“Change is hard because people overestimate the value of what they have—and underestimate the value of what they may gain by giving that up.”
by James Belasco and Ralph Stayer in Flight of the Buffalo,1994
China seems to be more and more in the news of late. Well I suppose with its clout as the second largest economic powerhouse in the world, that is hardly unusual. A couple of months back, the country unilaterally devalued its currency Yuan by about five percent to combat declining exports and economic slowdown. More recently the Chinese communist party at its annual conclave announced the end of the controversial ‘One child’ policy, allowing couples to have two children for the first time in thirty-five years. In an environment of economic slowdown, this underlines a heightened fear of loss of competitiveness to countries with better demography.
The Turn of the Screw…….
As Oil prices drop from above one hundred dollars to around forty dollars per barrel, the oil producing nation states in the Middle East led by Saudi Arabia seem to be stumbling, with fiscal deficit rapidly rising to unsustainable 20% of GDP levels. As these countries frantically dip into their reserves to balance the deficit, they fervently hope for oil prices to start climbing up again.
The Turn of the Screw……..
I suppose majority of the world believes, just as China and the Middle East hope for, that the economic and oil prices downturn are temporary and the ‘screw would turn back’. China would continue its rise, oil prices would climb back and all would be well with the world again.
My thoughts go back to that prescient article “Marketing Myopia” written by Professor Theodore Levitt of Harvard Business School more than half a century back. The central argument in that was “the history of every dead and dying ‘growth’ shows a self-deceiving cycle of bountiful expansion and undetected decay.” Professor Levitt goes on to say that with the ‘turn of the screw’ in terms of the environment, market and technology, there is always a small timeframe ‘window’ allowing an optimal match between these and an entity’s intrinsic competences. As the screw turns, that fit between such competences and the environment, market and technology starts getting lost. What is needed then is to rediscover and reinvent oneself in terms of ‘What business we are in?’ While Professor Levitt essentially wrote the article from an organisational and industry perspective, I see his concept much more universal and having relevance to nations and Global trends.
So how do I see the future trending?
For decades, manufacturing from the developed world has been migrating to China, attracted by low costs and productivity. But rising costs in China and development of sophisticated automation are tipping the scales back. Realizing the need to automate to remain competitive, China is implementing advanced robotics. It is constructing the first “Zero human labour” factory in Guangdong which would use a thousand robots to do the work of two thousand humans! But does this not run contrary to the effort to increase the Chinese work force by allowing a two child policy? And what happens to the Chinese manufacturing competitiveness as and when the US and Europe also employ similar robotics to manufacture? Allowing same costs but less the shipping time and transportation costs. Clearly, manufacturing is headed back to the consuming countries themselves. Once again a manifestation of the turn of the screw.
And what about the Middle East and its oil lifeline? For decades now, this region has been enjoying windfall profits from Oil and Gas and resorting to heavy subsidization of its citizenry. Says Meghan L. O’Sullivan, director of the Geopolitics of Energy project at Harvard Business school, “The expensive social contract existing between the Rulers and citizens in the gulf states will get more difficult, and eventually impossible to sustain if oil prices don’t recover”. (A few years back, during the days of the Arab Spring, I had deliberated on this ‘Social Contract’ aspect in my post, “Childhood’s End?”). The question that brooks an answer is when will the oil prices recover? More and more experts in the Energy sector are of the view that with improved energy efficiencies brought in by new technologies and the fracking industry waiting on the sidelines, there is no way oil prices can go up to earlier levels. This coupled with clean energy technologies like the Solar and Wind advancing exponentially means that the fossil fuel industry is headed the way of the dinosaurs. Yet another manifestation of the turn of the screw!
One might wonder that with such inevitable turn of the screw, what is the kind of leadership that would succeed in the world. As I think of this, I realise that such leadership needs to have the ability to envision and embrace a future unencumbered by the present- be it the technology, the geopolitics or the economics. A future which addresses core concerns rather than transitory symptoms. And a leadership which comes to live into such a future as it empowers others to deal with the socio-economic and other changes needed to realise that envisioned future. A future that was not going to happen anyways……….
In learning………….. Shakti Ghosal
Reference: Marketing Myopia by Theodore Levitt, HBR July-Aug 1960.
A New Beginning 
Well said! Also known as ‘long-term planning,” which most businesses and governments seem to fear – they just go for the short term.
LikeLike
Hi Pam.
I see it somewhat differently. I see it as the ability to envision ( or the lack of) a future that inspires and addresses the concerns of various stakeholders. I see it as a intrinsic tendency instead to continue in a ‘short term’ comfort zone and thereby have our actions and thoughts lead us into a negative, default future which is what we have been fearing all along.
So the aspect of ‘Long term planning’ you speak of is really all of the above for me.
Thank you for taking the time to visit and comment.
Shakti
LikeLiked by 1 person
Good analysis.
LikeLike
Thanks. Glad you liked it.
Appreciate your visit.
Shakti
LikeLike
A fascinating read. It will be interesting to see what plays out in both the short and long term.
LikeLike
Dear Sue,
Indeed it would be fascinating to see how these several emergent trends play out in the future.
Glad to know you liked it. Appreciate your visit and comment.
Shakti
LikeLiked by 1 person
Another great thought provoking post Shakti.. and I agree with Bill thoughts about there not being enough jobs in industry as robotics take over.. I am not up to press within the commercial world as I perhaps should be.. But I did read the other day how China is buying up industry now in Korea now.
Like everything else in life, the Boom has to come to an end at some point.. How we maintain our economies in the future I think many will have to re-think the present day structures we base our economies on..
I can only speak on a personal level at the moment in that the drop in oil prices have seen at last a fall in Petrol costs here in the UK.. which is welcomed by all consumers at the moment..
I hope you received my reply to you last comment upon my post.. and I thank you dear Shakti for all of your support at Dreamwalker’s
Wishing you and yours A Very Happy Holiday Season and all the best for 2016 to you and your family..
Blessings Sue
LikeLike
Dear Sue,
Thank you for your comment.
As I had mentioned to Judy a while back, “….history has shown that every time a disruptive technology has come in, while certain other technologies and the jobs associated with those have been lost, other jobs have got created…..” So indeed, as technologies, processes and work flows change, we need to re-think the present day structures on which economic activities get based, as you say.
Dear Sue, I did read your reply on my comment and I appreciate your kind wishes for the holiday season. May I also reciprocate and wish you and the family a great 2016 ahead.
With blessings
Shakti
LikeLike
Shakti …
You have outlined some excellent insights. I wonder if China’s two-child rule might be connected to economics. What income will the government tap into to take care of the elderly who are living longer than in previous generations? That is a concern in the U.S. as well.
I agree with Bill’s comment. If robots wipe out jobs, that is another blow to the middle class. It also raises a question on who will have the buying power for the goods made. Some politicians brag about creating jobs, but they don’t brag about the low wages that accompany those jobs. That’s forced some families to work two and three jobs just to pay the bills.
That’s not progress. It is a real concern.
LikeLike
Hi Judy,
Thank you for your great thoughts.
Indeed part reason of China’s policy change could be, as you say, for generating additional income to fund an aging population. But this intent itself underlines the need to retain jobs and not allow them to shift to other countries. And to do that you need additional manpower…. and hence a larger population in the working age.
While there does exist the widespread fear that robots would wipe out certain kind of jobs ( and which they will, whether we like it or not!), history has shown that every time a disruptive technology has come in, while certain other technologies and the jobs associated with those have been lost, other jobs have got created. The only aspect that impacts some sections of society during such times is that they lack the adequate competence or support to shift to the new jobs that have got created. This is an aspect Governments and Organisations need to be mindful of and play an enabling role.
I appreciate your participation here.
Shakti
LikeLiked by 1 person
I used to live in Central New York. The shift in technologies – not robotics – cost many people jobs that paid very well. For many, the jobs that replaced those did not pay as well.
We have highly-skilled people here in Florida searching for employment. It seems, however, that some of those jobs are being outsourced by companies that can hire folks elsewhere for far less.
LikeLike
Dear Judy,
I suppose what you are seeing in Florida is a manifestation of ‘leveling playing fields’ being created by Globalisation and Technology. I believe the only sustainable way to create and hold onto jobs in today’s world is by acquiring competences in the niches we choose to operate in. This process might bring in pain in the short term but am not sure if there is any way to get around it.
Cheers
Shakti
LikeLiked by 1 person
wonderful inquiry & commentary, Shatki!
perhaps, if human beings lived on a much larger planet
with endless resources and an environment less fragile
then they could carry on living as if earth is a playground of fun
and not the sacred sanctuary that it is. yes, leadership could have made a difference throughout human history. imagine if the true cost of exploiting resources were calculated. but as we see, there are only rare instances of unscarred places left on this planet. i agree that wise leadership is most important now in order for a future to be possible for humans. the earth will heal itself & be fine within some millions of years 🙂
LikeLike
Thank you!
You have brought in a wonderful perspective here and I need to acknowledge you for that. In fact, you have pointed me towards what I should be writing about in my next blog.
Cheers
Shakti
LikeLike
Excellent insights, Shakti. You began with a strong reference quote and then followed up with very interesting points. Thank you. I’m sending your link to two college friends (one is a philosophy professor now).
LikeLike
Hi Marilyn,
Delighted to know that you liked the post and shared it to your friends.
Thank you for your visit.
Shakti
LikeLike
Great post. I’ve been pondering some of these same things a lot lately. As robotics and automation increasingly render human work forces unnecessary (or at least greatly reduce the need for them), then what is to become of the working classes? And if there aren’t enough jobs, how will the consumers get the money to buy the products being churned out by the new automated industrial system? If industrialization destroys the consuming classes, they will kill the very people that feed them.
We saw this same thing happen with agriculture. When automation and technological advances greatly reduced the workforce necessary for food production (100 years ago a majority of Americans were farmers, today less than 1% are), the displaced workers migrated to cities and took industrial jobs. But as those jobs are destroyed, where are people to go now? It seems to me that is one of the biggest challenges the future holds.
Perhaps the answer is a return to localized economies and an emphasis on sustainability. But that won’t happen easily and will require some significant paradigm shifts. Thanks for the thought-provoking post.
LikeLike
Hi Bill,
You have provided a great thought here. Yes, as you have surmised, the answer might well lie in a ‘return to localized economies and an emphasis on sustainability’. But we could think of it another way. Just like at the dawn of the industrial age, no one could have imagined how the society and the individual lifestyle would shift and change over a mere two to three centuries. Similarly, robotics and automation are sure to transform the societies in unimagined ways once again and over the next century or two.
Some years back, I had mused about the above aspect in my pst, “The Clash of Pillar beliefs” and I invite you to go through that. It just might answer some of your questions or at least provide some food for thought.
https://esgeemusings.com/2011/12/25/clash-of-our-pillar-beliefs/
Thank you for taking the time to visit and comment. I appreciate.
Shakti
LikeLike
Thanks, very insightful. Time will come for self sustainable geographical clusters, Gandhi’s villages ? !
LikeLiked by 1 person
Hi Sanjeev,
That’s a great thought! Gandhiji’s vision of self sustaining village structures….. Could it just be that with the turn of the screw, technology is turning full circle to once gain allow that?
Thanks for the visit and the comment.
Shakti
LikeLike
“… with the ‘turn of the screw’ in terms of the environment, market and technology, there is always a small timeframe ‘window’ allowing an optimal match between these and an entity’s intrinsic competences. As the screw turns, that fit between such competences and the environment, market and technology starts getting lost. ”
I would add “diet” and “health” to that list. As the economy improves malnutrition and infectious diseases decline and the overall health of the population improves (survival of the species) but as the “screw turns” and the economy becomes greedy over-nutrition sets in and what we see today is a worldwide pandemic of obesity and diseases of affluence (non-survival of the individual).
LikeLike
Dear Elizabeth,
Indeed, the “health” of human society is an important parameter to judge progress by. Thank you for bringing this thought in here.
In response to your comment that “… as the the economy becomes greedy over-nutrition sets in and what we see today is a worldwide pandemic of obesity and diseases of affluence (non-survival of the individual)”, my questions are:
(1) What is that competence that the society needs to acquire which would allow a changed mindset regarding such greed?
(2) How could we enable the society to acquire such a competence?
I appreciate your presence.
Shakti
LikeLiked by 1 person
These are tough questions (and ones experts around the world are unable to answer). My thoughts are (1) the changed mindset we need is simplify our lives; control over-consumption in every aspect of our lives, including our eating; and to take responsibility for our own lives and health. The competence required is knowledge as knowledge is power. (2) Enabling society to acquire this competence (knowledge) is complex as there are many avenues to reach people and there are opposing forces of society’s best interests in the name of health compared to society’s best interest in the name of economy. So it does come down to education of the individual through books, guidelines and opinions of experts; and getting those messages out into society.
LikeLike
Dear Elizabeth,
I would totally agree to what you are saying. Yes, we need to simplify aspects in our lives. Development can be like opium. It allures… and makes us ‘want to keep up with the Joneses’, to consume and buy things we really may not require. And by doing so, our life becomes even more complex.
And yes, in the ultimate analysis, it is Health and Education which remain the core parameters by which to track a society’s development.
Thank you for bringing your thoughts here. I appreciate.
Shakti
LikeLiked by 1 person
An additional comment I would make in trying to have society gain this competence is that the medical model changes from one of treating diseases to one of restoring health – a subtle yet profound difference.
LikeLike
This a great thought Elizabeth!
LikeLiked by 1 person
Excellent observation. Due to the industrialization of food production (and the flood of processed junk food that comprises 70% of our diets these days) the world is increasingly over-fed and under-nourished.
LikeLiked by 1 person
I agree that the world is increasingly over-fed and this has reached epidemic proportions.
LikeLike
I too agree….. and I suppose this is one of the reason’s for excessive need for energy which is leading to Climate Change.
So how could each one of us stand in the Cause of the matter and shift the mindset leading to over-consumption?
Shakti
LikeLiked by 1 person
Thankyou for this interesting and insightful analysis Shakti. Whether it is all a matter of leadership, I am unsure. If the paradigm itself is broken, then it is questionable as to whether any amount of leadership is likely to succeed for long. It seems that much of Capitalist growth in the past 30 years has been dependent on the financialisation of producing entities themselves, who become speculators and manipulators in commodities and currency markets as a means of achieving profits, as well as exploiters of labour and financers of their own sales – in effect becoming casino banks. One might say the screw turns on itself as product supply outstrips demand and sources of capital hence turn to competing not just within the conventional product marketplace, but in the framework within which all such marketplaces exist: the mythical neo-liberalist ‘free market’ paradigm itself.
LikeLike
Dear Hariod,
As always, you have brought in some deep and fundamental thoughts here and I would acknowledge you for that.
When you speak of the paradigm being broken, I presume you are alluding to the ‘Leadership paradigm’. If so, then I would only say that true Leadership is never really about doing this or that. Nor about showing up with specific way of being. It is really about recognising a future that inspires and addresses concerns and then coming to live into that future with actions in the present which would make that future come true.
Yow write, “…Capitalist growth in the past 30 years has been dependent on the financialisation of producing entities themselves, who become speculators and manipulators in commodities and currency markets as a means of achieving profits, as well as exploiters of labour and financers of their own sales – in effect becoming casino banks.” You seem to suggest this is something which occurred in the environment, independent of Leadership being present. That may well be true. But a leader, if he was to exercise leadership effectively, under such a situation, would be listening for the concerns that have led to such exploitation and then envisioning a future that addresses that.
Thank you Hariod for your wonderful comment and this ensuing discussion. I so appreciate your presence.
Shakti
LikeLiked by 1 person
Actually, I meant the ‘paradigm’ of Neoliberalist (unregulated) Capitalism Shakti.
Who leads the leader? The major shareholders ultimately? The leader, it seems to me, walks a tightrope that on the one side demands ethical and legal accountability, whilst the other necessitates effecting strategies that produce maximal profits for shareholders – and the two are often not compatible.
So yes, the financialisation process was something that initiated in the environment, or more specifically the finance industry, and we saw what that led to in 2008. I fear a re-run, given the dearth of political will to fix what I have referred to as the ‘broken paradigm’. The problem, as I see it, is the dubious entanglement of the corporates and the politicians – party funding, offers of directorships, etc.
As you can tell, I am rather sceptical when it comes to so-called ‘free-market’ Capitalism Shakti, and instead believe in regulated Capitalism along with public goods – banks, utilities, transport – being under public ownership.
All best wishes to you Shakti,
Hariod.
LikeLike
Hi Hariod,
Thank you for clarifying.
You ask, ‘Who leads the Leader?’ It could be anyone including, as you have surmised, the shareholders. Do you realise that it is the circumstance which might dictate who would be the effective leader at that point in time? True leadership is really not about some lapel sign being put onto the ‘Leader’. It is really about the following:
It is an exercise in language that results in the realization of a future that wasn’t going to happen, which future fulfills (or contributes to fulfilling) the concerns of the relevant parties, including critically those who granted the leadership (those who lead you, and those you lead).
You have said that… “The leader walks a tightrope that on the one side demands ethical and legal accountability, whilst the other necessitates effecting strategies that produce maximal profits for shareholders – and the two are often not compatible.”
I agree that this is how situations manifest frequently. But integrity of word and action is a foundational element of leadership and so a leader needs to align all stakeholders with regard to Integrity and how this is totally non-negotiable. Any strategy which is not compatible to this, irrespective of what short term profit maximization it may allow, is really not even an option for leadership. And such strategies are never sustainable!
Thank you for this lovely discussion Hariod!
Cheers
Shakti
LikeLiked by 1 person
Hi Shakti….Two phrases came to mind as I read this post. Resourcefulness and think outside the box! Both are required in order for the world to move forward. Remember that quote Albert Einstein spoke about? To paraphrase ” one cannot solve the worlds problems with the same minds that created them”. Learning to be resourceful is a great gift to live by and thinking outside the box is what will save the world. To continue to think the same way about things is a sure sign of stagnation and if we wish to be successful in our lives we definitely need to be able to turn around at any given more and move in a new direction. Flow!!! Flow happens only when there is no obstruction blocking movement, so keep on flowing and make reinventing oneself a joyous challenge not something to dread. Everything we are watching take place in the world right now is nothing more than watching the old paradigm try to hold on to the old ways of doing things, and they are failing. It will never work because the human spirit always wants to grow and expand into new expressions of itself…Hope all is well over there and you are enjoying the holiday season….Blessings…VK
LikeLike
Hi VK,
Great thoughts there.
Einstein was right when he said, “One cannot solve the world’s problems with the same minds that created them”. But have you wondered what is it that makes this so? To me, our thoughts, actions and behaviour is a function of our World-view and Frames of reference. These are nothing but the network of unexamined ideas, beliefs,biases, prejudices, social and cultural embedded-ness, and taken-for-granted assumptions
through which we as an individual interprets and interacts with the world, other people, and even our own self.
Effective Leadership is really about recognising these inherent constraints that we hold within us, which distort and limit what we see of a situation and what we perceive as our own ability to handle it.As we gain this ability to recognise our own constraints thus,our Resourcefulness and the ability to think outside the box which is nothing but gaining the ability to see beyond what is allowed by our beliefs etc., improves dramatically.
I would urge you to keep this perspective in mind when you encounter a situation next time and you will yourself notice the difference that makes.
VK, thanks again for bringing in such thoughts which has made me write thus. I truly appreciate.
Shakti
LikeLike
Absolutely! As these nonsustainable systems crumble – due to a plethora of reasons – the old guard is fighting to hold on to its greedy consumptive ways. It’s an interesting time to be alive, witnessing it all. Your inference that the new model of management (for I cannot now view your post, thanks to the ipad WP app) requires visionary skills hits the mark. In reading various newsy posts online, I am often reminded of watching a dying cockroach. Kicking the air in futility, the creature goes down fighting to hold on. We live in such times. Great thoughts as usual, Shakti. Blessings and Aloha.
LikeLike
Hi Bela,
Thank you for the lovely comment.
Indeed, I believe that the Leadership that would be effective in today’s world in which the screw of change is turning faster and faster, is that which has learnt to separate itself from the encumbrances of the ground situation. Such leadership does not ignore the issues on the ground but rather envisions a future that addresses these. Such Leadership then invites all the effected parties to come and live into that future by taking actions in the present consistent to its realisation. A Future that otherwise was not going to happen anyways….
Blessings to you too and thanks for the visit.
Shakti
LikeLiked by 1 person