Transcript of the "New Worldview" Video /  by Cristian Mitreanu

This is the transcript of my latest video on the new economic worldview:

 

SECTION 1 (starts at 0:00)
> enabling personal freedom and the pursuit of happiness
> or... ...how to indefinitely sustain a democratic society

SECTION 2 (0:15)
> since early on,... ...humans have gathered in communities... ...to succeed.
> cities and states were created... ...to provide a platform... ...for a better life.
> governments have evolved,... ...providing security... ...and public order.
> democratic societies have emerged,... ...standing for individual freedom... ...and the pursuit of happiness.
> nevertheless,... ...an important question remains.
> can a democracy be sustained?
> the answer, it turns out,... ...ultimately depends... ...on the economy.

SECTION 3 (1:10)
> driven by natural impulses,... ...humans generate unique and dynamic... ...structures of needs.
> the behaviors employed... ...to generate needs... ...form a continuum.
> at the top,... ...the buyer updates... ...a unique and overarching need... ...that describes a successful existence.
> at the bottom,... ...the buyer generates... ...a multitude of common needs... ...that match existent offerings.
> the clearer the need,... ...the lower its position... ...on the continuum.
> accordingly,... ...all economic transactions... ...can be represented... ...on the continuum.
> furthermore, an economy... ...can be represented,... ...showing transactions... ...taking place over time.
> nevertheless,... ...there is order in disorder.

SECTION 4 (2:25)
> within the same community or market,... ...buyers tend to have similar behaviors... ...relative to a particular need... ...and the matching offering.
> such offering and market... ...tend to form... ...a lasting... ...virtual business space.
> this space or microcosm... ...is called... ...tofmos.
> all transactions within a tofmos... ...appear clustered... ...on the continuum.
> furthermore, the cluster is persistent,... ...moving lower... ...as knowledge about the offering... ...accumulates over time.
> this process is known as... ...the commoditization... ...of the offering relative to the market.
> tofmos commoditization... ...can also be used... ...as a more concise term.
> every economy, then,... ...can be represented... ...as an ever-changing collection... ...of commoditizing tofmos.

SECTION 5 (3:43)
> during commoditization,... ...the characteristics of a tofmos... ...change.
> the number of buyers... ...and, thus, the total revenue... ...increases.
> the prospect of growth... ...attracts vendors... ...and entices them to persist.
> it is generally easier to join... ...a commoditizing tofmos,... ...than to create a new one.
> as a result,... ...every economy... ...will naturally tend to bunch up... ...toward the bottom of the continuum.
> in other words,... ...an economy's share of revenue... ...that comes from commoditized offerings... ...has a natural tendency to increase.
> so, what... ...does that mean... ...for a society?

SECTION 6 (4:47)
> as an economy bunches up,... ...business practices... ...that are specific to commoditized spaces... ...become increasingly popular.
> higher levels of standardization... ...enable... ...higher levels of efficiency.
> outsourcing,... ...mergers and acquisitions... ...become widespread.
> the number of low-skill jobs... ...increases disproportionately,... ...leading to rising unemployment.
> although the economy is growing,... ...the overall wealth becomes... ...increasingly concentrated.
> a widening share of the overall wealth... ...migrates toward... ...a shrinking segment of society.
> at the same time,... ...more and more people... ...see their economic power diminishing.
> eventually, this natural development... ...becomes a threat... ...to the current social order... ...and, thus, democracy itself.
> so, what... ...should a society do?

SECTION 7 (6:05)
> once bunched up,... ...economies are also prone... ...to stay that way.
> the natural drive for maximization... ...tends to favor tofmos... ...that commoditize fast.
> moreover, societies... ...tend to sustain and create... ...more commoditized tofmos.
> governments tend to intervene... ...to help existent businesses... ...and to create more public projects.
> in short, societies are predisposed to evolve... ...into welfare systems,... ...which would encroach on individual liberties.
> nevertheless,... ...by pure luck, an economy... ...can debunch itself.
> a wave of new offerings,... ...creating many tofmos high on the continuum,... ...could emerge at any time.
> also, natural disasters... ...and wars... ...can swiftly debunch an economy.
> fortunately, though,... ...a less destructive... ...and more deliberate alternative... ...is available.

SECTION 8 (7:24)
> to sustain democracy,... ...a society must strive... ...to prevent its economy... ...from bunching up.
> it must constantly push... ...for new tofmos... ...that are positioned high on the continuum.
> new tofmos... ...that are based on new offerings,... ...rather than new markets,... ...must be encouraged and supported.
> at the same time,... ...the society must constantly ensure... ...that tofmos evolve and disappear freely,... ...protected from manipulation.
> in short,... ...to achieve enduring success,... ...a democratic society must create an underlying system... ...to keep its economy perpetually debunched.

SECTION 9 (8:20)
> the end
> or... ...the beginning?

Enabling Individual Freedom and the Pursuit of Happiness /  by Cristian Mitreanu

Formatted as a "YouTube video," here's an introduction to the new economic worldview that stems from the theory detailed in my article "A Business-Relevant View of Human Nature" (this should be your next stop). Some interesting conclusions can be drawn from it, including a potential explanation for the current economic crisis...

UPDATE 1/23/2009: A transcript is now available here.

Give Your Company an Edge! /  by Cristian Mitreanu

A new workshop on my theory of needs is now available. Here is the mailer (without the fancy formatting) that I've been sending out to various companies:

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CUSTOMER-CENTRICITY IS NOT STRATEGY.

...And one should not treat it as such.

Every company must be customer-centric. No matter how loosely we define the term, the heart of any business is about customers and their needs. If a company's product or service wouldn't address a customer's need, then there wouldn't be a transaction. And if there is no transaction, there is no business.

The belief that being customer-centric is a strategy, and thus something that only some companies should do, is not only false, but also dangerous. A sound understanding of the customer's needs enables a company to identify its opportunities and threats. Unfortunately, the fact that it is possible for a company selling commoditized offerings to perform satisfactorily by simply mimicking its competitors continues to fuel this misconception. And that is a direct result of the decades-old stagnation of our general understanding of business, and ultimately our understanding of human nature.

This state of affairs is about to change, however. A new, revolutionary theory of human needs has been recently introduced in Cristian Mitreanu's article "A Business-Relevant View of Human Nature." It is a theory that, compared to others, "provides an even deeper understanding of human nature, showing how human issues, or needs, are interrelated. Furthermore, it allows for identification of the basic forces that shape the dynamic business world." Simply put, the new theory deepens our understanding of innovation and commoditization, and the way they shape the business landscape.

GIVE YOUR COMPANY AN EDGE!

Download and Share, Free of Charge,
"A Business-Relevant View of Human Nature"
(http://www.RedefiningStrategy.com/HumanNature.pdf)

A workshop for small groups can be booked by contacting cmitreanu@redefiningstrategy.com.

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New Blog Name /  by Cristian Mitreanu

As of today 10/28/2008, this blog has a new name and URL -- "Cristian Mitreanu's Blog" (http://www.BizBigPic.com/CristianMitreanu).

The blog was launched on 04/05/2007 under the name "Picture001" (http://www.BizBigPic.com/Picture001). There was also a subtitle -- "Cristian Mitreanu's Business Big Picture (A Blog)" ...

My Human Nature Article Gets "Must Read" /  by Cristian Mitreanu

My article "A Business-Relevant View of Human Nature" has been recently recommended by Stephan Zimmermann, professor and former department chair for economics, whose blog "No Widgets Here" is part of the online economics magazine Amateur Economists. In the comments section of his post "Dominant Economic Views in Western Society, Part II," Professor Zimmermann says (bold type is mine):

“Cristian - your article should be a “must read” for all of our “Amateur Economists” readers. Obviously I agree with your concept of “successful existence,” which really cannot (or should not) be reduced to a pat formula, economic or otherwise. This might even, as you suggest, include maximizing, as long as the inherent dangers of such maximization are considered.”

In his article "Turning Bright Lights on the Dismal Science," Prof. Zimmermann explains one of the reasons a deep insight into human nature is important:

“Economics is just another method of trying to solve the age-old question of what, how and to whom to distribute finite resources. [...]

Ever since Adam Smith, the foundations of economics have been presented as scientific fact. The facts presented as economics are really two: an assumption regarding the nature of man as well as a strict belief and usage of logic. Unless someone can show an alternative to thousands of years of developed logic based on fact, we should be able to live with that assumption. More difficult, of course, and subject to endless debate is the assumption regarding the nature of mankind. [...]

Too many would-be economists in graduate school or beyond may never really have had asked themselves about the fundamental nature of man.

Once we understand and accept the essentials of mankind, bolstered with valid facts, we should be able to look at the “dismal science” with a much brighter perspective.”
— Stephan Zimmermann

Waking Up the Business Nation /  by Cristian Mitreanu

What if the world of business has been stuck in the wrong mindset for the past half century? Here's a quote from my new initiative "A Wake-Up Call for the Business Nation:"

“Keynes’s impact on the business world was even more profound. His view that an economy, as a whole, does not necessarily abide by the same laws as do individual transactions has created a lasting rift between business thought and economic thought. While the field of economics has continued to search for a more insightful economic worldview, generally focusing on a macro perspective, the business world has remained trapped in the post-war mindset. The apparent perfect fit of the discipline of corporate strategy, backed by Keynes’s macro-micro divide, has gradually diminished the importance of an historical perspective, ultimately leading to a business world in which few question the discipline’s very existence, and even fewer see the Keynesian underpinnings.”
— Cristian Mitreanu

Make sure you join the discussion.

UPDATE 7/24/2009: The essay/manifesto quoted above was part of a proposal sent to several potential investors for the first time on March 9, 2008 in an attempt to raise capital for one of my business ventures. For the public at large, it was first published on September 11, 2008 as part of the initiative announced here. And later, it was published as a RedefiningStrategy.com article on June 19, 2009.

UPDATE 6/21/2010: The discussion "A Wake-Up Call for the Business Nation" was deleted. Nonetheless, the essay/manifesto remains available at RedefiningStrategy.com/WakeUpCall.pdf.

On Changing the World... /  by Cristian Mitreanu

“[I]t ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.”
— Machiavelli

That's Machiavelli in his famous book "The Prince" (circa 1515). The full text of this English translation by W.K. Marriott is available here.