Case
In 2005, when I was undertaking an MBA program, I was the president of a form of an Art Club. We organized several events. One day, one of the core members of the organization
asked me to arrange an event: where people come to a school cafeteria, with a bottle of wines. The participation fee looked a bit expensive and for me it doesn’t look either interesting or feasible at all. I have no idea if there is anyone who is willing to pay such a fee plus wine and just come together, for simply chatting. I asked her,
“How come could you believe people come to this event without any clear incentives? “
She answered, “Well, I don’t know…”
“Fine, so why we have to spend our resources, which means our time, energy and budget for organizing such an uncertain event? Can we make sure some participants? ” I asked her again.
“Well,… maybe… just we should trust them! ” she responded.
It was shocking to me. I found out that there are many senses that I can’t share with her. She was from a country in Eastern Europe, a former communist country. I was relieved that it was not my professional work but just MBA club. I realized that there are many things that I should learn in the world for me to be international. What I found as huge gaps between us are as follows.
1 Business efficiency
2 Profit and loss concept
3 Market driven approach
4 Social capital allocation
5 Responsibility
1 Business efficiency
Obviously, there was a large gap. I read a book written by a mathematician originally from Czechoslovakia. He recalled how inefficient infrastructure development had been done in his country. For instance, for developing a bridge, they start without planning, they destroy everything then start from the scratch when they find it is too short. They keep doing until they find the best fit length to connect two separate lands. I think this is too exaggerated example. However, I don’t think this was a joke when I heard my colleagues’ words. Business efficiency is naturally developed under the competition. Without a healthy competition, no one would work hard to improve their skills and productivity.
2 Profit and loss concept
The same we can say for this profit and loss. Under the capitalism, business entities have to seek their profit, otherwise they must disappear with accumulated losses. Under the fully controlled economy, people would never think about revenue and expense. Then naturally, they remained less knowledgeable for how to produce the profit.
3 Market driven approach
How much demand you can expect? What about the existing market size? Are there any competitors? What is the entrance barrier? How would you position your product?
All of them work as long as you can define the “market”. The place where the buyers and the sellers interact each other with a desire to buy/ sell. If we can’t define such a market, most of the business discussions don’t make any sense.
4 Capital allocation
Business capital, labor, and the real estate, when you get some fruit from your economic activity, that would be allocated to those three components. However, if you don’t have a workable market, the social capital allocation looks untransparent/ under the veil. Some people would feel comfortable but others would not. This has remained as an issue however, I believe it’s really hard to share such ideas each other unless we share the same social capital allocation system.
5 Responsibility
Under the capitalism, the responsibility is clear as your outcome. If you work hard, you get reward. However, if you don’t work hard, your reward is most likely to be very small. All of us have to take responsibility for what we have done so far and for what we are going to do.
To some up, people who come from capitalism society can hardly share feelings/fundamental business minds with those who come from communism society. Especially for the following.
1 Business efficiency
2 Profit and loss concept
3 Market driven approach
4 Social capital allocation
5 Responsibility
Although the market has been changing dynamically, we still find it would not be so easy task for us to work together by filling huge gaps
Further queries or doubts, please email to ytomizuka@abrilsjp.com
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