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Global Competitiveness

If the confidence of U.S. CEOs hadn’t been sufficiently shaken by the recession and the collapse of the credit markets, …

If the confidence of U.S. CEOs hadn’t been sufficiently shaken by the recession and the collapse of the credit markets, the 2010 Global Competitiveness rankings by the World Economic Forum undoubtedly hit home. The U.S. tumbled from second place to fourth, a year after Switzerland had knocked it from first. but take heart: While the U.S. score was battered by government debt and the overall macroeconomic outlook, it scored high on efficiency of labor markets, innovation and higher education, which shows promise for the future.

“What is happening in terms of America’s competitiveness in the world is both a problem and an opportunity,” noted Margery Kraus, CEO of APCO Worldwide, who, with Cerberus Capital Management CEO Robert Nardelli and Monsanto CEO Hugh Grant, gathered to discuss U.S. competitiveness at the CEO2CEO Summit.

The 2011 Most “Free” Economies
The U.S. dropped to No. 9 in The Heritage Foundation’s ranking of “free” economies.
COUNTRY

Switzerland

Sweden
Singapore
United States
Germany
Japan
Finland
Netherlands
Denmark
Canada

RANK

1

2
3
4
5
6
7
8
9
10

Source: World Economic Forum, “The Global Competitiveness Report 2010-2011″

To be sure, U.S. companies have significant challenges to overcome. For one, leaders will have to do better at understanding other business cultures—and jettisoning their arrogance—to truly become “glocal.” They’ll need to demonstrate the sustainability of their business models to compete in a world with dwindling resources, while companies from Asia and Latin America have “business models that are used to dealing with a lot more scarcity,” Kraus noted.

China, which is now focused on indigenous innovation, offers a unique threat, given the robust economic and political support enjoyed by its companies. but for U.S. companies that approach in the spirit of collaboration, China presents huge opportunity, said Nardelli of Cerberus, a $50 billion portfolio of companies. “I am very excited about being able to partner with some Chinese and state-owned enterprise organizations who want to invest in U.S. companies because they want the brand, they want the technology, they want the market access, and, most of all, they want the management skills here,” said Nardelli.

He cautioned CEOs to be open to embracing cultural diversity and partnerships rather than maintaining a confrontational posture, as well as to adopt a childlike curiosity about how they can improve their businesses, whether it’s looking at new prod-ucts in new channels expanding existing channels or product-sharing. “Sometimes we get so myopic on the cost and the contraction that we’re not willing to take a swing and take a risk on some of the topline growth through adjacencies.”

Grant added that while there are risks going into other regions—intellectual property theft being just one—CEOs who take a pragmatic approach, knowing the stakes as well as the parameters of what they’re willing to lose, can succeed. Know-how, experience and talent will be as much a differentiator as IP, he indicated “There’s a piece of this that isn’t just the recipe. It’s how you bring the ingredients together, how you produce that cake, how you present it,” said Grant, who spends a lot of time on developing the talent pipeline overseas.

“This is a great country and we should not be apologetic,” Nardelli added. “We should dig deep into the roots of what got us here and rekindle that energy and passion to go out and compete.”

The 2011 Most “Free” Economies
The U.S. dropped to No. 9 in The Heritage Foundation’s ranking of “free” economies.
THE MOST FREE

Hong Kong

SIngapore
Australia
New Zealand
Switzerland
Canada
Ireland
Denmark
United States
Bahrain

RANK

1st

2nd
3rd
4th
5th
6th
7th
8th
9th
10th

THE LEAST FREE

Timor-Leste

Iran
D.R. of Congo
Libya
Burma
Venezuela
Eritrea
Cuba
Zimbabwe
North Korea

RANK

170th

171xt
172nd
173rd
174th
175th
176th
177th
178th
179th

Source: The Heritage Foundation and The Wall Street Journal, “Index of Economic Freedom”

About C.J. Prince