Management Matters
By Russell M. Linden, PhD
“The World is Flat” -
Implications for Government
n the last
column, we discussed examples from Tom Friedman’s
extraordinary new book, The World is Flat. Friedman argues
that, since the fall of the Berlin Wall in 1989, a series of
political, economic, technological and organizational barriers
have fallen around the world. Today, companies (like McDonald’s)
that have been at odds with environmental nonprofits for
decades work together to reduce the impact of their operations
on the environment. Advanced technology and extraordinary
levels of trust allow Wal-Mart to share unprecedented corporate
information with its suppliers, allowing those suppliers to
replenish their products in Wal-Mart stores without Wal-Mart
managers even placing an order. United Parcel Service (UPS) has
such close relationships with Toshiba that it not only ships
Toshiba laptops to purchasers, it also repairs those laptops
when they’re broken, reducing the amount of time
customers go without their computers, and allowing Toshiba to
focus on its core competencies.
These and other changes are transforming
the way our economy is working. Are these changes good for
everyone? No, it turns out there are winners and losers.
Wal-Mart’s customers are delighted at the low prices, but
the communities and states in which Wal-Mart operates end up
paying millions of dollars in taxes for the opportunity to shop
at Wal-Mart. Why? Because Wal-Mart pays relatively low wages
and few benefits; some of its full time employees live in
public housing, rely on food stamps, and use the emergency room
for health care, the most expensive kind of medical treatment.
One study by Georgia officials showed that the state pays
almost $10 million on health care for children of Wal-Mart
employees.
SOME CHALLENGES
Given that these enormous changes are
mixed blessings, what challenges do they pose, and how can the
US thrive in this environment? The hurdles include the
following.
• Workers
in the emerging economies are more productive than those in the
US. As one American CEO remarked to
Friedman, “the dirty little secret is that not only is
[outsourcing] cheaper and efficient, but the quality and
productivity [boost] is huge”
The author is the principal in the firm
Russ Linden and Associates, a management consultancy based in
Charlottesville, VA. He is an accomplished author and teacher
with experience in the public and private sectors, including
the Federal Executive Institute, Virginia Innovation Group and
the International City-County Management Association.
(p.261). Employees in China and India are
so hungry for better jobs that they willingly work 12 and 14
hour days, and don’t insist on four weeks of vacation.
Bill Gates notes that Microsoft’s most productive
research facility is in China, “in terms of the quality
of the ideas they are turning out. It is mind blowing”
(p. 266).
• We have
an education gap in the US. We face
a “quiet crisis” in engineering and the sciences.
For example, 60% of the science graduate students at Johns
Hopkins are from foreign countries. Asian countries are
producing an increasing number of patents, while the share of
patents produced by the US has been falling since 1980. We are
producing fewer masters and PhD students in these areas than in
the past, and our students are falling behind some other
countries in their knowledge of math. Science and engineering
are keys to succeeding in the emerging economy, they will
create the products that lead to higher job creation, and we’re
falling behind in this competition.
• The
trend among many leading US companies is to pay employees fewer
benefits than they did in the past.
This pattern, of course, can improve a company’s stock
price, as Wall Street analysis love companies that find ways to
reduce costs. But the millions of families that are losing
health insurance aren’t cheering; nor are the gov
