William Polushin is founding director of the Program for International Competitiveness at the Desautels Faculty of Management, McGill University, and President of AMAXIS, an international business and operational development services firm.
Jobs, growth, and national prosperity. These words represent the central themes driving economic policy today, from Ottawa to Washington to Brussels to Tokyo to Sydney -- especially as governments and central banks around the world scramble in their efforts to keep our economies from slipping back into recession.
Ultimately, though, it isn’t our governments that feel the front-line effects of sliding consumer and business confidence or increasing competition from China, India, Brazil, Mexico and other rapidly developing nations; and it isn’t our governments that build the wealth upon which our economies expand and thrive. It’s our enterprises/businesses/firms -- small, medium, and large, and across industry.
In a world that is being reshaped by technology, economic globalization, demographic shifts, ever-evolving labour markets, and the rise of BRICs + Mexico + Indonesia + Turkey + South Africa + . . . , it’s our enterprises, represented by its owners, managers, and employees, that compete in the global economy. If a particular enterprise -- Canadian or otherwise -- does not possess the necessary knowledge or capacity to compete at a level that is dictated by increasingly integrated and competitive world markets, it will not realize sustainable sales and profit growth, and, as a result, will not be in a position to positively feed into the jobs and growth agenda.
In the world we live in today, the path to commercial success in business goes beyond the process of developing new and improved products or services, or implementing the latest quality control or CRM (customer relationship management) system. Competitive advantage in the global economy is driven by knowledge, but a comprehensive and multi-dimensional form of knowledge that effectively integrates information and intelligence, discovery, know-how and expertise, and business and research networks. In Canada: A Nation of Traders that means:
- knowledge and understanding of the competitive dynamics driving the enterprise’s industry now and into the future;
- knowledge and understanding of government policies and programs affecting the enterprise (in whichever country it operates);
- knowledge and understanding of the economic forces impacting government and industry, now and into the future; and
- knowledge of how to respond to these factors in a manner which will enable the enterprise to compete at a world-class level.
It is this advanced and comprehensive knowledge which drives effective innovation, which drives productivity which, in turn, leads to greater and sustainable company/firm sales and earnings. Ultimately, improvements in national prosperity are a function of the wealth generating capabilities of each and every enterprise active in a particular economy.
In a project that my colleague Bob Hebdon (Professor at the Desautels Faculty of Management) and I completed for the Canada Millennium Scholarship Foundation in 2009, the following conceptual framework was developed to help explain this wealth creation/economic prosperity dynamic:
So, as our government leaders and central bankers debate over how to best deal with the woes of the global economy, let’s make sure they don’t lose sight of who or what the key is to economic growth and job creation in our countries -- our businesses.
I will continue this discussion on the fundamentals of competing in the global economy in my next post.