There are several permanent shifts actively taking place – some technology based and other socio-economic. Addressing the latter first, the world economies are no longer independent financial sovereign entities but microcosms of interrelated domestic products and services loosely cobbled together to make a world economy.
Whereas it is obvious that some nations are major consumers, suppliers, or both on the world stage, what is still evolving are the interdependencies and implications of ever these expanding globalized economies. This can be seen with the rise of the Sovereign Wealth Funds (SWF’s), foreign currency valuations, trade imbalances, and real and relative GDP just to mention a few. The numbers tell part of the story – U.S. GDP is over $14 trillion growing at 2% to 3%, China has overtaken Germany in economic size driven by robust real and relative GDP, and SWF’s in Asia and the Middle East are projected to triple their cumulative size in the next 10 to 12 years to over $10 trillion USD.
Are these shifts to be feared with hostility or protectionism? It’s unlikely that either of these reactionary strategies and visceral emotions would position the U.S. to grow. It may stem the bleeding for a short period of time, but the resulting infection from a lack of open-market strategies and participation will create a potential terminal imbalance which will could be more painful and completely outside of government or political controls.
However, it is the lack of technological innovation that should be of much greater concern and scrutiny. Saddled with arcane and expensive back-office legacy systems and relationships, the U.S. investments and returns are lagging behind European and Asian organizations by nearly 60%[i]. Also readily witnessed with the technology value chain are statistics that show just 3 in 10 American CIO’s would be early adopters of advanced solutions, while 7 in 10 of their Asian counterparts indicated that they would eagerly embrace advanced web delivered and componentized architectural solutions[ii].
The implications of these two challenges are very chilling. Domestic operations will continue fall behind global competitors resulting in even greater regional economic losses without a realization and adoption that advanced iterative solutions and componentization architectures must be quickly implemented in support of evolving business needs. Moreover, failing to utilize technological components as catalysts to secure fundamental business shifts results in a spiral of decay that can only be addressed with pervasive offshore outsourcing, M&A transactions, bankruptcy, or government rescue.
[i] “American companies are falling behind in technology,” Bob Suh, Financial Times, February 12, 2008.
[ii] Ibid.
Mark Dangelo