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
Transcript of The New Economic Economics of Commerce of ommerce · Economic Economics of Commerce of ¢ ommerce...
Economics of Commerce Economic of ommerce The New
$ ¢ The New
Adam Smith
The Wealth of Nations
Adam Smith
Father of Modern Economics
Ronald Coase Nature of the Firm
Ronald Coase
Total Cost of Ownership
Total Cost of Ownership
Coase received a Nobel Prize in Economics in 1991
A Word or Two about Negotiating Pricing
Robert Solow Nobel Prize 1987
Robert Solow
Economic Wealth Is Driven by Innovation
Innovation Matters
Robert Solow earned a Nobel Prize in 1987
Labor & physical capital 13%
Innovation & Technical
Change 87%
John Nash Nobel Prize 1994
John Nash
Grow The Pie vs. Fight Over It
Win-Win Thinking is Steeped in Research…
Command
Cooperate
Cooperate
Command
Buyer
Sup
plie
r
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“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
Oliver Williamson Nobel Prize 2009
Oliver Williamson
Transaction Cost Economics
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
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
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….. ”
Perverse Incentives….
Dan Ariely Duke University
Dan Ariely
The Importance of Trust
Perverse Incentives Are Real
“We are adept at rationalizing
our pettiness”
Changing the Game
So just how do the world’s best redefine winning in business relationship?
Photo by Alison Levine
First and Foremost, They Have a Vested Mindset
And They Follow Five Simple Rules
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)
