The Five Mental Shifts Required to Rebuild America's Economic Competitiveness
-- As Determined by the US Intelligence Community's Socrates Project --
December 1, 2009
Michael C. Sekora
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Executive Summary: To ensure the economic health of the US and its people, US decision-makers in government, industry, and academia must address America's rapidly declining competitiveness, the source of the present economic crisis. To effectively address the decline, the decision-makers must make major shifts in their thinking: They must question what is true economic competitiveness and what are the means required to generate it. They must see that issues like trade policy, IP laws, and infrastructure upgrades must be addressed with those means in mind. They must acknowledge that the world is on the verge of the next revolutionary step in generating competitiveness and that to remain a super-power the US must lead this next revolutionary step. And they need to understand that leading the next revolutionary step does not violate the principles of democracy on which the US was founded.
Introduction:
Although the recently passed economic stimulus legislation will help mitigate the adverse impacts of the economic crisis in the short-term, it does not have the ability to effectively address the underlying source of the US economic crisis--America's declining ability to compete in both domestic and foreign markets.
Background:
Under the Reagan the administration within the US intelligence community, a classified program, the Socrates Project, was initiated to address America's declining competitiveness. Socrates had a two-fold mission. The firstwas to determine the true source of America's declining competitiveness, and the second was to develop the means necessary to address the source of the problem.
The Socrates project team knew that to develop the means to address the problem, theirinvestigation of the source of the problem had to go beyond obvious one-liners—“Japan, Inc.”—and go beyond accepted solutions—“level the playing field.” The Socrates solution took advantage of intelligence available through all the sources of the intelligence community, for a complete, holistic view and understanding of competition worldwide, generating for the first time in the history of mankind a bird's eye view and understanding of all competition worldwide.
This bird's eye view of competition went far beyond, in terms of scope and completeness, the extremely narrow slices of data that were available to the professors, professional economists,and consultantsthat addressed the issue of competitiveness. As a result, the conclusions that the Socrates team derived about competitiveness in general and about the US in particular were in almost all cases in direct opposition to what the professors, economists and consultants had been saying for years, and to what had been accepted as irrefutable underlying truths by decision-makers throughout the US.
The Socrates team then went on to use this understanding of the source of the US competitiveness problem to develop the means that would be effective in truly rebuilding America's competitiveness.
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Issues:
American financial institutions and Americans in general have been basing their financial decisions on the beliefthat American companies are sufficiently competitive in the foreign and domestic markets to generateconsistently the stable positive cash flow that the US and its citizens have learned to expect and rely upon for many years. But, in reality, for the past fifty years, many of America's companies have maintained stable or increasing positive cash flow, not because they are truly competitive, but only because they have very adroitly played economic shell-games. As a result, American financial institutions and the American people have greatly overleveraged, in an unsustainable fashion, the US economy, resulting in the Wall Street meltdown and the mortgage crisis, which in turn have sent an economic tsunami around the world.
The relaxing of federal regulations over the last few years have enabled decision-makers in financial institutions and many Americans to make what arenow in hind-sight considered highly risky decisions. But if the American companies' positive cash flow had been based upon true economic competitiveness rather than economic shell-games, the decisions of the American people and the country's financial institutions would not be in question today and would have not generated the economic crisis we now must aggressively address if the country is to survive.
To effectively address America's economic crisis we must do more than just mitigate the present adverse impacts of the crisis via cash infusions and tax breaks andjust reestablish federal regulations that will provide more accountability for the decisions of our financial institutions. We must aggressively address the underlying source of the economic crisis which is the decimated abilities of American companies to compete in both domestic and foreign markets.
What was discovered in the Socrates Project was that to rebuild America's economic competitiveness, key decision-makers throughout the US in federal and state governments, industry, academia, and the press must make five significant shifts intheir thinking:
#1The US must change from economic-based planning back to technology-based planning.
#2Technology-based planning is the foundation needed to address the wide range of functions in the private and public sectorsthat comprisetheUS economic competitiveness issue.
#3The world is poised for the next revolutionary step in technology-based planning, the Automated Innovation Revolution, and for the US to regain its ability to compete economically with its technology-based planning, it must generate and then lead the Automated Innovation Revolution.
#4A Techspace Map and Map Navigation Tool were initially developed within the Socrates Project of the US Federal Government, and then refined within the private sector, and these make it possible for the US togenerate and then lead the Automated Innovation Revolution.
#5To generate the maximum economic competitive advantage from the Automated Innovation Revolution for the US, the Techspace Map and Map Navigation Tool must be used to develop symbiotic technology strategies at the country, state and organization levels, enabling the full range of US resources to be utilized in a coherent, flexible, and independent fashion, not in conflict with America's open, democratic society.
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Shift #1The US must change from economic-based planning back to technology-based planning.
Technology-based planning is what was used to build America into a super-power. The focus on creating the very best product or service—in other words using technology to be best at satisfying customer needs—was a focus that kept US organizations competitive. It is this focus—this technology-based planning—that is what China and India are presently using to build themselves into the next great super-powers.The gradual shift after World War II by US organizations to economic-based planning—a focus on economic maneuvering to maximize the bottom-line—is what caused America's ability to compete to deteriorate over the last thirty-plus years. Yes, the deterioration has been going on for that long, but because we have been looking solely at the economic side of the equation, we have not seen the deterioration.
In economic-based planning the foundation of every decision within the organization is a matter of how to most effectivelyacquire andutilizefundsto generate the maximum profit for the organization. This is what is taught at all US business schools and what has been used within almost all US organizations since the end of World War II.
In technology-based planning the basis of decisions is how to most effectively exploit—acquire and utilize–technology to excel at satisfying acustomer need to generatea competitive advantage.In tech-based planning the technology is what is actually being manipulated. Technology is any application of science to accomplish a function, whether the science iscutting-edge or well established, whether the function is ahead-line grabbing new product or service or something significantly more mundane. (Then, on top of this foundation of technology exploitation, an organization can execute the full range of other types of planning like economic optimization).
The challenge in shifting to technology-based planningis getting decision-makers to truly see the difference between technology-based and economic-based planning. Maneuvering in the economics has been a fundamental, coreconcept to Americans since the end of WWII, and is so ingrained for American decision-makers that it is not even recognized as a premise with the potential of being ineffective.
Many US companies and other US organizationswill adamantly maintain that they do execute"technology planning" but in actuality what they are doing is executing economic-based planning for technology. Their planning consists of how to most effectively use available monies to fund their various R&D efforts. What they are actually manipulating arethe funds,not the technology, but they will be hard-pressed to understand the difference. In technology-based planning one manipulates technology thatis internal and external to the organization (or region) like pawns on a chess board.
This manipulation of the worldwide technology like pawns on a chessboard is what China has done and continues to do with an unmatched level of sophistication and aggressiveness to transform China into a world super-power, and to accomplish this objective with a speed that is unparalleled in the history of the world.
US companies, the White House, the US Congress, and various Washington think-tanks and organizations each have developed plans for rebuilding America's economic competitiveness,andstrongly maintain that their planscontains the necessary actions relative to science and technology (S&T). But in all cases these plans are economic-based.
Each plan addresses science and technology for economic competitiveness as if it is nothing more than a research and development (R&D) and education foot-race among countries; each country attempting to “out-R&D” and "out-educate" all the other countries in order to get to the finish line first (i.e., get the next set of science and technology breakthroughs first). And winning the foot-race requires nothing more than America increasing its R&D and education spending via initiatives like tax breaks to the companies and the direct injection of federal dollars….in other words, manipulation of the economics of the situation, not the manipulation of the technology, which is the foundation of the country's and the competitors' competitive advantage.
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What is key to understand about this required shift in thinking is:
(a)the true, fundamental and radical difference between maneuvering in the economics as executed in economic-based planning and maneuvering in the technology as executed in technology-based planning,
(b)that economic-based planning is so pervasive and such a core-concept throughout all US public and private organizations that its existence does not even register in the minds of the decision-makers let alone the thought that it could be ineffective and the source of the problem, and
(c)the fact that the determination that technology exploitation, via technology-based planning is the foundation of all competitive advantage, as well as all of the other determinations of the five mental shifts were made from a one-of-a-kind, all-source intelligence bird's eye view, holistic understanding of all competition worldwide.
Shift#2Technology-based planning is the foundation needed to effectively address the wide range of functions in the private and public sectorsthat comprise the US economic competitiveness issue.
Because technology exploitation is the foundation of all competitive advantage, technology-based planning is the most effective basis for addressing the wide range of functions which comprise the US economic competitiveness issue. Using technology-based planning to address these functions accomplishes two critical objectives. First,it enables each function to be addressed in the most effective way possible for increasing America's and American organizations' abilities to generate and maintain economic competitiveness. Second, because all of the functions are being addressed from the same basis, it enables all the functions to be executed in a coherent manner, further increasing the functions effectiveness in driving US economic competitiveness. It is literally impossible for the US to effectively address challenges like China's rapidly expanding worldwide economic dominance, if functions like US trade policy, IP laws and the upgrading of the country's infrastructure are not addressedin a coherent, highly integrated fashion.
Private sector--In the private sector, technology-based planning is the correct and therefore most effective basis for decision making throughout the US companies and even not-for-profit organizations. Using technology-based planning as the basis of decision-making throughoutan organization, takes the process for generating a competitive advantage (where generating a competitive advantage is the ultimate objective of each and every decision within an organization) fromwhat is thought of and addressed as
fragmented and fully at the whims of the illogical and undefinable factors of the market and the undefinable and unknowable "secret sauces" of the competitors,and therefore highly inefficient,
to one that is
logical, systematic, and therefore highly efficient and effective.
In addition, using technology-based planning as the foundation for the full range of decisions within the organization (e.g., marketing, R&D, human resources) enables the organization to achieve the heretofore unobtainable "holy grail" of the MBA programs--the ability to integrate the decision-making for all functions so that the resulting decisions are coherent rather then disjointed.
Public sector--In the public sector the functions to be addressed include, but are far from limited to, (a) trade agreements, policies and taxation and the enforcement of the agreements, (b) the US patent system and the intellectual property laws, (c) vocational training and education, (d) university education and R&D, and (e) infrastructure upgrades. To have the level of effectiveness required to support the US and its organizations' ability to generate and maintain the required competitive advantagerelative to countries like China and India, these functions cannot be addressed with economic-based planning as they presently are. They must be based on technology-based planning.
For example, take the case of US trade agreements and policies. In the case of a country like China, its trade agreements and policies are an integral part of China's grand economic development technology strategy for the country–and as such the agreements and policies are technology-based. China's trade agreements and policies are not economic-based, and they are not fragmented.
China's trade agreements and policies are designed to support China's and its organizations' acquisition and utilization of the worldwide technology to generate and maintain the maximum economic competitive advantage. Other factors and issues come into play, but it is the effective exploitation of the technology (where technology is correctly defined as any application of science to accomplish a function) that provides China and its organizations' with a competitive advantage and therefore is the underlying basis for the agreements and policies.
To effectively address China's and other countries' trade agreements and policies, which are technology-based, the US' trade agreements and policies must also be technology-based.
One of the strongly inherent problems with the US' purely economic-based planning approach to trade is the country's inability to understand the trade policies and agreements that are technology-based. To a US trade official whose entire view of competitiveness and trade is economic-based, the trade policies and agreements of a country like China can be more than a little mystifying in terms of their content and their results.
For example, the US trade official may identify the very strong trade barriers erected by China for a particular, very small new industry where the Chinese companies of the industry have full access to the US market, but due to trade barriers the US companies of the same industry have very little access to the Chinese market. With this knowledge, the US trade official will determine the present and make some projections as to the dollar value impact these trade barriers will have on the future trade balance between the two countries. Then armed with what he or she believes is a full understanding of China's actions and the actions’ impacts, the trade official will make some determinations on how to compensate for thisimpact on the trade balance between the two countries (e.g., negotiate the expansion of US company access to other Chinese markets).
The US trade official thinks that the China trade officials are not very wise to spend so much time and energy erecting strong trade barriers for an industry whose (a) maximum dollar value in potential trade is so small that it does not even register in the reported trade balance between the two countries, and (b) projected economic growth in the next five years is not expected to be significant. The US trade official also suspects that the Chinese officials may have instituted the trade barriers as bargaining chips to use to open up other larger US markets, but again the US official see this as very unwise because the small near and long term dollar value of the trade for this small industry is not very compelling.