The Global Human Capital Journal

New Global Economic Architecture Presages Economic Realignment—Thinking Beyond the Obvious to Tap Emerging Opportunities

Illinois leaders were addressed by His Excellency Shri Kamal Nath, Minister of Commerce and Industry, Republic of India. True to form, His Excellency struck chords of transformation, partnership, common interests and harmony at the lunch held in his honor at the University Club on 19 February 2008. Attending were Chicago Mayor Richard M. Daley, Mr. Rajinder Bedi, Managing Director of the Illinois Office of Trade and Investment, The Honorable Susan Schwab, U.S. Trade Representative, Craig S. Donohue, Chief Executive Officer, CME Group and John Estey, President & Chief Executive Officer, SC Electric Company.

Reading between the lines, the U.S. and India stand at a significant turning point: India's impressive economic growth is a significant element of the ongoing redistribution of global economic power—which holds excellent opportunities for U.S. businesses and workers that are looking for it.

U.S. Economy Due for Sideways Year—Special Effects by Presidential Election—Uncomfortable Long-term Questions Waiting in Wings

The Executives' Club of Chicago assembled an all-star panel to give Midwest business leaders their guidance for various aspects of the U.S. economy in 2008. Diane Swonk, Chief Economist of Mesirow Financial and Robert "Bob" Froehlich, Chairman of the Investment Strategy Committee, Deutsche Asset Management returned, and the mystery panelist was Jack Ablin, Chief Investment Officer, Harris Private Bank. They broke out their respective crystal balls for 2008, along with comedic effects. The session was brilliantly moderated by Terry Savage, Financial Columnist of the Chicago Sun-Times who didn't miss a beat and extracted specific predictions from panelists.

Panelists agreed that the U.S. economy would struggle in 2008, but it would move mostly sideways, probably eking out a 1-2% gain for the year after an unsatisfying first half. All panelists predicted that the Dow would touch 14,000 sometime during the year. Froehlich again emphasized the importance of looking beyond the U.S. for investments. Swonk and Ablin were less outspoken but had high non-U.S. allocations in their recommended investments for 2008.

After reportage on the panelists conversation, I will add my analysis and points to ponder, about the economy, opportunities and the election.

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!

"Emerging" Market Companies Rapidly Becoming Global Players—New Owners for Jaguar and Land Rover

Emerging countries have long been regarded by globalizers as targets for exploitation, but 21st century market forces are turning legacy thinking on its head, which produces disruption and its sibling, opportunity.

The conventional thinking goes that emerging countries like Brazil, Russia, India and China (BRIC) have talented knowledge/human capital resources that can be tapped in outsourcing and offshoring arrangements. Moreover, these workers' employment in high value knowledge jobs creates a new consumer class among large populations. Emerging countries' rapidly growing consumer markets stand in sharp contrast to developed countries', which are flat or shrinking. China and India have been relaxing restrictions on foreign ownership, which has increased FDI, especially in China, enabling foreign companies to invest in and buy BRIC companies.

However, the big story in 2007 was the opposite:

Edison as Mashup Artist: Combining Discipline, Process and Intuition

Innovate Like Edison is a must-read for anyone who wants to thrive in the "flat world." Had it been written in the 20th century, the book would have been applicable to R&D leaders, and it would have been a nice-to-have for business and government leaders. Innovation was the place kicker on the team during the Industrial Economy because companies created value through efficiency (refining continuous processes), and innovation is about discontinuous processes.

In the 21st century Knowledge Economy, however, innovation is the linebacker. Customers merely expect world-class efficiency, but it rarely differentiates. Innovation is now a core competency at most levels of every organization.

The problem is, the authors explain, is that very few people are innovation literate, and they don't know how to practice it practically. As I've written extensively, business innovation failures are over 95%, and most new products fail at high rates. We must reposition innovation as a linebacker, and that means understanding it differently and treating it differently. It's a group effort, no longer a specialist activity. Therefore, this book is one of the key guidebooks of government and business leaders, and it's also a fascinating read. Here's why:

Geeky Session Explains How a Potent Mix of "People Like Me" Navigation and Digital Leverage Can Drive Sales and Profits

The Secret to Emerging Markets?

The Global Human Capital Journal's coverage of the Forrester Consumer Forum 2007 continues with this session on social tagging. Before your eyes glaze over, bear with me and learn how this simple, revolutionary social technology can help your customers to help your business. Forrester's Sarah Rotman Epps moderated a discussion with Brian Rosenblat, Online Retail Industry Lead, Endeca Technologies and Jay Shaffer, Vice President Marketing, PowerReviews, who represented companies that offer social tagging solutions, and they all shared numerous examples.

This was one of the most "actionable opportunity" sessions of the conference: tagging is a relatively unknown, simple, yet transformational Web 2.0 phenomenon that will gain traction in 2008 and explode in 2009. If you aren't doing it, you will be at a significant disadvantage to your competitors who do.

The Global Human Capital Journal published the overall conference wrap as well as in-depth coverage of several sessions. Access all through the link to the conference logo (right).

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."