The true leader of the free world, Federal Reserve
Chairman Alan Greenspan, recently praised the US economy for its resiliency following a
cascading period of terrorist attacks, tumbling stock prices, corporate scandals and war
with Iraq. You are not alone if this fails to give you more than a shrugged shoulder
smile. Greenspan's assurances aside, it's pretty clear that most of us are becoming more
and more impatient for even a glimpse of recovery. We know it'll happen eventually, but as
Tom Petty sang, "the waiting is the hardest part."
As we wait, it's difficult to envision what will break the slump of
poor sales, bankruptcies and layoffs. At Management Roundtable we try to keep our ear to
the ground for what companies are focusing on. Lately, there's been an odd buzz about the
subjects of "lean" product development and innovation. This seems in keeping
with tradition. Historically in down economic periods, there seems to emerge two clear
directions that companies try to pull themselves towards: operational efficiency and
breakthrough products.
The first is done to enable the company to keep paying the bills and
the salaries of what's left of their workforce. The second is done to woo customers, lock
in market share and attempt to bring an end to the stranglehold of the first thing. Some
may find this oxymoronic. After all, how is it possible to invest in the future while
simultaneously shedding the resources that enable it? However, even if one can accomplish
both, there is a bigger threat that warrants attention -- yes, it comes from Asia, and
it's quite viral in nature, but it ain't no chicken flu.
The Asian threat to American economic dominance
is not new news. Detroit has been fearing Japan for far longer than software developers
have been shaking about Indian outsourcing. Even though companies like Toyota and Sony
(arguably two of the top 10 most powerful brands on the planet), can't seem to lead Japan
out of its depression, one would be naοve to relate these failures to the potential of
their "sleeping dragon" neighbors: China, India, Singapore, Russia and others.
Chinese interests, in particular, could grow to Microsoft proportions on the global scale,
and it could happen much faster than you think.
The Chinese have many advantages over other Asian rivals. Among the
players (including Russia), they are the only one that can rightly consider themselves a
global superpower. They have nearly limitless resources, much of it untapped. They have
access to state-of-the-art technology and production processes, which wasn't always true.
Their economy has the full backing of the government and its world ranked military force.
And, perhaps most importantly, they have a cheap, well educated and highly motivated labor
pool, perhaps larger than the others combined. If you can think of a capability that
American companies have that Chinese companies can't trump, the fact of the matter is you
are probably wrong.
The biggest problem is that America may be the one that fuels the
potential leapfrog. Remember our current problem of focusing on operational efficiency?
Many are finding outsourcing to China to bring not only a giant cost savings (which is
expected), but also a great leap forward in delivery speed and quality (much more of a
surprise to many). Farming out manufacturing and software development could be the gateway
drug leading to a new revolution that leaves the western world as skinny and malnourished
as a heroin addict. Perhaps this could be considered revenge for the Opium Wars of the
19th century?
And what about innovation? Remember, China houses the culture that
created paper, the compass and gunpowder. While more recently they are better known for
mastering the art of the cheap knock-off, don't forget about China's population, their
culture of education, and their motivation to show the world what they can do. China
cranks out more engineers than any other place on earth, many of them educated in the
United States. Merely on the numbers alone, one must assume this could be a bigger source
of the "next big thing" than a giant garage in Silicon Valley housing a million
Steve Wozniaks tinkering with a million Altair computers.
And that's just China. Remember Russia, India and the others? These
are not wallflower countries, they are major players in their own right. SARS, human
rights and political oppression may seem like formidable barriers, but most likely they
are short-term side stories to the big news that something's brewing in the country of my
family's origin.
In America's past we Chinese ran laundries, laid railroads and
dished out fried rice. In America today, we're generally ignored by a society more
interested in other minorities, but quietly flourish in obscurity, crowding others out of
universities and buying up suburban homes. Ironically, someday it may be Americans that
move across the pacific to pursue such dreams. Really? Could happen.
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EVENT ANNOUNCEMENT
2003 Annual
Conference of the Northern California PDMA:
Leading the Recovery: Driving Growth
Through New Product Development"
May 15, 2003 at the Oracle
Conference Center, Redwood Shores, CA.
Hear 10 top Bay Area executives discuss the
role of NPD and innovation in the turnaround of the economy. Keynote speaker is Guy
Kawasaki, ex-Apple Fellow, author and founder of various computer companies. To register
or for more information: http://www.norcalpdma.org
