Daily Archives: July 9, 2019

Takers and Makers: Who are the Real Value Creators?

By Mariana Mazzucato – We often hear businesses, entrepreneurs or sectors talking about themselves as ‘wealth-creating’. The contexts may differ – finance, big pharma or small start-ups – but the self-descriptions are similar: I am a particularly productive member of the economy, my activities create wealth, I take big ‘risks’, and so I deserve a higher income than people who simply benefit from the spillovers of this activity. But what if, in the end, these descriptions are simply just stories? Narratives created in order to justify inequalities of wealth and income, massively rewarding the few who are able to convince governments and society that they deserve high rewards, while the rest of us make do with the leftovers.

If value is defined by price – set by the supposed forces of supply and demand – then as long as an activity fetches a price (legally), it is seen as creating value. So if you earn a lot you must be a value creator.

I will argue that the way the word ‘value’ is used in modern economics has made it easier for value-extracting activities to masquerade as value-creating activities. And in the process rents (unearned income) get confused with profits (earned income); inequality rises, and investment in the real economy falls.

What’s more, if we cannot differentiate value creation from value extraction, it becomes nearly impossible to reward the former over the latter. If the goal is to produce growth that is more innovation-led (smart growth), more inclusive and more sustainable, we need a better understanding of value to steer us.

This is not an abstract debate.

It has far-reaching consequences – social and political as well as economic – for everyone. How we discuss value affects the way all of us, from giant corporations to the most modest shopper, behave as actors in the economy and in turn feeds back into the economy, and how we measure its performance. This is what philosophers call ‘performativity’: how we talk about things affects behavior, and in turn how we theorize things. In other words, it is a self-fulfilling prophecy.

If we cannot define what we mean by value, we cannot be sure to produce it, nor to share it fairly, nor to sustain economic growth. The understanding of value, then, is critical to all the other conversations we need to have about where our economy is going and how to change its course. more>

Updates from Chicago Booth

How to curb short-termism and boost the US economy
End the requirement for quarterly reporting
By Haresh Sapra – The United States is in the middle of that rarest of events: a public conversation on accounting standards. Since 1970, public companies in the US have been required to report quarterly. The Securities and Exchange Commission is now considering changing that frequency to biannual reporting, and in December 2018 issued a request for public comment on the matter.

Admittedly, the issue isn’t exactly igniting the passions of the masses, but the implications of these discussions could significantly affect the US economy. For the first time in many years, policy makers are seriously reconsidering the rules on corporate financial reporting. The SEC is examining how to change the system to lighten the burdens on corporations, and to reduce what it calls the “overly short-term focus by managers” of listed companies.

My research suggests there would be great benefits to the US ending mandatory quarterly reporting. It would help to kick-start innovation among US companies, for one. That should be of particular interest to the SEC, which stated in its request that it is interested in how the current system “may affect corporate decision making and strategic thinking.” more>

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Updates from Ciena

SD-WAN Gets (More) Real for Service Providers

By Kevin Wade – Interest in Software-Defined Wide Area Networking (SD-WAN), which is designed to offer enterprises cohesive end-to-end visibility and control of their multi-site WAN, continues to grow. Although SD-WAN was originally envisioned to give enterprises a ‘DIY’ approach to WAN management, most industry analysts and experts agree that managed SD-WAN services are the predominant consumption model for enterprises today, and into the foreseeable future.

The trend toward managed SD-WAN services is good news for service providers, many of which were initially cautious that SD-WAN might reduce their revenues and/or weaken their relationships with key business customers. To the contrary, SD-WAN services have emerged as a rapidly growing new source of revenues, as well as one that offers service providers new opportunities to improve the customer experience.

I’ve been following the SD-WAN movement closely since nearly the beginning, and have been pleased to see some recent developments that signal the increasing maturity of SD-WAN services.

Without a doubt, SD-WAN services are becoming more established and accepted. And while Blue Planet isn’t inherently an SD-WAN solution, the deployment of SD-WAN services is one of Blue Planet’s biggest drivers and most common use cases. more>

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Updates from Siemens

Gruppo Campari: Brand spirits leader digitizes its business operations with the SIMATIC IT suite
Using Siemens technology, Gruppo Campari has created a unified repository for all product specifications and increased the efficiency of product development and manufacturing processes
Siemens – With so much talk about securing the Italian control of key businesses, a few companies play offense and take the Italian lifestyle and “Made in Italy” all over the world. Among them is Gruppo Campari, which closed 26 acquisitions in the spirits industry in the past two decades to become the world’s sixth player, with over 50 premium and super-premium brands. Besides aperitifs of international renown (Campari, Aperol), the portfolio includes bitter liqueurs (Averna, Cynar, Braulio) and spirits (Skyy, Grand Marnier, GlenGrant, Wild Turkey, Appleton). In 2016 the group exceeded €1.7 billion in consolidated revenues, with most sales in Americas and the Southern Europe, Middle East and Africa (SEMEA) region.

With each acquisition, Gruppo Campari needs to integrate new products, plants and assets into its operations management systems. Recent examples include J. Wray & Nephew, a company with more than 2,000 employees producing Jamaica’s 225-yearold top rum Appleton Estate, Grand Marnier in France acquired in 2016 and Bulldog London Dry Gin in 2017. Currently, the group operates 58 sites: 18 owned factories, 22 co-packers and 18 distribution centers, counting up to thousands of materials and specifications.

The turning point for the management of such a complex and constantly evolving organization came in 2012. Until then, Gruppo Campari had maintained an unstructured approach to the management of product specifications, which were created locally using Microsoft Word documents or Microsoft Excel® spreadsheets. Besides creating documents in different formats and languages, there was no standard workflow for document authoring and validation, and information was shared via email or phone.

In 2012, the Group launched an extensive digitalization of operation processes, selecting SIMATIC IT Interspec from Siemens PLM Software, a configurable solution for product specification management in process industries, and embracing the Siemens “digitalization” philosophy.

SIMATIC IT Interspec allows the company to develop, configure and manage all product specifications (raw materials, intermediate and finished products and packaging materials), storing all specifications in a single, controlled data repository. more>

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