Is the world round again?

While no doubt we are living through one of the tough economic times – probably the most difficult we can remember in the recent time. But are the policies that promotes protectionism the way out of the current economic mess?

Here are some of the discussions happening at our policy makers circle:-

• Protectionism as part of the latest stimulus bill may spark trade war
• Microsoft layoffs add more fuel to H1-B fire 
• Stimulus bill barring H1-B hiring
• EU warns Obama on protectionism in stimulus bill

Seems like Europe is not far behind…it is all about protecting that we care most – our own first.

• Protectionism on the rise in Europe

This is not an easy question. Even in my family, my wife and I usually end up on the opposite side (and kids somewhere in the middle) of this discussion. She is more conservative in her thoughts than probably I am.

Let’s look at the other side of the discussion. Our world now is so inter-related that it is hard to untangle countries to shore up just by itself. Can you fix economy of one country at a time? Look at how the global market now work in tandem. This is a chart of DOW (New York), FTSE (London), Hangseng (Hongkong) and Nikkei (Tokyo) during the peak of market crash in Sept/Oct 2008.

In some regard, we are part of one big system with our own uniqueness and differences - knitted together. It is one BIG market that goes up and down together.

Current global recession is about choices that will determine how America and the world shapes up in the decades to come. Will we remain on the path of open economy, free trade;  global competition; etc. or we start to see the rise of nationalism and protective policies. Will we fight or flight? It is about the choices we will make. 

Thomas Friedman recently penned his opinion in New York Times discussing the same.  I like how he captured the spirit of America.

“Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.“

I say – let’s go stir and repeat…

Globalization of R&D

As world continue to flatten and economies become increasingly inter-connected – globalization of R&D remains a successful approach. Booz & Company published its recent study of 1000 public companies sharing the trend; rationale and geographic growth. The study is pretty recent and it was published in Winter of 2008. 

Check out the study here. 

This study emphasize – what I have always believed in – that globalization of R&D is just not about lower cost. Although cost gets more touted than the overall perspective that globalization can bring. It is about Innovation, access to better talent pool and market proximity otherwise not available. 

I also believe that doing it right require time and commitment.  There is no quick fix. In fact, more established an organization – harder it can be. It is like any other execution effort where there are companies that has successfully implemented the model as there are countless others who tried and failed.  

 

 

Snippet of message that sums up the study:

“… companies that invest wisely in a multinational innovation footprint are gaining far better returns on their R&D investment than companies that exclusively keep their laboratories at home — or that fragment them across a wide variety of locations.”

Here is a data point pertaining to the globalization of R&D as it relates to US: 

“At first glance, observers might think that this represents a loss of jobs, intellectual power, and influence for the home countries of these companies. But innovation spending seems to flow in both directions at once. Even as the companies based in the U.S. performed $80.1 billion worth of R&D in other countries, companies headquartered elsewhere poured $42.6 billion into R&D conducted in the U.S.  In fact, 40 percent of the money spent on R&D in the U.S. is spent by companies headquartered elsewhere. The total amount of R&D spending in the U.S. is 2.7 times as great as in Japan, whereas the spending generated by companies headquartered in the U.S. is only two times as great.”

Imagineering

Last couple of week, I watched Discovery channel “Project Earth” series. It showcases ideas that environmental engineers are working on to reverse the global warming and reduce carbon dioxide in our environment.

One thing that occured to me watching the series is the imagination of people involved. Although, most of the ideas are still scratching the surface of the huge environmental problems and true large scale deployment remains elusive – but the thought process is simply remarkable.

Consider these ideas:

1. Cover the ice cap with reflective material to reduce the polar cap melting

2. Re-ciruclate the ocean water from far deep to start the fertilization process in the Ocean that can help soak carbon dioxide from the environment and over time green vegetation sink taking carbon to the watery grave

3. Shoot some mirrors in the sky to reflect sun light back cooling the earth

4. How about creating clouds in the Ocean and use wind pattern to help cover the earth with clouds again blocking sun rays resulting in cooler temperature

5. My personal favorite – how about building a helium filled (kind of blimp) rotationary wind turbine high in the sky tethered with wires to the ground generating electricity using wind energy. Essentially mining winds at high elevation thus making wind energy feasible around the globe.

and on and on…how bright brains are tackling to help slow down the melting process or some how soak carbon out of our environment.

It just speak to the human spirit who on the face of seemingly impossible task find a way to make it happen. All the global warming and over $4 a gallon gas has created enough sense of urgency for us to put planet first and find solution that remove our dependency on fossil fuel.

Globalization: Rise of the rest

I just wrapped up Fareed Zakaria’s book titled “Post American World“. It is a good read and attempts to provide macro view of the world; discusses trends and perspective on things to come/shape future in the next couple of decades. Here are the excerpts from the book covered on Newsweek.

Here is Fareed’s interview on BBC providing glimpse on the book and his thought process.

If you need a short synopsis and key takeaway – here is Fred Wilson, a popular VC, sharing his key take aways.

Key theme that I pick on in the rise of rest is how citizens of growing nations are showing passion; having hunger in the belly to grow; risk taking; willingness to change; sense of optimism on what they can do and countries evolving to become more democratic in their own ways. It speaks to a lot of what had helped fuel America in its growth due to similar entrepreneurial nature and what we need to keep doing to remain in the leading position.

I like the closing of Newsweek article (quote from the book) that lured me to read the book:-

“Generations from now, when historians write about these times, they might note that by the turn of the 21st century, the United States had succeeded in its great, historical mission—globalizing the world. We don’t want them to write that along the way, we forgot to globalize ourselves.”

Let’s keep our innovation edge going and growing…As Steve Jobs once quoted in his commencement speech at Stanford “Stay Hungry, Stay Foolish“.