When historians look back, which will they say was the United States' greatest century? Was it the 18th, when the American Revolution started the trend to modern democracy, abolishing privilege and giving dignity and a voice, eventually, to all citizens? Was it the 19th century, when the American Continent was filled out, oil and gold discovered, and industry became the fountainhead of unprecedented new wealth? Or was it the 20th century, when American science and technology became amazingly fruitful, and its "third wave" electronic, computing and software industries changed the world in ways that we are still only starting to appreciate?
I will answer the question at the end of this post. But first, a personal digression.
Lack of Ambition?
Although I have lived and worked in the U.S., over the last two decades I have become an infrequent visitor. So my 5-day visit to Chicago for my Star Principle seminar last week provided a chance to take the pulse, and reminded me how very different America is from Europe. We Brits have a foot in each camp. Despite my deep affection for North America, and despite the ties of language, history, and culture, the U.S. always feels to me like a foreign country, in a way that European countries do not.
On the first day of my seminar, I was asked by a participant what surprised me about the audience, all of them entrepreneurs. I said two things -- friendliness, and, taking a deep breath, lack of ambition. How wrong I was. On the second day, about fifteen of the participants stood up and told us all how valuable their business -- in nearly all cases, currently below $10 million in revenues -- was going to become. There were several people who claimed they were on track to have a business worth a billion -- in one case $10 billion -- by 2020. Some lack of ambition!
Now, not all the seminar-goers were from the US. There were many Europeans, as well as Australians, Canadians, and Kiwis. But the fact that they had come to America for the seminar said something, and those who came from afar were definitely ambitious. Still, the predominant tone of the participants was American, and the ideas and case examples I used were three-fourths American, mediated through my brain which is at least half Americanized.
Three Problems and Solutions for American-style Business
I identified three problems for entrepreneurs -- and managers -- in the U.S.:
• A culture which values action above thought, and deprives even creative leaders of the mental space to seek out the best formula and unique positioning for their business. If they wanted to make their business worth billions, I told the owners, they had to stop doing and start thinking radically. They had to "get off the hamster wheel" and either do just one thing or nothing in their business. And they had to forget their Protestant ethic programming, and stop working hard. Think hard, yes, but do it with leisure. There is no other way to change the fortunes of your business. This I call the Hamster Principle -- you need to get off the wheel to transform your firm.
• The predominant business culture values growth above dominance in a unique niche. Many people believe that as long as they are in a high growth market, it doesn't matter too much if they are number two or three. But they are wrong. Countless academic studies have proved it. Nearly all the value in the economy comes from businesses that are or were stars in the old BCG (Boston Consulting Group) sense -- the leading firms in high growth markets. And to update that idea for a world being eaten from the inside by software and other intellectual property, the best markets are network markets where the customers themselves add much of the value and nearly all the growth. So unless you have found a unique formula to be the dominant leader or sole supplier in a market which you make extremely high growth, you are wasting your time, energy, and money. This is the Star Principle.
• How do you create such a business? Well, my undergraduate degree was history, and my method is to identify the most valuable innovators in the business world in the last 120 years. A large majority of them were simplifiers, either cutting the cost and price of their products and services by more than half, through turning their industries upside down; or by making the product so much easier and more delightful for customers. This is the Simplify Principle, the subject of my next book, previewed at the seminar.
The American Difference
What's different about Americans, together with their fellow-travellers -- those of us who are not American, and fully value our own cultures, yet follow the American way in business?
If you like, my three ideas provide the way or the mental technology to create a business worth billions from scratch or nearly-scratch.
But something else is needed too.
It is the belief in the ideas and their power.
And the self-belief that you can do it.
And above all, the overwhelming will to do it.
I have never seen so much willingness to believe in ideas and self, and so much naked willpower, as in that room of just under 200 people. I am sure that at least ten percent of the participants will create a business worth billions by 2020.
And I am equally confident that a similar seminar in Europe, dominated by Europeans, would not have been the same.
The Decline of Europe
The economic decline of Europe can be traced directly to the centralizing excesses of the European Union from about 1990, and specifically to the invention of the euro currency. Distinguished economist Roger Bootle -- who first forecast the death of inflation, at a time when it was rampant -- has proved all this beyond reasonable doubt, in his latest book, The Trouble With Europe. (The book is a must-read, and could conceivably transform the intellectual climate, and just possibly history, by convincing those of us who love Europe that ever closer union between its countries -- for good intentions -- is the road to hell.)
But I think the economic decline of Europe also stems from the dearth of entrepreneurs who have the American mind-set and determination. For sure, there are some such people in Europe, and I make my living out of investing in their businesses. But there are many times more such people in the US, including many who came from Europe.
So which is the American Century?
It is not the eighteenth, or the nineteenth, or the last century. Relatively speaking, Europe will decline. Japan and Korea will do well, but their moment has passed. China, India and Brazil, have lots of people; but despite the hype, I would be surprised to see any of them demonstrate the intellectual innovation and practical value creation that is so rampant in America, helped by all the highly qualified immigrants from Asia, Europe and elsewhere.
Which large country will have the highest value businesses and the greatest per capita income in 2099? I think the answer is clear. Historians will look back on the twenty-first as the great American century.
I would like to thank Perry Marshall and his associates for organizing the Star Principle seminar so well and for their hospitality and kindness last week, and all the participants at the seminar, who were the best and most stimulating audience I have ever had.
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