The Challenge of Globalization?

Internet Café, Cairo - Egypt

On globalization

It would be arbitrary to point out any one moment in the history of trade as the beginning of globalization. Certainly, there have been many times the world could have taken all free trade one would throw at it! That's not so anymore--at least from the perspective of the West. In the developing world, without intellectual property protection, and markets open to services from the developed world, globalization as we've known it for a decade or so is not sustainable. On the other hand, without strong education in the developed world, globalization is again unsustainable. Education in this context should be taken in its broadest scope, from elementary to college, and to job (re-)training.

Unlike in the past, technological advance permeates more quickly in the developing world. Strong property rights, IP included, at least would make the process fairer for those who pay the higher and higher R&D bills in the developing world. On the other hand, opening markets to services in the developing world could keep the money flowing both ways for a while. Until regional (capital) markets can supplant the inflows from the developed world, growth in the developing world remains uncertain. As well, the developed world needs to re-think its commitment to education. The post-industrial economy is at crossroads. Social expenditure rises regardless of how well the society leverages its human resources. Post industrial economies will run out of options unless they are able to make the most out of their human capital. Education is one of the keys to turning the human potential on.

The bring the conversation closer to the US shores, NAFTA was probably the beginning of the last wave of globalization. Then, a strong dollar (mid 90's Clinton-Rubin) and a relaxing and non-military expanding world fuelled global trade to unprecedented levels. Meanwhile, one of the most difficult barriers to growth has grown even higher: shortage of highly skilled labor. Just ask Microsoft why it lags behind most all deadlines it set publicly for itself. Immigration alone has not solved the problem and, probably, it won't. In the late 90's, the ever smaller manufacturing base had been weakened even further by fiscal policies meant to solve a problem in the high-tech sector--increasing short term rates and high dollar valuations. The social costs are only growing, but at least there is hope the current public conversation will get us somewhere. At least now, education is still missing from the public debate. The fiscal policies would have been be just the right vitamin--lower dollar and such--had it not been for the increasing cost of the war(s) and more expensive oil. All in all, it is only a crisis that can bring out the best in us, sometimes...

J. M. Keynes, economist

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood...
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

"...fear has become the emotion through which public life is administred"

Joanna Bourke, writer

Blogs are free enterprise capitalist expressions of communication

The day when the number of blogs equals the number of people in the US cannot be too far. Mainstream media, activist groups, corporations, and countless numbers of individuals and entities, are evaluating this medium trying to make the most out of it before (too) late. It's a blog-rush out there!

Following, let us take a look at some of the comparative-, and intrinsic-success factors for the blogs.

Arguably, the newsgroup is the predecessor of the blog. Newsgroups are still very popular forms of individual expression within the larger context of social-networks. So, everything we've come to know about social networks applies to newsgroups. On the advantages side, newsgroups enjoy the network effects/externality: the value of the newsgroup, to each one of its members, is the square of the number of members. On the costs side, newsgroups suffer from the tragedy of commons: rationally or not, each member of the newsgroup tries to maximize her own gain/utility function, which, at the limit, occurs when that member makes no contribution to the newsgroup. Things can get even worse when a newsgroup member's contribution is to flame the group--post a message that in essence destroys value for the other members of the group. Flaming has been addressed relatively well by introducing editorship/mediators. So, edited/moderated newsgroups tend to be of more value for their members. Also on the costs side, newsgroup membership comes usually on the cost of an email account, and requires the skills to handle email and a web browser.

Blogs could possibly be extended to embrace all characteristics of newsgroups while enjoying its own strengths as well. A blog could have more contributors besides its owner, and comes for about the same skill/fee prerequisites of newsgroups. Unlike a newsgroup, blogs are open to everybody to see, but not necessarily to comment. It is the intrinsic features/strengths blogs have that may address the costs associated with newsgroups. A blog's owner is the default editor of the blog, so blogs could become moderated fora. Then, a blog enables its owner(s) to build a mix of financial and moral capital, and it also allows its owner(s) to draw against the same capital. Let us examine the power of this statement: a blog allows you and me to build brand equity around our names/skill sets, monetize the equity we built, and it even provides the mechanics of using some of the capital we created. One can see how the blog solves a great deal of the tragedy of commons problem--through an old CATO Institute-like recipe, privatization. Thus, the title of my posting...


Challenges:

How do I know where to go for my questions? Possible solutions: emerging hierarchies, blog-aggregators, co-optation by newspapers, Darwinian selection, directories, word of mouth, search-engine rankings...


Growth Scenarios:

For most of us, blogs will be just another way to store digitally our trivia. For as long as key-word advertising is the major game in the advertising world,nothing targets an ad better than a text-search. This means I'll be able to save my daughter's graduation pictures as a service provided to me by, let us say, Google. As another category, we'll witness the emergence of independent online anchors--not all talented people (can) fit in the newsrooms of the world. And, a third category could well be the ad-hoc reporters in some sore spot on the planet.

Thank you for your comments, and happy blogging!

Cheap does not supplant Quality

I drove for 1/2 hour to Wal-Mart to buy a set of windshield wiper-blades only to find that the type I needed was out of stock. Is it a unique experience?

Have you also been bothered by the fan of your Dell laptop blowing hot air on your (right) hand-wrist as you were handling your mouse?

Beyond the fact that both types of customer dissatisfaction come from icons of our economy, is there anything else these companies share? Of course, they are both representatives, each in its own industry, of the transformational nature of technology and ensued operational efficiencies.

Wal-Mart, by operating a just-in-time supply chain, and Dell, by manufacturing-to-order, have managed to be the most efficient organizations in their given industries. The common knowledge goes on to say that the customer gets the benefits (read savings) when dealing with anyone of these two. Yet, driving twice to the same store to get wiper blades more than doubles my cost, and taking all the heat from a poorly placed fan is all I remember when the lower price I paid for the laptop is forgotten.

So, when you have a long supply chain, long in weeks and miles, or when you change suppliers of your parts every now and then, "to keep them honest," it becomes easy to overlook 'subtleties' in your service/product like the ones above.

To the extent these are not isolated occurrences, what can drive such organizations back to consider quality of service/product?

Could there be anything like a customer revolution or are we in a race to the bottom?

Juran saw the problem with quality (too) many decades back... Somehow, had he had mostly Japanese and European students?

Addendum: The minimalist approach throughout!
Ikea makes an interesting case study: Not the greatest service on the floor, several items out of stock unless shopping on the first floor or the warehouse, one's shopping experience is more like a crawl than a flow. Yet, Ikea manages somehow to offer simple lines / functional furniture, an entry level to Scandinavian design (as far as price and quality,) that is still popular with shoppers for the lack of alternatives. In the end, the model behind Ikea's success is keep it minimalist (assembly, features, price, logistics, etc.) The only exception from minimalism seems to be its global scale.

To understand the difficulty through which change comes about, at a macro-level, it's worth recalling how Thomas Kuhn used to say that mere disconfirmation or challenge never dislodges a dominant paradigm; only a better alternative does.

From Wired 13.02: Revenge of the Right Brain

Wired 13.02: Revenge of the Right Brain

Daniel H. Pink is quick to reach the conclusion that "In a world upended by outsourcing, deluged with data, and choked with choices, the abilities that matter most are now closer in spirit to the specialties of the right hemisphere - artistry, empathy, seeing the big picture, and pursuing the transcendent. [...] "The causes: Asia, automation, and abundance."

Trying to add a historical dimension of unavoidability to his argument, the author then goes on to identify similarities between his announced transformation of coveted abilities and other(s) in the past--i.e. from physical strength or manual skill to the so called left-brain knowledge workers'.

Mr. Pink, let me acknowledge that the current Western society has incorporated so much intelligence in everything that surrounds its members that even an average-skilled person can operate more than satisfactorily in this society. The problem, you see, is relative to the sustainability of the status-qvo. On one hand, one gets less and less schooled in those left-brain competencies--due to personal-, and systemic-choices. On the other, the type of problems that take most effort to solve require left-brain type of competencies. If we in the US, and elsewhere in the Western world, decide to cultivate the right-brain abilities, at the expense of the left-brain ones, we may hope to achieve a more harmonious society indeed. It is unsure though we'll manage to keep it away from bankruptcy--financial and otherwise.

Just because knowledge may be cheaper elsewhere doesn't mean one has to abandon it for knowledge is power. And it was precisely the power of knowledge that took civilizations up and down, and on, and on. As well, today's value of the green buck is no guarantee in and of itself for its future performance. I think today's value has more to do with those who built it yesterday, and global accounting idiosyncrasies, than with the strength of a society as prophesized by Mr. Pink. Luckily, Grove, Gates, Immelt, and even Orin Hatch, see the future otherwise...