There have been several major socio-economic upheavals in relatively recent history, each bringing in unprecedented economic change and a new way of doing business. The Industrial Revolution brought mass production and mass consumption. The Internet Revolution brought the rise of the information economy, and ushered in the current era, that of multinational capitalist globalisation. Globalisation brought, in Friedman’s term, a ‘flat earth’ where goods could be sourced, manufactured and sold in separate corners of the earth, an economic process brought together by a global information web and advances in affordable physical supply chain links in air, sea and road travel.
But the recent credit crisis, and the bursting of the bubble of global economic growth and prosperity, have led to a reconfiguring of global business. Multinational capital, especially the banking houses that funded the world’s commerce, had enjoyed an arm’s length relationship with national governments as the nation state structure seemed to be on its way out of history.
Now, with the global financial crisis biting hard, and major multinational banks falling by the wayside, governments are stepping in with rescue plans. The price of state intervention will be the ceding of economic control to the national interest for many countries in the world, in developed as well as in developing economies. And the agenda of the state is often substantially different to that of big business.
The world is therefore, it is to be hoped, on the brink of another defining moment, the age of ‘green economics’. It is possible that governments acting in the interests of national sustainability will now be able to exert a pressure on businesses to conform to a green agenda, a pressure that was not until now a compelling one for business. While the higher cost of making global business more environmentally conservative has been difficult to accept, multinational capital may now be forced to make tough choices in order to survive to do business even in the short term.
Paradoxically, global companies that have understood and incorporated the principles of flat earth globalism may be better positioned to make a sustainable success of the new world order. Those companies are already more flexible, agile and responsive to changing conditions, and will cope better with change than those with entrenched and expensive supply chain operations that have become less attractive to ongoing investment in the same business model – witness the present crisis in the US automotive industry.
Competitive advantage in this environment will not come from simply tightening belts. Most businesses understand the basic survival tactics required during times of economic pressure and uncertainty. Tighter controls over budgets, revaluation of employee positions with regard to their value to the company and a major focus on promoting sales are common reactions. While these may be necessary to negate an economic crisis in the short term, addressing company processes to establish innovative ways of doing business in a changed global economic environment is the means to enable competitive advantage in a sustainable and long-term way. Such innovation will of necessity involve ways of doing business that restore rather than deplete the planet’s resource base – perhaps by businesses collaborating in more meaningful ways with national governments in order to establish sustainable agendas for the future. If the current crisis should teach the world anything, it is that business and government still need each other.
James Sey, Strategic Communication Specialist and Media Analyst.