Aurosoorya Blog

Walmart has tied up with Bharti to create wholesale stores in India (Walmart opens wholesale store in India). Beyond marking a new phase in the Indian Retail environment, application of Fractal Systems Architecture indicates why this also marks a crucial phase in the Indian and Global developmental cycles.

Before continuing with this analysis let us remind ourselves of some Fractal Systems Architecture basics and implications (For a deeper briefing on this please look at other posts on this site):

1. A fractal is a pattern that repeats itself on different scale.
2. In Aurosoorya’s perception and research there is a pattern or fractal of progress that is true of organization regardless of scale.
3. It manifests in a shift from a primarily physical orientation to a vital orientation to a mental orientation.
4. This pattern of progress is observed from the smallest of organizations (an idea or a person) to the largest of organizations (evolution on earth itself).
5. The ubiquity of this pattern sheds insight into the functioning of our containing system, which is as a result seen as being purposeful, conscious, and integrated, amongst other things.
6. The insistence that world-phenomenon, regardless of scale, progress as per this pattern sheds insight into the trajectory that event / circumstance / organization will inevitably display.
7. Stagnation in a fractal happens when the choice is made to obstinately continue with an existing orientation rather than move to the next orientation in the fractal journey.
8. Stagnated fractals interacting with other stagnated fractals is a mechanism by which one or both fractals can progress along their respective paths.
9. Understanding of progressing trajectories and stagnations emanating within a conscious system that seeks ultimately to replicate a pattern of progress in all its constructs surfaces a unique system of analysis (fractal systems analysis) that sheds unusual insight into seemingly isolated events and their evolution.

Continuing –

Walmart’s success to date has been driven by consumer desire for an increasing array of diverse product offered at low prices. Walmart leverages its tightly managed global supply chain to offer just such a mix. But what are the hidden costs of this equation? Insight into this is gained by dwelling further on the nature of the driver behind Walmart’s success.

1. This driver is consumer desire, a vital-level dynamic. Such a dynamic seeks for satisfaction of its want immediately without considering the factors that have allowed the product to be supplied in such a manner. The cost, hence, tends toward a marginalization of all longer-term, more sustainable solutions.

2. As this dynamic becomes more real, there is a ripple effect and the vital-level dynamic is reinforced at the local, national, and global levels for a number of related fractals. These include the consumer-fractal, the business-fractal, the supply-chain fractal, the culture-fractal, and the society-fractal. In other words, the progressive realities possible to each of these entities is stalled, resulting in a slew of additional costs. Cycles of conspicuous consumerism, of business-as-usual, of questionable supply-chains, of stalled culture, and of misplaced society respectively, are reinforced. To illustrate some of these:

a) Vital-level consumer desire reinforces and strengthens vital-level global supply-chains. Such vital-level supply-chains often operate at suboptimal levels increasing the social and environmental costs to humanity in their wake. These costs remain unfactored in the final price of the product and are borne by the locality that has come into contact with the ever-expanding supply-chain. Ironically, as the companies managing such supply chains show increasing profits, they are rewarded by investors, and the very dynamic that it would make most sense to move away from is given additional impetus to continue with its questionable effects.

b) As local communities become part of these supply chains, their dependence on continuing to be a part of the supply-chain increases, and a balanced investment in their own communities often decreases. As a result local and hence regional development at multiple-levels is compromised, and then all must become part of the global business machinery in order to survive. There are, hence, huge costs at the community and regional levels.

c) The culture-fractal and the society-fractal are also hence compromised, and instead of growing to express their own uniqueness and possibilities, outcomes of journeying to the mental-phase in their own trajectories, continually circle at a standardized level because the basis of creativity has been marginalized by assimilation into a strong global machinery.

3. By the natue of the unrefined vital consciousness the costs to humanity of remaining at that level increase much faster than if corresponding shifts were made to the mental-levels of the respective fractals. Recall that mental-level dynamics are by their very nature more inclusive of a wider set of issues and hence more balanced in resulting action. Consideration of such balance has a longer-term positive effect that lowers hidden costs to humanity. By failing to shift to this level there are rapidly escalating opportunity costs.

These same costs that propogate out across the world, are also easily experienced locally at the site of the incoming Walmart.

On the flip-side the incoming of a highly organized force such as Walmart, albeit of a stagnated vital level, that has in fact succeeded in spreading its often welcome vital-way of being in many parts of the world, can as per FSA and the reality of intersecting fractals, cause a corresponding counter ‘organization’ at the point of its presence so that all fractals have the chance to alter by progressing along their respective trajectories. It is to be hoped that this is the case, and that such a reality may be proactively stimulated through thoughtful policy administered at the local level.

If so, then rather than Walmart displacing local producers and suppliers there is the possibility of local producers and suppliers becoming part of a hybrid Walmart-local ‘ecosystem’. Such a development pushes the vital-boundaries of the business-fractal to operate in another way that becomes more cognizant of the long-term benefits of strengthening localities for the sake of localities (BALLE) rather than for the sake of business alone or for Walmart alone. This development also pushes possible stagnation in the local community-fractal so that there is the acceptance of a new energy in the rearrangement of local activity.

Further, this and other such expanded ‘ecosystems’ can now feed into the global supply chain, to alter the very nature of the global supply chain itself. Rather than the usual vital-level heuristic of minimizing one-sided or manager-viewed cost, in this case Walmart’s, in managing the supply chain, a new mental-level heuristic of maximizing unique and local development could become the arbitrating factor in management of global supply chains, thereby pushing the supply chain fractal to the next level in its own fractal journey. Companies that develop localities along their global supply chains, based on respective uniqueness should be the one’s rewarded, because in reality such development strengthens the long-term wealth of the world.

As Walmart enters India, there is a chance to cause several potentially stagnated fractals to progress. This can be facilitated by substituting old ways of being and old measures of success by new measures that cause new behavior in the long-term.

As a measure of such real positive development the following should be tracked over the next couple of years:

1. Shift from vital to mental-level consumer behavior manifest in a shift from impulse and desire-based to more thoughtful buying.
2. Increase in price of products as real social and environmental costs are factored into cost of products.
3. Increase in local community, cultural, social capital with comprehensive development of local ‘ecosystems’.
4. Change in nature of supply chains so that they morph into robust development chains through acceptance and assimilation of local business / cultural / spiritual ways of being.
5. Change in reward to companies that cause true development along supply chains rather than compromise supply chains.
6. Change in the nature of development so that expectations of continued short-term financial growth is replaced by expectations of balanced long-term holistic growth.

In many respects what happens in India in the retail sector over the next few years is crucial to the overall development of the world. This is so for a number of reasons:

1. Retail in India is predominantly unorganized. Greater degree of organization that will accompany the incoming of the likes of Walmart will make it a far more serious, globally integrated industry with much more substantial effects on society and the environment.
2. Such organized retail will integrate in a huge middle class, by some estimates twice the size of ths USA, into the global market.
3. An unchecked retail sector at the head of what could currently be considered cancerous global supply chains, and driven by continued and unrefined vital-level consumer demand is a recipe for global disaster. On the environmental side GHG emissions will increase by a huge factor, global temperatures will continue to rise, and the rest could be history. On the social side more of the same will reinforce a self-destructive paradigm of business-as-usual, and the rest could be history.

On the other hand, a more well-thought out Indian retail environment, where the emphasis is to consciously shift the intersecting consumer, supply chain, business, culture, and society fractals to the mental-level in their respective journeys, will usher in a whole different and far-more balanced era in global development.