What to do for the next ten to twenty years
Increasingly we are reading and hearing about major structural changes that are taking place in the global economy. These changes are apparent in the weakness in Western economies while developing economies are still growing. The seemingly permanent nature of some unemployment in the developed countries as manufacturing has moved offshore. Some previously safe activities in accounting, medicine and engineering are also being moved to lower cost countries. But what is most interesting is that these developing countries are starting to build their own businesses and institutions and will not rely on worked handed out by Western businesses. The other comment that goes along with this discussion is that the transition will play out over the next ten to twenty years.
When a timeline like ten to twenty years is thrown at us we tend not to react with any sense of urgency. In fact, we probably ignore the issue and carry on business as usual. Maybe we believe someone else will take care of the problem or that we can suddenly just jump back into the game once the event takes place. But this line of thinking is dangerous in the circumstances we now face for several reasons.
Firstly, the old way we have enjoyed for fifty or so years is not coming back. It is not a case of just holding on for 10 or 20 years, get rid of our debt problem, tax some rich people and everything will be back to the way it was. Setting aside the fact that 10 or 20 years of that would not be pleasant, it is not going to happen that way. Too much has changed already and the changes will continue.
The impact of developing countries building self sufficient economies and pushing to create prosperity will evolve over this period of time and will not just suddenly appear. We need to start evolving our way of doing business to mesh with these changes because future competitors, suppliers and markets will come from some of these countries. They will also greatly impact the cost structure of business with the ability to complete at much lower prices than we currently can.
The modern world populations are aging while the developing world still has a large workforce of younger people. We had been relying on immigration from some of these countries to maintain our workforce. However, they will find increasing opportunities in their own countries and be less interested in ours. We need to ensure we keep our innovative edge and we need to make sure we utilize the experience of all of our people. Younger generations of tech saavy people combined with the business knowledge and experience of older generations is a combination the developing world doesn’t have. We need to figure out how to mobilize that strength.
We have legacy infrastructures, institutions and attitudes to overcome. The developing world has none of this and can build them from the ground up. Many are currently held back a little by incompetent and corrupt governments and laws but will overcome these at some point. We have to evolve our institutions and businesses to enable entrepreneurs and society to keep pace with developing societies.
When a business is faced with challenges from newcomers they have the choice of innovating their own new products and business models or eventually going out of business. The successful ones will create internal startups that are looking for the new products that come online as the old ones retire. They strive to make their own products obsolete before someone else does. We need to do the same with our entire economies. We need a strong entrepreneurial base that will mirror the approaches of the developing economies. These new businesses will create new infrastructure, have lower cost bases, look at the world as the market and be ready to compete head on with these new economies.
As these entrepreneurs build these new business models and products they will help to define the kinds of laws, government, infrastructure and financial system needed. We have to stop trying to bring the world back to the way things were because that is no longer an option. We have to stop propping up obsolete industries and look for ways to evolve them or to create new ones. We need everyone to think about how they will be effected and what they can do to contribute; you can’t be assured someone else will take care of it. We need to start now not in ten to twenty years.