The New Economic Economics of Commerce of ommerce · Economic Economics of Commerce of ¢ ommerce...
Transcript of The New Economic Economics of Commerce of ommerce · Economic Economics of Commerce of ¢ ommerce...
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Economics of Commerce Economic of ommerce The New
$ ¢ The New
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Adam Smith
The Wealth of Nations
Adam Smith
Father of Modern Economics
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Ronald Coase Nature of the Firm
Ronald Coase
Total Cost of Ownership
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Total Cost of Ownership
Coase received a Nobel Prize in Economics in 1991
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A Word or Two about Negotiating Pricing
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Robert Solow Nobel Prize 1987
Robert Solow
Economic Wealth Is Driven by Innovation
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Innovation Matters
Robert Solow earned a Nobel Prize in 1987
Labor & physical capital 13%
Innovation & Technical
Change 87%
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John Nash Nobel Prize 1994
John Nash
Grow The Pie vs. Fight Over It
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Win-Win Thinking is Steeped in Research…
Command
Cooperate
Cooperate
Command
Buyer
Sup
plie
r
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10
“Adam Smith was wrong….”
“Adam Smith said, ‘The best results comes from everyone in the group doing what is best for themselves.’
That is incomplete.
The best result will come from everyone in the group doing what is good for himself and the group. It is the only way we all win.”
- John Forbes Nash
A Beautiful Mind
Source: A Beautiful Mind
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Oliver Williamson Nobel Prize 2009
Oliver Williamson
Transaction Cost Economics
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Style Matters: Be Credible, Not Muscular
“Muscular buyers not only use their suppliers, but they often ‘use up’ their suppliers and discard them. “The muscular approach to outsourcing of goods and services is myopic and inefficient.”
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Williamson received a Nobel Prize in Economics in 2009
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Steven Levitt Author, Freakonomics and Super Freakonomics
Steven Levitt
Photo Source: http://www-news.uchicago.edu/releases/05/050428.levitt.shtml
The Power of Perverse Incentives
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Perverse Incentives Are Real
“One of the most powerful laws of the universe is the
law of unintended consequences. This
applies to schoolteachers, realtors, crack dealers, expectant mothers….. ”
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Perverse Incentives….
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Dan Ariely Duke University
Dan Ariely
The Importance of Trust
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Perverse Incentives Are Real
“We are adept at rationalizing
our pettiness”
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Changing the Game
So just how do the world’s best redefine winning in business relationship?
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Photo by Alison Levine
First and Foremost, They Have a Vested Mindset
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And They Follow Five Simple Rules
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Which One Do You Want Me To Share Today?
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• P&G (Real Estate/Facilities Management)
• Microsoft (BPO) • McDonald’s (Supply Chain) • U.S. Dept. of Energy
(Environmental Services) • State of Minnesota Dept. of
Transportation (Construction)