February 15, 2008
When Capitalists are Dangerous
From Johan Norberg's excellent In Defense of Global Capitalism, which I highly recommend:
Posted by John at 6:33 PM | Comments (0) | TrackBack. . . Capitalists are dangerous when, instead of seeking profit through competition, they join forces with the government. If the state is a dictatorship, corporations can easily be parties to human rights violations, as a number of Western oil companies have been in African states. By the same token, capitalist who stalk the corridors of political power in search of benefits and privileges are not true capitalists. On the contrary, they are a threat to the free market and as such must be criticised and counteracted. Often, businessmen want to play politics, and politicians want to play at being businessmen. That is not a market economy; it is a mixed economy in which entrepreneurs and politicians have confused their roles. Free capitalism exists when politicians pursue liberal policies and entrepreneurs do business.
January 6, 2008
Make It Daly
My friend John Daly, whose commentary I've featured from time to time, has redone his website and blog. It's one of my favorites, and should be one of yours as well.
In a recent entry, John reminds us, in this election season, to make FactCheck.org a regular reading destination. FactCheck is run by former CNN journalist Brooks Jackson, and examines the factual accuracy of the speeches, ads, and comments of presidential candidates of both parties. The site is non-partisan and accepts no funding from business, labor unions, political parties, lobbying organizations or individuals. Its mission is pretty simple: hold candidates accountable for their statements and claims, based on objective facts.
It you're an ideologue with your mind made up, don't waste your time or increase your blood pressure. FactCheck.org is not for you. If you're genuinuely interested in the truth behind what candidates from both parties are saying, then you'll learn from and enjoy this tremendous resource.
Posted by John at 7:41 AM | Comments (0) | TrackBackDecember 1, 2007
Underestimating Our Dynamic Economy: An American Tradition
Frederic D. Schwarz, writing at the American Heritage blog, comments on Daniel Walker Howe’s new book, What Hath God Wrought: The Transformation of America, 1815-1848, and highlights a delicious irony of timing in American history.
Henry Leavitt Ellsworth, the U.S. commissioner of patents from 1836 to 1845, issued a particularly in-depth annual report of the Commission's activities in 1843:
Posted by John at 10:12 AM | Comments (0) | TrackBackThis report was greatly expanded from earlier ones, with a description of every patent issued during the year and sections written by examiners who specialized in particular fields. Evidently moved by the richness of America’s inventive spirit, Ellsworth surveyed the great reductions in cost of common items over the past 30 years: Shirt cloth down from 62 cents to 11 cents a yard; hooks and eyes reduced from $1.50 a gross to 15 cents; horseshoes, formerly handmade by blacksmiths, now manufactured and sold at five cents a pound.
Then Ellsworth made a statement that has been misquoted, misattributed, and misinterpreted ever since: "The advancement of the arts, from year to year, taxes our credulity, and seems to presage the arrival of that period when human improvement must end." If this sounds vaguely familiar, you’ve probably heard the garbled version in which a patent commissioner supposedly asked Congress to abolish his office on the grounds that "everything that can be invented has been invented." . . .
. . . the year in which Ellsworth marveled at the wonders of progress and invoked “the arrival of that period when human improvement must end” was 1843. The following year [Samuel] Morse demonstrated his telegraph, and as Howe explains, in less than a decade, you could barely recognize the United States as the same country.
To be sure, Morse’s telegraph was hardly unknown to Ellsworth in 1843. Morse had received several patents on his invention and gotten government grants to develop it . . . Yet its success was far from assured; other inventors had been trying to send messages with electricity since the 1820s. Ellsworth’s rhetorical flourish, vague as it was, did convey a sense that technology might soon be expected to reach its limits. Instead, within a few months, it took a huge leap forward, which in turn led to many more huge leaps. That’s how technology works, and however many unforeseen directions it may take in years to come, it is sure to continue working the same way—and surprising people in the process.
September 24, 2007
Legrain on Mexican Immigrants in the U.S.
British economist Philippe Legrain, author of Immigrants: Your Country Needs Them, recent spoke with TCS editor Nick Schultz about the arguments for open immigration he makes in his book. The complete interview can be found here; an excerpt follows:
Schulz: Advocates of firmer restrictions on immigration in the United States say that past historical experience with large waves of migration is not a useful guide. When Europeans came to the US, for example, they had an ocean separating them from their homeland. This helped foster assimilation. But with Mexican immigration, things are different since the homeland is only a river away. What do you make of this distinction?
Legrain: It is certainly conceivable that geographical proximity could be significant, but in practice I don't think it's decisive. The fact that Mexico is next door does not necessarily make it easier for Mexican immigrants to stay in touch with their country of origin: those who are in the US illegally, for instance, cannot readily travel back and forth to Mexico. And thanks to ethnic TV and radio, the internet, cheap telephone calls and low-cost travel, it is just as easy for Vietnamese or Russian immigrants to keep up links to their country of origin if they want to. Conversely, the Amish have been in the US for centuries with little contact with their Swiss-German origins and yet have remained isolated from mainstream society. So I think it's more a question of whether people want to fit in, and whether others are willing to accept them.
I devote a whole chapter of the book to considering Samuel Huntington's argument that Latino immigrants are splitting America in two and find little evidence to substantiate his thesis. To quote just a few facts, census figures show that only 4.2 million of those born in the US--a mere 1.8%--speak Spanish at home and English less than very well, while only 1.2 million of the 232 million people born in the US--one in 200--speaks Spanish at home and has poor or no English.
Posted by John at 3:53 AM | Comments (0) | TrackBackHuntington inveighs against Latinos trying to maintain their cultural heritage, but what's wrong with that? Being American does not require giving up your roots--and if there is no problem with Irish Americans celebrating St Patrick's Day, indeed with American presidents of non-Irish origin officially celebrating it too, what is wrong with Mexican Americans celebrating Mexico's national holiday on the 5th of May?
Huntington also warns of "the creation of a large, distinct, Spanish-speaking community with economic and political resources sufficient to sustain its Hispanic identity apart from the national identity of other Americans and also able to influence US politics, government, and society." But even in areas where Latinos predominate, America's defining institutions remain intact. The US Constitution remains in place. Democracy and other aspects of the American political system remain intact. Capitalism is thriving. People are still free, the media uncensored, private property protected, the courts uncorrupted. Nothing like Mexico, in fact.
Huntington also claims that "Many Mexican immigrants and their offspring simply do not appear to identify primarily with the United States." But while only one in three foreign-born Latinos describe themselves as American, this rises to 85 percent among their US-born children--and 97 percent among the US-born kids of US-born Latino parents.
Of course, Latino immigrants will change America, as well as being changed by it. But this is neither exceptional, nor need it fracture America's forever changing national identity.
September 22, 2007
Rising Numbers of U.S. Hispanic Evangelicals
I ordered and have started reading Mark Penn's book Microtrends, which I mentioned previously. One of the microtrends he identifies--one which we've highlighted as well for you as well--is the rapidly growing numbers of Hispanics in the U.S. who identify themselves as Pentecostal, evangelical, or born again:
. . . a remarkably important subgroup of Latinos in America are Protestant. According to the 2005 book Latino Religions and Civic Activism in the United States, nearly one-quarter of U.S. Latinos identify themselves as Protestant or other Christian, including Jehovah's Witnesses and Mormons. That's about 10 million people in America--more than the number of Jews, or Muslims, or Episcopalians, or Presbyterians in the U.S. And of those 10 million Protestant Latinos, nearly 90 percent describe themselves not a "mainline" or liberal Protestants, but as Pentecostal, evangelical, or "born again".
To some degree, this is all part of the worldwide explosion of Pentecostals, who grew from fewer than 50 million to over 400 million worldwide int he last several decades. Clearly, some of the Latino immigrants' Protestant identity took hold in their home countries. But a lot of it is happening here. According to a 2003 study on Hispanic Churches in American Public Life (pdf), Catholic affiliation drops almost 15 percentage points between first-generation Latino Americans and their grandchildren. Sure, shedding our immigrant ethnic traditions is an old melting pot story--except that now, it's the opposite. New generations aren't so much "blending in" to America as choosing a different niche identity. . . .
To further confound misconceptions about the Hispanic population, Penn goes on to point out that more than half of Hispanic Protestants are predominate English speakers. To many religious Latinos, Penn observes, becoming truly "American" seems to consist both of learning English and turning away from Roman Catholicism in favor of Pentecostalism.
Posted by John at 9:36 AM | Comments (0) | TrackBackSeptember 9, 2007
The Power of 1%
Mark Penn, CEO of Burson-Marsteller, has just released Microtrends: The Small Forces Behind Tomorrow's Big Changes. I was attracted to the book by an introductory summary (pdf) you can find at ChangeThis.com:
. . . small choices have redefined society. We used to live in the “Ford economy,” where workers created one black car, over and over, for thousands of consumers. Now we live in the “Starbucks economy,” where workers create thousands of different cups of coffee, for individual customers.
That explosion of choice has, in turn, created hundreds of small, intense communities defining themselves in new ways. So now, we can no longer understand the world in terms of a few megaforces sweeping us all along. Rather, society is being pushed and pulled by “microtrends”—small, under-the-radar forces that can involve as little as 1 percent of the population.
In fact, by the time a trend hits 1 percent, it is ready to spawn a hit movie, create a political movement, or even start a war. In today’s mass societies, it takes only 1 percent of people making a dedicated choice—contrary to the mainstream’s choice—to change the world.
Highlighted below are just a few examples.
Any marketing guru or political consultant will say the key to communications is short, short, short. Bumper sticker messages. You can’t expect people to listen for more than 8 seconds. Well, slow down. As the chapter on Long Attention Spanners shows, there is a serious and growing group of people who are tired of the sound bite. They like to wrap themselves in ideas and activities that take commitment. They will engage you at length, if you respect their interests and concerns. So, shrink it all up at your peril.
Another example is Extreme Commuters. Forecasters of a decade or so ago said we’d all be telecommuting by now, with the workplace virtually defunct. Well, some people telecommute, but an equal number (about the 1 percent bullseye) travel more than 90 minutes each way to get to work. That has huge implications for traffic, gas prices, and car design—not to mention employers’ plans for where to locate. If you want to make smart business decisions, look at the different, intense ways people are making choices about their lives.
And the phenomenon is hardly limited to the U.S. Vietnam once fought a war in defense of Communism, and the Communists still rule. But you know what? Vietnam may now be the #1 entrepreneurial hotspot on earth. Microtrends is about the niching of society. People are self-defining in smaller and smaller ways, and neither “gut sense” nor conventional wisdom will likely get you to the truth. . . .
Penn's book looks like one I need to have on my list.
Posted by John at 6:49 AM | Comments (0) | TrackBackApril 5, 2007
This Week Changed The World More Than Even the Principals Imagined
I finished Nixon and Mao: The Week That Changed the World, a book I particularly recommend for young people who regard the early 1970s—and certainly anything earlier—as ancient history. It’s hard for twenty-somethings to imagine a time when U.S. officials obsessed over what military use "Red China" might make of condoms, and when the term "capitalist" in China amounted to a death sentence. While the U.S.-China relationship today is often described as "complex" and "multi-faceted", only a few decades ago there was no relationship to describe at all.
Just as it’s hard for younger people to imagine what the world was like then, it was equally hard for the protagonists at that time to realize what the future, just a few decades later, would look like. Author Margaret MacMillan’s access to notes of President Nixon and Henry Kissinger reveal their belief that this event was historic; "the week that changed the world" is actually a quote of Nixon’s. Even with an awareness that the events of February 21 to 28, 1972 were historic, the U.S. principals, naturally obsessed with the short-run implications of their actions, seemed to have little insight into the long-term developments their actions would precipitate. One particular example of this limited foresight was the negotiation over how trade and exchanges would be addressed in the Shanghai Communiqué:
The wording on trade and exchanges was also relatively easy to settle, and here the two sides were able to agree that it was desirable to expand the contacts and understanding between their two peoples, whether through cultural and academic exchanges or sport. The Chinese were nervous about allowing foreigners into China and not particularly interested in trade or tourism, but Kissinger was reassuring. The words in the communiqué would be window dressing: "We both know that basically they don’t mean anything." He was obliged by "sentimental" public pressure back home to push for more contacts between their two countries. "The maximum amount of bilateral trade possible between us, even if we make great efforts, is infinitesimal in terms of our total economy," he pointed out. "And the exchanges, while they are important, will not change objective realities." The Chinese were hardened revolutionaries, he said; "pedants" from American universities were not going to make any impression on them. These are interesting predictions viewed from our twenty-first-century vantage point: Wal-Mart’s imports from China amounted to some $18 billion in 2006 and place that one company ahead of Canada, Russia, and Australia as a trading partner with the People’s Republic; almost 900,000 Americans a year visit China; and many of China’s new leaders hold degrees from American universities.
"Infinitesimal" is hardly a word which describes the extent of the U.S.-China relationship today, and that fact, as hard as the issues both sides deal with today may be, is indeed a world changer—-for the better.
Posted by John at 6:10 AM | Comments (0) | TrackBackMarch 17, 2007
Nixon, Mao, and the Chinese Use of Prophylactics
I’m currently reading Nixon & Mao: The Week That Changed The World, a terrific read authored by historian Margaret MacMillan. One of the aspects of MacMillan’s work I really enjoy is the way she weaves the events of this truly earth-changing week into historical context.
In that regard, MacMillan describes the many years of hostility and suspicion which characterized U.S.-China relations for many years after 1949, and the heights to which this hostility ascended:
The United States set up a huge consulate in Hong Kong, still a British colony, partly to ensure that there would be no leakage, that goods from the mainland would not move on to the American market under the British flag. The American owners of the new Hong Kong Hilton had to get rid of the expensive Chinese antiques they had just bought because these came from the mainland. The effort to keep goods from Communist China away from Americans produced much work and increasingly arcane debates. If an egg came from Communist China but hatched in Hong Kong, was the chicken Communist or not? Was an egg laid in Hong Kong by a hen from the mainland a Communist one? The Americans were also concerned that important strategic goods not move into China through Hong Kong. A junior American consular officer once had to spend considerable time on condoms. “I had to go all around Hong Kong, talking to importers of prophylactic rubbers asking: How many do you think Hong Kong uses? And how many are reexported to China?” he said. His lengthy report garnered commendations in Washington, and he then received an urgent follow-up question: “Please update this carefully. We have heard that the Chinese Communists are using prophylactic rubbers to protect the muzzles of their guns from moisture.” The brief panic ended when the Pentagon got in on the act and a final message came from Washington: “Our experts have said that if you do try to protect your gun muzzles that way, it will simply rust and pit-out the muzzles themselves because moisture will collect; there is no air in the muzzle. So any prophylactic rubbers that want to go to Communist China, are okay.”
Isn’t it a healthy sign of the world’s future when the United States government is concerned with China’s policies on its currency or its intellectual property rights, instead of whether eggs were “red” or how the Chinese military makes use of prophylactics? Aren’t we all better off when the sight of Chinese in the street carrying pictures of Uncle Sam with fangs dripping blood of innocent children—something MacMillan describes in her book—is a distant memory?
Posted by John at 9:22 AM | Comments (0) | TrackBackJanuary 15, 2007
A Portrait of Rural China
If you want a better appreciation for just how complicated the process of reform in China really is, you must read Chen Guidi and Wu Chuntao’s Will The Boat Sink the Water?. Subtitled "The Life of China’s Peasants", this book takes you beyond the glitter of Shanghai and the bustle of Beijing into rural China, in this case, Anhui Province. In this part of China, the tremendous economic strides China has made over the past three decades trickle down in the form of the money husbands, sons, daughters and other family members, working in those cities, are able to send back home. In fact, the authors note that, officially, about 1.25 million migrants working in Shanghai are from Anhui Province alone; the actual number may be close to 2 million.
There are about 900 million Chinese peasants, and the average peasant, according to the book, has just over 1.5 acres of land per head. There are 660 counties in China where this figure is less than 1, too little, according to the United Nations, to sustain life. According to government figures, the average income of Chinese peasants is about 300 yuan, or about less than $40 a month. The World Bank, by the way, defines extreme poverty as less than $1 a day in income, and moderate poverty as less than $2 a day.
As the reforms of the 1980s were implemented in agricultural areas, some 56,000 people’s communes were transformed into 92,000 townships. This had the effect of creating five levels of government, national, provincial, municipal, county, and township. China is unique in having this many levels of government. Even with economic reform, government employment has grown substantially. In 1979, 2.3 million people were government employees; over the next ten years, over, 3.2 million people were added to the government payroll. By 1997, eight million Chinese worked for the government.
One senior official in the finance ministry quoted in the book puts it all in context: "In the Han Dynasty, eight thousand people supported one official; in the Tang Dynasty three thousand people supported one official; in the Qin Dynasty one thousand people supported one official; right now we have forty people supporting one public servant." (Incidentally, the United States has roughly 21 million government employees at all levels, implying one government employee for every fourteen people. Make of it what you will.)
All of these townships are responsible for raising their own revenue, yet with so many rural areas occupied by peasants in desperate poverty, the "tax base", as we call it here in the U.S., is meager. Since rural government officials don’t seem to receive much close oversight, corruption is rampant, and taxes to support that corruption are often based entirely on the whim or fiscal needs of a local official. National government officials depicted in the book seem sympathetic, but the scope of the problem defies short-term remedies.
I’ve given a very high level description of the problem; the book itself is a series of stories of how this dynamic has played out in real life, tragic stories. The headlines regarding China’s income inequality have mushroomed in recent months; in fact, a study by the Chinese Academy of Social Sciences finds that China’s income inequality is as severe as that of Latin America. For the Western reader, Chen and Wu offer a book with rich detail and color behind all those headlines.
Posted by John at 6:02 AM | Comments (0) | TrackBackJanuary 14, 2007
China's Biggest Export in a Decade Could Single Men
If present trends continue, by 2020 some 30 million Chinese men could be unable to find a bride, according to a recent report. While over 118 boys were born for every 100 girls in China during 2005, this ratio is as much as 130 to 100 in some parts of the country.
The report references the "instability" this imbalance could cause, but the global implications could be equally significant. Imagine a young Chinese man, a decade from now, who has the opportunity to go abroad for work or an education. A motivation to find a marriage partner could also be a consideration, and once married with roots in another country, such a man might find it hard to come back. Only a small portion of 30 million who make such a choice could represent a significant demographic trend in some countries, including the United States.
If you want to read more, one book which examines the global implications of this trend is Peter Schwartz's Inevitable Surprises, a book I highly recommend.
Posted by John at 9:00 AM | Comments (0) | TrackBackJune 13, 2006
Yesterday's "New Civilization" is Today's Fossil
David Beito at the Liberty & Power Group Blog points to this gem of a quote:
"Assuming that the increase in wealth production and population continue at the present compound rates, it seems likely that in the course of two or three decades, the U.S.S.R. will have become the wealthiest country in the world, and at the same time the community enjoying the greatest aggregate of individual freedom."
From Soviet Communism: A New Civilization, by Sidney Webb and Beatrice Potter Webb, published in 1936.
Hurry, folks, Amazon.com still has copies for sale.
Posted by John at 5:16 AM | Comments (0) | TrackBackMarch 26, 2006
An Odyssey of a Child
I read this background story from the San Francisco Chronicle on Enrique’s Journey, by Sonia Nazario, and immediately ordered the book. Nazario, a projects reporter for the Los Angeles Times, is a rare journalist—-one who actually goes above and beyond to get her story:
"I determined that 48,000 children enter the United States alone, without a parent, each year from Mexico and Central America," Nazario says. "Some of those are coming for jobs, but the majority are coming to find a parent. And in three of four cases it's a mother, usually a single mother, who left them behind."
The story was overwhelming: Some of the children are as young as 7, many are robbed or raped during their journey, some fall off the train and get sucked under the wheels. Nazario knew from experience that the most powerful way to illustrate the story was through the specifics of one individual. After meeting Enrique in Nuevo Laredo, a town on the Texas-Mexico border, she retraced his steps, traveling 1,600 miles on seven freight trains.
She interviewed his mother, Lourdes, in North Carolina, and traveled to Tegucigalpa, the Honduran capital where Enrique lived until he was 15. The series took two years to report and write for the L.A. Times. And when it came time to expand the series into a book, she went back and spent three months retracing his steps a second time. . .
When I get the book and read it I’ll review it here.
Posted by John at 9:05 PM | Comments (0) | TrackBackDecember 5, 2005
A Remarkable Look at Quantum Physics, Leadership, and Making Sense of it All
I highly recommend The Big Moo, a book probably best summarized by the tag line on it cover: "stop trying to be perfect and start being remarkable."
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Indeed, however, the book is remarkable, in part because it exists in large part to raise funds for three different yet quite worthy charities. Much of the book’s content is quite noteworthy as well, and worth your attention and the contribution to charity it will cost you to buy at the retailer of your choice.
One chapter I enjoyed in particular was "Inside Out, Outside In," an excerpt of which follows:
Posted by John at 11:19 PM | Comments (0) | TrackBackJohn Seely Brown is the former head of Xerox PARC and a renowned thinker and writer on the art of management. He is deservedly famous for a number of statements. The one I like best is, "The job of the leader isn’t just to make decisions, it’s to make sense."
Making sense is actually everyone’s job. The better you are at it, the better you’ll do in the working world.
Can you connect the invisible dots? Can you improve the signal-to-noise ratio in all the data that’s streaming at you? Take all the information that comes at you in the course of just one day. The morning newspaper: How many do you read? Two? Three? There’s the Times and the Journal, plus your hometown paper. What about magazines? Fortune, Forbes, BusinessWeek, Fast Company? How about professional journals and industry-specific publications like Variety, Advertising Age, Adweek, Institutional Investor, CEO, CFO, CIO? Do you try to keep up with weekly newsmagazine like Time, Newsweek, U.S. News & World Report, The Economist? What do you read for fun? Magazines about golf, fishing or hunting, home decoration or design, health and fitness, or just gossip? Do you watch TV? The nightly news? Sports or made-for-TV movies? How about email? Get a few of those each day?
Now, from all that stuff, how good are you at making sense? . . .
The premise is that your job as a leader, a sensor, a future-finder, is to weave these outside threads together faster, smarter, and better than the competition.
That’s the way it has been – at least up until now. Smart businesspeople making sense of the world, gathering and synthesizing external data.
Now we get to the interesting part.
Think of it as quantum mechanics come to business sense making.
Now the sense maker is part of the sense making.
Now the interior landscape is part of the connect-the-dots effort.
In other words, now the job of the business leader isn’t just to gaze out at a dizzying world full of streaming data. It’s to gaze in, at the long-ignored interior landscape. . . .
The way the world works now, the way the rules of engagement operate, you can’t claim to make sense out of the exterior without booking voyages into the interior. Think about it: How can you understand "it" if you haven’t make any effort to understand "you"? Because what you’re really doing is establishing a living, electrical, vital, energetic connection between it and you. You’re creating both of them, simultaneously. A lot like quantum physics. . . .
So what to do?
Do what Jim Collins did when he was a student. Treat yourself like an experiment, like your very own lab rat. Do you dream at night? Start writing them down.
Do you wish you could be a writer? You are! Reserve an hour every day to record you thoughts in a special file on your PC. Build up a journal, an inventory of your inner life. . . .
How many museums or art galleries have you visited in the last six months? How many contemporary artists can you name? If you only know the names of you competitors, and you can’t name a single artist, your outer and inner life are seriously out of balance.
Take time to go in side. Learn to meditate, to do yoga. Take time to exercise – you think you’re toning your body, but your also redirecting your mind. Gradually, over time, you’ll find that you can make more and better sense of what’s outside and what’s inside. And what’s the difference.
November 2, 2005
The Lessons of Trailblazing Chinese Entrepreneurs
On the substantial plane time during my recent trip to China, I read Made in China: What Western Managers Can Learn from Trailblazing Chinese Entrepreneurs. This book, written by London Business School professor Donald Sull, is both a warning and an opportunity.
It could be an eye-opener for companies in the developed world subject to competition from China which haven’t really done their homework. Such companies, consequently, really do not understand the persistent resolve to succeed which they may be dealing with on the other side.
One of the companies profiled in Sull’s book is Lenovo Group Ltd., the personal computer company which formerly known as Legend Group Ltd. This company founded by Chuanzhi Liu, is the largest information technology company in China, with $3 billion in revenues during fiscal 2004. It has become better known in the United States recently because of the combination of its personal computer business with that of IBM.
What Liu endured to start what became Lenovo, however, is amazing. Liu graduated from college during the Cultural Revolution; born into an intellectual family, he was therefore designated for "reeducation." He spent two years on a state-owned rice farm before he was permitted to take a position as an engineer with the Institute of Computing Technology of the Chinese Academy of Sciences.
He spent thirteen years conducting research on magnetic recording circuits, winning several awards in the process. He experienced tremendous frustration, however, because his research was not used in practical application.
Finally, he was chosen to lead a government entity which eventually became Legend. He was initially limited to distributing products manufactured by others, however, and could not get approval to produce PCs. He was forced to go to Hong Kong to set up a joint venture, and the results were successful enough to allow the company eventually to gain approval to sell its own computers on the Mainland.
At about the same time, however, the Chinese market was opened further to allow foreign PC companies market access, and the competition from IBM, Compaq, HP, and others was brutal. Fortunately for Legend, these companies did not sufficiently tailor their product to meet the demands of Chinese users. Navigating severe financial distress, Legend was able to take advantage of competitor blunders to build its market share, eventually becoming China’s top PC maker.
Sull relates several important lessons from Legend’s rise, such as using iterative, continuous strategy evaluation and planning. The old "fortress mentality" of peering into the future, determining the competitive landscape, opportunities and threats, and crafting a strategic plan which was rigidly executive has been discredited by a global economy marked by rapid innovation and competition arising from unlikely quarters
Some of the same lessons which Sull offers can be learned in the United States, however, by watching Apple and Google, just to name a couple of examples. Both are seemingly being run with the same iterative approach—quite successfully—which Sull finds in the companies in China he holds up as examples for us to follow. Both U.S. companies, like those which Sull cites, are run with relentless drive and work ethic.
Steve Jobs, however, has never been forced to consult government bureaucrats before making a decision to introduce a new product. Neither Larry Page or Sergey Brin went through "reeducation" because of their or their family’s past "capitalist ways."
From that point of view, Sull’s book is worthy of your attention to get a taste of the obstacles Chinese entrepreneurs have had to overcome over the last several decades in spite of a pro growth policy. It’s only a taste, though, as I suspect no Westerner could fully convey the trial of su
On the other hand, the contrarian in me sees a book like this and is reminded of the danger of deifying the latest business success stories. Do you recall the seeming innumerable volumes on Japanese management techniques which American business executives needed to learn in order to compete? Here’s just one example: The Art of Japanese Management, by Richard Tanner Pascale, published in 1981.
It’s available on Amazon.com for $0.01, plus shipping and handling.
Posted by John at 10:37 PM | Comments (0) | TrackBackSeptember 1, 2005
GM’s Lutz on the Strength of the Small
I recently read Guts: 8 Laws of Business from One of the Most Innovative Business Leaders of Our Time, by Bob Lutz, now Vice Chairman of General Motors. This time period much of this book covers, the second revival of Chrysler in the 1990s, seems like ancient history now given Detroit’s deep troubles. Whatever happens with GM, Lutz is getting plenty of material for another book at some point in the future.
In recounting the Chrysler turnaround, Lutz talks about the virtues of being with a smaller organization (at least by auto industry standards):
When I finally landed at Chrysler, two decades and three car companies later, I found a place where (at the top of the company, at least) a nonconformist like me seemed to fit right in.
Moreover, I found Chrysler’s small size (at least in comparison with Ford and General Motors) to be a tremendous potential advantage for the company. In the Marine Corps, and later, when I oversaw the disparate departments that would someday be the motorcycle division at BMW, I’d seen the power of small, dynamic organizations firsthand—organizations that through vision, wile, and, yes, just plain guts were able not only to overcome their size and resource deficiencies, but to turn them into advantages. And I was anxious to work again in an organization that wasn’t too large (or to be more exact, too lethargic) to get out of its own way.
The obvious irony of these words, of course, is that large size and conformity may be a major part of the problem of Lutz’s current company, General Motors.
In any case, his comments are a reminder that small brims with power in today's economy, even in "scale" businesses like automobile manufacturing.
Posted by John at 10:45 PM | Comments (0) | TrackBackAugust 31, 2005
The Great Flood of 1927 and Its Relevance for Today
I was thinking today about a book I read several years ago, Rising Tide: The Great Flood of 1927 and How It Changed America. This story of the nation’s greatest flood documents the power of the Mississippi River unleashed against the levee system, which was breached in about a dozen different places. Floodwaters covered over 26,000 square miles of land, an area larger than the entire state of West Virginia. At one point during this disaster, 13% of Arkansas’s land mass was covered in floodwaters.
Times were quite different almost 80 years ago, as this book recounts. In fact, author John Barry offers a social history as much as the history of a natural disaster.
Relevant to today, however, this book offers a glimpse not only how long it takes to get back to "normal" after a disaster like Katrina, but it also reveals how disasters can permanently change a region forever.
The Gulf Coast area, and New Orleans in particular, will be permanently changed in ways we can only guess at for now.
Posted by John at 11:35 PM | Comments (0) | TrackBackAugust 7, 2005
Ohmae’s Subversive Definition of Globalization
I’ve been doing what I suppose amounts to a running review of Kenichi Ohmae’s The Next Global Stage, a book I can highly recommend even though I’m not finished with it.
One of Ohmae’s key points in his book is that regions, often crossing national borders, are becoming more important globally as individuals, consumers, and companies become increasingly globally connected. These regions are becoming even more significant, in fact, than the nation-states which purportedly govern them:
What I have observed is that globalization is nothing but liberalization of the individual, consumers, corporations, and regions from the legacy of the nation-state in which they belong. Eventually, the information available to each one of them will give them the wisdom of choice. Whether the consumers buy the best and cheapest from anywhere in the world is also their choice and not the choice of the government. Likewise, corporate activities will eventually shift to the best host regions. Instead of begging from the center, the regions will polish themselves so that the rest of the world comes to help them prosper. Ultimately, it is a competitive world and one that will discipline all members of the global village because wealth will migrate across national borders. Diplomatic and military powers are now subjugated to the branding and marketing strategies of regions as a unit of operation in a borderless world.
For the nation-state, any choice by individuals or companies which ignores the nation-state itself is quite threatening. Free market forces, as Ohmae notes, are particularly detested by federal governments.
One of the more famous examples, recounted in Bob Woodward’s The Agenda, is President Bill Clinton’s response, after being told by advisors that his economic plans had to be put on hold because of Wall Street’s budget deficit worries: “You mean to tell me that the success of my program and my reelection hinges on the Federal Reserve and bunch of f—-ing bond traders?”
Yes, Mr. President, you’re right. Sorry to tell you, but you’re not in control.
Taxes, regulations, tariffs may or may not be essential public policy. Regardless, they are control mechanisms of a national government which help it justify its relevance.
The elimination or phasing out of such devices of power, even if beneficial to the society at large, are problematic for obvious reasons. National governments don’t like to give up power, pure and simple. If they don’t like to give up power, they absolutely detest discipline, particularly when the source of such discipline is largely intangible and hard to define.
More recently, this unwillingness to recognize a lack of control is the largely unrecognized reason why the recent debate in Congress over the Central American Free Trade Agreement (CAFTA) was so contentious. Congress doesn’t like to acknowledge the existence of people like the "Sock Guy," the "Trouser Guy," and their ilk: the businesses and industries that treat borders as mere checkpoints, moving production and people quickly if regulations, taxes, or tariffs in a particular jurisdiction are too onerous to deal with.
Moreover, having industries clamoring for protection is the mother’s milk of power and money. It explains why any proposal to lessen, or God forbid, eliminate, the reasons--largely federal price protections--why the domestic sugar industry keep knocking on Washington’s door and waving cash creates so much controversy.
If the sugar industry in the United States were subject to the free market, their political largess, one of most pervasive in this country, would be reduced dramatically. Their focus on Washington would dramatically fall. The industry would be forced to pay attention to competitive forces and how to be more efficient producers.
Globalization is indeed subversive. That’s what makes it controversial.
Posted by John at 4:34 PM | Comments (0) | TrackBackJuly 28, 2005
Ohmae on Africa
As I mentioned a couple of days ago, I’m currently reading The Next Global Stage, a book I highly recommend.
One of author Kenichi Ohmae’s themes is how nation-states inhibit economic development. The most severe illustration, he notes, is in Africa:
. . . it is in Africa that the nation-state concept has had the most disastrous consequences for people and economics. In 1885, the European powers met in Berlin to carve up the continent among them. The entities they created are still with us. They were not making states at all in Berlin; they were establishing colonies or protectorates. When a growing tide of African resentment forced the rulers of Western Europe to concede independence and political self-government to their African holdings, it was agreed that the border demarcations drawn up in Berlin should serve as the borders of the new crop of nation-states. This was to avoid border conflicts and the incipient risk of conflicts. Nation-states were born that made no sense. They had territories comprising few natural resources, a food production sector dominated by subsistence cultivation and chronically vulnerable to natural calamities. Not surprisingly, many of these states have remained at the bottom of the world’s GDP league.
Apart from the economic myopia of these policies, ethnic and religious borders were ignored. Many of the new states contained festering internal conflicts. In the case of Nigeria and the Congo, these have spilled over into bloody civil wars with predictable impacts on resources. Other areas that had the potential for growth, such as the Niger Delta region, were divided between two separate nation-states (Nigeria and Cameroon), neither of which was interested in cooperation—both wanted only total control.
I had a conversation with economist Don Ratajczak last week in which he made the very same point.
Posted by John at 6:00 AM | Comments (0) | TrackBackJuly 26, 2005
The Humongous Cybercontinent
I’m reading The Next Global Stage, by corporate strategist and prolific author Kenichi Ohmae. If you liked Thomas Friedman’s The World is Flat, then you’ll love Ohmae’s book. Nothing against Friedman, but Ohmae's book it The World is Flat to the third power.
One of Ohmae’s themes is the rise of borderless domains like the cybercontinent or the region-state, which make the nation-state less relevant. The cybercontinent, Ohmae notes, is humongous:
[The] cybercontinent is greater than any country on Earth or even the extended European Union. For the first time in human history, the world changes its habits in a matter of days rather than years. By the end of 2004, 800 million people had a URL or were connected to the Internet. This is the same number of people who lived in countries with a per-capita GDP of more than $10,000 10 years ago. These people are all connected, one way or another . . .
More to come from Ohmae. . .
Posted by John at 9:52 PM | Comments (0) | TrackBackJune 14, 2005
If You Want to Be Informed, Here’s a Book for You
My pal John Daly has written a book I highly recommend: The ROIL System: How to Be Well-Informed in a Media-Biased World. If you’re trying to figure out, in the media blitz in which we live, how to be informed without becoming inflamed, you will enjoy and profit from John’s book.
John’s experience in the news business helps give you a new way to assess the value of news stories you read. His book is an encouragement to be an active and questioning consumer of news.
Moreover, John offers a system to help filter and navigate the media blizzard which we all confront. Technology, as he points out, is a valuable tool in this effort which we can harness for our benefit. I’ve gained from several from several of his recommendations, and I think you will, too.
Posted by John at 6:05 AM | Comments (0) | TrackBack