A division of Soft Landing Korea Ltd.
By Tom Coyner
Nov. 27, 2008
Since September, much of the world has been walking around in a state of semi-shell shock. On unsteady legs, we have been trying to recover our bearings, trying to establish reliable landmarks, and guessing how to chart our personal and collective lives forward in the coming months, and probably years.
As much as I hate to use this cliché, we have been thrust into a new paradigm. Yes, given the logarithmic escalation of change about us, we have been talking and experiencing paradigms for decades. But this time, the clever monkeys have really done it. The giant pancake of major change has finally flipped. We are startled.
The change pancake, of course, has been with us a long time, resting but impatiently waiting for the forces to build up to the point to ultimately cause it to flip.
Those forces of change are too numerous to mention here, but the largest was globalization with the introduction of the Internet and cheap international communications, which in turn not only shrunk the world of disparate societies, but compressed us together so that we were culturally and intellectually forced to coexist just about cheek to jowl.
Until September, the world had tolerated much of this by working within a globally shared, yet flawed, Wall Street-created financial scheme.
This framework was promoted by advanced Western economies, led by that of the United States, buoyed on speculative wealth that in turn fueled the other nations' export engines.
Many people looked at this global phenomenon and remarked that it all looked like some kind of international Ponzi scheme.
They were right, of course, but all they could do was scratch their heads -- and then try to get a piece of the action while it lasted. But like the dot-com phenomenon before it, economic gravity pulled the multitudes back to Earth.
Unlike last time, however, the less developed economies as well as wealthy nations were involved.
And this pancake flip is truly historic.
I have been amused by the wishful thinkers who wonder if I see us pulling out of this economic downturn in the coming few months. I disappoint such people. I remark we will be lucky to make things right within a few years -- and I tell them to forget about us going back to where we were earlier this year. I point out that global interdependence has not only strengthened but also morphed.
Western nations are being forced to reconsider their standards of living and their abilities to achieve whatever levels they aspire.
Until recently, cheap energy, deteriorating public education and crumbling physical infrastructures were essentially taken for granted while the wealthy Western masses weekly marched to and from the retailers, often buying in volume.
Yet, in the United States, for example, some 85 percent of those polled indicated the country was on a wrong course. Both conservatives and liberals nominated presidential candidates calling for substantial change. So it came as no surprise that Barak Obama, who called for the greatest change, won the election.
Meanwhile, the American economic super engine has been engaged in a global war, including engagement in two major Asian theatres, while refusing to restructure itself into a wartime economy, as had been the cases with previous generations. Until most recently, tax cuts -- not de facto war taxes -- have been the order of the day.
Most Americans have over depended on the self sacrificing 0.5 percent of the population who served in uniform, while the mantra of the overwhelming majority, until quite recently, has been ``spend, baby, spend!" Rather than share in the sacrifice, the greater concern has been more about no new taxes than fiscal responsibility.
And yet common sense, buttressed with the principle of economic guns versus butter, foretold the Americans could not continue having it both ways. That all changed last September. The sudden slap of the flipped pancake awoke many Americans --and others -- to a new reality.
America's trading partners have been startled out of their economic ennui by that pancake's sharp report from Wall Street. Just now they are seeing economic decline caused by reduced and canceled foreign purchase orders.
Korea, for example, has once again been reminded of its economic vulnerability. Some two-thirds of Korea's GDP is generated by trade. Export growth is now expected to drop by 75 percent in the coming year.
Given this paradigm pancake's flip, export-oriented economies, such as China and Korea, now need to recalibrate to foster greater domestic wealth creation and consumption.
Trade relations will have to be more sustainable than in the recent past. China, for example, was exporting toxic goods in exchange for America's toxic financial instruments. Looking forward, China will need to greater foster its domestic economy while achieving a better, long-term balance of trade in both raw materials and finished goods with other nations.
In the face of this and similar economic restructurings by its trading partners, America's role as a central hub of international trade will not disappear, but may shrink.
In time, there could be more and more similarly sized trading hubs. As such, new hegemonies are likely to be formed with realignment of diplomatic and even military alliances. Henry Kissinger's vision from the 1980s of a genuinely multi-polar world appears now to be becoming fully realized.
While trying to encapsulate all of the above, I have wondered if someone would eventually come up with a moniker for this post-flipped pancake phenomenon. Quite belatedly, the obvious struck me. We have just entered the 21st century.
Major shifts in human civilization almost never coincide with numerology. Can you think of a major event that actually took place in a year that ended with two zeroes? If one looks back roughly a century, and takes a year such as 1910, one can fairly say that there really was little difference between 1900 and 1910 compared to 1910 and 1920.
In fact, there was much more global change between 1910 and 1920 than 1910 and 1890. In other words, one can say the 19th century continued until the June 1914 bang of an assassin's gun that triggered World War I.
Similarly, even with the 2001 trauma of 9/11, the world really did not have to reconsider as many fundamentals as the immediate and current aftermath of September 2008.
The advent of the war on terrorism was more of a continuation of the preceding 20th century events than a truly global paradigm shift.
In that regard, September 2001 was similar to the outbreak of World War II, albeit on a smaller level. To many Americans, 9/11 may seem to be the beginning of the new era. But like World War II, most people’s lives resumed in large measure to what they were prior to the event – and for many non-Americans around the world, 9/11 was at most an important event that did not directly impact upon their lives. When one considers how much global civilization changed – and stay changed – following World War I, we might say that the following world war and 9/11 were more like acceleration points than true pivots.
In any event, where does all of this bring us?
Given September 2008's sudden release of global forces, if we are to struggle back to where we were, it would be very much like desperately holding on to a rock in the face of a tsunami. Unless one has the grip of a Superman and the lungs of a whale, chances for survival would not be excellent. Rather, those who can swim -- or better yet, those who can surf -- would not only survive but likely thrive.
And just what may those "surfing skills" include? Perhaps most critical will be a fully honest assessment of the core competencies of us as individuals and as members of groups and societies.
We need to consider who we are, not in terms of the past century, but in meaningful terms of the coming age. To do this, we must shed supporting definitions and boil down to the essence of what skills and abilities we possess and who we are spiritually and culturally.
To give some examples, I recall studying how American railroads largely missed out on the pancake flip of a century ago in business school. The shallow and most common interpretation of that industry's case study is that the railroads failed to recognize they were in the transportation business and not simply the railroad line of work.
Actually, the example of a railroad company from which we can learn the most is Southern Pacific, which transformed itself into Sprint. The company first realized they could upgrade, with their continental internal phone system, into something that could compete with AT&T, but later they further realized their true competitive competence was their coast-to-coast rights of access to not only lay fiber optics but to offer access for other cable and pipe carriers.
Recalling this example with a friend, he said as a university English instructor, he excels in teaching his students to approach their studies from a process perspective. For decades, he has found great pleasure in analyzing systems of all kinds. I then asked whether he had ever considered becoming a systems analyst of some sort.
He thought a moment, and then replied, saying the issues revolving around gray water (or waste water) had intrigued him for quite some time and perhaps there may be some merit to consider formally studying and being accredited as a water purity engineer.
Now, the above is a simple illustration made over just two cups of coffee and as such may not make a compelling example. But I used that incident to convey how one person, with a bit of out of the box thinking and further consideration, may begin preparations for the 21st century.
So, like it or not, the giant paradigm pancake has flipped. Our Brave New World, the 21st century, is upon us. In spite of -- and because of -- today's difficulties, we have a once-in-a-lifetime chance to reinvent ourselves. As others flail about, I recommend individuals and organizations do some major reassessments and recalibrations.
Can you imagine what would have been the chances of success, in the years immediately following World War I, if one had tried to operate with a late 19th century mentality?
A century later, a similar need to change is upon us. The time for us to adapt to our brave, new world is now.
The writer is president of Soft Landing Korea (www.softlandingkorea.com), a sales-focused business development firm, and co-author of Mastering Korean Business: A Practical Guide.