Sunday mornings with Fareed Zakaria on CNN are sacred in my house.  Which basically means that my kids and husband abandon me for that hour.  More often than not, I’m highly tempted to blog about one or two of the topics Fareed covers.  I typically resist, because I rarely disagree with Fareed and over time I’m afraid I might come across as a “Fareed Groupie”, which could tarnish my image of a self-thinking, intelligent, strategic, modern woman.  That said, this week, I am giving into temptation. I simply must blog about this new British government and the 39-year old George Osborne (Chancellor of the Exchequer – Secretary of the Treasury to Americans) whom I found to be slightly pompous (expected), highly intelligent (expected), but unexpectedly refreshing and on-point in his ideas around what people really want from their governments.  I personally, think the US Republican party could take a lot of cues from the new conservative sheriffs at Downing Street.  As an Independent, I actually prefer it when both the Democrats and Republicans are acting wisely as it makes for better candidate options and more solution oriented action.

If you missed the show, it’s easy to watch or listen on demand.  Just click here.

Just to add my own touch to the conversation, and keep up my image, here are the four primary reasons why I like what I heard from Osborne and feel strongly that this is the direction that successful politicians will have to take (regardless of party) to be successful in the future.

Not Afraid to Act

Osborne has pledged to the British people that he will not hide hard choices from them and he will make them.  He has clearly lived up to this campaign promise with his austere budget that is getting a lot of press. He feels strongly that the public wants a government who can admit when there is a real problem, and work quickly to get it fixed.

Proper Leadership

The kicker here is their assumption that the public can and should act as an intelligent deputy to a sheriff who is willing to make and stand behind decisions regardless of which direction the political winds are blowing. This new conservative party clearly recognizes that the British public clearly understands there is a debt problem, and that the country has been living beyond its means for some time, and so they are willing to take it on as their first priority.  They also realize that not only Great Britain, but Europe, requires proper leadership to bolster their image and regain the world’s confidence in their ability to pay their own way.

Collaboration is Not a Death Sentence

Osborne speaks of forming a proper coalition government where the other party holds seats in the cabinet and how the real benefits of diversity in Parliament are less about looking different and more about being different and thinking different.  One of the best statements Osborne makes in Fareed’s interview is, “We can’t abandon whole areas of policy to the Left in British politics.  There is no reason why the Conservative Party should not have a progressive policy on climate change or be interested in issues of poverty and equity in our society and have answers to those issues.”

Open, Open, Open

They are open to new ideas, new views and anyone who can come up with a better way to reach a common goal.  Osborne indicated that he constantly seeks out second opinions and alternative views.  He encourages large numbers of people to come into meetings and say what they want to say, and understands that listening is a large part of the job.  His office recently asked the broader group of public servants for their ideas on how to reduce budgets in a way that doesn’t damage the frontline services people receive.  They received over 65,000 responses in a couple of weeks, and had some of them around to Number 11 Downing Street for a chat recently.  Interactive governement . . . what a concept!

I’ve been saying for years (just ask my friends) that the politicians in the US are simply making things worse and what most people really want is an entirely new breed of politician that is much more suited for the 21^st century.  We need politicians who care less about party line and more about solving problems. We need politicians who can explain both sides of an issue, without bias, and why they believe their decision is the best option.  We need politicians who can work with other politicians to get the job done and stop wasting the public’s time and money on petty politics.

As much as I love they way in which this new and refreshing British government is behaving, I would certainly caution them that the best solution in today’s environment is likely a combination of austerity in some areas and stimulus in others.  Because western politicians failed to play the austerity card when times were good, we are all now stuck in a precarious position.  The equation is really quite simple and it works for government, companies, and at home.  When times are good you pay off your debts, make smart investments, and put a little under the mattress for a rainy day.  When times are hard you dig out your mattress money and stretch on credit a little if necessary.  If used responsibly, credit can be a very stabilizing element in an economy.  When abused, as we all now know, credit can backfire as surely as a 1970’s MG.

One of the things I love the most about this new government is the fact that they aren’t letting fear run the show.  They are taking a stance, creating a strategy, and they are willing to listen to other ideas.  The longer we let fear run our households, our businesses, and our politics, the longer this era of uncertainty will linger.  It really is that simple.

This post is dedicated to the tens of thousands of Haitians who have lost their lives; to those who will undoubtedly loose their struggle in the coming weeks; to my friends and colleagues at Aimer Haiti and to the wonderful creative economic development ideas we were working on that now mean more than ever before.  See previous posts for more information on Aimer Haiti.

Globalization is no longer optional for any nation, company, or person in the world, regardless of their beliefs.  The realities of our globally interconnected world are more evident now than ever before given the failures in our global financial systems that are far more intertwined than many realized.  This coupled with the shrinking populations in many developed nations ensures that disasters such as Haiti and other atrocities happening in under-developed countries are everyone’s challenges and everyone’s potential.  It is now in the self-interest of the developed world that these tragedies are tended to and we band together to allow capitalism and democracy to bring people out of poverty creating new and sustainable consumers and markets for everyone to access. It’s no longer optional; and for me that brings hope.

In order for economies to grow, they require something to create an increase . . . more consumers, cheaper inputs, faster production, more products . . . you get the idea.  Until this century, the developed world has been able to primarily rely on their own increases in population, growing middle class, advances in technology, and fierce consumerism to feed the ever-increasing wheel of economic activity.  Take a look around today . . .

• Populations in many developed countries are decreasing or slowing
• Consumerism has taken a big hit as many realize debt gone wild is bad and things don’t bring happiness
• The environment is feeling the effects of careless growth increasing production costs around the world
• Non-renewable commodities/resources continue on a trajectory of ever growing costs because, well, they are non-renewable
• Finding cheaper inputs is a strategy of the past, including labor, as the world is realizing its better to pay a decent wage and create a consumer

What does all that mean?  It means that the primary resource of capitalism has moved from capital, to labor, and to knowledge over the past 150 years and is now moving toward Connectivity . . . Stronger, deeper, more trusting, compassionate, and creative connections in every direction imaginable will drive the future.  You can’t touch connectivity.  You can’t buy it.  You can’t even learn it from a textbook, but it can be cultivated and societies are increasingly hungry for it.  Those who can connect the seemingly un-connectable dots in new and inventive ways will win.  Businesses that connect to what their customers and employees value the most will win.  Capitalists that figure out how to connect to and serve the Bottom of the Pyramid will win.  Those who can embrace the connection between failure and success will win.  Those who have the courage to connect to their passion and not to the herd will win. Those who figure out that hording no longer works but collaboration does will win.  Those who learn how to tap into the innate energy that exists in every person to do good in the world will win.  Those who can disconnect from fear and connect to the creativity in courage will win.

The US, Europe, and the rest of the developed world must realize that in order to continue our own standard of living and our own comforts in life we must begin to help other countries build middle classes and become the productive citizens they desire to be.  My hope is that perhaps this tragedy in Haiti can bring light and education to the need for global citizenship and the prosperity it can bring to so many (rich and poor).  We have an opportunity to help Haiti rebuild itself and become a model to be used by other struggling nations.

Changing our outlook and expectations from the short-term to the long-term is key.  Today, liquidity does exist; it just exists with a short-term expectation of return and is invisible to most of us.  So we have what is referred to by some economists as a “wall of liquidity” that is searching the world for immediate arbitrage situations and completely ignoring the long-term opportunities that exist today in many industries and places around the world.  That “wall of liquidity” brings a risk of continued global financial instability as it preys on unlikely places such as Russia where the currency will likely normalize in relation to the USD and EUR and monetary policy has allegedly been mismanaged.  It is critical that we recognize the many unintended consequences of the past and vow not to repeat them in the future.

“The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.”  ~  Theodore Roosevelt

When you see the level of response from the US and nations around the world to the tragic earthquake that rocked Haiti only a few days ago, it is hard not to feel proud of the quality of global citizenship displayed by so many.  Individuals and organizations have been sent to help with security, medical care, food distribution, general aid, and journalistic coverage and they should be commended for their commitment to humanity.

However, as an economist who was working on economic development in Haiti before the tragedy, I know that the strategy and model used for rebuilding is the key to success.  Despite good intentions, the developed world does not have the best track record for helping under-developed countries gain any significant traction.  There has never been a lack of funds or good intention, but there has been a lack of effective and unifying strategies designed with the population’s physical and cultural needs in mind.  This unfortunate and tragic earthquake has presented the world and Haiti with an opportunity to set the rebuilding of Haiti on a course that will have long term significance for its people, if we are all willing to try something new and think about building sustainable economies with a new perspective.

There are a number of areas that will obviously require simultaneous focus, however the primary force and core strategy should be helping Haiti to rebuild their own country, with their own hands, and resist the temptation to do it for them. Often our own need to help gets in the way of truly understanding what is needed.  This may sound over simplified or inconsequential to many, but I assure you it is not. The rebuilding must be done in a way that unites and aligns citizens, government, businesses, investors, and aid organizations.  Without unity, there will be continued factions, hoarding, corruption, and minimal progress.  This monumental task requires a top-down strategy with a bottom-up implementation plan.  I have faith that with the assistance and guidance from the rest of the world, Haiti can rebuild itself and become much stronger than it was before the earthquake.

We must avoid simply jumping in with quick fixes and rebuilding everything back they way it was.  A master infrastructure plan that is comprehensive in its ability to connect the disparate parts of the country and support agriculture and other industries is critical.   It must take into account the reverse urban migration that is likely to occur as a result of the earthquake.  Many people will go back to the small towns and villages where they are from because they no longer have homes and jobs and have nowhere else to go.  The people in Haiti’s countryside are generally the poorest of the poor — why so many migrated to the big cities in the first place.  Supporting agriculture, tourism, and arts industries in the countryside will provide people the means to stay, to start over and to allow the country to grow in a more balanced way.

Agricultural Development Aid is a crucial component, and it will be required in a way never seen before.  With the traditional strategy of sending a disproportionate amount of food aid compared to Agricultural Development Aid, we generally set a country up for failure.   Sending only food aid does serve an immediate need and feeds people today, but it can also destroy what markets still exist.  Building chicken farms, developing farm land and building other food production facilities puts people in business so they can build up their own markets allows the aid to continue to churn through the economy and even increase economic activity over time.  Simply handing out food produced elsewhere and brought in through an outside distribution channel fills an immediate need, but if it is not balanced with other strategies eventually also feeds the equation of poverty.

Businesses must be created and financially supported so they can hire local employees and begin the re-building process.  Contracts must be structured with built-in profits from the rebuilding efforts that can be used to create further self-sustaining economic activity.  The banking industry must be supported such that the bankers can make enough profits to stay in business and grow while providing heavily subsidized loans for building businesses and rebuilding structures.  The World Bank and the IMF need to find creative ways to support industries and businesses directly as opposed to giving the lions share of funds directly to the government.  When businesses begin to grow and more money is invested in capitalistic endeavors, the government’s revenue will grow in sustainable ways and can it begin to rely less and less on foreign hand-outs.  The government should be orchestrating, aligning, and ensuring coordination of all efforts.  The government should be making master plans and ensuring long-term strategies are properly focused on growth.  Groups like Aimer Haiti, who can help build and mentor businesses, should be working with the government, the World Bank, the IMF, the US, foreign investors and domestic investors to develop completely new strategies for growth.  Aimer Haiti has already been working on such collaborative and creative economic development strategies since their launch in 2009 and for years before as concerned citizens and Haitian business owners.

Energy has been a growing issue for Haiti as its population rises, and is now even more critical.  Electricity has never been reliable and is often supplemented with large battery stores powered by diesel generators.  The good news is that technology has advanced enough that a country like Haiti can leap-frog many of the evolutionary steps in energy that the developed world could not.  It’s a matter of getting the brightest minds together, inside and outside of Haiti, to come up with the best solutions given the unique conditions of the country.  Before the earthquake Aimer Haiti was exploring the possibility of using small solar energy units in some of the poorest areas to provide light, refrigeration, and power. With refrigeration, people can store and sell perishable products such as produce and fish.  With power people who cannot read or write can begin the process of building an education base through radio and television.  Mobile phones can be powered and connect people to markets to sell their goods.

Solving the energy issue is also the key to stopping deforestation.  Until there is a reliable source of energy to replace charcoal, and until there are jobs and small businesses to give people a means to survive, deforestation will continue.  Deforestation causes rapid erosion, which leads to road and bridge destruction, and leaves the land unsuitable for farming ensuring the cycle of poverty continues.  The cutting down of trees does not happen because Haitians do not care about their land, it happens because it has become a means of survival for so many people.

The interconnectedness of all of these major issues in Haiti is another reason why getting the overall re-building strategy right is so key to its long-term future success.  Every solution and every single effort of aid and rebuilding should be viewed as an opportunity to put Haitians in businesses that will create jobs.  For example, the distribution of food and creation of helicopter landing sites, which is happening right now in Haiti, is a huge opportunity to employ people and allow them to feel a part of the solution and not a part of the problem.  There shouldn’t be such a stark line between those giving aid and those receiving aid.  This is an example of the change in thinking and the change in mindset that is needed to change the trajectory of how under-developed countries are assisted, particularly in times of need.

This type of re-building is not done from an office or over the phone, it is done by creating relationships on the ground, building businesses, one at a time, and helping families, one at a time.  It’s about doing, creating, uniting, and elating in each small success that both dedication and determination will bring.

History has proven time and again that capitalism and the building of a significant middle class are still the best ways to bring people out of poverty.   Before the earthquake, one of the first billboards you saw when you were leaving the Port au Prince airport, was the large unity triangle of Aimer Haiti, which of course translates to “Love Haiti” in English.  I hope it is still standing!

The short answer is EVERYTHING. The long answer is what this post is all about.  These are three of today’s most pressing issues that are all too often discussed in a vacuum.  The best progress will be made at the margins where each of these pressing issues overlap.  When we begin to see them each as an integral component of global economic progress and prosperity and not discrete issues, much will be gained.

Perhaps the inclusion of 21^st century business models is a surprise to many lumped in with the other two that get a lot more focus and media airtime, but please notice that I use the predication “21^st century”.  If we want to do something about the ramped greed and selfish strategies that exist in many of today’s firms, then it must be added to the mix.  If created correctly, new and improved business models can be a large part of the solutions to climate change, global economic development, and their own perils of decreased employee morale and disgraced public opinion.

• They all require new, passionate, and innovative solutions. In fact, we must assume that the very best solutions are not yet known.  Thus, the solution frameworks that are being bantered around today need to accommodate the unknown solutions of tomorrow.  It’s beyond out of the box thinking and into a world without the constraints of boxes of any sort.  It’s about unleashing the mass of untapped potential and productivity that lies dormant inside people and organizations around the world.

• They are each integral to the success of the others. Slowing population growth in the developing world is one of the keys to avoiding a climate catastrophe down the road.  Economic development and the creation of a middle class is the most effective way to slow population growth in the developing world.  Private sector ingenuity is key to new technologies that will reverse the current trajectory of climate change as well as promote economic development in the developing world.

• Alignment is key to effective solutions in each case. Businesses are learning how to align their shareholders, employees, customers, and the public in ways that will dramatically increase productivity.  When transparent alignment and partnerships are created between foreign aid, domestic and foreign private investment, and public money, global economic development will become significantly more efficient and effective.  Unless we properly align the big players in the world on climate change soon, it will likely suffer the same fate as the Green Revolution in Africa.

The most successful businesses models in the 21^st century will be those that realize contributing to the creation of new markets is a winning long-term strategy, that focusing on something besides growth and profits is the key to engaging employees and winning the hearts of customers (yours as well as your competitors), and that how you decide to be in the world can be just as important, if not more important, than what you sell.

Too often when these topics are discussed in the media, there is too much focus (in my opinion) on the facts known today which narrows the conversation and too little focus on what we want to create.  In other words, discussions and potential solutions are being filtered based on what we know how to do today and not on whether or not they fit what it is we are trying to create.  All great movements start with an unadulterated view of what should be created, if anything is possible.  There isn’t much humans can’t do once they set their minds to it.  Some things take a few months and others a few generations.  The problem is that we sometimes lack the belief that it can be done, which ends up being the biggest thing that holds us back from succeeding.

Investment comfort in the world of high finance all too often comes from fast profits in known and proven markets.  The never-ending game of offering higher profits at lower [apparent] risk to attract capital was certainly alive and well before the global economic crisis.  The question is, why does it appear to be coming back?  Didn’t we learn anything?

A global economic recession of epic proportions should have taught us a few lessons, but the days when CNN is glued to the US consumer expenditure figures as if it were the only barometer in existence, it seems it isn’t so.  Too much investment comfort will lead to not enough investment in the future and much greater economic turmoil down the road. For economies to flourish they need to grow, and we seem to continue to look for growth in places where the potential is quite low.

One of my mentors used to always say that if you aren’t feeling nervous and agitated about a deal, then it’s probably not a good one.  We were investing Goldman Sachs money, so the deals we worked on weren’t small and were often the first of their kind in that country.  A healthy amount of discomfort means we’re forging new territory.  Forging new territory in a world that primarily relies on capitalism to make the wheels go around is a good thing.  Running in the same old markets over and over and over again may move the wheel around, but it does little to make the wheel bigger.  In a world where we are slated to break 9 billion inhabitants in the next 40 years, we will definitely need a bigger wheel.

There is an inherent flaw in this mindset of investment comfort.  It stays in the world of what is known and it over-exploits markets such as US housing, US consumer, and luxury hotel.  While billions of dollars were being invested by countries all of the world in relatively finite (but comfortable) markets, much of the world’s potential new markets were being ignored.  I would argue that it is actually riskier to invest in false markets (backed by too much debt) that are unsustainable and maxed out on growth than it is to invest in creating completely new markets in the emerging and developing world that are backed by sustainable commerce.  It doesn’t feel riskier because it is known territory and feels comfortable, but from a purely economic system point of view it is, definitely riskier in the long run.

I believe this will be the biggest lesson of the 21^st century for both the private and public sectors around the world.  During the 20^th century, there was adequate growth potential in the population and quality of life in developed countries to support investments shrouded in the comfort of known markets.  This will not be the case for the 21^st century.  The 21^st century requires new investment models, new leaders, and new perspectives on globalization.

I predict that the very best Wall Street firms will turn from security selection and asset management in known markets to designing unique investment solutions that build entirely new markets around the globe.  They will bring public and private money together in ways that have never before been attempted.  The old model of trying to build nations through foreign aid and local (sometimes corrupt) governments alone clearly doesn’t work.  We need new models that forge new territory and challenge conventional thinking.  The potential and the opportunity are there.  The question is are we going to seize the moment and begin to look at the world differently?  Are we going to set future generations around the world up for success or for failure?

An uber-macro-global economic view of the world indicates that with stagnant population growth and an already high quality of life in much of the developed world, the economic progress and growth necessary to continue building global wealth must come in large part from under-developed countries.  In other words, the developed world is becoming over-saturated with capital.  The excess capital is creating false markets in many cases because new markets are unobtainable.  Companies are either stealing customers away from the competition or simply swallowing the competition because the markets are not big enough to support them all.  We also saw this play out over the five years prior to the recession where cheap debt allowed for an ever-increasing portion of returns to come from debt arbitrage as opposed to real investment fundamentals, which basically masked the issue.

Though, without the comforts of known markets, the developing world represents a significant potential for entirely new markets.  These new markets won’t get created overnight; however, they will require long term commitments and a lot of hard work.  The ones we are seeing pop up in China and India have been in progress for decades.  Creating entirely new markets requires both time and investment in infrastructure to create an environment where a middle class can flourish and grow.  Investors are starting to consider places like China and India, which is good, but they must realize that though the business mechanics are similar, the subtleties, relationships, and manner in which business is conducted is quite different.  There is still much work to be done in these markets and well as smaller ones that get far less attention but hold an equal amount of promise.

Success in creating new markets and building a middle class in nations void of one will require new and innovative ways of combining public global aid with both foreign and domestic private investment. Creating partnerships that promote food security, business investment, and job creation to jump-start capitalistic activity seems far more beneficial than the old ways of shoring up the local government and banks.  When businesses are sustained, tax collections will shore up the governments in much more sustainable ways, and citizens will gain more political power to avert corruption.  It’s about starting an economic cycle, not circumventing it.  Governments generally do not produce economic activity, but they do benefit greatly from it.  It starts with building business, not building governments.  We need an entirely new perspective on how we can work together to build markets and bring people out of poverty and increasing the quality of life of those who currently reside at the bottom of the pyramid.  This ultimately requires a broadened view of capitalism.  Creation of the haves and have-nots does not have to be a side effect of capitalism.  We can choose a different path for the future of our world.  This is what it means to start thinking like a global citizen.

It depends really on the US’ ability to recognize that the type of world leader required in the last century is quite different than the world leader that is needed in the 21^st century.  Just as in business, what qualifies as effective leadership changes over time as the constituents being led change not only demographically, but also in what they value the most.  Successful leaders of the 21^st century will be the ones that are more inclusive than exclusive; the ones put their egos aside; the ones that lead more by relationships than through control; the ones that recognize that every person and every country has their own story and though on a different scale they may in fact be doing the best they can.  Leaders of the future are not afraid to give credit where it is due, and in some cases they must step aside and let others lead.

Last week I attended the US-China Business Forum Green Texas 2009 in Austin Texas, organized by the US Department of Commerce, US Chamber of Commerce, and the Austin Chamber of Commerce, among others.  The overwhelming take-away for organizations wanting to take advantage of the tremendous business opportunities in China was that you must be willing to make a long term commitment that is centered on relationships, alliances, trust, and respect.  If you think you are going in as the big, intelligent, egotistical American, you will likely be in for a big disappointment.  We heard from folks that have done business in China for decades and newcomers that are still on their journey, and the most successful are open, respectful, and go in knowing that they will learn a lot from the Chinese.  It can be a wonderful win-win for both countries.

We may not always agree with the ways of the Chinese government, but the reality is that they are doing a lot more than the US in getting the world’s economy back on its feet.  They may not have an open political system, but they are very far along in an open economy and that is a massive step forward and certainly one in the right direction.  They may have substantial environmental issues to contend with, but considering where they started, they are definitely moving forward.  We cannot support immoral activity, but we can and should, in my opinion, support what they are doing well and their commitment to an open economy.  Political change will eventually come from within when the growing middle class become large enough and courageous enough to speak up for what they want.  Listening to a talk on China by James Mills of the Economist, this growing middle class and the political implications it may bring is a big concern for the Chinese government.

It would not surprise me if China eventually leads the world in the rate of environmental change.  They are starting at a much lower position than the rest of the developed world, and they will be able to leapfrog the stage we are in and go directly to the latest technologies with the best results.  Despite the large size of their country, their ability to make large sweeping changes is greater than any democracy because they simply lay out the new rules and begin demanding change.  I am certainly no advocating communism, but it is hard to ignore that in the case of environmental clean up in China it will likely be very effective.  My personal opinion is that slowly over many decades China will continue to take on more and more democratic practices in an effort to maintain peace and stability within their own country.

If we do not keep our eyes open, acknowledge and embrace the changes that our own country needs, and are not willing to support other countries in their struggles to become leaders themselves, we will miss the proverbial boat.  We will wake up one day and realize that the US is behind the times and has lost an important and powerful opportunity to continue to lead the world to success, out of poverty, and to a peaceful existence.

We must be proud of countries like Brazil, and be proud that they have one the recent bid for the 2016 Olympics.  Though we all wanted Chicago to be chosen, if we dig deep down in our hearts, we know that Brazil needed it much more than we did.  They now have a goal to work toward to clean up some of the violence, and prop up some of the infrastructure.  I only wish we could have see that before and perhaps graciously asked that Brazil be the winner.  Instead, we have confirmed what much of the world thinks of America; that we are selfish and sometimes a bit of a bully.  What a lost opportunity!

According to last week’s Economist (special report on Brazil), “Brazil has long been known as a place of vast potential.  It has the largest freshwater supplies, the largest tropical forests, land so fertile that in some places farmers manage three harvests a year, and huge mineral and hydrocarbon wealth.  Brazil could easily be one of the 5 largest economies sometime this century.  Shouldn’t we be asking them what they would like to create and how can we help?  Instead we always seem to be saying, “Here’s what you need to do.”  Shouldn’t we be helping our own entrepreneurs do more business with Brazil?  A strong and successful Brazil means wealth and stability for a large chunk of South America . . . and that has to be good for the spread of democracy and the globally interdependent economy.

It’s clear that later on in the century the US may loose it’s first place standing in some measures, or at least loose it’s massive lead.  We can either sit around worrying about how we can keep our edge in whatever measurement the media is focused on at the moment, or we can become true global leaders and help our comrades become leaders themselves and in their own right.

This is the exact same struggle that large corporations are facing today.  They can continue their hard-line ways of controlling their employees and making sure that all the decisions are kept close to the chest at the top of the pyramid, or they can realize that tomorrow’s greatest companies will come about through a new kind of leadership.  Leaders that genuinely deflect the limelight, constantly support their customers and employees, and believe in people enough that their full potential shines through.  These are the companies that will attract the best and brightest employees that design and develop the best products and services.  People will gravitate to companies where they can become themselves at the office and aren’t forced to go down a certain path or abide by a certain set of rules.

As the US learns how to help countries without dictating, and listens to what they really need, and has the compassion to put others first on occasion, then, and only then, will we deserves to be the leader the world can truly look up to.

It’s simple really.  When you gain their trust and have compassion, then you have a chance to really create a positive influence.  Without trust, you will, at best, maintain the status quo.

One of the most important lessons from this year’s World Business Forum in NY, is the need to update our business models for the 21^st century. Believe it or not, most of today’s business models are based on how the military and large industrial companies were managed over 100 years ago.  Gary Hamel’s presentation, in my opinion, was brilliant in presenting why we need new models and what they might look like and how to get there. The best quote I jotted down was “How do we build an organization that can change as fast as change itself?”

Don’t worry; you don’t need a degree in calculus to get the jest of this post.  But when you’ve finished reading it, you will understand the point.  In the graph above, the red line is linear, the blue cubed, and the green exponential.  Image the vertical axis is the rate of change, and the horizontal one time.  The point being that as time progresses, the change we see in our lives, society, technology, etc is increasing at an increasing rate.  A couple hundred years ago, change was very linear and much slower.  Now we are in a time of exponential change, where many of the new technologies and new insights allow things to change on the fly.  In other words, the reality of rapid change is already built in.  Think about the iPhone, even if you purchased the first model, you still get many of the great upgrades because they put new features in the software instead of the hardware. The question then becomes, are today’s business models equipped for such a world.  My answer is a resounding NO!  The good news is, we can get there fairly quickly.

Even the military recognized the need for a new model.  Commander’s Intent, or Miliary 2.0 Thinking involves the realization that there is great value in today’s soldiers’ ability to see and thus communicate things that their leaders cannot.  Thus today’s soldiers often operate under the Commander’s Intent as a guiding concept rather than absolute orders.¹

The primary goal of large-scale manufacturing companies during the industrial revolution was to get people to do the same job day in and day out without complaining while paying the least amount possible in wages.  The great production innovations created millions of un-fulfilling jobs.   In 1913, the year of the first moving assembly, large groups of workers at Ford began to leave with turnover peaking at 380%.  Ford finally ended up offering workers $5 per day (twice the minimum wage) and reduced the workday from 9 to 8 hours.  Thus the traditional relationship between employer and employee was born, dictating that employees would do as they were told by their superiors in return for more money and time off.² It was a trade most were willing to make because they desperately wanted a better quality of life.  It solved the issue it was aiming to resolve, but I would argue that it masked the root cause of an unfulfilling job.  This foundation still today, underlies many modern companies . . . and we wonder why so many workers, and even executives, are unhappy and dispassionate about their jobs.

The issues today’s companies face are quite different.  For starters, they want people to think, and collaborate, and innovate especially as we come out of this recession.  However, most companies are not aligned with any of those outcomes.  They are aligned with rule followers, and people who are afraid to even consider revolutionizing anything.   Sure, there are some industries, or departments, or companies that have figured out how to promote creativity and passion in the workplace, but most have not.  Command and control methods of management won’t work in a world where people want to feel valued, care if the company they work for is a good steward of the earth, and want to be challenged and grow as human beings.  Fifty years ago, very few believed that kind of job was possible.  Today, most people know that they do exist and there are more examples every year of companies with enough courageous to challenge the status quo.  That courage will pay off and provide the first movers with a tremendous competitive advantage.

The rate of change that occurs today in society, technology, infrastructure, and knowledge is far greater than it was 200, 100, or even 50 years ago.  Traditional business models are very linear in nature, which generally worked in the past because for a long time the rate of change was relatively low.  You could decide on a business plan and it would work quite well for a decent amount of time.  When a crisis hit, it was time to try something new.  Today’s business models need to handle change occurring at an exponential rate.  The 21^st century requires a business model that is fed by change.  Where crisis will hit if you stop changing, updating, and improving, not when it’s too late.  This is where competitive advantages will be born in the near future.  Is your firm ready?

It is imperative to start challenging long held beliefs about how businesses can and should be managed.  It starts with a commitment to change and a willingness to be brutally honest with yourself and your team about what works and what doesn’t.  If you have those two things, you will be amazed at what you can create, and you will be even more amazed by what your team can create once you give them the freedom to succeed.

This is a tremendously exciting time in business, and the ones that are more creative, have the courage to challenge old beliefs, and want to have a bit of fun along the way will WIN.

1  Smartsourcing by Tom Koulopoulos

2 The Support Economy by Shoshana Zuboff and James Maxmin

Was it really the amount of risk taken in the past few years that triggered the financial crisis, or might it be the type of risks taken that are the real culprits?  Perhaps, a simple case of too many eggs in one basket for too long?  Yes, banks kept piling on debt securities from residential and commercial mortgages based on a model that had value increasing in perpetuity.  Yes, hypermarkets such as CDX/CDS were created without anyone taking the initiative to add them all up and see if the insurance sold was actually more than the companies were worth.  Yes, Investment Banks were allowed to leverage up to levels that had never before been implemented. But to me, that says that we took too much of those particular kinds of risks for too long and did not scrutinize the underlying assumptions nearly enough.

At the same time, we were under-funding, intellectually and financially, innovation in new technologies and revolutionary products.   We cracked the code to the human genome a decade ago, and yet the average person sees little evidence of it in their daily lives.  We seem to be lacking in our abilities to bring new discoveries and breakthroughs into marketable territory.  Was it just a myth that we were in an era of great innovation, because we said out loud enough times that we actually believed it?  Were the best and brightest young minds being shuffled to Wall Street because they are better salesmen?  What can we teach and what can we do to promote and support entrepreneurs?  Perhaps some of those investment dollars (many coming from overseas) could have been better invested funding innovation instead of financial securities.  Funding innovation may seem like a much riskier bet, but I can promise the underlying assumptions would be a lot more realistic than the bets that were made in slam-dunk securities the last few years.

What I’m trying to say is that, as a nation, we seemed to have taken the easy way out (at least that is what we thought) and bet against what we knew was an inevitable cycle in hopes of piling on a bit more cash.  Where is the innovative and courageous American spirit that this country was founded upon?  Where is the spirit of the people who came together 2 short decades ago and created the impossible . . .  a nation built solely on the promise of freedom?  We have become complacent as we pretend to be a happy lug of androids that go to work, do what we are told, and go home.  Now that we know it won’t work in the future, we have a chance to make some game-changing moves.

We need to harness those adventuresome spirits that lead droves of people across the entire country in wagons with no real idea of what lay ahead.  Those are real risks, laced with dreams, passion, and courage.  Many of us have become our own silos.  We lack connections, challenges, and most of all the passion required to create real success.

The point is, if we are going to take risks, which we know is a part of life and business, we should take risks that are worth taking.  Let’s not take the same old risks over, and over, and over again until we look a bit daft for not recalling that economies run in cycles.  If we take risks in areas we are passionate about, and stop living up to the herd mentality, then we can make great strides in the growth necessary to push this next cycle.  It’s clear that the same-old thing is going to work this time.  Whatever we do must be different, inspiring, and creative.  Most every industry is being forced to reinvent itself in one way or another, which is an open invitation to do better.

Broaden your lens, stand on your head for a new perspective. . . do something, anything, to ensure that you are taking a new kind of risk that has some passion and guts behind it.

I found a article from Time Magazine, dated July 25, 1969 titled, ESSAY: ON COURAGE IN THE LUNAR AGE.  The opening paragraph says:

“ “COURAGE leads starward; fear toward death”, wrote Seneca.  Man needs courage simply to live in spite of knowing that he must die.  He needs it to live richly – to take risks and thereby define himself.  There are many kinds of courage, moral and physical, but all involve a struggle against heavy odds.”

The article goes on to link courage with collaboration in a way that exemplifies what the business community needs more than anything . . . the courage to create a new trajectory in our economic universe.

It is time to come together and show the world that we are more than the fraud that we see on the front page of the newspapers; we are more than the greed that somehow mesmerized our hearts; and we are still that same nation that took a President’s request to heart 5 short decades ago and found the courage to send 3 brave men to the moon.  I was only 1 at the time, but in the last several weeks I can feel the energy that was here 40 years ago.  Tears fill my eyes when I hear recordings of the astronauts, with their humbled excitement, share their journey with a young nation that has more strength and more perseverance than we sometimes realize.  Given the events of the past 2 years, I can think of no better time to have a celebration and a reminder of what united us 40 years ago.

Martin Luther King, Jr., a man who had the extraordinary courage to fight hate with love.  He would have been proud of Apollo 11 and certainly proud the day Barack Obama was elected President.  Let’s make him proud again and show him that we can come out of this economic disaster better than we went in.  Our values will be stronger, our convictions wiser, and our kindness more evident.  I was born on the day that Martin Luther King Jr. was assassinated, and that fact has created a special connection for me to his courage and this country, just as those born on July 20, 1969 when Apollo 11 landed, and those on September 11^th, 2001 will carry a special connection.

Courage comes when we realize that our fears are typically not very helpful, and in fact, most of the time they are quite hurtful.  Perhaps they were a bit more useful for our prehistoric ancestors hunting on the open grassland, but not so much for a 21^st century executive trying to connect with his employees. Generally, people find that they are more afraid of the prospect of something bad happening than they would be if it actually happened.  That’s because people are more resilient than they believe and will adapt when necessary.  Unquestioned fear prevents us from realizing our full potential by paralyzing our actions.  Courage is the ability to move beyond fear and into action.  Success is always born from action and never from inaction or reaction.

Tom Nicholas, a Harvard Professor, recently wrote an article for the McKinsey Quarterly titled INNOVATION LESSONS FROM THE 1930’s.  He reports that during the Great Depression, those firms that continued with research and development projects and made sizable investments in their businesses were several years ahead of the competition that decided to wait until the economy had a better outlook.  In 1930 DuPont recorded the discovery of neoprene.  They increased their development spending despite the fact that sales were decreasing.  Polaroid, Hewlett-Packard, and RCA are also examples of innovators during times of economic unrest.

The leaders of DuPont, Hewlett-Packard, and RCA all had the courage to look beyond the fear of the current economy and press forward with what they believed in.  It takes real leadership skills to go in the direction opposite of the herd.  And I’m afraid that we have largely become a community of herd followers.  There is far less courage and creativity in the workplace than we have the potential to produce.

The world needs more leaders that have the courage to tap into the wealth of creativity that is available within their organizations.  Employees are not being utilized to their potential.  Brilliant ideas remain hidden inside many organizations. We need to find the courage to look at business with a new perspective.

Do you have the courage to tap the hidden potential and brilliant ideas that lie within your firm?  Do you have the courage to execute that plan that you know in your gut will be a home run, but is just so far out in left field?  Do you have the courage to be the leader that you dream of being?  Do you have the courage to consistently push the boundaries and committing to a life of surprise and success?  I know you do.

When I am feeling a little low on courage, I often think of people like Nelson Mandela and Viktor Frankl, who epitomize what it means to be courageous in the face of unfathomable circumstances.  When the outside world and external forces are going well, it’s somehow easier for us to be courageous.  When the outside world is looking dismal, it may be more difficult, but the payoff will be far greater.

Hemmingway once defined courage as “grace under pressure”. I like that!

There is a great article by S. Mitra Kalita in today’s WSJ titled Outsourcing is Out, which discusses new “ . . . borderless partnerships to facilitate innovation and efficiency”, as the next wave of evolution in global outsourcing.  In other words, though stronger connectivity the business world will find a way to move forward on a positive trajectory.

“American companies must rebuild systems and protect themselves from another meltdown. They can’t do it without India…”

Understandably, a lot of people’s knee-jerk reaction in hard times is to keep all the jobs at home in America.  We want to feel like we are taking care of our own first, before we worry about the rest of the world.  Just like the all too familiar airline safety instructions to put the oxygen mask on yourself before you assist others.

The reality is that outsourcing to less developed countries such as India is one of the best ways to stimulate the US and global economies.  Whether we like it or not, we are now in a truly global economy.  Even just 10 years ago, the top countries of the world had separately timed economic cycles.  Now, because major companies and banks of the world are investing in the same products and businesses without regard to borders, this last recessionary cycle has served to put much of the developed world on the same economic cycle.  One could even argue that until now we weren’t actually working under the guise of a truly global economy, we were simply working to get there.

The name of the game at this point is to increase productivity, and the reality is that production/service costs in the developing world are much less than in the US.  Creating partnerships with the less developed world will create three positive outcomes.  One, productivity of US companies will increase by creating the same products for less.  Two, it will increase the level of education and standard of living in those countries, creating many more global consumers.  Third, it will serve to free up portions of the US workforce to move up the evolutionary chain.  Just as when computers moved in, the workforce changed and an entire new industry opened up with millions of new jobs.  That wasn’t a one-time phenomenon; it’s part of progress and the making of economic cycles.  Growth, in any situation, requires innovation and change.

The next wave of new jobs will include a much more creative and collaborative bunch who will figure out how to solve global social issues through capitalism, bring down healthcare costs while still pushing the envelope of discovery, and reverse environmental damages while enhancing productivity.  We need connectivity and creativity in order to solve these complex issues the world faces.  Businesses that can see such a world will be the most successful.