by Braden Kelley
I had the privilege of bringing you live tweets during the World Business Forum from a balcony full of friends and colleagues (new and old) as a member of the Bloggers Hub, and to now bring you this article.
The World Business Forum kicked off with Bill George (former CEO of Medtronic) speaking about leadership in the crisis. Bill George was a worthy last minute replacement for Jack Welch, and he spoke at length on some of the content of his book “7 Lessons for Leading in a Crisis”. I hope to bring you an interview with Bill George later this week.
Bill George started by talking about how we are left with the aftermath of the financial storm – a healthcare, energy, environment, and jobs crisis. Of those, the jobs crisis is the most pressing. Ask Bill George what he thinks about the stimulus and he will tell you that we should be focusing on creating new jobs rather than trying to save jobs that will likely be lost anyway. Ultimately in a crisis you have to set aside your old financial plans, make new plans, and after re-calibrating your business, look to go on the offensive. Markets NEVER come back the same after a crisis. Companies have to anticipate change, have a defensive AND offensive teams during a crisis. An innovation team should be part of your offense. Innovation can help lead us out of this crisis.
Later in the conference a trio of financiers and economists took the stage – David Rubenstein, Jeffrey Sachs, and Paul Krugman. David Rubenstein set out the US economic problems at length and admitted there is no simple answer. He predicted a United States that will have higher taxes, lower social benefits, higher savings, lower dollar, and decreased growth. David Rubenstein hypothesized that the government is going to maintain its increased role in business for a while and probably reduce its support for entrepreneurs. He also predicted that New York City will lose its status as the financial center as its role becomes ever more diffused between London, Dubai, Sao Paulo. Emerging markets will be the future. It was funny that after all of this gloom and doom about the United States, that the later speakers from Brazil and Taiwan thought that the world is full of possibilities. His recommendations? Innovate around healthcare, emerging markets, and energy – AND innovate yourself.
Ultimately, perspective depends on whether you are climbing up the pyramid or sliding down.
Jeffrey Sachs spoke about a world bursting at its seams, with nearly 7 Billion people facing a series of crises. A world in which the sense of American predominance is fading – but this is not the same as saying the American empire is falling. Sachs spoke at length about American political failures to regulate finance and health care effectively, and the crumbling infrastructure in the United States. Jeffrey Sachs seemed to be saying that lobbying is killing the United States and that both political parties are at fault – they are happy to take the cash. Speaking of cash, the financial Sector has spent $3.7 Billion on lobbying in the last ten years. The number two lobbying group? You guessed it – Healthcare. For me the takeaway was the following – The system is broken and American taxpayers don’t want to admit it. And after ruminating on Patrick Lencioni’s talk, it’s clear that American politics has moved to conflict around people. American political leaders need to re-capture their ability to build constructive conflict around issues, or nothing will change, in fact they’ll get worse. But he didn’t just speak about America, he also spoke about the big challenges that the world is facing. A world in which water is already becoming a limiting constraint on growth. A world in which greenhouse gas production, water usage, and land usage are not sustainable. Ultimately we will hit the carrying capacity of the earth, and so now it is up to us to improve how efficiently we utilize the resources that the world has to offer, and reduce the amount of waste of the system. Innovation has an important role to play in that.
“We have global scale problems that will require global scale cooperation.” – Jeffrey Sachs
While David Rubenstein talked about our financial future, and Jeffrey Sachs on our political and global future, Paul Krugman focused more on trade. Krugman talked about the relatively recent shift in the majority of trade coming from developed countries to developing countries. He referred to this as a third phase of trade or “trade at a distance”, and spoke about how higher energy costs in the future may slow the growth in this kind of trade. Krugman compared the ‘Great Recession’ to the Great Depression and spoke about how there has not been a big uptick in protectionism but at the same time the fall of the American economy has been steeper so far than in the early years of the Great Depression. Krugman believes that the trouble in the labor market will continue for some time and that this will be a drag on the economy. At the same time, Krugman seems to believe that financial innovation is bad and should be banned. I can’t say that I agree, but I would say that it should be scrutinized and that risk shouldn’t be allowed to be externalized and rated with a degree of safety that it doesn’t deserve.
When I take the content of Krugman, Sachs, and Rubenstein together, one thing is clear, innovation is needed more than ever. For countries that want to stay at the top of the pyramid, and also for countries that want to continue climibing upwards, it will be incredibly important to find effective ways for governments, businesses, and non-profits to work together to create the building blocks for innovation and stimulate a climate that supports innovation better than the competition (in this case – other countries).
President Clinton’s speech had several great examples and insights about the challenges we should think about. Here are ten of my favorites:
- In under-developed countries, people will keep cutting down trees until you give them a reason not to.
- We are now highly interdependent on a global scale.
- The recession might be over in Economics 101 terms, but it is definitely not over for workers, and it might not be over if hiring managers get spooked
- When President Clinton took office, there were only 50 web sites on the Internet. Period. Now Blogging Innovation ranks at about 300,000 out of 30,000,000 in terms of traffic (Top 1%).
- We have a shared vulnerability to terrorism
. The world shares t
- America must do something about the healthcare crisis. Climbing healthcare costs are driving America into an uncompetitive position in the world.
- You hire a President to make the 10% of decisions where all your advisors don’t agree.
- The hardest thing about being President was making decisions that he wasn’t sure were right, but there was a deadline to be made.
- Solving the climate crisis and changing the way we produce and use energy is the only way to get job levels back up.
- We need to focus on balancing the budget after we climb out of this recession – Shared Benefits, Shared Responsibility.
When you look at all of the challenges we face, it is obvious that our organizations (businesses, governments, and charities) need to change in order to support our new reality and these changes will not be easy or pain-free, but we must innovate, and each organization type must seek to innovate in concert with the others. Gary Hamel spoke at length about what management was designed to do versus what we now need it to do. Management was designed to get people to show up on time and do things with greater efficiency and sameness, but we have different needs now. Management is focused on managing operational efficiency not on managing operational change. This needs to change because we now need organizations capable of changing as fast as change itself. We need to move from managing to get employees to do more to managing to get employees to create more – this requires a different approach. The secret to management innovation is to challenge the assumed trade-offs. The trick is to separate the what and the how. But, you’re not going to become a better company by looking at the Fortune 500 – you have to look on the fringes for innovation. And these fringes need to become mainstream fast because the best people from the next generation will not want to work for organizations that don’t mirror the meritocracy of Internet. So, Gary Hamel implored the audience to conduct management experiments and report back with their findings because of course – if you’re reading or listening to this, it’s because you don’t want to follow some other organization, but because you want to lead.
So, are you ready to experiment? Are you ready to lead your organization into these uncertain times and transform your organization into a more nimble competitor capable of changing as fast as change itself? Or do you want to sit back and cross your fingers that none of your competitors will. The world is changing, it always has been, and those organizations and countries that aren’t constantly seeking to understand what changes are coming and aligning their resources to maintain their connection to the customers’ and trading partners’ needs, will find themselves sliding down the pyramid or out of the seats of influence and prosperity.
Which future are you ready to choose? Or will you let it choose you?
Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.