Corp Unc & Philos

How about Ford and Renault ?

After K.Kerkorian’s initiative to consider a Renault / GM collaboration, some talks are supposed to take place, obviously in a much more secretive context. Far less spectacular but potentially full of unexpected outcomes, some contacts have been organized between C.Ghosn and Bill Ford, according to this article of the NY Times.

The future is uncertain since, the article reports, everybody in this industry is now interested to talk to C.Ghosn. Apparently, Jaguar is for sale, and J.Nasser, former CEO of Ford, backed by a fund, might be interested.

The case of Volvo is unclear. The failure of a merger with Renault in the 90’s is still a painful memory. Particularly since the take over by Ford which took place in 1999. Since then, not much has been reported on this collaboration.

Here are some comments by swedes reacting on an article in Dagens Industri, the leading business newspaper in Sweden, about Ford. A reader finds it funny if the missed merger with Renault in 1993 was completed now, which he sees as a possibility. Another is convinced that in case Renault and Ford decided to collaborate, Volvo would be sold to Renault.

Finally, here is what an engineer from Volvo says : “We might as well achieve what P.Gyllenhammar had planned 13 years ago. For Volvo, Renault is a partner which is more secure than Ford. It is a solid group, which has proved its capacity to work internationnaly.” Let us remind that in 1993, the project had failed because the state-owned Renault was rejected by the swedish shareholders.

The same Volvo manager then declares publicly what everybody has known in Sweden for years : “Within Volvo, the Ford culture, with its reporting and top-down management, is more and more experienced as destructive.”

This automotive saga will keep on with interesting perspectives ahead of us.

Will technology change the relationship between supply and demand ?

The relation between demand and supply is a key issue today, as a consequence of the development of Web.2. The idea of “direct”, whether democracy or economy, is a natural association to be made with that of Web 2. Bruno Giussani brings up the matter in an interesting post where he mentions a soon to be published book by Xavier Comtesse. According to Xavier Comtesse, we are heading towards a greater participation of consumers in the processes so far taken care of by producers. Though the idea is as interesting as doubtless, it requires a comment.

The productivity gains result from an increased involvement of the consumer in the value chain. IKEA is a typical example. The wiki wave fosters participation and will further develop the active role of consumers. There is no doubt.

Now does that mean consumers will take part in the creative process ?

I think it is another question. More and more economists now agree upon the “supply-oriented” characteristic of capitalism. Mauss’s essay on the gift is increasingly influential among them.  The essence of giving is a key of the system. Therefore, the idea of consumers being able to express their need is a recurrent theme which once again loses ground.

Once again because another myth has already been deconstructed : that of consumers need as such. Consumers have no needs, they have desires, even though the Maslow pyramid is still taught to young business schools students. It is not difficult to express one’s needs ; it is another story to put words on desire. Its essence is to be satisfied in meeting the desire of someone else. To make it short, the engine of consumption is in the meeting of desires, which implies the free development of supply.

This, in my opinion, is the limit to direct economy.  Technology will revolutionize logistics, organisation, distribution, product-improvement and personalization, but it will probably not devitalize the need for a creative supply. Demand will probably never rule supply.

On blogs in France

Thomas Crampton’s article in the International Herald Tribune of July 27th has been circulating within the bloggers community, particularly in France. Some features of  “France’s mysterious embrace of blogs”  have been put forward.  A New York-based French executive, Laurent Florès, explains how negative and egocentric the French blogs are, compared  to their American counterparts, while Loïc Le Meur sees them as a substitute to riots in the street. Both comments are symptomatic and meaningful for a country which, as many believe, may not have yet completed its revolution.

Precisely, about the French Revolution ; one of its brightest analyst, Tocqueville,  disclosed its true nature as early as 1856. Explaining the importance of writers and intellectuals in the political life of the 18^th century after Louis the XIVth’s authoritative royal power, he says :       “ The political debate was violently repressed into literature” so that finally the actors of the Revolution behaved more as “literary heroes” than as political  representatives.

In France, the status of a writer is high, the unexpected symbol of a counter power. Every fall, nearly 700 new novels are released on the market.  This eagerness to “(re)write  our Revolution “, reminding the press of that period, which Chateaubriand called “the social electricity”, is probably one of the deep motivations for this “mysterious embrace”.

The pearl : meaning and value

The elements of the Meaning Capital of a firm are worth their meaning. Each of them means something and plays an active role in the context of a community. Here is a clear and simple example how .

“The pearl” is a short novel by John Steinbeck. Kino, a poor fisherman finds a pearl. He knows it is valuable and thinks his life is going to change. As he wants to sell it, the merchant claims it hardly has any value because it is too big.  Kino refuses the bargain and goes to town for a better deal.  The pearl attracts thieves and jealousy and Kino’s journey  becomes a march to evil.  He ends up throwing the pearl back into the sea.

The main character of the novel is neither Kino nor the pearl ; it is the value of the pearl. But Kino ignores the rules of demand and supply and things will not work according to what he wants.

The pearl has no value in itself apart from the system of exchange which is organized collectively around it.  To every actor, it means something by convention like any currency. Kino’s belief in the real value of the pearl is but a dream which drives him to misfortune.

The value and meaning of the pearl are outside it, not inside ; they totally depend on the collective structure using it as a sign. The same goes for the Meaning Capital of a firm ; it is full of "pearls" that would be meaningless outside its context.

Steinbeck’s “The pearl” is both an efficient and enjoyable introduction to the way it works.

What is the "Meaning Capital" of a firm ?

So far, the business model of the firm has been looked upon as an idea. In fact, it also has a meaning. Because it speaks for itself, the "Meaning Capital" involved, usually remains unconscious.

The concept of « Meaning Capital » is an outcome of my consulting experience supported by research on management issues, done within DIT.

I have always been puzzled by the fact that no two companies are alike, even within the same branch : atmosphere, processes, management, client relationship … Usually, the “human side” of the firm is supposed to make the difference.

But in fact, two competitors never develop the same business model. The same product may have different purposes which remain unconscious. I think of an example ; I came across two suppliers of mobile phones, the first one actually offering a communication means, the second one a communication filter. You could read the difference by comparing the functionalities of each product. But on the surface, both of them were supposed to be identical.

I soon realized that the corporate product or service is loaded with an original intention which exceeds its perception by the market. The product always has a meaning, whether perceived or not. This meaning is shaped by a set of items called the “Meaning Capital”, always brought by the founder-entrepreneur of the firm.

Why “Meaning Capital” ?

Simply because the elements of this capital are “meaningful” ; like any currency, they have a value which is collectively recognized. Just an example : developing mechanical devices was not only a technical activity for Louis Renault, it was above all a means to go against his father’s will who wanted him to become a trader in the textile branch.

This supplement of meaning is a sort of signature underwritten by the entrepreneur on the things of reality. The “Meaning Capital” just as the financial one, is a working capital. It is the key to the actual meaning of the business model of the firm.