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It could also give China an advantage in an unlikely arena: the development of strategies for sustainable economic growth. And its search for solutions will have global impact, opening up vast markets for forward-looking energy and technology companies while simultaneously creating a rich seedbed for new types of ecologically intelligent products, services, and technologies. So what is the circular economy to which President Hu refers? Thus, it is powered by clean and renewable energy; uses material inputs that have positive or benign effects on people and the environment; and employs manufacturing, distribution, and recovery systems that allow those material inputs to be returned to fully productive use not merely turned into products of lesser value, as in conventional recycling.

One way in which China is working toward a circular economy is through its involvement with the China-U. Center for Sustainable Development. Founded in , the center brings together a variety of organizations—business, governmental, nongovernmental, scientific—to develop commercially, socially, and environmentally advantageous enterprises.

Center team is advising local developers on the planning and construction of a sustainable rural village that the government hopes will serve as a prototype for improving the lives of million rural Chinese. But Huangbaiyu village also highlights the business opportunities that a Chinese circular economy would offer Western companies.

Model homes, which are being used to test environmentally friendly materials and technologies, feature recyclable polystyrene roof panels and insulation produced by BASF; compressed earth-and-straw-bale block walls created with machines made by Vermeer, a U.

BASF sees a huge market in China for superinsulating polystyrene as a possible alternative to resource-intensive building materials like coal-fired brick, which was recently banned in many cities under new Chinese environmental regulations. In another project, my architecture firm, under the guidance of the China Housing Industry Association and the China-U. The plan for one of the sites, in the city of Miyun, near Beijing, includes eco-industrial sites in which the outputs of one enterprise can be linked with the inputs of another.

For example, wasted heat from a green textile factory could be used to dry grain in a nearby brewery; the spent grains from the brewery could be used as bedding for neighboring mushroom growers. These kinds of experiments not only present commercial opportunities for Western firms but also may yield valuable economic lessons for the entire world. William McDonough william mcdonough. Management as a discipline is about a century old.

Frederick W. Budgeting made decision making more rational, and business units helped tame organizational politics. Tools such as Six Sigma for processes and insurance, hedging, and portfolio management for finance also promised to bring risk to heel.

Management this century should take on two bigger fish: uncertainty and doubt. What do they mean? Risk is calculable; it can be expressed in terms of odds. Uncertainty is incalculable. A game of roulette is risky but not uncertain. We simply do not know. A growing proportion of business decisions must be made under conditions of intrinsic uncertainty, for the following reasons. Second, behavioral research by Nobelist Daniel Kahneman, Amos Tversky, and others has fatally undermined the premise that economic behavior is rational.

If buyers and sellers make unpredictable emotional choices, then of what value are probabilities? It explains why complex systems, like markets, inevitably bubble and crash. Neoclassical economics had it wrong: A stable equilibrium is unnatural.

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The Novelty Of Effective Leadership From The Front Porch by Luv Alston, Paperback | Barnes & Noble®

Finally, greater uncertainty is a result of greater ambiguity in business outcomes. Manufacturing efficiency is easy to measure, but effectiveness of services is not. All these factors obscure cause-and-effect relationships and make managing less subject to calculation. Then there is doubt—perhaps the ultimate management frontier. Risk and uncertainty presuppose that you know what you want. We hire a new CEO, uncertain whether he will succeed. In each case, we know what we want. Doubt comes into play when there is no right outcome, when one must choose between two evils, or when good outcomes have bad side effects.

An archetypal example of doubt was President Harry S. What made the decision vexing was the difficulty of weighing the calculable benefit of ending the war swiftly against the incalculable future dangers of nuclear warfare. Today, human cloning raises similar anxieties. Doubt also attends the largely ungoverned evolution of the Web. Many tough business-ethics decisions involve doubt of a different sort. Imagine an executive, constrained by fiduciary duty, who knows that a soon-to-be-laid-off colleague is about to buy an expensive house.


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Should he warn his friend? Uncertainty and doubt push the boundaries of management as we know it.

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Dealing with uncertainty involves growing comfortable with ambiguity and trying to build robustness into choices. Tools such as scenario planning can help, but one must be careful not to assume away uncertainty or conclude that one of the imagined scenarios will play out. Indeed, the flight from uncertainty and ambiguity is so motivated, and the desire to reduce what is fundamentally unknowable to probabilities and risks so strong, that we often create pseudocertainty.

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Confronting doubt, by contrast, involves coming to terms with differences in values. How does one choose between two valued objectives: safety versus liberty, scientific discovery versus the sanctity of human life, individuals versus groups? Sometimes we overcome doubt with faith, sometimes we privilege one set of values over another. And sometimes we just live with the burden of making choices when there are no easy answers. Nitin Nohria nnohria hbs. Thomas A. Stewart tstewart hbsp. Companies have sought to exploit network effects since W. Brian Arthur dubbed them the competitive linchpin for information-age business.

Many have used technology to tie together critical masses of customers and the most or best suppliers and so have gained an edge.

The Novelty of Effective Leadership From the Front Porch

But now enough companies derive competitive advantage from their networks that they are coming up against one another. That means we must learn a whole new set of principles: not how companies compete against networks but rather how networks compete against networks. Companies that introduce new networked products or define the standards by which networked products interact can quickly dominate a market. Companies seek lockout not just through product design but also through an advantageous arrangement of buyers or sellers, through ingenious feedback or feed-forward loops within supply chains, or through the exploitation of technology-enhanced social interactions within markets think eBay and Friendster.

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We now have techniques for evaluating some characteristics of networks, such as the distance between nodes, diffusion dynamics, and connectivity patterns. But we know almost nothing about how networks compete against each other. And since most of us think in linear, nonnetworked terms, our intuition provides little help.

One approach to studying this new dynamic is to redesign the boards of games like Battleship, checkers, and Go into complex networks and observe how players compete. These games are traditionally played on grids, which are very regular networks nodes and links are evenly distributed across the board. The boards comprise a small number of very well-connected nodes, a medium number of moderately connected nodes, and a large number of sparsely connected nodes.

This connection pattern is a primary source of adaptation—and complexity—in networks. Consider Go, an ancient Chinese game in which players capture stones and occupy territory. That makes strategy more complicated, as the ancient Chinese board game Go demonstrates. The board on the left shows a traditional grid; the board on the right shows a grid hypothetically designed for a complex network, with large hubs, small clusters, and long-range links.

On the left, traditional strategies call for economies of scale, or deriving advantage from a greater number of adjacent stones. On the right, new strategies call for economies of scope, or deriving advantage from long-range connections between cleverly placed clusters.