Sunday, April 15, 2007

A Vision For The Future - A New Twist

I have a vision. It's about green. And greed.

Think back for a moment. When do you suppose was America's heyday? When were things the best for America? The 1950's? The 1960's? The 1970's? Sure there was the cold war, and Viet Nam, and there were social problems at home, too - but yet somehow people seemed happier. They seemed positive. In 1957, there was no doubt in anyone's mind that the next year would be better, and that every year after that would again be getting progressively better and better. What was it about that post-war era that made life so positive and hopeful and forward-thinking?

I think a large part of it was because the US lead the world in innovation, inventions, in technology. People talked about the space age, and Nasa was sending up missions to the moon, and we were inventing everything from microwave ovens, to pushbutton phones, digital watches, to the personal computer. We created networks to connect the computers together. There seemed to be no end to what technology would do for us, and America was king of technology.

Well, in the last 20 years, it seems we've lost some of that edge. Other countries have overtaken our lead and now THEY are the fountains of technological innovation. THEY have the cool new products coming out. THEY now lead the way and take the first steps. Much of the technical innovation seems to come from southeast Asia now. Japan, Korea, etc.

China has grown into a huge force on the world stage. They were a third world country just 15 years ago, and now they are the emerging giant of the world. They have done this primarily by keeping their currency cheap, and therefore their labor cheap, and therefore they have become a destination of choice for outsourcing manufacturing to, or for simply buying manufactured goods.

Let's look at one example:
It used to be that if you wanted to be a guitar-maker in the US, you would set up a little shop, design your guitars, buy your materials, make your guitars and sell them to people who would visit your shop. If you became bigger, and they became more popular, you would put them in other music shops and sell them that way.

Well, now it's done differently. You cannot possibly hope to make guitars for less money or more efficiently than they can in Korea or China. They have the high volume production equipment and economies of scale that you could not hope to match. So instead of trying to compete with them, you join them. You use what they have already put in place. So now you go to visit Chinese or Korean companies like Samick, who builds guitars for other companies under their labels. These are anything from Fender to Washburn, Schecter, Epiphone, Ibanez, Breedlove, Ovation, etc. Pretty much any guitar that said "Made in Korea" was actually made by Samick. They claimed at one point to make over 80% of all the guitars in the world. So you go to visit them, they show you a catalog of models, and you pick a handful of models, pick some combinations of features from their list, just so they are slightly different from other models they are making for other labels already. Then you agree to minimum volumes, and delivery guidelines, and sign a contract for production.

Then they make up a few samples with your name brand on the headstock to take back with you to the US, and you go visit the buyers of guitars for the major music store chains like Guitar Center, Sam Ash Music, etc. and you show them the guitars, and then you make a deal for the retail side. They agree to a price they will pay. You line up some advertising to start to create a demand. So you call up Guitar Player magazine, and Guitar, and Guitar One, and Guitar World, etc. and you put in some glossy ads for your new guitar products. Then the ads go out, the orders start coming in from the retail side, then you start fulfilling them from your Korean friends at Samick. They can either manufacture as required, or in batches for less money per unit, but then you pay up front.
You have become a middle-man. You are just moving "units". It no longer matters whether they are guitars, or toasters, or lighting fixtures. It is an inventory sku, and it has pricing and fulfillment limits set and the system flows - from manufacturing through distribution, through retail, to the consumer. You are not a guitar maker, you are a business man.
And that is how business is done, mostly now.

But where is the innovation? This is not innovating. This is not pushing the envelope for the industry or the world. The innovation belongs to the Korean company for coming up with the product. And even then, it is mostly just mixing and matching existing features, done with existing tooling. This one is a single cutaway. That one is a double cutaway. This one is a thinline acoustic/electric jazz guitar in the style of a Gibson ES-335. That one is styled like a Les Paul. This one is a strat-copy - and so it goes.

This is not innovation. This is not moving us forward.

I think there is a new area where we, here in America, can lead the world, and in our leadership position, we can find our profits again. And in that process, we will find our bright future once again. We just need our American optimism, our ingenuity, and our willingness to try.

For years, people have made a fortune by making things cheaper and competing on price. The lowest price wins. Wal-Mart is king of the retailers on the planet. That has been the rule for the last few decades, but now it is time for a change. Now, instead of competing to make things cheaper, we need to compete to making things more efficient, more environmentally friendly.

The new goal is "Green". In other words, while China and others are busy making things cheaper and cheaper - we have the opportunity to lead the world in developing environmentally-friendly products and processes.

Instead of competing in a price war in a race toward the bottom, we compete on a whole different level, in a whole different direction. More efficient cars, trains, boats, and planes. More efficient heaters for houses. More efficients batteries for gadgets. More efficient light bulbs. More efficient use of farmland. More efficient use of urban space. Less polluting cars and products. More efficient gas and energy consumptive products. Also, we can lead the world in developing processes and technologies for producing clean, cheap energy from renewable resources like wave power, wind power, solar power, reclaiming methane from trash and using the energy in that to run power turbines, etc.

China has amassed an enormous surplus of 1.2 trillion US dollars by selling stuff because it's cheap. We can make a fortune by selling stuff because it's efficient, and it's environmentally better. People all over the world will buy those products, because there is a wide and growing awareness now of global warming and how that will affect the planet. No one wants to see the major coastal cities of the world flooded out, and the farmland ruined and reduced. No one wants to see the weird weather patterns, freezing here, boiling there, storms, and tornados, and F5 hurricanes coming every year to destroy homes, villages and entire cities. They want products that will help reduce that and stave off the effects of global warming as long as possible.

The current crisis of global proportions, rather than being our doom - might just be our biggest opportunity. We just have to be smart enough to figure out how to make money from it. Green has to be connected to Greed. Once people see the way to make these green products pay a profit, then you will see people falling over each other to where they can come up with excellent products and processes to help move us forward. And the ones who start first and invest in the innovation and really commit to that direction will win the biggest. Toyota has already figured this out, and so they have made the deepest inroads into making and selling hybrid vehicles so far, and now they are positioning to become the world's largest automaker - but it's still early in the game. If we jump in with our resources, and our ideas, our innovation, our special genius - we can still leap out ahead and take a huge lead.

Some will say that the current political environent and the big oil companies have too much of a vested interest to allow these kinds of changes, and they have traditionally worked against it - but don't worry, because I have another idea to change THAT too.

We just have to find the tipping point in the equation, and then the whole game changes.

For example: GM had produced some really promissing electric cars a few years ago. These looked like the wave of the future. But they were destroyed and the program was squashed - largely because Big Oil applied pressure in the right places and suddenly GM caved. They shut it all down.

So, rather than accepting that we have to live with Big Oil as the neighborhood bully - why not find out WHY they do that. Well, I don't think it's because they want to destroy the country - or the world. They live here too. So I think it's safe to assume it's because they make more profit if we buy more oil.

So how about this: Through a combination of legislation AND attractive incentives, we force the oil companies to diversify their business to include green products. If they are motivated by money, then set up the game so that their motivations further our collective best interests. Greed is a powerful motivating force. Direct it in the right direction, and we all win! Hey - I bet if Exxon-Mobil stood to make a fortune by selling those expensive batteries for electric cars, then electric cars would
be on the road TODAY.. Big time!

So give them a piece of it. Don't make them an adversary - make them a partner. Share the wealth. Show them their role in this brilliant bright and clean new future. Show them how to be the good guys with the white hats AND still be rich - and they will suddenly be the biggest flag-wavers of all.

Every problem has a solution. We just need to think deeper, and try hard. In that way, America, and the whole world, will move forward. We all win! That's my dream.

...Well, that and being a rock star/guitar god, of course...


At 4/17/2007 10:34 AM, Anonymous Joe Parr said...

Nicely written and well thought out. I agree that we have to incent companies to go green and that the green market will be huge going forward. If the big oil execs were truly visionary, they'd already be moving into alternate energies because, as we all know, eventually oil will run out. Of course, most execs are concerned with this quarter, not 50 years from now. So, as you said, we have to incent them to become visionaries. That is, unfortunately, easier said than done. Government incentives are derided by the antibusiness crowd as 'corporate welfare'. The environmentalist lobby scream because coal burning electric plants polute, but they also scream about hydroelectric because it damns up rivers and they also scream about nuclear generated electicity because of the waste disposal. Hell, they even scream about wind power because it kills birds. My point being, that if logical solutions to problems were actually evaluated logically (instead of emotionally based on everyone's own personal, usually warped agenda), most of these problems would have been solved years ago. As I've always said, if it wasn't for all the rest of the humans on this planet, it'd be a great place to live.


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