The Opportunities for Communities in globalization

If you are in the manufacturing business, there has been catastrophic impact on your business from globalization. I know of no manufacturing sector of the economy, or perhaps any sector, that has survived the meta-nationalization of markets.

If we stand back and look at this as simply another round of rapid change caused by the explosion of the information age, then a reasonable person would think that when one door closes another one opens...And a good business person should damn well be looking for the open door. Well here in America, I think we have forgotten how to look for the open door. So we sit around and whine a lot about how Congress has given away manufacturing and are content to see the lowest cost producer get the marketshare and Wal-Mart get the distribution rights. This type of activity is not going to get us much of anywhere.

So let's stretch this analogy a bit. If we remember our natural history, it is surmised that around the peak time of the dinosaurs, some big comet hit the earth and created a catastrophic change. The big organisms at the top of the food chain, i.e., the dinosaurs, being cold blooded, could not adapt to the colder temperatures and rapidly changing environment. They, from all accounts, died out. During this time however, small furry mammals found niches where they could survive and even thrive. They learned to get away from the cold, find food and water, and even went to sleep off the coldest times of the year. They adapted and grew until man evolved to sit atop the food chain.

If we apply this analogy to the current business environment, there might be something to learn. Let's assume that globalization is similar to the comet hitting the earth. Certainly for the manufacturing workers in the country, a similar percentage of manufacturing companies have died in the change. There was an immediate scurrying about to find jobs in the "service sector" which was to be the savior niche, but lo and behold, those companies moved globally as well to chase the lowest possible wages. The jobs that are left are working for the "big box" distribution companies, food service, health care or infrastructure maintenance.

Underneath the radar however, is the beginning of a micro economy, even in the manufacturing sector, for specialized goods and services with companies that are producing unique things. Sometimes these unique things get "found" and they become global themselves and get sucked into the black hole of commodity-ism (their value declines as sales volumes increase with a loss of uniqueness). Other times, the value remains constant because the market niches are limited and customers like the quality or regional nature of the product or service.

Here are a couple of analogies. Fresh fish at the coast. There are always a few fish mongers at the coast who sell locally caught fish. There is no opportunity for commodity-ism because the source is limited and the further the fish goes from the coast, the less flavor, etc, it has. When one goes to the coast, one buys the fish there, pays more, and even gets some to take home to cook the next day. Wal Mart is not going to get that business. It is safe and people are not looking for the commodity experience here.

Another analogy comes from the book "Creative Destruction" by Cowen. Special music is created in Jamaica. Because it is an island, before global communications, it never got off the rock. If you were to hear it, you went to Jamaica. Because of globalization, this music has expanded and grown beyond anyone's imagination. It was a niche that was discovered, and because the value of music increase with the number of people that experience it, the niche become global.

These are two very different value propositions. One, the fish, is driven by geographic and logistic concerns based on scarcity. The music is based on a niche that can be expanded because the value proposition is based on abundance.

So rather than whining about globalization, the American businessman needs to understand the value proposition of his perceived enterprise. Is it based on scarcity or abundance? Is it of more value locally rather than globally. If it has a huge local following, why...And can it be expanded or will expansion "devalue" the product or service. Instead of globalization increasing the sameness of civilization perhaps it can be the foundation of a new creation of unique goods and services that in turn promote unique communities.

I am sure there will be more on this later..