Global Competitiveness Report

The World Economic Forum has recently published its global competitiveness report for 2010-2011. The competitiveness of 139 economies are ranked on the basis of 12 factors, including the nations’ institutions, infrastructure, and the efficiency of its proudct, labor and financial markets.

Switzerland is ranked the most competitive nation as it was last year.  The U.S., however , slipped  from second to fourth place behind Sweden and Singapore.  The report cited macroeconomic instability, concerns about financial markets and a weakening of U.S. private and public institutions as reasons for the decline in the rankings for the U.S.

The U.S. is followed by Germany, Japan, Finland, Netherlands, Denmark and Canada.  The Scandanvian countries are definitely showing the way to global competitiveness.

China led the large developing nations at the 27th spot.  Chile was the highest ranked nation in Latin America at number 30.  Qatar, at number 17, was the highest ranked country in the Middle East, and South Africa, number 55, had the highest ranking in sub-sarharn africa.

.

Favorite books of Premier Jiabao

In a recent interview with Freed Zakaria (Time, October 18, 2010) Premier Wen Jiabao of China was asked if he had read any books recently that impressed him.  The Premier responed that he always took two books with him when he travelled.  Which two books does thePremier of China take with him when he travels?

The State and Revolution – V.I. Lenin

The Mediations – Marcus Aurelius

Das Kapital – Karl Marx

The Prince – Niccolo Machiavelli

The Theory of Moral Sentiments – Adam Smith

The Little Red book – Chairman Mau

Profile (Thomas G. Marx, Ph.D.)

Profile

Thomas G. Marx

B.S., Business Administration, Summa Cum Laude, Rider University, 1969

Ph.D., Economics, Wharton School, University of Pennsylvania, 1973

Professional Experience

Federal Trade Commission (Washington D.C., 1973)

Foster Associates (Washington D.C., 1973-1977)

General Motors Corporation (1977-2005)

Lawrence Technological University (2005 – )

College Professor

Director Doctor of Business Administration Program (2007-2008)

Director Center for Global Leadership and Understanding (2009 -)

Teaching

Temple University

University of Pennsylvania

Wayne State University

University of Detroit Mercy

Courses

Leadership

Institutions: Strategies, Structures and Systems

Globalization and the New Economy

International Economics

Strategic Business Planning

Contact

Buell Management Building

Office: M308

Hours: M-F, 10:00 to 5:00 (Call for appointment)

248 204-3081

tmarx@ltu.edu

 

 

Leadership

Leadership

 

Leaders: Born or Made?

 

A recent article, “Homo administrans,” in the September 25th edition of the Economist puts a new wrinkle on the old controversy about whether leaders are born or made.  The article suggests the answer might be “yes” and “no” depending on whether the leader is male or female. 

The article contends that management science has been dominated by the Standard Social Science Model that assumes that differences among people are explained primarily by culture and socialization – i.e. leaders are made.  Some biologists, however, maintain that genetics interact with the environment to exert considerable influence over work behavior, satisfaction, performance and the ability to lead.

In a study of identical twins, the researchers found that genes help explain extroversion (a personality trait conducive to leadership) only in women.  The researchers concluded: “Businesswomen, it seems are born.  But businessmen are made.”  In a second study of just male twins, the researchers concluded: “Inborn leadership traits certainly do exist, but upbringing …matters too.”

Trust is listed as one of the most important requirements for effective leadership in just about every study of leadership, but is trust earned or determined by the amount of oxytocin in the leader’s blood stream?  Do we send leaders lacking in trust back to school for training or down to the lab for a series of hormonal injections?  Is risk-taking a function of testosterone levels?  Did the leader pay too much for the acquisition because his testosterone level was too low?  Are women better leaders than men?  If so, is it because of their nurturing behavior or their chemical composition? 

Biological studies of leadership and management raise these and numerous other fascinating questions about the selection, education, training and development of future leaders.  They also raise a number of daunting ethical issues including: Genetic determinism; misuse of biological information; and genetic segregation.

The More Things Change, The More They Remain the Same

 

In their latest book, The Truth About Leadership (2010), James Kouzes and Barry Posner draw a remarkable conclusion about the impact of the 21st Century global economy on the fundamental requirements for effective leadership.  Like the strange case of the dog that did not bark in the night, globalization is eerily silent while the authors investigate the requirements for effective leadership in today’s global economy.

The authors note that the context of leadership has changed dramatically with global competition, the accelerating pace of new technology, the multicultural workforce, concerns over terrorism, global warming, sustainability, and the displacement of the Baby Boomers with the Millennials in the workforce.  But while the context of leadership has changed, the content has not changed much at all. 

Kouzes and Posner postulate: “The fundamental behaviors, actions, and practices of leaders have remained essentially the same since we first began researching and writing about leadership over three decades ago.  Much has changed, but there’s a whole lot more that’s stayed the same (p. XV). Later they state: “While context changes, while global and personal circumstances change, the fundamentals of leadership do not” (p. XIX).

One of their most surprising conclusions, and one that will surely be challenged, is that the requirements for effective leaderships of Millennials are no different from those for Baby Boomers and other generations:  “When it comes to generating positive work attitudes, it doesn’t matter whether you’re a traditionalist, a Boomer, a Gen-Xer, or a Millennial.  Good leadership is good leadership, regardless of age” (p. XVII).

The core of the book identifies and describes the ten fundamental truths about leadership that are unaffected by changes in context. The ten truths include:

You make a difference

Credibility is the foundation of leadership

Values drive commitment

Leaders focus on the future

You can’t do it alone

Trust rules

Challenge is the crucible of greatness

You lead by example

The best leaders are the best learners, and

Leadership is an affair of the heart

Perhaps, in some sense, these ten truths are so fundamental – so basic – that they do not change or change little with context.  Perhaps, trust and credibility have been the foundation for effective leadership for 50,000 years and will be so for the next 50,000 years.  But, while it is important to understand these fundamental truths, the risk is that some may conclude that it is therefore not necessary to change behavior to be an effective leader in the 21st century global economy.

As a practical matter, many important dimensions of effective leadership behavior and practice do vary significantly with context.  Many aspects of leadership style, needed skills, behavior, and decision making that were expected and accepted by me over the past thirty years as a Baby-Boomer would be totally unacceptable and counterproductive to the Mellennials we teach leadership to here at LTU.

The authors note that you have to understand the perspectives of others to be an effective leader.  You have to be sensitive to the needs of others; you have to understand the needs of your constituents.  They state that leaders:. . . .“do not focus on satisfying their own aims and desires; they look for ways to respond to the needs and interests of their constituents” (p. 138).  That may be a fundamental truth, but the needs and interests of Millennials, for example, differ markedly from the needs and interest of Baby Boomers.  Meeting these different needs is not simply a matter of serving butter pecan in the cafeteria instead of strawberry.  Meeting the changing needs of a 21st Century, multi-cultural, knowledge-based work force requires dramatic changes in leadership beliefs, values, attitudes, styles, behavior and practice that will challenge the most astute of leaders, and be beyond the capabilities of many.

Globalization

Globalization

 

“It ain’t what you know that gets you into trouble.  It’s what you know for sure that just ain’t so”     

                        Mark Twain

I usually create panic on the first day of class when I tell students in my MBA class on Globalization and the New Economy to clear their desks; we are having our first test.  The relief is audible when I tell them just to holler out when they think they have a reasonable answer to the questions about the 21st Century global economy I proceed to ask.

Business leaders who lack a reasonable understanding of the economic, political, legal, social and cultural dimensions of the global economy cannot make effective decisions.  Business leaders who believe the world’s population is two billion people and half live in America; that New York is the biggest city in the world; that the world GDP is $5 billion; that only 5% of the world’s output is traded globally; and that only 2% of the world’s population lives in poverty are no more likely to make sound decisions than physicists and astronomers who believe the world is flat; the Sun revolves around the Earth; and the world was created ten thousand years ago.

One of the primary objectives of the Globalization class is to improve students’ understanding of the world in which they will be future leaders.  The introductory part of the course strives to provide the students with an empirical backdrop against which economic, political, legal, and social principles and theory can be meaningfully interpreted, and applied to the myriad of critical problems facing the world today.

What do you know for sure?

  1. What is the world population today?  What will it be in 2030?

 

  1. Is the world population growth rate increasing or decreasing?

 

  1. What country has the largest population?  How many people live in that country?

 

  1. What are the world’s five largest cities?

 

  1. What percent of the world’s population lives in cities?

 

  1. How large is total world output?

 

  1. What are the five largest nations in terms of economic output?

 

  1. What is the largest country in the EU in terms of population or GDP?

 

  1. What nation has the highest income per capita?

 

  1. What country is the largest exporter of goods and services?

 

  1. Which three countries have the largest trade deficits?

 

  1. What percent of total world output is traded globally?

 

  1. What is the volume of currency transactions on a typical day?

 

  1. What is the annual volume of Foreign Direct Investment today?

 

  1. Which country is the largest recipient of FDI?

 

  1. What percent of US GDP consist of manufactured goods; services?

 

  1. What are the world’s largest five corporations?

 

  1. What percent of the U.S. labor force is unionized in the private sector?

 

  1. What does WTO stand for?

 

  1. What is the name of the current WTO negotiating round?

 

  1. What percent of the world’s population lives in poverty – less than $2.00 a day?

 

  1. What percent of the US GDP is devoted to official foreign aid?

 

  1. What percent of the world’s population lives in a democracy?

 

  1. Name four Communist countries today.

 

  1. Name two countries that are a theocracy today.

 

  1. Who are the Prime Ministers of the UK, Russia, China and India?

 

  1. Which nations have the highest ratings on the Human Development Index?

 

  1. What are the three least corrupt nations in the world?  The three most corrupt?

 

  1. What percent of the world population that belongs to an organized religion is     Christian? Islam, Hindu? Buddhist?

 

  1. What is the sacred book of Islam?

 

  1. What do Judaism, Islam and Christianity have in common?

 

  1. How many nations are members of the European Union?

 

  1. What nations are permanent members of the United Nations Security Council?

 

  1. What does perestroika mean?

 

  1. What are the BRIC nations?

 

  1. What does OPEC stand for?

 

  1. What does IMF stand for?

 

Twenty reasonably correct (in the ballpark) answers would be impressive.

Institutions

Institutions

 

Why Do Institutions Matter?

 

Why study institutions?  Because institutions play a significant role in the growth and development of nations, and the living standards and individual liberties enjoyed by their citizens.  Global and national institutions in countries where operations are conducted are also critical components of the external environment that affects a company’s competitive opportunities and threats.  An understanding of these institutions is thus essential to effective business planning and leadership.  

Every society must determine what to produce, how to produce it and who gets the goods and services that are produced.  A society is a collection of institutions – political, legal, economic, social, cultural and spiritual among others.  These social institutions, to varying degrees in different countries, exert influence over the decisions about what to produce, how to produce it and who gets it.

The kicker is that some institutions respond to these three fundamental decisions that every society must somehow make in ways that provide opportunities and powerful incentives for individuals to work, save, invest and innovate – the sources of economic growth and development.  These countries typically experience economic growth and rising living standards.  They also typically enjoy high levels of individual liberty.  Other institutions provide no or limited opportunities, and no, weak or disincentives for individuals to work, save, invest and innovate.  Not surprisingly, these countries usually do not prosper for any lengthy period of time.

As an example of the impact of institutions on incentives, a legal institution that protects private property rights provides powerful incentives for productive economic activity.  A legal system that does not protect property rights – perhaps that does not even recognize private property- provides little incentive for productive economic activity as witnessed by the horrific starvation caused by the decline in production that followed attempts to collectivize (eliminate private property rights) agriculture in Russia and China.  

 

Who said it?

 

We have to “resolve the issue of the excessive concentration of unrestrained power,” and “create conditions for the people to criticize and supervise the government.”

Vladimir Putin

Wen Jiabao

Barack Obama

Kim Jong Il

Sarah Palin

Our economic model “doesn’t even work for us anymore.”

Ben Bernanke

Fidel Castro

Naoto Kan

Dmitry Medvedev

“Universal values tell us that government serves the people. . . .”

Nancy Pelosi

Qin Xiao

Gordon Brown

Manmoham Singh

 

Strategic Business Planning

Strategic Business Planning

 

Blue Ocean Strategy

The College of Management and the Office of Career Services is hosting a special breakfast workshop on November 10, 2010. 

Gerard Van Grinsven, President and CEO of Henry Ford Hospital in West Bloomfield will be the keynote speaker.  He will discuss how he accomplished both his professional and personal goals through the use of blue ocean strategies, and how he transformed an acute-care hospital into a wellness health center. 

Wednesday, November 10, 2010

Registration and continental breakfast, 7:30 a.m.

Presentation and Q & A, 8 – 9:15 a.m.

Wayne H. Buell Management Building, Room M218

Lawrence Technological University

21000 West Ten Mile Road

Southfield, MI 48075-1058 

The event is free.  Please RSVP www.ltu.edu/management, larnold@ltu.edu , or 248.204.3050.