The Unintended Consequences of Super-Development

The Unintended Consequences of Super-Development:

The ongoing recession (which I don’t think is over as some would like to believe) is really a case of unintended consequences of super-development.  I coined the word super-development, because some economies are well beyond the capitalist classical definition of development (mostly defined by the industrial revolution). My definition of super-development is when an economy is so highly sophisticated that over 60% of its GDP is comprised of income earning productivity from intangible assets; the skills of its labor force are no longer aligned or cannot fit with the required skills set to produce these assets; virtual technology efficiencies and mechanical automation is increasingly replacing human labor capital; tangible manufacturing outputs are based on fragments components of inputs sourced from multiple external suppliers, etc. There are other indicator variables but you get the idea! The transition from development to super-development (like most change) creates economic tensions and structural crisis that manifest in the form of economic depressions, recession, under or unemployment downturns, etc.  These are challenges and consequences of first mover advantages into super-development –another unintended consequent! However, to address these tensions requires innovative thinking, a paradigm shift in the ways they approach and implement economic solutions. But we seem stuck in obsolescence.

 Unlike other leaders before him as far as I know, President Obama is sending out his emissaries from different federal agencies to conduct focus group meetings with different local leaders of communities and industries. These private focus group meetings are being held all over the country as a way of the administration reaching out to the “grassroots”  in order to get feedback on  the pulse of what’s really happing on the ground in the Towns and Cities in the country! Once again this past week, one of President Obama’s emissaries was in New Jersey.  Assistant Secretary of Commerce for Manufacturing and Services, International Trade Administration, Ms. Nicole Lamb-Hale came to meet with business and economic development leaders in Newark, NJ.  As usual, I was one of those leaders invited for this focus group meeting to discuss and brainstorm ideas of boosting the economy in America. As an economic development specialist and business leader, I have been invited to several of these focus group meetings held in Newark because of my involvement with small business development at Rutgers.  Given that the Assistant Secretary is with the Department of Commerce the specific focus was on the broadening of international trade through enhancing American manufacturing and services industries. The ultimate objective is always to generating jobs, increasing business development, increasing consumer confidence, etc, etc.

 In her opening presentation the Secretary shared one fact that picked my interested: America makes up 5% of the global market; thus 95% is out there. From a business perspective we all know that there are really two strategies of growing your business through an increasing market share approach: 1) either through a vertical integration strategy where you penetrate the same market using a matrix of strategic actions; or 2) by a horizontal integration strategy where you create a diversified portfolio of new and old markets.  Why they are we still just focusing on the 5% and seeming to ignore the potential of the other 95% market? I suggested to the Secretary that we are too preoccupied with finding solutions within our 5% market and it’s not enough we needed to think outside the box. From the solutions like workforce development training how can we increase market share?  One of the ideas I shared with the Secretary was the possibility of thinking about the Department of Commerce, in collaboration with the Department of Labor looking at ways of exporting some of the brick & motor skilled labor force to emerging markets that are still in the building phase! One of the Union leaders in the room had pointed out that he has 40% of his skilled trades labor force unemployed – if we have stopped manufacturing as we used to, and building new infrastructure as we used to our 5% market is not going to absorb this skilled labor surplus.

She acknowledges collaboration of related federal department in businesses services is something the administration has started doing. She also added that the thought of exporting labor as a resource was brilliant and thinking outside of the box. But the silence in the room was telling me I had taken the conversation out of its comfort zone - Americans work as migrant workers? That would be a culture shock. A perspective I have discussed in one of my other blog: “The Era of the New Migrant Worker”. In addition, the idea of exporting labor is the same suggestion I wrote about on exporting the American high school education model on “Manufacturing Education: Navigating the Public High School System minefields”. Thus exporting this labor would definitely boost the American economy as it increases the purchasing power of the expatriate’s families.

I was in Southern Africa recently and I noticed the emergence of small businesses – mostly traders. Entrepreneurship is booming in these economies. I found out that most of these traders are buying their commodities from Asia and the Middle East through online commodity procurement portals. These commodity consortiums are predominately Asian and Middle-Eastern suppliers of goods and services. I do not know of any commodity portal where American suppliers of goods and services are available to buyers in the 95% global markets. The Federal & State goods and services procurement portals we have here are of those businesses seeking to do contract with the US government or its State and local affiliates! I suggested to the Secretary, it would be a great idea to have US supplier portals that any global buyer or dealer can access if they wish to buy US manufactured goods and services. America’s competitive advantage is its credibility in producing quality products and services that meets standard guarantees. With Asia gaining the reputation of flooding emerging African markets with sub-standard goods and services, this presents an opportunity for the US to step in. But if they really need to do business with Africa the Administration also needs to take into account discouraging and unfavorable visa practices in the State Department that have undermined emerging market’s desire to do business with the US!

In a nutshell growing a 5% market will entail expanding into the 95% global market share.  For me, each time I attend these private focus group meetings I have left with mixed feeling of both excitement and of hopelessness for several reasons. The excitement is merely because the President is genuinely interested in connecting with the grassroots and finding out what’s really going on in the field. I don’t remember any President ever trying to do that. However, I am frustrated because usually most of the so called leaders (politicians/administrators/ businesses/academicians, etc)in the room have a very narrow focus on what the issues or solutions are because they are too focused on their immediate local  challenges and short-sighted to the dynamic complexity of the interconnections between the small and big pictures;  focused on what more the government can do for us; some leaders are out of touch and do not have many ideas let alone words to share; most are the usual suspects (like me – but at least I get it!) but  most frustrating for me is  that most cannot even fully articulate what the solutions could or  should be! Instead they will recycle ideas that have been done already - like we need to have more workforce development training; complaining about the need for more jobs but how to get these jobs created no one can tell; we need to get people to spend more to boost the economy, but if they do not have the money or are out of work where is the money to spend? Everyone is struggling to comprehend what should be done? Most of what can be done locally had been done and the results do not meet expectation.

After my recent trip to Southern Africa, it reinforces what I have known for a while – geography is irrelevant, and where you invest does not necessarily dictate where you earn; and where you earn is above and beyond not limited by where you invest! That’s the migrant mentality. I believe the writing is on the wall, the question is: “Are we prepared to move out of our false self-sufficiency superiority complex comfort zone and accept that the world now is really flat, not hierarchical?”

Published and copyrighted: @ February 4, 2012 by Dr. Tendai Ndoro begin_of_the_skype_highlighting  end_of_the_skype_highl(DocNdoro) – Founder, SLIPPA (Strategy Leadership Institute in Private  & Public Affairs); Brighten The Corner Foundation; CEO EDCTrainers, LLC.

Suggested related readings from my blog CONCIENCIOUS OBJECTOR: http://docndoro.blogspot.com/

1.       “The Era of the New Migrant Worker”: http://docndoro.blogspot.com/2011/05/era-of-new-migrant-worker.html

2.       “Manufacturing Education: Navigating the Public High School System minefields” : http://docndoro.blogspot.com/2011/09/manufacturing-education-navigate-public.html

3.       “Urban Entrepreneurship: Challenges & Solutions”: http://docndoro.blogspot.com/2011/06/urban-entrepreneurship-challenges.html

4.       “A Framework of Possibilities for Small Business Growth in the Globalization Era”:

5.       http://docndoro.blogspot.com/2011/02/framework-of-possibilities-for-small.html