Abductive Reasoning, Absurdity, Advanced Economies, Centralized Economies, Centralized Planning, Design Thinking, Emerging Markets, Globalization, Ilf and Petrov, Information Technology, Innovation, Multinationals, Roger Martin, Supply-Demand, Validity Thinking
Many of the countries now part of the emerging economies club can trace their recent history to totalitarian regimes and centralized economies. What centralized political and economic paradigms have proven to have in common is a proliferation of material shortages coupled with propaganda driven, unrealistic plans. And so, under such regimes, populations found creative ways to adapt by learning to by-pass absurd rules and plans and to find ways of obtaining much needed resources outside of official distribution channels.
In essence, in free economies the population expects things to work as advertised; by contrast, in centralized economies the population expected things not to work. Ilf and Petrov, the Soviet prose authors, were early observes of the humor derived from the ways in which the Russian population learnt to deal with absurdity in the early Soviet Union. Another good related read is Jaroslav Hasek’s “The Good Soldier Svejk”, a parody aimed at the absurdity of war and military discipline. And when it comes to film, there may be more than just fiction to the Hollywood depiction of the stereotypical Russian cosmonaut at ease with malfunction while his western counterparts scramble for the instructions manual.
I contend that the centralized economy heritage fundamentally defines the psychology and personality of a significant portion of the emerging market population, with some very interesting implications to globalization. Let me focus on two such elements: abductive reasoning and consumerism.
Just as Roger Martin proposes that in business pure logical thinking is insufficient in designing a desired outcome, so would following absurd rules and nonsensical plans result in failure in a centralized political and economic paradigm. A different kind of reasoning was necessary to survive in such a system. One needed to find creative ways of obtaining a desired outcome more often than not in spite of the rules. And so rules were there not to be followed blindly, but continuously tested and flexed. Entire societies were in an ever vigilant “work-around” mindset. Design thinking, the latest in advanced economy business strategy advocates the benefits derived from focusing on a desired outcome, using validity thinking that is based on abductive reasoning. According to Roger Martin, design thinking is a form of thinking that adopts the abductive reasoning element of intuitive thinking—what the philosopher Charles Sanders Peirce called a “logical leap of the mind” or “inference to the best explanation.” And so, after decades of being on a constant look-out for the “best explanation” that defied deductive logic, I contend that emerging economies with a heritage in centralized regimes represent the largest pool or supply of abductive reasoning, ie design thinking, in the world. Since huge value is now being attached to this type of intuitive thinking in advanced economies, it is I believe in order to say that emerging markets represent a huge untapped capital for the global economy.
So is this capital explored and exploited, and if not, why so? Let’s get back to the material shortage argument for a second. As I’ve pointed out, centralized economies came with material shortages. For those emerging economies that can trace their recent past to a centralized political and economic paradigm, there is a thirst of catching up on the material side, which equates to consumerism. And so advanced economies regard emerging economies as another type of capital: consumers. Multinational companies with headquarters in advanced economies go to emerging markets to sell more product, ignoring for the large part the availability of abductive reasoning capital.
I can now call out the irony echoed in the title of this piece: while emerging markets likely represent a supply of an increasingly valuable commodity for advanced knowledge economies, abductive reasoning, they are being instead seen by advanced economies as a supply of consumerism. This I believe represents a lose-lose proposition for both parties.
There is however one exception to this irony. I’ve searched for years for an explanation of why some of the best information technology and software development professionals seemed to come from emerging markets. In this blog I will use abductive reasoning to assert an explanation: it is because information technology is one of the few fields where the two dynamics I’ve called out, abductive reasoning and consumerism, actually intersect and are in resonance. Here’s my explanation: consumer markets rely heavily on business processes, whether it be supply chain, enterprise resource planning, or customer relationship management. As information technology is the key enabler for process governance, it is one of the main employers for the professional class in emerging markets. This presents the opportunity to capitalize on the readily available abductive reasoning, with positive results in terms of solution creativity and innovation.
The question remains: can we upgrade the quality of supply-demand relationships to better align with the knowledge and creativity intense future we envision for our global village? If so, can the information technology model be expanded to other industries? And how can we nurture this pool of abductive reasoning talent before it is eventually diluted as emerging countries populations increasingly emulate and resemble those in advanced economies?