Finding Our Soul to Compete in the Future
Published January 2006 – IndUS Business Journal
Written by David Lapin (CEO)

Asia and the "Google-Effect" have commoditized not only the West's traditional products, but also many of its services that are potentially generic.  Unless you are cheaper than anyone else, your market will shrink.  And if you are cheaper than everyone else, your profits will shrink.  Every conventional business will sooner rather than later tremble the way that mighty Wal-Mart Goliath trembles before little David Google (The New York Times, Nov. 6, 2005, page 1 - "Just Googling It is Striking Fear Into Companies").  In this environment, improved efficiencies alone will not secure margin growth.  The key to growing margins is not in the products we produce but in our ability to overlay our products with those intangible offerings for which people truly crave.

Brutal cost-cutting and automation brought advantages to consumers but not sustainable competitive advantage to business.  It doesn't take long in an environment of quick diffusion of information for our gains to become entry-level requirements for everyone in our game.  And so, consumers keep their gains, while businesses struggle to find new advantages.  Meanwhile, competitors, who are forever catching up with them, sometimes surprise them with a strategic leapfrog that leaves them way behind.  Each such cycle presents the consumer with another round of victory.  Outsourcing is the newest example of this spiral.

There is hardly anything we do that China and India cannot already or will not soon be able to commoditize and offer to our customers at lower prices and higher efficiencies than we can.  Google, and others like it, facilitate consumer awareness of those possibilities. What is our defense?  With little concern for our employees, we are scurrying to own Chinese and Indian production facilities.  This way, we argue, at least our shareholders will continue to reap profits from our global businesses as we benefit from Asia's cost advantages.

Owning Chinese production facilities, or outsourcing, is just a further example of a strategy that serves consumers but, ultimately, not shareholders.  As everyone does the same, our margins and market share continue to shrink, and our remaining employees become increasingly demoralized.  Furthermore, the West cannot "own" Asia or Asian production, for long.  Asia, unlike the U.S., has a very long-term perspective.  It will use every opportunity of joint venture to learn everything U.S. business can teach it.  Then, Asia will stretch its muscles, stand on its own feet, and go it alone.
 
This is not bad news for those of us who understand that we are on the threshold of a new post-infotech era.  Exhilirating opportunities aboud for us to move beyond the commodity game:  While continuing to manage traditional business efficiently, we have the opportunity to reshape the future.  Every business can create a unique offering immensely more valuable to its customers than any commodity available.  We have saturated our customers with material choices, but their starvation for a more "spiritual" satisfaction and sense of well-being represents the biggest business opportunity of our time.  Our society has built superb structures to provide people with a degree of material security, but their dignity is assaulted a thousand times a day. Our spirits crave a sense of meaning, and our souls erode in pursuit of the very consumerism that oils the wheels of business. American business needs to recover the soul it has lost so that it does not also lose its edge.
 
For this to happen, business leaders and managers need to expand into five new paradigms:

1. Radically re-engineer your understanding of the term "value."  Value is no longer defined only by price, convenience, and quality, but also by the degree to which the transaction satisfies people's deeper emotional and spiritual needs too.
2. No longer see your tangible product or service as the end product, but rather as a vehicle upon which to offer a much more valuable (and lower-cost) intangible product:  the true human dignity of your customer.
3. Your tangible product, its price, and its features appeal to your customers' minds.  Your brand should captivate their hearts, but only your intangible product nourishes their souls.
4. Your business process creates your tangible product, but it is your business culture that will create and deliver your intangible product.
5. Authentic culture is non-replicable and will deliver more value than inauthentic advertising and sloganeering.

The authenticity of our business values is now as crucial to our business success as the effectiveness of strategy and the efficiency of our process.  Valuing customers as dignified human beings, and not merely as buyers of products and services, cannot be faked.  It requires authentic values and a sterling business culture.

Many current business practices inhibit the experience of genuine human dignity.  At best, these practices improve standards of efficiency and convenience, but they leave nothing for one company to differentiate itself from another.  As with individuals, companies of tomorrow will differentiate themselves not only by products and processes, but rather with their intellect, culture, and values.

The companies who reshape the future and dominate it will be those who develop complex new human skills, deeper multi-cultural understanding, and a far higher prioritizing of human values and people's spiritual aspirations as the center stage of their strategic thinking.