At the Institute, we are currently building a presentation on the current financial crisis and its connection to longer-term trends in the economy. We believe that certain fundamental things about business are changing and that only those organizations than can adapt to them will survive.
In this discussion, this recent article, A User's Guide to the 21st Century, came up. This is article I consider typical academic myopic, culturally blinded, nonsense the passes for strategy. I almost hate to waste time on it. I agree with the author's basic premise, that the 21st century will be fundamentally different than the 20th century. Unfortunately, all the specific points in this article only glance off of the truth of what is really changing to end up somewhere really silly.
While it is true that we are going beyond the mass market culture, we are not throwing it away, but incorporating it into something better. While it is true that there are a lot of industrial dinosaurs out there, this article does nothing to illuminate who they are and how we can separate them from new generation of competitors.
The main problem is that the author confuses what is merely fashionable with what is fundamental. The most amusing of his points is that tonly “hip” products--Apple, Zara, Nike, Google-- have real value while everything else (you know, food, clothing, transportation, and so on) is merely perceived valued that we have been sold by large, evil corporations. After all, everyone at Harvard knows that ipod are good and we really need them while refrigerators are evil and we just buy them because we are have been programmed by evil corporations! Hah!
Let us list some of the silly ideas that people commonly make these mistakes:
1. People are going to consume less and start saving. Perhaps in the West, where the US and Europe have an aging population that has been spending like crazy on junk. They, like the author, have all the junk they need (except for the new truly valuable junk like ipods and iphones) so it is easy to badmouth other people’s desires for stuff. The emerging young people of India and China, SE Asia, and Brazil (and hopefully some day, all of Latin America and please God, Africa) are going to be consuming a lot more, starting with really cool stuff like meat but soon cars and refrigerators and all the other stuff that the author takes for granted. The parents of these young people saved. Their children will consume. And these places are where the young people are, not the US.
2. People are "confusing what is strategic with was is merely selfish.” The author may think it is selfish that people want to have more physical comfort (or stuff other than ipods and Nike Pluses), but that is the nature of most goals (when they belong to other people rather than ourselves, of course). Even after you have all the cars and refrigerators you need, what do you want as you age? Better health! What is more ultimately selfish than better health? Who does it benefit other than yourself? Do we need less health care because it is selfish? Should old people just die because they produce less than young people for society and therefore their health is less valuable to others? This hate of “selfishness” is nothing more that political correctness unfiltered by any any thought at all.
3. “Consumption...destroys tomorrow for today.” While this may be technically true, how has anyone’s life gotten worse over time because of consumption? Of course, we can only consume things today, and in doing so, we do destroy products and we don't have them tomorrow. If I eat a cake, I destroy it and don't have it tomorrow. So, how is this bad and how can it be avoided? Production and consumption are complementary opposites. One cannot exist without the other. Consumption finances production. If consumption is for today, it generates production, which is for tomorrow. Production destroy today for tomorrows, using today’s resources to build systems that uncover and develop new resources that were once worthless. Over time, consumption and production make the world a better place for the people living on it. The basic economic equation of supply and demand forces us to seek ways to produce more value while consuming less resources. Resources are costly. The idea that we need to cease all production of value to stop consuming resources is silly. What value are the resources if they are not consumed? The production of things that aren't consumed is the production of things that no one wants. It is waste, not progress. How does this make the world poorer? The air is clearer today than it was 20 years ago in the US while it is dirtier in China. Is this because the US is consuming less than China? Only profit measures how good we are at producing the most value at the least cost. Those who hate the most profitable companies, hate the production of the most value at the least cost, which means that they