Given the complexity and magnitude of our situation, it is hard to imagine that there could be a solution. Our very survival and progress in life depends on our ability to apply massive funding to our serious challenges, yet we are beset by staggering debt. Fortunately, a miraculous new economic approach awaits us. While our current approach to business pits firm against firm so that each industry segment produces only the sum of the earnings of the segment’s firms, Global Economic Optimization (GEO) proposes five types of inter-firm collaboration within each industry segment, resulting in generation of enormous additional wealth.
While the collaborating eight-firm industry segment shown above would provide 140 (28 interconnecting lines x 5 types of collaboration) additional ways of generating wealth beyond that possible in a non-collaborative segment, a more typical thirty five-firm segment would offer 2800 (560 x 5) additional ways of generating wealth, upon establishment of inter-firm collaboration. On a global basis, inter-firm collaboration could annually generate many trillions of dollars of additional wealth.
Five types of inter-firm collaboration
GEO will employ five types of inter-firm collaboration to generate vast additional wealth beyond that currently being produced by the global business sphere. On a limited scale, these forms of collaboration are already pursued successfully in business.
Combined purchasing of raw materials and supplies
Savings on purchased raw materials and supplies will result when segment firms place larger combined orders of the materials and supplies upon which core competitive differentiation does not depend.
Sharing of support functions needed by all firms
Substantial savings within each industry segment will result from inter-firm sharing of the support functions used by all firms. Care will need to be exercised to ensure that sharing is not expanded to the point where individual firms experience a deficit in the volume or quality of support needed for optimum business performance.
Optimization of production assets
Maximum profitability of the manufacturing facilities within each industry segment will be created by filling the production facilities of underutilized firms with the excess orders of firms where production facilities are already being fully utilized.
Segment-wide sharing of know-how
Through segment-wide sharing of know-how, the most cost effective operating practices can be employed by all firms. Additionally, product innovation will spread most rapidly throughout the segment and accelerate the benefit to customers.
Optimization of selling, warehousing, and distribution assets
Maximum profitability of the selling organizations and logistical infrastructures within the firms of each industry segment will be created by optimizing the organizations and infrastructures of underutilized firms with the excess orders of already fully utilized firms.