Staying Competitive

July 8, 2007
Everyone knows that emerging countries—India, China and many others—are starting to grab significant market share in U.S. and world markets.
The significant, long-term problems we are facing in the new century require major shifts in mindset and consistent adaptation to new societal shifts. There are three key points that must first be acknowledged:•In this new global century, nations and regions are engaged in a fight —albeit peaceful. It’s a war of ideas and innovation, of agility and tenacity.•When offshore resources are utilized for short-term benefits, we are also giving away our intellectual property. We must start thinking of longer-term advantages for ourselves. •We must innovate, or lose.
Whoever makes things better, cheaper, faster wins!It’s important to keep investing in jobs to be competitive in global markets. But this doesn’t mean replacement of the old-style, labor-intensive factory jobs. Those already disappeared in the last century. The prevailing wisdom of lower-cost, higher-volume manufacturing is clearly wrong. It’s not just a question of “manufacturing” jobs. What’s needed is new job creation with high-tech, high-value, innovative, non-commodity items. Post-industrial age“Capacity” and “production” are outdated, industrial-age terms. In the new techno-driven age, it costs almost nothing to make another copy of software. The high costs of pharmaceuticals are in research and approvals, not factory production. The incremental cost of another music download is zilch; sending another e-mail costs virtually nothing. Once the equipment is in place, it costs telephone companies very little to accommodate more traffic. Innovative growth comes through new ways to generate incremental value and corresponding revenue.For new hardware and software products, when knowledge sources (research, design, engineering) are available somewhere else in the world, at cheaper prices, the center-of-gravity of the industrial world shifts. We must focus on keeping the leading edge here at home—based not on the cost of goods but on the effectiveness of innovation.America has a significant level of domestic entrepreneurship and talent. This should be encouraged and stimulated. Beyond just universities, national mini-enterprise zones must be developed like “national technology parks.” The objective must be to nurture talent, ideas and innovation as a jumping-off point for new, growth businesses.

New workplaces, the equivalent of “factories,” must be bright and stimulating places where people enjoy working and the jobs are challenging and rewarding. Knowledge workers don’t need time cards, defined working hours and staff-sergeant supervisors. They are most effective and are stimulated by a campus-like atmosphere with environment-friendly, park-like facilities. Interestingly, it is the Japanese car companies in America that are advertising “green” factories and minimal waste. That attitude and those kinds of workplaces must spread everywhere.The short-term financial mindset must change. Financial myopia manipulates corporate value by demanding short-term, quarterly financial performance. Business needs to realize that continual quarter-to-quarter increases in revenue and profits cannot be sustained through lower-cost work that is done offshore.It’s significant that science and engineering professionals are dangerously absent from all levels of policy and decision-making in the United States. By default, lawyers and politicians have been allowed to take over everything. As a result, the government is manipulated by lobbying interests and the business climate has become a political football. This has become a direct threat to innovation and job creation.On balance today, America is still the world’s premier producer of high tech products and growth services. Extrapolating high value-added trends will be part of the solution. We must continue to compete with our best assets—technology, innovation and agile response.