Long distance vision
Dr. Terry Cutler
Originally published: Business Review Weekly
In psychology and in art people talk about something called
"figure:ground" reversal. This phenomenon involves the flips
and interplay between the wider landscape or big picture and
the myriad points of detail in the foreground. Linking broad
strategic insights with the minutae of tactical operational
detail is the art of perspective, the art of leadership, and
the art of innovation and business development.
Currently we are at a break point, a point of discontinuity
in many of the structures and frameworks which shape our
economy and the community. Shaping the 21st century landscape
is a world wide web of forces. My working checklist consists of
eight key forces.
- 1. Globalisation
- There have been many waves of globalisation throughout
history. What is different today is the scope and intensity
of what is happening. We are seeing new levels of global
interdependency being embedded through new trades,
particularly in skills and knowledge, trade in services and
people, and now the emergence of global electronic commerce.
The devil of globalisation is in the detail.
- 2. The collapse of the Second World.
- The second key global trend is the progressive impact of
the collapse of the Second World order. The pivotal
development in recent times is China's entry into the World
Trade Organisation framework. Now Russia is lobbying to join
the WTO. This represents a massive shift towards the
integration and internationalisation of the global economy to
an extent that we have never seen before in history. With the
collapse of the Second World and the triumph of free markets
we hear euphoric statements about a new borderless market.
This is nonsense. We might be changing market boundaries from
political and geographic borders, but all markets have
boundaries and the key to thinking about the shape of new
markets is to identify the new boundary markers in an online
world. In my view those markers are going to be things like
cultural boundaries, language boundaries and boundaries
around generic virtual communities.
- 3. Digital technology
- The third key force is the radical discontinuities
introduced by digital technology and the emergence of the
digital economy. Information and communications technology
continues to develop and will become even more pervasive in
its impact There is much more to come, which will profoundly
affect the ways we organise economic activity.
- 4. Industrial restructuring
- Industrial and firm restructuring looms large in my world
wide web of forces reshaping the 21st century. The underlying
point here is that the nature of the firm as a way of
organising market activity has always revolved around the
nature and the quantum of transaction costs. Transactions, of
course, are fundamentally affected by communications
networking and information processing power, which is at the
heart of the information and communications technology
- 5. Labour market restructuring
- The flipside of micoeconomic restructuring is labour
market restructuring. A decade after Robert Reich's
insightful work in the early 1990s into the restructuring of
labour markets, and his focus on the growing divergence
between location-specific employment and globally mobile and
footloose employment, it amazes me how little we have thought
through the implications in for both labour market policies
- 6. 21st century corporate governance
- Over the last decade a quiet revolution has been going on
in the area of corporate governance and the nature of the
corporation. The cultural shifts associated with the
democratisation of stock markets, the new primacy of
intellectual capital, and the emergence of stock options and
employee participation in the ownership of firms all starts
to change the fundamentals about careers, employment and the
nature of labour in organised economic activity.
- 7. The internationalisation of business regulation
- This trend relates to the progressive
internationalisation of the key frameworks for the governance
of economic activity - the role of the World Trade
Organisation and the OECD, and a growing proliferation of
international, inter-government or supra-government global
organisations, defining key parameters to business functions.
This is irreversible and it has happened without a lot of
governments and a lot of people really being aware of the
actual extent of the transfer and the alienation of effective
control. This leads to increasingly complex power-sharing
arrangements at the international level between government,
business and non-government organisations. This raises the
question as to what levers of influence national governments
can exercise. The degrees of freedom are contracting and
national governments are likely to focus increasingly on the
competitiveness of factor inputs and areas of market failure
within a global environment.
- 8. New value drivers
- What creates value in the emerging industrial landscape?
One of the problems is that we are struggling to find useful
ways to quantify or calibrate the new drivers as we move
increasingly from tangible to intangible assets and the
valuing of intellectual capital. Identifying and
understanding the new value drivers is essential in readying
ourselves for the shock of the new.
It is not so much the individual trends in themselves that
matter; it is the interconnection, the linkages, the
interdependencies that make the difference. The important thing
for us to grasp is the nature of these interdependencies and
their impact in changing the frameworks within which we operate
- in other words, to understand the context of innovation.
In future columns I will home in on the detail of these
defining characteristics of the changing landscape of the
© Dr Terry Cutler 2002