Michael Porter on strategic thinking
Well over one year ago Michael Porter of the Harvard Business School outlined what he thought were the sources of our country’s exceptional prosperity. The U.S. has prospered, he said, because of a “set of unique competitive strengths.”
These were:
an unparalleled environment for entrepreneurship, for starting new companies.
an entrepreneurship fed by a science, technology, and innovation machine that remains by far the best in the world. (In 2007, American inventors registered about 80,000 patents in the U.S. patent system, where virtually all important technologies developed in any nation are patented. That’s more than the rest of the world combined.)
the world’s best institutions for higher learning
the strongest commitment of all countries to competition and free markets.
an economic policy highly decentralized across states and regions. (think of the entertainment complex in Hollywood or life sciences in Boston)
the deepest and most efficient capital markets of any nation, especially for risk capital.
a willingness of entrepreneurs to restructure, take their losses, and move on to the “next big thing”
Assuming that our prosperity does stem from these sources, an assumption that most of us would readily make, shouldn’t it be the government’s highest priority to get behind programs in support of these sources?
And yet when one looks at what has most occupied the executive and legislative branches of the government during President Obama’s first year of office one looks in vain for major Congressional or Presidential initiatives to strengthen anyone of these sources.
(See, for example, an astonishing WSJ report on the difficulties, including wait times of at least 12 and sometimes as long as 20 years, that highly skilled and highly talented, and therefore highly desirable, foreign-born professionals encounter when seeking to become permanent U.S. residents.)
Instead of policies to increase our competitiveness, and thereby our economic prosperity in a now global economy, we hear mostly about government bail-outs of too big to fail banks and car companies, about the 100s of billions of stimulus dollars going to increase consumption rather than production, and hesitant, timid, and certainly inadequate congressional proposals to reform the country’s system of health care.
And if all this wasn’t enough to prevent us from doing the right thing there are a number of other problems and issues, any one of which could almost by itself undue our prosperity and for which no reasonable and obtainable solution is even yet in sight, let alone on the table, a few of the weightiest of these being the wars in Iraq and Afghanistan, immigration, and our system of public education.
The President seems to be all tactics, leading skirmishes, waging battles, but the strategic thinking for which he was known for as a candidate, has not been transformed into particular strategic priorities and initiatives.
Instead, President Obama seems on the one hand to be trying to hold things together (because when he assumed office things did seem to be falling apart) — the economy, the war effort. On the other hand the particular attention he has given to health care and job protection, in the form of new entitlements and tariffs, clearly stems from promises made during the campaign.
Too bad. It does seem to be that our leaders are failing us. The President because he seems unable to break free from the entrenched political, corporate, and military centers of power in the country. Is it because he is without sufficient courage to go it alone, for he does seem to have sufficient knowledge?
And the Congress? It is still subject as much as ever to partisan bickering, its members still unable to put the country’s welfare ahead of their own private interests.
In Michael Porter’s words:
“Republicans keep repeating simplistic free-market thinking, even though the absence of all regulation makes no sense. Self-reliance is preached as if no transitional safety net is needed…. Republicans seem to think business can thrive without healthy social conditions.”
“Democrats, meanwhile, keep talking as if they want to penalize investment and economic success. They defend unions obstructing change in areas like education, cling to cumbersome regulatory approaches, and resist ways to get litigation costs for business in line with other countries. Democrats equivocate on trade in an irreversibly global economy. They seem to think social progress can be achieved only at the expense of business.”
