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Insights on business -- and life.

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Some Thoughts on Globalization

A paradigm revolution: The Big eating the Small is now the Fast eating the Slow.

by Joel Ginsburg (September 3, 2007)

(Note: This was written in the context of discussing how private equity firms are buying industry companies. Is that the major trend/challenge in the industry today? No, says Joel, a former exec at Colorbok. Joel is working on his Doctor of Management in Organizational Leadership and teaches at the Colorado Technical University and the University of Phoenix online He also does consultant work for various companies.)

My sense of the global marketplace is that, indeed, innovation and speed will be the credo. The focus is no longer on the Big will Eat the Small; rather the Fast will Eat the Slow. There is and will continue to be more and more competition in all shapes and sizes, coming at companies from all directions.

I do not see the coming decade as a period of venture capitalists purchasing companies, selling off certain marketable assets, and then trying to use the finance folks to grow the company until an exit strategy of grow-and-sell kicks in. The skills needed to grow companies with innovation and competition will require more than the skills of investment bankers who are essentially "flipping" companies.

Until and unless the United States steps up to the plate BIG TIME, it is currently anticipated that China, now #3 in gross domestic product, will surpass the current number two, Japan, by 2015, and the now #1, the U.S., by 2030-2045. This is no arena for venture capitalists with tunnel-vision focus on dealing with organizations.

Based on my work, I could go on and on, citing reputable sources, but companies who fail to grasp the understanding of the leadership paradigm for the coming decades will be chewed-up, bit by bit. I recently completed a paper on Canon, the technology-innovation leader from the 80's and 90's, now finding that technology, alone, will not yield growth necessary to maintain market share.

I saw the emergence of the Mass Merchandisers coming. I also knew some senior level folks at K-Mart before the merger. The culture and these folks were lost, even at the turn of the century. The large companies that have been gobbled up had lost their fire for innovation and were not willing or able to engage the new global forces. All of this is NOT the fault of the American worker. Rather, it is the result of inferior and lazy senior management.

Ultimately, if America is to get back momentum, it needs to get into the same cross-border collaboration that enables companies to piggyback on each other's strengths, synergistically. Would you believe that 23% of Canon's sales are with one company, a future competitor, assuming Canon does go ahead with its plans to enter the computer industry? That company is HP which is buying their laser printers, using Canon as an OEM supplier.

The point is that business, global business, is convoluted, a long way over the head of these venture capitalists looking for their "quick-hits." There will be no "quick-hits" if these acquired companies are not capable and willing to invest in environmental-scanning (maintaining a constant vigil on external pressures, changes in dynamics, and the actions of competitors). There will be no "quick-hits" if these acquired companies fail to apply analytics and strategic modeling to create constant streams of analyses of data acquired from the scanning, and from personnel who are members of virtual teams functioning in widely dispersed parts of the world. These analyses must include both linear and non-linear thinking in order to identify clear trends and, more importantly, identify the subtle market events that explode into major changes in industries and niches.

xxx

 

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