THE BLOG

Leadership: The Solution is ...

06/28/2010 05:12 am ET | Updated May 25, 2011
  • Paul David Walker Author of Unleashing Genius: Leading Yourself, Teams and Corporations

Mr. Geithner, given the evolution of the global economy, and the position of the U.S.A., how does an American company achieve growth? How do we unleash the genius of the companies we work with? This is the question for you, our leaders, and all of us. Here are a few of my observations. I look forward to your thoughts, and any solutions you might have.

The Bad News

1. We are at a disadvantage in the export markets due to our high wage rates, compared with Asia. It is almost impossible to be competitive on cost of goods.
2. Our economy has been expanded beyond it's natural size due to financial re-engineering that has created and lost, due to the financial crisis, more jobs than we can sustain. It will take decades to rebuild the consumer base.
3. Our culture is becoming less competitive with the movement of entitlement into the middle class, which used to be our strength, and worse, our attitudes indicate we are living off past glory... we often act like spoiled children.
4. Our debt to equity ratios across the board are way out of balance and it will take at least a decade to re-balance them, hence credit availability will never be as robust as in the past.
5. Real global competition, which we have never experienced in the past, is heating up rapidly. We built our economy after World War II, while Europe and Asia were devastated. The assumptions built up in our culture and business practices are no longer relevant, perhaps even dangerous blind spots.
6. Our social, financial, educational and physical infrastructures are behind Europe, and Asia is using enormous cash flows to build new ones. We have been living on borrowed time and money for thirty years.
7. Our military spending is greater than all the other industrialized countries combined, and brings us little advantage in the world. Over-spending and over-extension of the military destroyed the Soviet Union, Great Britain, Rome and many others.

The Good News

1. Innovation is still a deep cultural strength, positioning the U.S. as leaders in many products and industries -- high-tech being the primary example.
2. Our standard of living is still the best in the world. There is really no better place to do business or to live.
3. The rule of law is much stronger than in most of the world, with the exception of Europe. We are a civilized nation that offers safety and certainty.
4. Our vast size, natural resources, common language and culture still provide advantage in many industries. Oil is our only real weakness.
5. Our culture has shown high levels of resilience and an ability to change in times of crisis, as the increased savings rates indicate. We feel like anything is possible and we can achieve anything.
6. Our financial systems, once properly regulated, are still the safest in the world. China still sends its money for us to invest, and the oil-rich countries are still anxious to invest their money in the U.S.A.
7. Much of the world, especially emerging economies of Asia, depends on our middle class for consumption of their products. Therefore, it is in their best interest for the U.S.A. to succeed.

To summarize, our optimism, while being a great strength, dulls our ability to acknowledge reality prior to crisis. Often times those who acknowledge realities are considered unpatriotic and subversive. This is the most difficult cultural challenge, which plagues America as a whole and many of our business enterprises. We cling to the glory of the past, and often use hope as a strategy. How do we shift this mentality and use our strengths to compete in the global economy?