Restoring American Competitiveness

Introduces the concept of “Creative Commons.”  In a nutshell:  All those low value manufacturing jobs aren’t so low value after all.  Gary Pisano, Professor at the Harvard Business School, shares his thoughts “Restoring American Competitiveness.”   at the HBSAB Annual Dinner.

Professor highlights erosion of “Industrial Commons” that provide the bedrock of innovation.

Professor Gary Pisano ahared some powerful insights on the decline of American competitiveness over the last few decades.

After spending some time defining competitiveness among nations, Prof. Pisano painted a grim picture of a trade balance in decline, not only for manufacturing jobs considered to be “low value,” but also for good jobs in high tech and energy fields. He went on to explain the relationships between these sectors of the economy, introducing the concept of “Industrial Commons.”

The essence of the idea is that the ability of an organization to innovate depends on it having access to skills and capabilities in the supporting ecosystem that arises around all geographically concentrated industries. Consider the ecosystem of component suppliers, tool and equipment manufacturers, complementary technology providers, HR, institutions etc. that exist to support the automotive industry in this country, for example. Access to that ecosystem encourages innovation and the development of high-paying skilled jobs, creating a virtuous cycle of competitiveness important in many US industries.

But the reverse is also true, and having allowed so-called “low value” US manufacturing to drift offshore, we may have inadvertently outsourced the higher value knowledge worker jobs of the future in industries which may not even exist. The Chevy Volt, for example, will use South Korean batteries. Why? Because so much “low value” consumer electronics manufacturing happens in asia, it now has a genuine competitive advantage in the design and production of highly efficient lithium ion batteries, which may be the future of transportation.

Basically, we need the surrounding infrastructure in order to be able to innovate.  So the question is how does a company compete on an economic basis if one can’t use cheap offshore manufacturing.