Size does matter

While we were rushing to make the last deadline for our Microeconomics paper, little Miss Havaianas was rushing to the hospital - to give birth to a little boy. In our MBA micro-world this is a macro thing to happen and we are all very happy to hear that mother and eMBAby are doing well. Guess that Miss Havaianas will from now on be the person to talk to if you want to find out more about the price elasticity of diapers, baby milk and other baby-related products.   This price elasticity (of demand) is a major concept in microeconomics.  It explains how demand will react whenever prices increase or decrease and is mainly determined by factors such as the availability of substitutes, necessity and income.  Take gasoline for example which has a price elasticity of - 0.26: in layman's language this means that if gasoline prices were to be increased with 10%, the demand will drop by 2,6%.  There are of course substitutes such as public transport or cycling but if you are all day out on the road this does not really help.  The trick to understand elasticity is simple, the closer the figure is to zero, the more inelastic demand is (read the less sensible it is to price changes). 

Microeconomics also help you to understand how pricing is done for a given product or service in a given market structure. Obviously, price setting is different when you are in a market structure of monopoly, oligopoly, perfect competition or monopolistic competition. I learned that price discrimination, bundling, damaged goods are typical strategies of the monopolist whereas companies in perfect competition are price takers instead of price setters.  Although all this might sound boring I was very much into the subject. Part of it can be explained by the fact that I just read Superfreakonomics and although this book had quite a different perspective on the matter (no mention of terrorists in the course) it makes me want to dig deeper.   

Once again, this course has been a very relevant building block (all credits to our teacher Jan Bouckaert) - not only for my professional resume but also for my personal curriculum.  Perhaps I will never be involved in price setting (but then again, Buddha walks in mysterious ways) but it doesn't matter. What matters is that I am on a personal discovery journey and start to see things differently.

Crash course

Haven't written much lately but I have a valid excuse: Macroeconomics.  Macroeconomics is the study of the national economy as a whole or its major components. It deals with the "big picture" of the nation's economic activity and explains the mechanics of BBP, economic growth, inflation, (un)employment and other economic indicators.  That's the easy part - the difficult part is understanding the underlying principles as well. This means that you have to understand how the government's monetary and fiscal policies contribute or slow down economic growth.  What happens to Demand when the interest rate increases or decreases?  Why do Central Banks have to monitor money reserves? What happens to the money supplies when the Demand for Goods and Services increase and why people tend to save and put money on their bank accounts when you're heading for a recession?

The challenging part of this course is that we only have two days to assimilate a course which is normally taught over the course of a year.  Wannabe economists spend an entire year on these topics - we get the crash course. And man, did we crash... Talking about crashes:
As with every module, we also had to write a paper and show that we can apply the theories and insights acquired during the course.  Mine was on the economic growth of Ireland between 2005  and 2012. I had to look in the eye of the Celtic Tiger and explain how a booming economy headed straight for recession and deflation.  How come that one of the poorest countries in the European Union turned itself into the fourth richest country in the EU over a period of ten years and all of sudden went bust? They didn't really go bust like Greece but still.... they are looking at a serious deficit now and yours sincerely had to come up with a couple of recommendations on how to run a balanced budget and stimulate growth again.

We'll see if I have convinced our teacher or rather confused him but I must admit I enjoyed this module. When I now hear on the radio that the Belgian citizens have put billions on their bank account in 2009, I know that this is because they are preparing for tough times. If the newspaper writes that running a balanced budget is key in 2010, this means that debt stabilization is on top of the government's agenda.  And if you have to choose between running balanced budgets or fiscal policies, you must not ignore the system of automatic stabilizers.

Like the Russian playwright Checkhov put it so well: "knowledge is of no value unless you put it into practice". Let this be our ground rule for 2010 and may it be a year full of knowledge, wisdom, prosperity and happiness.

Funky

Tomorrow, I take up a new assignment at a Dutch multi-utility in Middelburg (Zeeland). My responsibilities center on rolling out an Enterprise Social Software platform, creating awareness on "het nieuwe werken" and engaging my co-workers in a conversation.  Het nieuwe werken is the Dutch cover term for Enterprise 2.0.  It is a three-pillar program that focuses on 1. New facilities, 2. Human Resources and 3. Technology. 

Fortunately they only asked me for the latter two as building new offices is not my strongest asset.  I'm very curious to see how I can fit the program into the job. Well, I guess that macro-economics is not the first to spring to mind but certainly, other program modules will help me to deliver a better job.  Looking at the agenda, I look forward to the 2 modules on managing people and organizations, market and customer understanding and the April course on market strategy.  Although this a seen it, been there, done it thing - I am convinced that I will learn new insights and practices that are off-the-shelf implementable.  Talking about insights, we have to do a 360° assessment - again a seen it, been there done thing.  But this was 3 years ago so I can benchmark myself now.  On the brink of turning 35 - I wonder how some of my old friends see me.  Because there is no role for boss, direct reports and colleagues in my particular situation I asked Captain Starbucks, DC Comics, Boy Wonder and Zappos to evaluate me.   Together with some close friends they will evaluate me on a variety of personality-related topics. 

Curious to see how my personal profiling and self-assessment is put in a perspective of them assessing (and perceiving) me.  In the light of 2009 coming to an end, it might be useful to use that input and add some extra bullet points to my new year resolutions list. And just FYI, even in 2010 the internet will still be hot -  it's going to be an exciting year!