Four Change Drivers

7 November 2013

This blog focuses on smaller manufacturing business units that intend to thrive in perpetuity.[1] Doing so entails successfully confronting the complex and rapidly changing global business environment in which that business unit exists.

 In the past, manufacturing managers could spend most of their time zoomed in,[2]  working within the business. Then, zoomed out meant attending to immediate stakeholders — customers, local neighbors, suppliers, the bank and so on. The 21st century extends zoomed out from a relatively static local perspective to a quite dynamic multi-dimensional global perspective.


This essay previews some of the most immediate aspects of that “dynamic multi-dimensional global perspective”. For organizational convenience, these are presented as four Change Drivers — Globalization, Sustainability, Technology and Demographics & Trends. As will be clear, these Change Drivers and their aspects overlap and interact.   — C.H.


Confronting the 21st Century


During the first half of the 20th century, American industry grew to be a colossus, fueled by its role as the “arsenal of democracy” in two world wars and an unprecedented avalanche of new technologies. It became a colossus of smokestacks that paved a continent and spawned an educated, affluent middle class that awed the world.


Through the second half of that century, other nations recovered from war, built or rebuild their own industrial systems and enjoyed the economic benefits of doing so. Advances in transportation and communications made distances between nations less important. Global financial systems became increasingly interdependent. The world became increasingly aware of the affects of industrialization on the natural world. Here, in the early decades of the 21st century, American industry finds itself confronted with a convergence of four Change Drivers:


 

Sustainability:

 

Zoomed out Sustainability — thriving in perpetuity and the implications of doing so — is a primary emphasis of many of the essays posted to this blog. Thriving in perpetuity entails a successful business in consort with a thriving natural world and a healthy human society. Double Take on the Triple Bottom Line,[3] an earlier post to this blog, elaborates on this.


Globalization
:


Journalist Thomas Friedman describes Globalization this way: “Globalization is not just a phenomenon and not just a passing trend. It is the international system that replaced the Cold War system. Globalization is the integration of capital, technology, and information across national borders, in a way that is creating a single global market and, to some degree, a global village.[4]


Here are a few of the aspects of Globalization that are particularly pertinent to thriving in perpetuity:[5]


>> Nations, Trade, Capital and Labor — Globalization presents a new arena for global competition, hence lends new meaning to the term competitiveness.[6]


>> International Firms — Many firms, especially very large firms, have become trans-national. While they still have a home office in one country or another, operations and capital allocation are pluralistic.[7]


>> Global Financial System — Today’s global financial system is an amalgam of remnants from the Bretton Woods system developed by western countries in 1944 with remnants of eastern bloc statist ideas, among others. It doesn’t work very well in an increasingly globalized world. Nearly continuous global financial turmoil is the result.


Technology
:


The technologies of most interest here are those that that enable (or impede) Globalization and Sustainability. Examples include:


>> Internet and Cellular Technologies — These enable global e-commerce, provide almost universal communications, and provide almost everyone everywhere with personal access to enormous amounts of information an almost any subject imaginable.[8]


>> Transport — Technologies such as containerized freight, FedEx – style rapid parcel delivery and expedited customs clearance enable international supply chains and e-commerce.[9]


>> Productivity Enhancement — Examples of technologies that promote competitiveness include on-line education and training, industrial automation and “smart” controls, among many others.


>> Renewable Resources — Technologies such as bio-based fuels, improved recycling techniques and new dimensions in product design provide a few examples.


Demographics & Trends
:


Newton’s first law of motion also applies, in a limited sense, to events. The direction and magnitude of a stream of past events often do provide useful insight into the likely course of future events. Here are a few examples:


>> Population Growth — The advent of truly viable methods for birth control has provided humanity with an escape from the Malthusian Trap. At the same time, it has enabled dramatic changes in the role of women. Going forward, humanity confronts the corollaries of substantially reduced rates of population growth, particularly the consequences of an aging population.  


>> Per-capita Wealth — Recent history provides examples of rapid economic development, of which China is the poster child. One consequence of economic development is advancing per-capita incomes. As per-capita income increases, rates of consumption might also be expected to increase. Higher rates of consumption, along with a still increasing global population, entail increased pressures on the natural world. And bigger markets for goods and services.


>> Resource Constraints — Many natural resources, including arable land, metals and fossil fuels are obviously limited. Competition (and conflict) for them can be expected to increase. Further, such resources are the patrimony of current generations, in trust for future generations. Balancing the enjoyment of the fruits of patrimony with the responsibility to pass on that patrimony presents a major concern for humanity.


This brief discussion of the four Change Drivers is intended as an advance organizer. Future essays posted to this blog will elaborate on these Change Drivers, their aspects, and their attendant corollaries.


Chuck - AsilomarThoughtful comments and experience reports are always appreciated.


…  Chuck Harrington
(Chuck@JeraSustainableDevelopment.com)


P.S
: Contact me when your organization is serious about pursuing Sustainability … CH


This blog and associated website (
www.JeraSustainableDevelopment.com) are intended as resources for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on Wednesday evenings.


 

[1] Adam Werbach, Strategy for Sustainability, Harvard Business Press (2009), page 9.

 

[2] For more on zooming in and out, see Green and the Zoom Lens Mind, this blog: http://blog.jerasustainabledevelopment.com/2012/02/22/green-and-the-zoom-lens-mind/

 

[3] Double Take on the Triple Bottom Line, this blog: http://blog.jerasustainabledevelopment.com/2012/10/03/double-take-on-the-triple-bottom-line/

 

[4] Quoted from Friedman’s website: http://www.thomaslfriedman.com/bookshelf/the-lexus-and-the-olive-tree. Friedman’s books, especially The Lexus and the Olive Tree, The World is Flat and Hot, Flat and Crowded, offer readable insight to the phenomenon of Globalization and its importance.

 

[5] Globalization and Sustainable Development, an earlier post to this blog, http://blog.jerasustainabledevelopment.com/2012/06/06/globalization-and-sustainable-development/ clarifies the relationship between Globalization and Sustainability.

 

[6] Daniel Alpert’s new book, The Age of Oversupply and “The Gated Globe”, featured article in The Economist, 12th – 18th October 2013 issue both provide useful insight as to this aspect of Globalization.

 

[7] Andrew Liveris’ book, Make It in America, provides an insider’s view to managing a globalized firm. Liveris is the CEO of Dow Chemical Company, which is based in the U.S. Interestingly, Liveris is an Australian.

 

[8] Transparency – The Triumph of Technology Over Privacy, this blog: http://blog.jerasustainabledevelopment.com/2013/03/06/transparency—the-triumph-of-technology-over-privacy.aspx offers another view on this. Ask Angela Merkel.

 

[9] Regarding e-commerce: my daughter’s firm produces herbal products for Spa treatments. She routinely orders herbal essential oils from India and receives delivery within a few days. Most U.S. domestic suppliers are slower. For more information, see www.thespaherbalist.com