pool resources.

It’s big ambition and big innovation born from systems thinking, the original 'large language model' for strategy to see and compete differently. And the faster that the West can start working with this understanding and mode of being, the faster it can stop the commercial withering and strategic atrophy that has come to dominate the PowerPoints. 

Finding Strategic Fit

The Problem everyone is struggling with is positioning and communicating strategic fit to a world transitioning from Newtonian economics to a world of quantum economics, where two things that seem to be in opposition can be true at the same time.

“....In the disorganization and the chaos of the free-for-all,” says Julie Plec, the creator of The Vampire Diaries, “the foundational pieces of the business that made it work for everyone disappeared. The solutions weirdly all revert back to what used to be on some level. And that is not good because certainly it felt pretty fucking broken at that time, too,” says Plec in an article on the collapse of the streaming market. “It’s not like just returning to the old status quo is the answer. We’re at the center of the tornado right now, and it seems like it’s whipping all around us, and I don’t think anybody really understands how to make it stop.”

We are in the midst of a massive transformation coming at us with a speed and level of intensity that no one has faced before. Society has changed. The underlying economics have changed. Business + government has changed. The information environment has changed.

The world around us is now within us — there is no “out there” that separates the observer from the observed. And the deep chaos and complexity of the moment are not going away; if anything, they're only increasing exponentially, becoming permanent features of the landscape.

The skill in short supply is novel strategic thinking, a whole new taxonomy to help #leadership navigate the currents shaping major directional change in the world with different vision, a new category of ideas from which to create and compete.

We are, it seems, collectively stuck in a low-Earth orbit of small ideas and zero-sum competition, trapped by the kinetics of cliche and linear solutioning, “space junk” and orbital debris spinning around obsolete definitions of economic progress. Everyone is launching their own satellites, leaving it to someone else ‘out there’ somewhere to manage their interaction and coordination, to figure out the paradox of value alignment.

The art of shaping ‘strategic fit’ (and, conversely, preventing strategic collapse) is to not even bother trying to “fix” an embedded economic system. It’s an impossible task.

Modern strategies think in terms of biology and ecology, an orientation for creativity and competition that works with the laws of nature, not against it, as an infinitely recursive cycle of production and progressive integration of contexts and capabilities. The end state is a new economic system feeding itself with its own energy, a process where markets self-generate and new pools of value form in the space ‘in between’ the words.

The answer is to start in a new orbit for strategy and innovation, at a system level, with new industry + government ecosystems that encourage and enable the interplay of markets and new storylines of value, ‘large language’ concepts to guide executive perspective and sales presentations that cover a larger surface area.

Which is what India is doing so well.

/ jgs

John G. Singer is Executive Director of Blue Spoon Consulting, a global leader in ecosystem-centered market strategies. Blue Spoon delivers a Punk Rock ethos of disruption. It was the first to apply systems theory to solve complex market access and integration challenges in the pharmaceutical industry.