BENEATH THE SURFACE Doing Business in a Rapidly Changing World A nyone who is consciously aware of the challenges facing economies throughout the world knows that economic and societal systems are not only in a state of flux but also are being challenged by fundamental technological and geo-political forces. Companies and individuals will need adap- tive skills, and, moreover, a heads-up aware- ness of and attitudes about how to manage and flourish in a dynamic environment. While it would be comfortable to sit back and let the chips fall where they may, such an attitude will inevitably lead to the chips falling fast and hard. Innovation has always been the economic driver in the world’s successful economies. Stagnation or longing for the “good old days,” which were “old” but not necessarily so “good” may be attractive to some but will not cut it in our rapidly changing world. I am an economic determinist, which is to say that funda- mental economics and how it plays into our lives is the primary driver of change, often rapid, and determines what it will take to survive and flourish in turbulent times. A book incorporating multiple studies on this subject, Sustaining Capitalism, Bipartisan Solutions to Restore Trust & Prosperity, was published in 2017 by a task force of the Council for Economic Development (CED). According to its stated purpose, the CED “is a nonprofit, nonpartisan, business-led policy organi- zation that delivers well-researched analysis and reasoned solutions to our nation’s most critical issues.” Founded in 1942 the CED’s mission is to address and promote national priorities to foster sustained economic growth and development to benefit all Americans. The underlying values of capitalism as an economic system is a foundation element of the CED’s efforts. The research they have published offers profound insights about not only the American economy, but others like it throughout the world. According to a report on which the book is based, “conditions that foster a healthy business environment include an effective and equitable legal system, clear and efficient regulation, sound fiscal policies, modern infra- structure, and a healthy financial system.” It goes on to note that “social investments in the educa- tion of citizens and the general workforce, and in infrastructure and public goods also strengthens the potential for businesses and societies to prosper.” Most of the readers of this publica- tion are in one way or another involved in business activities, and many, including DFI’s academic members, are involved in education of citizens and the workforce. Technology and Globalization Drive Economic Change Much has been said and written about the effect of technological advances and globalization on how the world goes about conducting its business. Like it or not, technology has eliminated the barriers to international commerce. While some would like to see the nations of the world look only inward, it is a fool’s errand to try to do so. Colloquially speaking, “Sorry Charlie, it’s too late for looking backward.” Of course, if some choose to do so, it is at their peril. As this relates to seminal technological advances, it is easy to list the obvious; however, for me, one of the most insightful events is described by Thomas L. Friedman in his 2016 book, Thank You for Being Late, An Optimist’s Guide to Thriving in the Age of Accelerations. He notes that 2007 may be one of the most profound years in technological history to date, that being the year in which the iPhone was introduced. It is small, powerful and revolutionary. Of course, the iPhone and other similar devices would not have been possible without the invention of the first integrated circuit otherwise known as the microchip in 1958. Thank you, Jack Kirby of Texas Instruments. Now, consider Moore’s Law proffered in the mid-1960s. Moore’s Law states that the power of microchips would double roughly every two years. In mid/late 2018, we have begun to AUTHOR S. Scot Litke, Hon. D.GE think that old Gordon Moore was conservative in his thinking. When it comes to politics, the traditional thinking has been that no mat ter the big, bold nat ional or international issues, political decision- making comes down to what’s important at the local level. Guess what? What is global IS now local. The Responsibility of CEOs While it is interesting to cogitate on the implications of all the above, the take-away here is how do the aforementioned realities impact how company CEOs conduct their business? While the present practice of many companies is to focus on short-term success to “make it while you can,” or to only worry about this year’s bottom line to keep shareholders happy and generate those dividends, the realities of rapid technological advance and globalization’s effect on products, materials, labor and services require taking a longer view. Company CEOs need to think strategically, i.e., long term. It is interesting to note that the CED research found that, in 2005, “approxi- mately 80% of chief financial officers (CFOs) said that they would reduce discretionary spending on projects, such as research and development, to reach short-term earnings targets, and more than half said that they would delay new projects even if it meant a sacrifice in value.” I believe that, in most cases, companies run by accountants rather than by forward thinking CEOs tend not be creative or nimble enough to respond to the realities of a fast-changing marketplace. The appropriate survival mantra for today’s business world should be “adjust, innovate or die.” If you don’t do it, someone else will! As Bob Dylan sang back in 1963, “The Times They Are a Changin’.” If you think that was true in the 60s, hold on to your hat. DEEP FOUNDATIONS • NOV/DEC 2018 • 117
