Thursday, September 26, 2013

Top 10 ideas for Multinational corporations - 9

Idea No. 9

Have a Distributed Economies approach for your portfolio in your Organization

The concept of distributed economies (DE) as a fresh strategy to guide industrial development towards becoming more sustainable.
The concept calls for a transformation in the industrial system towards DE departing from the socio-economically and environmentally difficult dynamics associated with large-scale, centralized production units that are favored by neoclassical economic drivers.

With DE, a selective share of production is distributed to regions where a diverse range of activities are organised in the form of small-scale, flexible units that are synergistically connected with each other and prioritize quality in their production.

However, rather than the total abolishment of large-scale production, the argument concentrates on finding a renewed balance between large- and small-scale and between resource flows that take place within and across regional / global boundaries.
Follow distributed capitalism with a report from McKinsey
Key approach on DE / DC has the following steps
  • Inversion
  • Rescue
  • Bypass
  • Reconfiguration
  • Support
Key factors that could help the adoption of DE / DC
  1. Price is high
  2. Trust is slowly fading
  3. High fixed cost, no further optimization possible
  4. High middle management costs
  5. Not having solutions / assets needed for customer
  6. Key economic solution / service not fully leveraged
  7. Users requirement is ahead of provider. 
iTunes / Apple to the music industry and Ford are widely quoted as examples - ebay, amazon, smart phones app stores are few more examples that has a DE model. 

Here is another link

Check out the video as well
Here is the key note to fine-tune practices around DE

DE surely can give us the benefit - what 1900s has given us due to industrialized mass production!

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