The Global Human Capital Journal

Editor's Choice of the Global Human Capital Journal

As I reflect on 2007 and create strategy for 2008, several macro-trends come into sharp relief, and I believe that some of them might be helpful to you as you conduct your own planning. As always, I focus on emerging phenomena because they are areas in which disruption and discontinuous change are acting on markets, thereby elevating threats and opportunities. Helping leaders to create strategy to manage the risk of unusual market developments is the focus of my consulting practice.

In 2007 it became clear to me that we were entering a profound social transformation that would produce an unimaginable degree of change. Unlike the technology-precipitated change that I've been helping people with since the 1990s, technology is shifting to the background now, and pervasive social change is taking the stage. Look for disruption in all areas affected by how people connect, communicate, purchase and collaborate: business, politics, community and leisure. Moreover, these changes are completely global with all the variations that engenders.

I can't tell you how many acts this opera has, but 2007's themes can provide you enough clarity, at a minimum, to notice that the water is getting warmer. I have also included among the links some prescriptive market advisories I wrote this year. They give explicit advice and action steps to maneuver your organization so that you can become stronger as these changes unfold.

Thank you for your readership and support, and best regards as the curtain rises on the first act!

The automobile is a personal manifestation of the ultimate promise of the Industrial Economy—that physical power is essentially free—because it enables people to move quickly and easily. People just love cars because it is immensely satisfying to glide effortlessly (traffic notwithstanding ,^) from one place to another with a high degree of individual freedom.

However, as 2007 draws to a close, autos' current reliance on fossil fuels makes it increasingly obvious that we need to change the rules. First, new wealth in emerging markets is dramatically increasing auto ownership and its concomitant demand for oil. Increased demand and uncertain supply will undoubtedly prove unsustainable in the medium term. Second, and even more daunting, is the carbon/climate change problem, which is far more life-changing in the long term. Petroleum and coal are the largest contributors to man-made carbon emissions.

Since every challenge also means opportunity, entrepreneurs are busy with an increasing sense of urgency, trying to solve the problem. Here are two examples that I found particularly interesting:

Examining the Environmental Fallout of the Chinese Economic Supernova—Sibling Rivalry Rears Its Ugly Head

In 2007, nary an RSS feed or the page of a newspaper (for those still inclined ,^) does not mention China's exploding impact on the global stage: China is truly an economic supernova, and it is breaking almost any record for development that is laid before it. However, China's breakneck development is accompanied by grave environmental fallout: for example, as the host of the Beijing 2008 Olympic Games, the city is designing extreme measures to ensure that the air is clean enough for the athletes to breathe. The chief culprit is coal, a key source for China's insatiable need for electric power, and a resource that the country has in abundance. For key facts on China, I suggest The Economist's Country Briefing or Global Human Capital's China category (in depth) or China tag (mentions).

The Economist and WBEZ 91.5 FM presented an Oxford-style debate on the effect that China’s rise would have on the environment at Millennium Park's Harris Theater on 24 October 2007. National Public Radio’s Worldview host, Jerome McDonnell, moderated the session in which two debate teams argued their cases in front of the audience, which then voted on the debate winner. As a baseline, McDonnell polled the several hundred member audience prior to the debate, and we were evenly split and "too close to call."

Political Insight into the Global Knowledge Market

The Strategic Management Association, the Harvard Business School and the CDMA sponsored the 2007 China Outlook, which was given by Lyric Hughes-Hale, Founder China Online in Chicago 9 January 2007. Her presentation was preceded by David Hale's 2007 Economic Forecast. As a long-time China watcher and analyst, Lyric has rare and unusual insights to which I'll try to do justice before giving my observations. The Global Human Capital Journal also covered the 2006 China Outlook.

Lyric's China Outlook reflected global political transformation and how yesterday's Cold War politics are becoming more outmoded with each passing quarter. She didn't say it directly, but her comment about increasingly irrelevant organizations like the World Bank could easily apply to governments as well. Democracies and legal agreements increasingly lag technology development, and the gulf between them is accelerating. Are they becoming less relevant or effective? China is not burdened by dissent, which currently seems to add to its competitive advantage because it can move quickly and decisively.

Refreshingly, Lyric sees that the biggest threat to the U.S. is its leaders' own limited thinking, which is causing them to lose tremendous opportunities to engage the world. Here are her remarks, from my notes:

Dr. Clotaire Rapaille served a delectable elixir to a packed room of B2B marketers at BIGfrontier yesterday. His talk spanned business in China, investing in India, a new value proposition for shampoo (think "breastfeeding"), why people drive Hummers to the mall, why French people don't work and myriad others. Rapaille ("Rah pEYE") lists half of the Fortune 100 has retained clients because he has a track record with helping them understand the inner structures of consumers' minds and, therefore, how to communicate with them. Moreover, many of these inner structures hold true across cultures which can enable companies to develop offerings that will hold true globally. Sound impossible? Read on.

Emerging Opportunity to Rebalance Economic and Political Influence

Part II of the 2006 Economic Forecast featuring David Hale (presented Part I) and Lyric Hughes-Hale. Here, I present my notes of Lyric's talk, followed by my observations.

• Background: China's development and situation are far more complex than U.S. news sources report. It has seen significant economic liberalization during the past 25 years, and it shows every sign of continuing on that trajectory. However, the country is politically conservative. There is no freedom of the press. That said, the authoritarian government may produce reform much more quickly than if China had been democratic because the democratic process often slows reform. China is far more open and engaged on the world stage than it has been in many years.
• Social issues: more than half of China's population work in the agrarian economy, and China spends 45% of GDP on investment. Building and infrastructure investment are tremendous in scale and scope. Many people are being forced off their land to make way for high tech centers, roads and other projects, and protests are growing. There is a veritable middle class rebellion underway, as those who did well under the Communist regime still want the status quo. Younger people are moving to the cities, and they are breaking with traditions, which is producing social turmoil. It's difficult to predict how this will be resolved. Mao was a peasant, and the possibility of revolution exists, although it is by no means probable.