It appears our national economic experiment of attempting to build
an economy on finance, services, and information, leaving such
trivialities as manufacturing to other less enlightened nations, hasn't
panned out.
Our collective economic experience of narrowly averted economic
depression got me wondering about what we do in the United States to
create wealth.
The subject isn't money. It's what you can buy with money - the
total amount of desirable stuff in the world, however it's distributed.
This definition disqualifies the products of financial innovation ...
derivatives, securitized debt and so on ...while including (for
example) services like dry cleaning and vacuuming my carpets, and
things like cars, toys, food, clothing, homes, jewelry, and beer.
The Anchor Steam brewery creates wealth. Chase does not.
Here's what's disturbing: The private sector, for quite a long time,
has been a minor contributor to the underlying drivers of wealth. Our
preference for free markets notwithstanding, over the past couple of
decades the federal government has done more to create the foundations
of wealth than private industry, and it's hard to find any modern
foundation of wealth that hasn't depended heavily on government-funded
innovation.
The entertainment industry might be the only U.S. industry that
creates wealth without government help. Except, of course, professional
sports teams, which consider free facilities their due.
In our own industry, an admiral invented COBOL; microprocessor
technology owes a lot to the Apollo program; and the private sector
completely ignored the entire Internet until after the Web got started.
The private sector contributed relational database management,
transaction processing, local area networking, and not a few other core
innovations.
Healthcare? New diagnostic technologies and most cures begin with
the National Institutes of Health. Agribusiness depends heavily on
public-sector research and development.
In consumer electronics, every device depends on the
microelectronics revolution that, as already noted, owes so much to
NASA; some gadgets, like GPS navigators, owe a lot more. Private sector
innovation has mattered here ... a lot ... but other than cellular
telephones relatively little has been foundational.
Then there's energy. Nuclear power began with the Manhattan project.
Those who promote fossil fuels are harvesting private sector
innovations, not from the last century but from the century that
preceded it. And just about everyone who is interested in "green"
energy expects the innovation to come from government investments - private-sector-funded energy research and development has declined steadily since the mid-1990s.
The broad trend toward leaving wealth creation to others mirrors a
long-standing business preference for investments in cost-reduction to
investments in revenue-generation. And when businesses do invest in
revenue, a lot of the investment goes to buying it through acquisitions
instead of winning it in the marketplace.
What does this have to do with you in your role as an
information-technology leader? Viewed narrowly, not much, other than
giving you one more reason to look at the world and say "tsk tsk."
After all, if your internal customers don't want to invest in
revenue-generating business projects, that isn't your concern, is it?
The answer depends on whether you accept the misbegotten notion that
you have internal customers. If you do, you can leave such niceties as
the business strategy to others, accepting the subservient roles of
execution and blame-acceptance as your proper lot in life.
Sound like fun?
The microeconomic equivalent of wealth-creation is creating value
for Real Paying Customers, one product and service at a time. This is
where revenue lives. It's also where IT's leaders should spend most of
their time and attention, because directly or indirectly, a lot of
customer value comes from information technology.
Or could, if we looked at the world from a value perspective.
Ask yourself: What are the current big trends in technology? What
are the trends waiting around the corner that you, in your role as the
company's IT leader, are best-positioned to recognize before anyone
else? Think about how your company can:
Revenue might not cure all ills, but one thing is certain.
It's way ahead of whatever is in second place.
