by Kenneth Rudich
It was 1982 when I initially realized the U.S. economy was on the brink of taking a sharp turn, one that would forever change its trajectory.
The evidence was seemingly everywhere. Already the nation was littered with shuttered factories as unskilled manufacturing jobs were moving abroad to take advantage of cheaper labor. Legions of other companies were struggling too, and they either were in the midst of a massive restructuring to become lean, or they were being dismantled and sold off in pieces. Unemployment steadily crept upward during all this, and the mood of the country in general was something akin to bereavement.
Across the Pacific, meanwhile, the Asian economy was taking root and starting to simmer. As people gazed in that direction they were transfixed by what they saw. For the first time in recent memory the U.S. was about to take a backseat, economically speaking, to Japan. It truly was uncharted territory.
I was working on an MBA at the time, and I remember being told the U.S. was transitioning from a manufacturing-based economy to a services-based economy, from producing tangible goods to intangible products. This was heartening news because it insinuated the currently bad situation was only temporary, that the economy would rebound after a bit of correction, return to an even keel, and then go galloping on as if nothing had ever happened.
But the reassurance of that explanation didn’t last. A few days later, after listening to another economist describe the same circumstance as moving from an economy built on bedrock to one being built on quicksand, I began to recognize it wasn’t as simple as merely shifting from tangible to intangible products. That was only part of it, and a relatively small part at that. Something bigger yet was at hand. And though I didn’t fully understand exactly what, I do remember my intuition telling me he had just said something extremely insightful. From there, it always stuck with me.
Thirty more years of watching the economy twist and turn has since given me the perspective of hindsight. I now get what that economist was trying to say back then and, none too surprisingly, it remains as relevant today as ever – in fact, even more so.
You see, it wasn’t about whether the economy was manufacturing-based, or services-based, or anything else-based for that matter. Nor was it about the fate of the U.S. economy alone. Rather, it was about the new reality of having to deal with unprecedented competition and the impact it would have on the lifecycles of products or services.
In the next post, “The Complexity of Delivering Value,” I delve more deeply into how this change has added a great deal of complexity to the task of consistently delivering value across time.