What’s wrong with EU? Appling the 7-S framework by McKinsey to EU (Open Innovation)


7s_for_government_insitution

A company has to organize itself properly in order to implement its objectives (values and mission).  A famous model that addresses such issue is the 7-S framework suggested by McKinsey, well-known in the business world. According to such model, all the 7-S (Shared Value, Strategy, Structure, System, Style, Staff and Skills) must be aligned in a way that is consistent in order to be effective. Organization is not only about Structure (see [1]).

Thinking about the current situation of European Union (EU) and in particular the youth unemployment and the nequalities among the members (see [2]): “Is the 7-S framework applicable also for other kind of organizations such as the EU?”

Let’s see how the 7-S framework might be applied to EU (comments coming from experts in business and law are more than welcome).

Shared Values

The EU doesn’t have a constitution that formally define itself as a country. However, the values shared among the members of EU are stated in the article 2 and article 3. In particular, “The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities” while the aims of the EU are 1) to promote peace, 2) offer to each citizen an area of freedom, security as well as ensuring free movement of people and 3) establish an internal market based on balanced economic growth aiming full employment and social progress. (see [3]). Is it reasonable to consider the principles stated above as Shared Values?

Strategy

For a company, a strategy is the definition of a plan for the implementation of its values and objectives. What about EU? During last decades, the EU promoted the enlargement program (see [4]) in order to help countries in the Central East Europe to join the Community while last year (2012) the members signed the fiscal compact where it was agreed a reduction plan of the public debt in order to face the economic crisis. Should the EU enlargement program and the fiscal compact be considered as part of the Strategy of EU?

Structure

In a company the structure is related to its organization and governance. For a country in general, government, parliament, banks, unions and other institution might be considered as a part of the structure of a state. Regarding EU, there are the European Parliament, Council, Commission and the European Central Bank.

System

In a company, the System is everything that defines policies and formalizes procedures. Thus, does it make sense to consider as part of system for a country all the laws, the regulations and the policies? Regarding EU, its system is defined in the Treaty on the Functioning of the European Union (TFEU). An example, is the article 294 of the TFEU that defines the ordinary legislative procedure.

Style

The Style of the company is about people and in particular the managerial style adopted by the governance.  There are many models that define the different styles of leadership (see [5]). Is it possible to assign a Style also for the institutions that lead the EU?

Staff

If the Style is related to managers, the Staff is about employees. The Staff are the generic capabilities of the employees in a company in terms of soft skills, behaviors, habits and ritual that are strictly related to the culture. Since the employees that work for a company are also citizens the Staff of a country or an institution like EU might be defined as the culture or the cluster of cultures within its territory as well. An example of how a culture should be described is given by the 6-dimensions model by Hotsfede (see [6]).

Skills

The Skills are the actual competencies of the employees working for the company. Thus, what about consider the same capabilities of the citizens as set of Skills of a country and EU as well?

What do you think? Is it possible to apply the 7-S framework aslo for insitutions such as the EU? If yes, within the 7-S framework, is the EU properly defined?

Share you thoughts and feelings.

Feelink – Feel & Think approach for doing life!

Resources:

[1] The 7-S framework

[2] Unemployment statiscitcs (April 2013)

[3] The ABC of European Union law

[4] EU enlargement program

[5] Leadership Styles

[6] Culture: 6-dimensions model

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Does the price for inequalities exist because of the second law of thermodynamics? (Entropy)


Inequalities, information theory and economy

Few days ago in The Economist’s blog was posted a comment regarding the issue of the wealth inequalities in the world.

In the comment was mentioned the last book written by the Nobel Prize in Economics in 2001 Joseph E. Stiglitz: “The Price of Inequality: How Today’s Divided Society Endangers Our Future“. Inequality is an actual topic especially considering the differences between the level of development of the economies and wealth in the world and the unbalance in terms of net exports and public debt between the emerging markets and the developed economies (see also The importance of balance and the idea of a sustainable growth).

Joseph E. Stiglitz, together with George A. Akerlof and A. Michael Spence, won the most famous and prestigious award price in Economic Science thanks to their analyses of markets with asymmetric information. Knowing that, suddenly came into my mind the relationship between differences (inequalities) and the concept of entropy. Why? Because entropy is a measure of the level of disorder of a system and the information within the system is fully distributed when the level of entropy (disorder) is highest.

An example of the second law of thermodynamics

photo credit: Josh Kenzer via photopin cc

photo credit: Josh Kenzer via photopin cc

Think at a glass of pure water taken from a fresh mountain spring and a drop of a good red wine. Since the water and the red wine are separated the level of disorder is low and the entropy as well. Furthermore, since it possible from an external observer to clearly distinguish between them, it is also provided an information: there is a clear water and there is  drop of red wine, nice and easy. Then, imagine to let the drop of red wine fall into the water: what will you see? There will be a transition phase in which the drop of wine expand itself and the water become less and less clear. At the end of the process the water it’s not so pure as a mointain spring and the drop of red wine is widespread and uniformly distributed so that the maximum level of disorder (entropy) has been reached and the information (red wine and clear water) is not available anymore from an external observer.

Time for a recap – entropy and information are related together: a high entropy means that the information is widespread and fully available within the system while a low entropy means that the information is ordered and organized and thus not fully available within the system.

Now, how entropy and cost of inequalities are correlated one to another? Well, let’s consider again the glass of water polluted with a drop of red wine. How should be the drop of wine separated again from the water? By looking at the tools available in the Chemistry Set, there are many techniques: centrifuge, stills and so on. However, these techniques, despite they are different, have common pattern: they need energy and where some energy is required there is always a cost and resources used! For the same reason, thinking about the transition phase of the process, in order to avoid that the drop of wine spreads over, a counteraction is required: barriers, centrifuge as well and whatever any chemist’s tool can provide.

Time for recap part 2 – information and entropy are related. If it is wanted to preserve the same level of entropy\disorder (information spread) some energy to spend is required unless the level of entropy has reached its maximum level (information fully widespread inside the system)

Conclusion

As far as I understand from the reasoning of Joseph E. Stiglitz,  to a polarized information correspond a polarized distribution of wealth as well. A polarized distribution of wealth means having inequalities that have a cost in terms of: inefficient use of resources (environment, labour,…), political insabilities and even unbalanced prices and rate of return in the stock market because an enclosed information let more space for speculation rather than for investments. Just think what’s going on with the public debt crisis in the Euro zone.

Considering the example of the water and the drop of wine described above, Is it possible to infer that behind the cost of inequalities mentioned by Joseph E. Stiglitz there is the second law of thermodynamics? (Entropy).

Since is sill more probable and easier to pollute the water rather than clean it or is not still possible to remember the future and forget the past (see also A Brief History of Time by Stephen Hawking) the second law of thermodynamics hasn’t been contradicted yet. Acknowledged that equality doesn’t mean fairness, how can be possible to measure the inequalities that can be tollerated by applying entropy to economic and society sciences in general?

Let’s think about it sitting in front a good red wine!

Feelink – Feel & Think approach for doing life!