Benign and dark 'informal' supply chains

Benign and dark 'informal' supply chains

Summary: The global black market economy is estimated at around 10 trillion a year, easily making it the second-largest economy on Earth, rivaling the United States in size. Where does the 'informal' economy end and the black market begin, and how do we foster ingenuity in formal business collaboration without crossing criminal lines?

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TOPICS: Collaboration
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Mature companies are increasingly looking for innovation from their employees: there are plenty of CEO's with minimal education and the street smarts of a street trader, and (....to use a favorite expression used by my educator father) plenty more 'educated above their intelligence' managers who would probably be complete rubes negotiating at a swap meet.

I've enjoyed Robert Neuwirth's writing about the 'informal economy' for many years - he's lived amongst traders in Nairobi, Rio de Janeiro, Istanbul and Mumbai in the past and has a new book out 'Stealth of Nations' which reveals how people throughout the world smuggle legal goods into other countries or use technology to sell unlicensed products or services.  I haven't read this yet but did enjoy and recommend his recent piece on the excellent (US) Foreign Policy magazine site 'The Shadow Superpower'.

....You probably have never heard of System D. Neither had I until I started visiting street markets and unlicensed bazaars around the globe. System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of "l'economie de la débrouillardise." Or, sweetened for street use, "Systeme D." This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy. A number of well-known chefs have also appropriated the term to describe the skill and sheer joy necessary to improvise a gourmet meal using only the mismatched ingredients that happen to be at hand in a kitchen.

Enterprises theoretically lust after these types of individuals inside their organizations to 'think outside the box', shake things up and innovate. Culturally it is very hard to introduce agility into hierarchies with bureaucracies that tend to cross check and ratify everything, although according to Neuwirth in the currently booming Latin American market, big discount stores are trying hard to compete as they're worried about the agility and success of small store distribution systems.

Trust and collaboration is everything in these multi stage distribution stages, which are also happening on an epic scale. The transcontinental reach and realities of globalization are exemplified in a great short Economist article 'Extreme Shipping' about one of the world’s largest container ships, the Eleonora Maersk. I wonder what percentage of the 7,500 container cargo manifest is 'informal' or soon to be once it reaches port...

The video at the top of this article is the excellent Misha Glenny's TED talk and provides a darker tone to the optimism of Robert Neuwirth. Glenny's 2008 'McMafia: A Journey Through the Global Criminal Underworld' is a terrific book on a 'criminal network of unsettling vastness, complexity, and efficiency that represents a fifth of the earth's economy, trading in everything from untaxed cigarettes and the usual narcotics to human lives and nuclear material'.

The incredible resources available to the darker shades of 'informality' and the ingenuity economy, such as the million dollar  Balkans smuggling speed boats in Glenny's video and the custom built South American narco submarines and narcotanks put a different light on 'l'economie de la débrouillardise'. Ingenious people competing and collaborating to realize fabulous riches in completely unregulated free markets is a harsh, violent business.

Glenny's journeys through the criminal global supply chains, which he found focus on four nexuses - Israel, Cyprus, Dubai and the Balkans for money laundering - demonstrate how small and connected our world really is. Money can be "stolen by a Russian in Ukraine from an American company and paid out in Dubai – and the whole transaction need last no longer than 10 minutes" says Glenny in his latest book DarkMarket, illustrating how widely distributed crime is against siloed local legal jurisdictions.

Finding a balance to inject some Systeme D into the many conservative western businesses whose business and IT infrastructure predates the internet era requires very clear understanding of where the legal lines are...the irony is the ever-morphing, often invisible global predators trying to break into enterprises are much more agile and collaborative than they are. Today hundreds of billions of dollars are being spent on cyber security technology, but "there is virtually no investment in trying to ascertain who is hacking and why..."

This sounds remarkably similar to the emphasis on enterprise software investment for collaboration and innovation with a sometimes similar lack of focus on how to coax ingenuity from employees and foster enduring collaboration between real people - as opposed to stereotyped personas...

Topic: Collaboration

About

Oliver Marks leads the Global Digital Enterprise Team at HP, having previously provided seasoned independent consulting guidance to companies on effective planning of business strategy, tactics, technology decisions, roll out and enduring use models that make best use of modern collaborative and social networking tools to achieve their business goals.

These are Oliver's views and not those of his employer HP.

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  • RE: Benign and dark 'informal' supply chains

    I find it interesting, in the context of 'black-market' economies and the so-called 'Debrouillardise', how little effort is seemingly paid to stopping these enterprises. As the strength of the former grows, so do the lines get blurred between it and the latter. Another interesting thing to consider is something as simple as the Exchange Rate. Without an international economy, the temptation to steal a cheap good in Ukraine, and sell it for top dollar in Mumbai is simply too great to prevent. This opens up a can of worms ho9wever, as it would seem, in order to combat this exponentially increasing epidemic. It would appear there would need to be an international monetary system, as well as an international task-force whose sole purpose would be to fight this. Never going to happen.
    James Keenan