When environments change due to cataclysms, mutations often become the solution to survival. What can companies learn from this observation? And what do Aristotle, Buddha and Confucius have to do with it?
I write from St. Petersburg where I ate dinner the other day in a steak house off Nevsky Prospekt. Over herring and steak and vodka, and then more vodka, a barrel chested man inquired my way, “What the hell is going on with your American finance system?”
He poured more vodka. He rubbed his chin. “It’s bad for bizness.”
“To bizness,” we toasted, and threw one back.
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And then another to American financial markets, the current maelstrom of discontent that’s rocked economies both near and far. As with the current US bailout, Russia too is pumping billions into its banking system. This follows various corporate stumbles on both sides of the Atlantic: Lehman Brothers’ bankruptcy; Merrill Lynch’s shotgun sale to Bank of America; AIG’s $85 billion bailout; Fannie; Freddie; and even HBOS, England’s largest mortgage lender, ending up part of Lloyds TSB for some $22 billion.
It’s long been noted that disruption breeds opportunity. Less discussed is the testicular fortitude needed to actually adhere to the adage when our natural inclination may be to retreat to our caves, weather the storm and peer out again when a new day emerges. Indeed, calls for a protectionist revival bandaged in well needed regulation fill the air. Witness Germany striking off on its own to guarantee private deposits to the tune of $500 billion. European stock markets did, and as I write they tumble badly on news of Germany’s solo act.
Two things stand out though: global interconnectivity has never been quite so global, what with sovereign wealth funds from China to Dubai coming to the rescue of developed economies; and if we’re not actually in the cataclysm we certainly stand on the ledge as various pundits, academicians and generally clever financial types simultaneously tell us that the worst is over, the worst is yet to come, there’s light at the end of the tunnel, there’s light just around the bend. I leave it to them to someday deliver consensus.
As the Economist notes with a backhanded reassurance they’re uniquely capable of:
Unless policymakers blunder unforgivably… there is no need for today’s misery to turn into a new Depression.
Meantime, I look about the edges through the lenses of our new “globality” and current crisis. Our world is not flat, as Thomas Friedman would have us believe.
Instead, it’s filled with all sorts of geographical and meteorological hurdles. And lest we forget the endlessly fallible human element, a simple review of American Financial History, The 21st Century Edition should suffice. (And if that won’t do, let The American Foreign Policy Experience, From Old Europe to New Kabul illuminate).
With that in mind, I rejigger the metaphor to say the world is a beat up Chevy careening down a narrow mountain, potholed road piloted by a recently licensed drunken teenager. And the brakes don’t work.
Which is another way to say that while white-knuckled, we need to look, listen and learn from the world around us to ease ourselves back to some semblance of stability.
Lou Marinoff, former Canadian table hockey champion and philosopher author behind such books as The Middle Way and Therapy for the Sane, has an evolutionary take on disaster and cataclysm. It’s only at such times that we actually evolve, he believes, and innovate our way out of trouble. Otherwise we’re in permanent stasis as the world passes us by.
Manufactures and service providers have long navigated disruption and opportunity. Once upon a time, they were getting clobbered too.
Take IBM. A few years ago it sold its stagnant PC division to Lenovo, a Chinese firm that recently cracked the Fortune 500, but simultaneously grew in India from 2,000 employees at the start of the decade to upwards of 73,000 today. These moves weren’t about labor costs, but reassigning priorities and winning the talent war against global competitors in the higher margin industries it remained in.
And it’s not just traditional Western corporations that successfully innovated their way out of the globalization disruptions of the past 15-20 years. As they cast a global eye at the world, successful companies began to understand the value and opportunity of what market guru C.K. Prahalad calls the fortune at the bottom of the pyramid.
India’s Tata Group, according to a recent Economist report, operates in 85 countries, recently bought Jaguar and Land Rover, borrows liberally from the ideas of Berkshire Hathaway, Mitsubishi, and GE, and understands globalization and manufacturing not as a drive towards the lowest priced labor markets, but towards assimilating the culture of markets they wish to penetrate.
Take the Nano, Tata’s new $2,500 car developed for India’s lower middle class. With demand from Western markets that see the vehicle as an ideal second car, Tata’s modifying it to meet geographic and cultural sensibilities.
Yes, it’s a far way from financial crises and roiling markets. And, of course, it’s these troubled institutions that finance such global growth. But if we step back a moment, take a deep breath and innovate properly we just may get sober hands on the steering wheel and drive ourselves out of this mess.
Either that or, perhaps, take another shot.