The contest of this century will probably be between China and India

In the recent issue of ‘The Economist’; the most discussed topic Contest of the Century, was the cover story.

China has officially become the world’s second-biggest economy, overtaking Japan. In the West this has prompted concerns about China overtaking the United States sooner than previously thought. But stand back a little farther, apply a more Asian perspective, and China’s longer-term contest is with that other recovering economic behemoth: India. These two Asian giants, which until 1800 used to make up half the world economy, are not, like Japan and Germany, mere nation states. In terms of size and population, each is a continent—and for all the glittering growth rates, a poor one.

As the years roll forward, the chances are that it will increasingly come down once again to the two Asian giants facing each other over a disputed border. How China and India manage their own relationship will determine whether similar mistakes to those that scarred the 20th century disfigure this one.

As China and India rise in tandem, their relationship will shape world politics…

Africa Unlikely to Follow China’s Goose

I was reading an article by Mr Andrew Batson on Chinese investment into African economies which I found it very interesting....

Can Chinese investment inject some Asian-tiger-like vigor into African economies? That’s certainly the hope of many – including World Bank President Robert Zoellick, who has urged Chinese companies to expand beyond infrastructure and resource-extraction projects and also invest in manufacturing in Africa.

Reuters And with China’s labor-intensive industries, like textiles, increasingly challenged by the rising salaries they need to pay workers, there is pressure for to shift to lower-cost locations.

That is, after all, a trend that aided China itself in earlier decades, when the textile and garment industries shifted from Japan and Taiwan as costs in those economies rose. Japanese scholars dubbed this phenomenon the “flying geese” model: One economy, like the first goose in a V-shaped formation, can lead other economies toward industrialization, passing older technologies down to the followers as its own incomes rise and it moves into newer technologies.

Something like this seems to still be happening in Asia, where countries that are poorer than China — such as Vietnam, Bangladesh and Cambodia — have in fact been picking up some of the textile and garment business in recent years as Chinese costs go up.

But a new short paper published by the Vale Columbia Center on Sustainable International Investment, at Columbia University, casts doubt on whether China’s low-end industries will actually shift to Africa in “flying geese” style.

First of all, say authors Terutomo Ozawa and Christian Bellak, China’s own hinterland is large and still relatively poor, which means factories seeking lower-cost locations can find them inland, before having to look abroad. “China’s own vast interior seems more attractive as new production sites than any faraway countries,” the paper says.

Second, China’s government seems in no hurry to give up labor-intensive industries to African or other countries. Pointing to the government’s policy of restraining its currency’s appreciation against the dollar, the authors say “China is not quite ready to dismantle labor-intensive industries that still provide much-needed jobs at home.”

And third, the authors argue, many African countries are not well equipped to take such Chinese investment even if it were on offer. “Infrastructural deficiencies (e.g., unreliable power and water supply, transportation, communication, poor governance, inhospitable regulatory environments, work ethic) in Africa are well known. This explains why foreign multinational enterprises in general, let alone China’s, have not yet seriously advanced into the continent in search of low-cost labor,”.

Building a better Pricing Structure

Well-managed companies already recognize the critical role pricing plays in driving performance. A foundation that underpins excellence in pricing is the key to realizing its potential...

Over the past two decades, most companies have recognized the bottom-line impact to be gained through effective pricing. Yet awareness by itself is not enough. Tapping the full promise of pricing requires an infrastructure to drive real and sustained pricing performance. With such a foundation, a company can establish and strengthen pricing activities by creating deliberate decision processes, a specialized pricing organization, mechanisms that appropriately measure and reward pricing excellence, and robust support tools and systems.

A pricing infrastructure can be difficult and costly to create. It requires investing appropriately, empowering the right people, articulating clear targets and goals, and managing risk. Yet the benefits of realizing true pricing excellence are worthwhile: a one-percentage-point improvement in average price of goods and services leads to an 8.7 percent increase in operating profits.
(Source: McKinsey Quarterly)
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Biodiversity: The next environmental issue for business

For most companies these days, the environment—which is synonymous with climate change for many executives—has become an important topic. But another key environmental concern is emerging: biodiversity, or the diversity of species, variety of ecosystems, and variability of genes. Biodiversity now occupies a similar position in the public debate as climate change did in 2007.

Biodiversity is the variation of life forms within a given ecosystem, biome, or on the entire Earth. Biodiversity is often used as a measure of the health of biological systems. The biodiversity found on Earth today consists of many millions of distinct biological species. The year 2010 has been declared as the International Year of Biodiversity.

Majority of executives, 59 percent, see biodiversity as more of an opportunity than a risk for their companies. The companies identify a variety of potential opportunities, such as bolstering corporate reputations with environmentally conscious stakeholders by acting to preserve biodiversity and developing new products or ideas from renewable natural resources. The positive outlook on biodiversity is in stark contrast to executives’ views on climate change in late 2007, when only 29 percent saw the issue as more of an opportunity than a threat.

Given that threats to biodiversity are getting more and more public attention, companies with any direct or indirect exposure to biodiversity issues will benefit from addressing them in some way. A collaborative, industry-wide approach is necessary for understanding issues such as biodiversity and exploring potential solutions.

(Reference: McKinsey Quarterly; Wikipedia)
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Creative Tension

In learning organizations, the leader's work starts with the principle of creative tension and includes building shared vision...

Leadership in a learning organization starts with the principle of creative tension. Creative tension comes from seeing clearly where we want to be, our "vision," and telling the truth about where we are, our "current reality." The gap between the two generates a natural tension.
Creative tension can be resolved in two ways: by raising current reality toward the vision, or by lowering the vision toward current reality. Individuals, groups, and organizations who learn how to work with creative tension learn how to use its energy to move reality more reliably toward their visions.

The principle of creative tension has long been recognized by leaders. Martin Luther King, Jr., said, "Just as Socrates felt that it was necessary to create a tension in the mind, so that individuals could rise from the bondage of myths and half truths, so must we create the kind of tension in society that will help men rise from the dark depths of prejudice and racism."

Without vision there is no creative tension. Creative tension can't be generated from current reality alone. All the analysis in the world will never generate a vision. Many who are otherwise qualified to lead fail to do so because they try to substitute analysis for vision. They believe that, if only people understood current reality, they would surely feel the motivation to change. They are then disappointed to discover that people "resist" the personal and organizational changes that must be made to alter reality. What they never grasp is that the natural energy for changing reality comes from holding a picture of what might be that is more important to people than what is.

But creative tension can't be generated from vision alone; it demands an accurate picture of current reality as well. Just as King had a dream, so too did he continually strive to "dramatize the shameful conditions" of racism and prejudice so that they could no longer be ignored. Vision without an understanding of current reality will more likely foster cynicism than creativity. The principle of creative tension teaches that an accurate picture of current reality is just as important as a compelling picture of a desired future.

Leading through creative tension is different than solving problems. In problem solving, the energy for change comes from attempting to get away from an aspect of current reality that is undesirable. With creative tension, the energy for change comes from the vision, from what we want to create, juxtaposed with current reality. While the distinction may seem small, the consequences are not. Many people and organizations find themselves motivated to change only when their problems are bad enough to cause them to change. This works for a while, but the change process runs out of steam as soon as the problems driving the change become less pressing. With problem solving, the motivation for change is extrinsic. With creative tension, the motivation is intrinsic. This distinction mirrors the distinction between adaptive and generative learning.

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Quadrant Crunching

Quadrant Crunching has proved to be a highly efficient and effective technique for generating an extremely broad set of alternatives when faced with very little data and high degrees of uncertainty. The technique is adapted from Alternative Scenarios forecasting and is extremely useful for discovering “unknown unknowns.” The primary benefit of the technique is that it helps analysts, policymakers, and military decision makers set priorities and generate specific sets of field requirements in response to highly ambiguous threats. The technique helps analysts think through how such an attack would be launched, what the most likely targets would be, and what signposts or indicators would suggest that a specific attack is in the early stages of implementation.

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The Delphi Technique

The Delphi Technique was originally conceived as a way to obtain the opinion of experts without necessarily bringing them together face to face. It was developed as a forecasting methodology. Later, the U.S. government enhanced it as a group decision-making tool. In recent times, however, it has taken on an all new meaning and purpose.

The Delphi Technique can be used to:
 Develop a number of alternatives.
 Assess the social and economic impacts of rapids community growth.
 Explore underlying assumptions or background information leading to different judgments.
 Seek out information on which agreement may later be generated.
 Correlate informed judgments on a subject involving many disciplines.
 Educate respondents on the diverse and interrelated elements of a topic.

The Delphi begins with the initial development of a questionnaire focusing on the identified problem. An appropriate respondent group is selected, and then the questionnaire is mailed to them. Each participant answers the questionnaire independently and returns it. The initiators of the questionnaire summarize responses, and then develop a feedback summary and a second questionnaire for the same respondent group. After reviewing the feedback summary, respondents independently rate priority ideas included in the second questionnaire, then mail back the responses. The process is repeated until investigators feel positions are firm and agreement on a topic is reached. A final summary report is issued to the respondent group.

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