Today I watched the webcast titled A Business Manifesto for Globalization again, and I tends to agree with what Carlos Ghosen, CEO of Nissan and another car manufacture in France, he claims that while people dealing with globalization today, those who are benefiting from globalization do not feel it, and those who are being hurt by globalization do feel it, and scream about it. Indeed there are cons and pros of globalization, there are pains and gains of globalization, there are joys and sadness of globalization, and there are winners and losers of globalization. However, if we look at globalization deeply, we will find that there is one thing is for sure, that is, the Commoditization of the Elite Class under globalization, for country, for business and for people.
In terms of countries, G7 used to be the elite class club, and with the addition of Russia, now it’s G8, and people are talking about to expand G8 to include Brazil, Indian and China (BIC), some people even go further, they want to see a G13, can you believe that? There will be more and more countries that can be categorized as elite countries, and that means the commoditization of elite class at the country level. It is the change that brings to us by the globalization.
At business level, if you look at the change of entry barrier of being a Fortune 500, you won’t be surprised we could easily expand Fortune 500 to Fortune 1,000 in a just a few years if we do not raise the bar for the entry. Each year you can see more and more startups go public, being listed in many stock exchange markets worldwide, such as NYSE, NASDAQ among others. On the hand, competition in virtually every industry becomes more and more fierce, more and more business have to go and find their own blue ocean by combing the overall cost leadership and differentiation as competitive strategy in order to gain their competitive advantage. That means the commoditization of elite class at the business level.
Now if under globalization, some countries gain more through their business expansion in other countries, while some other countries lose because of their loss of domestic markets; at individual-level, that mean more job opportunities or less job opportunities, increasing salary or decreasing salary, hence better living standards or worse living standards. In those developed countries, while their transnationals are gaining more market shares in those developing countries, not only their blue collars in the manufacture sector, but also those white collars at the service sector, such as lawyers, doctors, dentists, issuance agents, stock brokers, journalists among others, are feeling being threatened on job security since more and more jobs in their sector being outsourced to those emerging countries, such as Indian and China. That is a crystal clear demonstration of the commoditization of the elite class at the individual level. I believe most of the negative side of globalization are coming from the individual level, since democracy in those developed countries drive those politicians to speak up for their fellow citizens, the used to be elite class, now the scapegoat of the globalization
While all of the above all are true, personally I am quite optimistic on globalization, since I believe everything might be outsource, however, you could not outsource your innovation, and if you are good at innovation, which could serve as your unfair advantage, then no one could replace you being as part of elite class, whether as a country, a business, or an individual.
So under globalization, what are we competing for? No overall cost of leadership any more, it is Innovation that could truly make us standing out in a crowded and commoditized world.
This concludes my Davos Forum series, hopefully see you in person at Davos Forum 2008 on site, and I shall report for you live there at that time