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Umair Haque

Umair Haque focuses on how next-generation economics demand new approaches to strategy. His posts help managers anticipate and take advantage of these changes.

Profit (Really) is an IllusionDecember 18 2008

One of the themes we've been discussing is summed up in a phrase: profit is an illusion. Often, people think that's hyperbolic. Am I just kidding around, or deliberately overstating the case? Not even a little bit. Growth will not reignite until new DNA organizes the economy. New DNA, for example, that makes profit meaningful again.

Why (Real) Relationships MatterDecember 18 2008

Here's the Economist rocking some hardcore 20th century thinking.

So what happens when every credit card company is exploiting every cognitive bias across markets? Simple: another credit meltdown, as nonpayment correlations spike.

Sound familiar? It should: it's the same systemic flaw in organization that is causing today's crisis.

The point is this. We cannot organize tomorrow's businesses - or economy - like yesterday's. What do I mean? Simple. How should we organize and manage how firms interact with consumers? The Economist thinks it's "creepy" but cool to trick consumers, because it's profitable.

Is it?

Not a chance - as our research at the Lab notes, the fact is: companies who can build authentic, honest, open, collaborative relationships with consumers are significantly more profitable (and sustainably profitable) than companies who treat consumers deceptively, antagonistically, and manipulatively.

True power isn't the power to manipulate. It's the power to create. There is a world of difference between the two - that orthodox economics has yet to understand.

Here's a final irony: it's telling that the blog is called Free Exchange - yet what the authors (mistakenly) conclude is going to be profitable is, in fact, subverting free exchange.

Lol - like I said: that's hardcore 20th century thinking, replete with it

Open Thread: Stimulus/ResponseDecember 18 2008

A collection of proposed stimulus packages - feel free to leave a vote in the comments.

AdminDecember 17 2008

Just a quick note to say how awesome the comments have been lately --and to apologize for having far less time to respond than I would like. I will be highlighting comments here to make up for it! And please, don't call me "Mr." Umair is just fine :)

Do Economists Matter?December 17 2008

Check out this post at Real Time Economics summarizing various economists' response to the Fed's latest (dramatic) rate cut.

None of them talk about more than the long-run risks of inflation, quantitative easing, or near-term deflationary prospects. Wow -- talk about beating a dead horse.

The question these non-responses beg is: If growth depends on how the economy is organized and managed, do economists matter?

We can't fix today's problems unless we change yesterday's rules. But economists -- and the models they rely on -- are bounded by yesterday's rules.

For most economists, the economy can only be organized and managed in a very specific set of ways -- by orthodox institutions: evil corporations, pump-and-dump brokers, profit-seeking investors, you know the score. Yet it is exactly that set of institutions that got us into this mess.

Here's my answer: what we need far more than forecasts from economists powered by models made of Play-Doh are new concepts, ideas, and innovations from revolutionaries building new kinds of institutions.

The fundamental constraint our economy faces isn't money, forecasts, or models -- it'