IBM had dominated the technology space for decades but it lost its lead in the 1980s as it outsourced key elements to competitors. Those competitors soon became mega-companies, while IBM slipped.
By the end of the decade, IBM was overstaffed and overinvested in low-margin businesses; revenue had peaked in 1990 and was declining rapidly while its profit margins and stock price plummeted.
So what did IBM do?
It studied the competitive landscape and learned that its expenses were out of line with the industry. Further competitive intelligence resulted in IBM reinventing itself by developing a strategy to leverage its advantages and eliminate many lagging practices and unproductive assets. The rebirth was wildly successful. Today IBM has more patents per year than any other American company and is successfully focusing on high-margin software and services.
Competitive intelligence is a standard business practice but not in American government and society. Too often, Americans ignore the rest of the world unless it is in our immediate interests to pay attention. Faced with problems, Americans rarely ask "What country does this better?" or "What can we learn from other countries?" This hubris is a dangerous symptom of the belief in "American exceptionalism" that can produce either blissful ignorance or arrogance. By failing to look outside of the American system, we deny ourselves the opportunity to learn from other countries' experiences.
Systematically comparing the United States to other wealthy countries allows us to identify where America is excelling and where it is lagging behind. Where America lags behind, we can select the best practices in those leading countries that can be adopted here. These best practices are not ivory tower or think tank-generated theoretical exercises, but rather are real-world proven solutions.
In our comparison, we selected wealthy countries with a population over 10 million, resulting in a comparison group of 13 other countries: Australia, Belgium, Canada, France, Germany, Greece, Italy, Japan, Portugal, The Netherlands, South Korea, Spain, and the United Kingdom. The subjects being compared were health, education, safety, democracy and equality.
The results of this analysis showed that if America were a corporation, it would today be the equivalent of IBM in the early 1990s. Once a world leader, America is now lagging behind.
In health, the United States had the twelfth lowest rate of infant mortality in 1960 but has now fallen out of the top thirty. In education, America once enjoyed the highest rate of college education in the world but is now average for wealthy countries. In democracy, we introduced the world to modern representative democracy but we now struggle with an inefficient and archaic voting system and comparatively anemic levels of voter participation. In equality, America has long been extolled as a land of opportunity yet our social mobility is worse than in other wealthy countries, while income inequality has been exploding for decades.
The declining performance of America over time and our overall poor comparative performance point to a major disconnect between American self-perception and the data. In fact, America's self-perception is the most immediate barrier to implementing improvements. Another major barrier is our political process itself, one that is designed for inaction. Other democracies have developed leading practices that we must learn. Another barrier is the entrenched self-interests who have profited greatly off of America's inefficiencies and will fight hard to defend those profits.
America has competitive advantages. We are still the preferred destination for millions of people around the world. We are still viewed as a great place for innovation, higher education, and for unlimited business potential, yet other countries are also competing for the same top talent and investment money. America is still admired for its entrepreneurial spirit, its cutting-edge technology, its research facilities, universities, hospitals and world-leading companies. We must leverage these strengths while improving the deteriorating aspects of our society.
Imagine if IBM had ignored the competitive intelligence. No modification to its business approach, no shift in strategy, no changes at all. Had they continued operating along the same declining trajectory, IBM would now be a small company struggling for survival, a subsidiary of a larger company, or out of business. Of course, it did just the opposite. IBM paid close attention to the data, followed the lessons learned and today is once again a powerhouse.
Now it is America's turn.
The competitive intelligence has shown us that we are lagging behind and need to make major changes. Are we Americans ready to accept the lessons learned from the competitive intelligence and make the necessary changes to improve America? For future generations, the answer needs to be yes, we are ready, willing and able.