Difference between revisions of "Scenario 4 - Empire with Walls"

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''''''<br>
==Overview==
It is 2010 and the world is still battling to recover from the global recession. Most western economies are battling several financial challenges that are occurring simultaneously; deficits, trade imbalances, rising unemployment, company fold-ups and bail outs. At the same time emerging economies like Brazil, China and India are expanding with previous year growth for China at almost 10%. With the suspected likelihood of a second global recession, developed countries establish new regulations, some out of desperation with globalization taking a back seat. Governments intervene in society to provide bailouts for companies, implement tighter financial regulations to prevent another recession and take greater roles in other areas that used to be less government interventionist i.e. the U.S. exercising greater control on health care reforms is being viewed by many as more socialist that capitalist. <br>
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of the smaller companies are resistant to acquisition, breeding more of collaboration and joint ventures between these companies than straight-out acquisitions. This creates an opportunity for the rising global companies to explore business opportunities in the developed world and the developing world. to draw the best of what the world has to offer in face of global financial challenges.<br>
<b>5 words define this world:</b><br>
The stifling economic climate and , beaming the searchlight on the African continent as the new hub of economic activity. Several countries on the continent have begun discovering new natural deposit resources but lack the technical expertise and knowledge to extract and refine these
* Collaborative Innovation<br>
The new opportunities on the African continent and the effect of the financial crisis on companies influence a change in approach on innovation; innovation is now approached from a cost perspective with investment based on expected profit and several cost-cutting measures are put in place. The continuous decline of lack of financial assets by companies also influence this change in approach because new investment opportunities in Africa and research programs on the development of new ideas requires funding which most companies do not have. Raising funds from external forces do not work as banks are still not loan friendly, and consumers have become spendthrift and with society gradually evolving to a saving culture.<br>
* Government participation <br>
The increase in activities like exploration, manufacturing, production, refining and construction leads to a rise in pollution levels round the world, especially in regions where regulation is lax like Asia and Africa. Regulatory authorities in the West enact stricter measures on emerging markets to comply with carbon emissions regulation, with penalties to be applied on exports from those countries through increased import tariffs. Although the concern is genuine, the approach is viewed by some as an opportunity to ensure survival and competitiveness for Western corporations.
* Enviornmental Regulations <br>
* Sustainability <br>
* High Investment <br>
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'''2030''' - The global economy has experienced major transformations over the last 20 years. The BRIC (Brazil, Russia, India and China) have become mainstay economies rivalling western traditionalists and have produced some of the largest multinationals in the world. Initially deemed as threats to the likes of Apple and Google, they now operate on the same competitive platform as these companies and both sides of the divide share mutual interest in the protection of intellectual property, as a means to their eternal survival. <br>


Innovation is controlled by a walled empire of a few Multinationals that survived the last global recession, through acquisitions, mergers and joint ventures. We now live in a business world where companies are protected by the strictly applied rules of IP compliance. <br>


Countries and organizations that violate such laws are heavily fined and sometimes suspended from operations for one year. Smart individuals who possess ideas that can be implemented as disruptive technologies are by these companies so they retain the rights to such ideas. The same thing applies to forums and platforms for idea sharing. Individuals that are found to be guilty of IP theft are prosecuted, fined and sometimes jailed. <br>
The eastern companies discover a loophole in the new carbon emission regulation and exploit it. Apparently, the regulation only covers companies that export to the West not companies that produce, manufacture and sell in other market economies. To bypass this, the companies set up joint ventures in these markets, subsidiaries and partnership with local entities and continue with their investment and expansion activities. The strategy allows them to establish operations in such markets faster and with less bureaucratic challenges, allowing them to easily utilize on existing supply chain/distribution channels without spending to create new ones. With a reputation for offering affordable pricing, consumers in these markets gradually shift loyalty from the traditional Western providers, to the emerging players. Ghana, Uganda, Sudan, Rwanda, Kenya, Nigeria and South Africa are amongst the many countries experiencing massive investment and growth opportunities influenced by companies like Bharti Airtel, Tata, Godrej group, CNPC and Industrial & Commercial Bank of China. These economies begin to benefit from the inflow of investment through employment and increased productivity and thus begins a burgeoning middle class and upper middle class. As these benefits continue, governments in these markets implement strict financial laws to ensure economic sustainability for their country but the growing needs (basic) of the populace means environmental regulation is still lax.<br>
operations, focussing on their core speciality. The survivalist thinking also sees IP as sacred and as competitive advantage through protectionism. Pressure begins to mount for stronger regulations to be implemented for IP protection for companies round the world and the need for new effective global legal framework(s). Though developing economies offers fresh investment opportunities, the lack of IP protection stills makes the region somewhat risky for some Western corporations in certain sectors i.e. technology.<br>
Even though the global economy is relatively stable, companies in the West are still struggling somewhat in business due to several factors; the advancement in living standards means an increase in life expectancy and a declining work force, reduced spending and decreasing tax revenues. People are becoming more like the Japanese and saving more because the last recession was one too many and there is an erosion of trust in their respective governments. The financial recession also gave fuel to the cries from people for sustainable ways of doing business to ensure history does not repeat itself and increased awareness on environmental protection, things that can only be driven by innovation and creativity. There is far more concern about where goods and products are manufactured and the requirements of low emissions stamps on products. This breeds a change in the demographic perception of the customer beyond traditional metrics like age, sex, location etc. It has become more about lifestyle, influences and it seems to begin a change to consumer power.<br>
There are 2 new Sheriffs in town; China (the 2nd largest economy) and India (who are on the way to becoming the 3rd largest economy). They have taken the world by storm and have become major power brokers on the both economically and politically. Their corporations rival the Western traditionalists and half of the Fortune 500-listed emerging companies are from both countries alone. They have established themselves on strategic locations around the globe particularly in developing regions like Africa, Asia and South America. The penetration strategy is a bundle of low cost and customized innovation specific to the societal challenges in these operating environments. They do not present pre-conditions to doing business and do not interfere with domestic politics although their actions influence local policy decisions. They bring a lot of technical expertise, knowledge and skills which is acquired overtime by the local workforce through employment opportunities, training programmes and trade-free zone management established by these companies, thus establishing a transfer of knowledge process. The continent benefits from economic and infrastructural development and skill growth. However, this success has also becomes a threat; the invasion of the deputies.<br>
The deputies are rising players from other emerging markets like Indonesia, Russia, Malaysia, South Korea, Brazil and Chile. They bring with them everything that China and India have to offer but with a difference; lower cost, more opportunities for local start-ups and employment. The original emerging players have become global empires and smart innovation, strategic thinking, knowledge provision and the creation of a multinational workforce of brilliant minds and creative personnel, some of them from the local population.  They are now large hierarchical organizations with a huge workforce some of whom seek bigger career opportunities or the possibility of starting their own companies through joint-ventures or partnerships. The to these potential employees because of the knowledge and expertise they have acquired working with the Chinese companies. Operating in regions with lax laws on IP protection, they present a threat to the new players. It is difficult for the Chinese companies to seek individual assurances of IP protection from the different governments, because of the various local interests involved in bringing some of these companies into the region, to exploit the vast opportunity that abound.<br>
Rising emissions and environmental pollution become by-results of the torrential economic activity and development, and has caught the attention of the International community. Consumer groups and environmentalists put pressure on International regulators and Western government to clamp down on countries violating emissions compliance. The influence of these groups have increased in the last decade, as there is more awareness and concern over their source and increased clamour for companies to take absolute responsibility for the end-to-end supply chain process.  International regulators implement measures to force compliance from these regions from the new Multinationals to local businesses that are and have established business relationships with the developed countries. The policies range from penalties and fines levied on the government aid and donor packages to high tariff and outright ban on products exported from these regions. Though not very effective in the first decade especially on Chinese companies, the threats of IP violation by smaller but fast emerging entities force China to make a re-think and corporate more in environmental control.<br>
The International pressures placed on the governments in developing countries to curb emissions levels and the threat of fines, disruptive tariffs and outright bans on exports leads to local demonstrations supporting the calls. The environmental degradation suffered in these countries has given rise to local demonstrations by environmentalists and consumer groups established through an International network, to raise public awareness on these issues. The old GATT agreement for IP compliance is being reviewed to amend loopholes previously explored by its members. The government is under pressure and begin to design strict local laws for companies to abide by in terms of environmental protection. Countries who are quick to respond are those still dependent on International aid whose with high debt balances with the develop countries. <br>


<br>
These Global Organizations have tapped into the full commercial potential of emerging and developing markets by mastering the complexity of global value chains, rethinking value propositions, globalizing research and development, tailoring talent management and managing risks. This has ensured their success in the area of innovation and more guarantees to the quality of goods produced and the equitable distribution of such goods between the various markets. <br>
Governments from the East and West discuss forming regional organizations and new policies to enforce IP emissions compliance. The of the to fight IP violators encroaching into their economic territories and the Developed countries want them to apply procedures that promote sustainability and focus more on developing innovative methods of doing business without exploiting natural resources. Local businesses in countries that are yet to cut down on emission levels have had most of with high tariff rates making them unattractive in the selling market. The governments of these countries have been issued huge fines and had selected aid programs withdrawn, except for essentials like education and food. The Chinese and Indian companies are reluctant to fill the funding gaps because of their battle with IP violations, and they need the support of the International community to guarantee their protection.<br>
 
==2010 - 2015==
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In the beginning of 2011, the emotion across the world markets was gloomy. The second dip had hit the market and the fear was that Japanese episode of deflation and continued recession will recreate itself in the developed world. Governments in USA and EU were struggling to get the economy back on track. When the focus of the governments was on reviving the economy, on the other hand, the world was facing climate change disasters which were getting stronger year on year. To curb emissions. The Chinese government was disposing its vast reserves of dollars in return of investments all around the globe and yuan was appreciating steadily. China was transforming itself from low cost manufacturer to global innovation test bed. The innovation in Chinese companies was focussed on re-engineering products to cut costs and finding novel ways to manage supply chain. Meanwhile, the governments in US and European countries were discussing and debating the new reforms and regulation that needed to be put in place for sustainable economic growth in future. After heated debates and protests by banking heavyweights, the governments in the developed world initiated re-regulation of the financial markets, demerging of huge banks into its specialized components of retail banking, merchant banking and securities. The taxation laws and accounting rules were altered to clamp down on tax havens and transfer mispricing. This was reforming movement in the business models of financial institution. <br>
 
 
==2015 - 2020==
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The recession was long over. The beginning of a new era was marked with stable financial market and a healthy business environment for slow yet stable growth. But the oil prices were rising steadily without any future hope of stabilizing. The fact that the peak oil was closing in, which could lead to another wave of instability in the global market, was a growing cause of sleepless nights for many. New companies in the field of alternate energy had emerged in the due course and the existing energy giants were investing heavily in innovation of new fuels for the future generation. Governments contributed by ensuring the availability of infrastructure for these companies. In many countries, governments led the initiative of installing new alternate energy industry like wind, solar, nuclear, biofuels etc. The problem of nuclear waste dumping was solved by a collaborative effort of nuclear power plant companies combining their expertise together along with government funded research institutes participating in this effort and also ensuring that the environmental and safety norms are strictly followed. The collaborative effort was due to the common goal of the industry to find a resolution for waste dumping that had slowed its growth for past many decades.<br>
The digital advancements like cloud computing revolutionized access to resources and helped companies accelerate innovation. The introduction of [http://www.memristor.org memristor] technology was all set to change the fate of computing and communication industry. The memristor would shrink the size of all memory and computing devices after the chip makers hit the glass ceiling with traditional transistor technology. It was also two times more power efficient and was likely to improve further. The technology invented by HP in 2008 was later opened to the industry for R&D. The current technology was saturated and memristor offered a solution for sustainable and revolutionizing future. The memristor technology could be copied easily by competitors in future and hence it was in the best interest of HP, the industry, and the society at large if the technology was developed in collaboration. Hence, the research was conducted jointly by all the major competing players in an industry collaborating to tap the enormous potential of the technology that would be one of the biggest leaps in the digital revolution. The collaborative innovation revolution widened the playing field for innovation in other industries and was vital for going green.<br>
Parallely, the intensity of natural disasters were increasing continuously. The governments and organizations were geared to take a big step in combating the effects of climate change by investing in development of innovative technology that helped reduce emissions. <br>
 
 
==2020 - 2025==
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The beginning of 2021 was marked by the historic Shanghai protocol that was meant to succeed Kyoto protocol. The new protocol was developed and approved to be implemented by all [http://unfccc.int/2860.php UNFCCC] countries. The protocol incorporated ambitious agenda for carbon emissions and environment conservation that was required to be rolled out in the next 5 years by all the member states. The first ones to act as a result were the multi-national organizations since the guidelines were being rolled out in many countries that these organizations operated in. They also had resources and expertise to build the action plan for future compliance. The strict environmental regulations required inventing new ways of conducting business. The time-line was sufficient yet challenging. There was consensus between mega companies about collaborative innovation since every company going through the same process by itself without a guarantee of being successful at the end of 5 years was not ideal. The combined expertise of mega corporations working towards the same goal was a more promising and viable option which was exercised within many industries. The new environmental regulations were however a bane for many small industries who did not have the resources and expertise to transform the way they conduct business. This created an upheaval within the business society in many countries.<br>
The catalyst in the quest to sustainability and compliance was provided by advancement in digital technology such as evolution of smarter way of conducting business through cloud computing, use of [http://www.elsevierscitech.com/emails/physics/The_present_and_the_future_of_spintronics.pdf spintronics] technology, evolution of smarter grids and most importantly memristor that was taking the generation beyond transistors. <br>
 
==2025 - 2030==
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The world was going green! The Shanghai protocol was being implemented throughout the UNFCCC member states. The time line provided of 5 years to comply with the environmental regulations was over and it was time for the litmus test. The collaborative innovation initiatives within many industries were a great success. However, there were many organizations formed by companies who failed to achieve the desired results. The failure was attributed to too many loud voices within the organization. The non-compliant companies were either asked to shut down or pay fines till they adhered to the environmental norms. The revenues generated by these penalties were partially diverted for welfare of climate change refugees and partially to further invest in innovative products or processes that were focussed towards sustainability. Companies over the years had realized that even if the capital expenditure to adopt sustainable business process were sometimes high, in the long run the reduction in operational expenditure benefited the balance sheets. <br>
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The regional organizations form a stronger consolidated pressure force for compliance by the concerned governments and companies. The local governments start to give in and enact policies to force carbon emission levels and IP protection, applicable to both local and international businesses. Only the strongest of the new deputies survive under his new policy regime, some through political support and others through a strong financial base that allows them attract some of the smart people in the bigger companies. Their plan is to build a small multitude of brilliant minds that will leverage on the creativity and experience they bring, to someday blindside the large corporations by launching a form of disruptive technology that will not only gain market share, but threaten the existing status quo.
The somewhat vanquished threat of new deputies and a fresh regime of IP protection laws leaves the Eastern Beasts comfortable to continue with business, only now with a strong (or forced) sense of social responsibility and regard for environmental concerns.  Their approach to innovation borders on using sustainable technology to provide incremental improvements on existing products and established technology already live in the market, and they do this by staying close their clients and being proactive is creating future needs based on current challenges. This allows them maintain a strong hold on their territories and make create some sort of entry barrier for new players. They ensure the core of their creative talent pool is retained no matter the means, because of the need to maintain their competitive advantage and thereby build a tall-walled empire. <br>
The period of consolidation leaves the Western hemisphere with few global empires/big brands that have vertically integrated their operations, empires resulting from acquisitions, mergers and the collapse of non-performing corporations.  They have become financial stable, extremely wealthy with a vast range of assets and can begin to influence issues at the level they used to before the global meltdown. The smart acquisition strategy has left them with an international pool of brilliant minds and untapped ideas through which they can begin to power the innovation drive and regain lost market share. Towards the end of 2025, an embryonic level of collaboration between these companies on innovation and sustainability slowly begins to occur; there is now a sense of the need for high level partnerships and Government (s) support in areas of tax breaks for companies who re-focus on innovation aggressively and strict implementation of IP policies worldwide to ensure competitive advantage.


[[Future of Innovation Main Page]]
[[Future of Innovation Main Page]]

Revision as of 16:02, 10 September 2010

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