“America is open for business.” – President Donald Trump.
News reports have it that the president’s recent trip to Davos and speech exceeded expectations. From his speech:
“I’m here to deliver a simple message: There has never been a better time to hire, to build, to invest and to grow in the United States… America is open for business, and we are competitive once again.”
Great sales pitch. Simple, quotable message. And it was indeed widely quoted, not just in the United States and Switzerland, but around the world.
The president is himself a businessman, and knows that even the best sales pitch works only when backed by reality on the ground and effective action behind the scenes.
Reality on the ground and effective action? All of us have a picture of what that looks like for a small shop or store. It means customers will reliably find what they’re looking for, at reasonable prices, backed by good service and reputation. Usually there’s a special individual – the owner – whose presence, vision, and service-attitude makes all this happen.
But scale up – grow an enterprise from a stand-alone coffee shop to the Starbucks network, or from hand-built ultralight aircraft to a multi-billion dollar Earth satellite system, or from house electrical wiring to a national power grid – and the dollar stakes and complexity of the task attract stiffer competition.
To win big contracts, especially from government customers, requires more than just sales or marketing in the conventional sense. To win such business at the level of multi-billion-dollar, multi-year commitments challenges firms to reach across their entire workforce and build large teams that can address every element of customer concern, including: technical competence; cost; management capability, including subcontractors and legal issues; past performance; and much more. The effort has itself become a discipline, to be studied and practiced. It’s even earned a label – capture management. The high rewards and the convoluted nature of the process attract consultants galore. Corporate survival depends upon getting capture-management right. Here’s a slide from one on-line powerpoint presentation that gives a flavor of the scale and complexity.
This work – the capture of big contracts – can easily require hundreds of millions of dollars of investment sustained over many years.
Now, scale up once more, to much higher dollar figures – what the world’s nations will be looking to purchase over the next two decades or so. With global GDP at $80T/year-$100T/year (depending upon whether measured in purchasing parity- or dollar-denominated terms), and likely to roughly double over the next twenty years, it shouldn’t be a surprise to learn that the world’s governments will spend something like $100T over the period on critical food, water, and energy infrastructure.
Much of this work will be accomplished domestically, in country, world over. But multi-national corporations will be competing globally for their share of this huge pie.
In fact, such enormous sums draw nations into capture management as well, whether intentionally/strategically, or haphazardly. It’s the kind of incentive that causes presidents to declare their countries “are open for business.”
Realistically, only two countries are positioned to play a role at global scale, as opposed to locally – the United States and China,. China views such work through a national security lens. It is actively building dams, developing mines, and connecting these projects with rail lines and seaports worldwide. Its “one belt, one road” initiative calls for $1T in outlays across sixty countries. U.S. activities currently lag in both scale and unifying vision.
The stakes go far beyond jobs and money. The outcomes will shape countries’ governance, world over – influencing whether they will trend democratic and free, or drift to the despotic. The implications extend to quality of life, culture, and the very deepest values. All are in play. By the end of this century, one of these two superpowers may find itself in a friendly world, one compatible with its goals and aspirations. The other risks finding itself isolated.
To dig a bit deeper:
At its heart, success in global-level business capture is founded on national S&T capability and workforce. Start with S&T. According to recent estimates, China has the lead in exascale computing; R&D outlays as a percent of GDP, and rate of growth of those outlays; manufacture of solar cells, etc. The United States has long-been the established and acknowledged leader, but now finds itself playing catch-up in these respects.
In big-business capture, a skilled workforce matters. Businesses seeking capture focus intently on workforce training and on new hires. At the international scale, this translates into national policies governing STEM education domestically, and immigration. One measure of STEM education is provided by the Program for International Student Assessment, or PISA ranking of the Organization for Economic Co-operation and Development (OECD) The results of the PISA 2015 global rankings for student performance in mathematics shows the urbanized provinces of China ranked sixth worldwide, with the U.S. falling below the OECD average, in 40th place. (Of course, this is all U.S. students versus the favored few in China, however those favored few Chinese are a segment of a population three times that of the United States.) The science picture is similar: students in the same four Chinese provinces are ranked tenth; U.S. students overall were ranked 25th .
Turning to immigration, in the past the United States has historically attracted high levels of young immigrants showing aptitude for mathematics, science, engineering and technology, but in recent years barriers to entry and competition from abroad have seen increasing numbers of those students seeking education and their future careers elsewhere. The United States no longer enjoys its near-monopoly of the last century when it comes to attracting and retaining skills and talent of the world’s young.
In addition to these core components to successful business capture, several other factors carry weight:
Ease of doing business. At the country level, this translates into trade policies, trade agreements, and trade rules. For decades the United States has played a lead global role in developing frameworks for fair, non-exploitive trade. More recently, some of this has been displaced by an overt “America-first” rhetoric.
How well can this be expected to enhance international business capture? It is instructive to compare this easily memorable tagline (the whole world knows it by now) with those of major aerospace companies. A sample:
- “We’re engineering a better tomorrow.”
- “Customer success is our mission.”
- “Innovation isn’t just an idea – it’s a way of life.”
- “From ocean to orbit and everywhere in between, …solutions [to] connect, inform and protect the world.”
- “A legacy of innovation.”
- Ready for the next 60 years.”
You can bet that each of the corporations represented here is internally thinking “[our aerospace company] first.” They owe that to their shareholders. For some strange reason, though, they’ve universally decided not to lead with that message – perhaps for the same reason that each partner in a marriage doesn’t lead with that “me-first” idea upon arrival home each night. All of us have learned that our selfish ends are best met by putting the customer/partner (and the customer/partner’s concerns – security, innovation, success, a better life) first.
Internal corporate unity. Corporate leaders know that their companies, if they are to succeed in business capture, cannot be riven by internal factions, bickering, polarization, finger-pointing, constant reorganization and upheaval. To win the trust of customers, they have to build and maintain a culture of stability and trust internally that is evident (and winsome) to outsiders. China has private sector, government, and academia on the same page, in part because of a top-down, command-and-control approach to governance; in part by constant messaging to its people that the United States is an enemy to be feared. This semblance of unity is more fragile than it appears. In the United States, by contrast, longstanding freedoms that foster real loyalty and encourage individual responsibility at the same time allow vocal minorities to cast off restraint and stir up noisy disagreement. This national barking is worse than the national bite, but it can be unsettling, even off-putting to other countries. It works against U.S. prospects for international partnering – and business capture.
Corporate Social Responsibility. Corporate leaders and their shareholders constantly fret about the balance between core activities of their businesses and CSR: equal opportunity, diversity, inclusion, interests of workers relative to customers, and much more. But they all understand this: that when they come up short in such respects, they are likely to lose government business. In the same way, nations who fail to meet the needs of their own people for social justice, who lose sight of the public good, will also ultimately lose out on international business. China risks losing big here, as its leaders begin to demand that American and European companies doing business with them accommodate a greater role for Chinese influence in their decision-making. But here in the United States, we know only too well that we too have considerable room for improvement.
Evidence-based environmental considerations. This issue will be paramount in national leaders’ minds around the globe as they look for help in building the infrastructure needed to make food, water, and energy supplies reliable, plentiful, and cheap for their peoples. They have to meet today’s essential needs in ways that are sustainable. Business capture will go preferentially to the companies and nations that demonstrate the best environmental monitoring, the best numerical modeling, and impact-based decision support for these vital sectors – knowledge, analytics, and technology able to meet resource needs in the face of natural hazards and while protecting the environment and ecosystems. The U.S. used to provide leadership example and assurance here. However, failures to rebuild quickly following natural disasters in California, Texas, Florida, and Puerto Rico; precipitous casting aside of hard-won environmental protections across the nation ranging from Alaska’s north slope to the continental U.S. shoreline; and unilateral withdrawal from global climate agreements are shaking international confidence.
Tonight’s State of the Union message will provide insights into these and other aspects of America’s capture-management strategy. A world of potential customers with $100T to spend will be watching. They’ll be wondering: “America’s open for business. Okay. Will Americans put their customers first? Make it easy to do business with them? Are they innovating? Are they on the same page over there? Are they building the capacity of their workforce for the big demands ahead? Can we count on the business solutions they propose to build in resilience to hazards and protect our environment?”
The stakes are a lot higher than the rollout of the latest iPhone.
much as when it comes to those major satellite buys, only a small handful of aerospace firms realistically hold the resources needed to compete.
Viewed as a single entity, the European Union also qualifies as a player in this space.
European nations generally fall somewhere in between.