Wednesday, November 15, 2017

On the point of the capitalist spear

Is your project on the point of the capitalist spear?
Probably; or should be.

Capitalist: One who invests the proceeds of business into R&D, new capabilities, and new production to make the pie bigger. (*)

Not-capitalist. One who invests proceeds in other than the above, having no discernible effect on making the pie bigger.  See: zero-sum economic stagnation (I gain by making you lose)
Conundrum: many capitalists make non-capitalist investments; many decidedly not-capitalists start businesses and make investments toward expanding the pie.

Pre-capitalist, zero-sum

Before about the time of Adam Smith, say 17th century and earlier:
  • There was no conviction that the future could be better than the past, and 
  • Saving was a better deal than investing
  • Investing in R&D, process improvement, etc wasn't really on anybody's to-do list
  • There was no concept that economy could grow any faster than the demographics
  • The best use of "profits" was to put them in the mattress, or indulge one's self, leading to enormous wealth disparity, but also leading to a near-desert of new ideas that would expand the economy
Since then
Nearly all who will read this posting believe the future can be better; the pie can be larger meaning the sum is >0; the economy is more likely to be driven by invention and innovation than demographics.

And, thus we arrive at project management and the balance sheet of business:
  • Business assets are entrusted to PM to execute on invention, innovation, and business effectiveness
  • Assets are financed by -- that is, provided by -- lenders and those that work for the project for future payment; and by investors and owners. These are "holders of liabilities" against the business
  • Happiness is a balance: holders of liabilities are happy with the work of the asset managers
Trust in the future is the lubricant to make all these wheels turn. Trust that the future is a better thing motivates investors (to be investors, rather than savers) and allows for work for future payment rather than "pay me now" .... in other words, credit. 
  • Without a credit system there can be no projects of any scale
  • Without trust -- backed up by rules and regulation -- there can be no banks or contracts
  • Without banks, there can be no credit
  • Repeat
So, deliver!
To keep the creditors happy there have to be favorable outcomes. And, that more less closes the circle on project management: Successful delivery begets more or repeated credit which finances more projects, the objective of which is to expand the economy leading to even more availability of credit and a greater economy.

(*) See: Adam Smith, author, economist, and philosopher, and "The Wealth of Nations"

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