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 A kind friend forwarded this video on Umair Haque’s views.  

Umair Haque at BRITE ’09 conference from BRITE Conference on Vimeo.

How apt. Makes one think if all that profit taking was worth the final wealth destruction? No. There needs to be a more mindful approach to maximizing profits.

That is creating wealth for the good of the larger community rather than maximising profits so that A looks better than B. I thought this was resolved decades ago, when game theory showed us that many times the long term good for the larger community was better than the short term good of the individual. Anyone remember game theory?

Well Umair Haque brought this discussion from a very much better perspective, that there were real positive economic outcomes aligned to the moral good. (We used to use the term ‘strategies’!) That there are 5 key principles:

1. Stewardship
2. Trusteeship
3. Guardianship
4. Leadership
5. Partnership

All of which we know but don’t do because these 5 priciples are not as macho as maximising profits. Wow, looking back into the 70s, this is how Toyota beat the Big 3 auto companies to quality and profitability.

40 years later Toyota does not have to do anything – just sit back and watch GM and Chrysler disappear on their own accord. This auto failure must have been Toyota’s cheapest defeat of a competitor. I wonder what GM’s and Chrysler’s Board was thinking. Wasn’t 50 years of losing market share something to be worried about?

In the same vein, didn’t Wall St realize that there was only so much credit enhancement they could sell/buy? Didn’t Wall St realize that chasing the deal was not the same are managing their own companies?

Essentially, we have let 30-day profitability concerns over-ride 10-year strategic planning.

QuantumRisk LLC has a very sophisticated proprietary business strategy model that allows its clients to figure out competitors’ strategic options (from public data) before deciding on its own strategy. But this kind of strategic modeling advantage is of little value to companies that value 30-day profitability.

Benjamin T Solomon
Managing Principal

Disclosure: I’m a capitalist too, and my musings & opinions on this blog are for informational/educational purposes and part of my efforts to learn from the mistakes of other people. Hope you do, too. These musings are not to be taken as financial advise, and are based on data that is assumed to be correct. Therefore, my opinions are subject to change without notice. This blog is not intended to either negate or advocate any persons, entity, product, services or political position.

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