archive: economy

Can the US be the Kind of Leader the World Needs?

Tuesday, November 17th, 2009

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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 21st 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 21st 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.

Posted in business, economy, global, leadership, political | No Comments »

From Linear to Exponential: A Lesson from the World Business Forum

Tuesday, October 20th, 2009

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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 21st 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 21st 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

Posted in business, economy, global, management, strategy | 2 Comments »

Is Less Risk Really the Best Business Strategy?

Tuesday, September 22nd, 2009

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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.

Posted in Courage, business, economy, strategy, success | 1 Comment »

The Courage of a New Perspective

Monday, August 31st, 2009

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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 11th, 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 21st 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!

Posted in Courage, business, economy, management | No Comments »

Mumbai or Bust

Tuesday, August 11th, 2009

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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.

Posted in business, economy, global | No Comments »

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