The U.S.'s Hidden Asset: Global Capitalism
For the past seven years our political leaders have been trumpeting the spread of U.S.-style democracy, with decidedly mixed results. Developing countries aren't eager for the U.S. to impose its form of democracy on their fledgling—and often fragile—governments. In fact, many of them resent our government's attempt to tell them how to run their countries, especially when threats of "regime change" are not so subtly mentioned. It is U.S.-style capitalism, not democracy, that is spreading like wildfire around the globe.
Every government leader and business executive I have met in developing countries—from the mayor of Beijing to the ruler of the United Arab Emirates—is eager for one thing: U.S.-style capitalism to build their economies, create jobs and wealth for their people, and bring their countries fully into the global trading network. From Kazakhstan to Vietnam, people are hungry for capitalism. They want to study it in the U.S., learn how to create local capital markets, acquire our technology and know-how, and build companies that can export their goods around the world, especially to the U.S. But most of all they want our hidden asset: leadership of global capitalism.
Let me emphasize that this is not the old-style business leadership of the 20th century, which was based on the assumption that U.S.-based companies had superior products and management processes and could simply export them to the less sophisticated markets around the world that were eager for U.S. goods and know-how. That day passed by 20 years ago.
They Come to Learn
In recent years our new competitive advantage has emerged: the ability to train and develop global leaders who are capable of leading global organizations. These new leaders, who are mostly in their thirties and forties, have lived all over the world and are as comfortable doing business in the Ukraine or Indonesia as they are in Des Moines—perhaps more so. Many of them have attended the best U.S. graduate business schools, where they have interacted with a vast array of foreign nationals and newly immigrated Americans with similar leadership abilities and like ambitions.
After attending my class at Harvard Business School my wife remarked, "I feel like I am in the United Nations." In fact, more than one-third of Harvard's MBAs and two-thirds of participants in its executive programs come from outside the U.S. to learn the latest leadership approaches in global business. (These percentages do not include the substantial number of newly immigrated Americans from all over the world attending these programs.)
This new generation of U.S. business leaders—as well as foreign nationals who have been trained in our leading academic institutions—is very different from the previous generation. They are authentic leaders; collaborative, not imperial, in their relationships. They genuinely respect and appreciate the comparative advantages that people of other nations bring to their global companies—from manufacturing skills to ingenuity. Most importantly, they know how to bring together and motivate people of very different backgrounds to build high-performing organizations.
Still the Melting Pot
The U.S.'S competitive advantage is seen most vividly in financial markets, where governments and business people around the world are eager to have our investment banks help them restructure their financial institutions and industrial companies to become competitive in global markets. Serving on the board of Goldman Sachs (GS), I have had the opportunity to witness first-hand just how important this leadership is to countries like China, Saudi Arabia, and the United Arab Emirates. In building financial institutions in these countries, U.S.-based companies are developing the relationships with business leaders that will sustain this competitive advantage in global leadership for the next several decades.
For all the xenophobia about immigration and widespread panic over outsourcing, the reality is that the U.S. is the world's melting pot. We are more accepting of people of diverse national origins and ethnic backgrounds than any country on earth. Progressive business leaders such as IBM's (IBM) Sam Palmisano, Andrea Jung of Avon Products (AVP), GE's (GE) Jeff Immelt, and PepsiCo's (PEP) Indra Nooyi recognize that diversity is not a challenge to be overcome, but a source of sustainable competitive advantage.
Whatever issues diversity may create—both real and perceived—our hidden competitive advantage is the ability of our leaders to operate effectively in integrated global organizations and to deploy the principles of capitalism throughout the world.
Our political leaders would be well-advised to recognize this strength and use it to build relationships with countries around the world, while helping them build their economies through capitalism, irrespective of their form of government.