SUSTAINING SMART BALANCES BY INNOVATIVE DISRUPTIONS The SmartBalances approach enhances an urban system’s value upon the conventional ones by extending its key success factors through maximum operational flexibility based on resource-deployment optimization, maximum managerial/decisional latitudes based on creative-disequilibrium optimization, and maximum strategic alignments based on innovative-disruption optimization. Hence, in order for a city to fully utilize this approach, it needs to 1) develop resiliency and renewability amid systemic crises and then learn how to 2) master strategic alignment so that it could 3) innovatively harness crises and fabricate disruptions that may unexpectedly arise. 1) Developing Resiliency and Renewability A mundane way of economic development focuses on productivity, profitability, growth, and stability along its developmental process with less attention towards its impacts on the society and the environment as they have been treated as externalities. When those foci are expanded to include social and environmental issues, questions have arisen as to how the performance of a social and an environmental setting is measured in a similar fashion to that of an economic setting. The measures of social resiliency and of environmental renewability are proposed to quantify their values resulting from the impacts of those economic-performance measures. The arguments are that since positive economic performance often leads to negative social performance (e.g., income disparities, wealth inequalities, and illegal activities) as well as negative environment performance (e.g.., resource depletion and industrial pollution), social resiliency that represents the capability of a community to withstand and counteract the economic impacts and environmental renewability that represents the capability of an ecosystem to rejuvenate at a faster rate than its decay rate are more appropriate than measuring their upside performance. An urban system is able to develop its social resiliency and environmental renewability along with its economic prosperity by engaging the passive-resident and the active-workforce value clusters into the overall value chains that take into account the socially and environmentally exchanged transactions. As mentioned earlier under the first practical procedure, resources contributed by those two value clusters would be measured, recognized, retained, and ploughed back into the urban system in a more transparent and accountable way while they are being reciprocated or incentivized by the private-business and the public-planner value clusters. With adequate data observed and collected on social and environmental activities, the measurement of social resiliency and environmental renewability can be analyzed and derived with ease. Without the SmartBalances approach and the strategic design of value clusters, it would be more difficult to measure, let alone develop, social and environmental capabilities that are essential to the sustainability of the whole city. 2) Mastering Strategic Alignments Based on the 7-S Framework developed by Waterman, Peters, and Phillips (1980) for building organizational (or urban-system) effectiveness around dynamic alignments among resources and processes to reinforce strategic impacts on future performance, a sustainable financial industry could thus be designed. Such a framework involves six alignable elements, namely strategy, structure, system, style, staff, and skill to achieve a set of shared values (the seventh element) that cuts across all those six elements. The definitions of 7-S elements are shown below. • Strategy for Sustainability: The plans to create, grow, and sustain quadruple urban values in demographic, economic, social, and ecological areas amid frequent systematic disturbances or occasional systemic crises. • Structure for Efficiency: The designs of the urban system to fairly and efficiently allocate resources among its value clusters in order to grow with public confidence and be managed by best governance practices. • System for Efficacy: The interrelated activities and contingencies that effectively and effortlessly integrate innovative and prudential tasks to optimize resource utilization with creative and ethical people to drive sustainable growth. • Style of Leadership: The decision-making approaches of urban-leadership best practice to be adopted so as to incentivize value clusters, deal with expected disturbances creatively, and cope with unexpected crises innovatively. • Staff Engagement: The sharing attitudes, transparent behavior, accountability-based culture, and entrepreneurial decisions of all urban members to create and enhance values for growth while sustaining their ethically prudential impacts. • Skill on Technology: The competency, dexterity, and talents of each and every value-cluster member to utilize/employ and mobilize/deploy relevant technologies to innovate value-adding capabilities while being vigilant toward risks. • Shared Value: The core urban values being transformed into best practices that encompass all value clusters’ attitudes, behavior, culture, and decisions that would lead the urban system to its sustainable growth. These 7-S elements can be divided into two groups: 1) the task-oriented hard elements as a city’s infrastructure consisting of strategy, structure, and system; and 2) the people-oriented soft elements as the city’s ultrastructure comprising style, staff, and skill. The shared value is what both groups and their interactions are aligning among themselves to achieve. In relation to the SmartBalances approach, the hard-element infrastructure is comparable to the city’s projects, the soft-element ultrastructure is mapped upon its value clusters’ ABCD minimum criteria, and the shared value are earmarked by the four parameters’ sustainable growth targets. Adapting the 7-S Framework to achieve such a shared value requires an alignment among the four factors which can be identified with one or more hard and soft elements. When the people-oriented ultrastructure (i.e., the ABCD) are constrained, the task-oriented infrastructure can be optimized, and vice versa. For instance, the city could focus on structure and skill in order to boost latitude in the public-planning cluster, on system and style to increase fairness in the private-business cluster, on strategy and staff to bolster competition in the passive-resident and active-workforce clusters, and on style and staff to enhance transparency throughout the whole urban system. 3) Harnessing Crises vs. Fabricating Disruptions The last deployable activity under this SmartBalances approach involves the way in which an urban system could either 1) harness any unexpected crisis whenever it occurs or 2) fabricate systemic disruptions before any crisis arises. To be prepared to harness the crises on the one hand, the city takes a reactive mode to analyze multiple patterns of past disruptive situations and utilizes a responsive method to adjust its future actions when engaging actual disruptions. To be equipped to fabricate the crises on the other hand, the city employs a proactive mode of assessing the likelihoods of future disruptions and deploys an anticipatory method to align its current strategies to engage different outcomes of fabricated disruptions. By practicing both crisis-handling modes, the city could be more alert to embrace both types of systemic disruptions that may arise in the least expected moment. The difference between those two modes is underscored in five contexts as shown below, namely the nature of crisis situations, the structure of urban markets, the approach of regulatory interventions, the arrangement of urban institutions, and the adaptability of urban members’ attitudes, behavior, culture, and decisions. • Harnessing Crises Innovatively: - Crisis Situational Nature: Unexpected but with observable past patterns to benchmark on - Urban Market Structure: Low entry-exit barriers to compete within and across markets - Regulatory Intervention: Automatic interventions to restore normalcy after disruptions - Institutional Arrangement: Fragmented but coordinated to freely pursue agreed targets - ABCD Adaptability: Less predictable due to low transparency and accountability • Fabricating Innovative Disruptions: - Crisis Situational Nature: Fabricated from plausible stress-test simulation scenarios - Urban Market Structure: Lower transactional and operational frictions relative to others - Regulatory Intervention: Strategic interventions designed to fit expected abnormalities - Institutional Arrangement: Clustered and empowered to jointly achieve focused targets - ABCD Adaptability: Predictable due to better incentive and governance systems To innovatively harness crises with smart experiences, the city should draw from vast empirical data of other cities a country or foreign ones that had gone through tough times, and then design innovative actions that could respond best to actual crises as though they really happened to it. Sometimes, such innovative reactions are proven to yield better sustainable growth under certain disruptive situations. This crisis-harnessing mode is akin to buying a contingent claim (e.g., option) that allows its holder to either exercise the locked-in action when the future situation turns out to be favorable or abandon that locked-in action when the future situation becomes unfavorable. To innovatively fabricate disruptions with smart foresights, the city could perform “stress-test” simulations that generate different crisis scenarios, and then experiment on them using innovative strategies to find out the best-fit ones in containing systemic losses while still maintaining its sustainable-growth path. This crisis-fabricating mode is similar to the preemptive-strike strategy to exploit the elements of surprise and seize the first-mover advantage, or to the money-market hedging to lock-in future outcomes by discounting future foreign obligations at foreign interest rates, converting them at today’s exchange rates, and then compounding them at domestic interest rates. Considering their strengths and weaknesses, each mode carries different aspects of pros and cons. On their positive side, the crisis-harnessing mode has data-availability and action-adjustment as its advantages whereas the crisis-fabricating mode has quantitative-analytic and strategic-alignment as its advantages. On their negative side, the time-lagging and flexibility-lacking disadvantages belong to the crisis-harnessing mode while the erroneous-assumption and costly-commitment disadvantages can be attributed to the crisis-fabricating mode.
Posted on: Sun, 21 Dec 2014 12:57:21 +0000
Trending Topics
Recently Viewed Topics
© 2015