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Challenging Market or Uniformed Players?

Over the last few months Eupex REIT has been having a difficult time engaging placement agents for the private placement of the REIT’s trust units. It is my belief that the difficulties associated with this capital raising endeavor stems from three areas: 1) poor understanding of the current commercial real estate market by gatekeepers (project [...]

September 2008
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Quebec Lacks Tolerance

Xenophobia and intolerance are still common in the province of Quebec. With the recent riots in Montreal North, Bouchard Talyor Commission report (http://www.truveo.com/Controversial-Quebec-tolerance-report/id/4241100143), and the refusal of the town of Herouxville to allow citizens to practice their cultural (and religious) rights, Quebec still has a long way to go before it can climb out of its prehistoric attitudes. I have lived and visited many parts of the world, yet I find that the province of Quebec lacks a moderate level of tolerance. Clearly, the province of Quebec will not reach the same level of equality as in the United States any time soon.  

Today, Ontario and British Columbia remain the leaders in equality and tolerance. Community leaders, politicians, and various other esteemed members of the province reflect an ideal representation of the members within the community. Some notables included Chief Constable Jim Chu of the Vancouver police department, born in Shangai, China and raised in Vancouver. Visible minorities are also represented in the political arena for both these provinces. More importantly, women are taking the same strides as men in these provinces. The question is: Can we reach this level of equality in the province of Quebec? NO!

There is significant feedback from politicians and legal professional on the level of inequality in Quebec. Some say that equality is at the same level as in the United States or elsewhere in the country. Others say, if you do not like it…leave! And that is exactly what is happening. The lack of a diverse workforce in Quebec has seen an upsurge in the phenomenon known as “Brain Drain” and the flight of intellectual resources. Unfortunately, the media recognized that it was not only intellectual visible minorities that were leaving. Click here.  

One simple way to view the level of tolerance and equality in Canada’s three most populated provinces is to take a look at the province’s legislative assembly and average university classroom. If they are equal, in terms of group representation (gender, ethnic background, etc.) then there is an acceptable level of tolerance. Although this is not scientific, it is a fair representation of the level of tolerance and acceptance for each province. Needless to say, Quebec fails miserably in this regard. Quebec’s legislative assembly does not come close to representing its community and certainly not its educational system. One must wonder why.

In the late 60s through the 70s, Quebec was the dominant province in terms of economic growth. This was due in part to its positive immigration policy and tolerance policies during that time. Unfortunately, these policies and attitudes have not progressed. I believe that this will hinder Quebec’s economic growth in the future.

As provinces like Newfoundland become major contributors to Canada’s gross domestic product and Quebec’s xenophobia and intolerance does not subside, the province may become the next “have not” province.

I will come back to this in a couple of days. I restrict my blogging to no more than 7 minutes or I will be here all day!

Let me know what you think!

The Death of Competitive Advantage and the Rise of Adaptability

Corporate strategists, industry analysts, educators, and various other pundits have placed a great deal of stock in an organization’s competitive advantage. I believe this to be the biggest misnomer of the new unbounded economy. Competitive advantage is defined as a unique set of activities or resources that differentiates (in most cases provides a competitive edge) itself from its competitors. It is usually falls under one of two categories: cost advantage or differentiation advantage. Unless these unique set activities are inaccessible by other competitors (for example due to government regulation), competitive advantage is a concept that is used too often and is almost irrelevant in today’s economy.  

As a corporate strategist, I have great respect for Michael Porter’s book “Competitive Advantage”. It is the “holy grail” on sustainable competitive advantage and became known before its time. However, with increased globalization, the insignificance of distance between a company and its clients, and the irrelevance of the size of the organization, organizations can easily replicate (and usually improve on) a competitor’s competitive advantage. Therefore, the key to organizational success is not competitive advantage but adaptability.

When evaluating organizations, we should evaluate the organization’s level of adaptability. In my opinion, there are three reasons why competitive advantage is not an adequate evaluation of an organization’s abilities.

The first problem with competitive advantage is its short-term scope. In my opinion, no competitive advantage is sustainable in the long term. If we review our business history, organizations’ competitive advantages have become, on average, shorter and shorter generation after generation. This is because the global market place has become increasingly competitive in every industry. As technology improves, our ability to perform various operations becomes effortless and less time consuming; hence shareholders demand to be compensated in the form of higher returns year over year. As you read this, automobile plants across the globe are changing production lines due to shifts in consumer buying preferences (well, we all know it is because of the high gas prices). A few decades ago, this shift in production lines would cause a significant slowdown in production. Today, the shift in automobile production lines takes considerably less time than it did back then. There are many factors working against an organization’s competitive advantage, time is one of them.

The second problem with the concept of competitive advantage is the constant flux of society in general. Consumer preferences and economic conditions are constantly changing.  The era of SUVs and Microsoft is over. It is now the era of hybrid vehicles and Apple. Given that we are in a state of dissipative equilibrium, we need an associated concept. Competitive advantage is a stock or static concept that can only be measured at a single point in time. Successful organizations should measure themselves on how quickly they adapt to changes in the market and have a structure to follow. The astute corporate strategist must ask himself or herself: does structure follow strategy or does strategy follow structure? (That is for another blog). Simply put, it would be analogous to measuring distance in units of time. Quick question: Light speed; is it a unit of time, distance or space? (If you are the first to answer this question, you win a prize!)      

My former professors are probably rolling their eyes as they read this blog. Please do not misunderstand me, competitive advantage is important in the analysis of an organization’s position against its competitors in the near term. However, we need to rethink our dependence on its contribution to an organization’s success and in turn its relevance in an analysis. I place a higher dependence on an organization’s diversity policy or human resources selection process than its short-term competitive advantage.   

Is your organization’s competitive advantage sustainable in the short term? Long term? What about its adaptability level?