Business is Stuck

I was speaking with a friend who’s an executive in large US corporation, and our conversation made the cause of the Great Recession more clear.

Business people are holding almost $2 trillion in cash that should be used to create new products, jobs, and sustainable economic growth. My friend said they dislike the uncertainty and change caused by Obama’s restructuring of health care and financial markets. They are angry at seeing business criticized, and they are afraid  “the U.S. is becoming like Europe.” The general impression is that they want to return to business as usual.

This seems unlikely because Obama represents a wave of change that requires a different form of business, especially for large corporations. It was primary the single-minded focus on money and self-interest that almost brought down Wall Street and the rest of the world. In health care, this country allowed free enterprise medicine to create such a mess that our system is twice as expensive as other nations — and less effective — while leaving the poor uninsured. Free enterprise has done little to address the climate change, energy, and environment crisis, and the U.S. is losing the global race to green technologies.

These failures means there is no turning back. The Reagan Revolution was important in encouraging the creative free enterprise that drove the boom of 1990-2000. But that era is passing as we increasingly see the limits of free markets and a obsolete form of business based on profit alone.

Other nations are facing the same challenges to manage their markets effectively – a stunning example being the huge success of “state capitalism” in China.  The world badly needs to transform business into a more powerful system that serves society as well as making money. It’s hard to know what the U.S. will do because we are so Mercurial. Other nations may take the lead.

There always exists the possibility that Americans could rise to this challenge by drawing on their ideals of democracy, human rights, community, problem-solving, etc. to create a “democratic corporation/collaborative enterprise/corporate community” and other concepts being explored. [1] We could give the world an update on the principles of democracy we invented more than 200 years ago.

Without transformational change of this type, business people are likely to remain stuck in an outmoded institution that continues to struggle with business-society conflicts that sap the strength of the nation.


[1] Halal, “Business Collaboration Could Transform the Economy,” Christian Science Monitor (August 6, 2009)

Singapore II

I was invited back to Singapore to keynote the International Risk Assessment and Horizon Scanning Symposium with hundreds of the world’s best futurists, planners, forecasters, government policy-makers, entrepreneurs, business executives, and other interesting people. Singapore is always a luxury to visit, of course, but the focus was on where does the world go from here? There was a palpable sense that everything has been changed with the 2008 near-collapse of Wall Street.

Singapore 1

Few had good answers, although my TechCast data made a convincing case that the Technology Revolution is driving a boom in green technologies, IT, e-commerce, and other emerging fields that are likely to form an economic revival about 1015. I also outlined a global boom based on high-tech and sustainability about 2020.  See www.TechCast.org for more.

Tamkang U. Taiwan

I then spoke at Tamkang University and the National Chengchi University in Taiwan. These were lively visits, and faculty and students not only accepted the impacts of the Technology Revolution but are even excited by the prospect. Throughout SE Asia, one gets the impression that these cultures are better equipped for the uncertainty and complexity of the high-tech landscape we are entering. These societies have their problems, of course, but they do not have endless political stalemates over liberals vs. conservatives, big-government vs. free markets, environmental safety, energy policy, gun control, abortion, immigration, and the hundreds of contentious issues Americans fight over. These societies seem to work.

Woman-Seoul

Seoul was the highlight of this trip. My lovely wife was with me, and we had a marvelous time enjoying the bright lights of modern Seoul, great Korean food, and a strong, vibrant culture. I found myself explaining my experience by noting that Koreans seem to be the “Germans” of Asia – technically superior, hard working, ambitious, etc. But maybe it’s not such a good analogy to make.

korea

I greatly enjoyed speaking to large groups of 100-300 CEOs, politicians, academics, consultants, media people, and other influential Korean professionals. These are very competent people, steering their society through difficult times in a very adroit and collaborative spirit. I especially like the small courtesies and rituals that govern Asian culture – bowing slightly when meeting, placing palms together in a prayerful sign of peace, removing shoes indoors, and always supping tea. I am fortunate to know a few words of Korean, and it is a delight to share their culture briefly when saying “hello” and “thank you” in my pretty good accent of these admittedly simple phrases.

The highlight of this trip came unexpectedly when I was asked to speak with a large group of high school students in Seoul. I gave them a peppy version of my talk, pointing out how the Technology Revolution will change the world, but also noting that this growth process presents us with a massive Global MegaCrisis. They were excited, but the shock came after my closing comments.

I reminded them they this meant they will have adventurous lives that are likely to include more than 100 years spanning several careers in a high-tech world  — but that they would also have to solve the MegaCrisis !!! They erupted with pure joy, and even glee. The Global MegaCrisis didn’t faze them. It was challenging.

Korean HS students

Then all these lovely, bright children swarmed me for photos, autographs, and endless questions. I have had wonderful experiences when connecting to audiences, but this was a new high. It was like being a rock star.  More importantly, it gave me a burst of hope in the prospects for this generation.

Stalemate: Political Gridlock in the U.S.

The 2010 Massachusetts election for U.S. Senate marks the resurgence of Republican power to counter the Democratic revolution that elected Barak Obama. Both parties should feel proud that they have carried their ideals to the point where the nation is now effectively stalled in political gridlock.

Yes, the Republicans have been brutal in their attempt to claw back to power, and they were clear about it at the onset. Rush Limbaugh, Bill Kristol, and many others urged people to do all in they can to cause our elected government to fail, and they may have succeeded. Obama’s approval ratings have fallen, Republicans have won back crucial posts like the Governorship of Virginia, most Americans now oppose the health care bill, and 70% or so think the nation in “on the wrong track.”  To accomplish all this in less than one year after a resounding loss is truly amazing. How did it happen?

The fault lies not in the stars, dear Horatio, but in ourselves. Democrats must have been dazed from their great victory because they reverted to old habits and branded themselves once again with the curse of “big government.” They couldn’t resist getting their share of pork into the stimulus bill, failed to get Republicans engaged in solving the health care mess, and generally reminded people of old fears about taxes, debt, and bad government. Perhaps we were expecting too much when Obama was elected, but this is a reversion back to the liberalism that Americans condemned 30 years ago.

The U. S. stands at a time when both of its political ideologies have been tested and found seriously wanting.  With its reversion to the left, Democrats demonstrate that they have not learned how to govern from the center. And Republicans are not likely to find a solution to the massive challenges facing the U.S. in their fetish for free markets.

It is amazing how conservatives are unable to allow the massive failings of their ideology to penetrate. It was precisely the limits of overly free markets focused on profit-making that caused the financial meltdown, the collapse of our auto industry, the horrible mess in health care, two recent booms and busts, massive debt, and the yawning gap between the wealthy and the middle class. The beliefs of Sarah Palin and other Republican leaders today are so detached from reality that they sound like the Marxist ideologues conservatives condemn.

It’s hard to see a way out of this impasse that grips the nation. In theory, a lovely solution is possible in which corporations assume responsibility for their vast social impacts by collaborating with their employees, clients, and the public in a productive way. This “Collaborative Enterprise” concept could transform the economy into a free market composed of self-regulating “corporate communities” that serve the broader public welfare as well as investors, thereby creating an historic breakthrough. (See “Business Collaboration Could Transform the Economy” under my Articles page). This is a tested concept that thrives in a marginal sector of business, but moving it into the mainstream would require great leadership.

I continue to think that President Obama has the potential for this type of transformative leadership, and I suspect that moderate Republicans could be receptive. Possibly new voices could be heard at this difficult time to move the national conversation into more creative directions. They are certainly needed.

Report from Singapore

I’d like to give you a report on my trip to Singapore and what it means about my work as President of TechCast. I keynoted a conference for the International Congress on Industrial Design, the major association for architects and product designers.

Although they were keen on planning for the future, they were fascinated about our work forecasting breakthroughs in all fields.  They loved our bubble charts summarizing the results, the crisp forecasts on Alternative Energy, IT, Robotics, AI, and the scenarios. Below is the longitudinal summary of our forecasts that I use for macro-forecasting:

Longitudinal Bubble Chart

The big social ideas – the global megacrisis, the emerging world brain, the crisis/transition to maturity, consciousness as the next great frontier, and technologies of consciousness — blew them away.  Here’s the summary of our forecasts for the critical period of 2020 –

 2020

 

 

I do a lot of this, and it always confirms the value of our work at TechCast. Defining these technology breakthroughs in an incisive way requires great skill and lots of good scanning work. And our 100 experts have to make carefully thought-out estimates on these technologies and pay attention to tons of detail.  But the results are unique and powerful.

Bill On Kojo Nnamdi Show

Bill was interviewed on WAMU’s The Kojo Nnamdi Show.  They discussed TechCast’s forecasts on the Economic Crisis, indicating that the Green Revolution, global E-Commerce, and other emerging business sectors are likely to lead the world out of recession in 2-3 years and to create a new economic boom about 2015.

Kojo

For an audio of the show, see “Economic Realities & the Future of Technology” at http://wamu.org/programs/kn/09/03/17.php#25115

Going Nowhere

As President Obama and a few allies like Senator Kennedy struggle to pull together a coalition able to pass health care reform, I am struck by the single-minded selfishness that rules the nation. Every interest group insists on their narrow self-interest without much regard for the nation as a whole.

Republicans are utterly shameless in opposing everything the president does, of course, but we don’t expect much from the GOP. What is shocking is that big labor insists on maintaining tax-free status for their lavish corporate health care benefits, HMOs lobby to block a public option, the AMA prevents accountability and transparency of patient outcomes, and so on.

This is an old story, but it is exacerbated by the ideology of “profit-centered capitalism” that dominates American culture, and which caused the financial meltdown in the first place. Yes, individualism, competition, and free markets are great strengths of the American character. But what about E Pluribus Unum, the benefits of coopetition, teamwork, and all of our other equally valuable traditions?

Americans don’t want to even think about cooperation. The very idea is anathema to our reigning culture that glorifies the satisfaction of me. Apart from an occasional crisis like hurricane Katrina that causes people to rally together for a few days, it’s hard to find much many people willing to cooperate. It’s certainly true that “politics ain’t  beanball,” but creative politicians know that great strides forward can only be made by finding intelligent ways to reconcile divergent interests into a more productive whole.
I am left wondering what it will take to see us recapture the great accomplishments this nation made based on selfless cooperation for the public good – winning World War II, the Marshall Plan, and landing men on the Moon. Obama is trying as best he can to resolve differences, but he can’t do it alone, and expecting a leader to lead over the objections of his followers is silly.  Unless Americans develop a little humility and learn to think of others’ interests as well as their own, we are going nowhere fast.

America Should Learn to Cooperate

Americans seems stuck in a high-conflict mode, as best seen in the heated clashes between the Obama Presidency and the Republicans.  Liberals can be difficult, certainly, but William Kristol advised conservatives to “find reasons to obstruct and delay,” “raise doubts,” and “try in any way possible to break Obama’s momentum.”

Whereas a crucial shift from a culture of conflict to one of cooperation could do wonders for reviving today’s morbid economy. It could even raise the possibility of turning this mess that American Capitalism inflicted on the world into a bold new opportunity.

Consider for a moment a little thought experiment in which we entertain the sheer possibility that President Obama could fulfill his grand mission of achieving collaboration between Left and Right. Leaving aside the overwhelming obstacles, what could be accomplished if we could unite the Republican ideal of creative free enterprise with the Democratic ideal of supportive social community?

Yes, it may seem a fantasy, but trends among progressive American corporations are moving in that very direction. The leading edge is building a collaborative form of free enterprise that offers a more productive, transparent, and accountable form of market system. Some examples:

  • Whole Foods organizes small teams to manage themselves, including hiring co-workers and selecting products to carry. Teams earn performance-based bonuses, while the CEO is happy earning a paltry 14 multiples of employee pay. The company’s stock multiplied 25 times under a philosophy that holds – “Profits are a by-product of treating people well, not the top priority.”
  • Nucor is America’s most successful steel firm because of each mill team builds a cohesive culture based on performance and collaboration. Top workers earn three times the industry average, and the CEO said: “Our culture outperforms anything.”
  • Johnson & Johnson has grown a robust 15% each year for 120 years by requiring each of its 80 small businesses to be self-managed, including having their own governing board, and by focusing on the needs of doctors, nurses, and patients.
  • Best Buy moved to a “results only” system that allows employees to choose when, where, and how they work as long as they produce.
  • Google uses teams to manage each project as a small internal venture, while the Company serves as an internal venture capital firm placing bets on the best projects.

These advantages could move into the mainstream, but America’s culture of conflict obscures our vision to the enormous possibilities. Talk shows hosts invariably pit one adversary against another, so little wonder our airwaves are filled with opposing views and bitter arguments.  Why can’t media figures act as facilitators who try occasionally to reconcile conflicting positions?

A blatant example is the popularity of Donald Trump’s TV show, The Apprentice, which glorifies the harsh conflicts Mr. Trump believes endemic to business. Whereas savvy business managers in the examples above cultivate the benefits of “co-opetition” – collaborating with partners as well as competitors to ensure better results for all.

As usual, the public is way ahead of politicians. Polls show more than 80 percent of Americans think political conflict has become dysfunctional and that we need to unite the country. And if President Obama hopes to pass legislation solving festering problems in health care, energy, social security, and immigration, some form of cooperation and coordination will be badly needed. It would be ideal to engage in collaborative problem solving to find new solutions.

Contrary to the past 30 years of Reaganomics that fostered a belief in harsh competition for limited riches by the wealthy few, the fact is that cooperation has always been a productive aspect of life. Scientists consider cooperation the third major force in evolution. The first two we hear most about – random mutations that produce genetic diversity and natural selection of the most fit – are intimately augmented by cooperation among humans, animals, and even plants to favor the odds of survival.

And cooperation is becoming more crucial in today’s knowledge economy. Unlike an industrial economy in which limited physical resources foster conflict, knowledge increases when shared, producing gains for all parties. Ray Smith, the late CEO of Bell Atlantic, called it the “loaves and fishes principle of knowledge.” That’s why strategic alliances have been the hottest trend in business for many years now.

Other nations have been doing this for years. Sweden, Finland, Germany, Canada, Japan, and other productive societies avoided much of the pain we are experiencing in this economic collapse because of cooperative cultures, labor leaders on corporate boards, sound regulations, business-government partnerships, and safety nets for their citizens. The irony is that America holds the original claim on cooperation because we invented modern democracy – yet we have allowed our fetish for laissez-faire capitalism to create a horrible tension between Left and Right that is tearing this nation apart.

Organization theory and practice now routinely acknowledge that modern corporations are socio-economic systems consisting of five major stakeholders that are all essential to success: investors, employees, customers, partners, and the public. One of our graduate students noted that this raises the thought of depicting the modern business firm as a five-pointed star. What better symbol could Americans find to initiate a badly needed economic revolution? Imagine what we could do by redefining business as a democratic enterprise that unifies the interests of capital with those of other constituencies to achieve social, environmental and economic sustainability?

Just as this nation founded the concept of democracy in the crisis of revolution, today’s crisis asks that we draw on our unique heritage to give the world a new economic system that finally resolves the clash between Capitalism and Democracy. But until Americans find a way to develop the social systems, leaders, and political will to change today’s culture of conflict, this perfectly realistic vision will remain a wishful fantasy.

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William E. Halal (Halal@gwu.edu) and Elias Carayannis (caraye@gwu.edu) are professors at the George Washington University School of Business. Halal’s recent book is Technology’s Promise: Expert Knowledge on the Transformation of Business and Society (Palgrave Macmillan, 2008) and Carayannis’s recent book is Diversity in the Knowledge Economy and Society: Heterogeneity, Innovation and Entrepreneurship (Edward Elgar, May 2008).

Through the Crisis of Maturity: Forecast of a New Economic Boom

The constant drumbeat of cascading business failures is certainly daunting, but technology forecasts suggest that a green revolution, advanced auto designs, surging e-commerce, and other new business sectors are poised to lead the global economy out of today’s recession, producing a new economic boom at about 2015.

We have poured trillions into reviving economic life and President Obama shows the temperament to lead. But in the rush to be practical, we have slighted the need for a guiding vision of a viable economic system beyond the one that is failing. We lack a clear understanding of what is taking place and what it means.

The financial meltdown is part of a larger “global crisis of maturity” – energy shortages, climate change, weapons of mass destruction, terrorism, and other yet unforeseen threats that are straining old systems to the breaking point. These are interrelated elements of a failing global order that increasingly looks like a train wreck in slow motion. If not sub-prime mortgages, some other flaw in today’s economic system would likely have caused roughly the same failures. Just as the collapse of Communism resulted from an over-controlled planned economy, today’s “collapse of Capitalism” is the result of an under-controlled market economy.

I lead a research team that forecasts the evolution of technology and its massive impacts that are changing the world. We’ve developed an intelligent website (www.TechCast.org) that pools the knowledge of 100 experts worldwide to forecast breakthroughs in all fields. Technology forecasts are especially useful because our collective “tools” form the economic foundations of the social order.

The relentless power of technology can be seen in the fact that the dot-com bust of 2000 didn’t faze the Internet, which has now entered a more sophisticated “participative” stage of Web 2.0 sites, like Facebook and YouTube, and even the election of Barack Obama. Today’s recession is but a 2-3 year dip as globalization continues to be driven on by the exploding forces of information technology. As Andy Grove, Chairman of Intel, put it so well – “Technology always wins in the end.”

Our forecasts show that today’s surging interest in green business should take off in four-five years, and governments are likely to take serious steps to curb global warming about the same time. Entrepreneurs are working on alternative energy sources – wind turbines, biofuels, nuclear plants, and solar cells — that are growing 30-50% per year, roughly the same rate of the famous Moore’s Law that drives information technology to double every 2 years. Al Gore was right that the transition to sustainability could be made substantially in 10 years or so.

Because these complex issues are so intertwined, President Obama should use his political capital to invite major corporations and other governments to work together on innovative solutions. Green technology is roughly a $500 billion market and expected to reach $10 trillion in 2020, larger than autos, health care, and defense. In short, the present energy and environment mess actually offers a great opportunity in disguise. It may be that the resulting economic growth in a noble cause to protect the Earth could even defuse the race toward weapons of mass destruction and conflict as diverse cultures are more closely integrated into the global community.

Almost all sectors of the economy are likely to be rejuvenated with high-tech advances in roughly the same time frame. A new wave of green autos powered by hybrid, electric, and fuel cell engines should enter the mainstream about 2013 – 2018, and we are likely to see “intelligent cars” that may even drive themselves. So there are growth opportunities for automakers if Detroit can get its act together and make needed changes in corporate governance – just as financial institutions must do.

The information technologies driving globalization are gaining momentum as publishing, entertainment, virtual education, and other forms of e-commerce reach the critical 30% adoption level where new businesses usually take off. And the huge populations of China, India, Brazil, and other developing countries are moving in droves to PCs, the Internet, smart phones, and global media, for better or for worse. Our forecasts show that three-four billion people will soon inhabit a digital world that is smarter, faster, and interactive, creating online markets of several trillion dollars and forming a fine web of global consciousness.

The year 2015 seems to mark the serious beginning of all this innovation because it is the next inflection point in the 35 year cycles that roughly govern U.S. markets. The roaring twenties were the peak of a 35 year cycle that ended with the Great Crash and Depression. The Eisenhower boom of the sixties started about 1945 and was followed by the Reagan boom that began with his election in 1980. Today’s collapse marks the end of the Reagan 35 year cycle, and it is likely be followed by the “global boom” outlined above starting about 2015. The economy may recover its recent losses, but five-six years may be needed to begin a major new growth cycle.

These are enormous challenges, of course, so it’s hard to imagine how they can be achieved in a world that celebrates power politics, money, consumerism, and self-interest. The 2008 financial crisis, however, is widely understood to mark an end to that era, and the outpouring of goodwill around the world for the Obama presidency signals the possibility of global support. Polls show that 70-80 percent of Americans are also united behind him. Beneath the surface, deep rivers of fresh thought are bubbling up. Pollster John Zogby analyzed his data over the past 20 years to conclude “We are in the midst of a fundamental reorientation of the American character… Away from wanton consumption and toward a new global citizenry in an age of limited resources.” Zogby finds that 18 to 29 years Millennials constitute the “First Globals.” This “digital generation” accepts all races, genders, and cultures equally, and they are intent on living sustainably in a unified world.

This global megacrisis may not be catastrophic if acted on in time, but a major turning point seems inevitable as these multiple threats reach critical levels over the next decade. Global GDP is expected to double by 2020, increasing all these threats to the breaking point. We can no longer muddle through because the world is poised at the cusp of a great discontinuity – much like a teenager when thrust into the passage to adulthood. Whether a teenager shedding the baggage of youth to become a responsible adult or a civilization facing the imperative to form a mature, functioning society, the imperative is much the same – grow up or perish.

Things look bleak because that’s the normal situation facing any system struggling through maturity, whether a youth or an entire civilization. The transition seems to possess a life all its own that is unfolding rapidly, and it is precisely because so many people are so deeply concerned that serious change is underway. The world has accepted women in power, transformed planned economies into free markets, begun to protect the environment – and Americans have elected a black president. Now the tough challenge of forming a sustainable, collaborative, intelligent global order lies ahead. Hardly a perfect world, of course, but a mature world that works.

Parable of the Light Switch

I was puzzling about a light switch with a broken “arm” that holds the control knob, when a brilliant solution appeared out of nowhere to solve the problem in an unexpected way. The experience left me thinking about a better approach to solving the countless other nasty problems that beset us on all sides today.

The arm sticks out from the switch and holds a knob that controls the action. As an engineer, I thought I could solve the problem with a small bit of metal to replace the broken part. I gave a lot of thought to where I could find a piece of metal that would work, how to cut it to the precise size, if I should glue or solder it in place, and endless other little dilemmas that are familiar to any handy man who works on his home.

It would take a few hours, I thought, and there was no assurance it would work, so I was feeling discouraged. Suddenly out of the blue, I mysteriously reached my hand up to a shelf in my workshop and grabbed a bit of “putty” lying around, slapped it into the back of the knob, and simply pressed the knob onto the broken off stub of the switch’s arm. The putty held the knob perfectly, and the problem was solved in seconds!
This dramatic solution seemed to appear out of nowhere, and it was so brilliant that I found myself laughing hysterically. I had saved hours of tedious labor and solved the problem in an easy, secure way. Rather than the methodical, painstaking approach I had in mind, this was a totally different logic, almost as if I had entered a parallel universe containing powerful solutions. Why didn’t I think of this before, I wondered? Where did the idea come from? Could the secret to this approach be applied to other dilemmas, I wondered?

I have to admit I don’t really understand how this happened, and so I can’t offer a convenient formula for finding creative solutions beyond letting go of what you know, thinking creatively, and other common guides. But this simple incident reminds me that often we struggle against odds to solve tough problems using the wrong approach, as in the war on terror, poor health care systems, poverty, pollution, and endless other challenges facing the world today. Rather than on wasting time and energy pushing the same old logic, the real solutions probably lie in rethinking the very nature of the problem and finding easier, more penetrating solutions. That’s what my work is about.