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TRUDEL TO FORM. (an article by John Trudel)
We have been discussing the consequences of two disparate business strategies [in a series of articles published by Electronic Design magazine]. Most of the world is into "faster, cheaper." I called this group "the Dilbert firms." These are doomed. They decline into the "Nerd-in-Hell" behavior that Jim Adams pokes fun at in his popular comic strip.
The leaders reject that approach. They prefer strategies that "add value and expand the market." This group includes names like Intel, Microsoft, and Hewlett-Packard.
Remember rule #1: The only factor that adds value is knowledge. Peter Drucker said it well: "Knowledge has become the key economic resource and the dominant, if not the only, source of competitive advantage."
Unfortunately, the Western concept of knowledge is very shallow. "I took a class, therefore I know the subject." What nonsense! Our educational system is a national disgrace.
About half of our workforce is illiterate. Our high school graduates have test scores below those from countries like Spain and Ireland. Even graduate school students are sometimes pushed through with automatic Bs. Unfortunately, neither political party is apparently up to the challenge or pain of fixing these problems.
The knowledge that Drucker and I speak of is deeper. It comes from classes, books, experience, soft science, technology, relationships, and intuition. The Japanese aggressively move their promising people across functional roles. They don't do this because it is fun or cheap; they do it to build mastery.
Masters learn to perceive things that can't be seen, and to quickly grasp and intuitively react to complex changing environments in real time. Few Western MBAs -- under-scienced, and trained in financial abstractions -- learn true mastery of technology based business.
"How should we compete with those that pay third-world wages?" My core answer is, "Don't compete where you can't win." I recommend reading Stephen Covey's book, "7 Habits of Highly Effective People," and I endorse his concept of "win/win or no deal."
Did I hear, "Easy for you to say?" No, it isn't easy. But it is worthwhile, and it has integrity.
A large firm needed to sort out an emerging market based on new technology. Instead of retaining me, they paid someone who "knew the market" (which had not happened yet, I note) to fill out a form with numbers that corporate wanted, to do the project that engineering wanted. It "saved" them $30,000, but launched a misguided project that cost over $2 million before it was shut down.
For a product example, consider the garment industry. How can western firms win in markets where children sew garments for pennies a day? They use knowledge. In this case they use HDTV, CAD systems, and automatic laser cutters to get new fashions on the rack in a week. By the time the sweatshops have copied these, they are on to the next fashion.
Cost matters, of course. If you cannot eventually become the low cost, high quality supplier, your entire market is at risk. Still, the core job of management, marketing, and design teams should be to get out of the zone of commodity competition. If you cannot add some unique value for your customers, you should seriously question why you are in business.
Most important, Capitalism can't work without property ownership. You can't make money if other firms are free to steal your knowledge, designs, and intellectual property. That is why the patent wars should matter to you.