Don’t write the U.S. off just yet – How the TIDES of Change model can help assess the future of the world’s largest economy
“Many business leaders will realise, soon, that they are underinvesting in North America” says Joel Kurtzman a leading figure in the U.S. on the future of business. Joel founded the Booz & Co magazine Strategy+Business and is also a senior fellow at the Milken Institute, an economic and finance think tank. This is an interesting prediction especially as the prevailing wisdom suggests that companies should be focusing on the emerging BRIC nations. So should you take note of Joel’s prediction or is it the hype of an American consultant longing nostalgically for the return of America’s golden era? If Joel is right however, there will be important strategic implications for businesses, consumer confidence and the future of global economic growth.
At TomorrowToday we specialise in understanding disruptive forces and for over a decade we’ve been making sense of a changing world. Our research on disruptive forces indicates that economic and political power is shifting distinctly East as well as South away from the U.S. This trend, we believe is likely to continue for the next two to three decades until a new equilibrium is reached in the global economy. So on the face of it our research does not support Joel’s prediction. However, this is where it get’s exciting because disruptive forces have an uncanny knack of creeping up and catching business leaders suddenly off guard. To remain vigilant leaders need to seek out the voice of dissent, find the voice that goes against reason because these can often be the weak signal that things are about to change or be disrupted. For example, back in 2005, Raghuram Rajan, a chief economist at the International Monetary Fund, attended the top central bankers’ get together in Jackson Hole, Wyoming, to present a paper on how the financial sector had evolved during Alan Greenspan’s era and gave a presentation that his listeners could never have expected. He argued that increasingly complicated instruments like credit-default swaps and mortgage-backed securities, had made the global financial system a riskier place, not less so as many believed. His presentation at the time represented the voice of dissent, under Greenspan the global financial market had never seemed more stable and Rajan’s audience didn’t take him very seriously. Three years later in 2008, however, his views proved prophetic. Rajan has since been credited with generally predicted the sources of the worst financial collapse since the Great Depression of the 1930s.
So as the global economy navigates to a point of equilibrium, the forces of disruptive change will make the journey somewhat turbulent and if Joel’s prediction represents the voice of dissent, it’s worth considering it in more detail. Using our TIDES of Change model on disruptive forces I’m going to test Joel’s prediction. The TIDES model assesses the impact of five disruptive forces – Technology, Institutional Change, Demographics, Environment & Ethics and Shifting Social Values.
Does Technology support Joel’s prediction? … Continue Reading