Leaders Say China To Pass US In 2029

This year at Davos I asked people how many years it will take for China to pass the US in gross domestic product. For context, China's GDP in 2010 was $5.7 trillion; the US was at $14.6 trillion. China is growing at 15.3% per year, the US at 3.6%.

Respondents to my question included tech CEOs, a former UK prime minister, a former US senator, and the head of one of the world’s largest banks. I polled entrepreneurs, economists, and businesspeople from many parts of the world. In all, 40 attendees answered the question. Here are the results:
1) The average was 18 years -- 2029.
2) Of the 40, only three said that China would never pass the US.
3) The low number of years was eight; the high was 55.
4) Many believed that there would be a political disruption for China, but this would not delay the eventual overtaking of the US.
A caveat: The World Economic Forum loves straight lines -- it celebrates stasis and is not adept at predicting disruption. So any so-called obvious trend (e.g., China up, the US flat-lining) is embraced and accepted. Only one problem:  The future rarely cooperates.
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My Notes From Davos 2011

Sorry for the long post. Here are my quick, random takeaways from this year's World Economic Forum in Davos. I hope you find this helpful...

1) European leaders felt activist, energetic, and up to the task of cleaning up their economies. David Cameron, prime minister of the UK, came off as decisive and vital. He's got a vision (make Britain more competitive, balance the budget, revive the country's export economy), and he's hell-bent to get there. I found him refreshing after the fuzziness of American politicians. Sarkozy of France and Medvedev of Russia also came off as forceful, opinionated leaders. Sarkozy was defending the euro ("We will never, ever let it fail") and kicking the bankers. Medvedev was soliciting investment in Russia...

2) The media cognoscenti believe the final nail in the coffin of newspapers will be local advertising going online. Believe it or not, that nail may be pounded by AOL...

3) When you meet a former president of the United States, don't make the mistake of calling him by his informal first name...you'll get a dirty look. Remember, it's "Mr. President."

4) Two years ago the negative nabobs of Davos were predicting double dips and potential depression. The elite love to draw straight lines -- they presume that whatever is happening now will happen tomorrow. So almost nobody saw the recovery of the past 18 months.

5) Paranoia about China was seeping out of the walls. Unlike in years past, the Chinese were much in evidence -- lots of press from China and a sprinkling of government ministers and businesspeople. As one Chinese executive said to me: "...1.2 billion consumers means something." More about this in my next post...

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What Should This Year's "Davos Question" Be?

It's that time of year again -- off to Davos to hang around with people who are way more important than me...

But I need your help. I like to ask everyone I meet at WEF one simple question. Think of it as a mini-survey that gets answered by a cross-section of the business, political, artistic, and altruistic leaders of the world. 

Two years ago I asked everyone: "When will the worldwide recession end?" The results were pretty accurate...

What do you think this year's question should be? I'd love to get your ideas. And if I use your question I'll make sure to give you attribution when I post the results back here.

Thanks in advance!!

Top Ten for 2010

A year ago I posted my favorite things of 2009. Here’s my top 10 for 2010. 

1) London. I’ve spent my business life slogging in and out of this city, never stopping to really take a look or know anything about the place. My family and I spent six days there in March: it’s clean, it’s historic, the people are hospitable, the shows are great, the walking is easy. High point was passing by Geddy Lee, the lead singer for Rush, in Notting Hill. Stay at the Covent Garden Hotel if you’ve got the bucks -- understated, comfortable, centrally located, stuffy-hip.

2) iPad. It won’t replace your laptop -- but I use it in all of my meetings to give me a continuous but unobtrusive window into the digital world. Best thing about it: battery life.

3) The movie The Social Network. Like all good art, critics and fans have interpreted this movie to represent the good and bad of our era. Here's my take: Yes, we are connected at unprecedented levels, but the moral content of those connections is declining. In other words, we can have many "friends," but we apparently have no obligation to do right by those friends. On a less serious note, I think it's cool that someone can still invent something in his or her dorm room that touches half a billion people...

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New Research On Social Sigma

OK -- shameless plug alert -- here's some fresh research from Forrester on social sigma. Social sigma is the use of digital feedback to improve products.

The boring graphic to the left shows that social is gaining traction on the product development front. Our most recent report, written for consumer product strategy professionals, will help your employees with the “how” of social sigma (which the report calls "co-creation"). It provides a social asset tracking scorecard and a social co-creation action plan to help your product strategists get started. 

The report identifies nine reasons to embrace social sigma. Chief executives should take special note of the following three: 
- Social Sigma humanizes the company, This is happening today at Domino’s Pizza, Ford Motor Co., and Starbucks. Transparency breeds customer loyalty.
- Risk is mitigated: 80% of products fail. Co-creation of  products with customers will improve this math.
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Death Of The CIO, Birth Of The CBTO

All CEOs worry that the CIO and staff are more interested in technology than in driving business results. Here are some simple but powerful changes you can make to get your technologists leaning in the right direction...
For the last three years, I've been advocating that companies drop the term "IT" to describe their technology efforts and replace it with "Business Technology" (BT). This signals the people who work in technology departments of large companies that they exist to drive one thing (business) and it signals the corporation that the technology department is serious about helping increase growth and profit. The graphic at left shows that firms are already on the road to building better linkage between technology inputs and business results.
Once you make the switch to BT, I propose that you drop the term "CIO" and adopt a new moniker for the head of technology: "Chief Business Technology Officer" (CBTO). I was in front a large group of Forrester's CIO clients in October and I asked them to describe the CBTO using a semi-comedic device: "You know you're a CBTO if..." Here are some of the better entries:
"You know you're a CBTO if your boss feels that you can step into the COO or CEO role."
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Social Sigma = Better Pizza

A story. Domino's Pizza took hits over the last two years: 1) gross-out videos posted on YouTube by employees "tampering" with the food (don't ask), and 2) harsh customer criticism of the company's pizza on social networks. The company's CEO decided to go on the offensive, firing and suing the wayward employees and using social to develop a better pizza. I call the latter tactic Social Sigma -- using digital feedback to improve products. 

Did it work? Phil Lozen, the social media specialist at Domino's, reports that customers have been thrilled with the company's honesty and candor. If you watch some of their videos and TV spots, they highlight tough social critics who blogged and tweeted about cardboard crust, ketchup sauce, and bland, boring pizza. “Sometimes it was difficult to hear,” said Chris Brandon, a Domino’s PR manager, “but ultimately it’s what inspired us.” It worked:  the company's Q3 2010 revenue was up 15% over last year.

A few Forresterites and I  ordered Domino's pizza today (shown at left). Scores were high across the board (an average of 8 out of 10)  with words like "impressive," "fresh," "not greasy," and "very surprising" spoken all around. I have three boys so I've consumed a lot of pizza over the last ten years -- Domino's satisfied my tuned palate. 

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Social Sigma Rising

Social Sigma is the use of social networks to improve products and services. I first talked about it here. I counseled CEOs to pay attention -- social will represent an important new font of data and feedback for product development and refinement.
Forrester's data reveals the growth of social critiques -- the front end of Social Sigma. 6% of online Americans post ratings and reviews of products at least monthly, up from 5% last year. 25% of online adults read these ratings and reviews at least monthly. The trend is more pronounced for young consumers aged 25-34, 32% of whom use reviews every month to make purchase decisions.
As shown in Forrester's graphic on the left, consumers are using diverse channels, led by Facebook, to voice their opinions online. 
What does all of this mean about Social Sigma for large companies?
1) Tune in. This may sound obvious. But Forrester estimates that one in five companies do not participate in the social realm, and another one in three have no coordinated social strategy. This means that more than half of you are unprepared to handle Social Sigma. Companies work in three dimensions -- social needs to become the fourth.
2) Tune in lots of stations. As shown above, social feedback isn't restricted to one or two sources -- you're going to have to listen to a wide variety of sites to create a full picture.
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Perspective On Zuckerberg

Quickly: Mark Zuckerberg's skills as a CEO are overrated.

Content: What can Mark Zuckerberg, CEO of Facebook, teach other CEOs? Not very much. To date, he is a one-trick pony -- a leader who has expertly refined and polished one very, very big idea -- remaining unproven beyond the borders of that idea.

Zuckerberg's media profile vastly overshoots his abilities. David Kirkpatrick’s The Facebook Effect describes him as ". . . a natural CEO" and ". . . a visionary business leader." In the October issue of Vanity Fair, Zuckerberg is named No. 1 in the magazine’s power ranking of the New Establishment, just ahead of Steve Jobs, the leadership of Google, and Rupert Murdoch. The magazine declares him “Our new Caesar.” The movie The Social Network portrays him as the successor to Bill Gates.
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Tech Antitrust

If you're a typical CEO, you've probably had a few nights where you lay in bed pondering where all that money your company spends on technology goes. If you've studied your CIO's budget, you may have asked the question, "What are these software maintenance contracts, and why the hell are they so damn expensive?" Or you may have questioned why your company has to make large capital investments every four or five years to buy new switches for your global private network. In short, you may wonder if you're paying too much for technology and if your vendors are treating you fairly.

Now, is there a dirtier word in the CEO's world than "antitrust?" CEOs never like to be told what to do, and I'll include myself in that group. CEOs focus on increasing revenue and profit -- the big always want to be bigger, and they don't want the government or anyone else telling them they can't grow. 

But if you look at history, antitrust has generated benefits for your company. Theodore Roosevelt is arguably the father of 20th century American capitalism, through his fight to reduce the power of concentrated monopolies, then called trusts. If your corporation is based in the US, it may have been founded under the protection of Roosevelt's antitrust umbrella. In 1969, the Nixon administration pressed forward with action against IBM, stimulating the company to unbundle software from hardware. This sparked the formation of a new market for independent software companies -- their products lie at the heart of your operation today. Ronald Reagan's administration used antitrust to break up the US phone monopoly AT&T, setting the stage for sharply lowered long-distance pricing for your company. 

Enough with the history lesson -- what does this mean to you? Let's face it: You and your CIO want two things: 1) reasonable, competitive pricing, and 2) new technology that could make your operation more efficient. From 1980 to 2010, the number of tech companies in the Fortune 500 increased 115%. But there has been increased concentration in some markets -- enterprise software, network equipment, and systems providers (the big vendors that can "offer it all"). The latter category has fallen from 12 companies in 1980 to seven in 2009.  
So don't be surprised if regulators put their antennae up and prepare to use antitrust to ensure that: 1) prices for users of technology (especially at the enterprise level) remain fair, and 2) markets remain open, enabling new technology companies to blossom. Remember what happened to the car industry in the US? When it boiled down to three players, it began a long, slow slide toward mediocrity. A plodding tech market dominated by a few big dumb companies would be disastrous for your company -- and for the economy.