Background
I believe most of you who are reading this note has already heard the terms of Effective and Efficient. You occasionally heard that in school, workplace, TV, etc. But how many of you know the real meaning of those words? What is effective anyway? What is efficient? And what are the main distinctions of those two delightful words?
I initially got the real meaning of those two words during my undergraduate study in Bandung. To put it simple, here are the main differences:
Effective – Do the right things
Efficient – Doing things right
These words are two common and relevant terms in any kind of organization; spanning from big to small, government to private, intra-school organization to political party, manufacturing-based to natural resource/agricultural-based. Every organization wants to be effective and efficient in a way they do things, simply said: no pain-in-the-ass. Hence, achieving their main objective would not be any hassle.
Effective and Efficient in Broader Context
Tonight, unlike any other night, I suddenly got an interesting thought. What if I use the analogy of doing things effectively and efficiently into what I am doing right now in life? As a human being, of course I want to make a meaningful life (come on, we live this life only once right? Even if you believe in reincarnation, your memory will eventually be erased just like how C-3PO and R2-D2 forgot who their maker/Anakin Skywalker is). To ensure it has a meaning, we need objectives to be achieved. To make sure it could be achieved in certain period of time, we need to make a plan for it. And since our time in this life is limited, we need to make it MORE EFFECTIVE and MORE EFFICIENT.
CMIIW, but to me it all makes sense and sounds logically correct =)
So, after the WHAT, let us discuss the HOW.
Effective: To do what you love
The magic words are: DO THE RIGHT THINGS. In my current business, I need to ensure that in everything that I do, I am doing something that needs to be done. Since the objective is maximizing the profit from the chickens being produced and sold, then everything I do should refers back to that objective. If what I do hinders me to do so, then I should reconsider taking a step back and reviewing whether I am doing the right things.
In life, I believe it is no different. The objective is a meaningful life. To make it meaningful, we need passion. And to be passionate, we need love. Simply ‘do what we love’ (or to some people ‘love what you do’). If something that we do is not within our scope of passion, then, again you need to take a step back and reconsider whether you are already doing the RIGHT THING for your life.
Efficient: Doing what you love in a most “cost-effective” manner
After knowing what we are going to do, we are facing a culprit by the name of CONSTRAINT. As a mere human being, we have limitation. Just like a company who has due date limit in closing their account payable or limited resource to acquire an asset, people also have lots of limitation. We can not do everything that we want to do. Modern people tends to consider themselves as multi-tasker, yet they will eventually find that it will make them less productive. Hence, PRIORITIZATION is the key to overcome the barrier.
To be able to reach the optimized state of what we want to reach, we need to understand our limitation. Generally, the limitation which respectively becomes our cost is divided into two things: TIME and CAPITAL/ASSET (include money).
You may find Pareto 80:20 concept is very relevant here, doing more things with less effort. We ONLY do the most important things that contribute significantly to the end results.
Closing
Life is short, don’t waste it.
Hope you find this useful.
JW
Thursday, 20/08/09 – 12.55am
Sebuah penggalan diskusi dari FB page pengusaha nasional Sandiaga Uno mengenai:
mengapa lebih banyak orang mencari kerja daripada membuat lapangan pekerjaan.http://www.facebook.com/topic.php?topic=10543&post=61963&uid=92828041744#post61963Tentang
KENAPA? Poin yang dapat saya sampaikan sebagian besar telah dituliskan oleh teman2 di atas.
Saya akan mencoba mengarahkan jawaban saya ke
BAGAIMANA supaya lebih termotivasi menjadi Pencipta Lapangan Kerja.
Terkait dengan statement pak Sandi di atas:
"Lingkungan adalah tantangan terberat bagi seseorang yang mengalami kegagalan namun jika kita mau berpikir bahwa setiap kendala merupakan peluang usaha maka segala hambatan pasti memberikan jalan."
Berdasarkan pengalaman pribadi saya sendiri, berada pada lingkungan yang sesuai tepat sangatlah penting dalam usaha mencapai suatu tujuan. Dalam konteks ini, berada dalam lingkungan yang berorientasi wirausaha akan mendorong kita ‘beraksi’ untuk memulai usaha baik secara langsung maupun tidak langsung. Contoh
dorongan langsung dari lingkungan ini tentu saja berupa dukungan modal, relasi, ataupun kiat-kiat dalam memulai usaha. Beberapa contoh
dorongan tidak langsung yang mungkin tidak disadari oleh banyak orang adalah SEMANGAT dan PEMIKIRAN POSITIF yang dimiliki oleh orang-orang yang memang berjiwa entrepreneur/pengusaha.
Ada peribahasa yang mengatakan, “
90% of success is just by being ‘there’” atau “
If you want to change, change your mind.”
Apabila memang kita memiliki suatu tujuan menjadi pengusaha sedangkan lingkungan kita jauh dari lingkungan tersebut, membenamkan diri kita ke lingkungan tersebut dan mencurahkan segala pemikiran kita ke arah tujuan yang ingin kita capai akan mempermudah kita dalam proses. Hal-hal tersebut akan mampu mengubah pola-pola pikir kita menjadi suatu pola pikir yang mematahkan mitos yang mengatakan bahwa pengusaha hanya akan besar dari lingkungan keluarga pengusaha; mendekatkan pemikiran “Pencipta Lapangan Kerja” dan menjauhkan “Pencari Kerja”.
Silakan join di forum diskusi tersebut agar kita dapat saling memberikan manfaat.
“Jadi, jangan berpikir mau jadi entrepreneur kalau Anda tidak bisa bebas merdeka, sesederhana itu! … Kebebasan adalah jantungnya sang wiraswasta; the heart of the entrepreneur.”– Bob Sadino, Mereka Bilang Saya Gila!
On one occasion that I attended earlier this year, Ir. Ciputra mentioned that there are 3 common types of entrepreneur; entrepreneur by-nature (family background), entrepreneur by-accident, and entrepreneur by-learning. Within this writing, I am going to put focus on the last type since I consider lots of people around me (include myself) are grouped into the last one as we grew up within strong culture of conservative academic background (i.e. ITB, UI, ITS, etc.) yet have the very strong passion to start our own venture. We are type of persons who are changing or strengthening our ‘opportunity-seeking-value creating-DNA’ by exposing ourselves directly to entrepreneurial world.
It has been quite some times I gazed for an answer on what really thwart most people around me to start realizing their entrepreneurial dream. Lots of strong reasons have already been established by many successful Indonesian entrepreneurs, alas there are also counter-reacting reasons or boundaries come from within.
Taking lessons from the quote above, any person who would like to start their journey in entrepreneurial world will need to be a free-man, as independence is the heart of the entrepreneur. I need to get rid of the boundaries (batasan-batasan) that hinder me from start realizing my dream and expanding my comfort zone, so that I could really do the thing that I love (refer to:
http://jakarespati-wiradisuria.blogspot.com/2009/04/do-something-that-you-love-or-love.html ).
Excessive Fear boundary (
ketakutan yang berlebihan)
The first one, which is the most common, is the boundary that comes from the fear of failure. This will leads to the fear of making decisive action and bearing higher risk. If the fear is not being taken care thoroughly by now, I’ll definitely just say good bye to the passion of starting up my new venture. The objective of expanding our comfort zone to entrepreneurial world would be just a mere utopia in my head.
The excessive fear is also related with the perceived expectation from society/surroundings to college graduate that I am considered to be a successful alumnus if I have a steady paying career, work at huge Multi-National Company, etc; although it might not be 100% correct, but it did happen to my surroundings.
Excessive Hope boundary (
harapan yang berlebihan)
Possessing hope is fundamental when it comes to achieving something that is far beyond my current comfort zone state. This is very true since without hope there will be no passion that drive me much further to reach our end-in-mind. However, contrary to common belief where people consider hope is everything, there is a flop of having a hope, especially when the hope is considered to be excessive or too high expectation on the result/return.
The excessive hope may give negative impact on early disappointment that could make the entire entrepreneurial dream vanish prematurely.
Main lesson of this point is that by wiping excessive hope out of my mind, I could make every step of my day by day journey feels lighter and full of pleasure and happiness.
Excessive Theoretical Considerations boundary (
pertimbangan teoritis yang berlebihan)
The last boundary is the most interesting one, especially to those who gained or are getting their degrees in engineering. The beauty of having an engineering background is that I am being equipped with strong analytical skill and structured logical way of thinking. And the real beauty will shine when I am involving myself in solving any technical issue that we are expected or designed to solve.
On the other hand, that kind of beauty is actually considered to be a double-bladed knife since having too robust logical process will makes most engineer a “Mr. Know-it-all-narrow-minded person” with abundance of theoretical assumption and excessive calculated risk. At the end of the day, the beauty will fade and all we see is the old fagot with very restricted knowledge to make any significant progress in life, while other person having the luxurious of being open-minded and realizing what is really important to make progress in life.
With that particular way of thinking, I realize that I won’t be able to make any progress since all my next step will be hindered by excessive fears. Hence, “just-do-it” approach might be the only way to make me really did it…
AND IT WORKED =D
“He who can not change the very fabric of his thought will never be able to change reality, and will never, therefore, make any progress.”– Anwar El-Sadat
Change thyself. That is the main lesson learnt from the quote above which is utterly correlated with the need of acquiring independence of thought, attitude, and action. Without being open minded we won’t be able to change the way we perceived things, hence, will not be able to make any of our dream a reality.
Taken from the article of ARMA International
“Lost customer files. The inability to produce e-mail messages results in $10 million fines and a judgment of $1.4 billion. Shredding of files helps fell two giants.”
The past few years we’ve seen headline after headline detailing just how serious the management of records and information is in government and corporate settings. It has contributed to the downfall of multibillion-dollar corporations, irreparably damaged public images, and spawned far-reaching legislation and regulations that affect businesses around the world.
Yet too many executives still have a difficult time understanding how records management supports the business. Many still think of it as a backroom operation housing musty files crawling with paper mites. In reality it is a component that can make an organization into a smarter, more effective, and efficient operation.
Procter & Gamble (P&G) CEO A.G. Lafley is one of those rare executives who understands the powerful role records management plays. “Records management is important at P&G,” states Lafley. “First and foremost, it’s part of P&G’s commitment to good governance. Second, it helps ensure we have the right information available at the right time in the right place to make smart business decisions. Third, it makes us more efficient and helps keep costs low – and lower costs ensure P&G brands provide superior consumer value.”
It’s this commitment to and understanding of records management’s central role in the company’s success that has helped P&G’s records management program gain international recognition. Procter & Gamble was awarded the Iron Mountain/ARMA International Award for Excellence in Records Management for Overall Program Excellence in September 2005. This is the highest honor bestowed a records management program. The previous year, the company won the same award for Best Program Innovation.
An important element of that success is the support the program has from the top echelon of the enterprise. According to Global RRS Manager Randy Moeller, P&G’s records management program was presented to the company’s top 50 officers by the CEO and P&G’s chief legal officer. That sent a loud and clear message that P&G recognizes the key role the program plays in the company’s success, said Moeller.
In preparing its application for the coveted Iron Mountain/ARMA International Award for Excellence in Records Management, the records management team went to the top. “Even though we have great relationships with many executives, we decided to ask A.G. [Lafley] why he felt records management is important at P&G,” Moeller said. “In a thousand years we could not have come up with a better explanation.”
The three reasons cited by P&G’s CEO instantly became the program’s mission statement, and it guides their efforts every day.
“First and foremost, it's part of P&G’s commitment to good governance.” Over the last few years it seems that almost nightly the evening news has carried one story after another of governance issues at companies, with trust being one of many casualties. Maintaining trust with their consumers and shareholders has always been a part of P&G’s core beliefs. The corporate retention schedule helps in this governance issue by providing evidence that the company recognizes and follows the laws of the 80-plus countries in which it operates. The length of time they retain records is based on what is stated (if any) by law and then business needs. These laws are periodically researched to help ensure they haven’t missed anything.
Supporting the schedule and the program in general is a corporate policy that states an employee is expected to review their records against the retention schedule. This is further supported by records management questions in controlled self-assessments and internal control audits. A process has been developed where departments hold record review days and document the results, which are needed for the assessments and audits.
In another governance role, Records Management partners with the Legal and Tax groups regarding the processes for litigation and revenue issues to aid in identifying, locating, and securing needed records.
“Second, it helps ensure we have the right information available at the right time in the right place to make smart business decisions.” One way the program aids this is by the results of employees disposing of records past their retention date. Having less to look through to find something makes employees – and therefore the company – more efficient. When the retention schedule rolled out, Records Management received numerous comments on how much easier and faster it made locating and using records when needed.
One example is Records Management’s redesign of the system that manages the company’s laboratory notebooks, which are critical in supporting patents and the reapplication of gained knowledge. The result was the graduation of a handful of sites and a few thousand notebooks to 17 sites globally and 100,000 notebooks. Timely access to these records supports the research and decision-making process involved in the creation of new and improved products, enabling the company to get them into the marketplace quicker and therefore be more competitive.
Records Management has also worked with departments and their system support and implementation groups regarding records management standards for electronic records. This can range from creating, locating, and migrating records, among other issues, to ensure that records are accessible and useable when needed. The department is also working with the paradigm shift from paper to electronic records so the information they contain remains trustworthy.
“Third, it makes us more efficient and helps keep costs low – and lower costs ensure P&G brands provide superior consumer value.” The work noted within the first two statements aids in lowering internal operating costs. Whether through less hard drive, server, or file space, having less costs less and allows the worker to be more efficient. With the roll out of the retention schedule which is currently a third of the way done globally, P&G has already opened up more than $500,000 of drive space.
P&G’s effort in making existing knowledge available for reapplication by their employees avoids the costly expense of recreating this knowledge. Each day saved in launching a new or improved product, or reducing internal cost, allows products to be priced more effectively. This increases the chance of winning at the first moment of truth, which is the moment when a consumer chooses a brand while shopping.
“We have been very honored in winning the Iron Mountain/ ARMA International Award for Excellence in Records Management and I thank ARMA in providing this opportunity to share these examples of our records management program at P&G,” says Moeller. “I hope this gives others a better understanding on the impact a records management program has on an organization and encourages them to learn more.”
P&G has been named among the top five Most Admired Companies in 2006 by FORTUNE magazine and P&G ranks as the third Most Admired Company globally. Randy Moeller is the Global RRS Manager at P&G and can be reached at moeller.rj@pg.com.
Taken from the article of MIT press:
http://tech.mit.edu/V122/N44/col44basil.44c.htmlby:
Basil EnwegbaraGreat warriors had coup d’oeil in abundance. Great warriors used it to predict what the opponent would do. Alexander the Great called it his “hope,” Caesar called it his “luck,” and Napoleon called it his “star.” Coup d’oeil , literally translated as “stroke of the eye,” is the ability to assess a situation at a glance, which enabled these great leaders to look over the battlefield and take immediate advantage of the terrain and the opponents.
These great warriors, having the genius of war, looked first at the environment in which war occurred, then matched the environmental factors with personality characteristics. They knew that warfare always involved danger, physical effort, uncertainty, and change. And that is why Napoleon concluded that “if the art of war consisted merely in not taking risks, glory would be at the mercy of very mediocre talent,” and Machiavelli advised his Prince, “even when your domain was at peace, act as if it was at war.”
But who are the economic warriors of tomorrow? Are they going to come like the Barbarians, who defeated Imperial Rome? Where will their surprises come from? Or will these new players win because theirs is a battle of survival at all costs? Will their unique gifts be their great curiosity? Do they wonder why things work and what is beyond the ridge of hills? Do they have courage to go where no man has gone before? Will they have a burning desire to get new knowledge in a different way from others, and their ambition to conquer and build something different?
Prophecy, they say, is a risky business. Nobody can predict the future, including the experts. Socrates believed only an utter fool would desire to do so. Surprises and knock-out will emerge from the least expected. It happened to the British, when their great trading machine in the mid-Nineteenth Century was halted in the oil-rich Niger Delta, not by Germany or France, but by Jaja of Opobo, a former Ibo slave boy, who outsmarted Queen Victoria’s best-trained trading warriors.
Although it is true that nobody can predict the future, Lester Thurow, as one of today’s foremost thinkers, explains the forces that will shape the future. In fact, through such books as “The Zero-Sum Society,” “The Future of Capitalism,” or “Building Wealth,” he gives us the privilege of understanding tomorrow’s game rules. They are as follows:
Rule #1:
Nobody has ever become very rich by saving his money. The rich see opportunities to work and invest in situations where large disequilibriums exist. This was as true for John D. Rockefeller as it was for Bill Gates. In both cases their lifetime savings constitute a small fraction of their total wealth. Carefully saving one’s money and investing in normal equilibrium situations can make one comfortable in one’s old age but never really wealthy.
Rule #2:
Successful businesses must be willing to cannibalize themselves to save themselves. They must be willing to destroy the old while it is still successful if they wish to build the new before it is successful. If they won’t destroy themselves, others will destroy them.
Rule #3: Businesses that would grow rapidly with high profit margins must
take advantage of technological disequilibriums, exploit developmental disequilibriums, or create sociological disequilibriums. All other activities are slow-growth, low-rate-of-return commodity businesses.
Rule #4:
Understanding, recognizing, and accepting the limits imposed by their genetic weaknesses is the beginning of wisdom for all organizations. The secret of success is finding places to employ one’s resources where those weaknesses are irrelevant.
Rule #5: Humans have discovered how to operate successful capitalist economies in the midst of modest inflation, but not how to operate them in the midst of even mild deflation.
Given a choice between the same rate of inflation or deflation, take the inflation every time.
Rule #6: There are no institutional substitutes for individual entrepreneurial agents. The entrepreneur winners of the game become wealthy and powerful,
but without entrepreneurs, economies become poor and weak. The old will not exit; the new cannot enter.
Rule #7: Any society that values order above all else will not be creative,
but without the right degree of order, creativity disappears as if into a black hole.
Rule #8: The
economic payoff from social investment in basic research is as clear as anything is ever going to be in economics.
Rule #9: Knowledge-based capitalism isn’t going to work without a new system for determining who owns or controls intellectual property right.
Capitalism requires clear, easy-to-enforce ownership right.
Rule #10: The biggest unknown for the individual in a knowledge-based economy is
how to have a career in a system where there are no careers.
(where is the eleventh???)Rule #12: Economic progress and environmental progress are synonyms, not antonyms.
Rule #13:
Luck is necessary. Talent, drive, and persistence by themselves aren’t enough to get wealthy.
Even mere intelligence will not be enough. After all, Sir Isaac Newton, who could predict the motion of the heavenly planets, failed woefully as a great investor during the South Sea Bubble. Those who are in the old industrial economy educational system are only doing a great damage to those who are going to inherit the mantle in future.
It is going to be a global economy where mind games and manipulation are the stock-in-trade. Even going to the best elite management school is no longer adequate; after all, whatever is learned there is already known to many. In fact, if information technology is capable of changing the game, in this “new knowledge revolution,” the game becomes changing the game. Ergo, I make no sense.
According to what has been told by many Indonesian entrepreneurs, the nation needs at least 2% entrepreneur to develop its economy. One of the most relevant reasoning concerning the statement has already been given by Lester Thurow (MIT's management guru) as mentioned in Ciputra's Quantum Leap book:
"There are no institutional substitute for individual entrepreneurial change agents. The entrepreneur winners of the game become wealthy and powerful, but without entrepreneurs, economies become poor and weak. The old will not exit; the new can not enter."
Without new venture, there will be no regeneration in the nation's economy. Without entrepreneurs, there will be no change agent that could give significant improvement and beneficial value added to the society. We need to change and we need to make it happen, NOW.
This writing is taken from an article written by Brad Sugars (February 25, 2009). May you find the content beneficial to you and your surroundings.
Regardless of what people around you (including the media) may say, right now is the best time to get into business. Just go back and look at the economic slowdowns throughout history. Most recessions in the post-World War II era last an average of 10 months, followed by growth cycles that last an average of 50 months.
What this means for the startup is there's no better time than right now to get going and start pursuing your business dreams--in anticipation of the next period of growth.
So with a nod to David Letterman, here are my top 10 reasons you should start your business now--despite the current downturn:
1- Everything is cheaper - Let's face it: There is great value right now in this and in world markets. This is the right time for fantastic deals in virtually every category, from land and equipment to commercial office space, personnel and labor. As asset prices have been knocked down, there is no better time to get into the real estate or financial markets, or even heavy equipment and construction. Some people have waited years to find value in these markets--and now that time has come.
2- You can hire more and better-qualified people - In an era when even Microsoft is laying off, you can find great resources at affordable rates. Thinking about getting your high-tech startup off the ground? There are plenty of engineers waiting to be hired. Thinking about forming a professional services firm? There are many accountants and attorneys looking for their next opportunity.
3- People are looking to change suppliers - From a cost perspective, everything is on the table for most companies. Even if your prices are higher, if you can come in with greater value, you have a good chance at winning new business. You also have the advantage of being the new kid on the block when it comes to pitching your products and services. Many companies are desperate to find new partnerships with new companies that have a different, better or more innovative way of delivering those products and services.
4- Ownership equals tax incentives - Business ownership offers a variety of tax benefits that aren't available to employees. While taxes should never be the sole reason to go into business for yourself, it should be one reason to add to you "benefits of business ownership" list.
5- Family and friends don't want to (or can't) invest more money into the stock or real estate markets - That means they may be willing to finance a portion of your new venture, or the expansion of an enterprise that has proven itself over time. The main benefit is that they know you and have a relationship with you--and if you have a solid business plan that delivers real numbers, your chances of raising the capital you need increase exponentially.
6- Suppliers are giving better credit - Because the credit markets have virtually shut down, the B2B credit flows are keeping money circulating out of sheer necessity. That means a bullish outlook for companies looking for good terms on stock and/or inventories. The main advantage is that all parties have more incentive than ever for finding true win-win situations that allow for cash and stock flow. When everyone is looking to survive, great deals can be had.
7- You can get good PR by showing you are going against the trend - The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your "alternative" view of the market.
8- You can buy everything you need at auction - In addition to everything being less expensive, you can find great deals at auctions, especially in terms of any large equipment and office furnishings. Auctions are also a great place to find hardly used or "gently" used restaurant and bar supplies at great prices. These days, you may even be able to get deals on fleets of vehicles and trucks for a delivery service or hauling or construction company.
9- You can find great "low money" or "no money" down deals - This is simply being aware of good opportunities others have buggered up, and finding deals where you could get an entire business simply by taking over a lease (along with all the equipment). Many business owners want out at any cost, meaning you can negotiate great win-win deals that allow the current owners an escape while giving you an opportunity to turn around what could be, if run right, a very viable business.
10- You've lost your job, and you have to do something - Sometimes, the best business decision is the one you are forced into, and the incentive (as well as need) for income is often enough to push those previously "on the fence" to strike out on their own. There's nothing wrong with being in this position; it simply means there is greater urgency to do something that will start to generate income as quickly as possible.
There you have it: Brad Sugars' top 10 reasons to start your business in a recession. After all, the odds are on your side that the expansion will be many times more robust than the present slowdown.
There's no better time to start than the present, especially if people around you are more comfortable with their own list of reasons why they shouldn't start pursuing their own business dreams right now. It only means you'll be facing a lot less competition.
"A dream is just a dream. A goal is a dream with a plan and a deadline" -Unknown
"If you can't see the world, and you can't see the interactions that are shaping the world, you surely cannot strategize about the world. You need a strategy for how to choose prosperity for your country or company."-Thomas L. Friedman
Today, almost every newspaper, TV news, or web-based news like Yahoo-news talks about Israeli savage attack towards Palestinian people in Gaza Strip (jalur Gaza). From the same means, they also share the news about the current rate of your stock in NASDAQ or KOSPI. At one moment they talk about how world leaders gather to discuss about world climate, while on the other moment, you could see another story about corruption suspicions to some Government official in some remote town of Sulawesi. You check fashion TV you could see the lifestyle of those European young jetsetters wearing the “oh-so-luxurious” Versace, Dolce & Gabbana, or Louis Vuitton brands on their holiday to some exotic islands, and at almost the same time when you check BBC, you may see another story about children that is struggling for food and shelter in the remote area of Bangladesh. Furthermore, if we look for news or stories in “google”, we could practically look for almost anything in this world (that’s why people said that “google” knows men darkest secret MUCH better than their wife or their mom =p).
What is this phenomenon? This is what people call as GLOBALIZATION. I believe many of you have already heard, talked, or read about globalization. But what globalization really is?? Is it a situation where we could send Blackberry messenger to friends in other part of the globe anytime and anywhere? Or is it the situation where you could buy the stock of some sugar-cane company from Brazil during your personal leave in Lombok while watching TV which is telling you that Thailand has new Prime minister? Those things are true examples of globalization, but that not just it. Globalization, in the context of basic concept, is much broader than that.
This note is basically a shorter and much simpler FIRST chapter of “The Lexus and the Olive Tree” which explain about what globalization is with some personal analysis at the end of the note. The intention is to give another perspective of Globalization as an additional insight to establish a strong-rooted knowledge to position ourselves (and even further, our organization/our company/our nation) in this fast-changing global world.
SEEING THE SYSTEM
To see the system as a whole, Friedman divided the system understanding into 7 parts: how the system differs with previous one (The New System), how to understand it completely (Information Arbitrage), the human aspect (The Lexus and the Olive Tree), the component that support globalization (…And the Wall is Tumbling Down), the impact of the change/democratization (Microchip Immune Deficiencies Syndrome), how each of the nation adjust to Globalization system (The Golden Straitjacket), and the last one is about how the system controls the world market (The Electronic Herd).
1- The New System
I believe many of you still remember (or at least know) the moment when Berlin wall fell in December 9th, 1989. That particular moment is the symbolic ending for the Cold War era, the era where everything is about the balance between United States and U.S.S.R. (Russian Federation/Uni Soviet). But not so many people realize that it is also a symbolic moment of the reign of new era, or post-Cold War era that we now call Globalization.
The Globalization era that we currently are in is a whole new era with a totally new system. Each system has its own characteristic. To give the sense of the situation, here’s how Cold War era see their world. The idea of Cold War is basically the dispute between capitalism and communism in grand scale, which in turns divided the world into three “camps”: the communist camp, the Western camp, and the neutral camp (which we knew by the name of “KTT non-blok”). While for globalization, integration is its main feature. To compare with Cold War, Globalization is defined as unstoppable integration of markets, nation-states, and technologies to the degrees that many people who used to live in the previous era would never think about. It enables individuals, corporations, and nation-states to reach the world in a farther, faster, cheaper way and vice versa.
In economic figure, here’s the different. In 1975, at the moment of Cold War, only 8% of countries worldwide have liberal free-market capital regime with total foreign direct investment “only” $23 billions. By 1997, the number of the countries increased to 28% with total foreign direct investment of $644 billions according to World Bank.
In terms of technologies, here are the characteristics:
- Cold War --> Nuclear weapons and 2nd Industrial Revolution
- Globalization --> Computerization, miniaturization, digitization, satellite communication, fiber optics, and the Internet
The Cold War was about Einstein e=mc^2 equation, while Globalization revolves around Moore’s law which states that the computing power of silicon chips will double every 18-24 months while the price is ½. In the Cold War, they asked, “Whose side are you on?” or “How big is your missile”; in Globalization the question would be, “To what extent are you connected to everyone?” or “How fast is your modem?”
In Globalization, the system consists of 3 balances. The first one is the traditional nation-state balance with US as current single superpower nation (we’ll see the stability post current Global Crisis). The second one is the balance between nation-state and Global Market. Thomas L. Friedman define global market as a market made of millions of investors who move money around the world which later being called as “the Electronic Herd”. They gather in places like Wall Street, Hong Kong, London, and Frankfurt which later defined as “the Supermarkets.” The impact created by the work of the Electronic Herd and the Supermarkets are massive. One of the examples that are stated in the book is about the down fall of Soeharto in Indonesia during crisis in 1997. According to the writer’s analysis, “the Supermarkets” play significant role (not to mention about the riot and political situation at the moment) in ousting Soeharto from his throne by support (investment) withdrawal from Indonesian economy. The last one is the balance between individual and nation-state. This is where globalization could really make difference where a super-empowered individual could stand their chance to act on the world unmediated by any state. One perfect example would be Osama bin Laden who made US spent billions of dollars just to “eliminate” him. The other one was Jody Williams who got Peace Nobel to ban the utilization of land mine in 1997 by organizing 1000 human rights group in six continents using only E-mail!!
2- Information Arbitrage
Taken from the market term of “arbitrage” where you simultaneously buying and selling securities, commodities, or foreign exchange in different markets to profit from unequal prices and information. The term is being used as a way to get complete understanding of globalization. Since Globalization is a complex system where walls between countries, markets, etc have been blown away, arbitraging six dimensions of politics, culture, national security, financial, technology, and environmental would be a compelling way to get the whole stories. Or in much simple manner; be a globalist. This could be done by assigning different weights to different perspective at different time in different situations, without losing the conscious that all the interactions define the current international affairs.
To see the system from a global perspective, or being a globalist, is the only way to systematically connect the dots, see the system of globalization, and order the chaos.
3- The Lexus and the Olive Tree
You might be wondering, what on earth is the connection between Lexus and Olive tree (pohon Zaitun)? Or why is it become the title of the book? The answer is: humankind. To understand the system completely, we need to include men and women into the analysis with all their unique characteristics and way of thinking.
The writer inspired to use this kind of analogy after he paid a visit to Lexus car factory outside Toyota City, south of Tokyo in 1992. He was so amazed by the technological advancement made by the Japanese in producing such luxurious car. Almost all the process is made by robots and human only do the quality control process (which is a cutting-edge technology at that time). However, when he went back to Tokyo on a bullet train, he read the International Herald Tribune and caught a story about controversial interpretation of US State Department spokeswoman concerning 1948 United Nations resolution regarding the right of return for Palestinian refugees to Israel. The misinterpretation really disturbs both the Arabs and Israelis and created uproar in the Middle East.
These are the symbols of humankind post-Cold War era. Half of the world came to the surface and build better “Lexus”, while the other half still fight over “who owns which olives tree”.
The Lexus represents the willingness of humankind to achieve nourishment, improvement, prosperity, and modernization in today’s world. In globalization context, it plays on the field such as global markets, financial institutions, computer technologies, advance military technology, etc. The Lexus represents anything that improves the living standard to another level.
On the other side, The Olive Tree represents anything that roots us, anchors us, identifies us, and locates us in this world. It could be anything, from family, community, religion, tribe, nation, or even our small home back in home town. The Olive Tree is something that makes us feels ‘human’, and in much simpler manner, we usually call it by the term of “sense of belonging”. The Olive Tree is something that makes our life even more complete. Basically, it is human "basic need" fulfillment.
What is really interesting about this analogy, it is not only splitting the world into “The Lexus” nation and “The Olive Tree” nation, but we can also see the analogy within a nation, or even within one self.Relevant examples are as follows:
- The French Airbus launch the stunning A-380 which brought world aviation industry to another level, while on the other side Palestinian and Israeli still struggling for a place they called “holy land”.
- A GPS device implemented in Gulf Air flight so it could always give Muslim passenger to know which way is Mecca (Kiblat) since compass is not reliable on certain altitude.
- There are so many luxurious shopping malls built in Jakarta, e.g. Grand Indonesia as a symbol of prosperous and property development in Indonesia, yet there are still so many preman/gangster members in Tanah Abang that is fight over another just to claim that one market area are theirs.
- A man who is pursuing his dream to become a successful person in his business to a global level with the intention so that some day he could develop his home town in the remote town in West Java.
4- … And the Walls Came Tumbling Down
When the Berlin wall tumbled down which implied the raise of new reign, there are actually three other “wall” that had been broken down, or in this context, democratized to support globalization.
The Democratization of Technology
The keyword of this concept is “digitization” and “globalizes production”. Democratization of Technology was smartly defined by former NBC News President Lawrence Grossman which mentioned that, “Printing made us all readers. Xeroxing (copiers) made us all publishers. Television made us all viewers. Digitization made us all broadcasters.” This kind of democratization is something that made country like Thailand could compete versus Detroit, US in producing pick-up trucks.
Beyond the things mentioned above, digitization also made outsourcing business model possible. For example, I remembered when I involved in some ITB student projects with PT. Dirgantara Indonesia in 2005; they mentioned about Airbus use an outsource business model to build the smaller components of A-380. They widespread the project to the world for the intention of cutting cost, especially labor. The digitization process makes the process of the work much easier, e.g. data/blueprint transfer via e-mail, audio/teleconference technology between each related party to cut expensive travel budget, etc.
The Democratization of Financial
This kind of democratization really altered the way we ‘invest’. It actually began in late 1960s with the emergence of “commercial paper” market. Previously it was really undemocratic since all underwriting for any investment only done by commercial bank, investment bank, and insurance company which at the moment tend to be risk-aversive and really not responsive to any change or need in marketplace.
Nowadays, without the necessity of further explanation, financial market has created so many breakthroughs whether it is for good or bad sake that made so many financial instrument options available for almost every people.
The Democratization of Information
The simplest way to explain this kind of democratization is using the simple phrase of “INTERNET”. It became the cutting-edge technology that enable almost every people (that connects to the web) gain access and get so many information that is being uploaded. And since the world has use the digitization process for so many purposes in our daily lives, almost all aspects of our lives are being there, you just need to utilize the search engine like Google or Yahoo, basically it went to the extent of “you name it, I got it”.
Even further, popular broadcasting site like Youtube or social networking site like Facebook has been utilized to leverage the latest 2008 US Presidential candidacy process.
The combinations of all those three, again, are essential components that support the globalized world that we know nowadays. To relate the concept with current world affairs, these democratizations also became some sort of means between world leaders to benchmark how they perform between each other in terms of politics, economics, cultural, and technological development. Not only world leaders, people nowadays could also get a lot more information concerning their country and other countries in the world in the in way much liberated manner compare to the Cold War era where information sharing and technology transfer were a ‘luxurious’ thing to have. At the end of the day, these democratizations will evolve and created the ‘fourth democratization’ which will be explained in the next section.
5- Microchip Immune Defficiency
Friedman creates a definition of a disease or syndrome that could affect any country or company that fail to adapt to changes brought by the democratization of technology, finance, and information – which create a more open and complex, yet efficient marketplace – by the name of Microchip Immune Deficiency Syndrome (MIDS).
The examples of the infected country and corporate to MIDS are Uni Soviet and IBM. In a world without “walls”, they lost their touch to their ‘customers’ and can not keeping up the pace in the marketplace. MIDS also infecting the state-directed economies in ASEAN like Indonesia, Malaysia, and Thailand which made the economic crisis in late 90’s felt so impactful.
Now let’s look into this detail. If you are a person who has your own PC, phone line, high-speed modem, Internet connection, credit card account, color printer, Website, and Fed-ex delivery account, you could start so many businesses just by sitting in your home in front of your computer, from consulting service, web-designer, newspaper, on-line retail outlet, or even an trader of traditional Batik clothes. In fact, there are already so many businesses that gain success from this kind of basic information technology and financial utilization. This is a current world phenomenon where any nation, any company, or anybody who are able to adapt and really make use of the three democratizations will definitely make production and economics much more efficient. Imagine if the example is being analogized in corporate or country level.
This collaborative utilization of these three democratizations evolves into the fourth democratization. which implied become the cure of MIDS. We call it by The Democratization of Decision-making and Information flows, and The Deconcentration of Power.
6- The Golden Straitjacket
This “jacket” is a coat that is popularized by British Prime Minister Margaret Thatcher in 1979 and US president Ronald Reagan in 1980. In the Cold War, different people have so different wardrobe to wear on, name it the Mao suit, the Nehru jacket, the Russian fur, or the Nazi uniform. Globalization has only the golden Straitjacket. It became global fashion once the three democratizations blew away all the alternative fashions. Thatcher and Reagan combined were being the one who responsible for stripping economic decision-making power from the state, from the advocate of the Great Society, and from the traditional Keynesian economics, and hand it over to free market.
It’s been said that to fit into Golden Straitjacket, a country must either adopt, or be seen as moving toward the rules: “making the private sector the primary engine of its economic growth, maintaining a low rate of inflation and price stability, shrinking the size of its state bureaucracy, maintaining as close to a balanced budget as possible, if not a surplus, eliminating and lowering tariffs on imported goods, removing restrictions on foreign investment, getting rid of quotas and domestic monopolies, increasing exports, privatizing state-owned industries and utilities, deregulating capital markets, making its currency convertible, opening its industries, stock and bond markets to direct foreign ownership and investment, deregulating its economy to promote as much domestic competition as possible, eliminating government corruption, subsidies and kickbacks as much as possible, opening its banking and telecommunications systems to private ownership and competition and allowing its citizens to choose from an array of competing pension options and foreign-run pension and mutual funds.” Sewing all of these pieces together, puff, the Golden Straitjacket it is! (some people might say, this is a major capitalism).
The Golden Straitjacket, whether this is a good concept or a bad one, you are the one to tell, but one thing for sure, it leads to growing economy and shrinking politics. That’s why so many arguments occurred today in developing country over minor tailoring changes in the Golden Straitjacket, not radical intervention. Here’s what is stated by Friedman: “Not every country puts on the Golden Straitjacket all the way - some just go part way or a little at a time (India, Egypt). Some put it on and take it off (Malaysia, Russia). Some try to tailor it to their specific culture and wear a few of the buttons unfastened (Germany, Japan and France). Some think they can resist its pinch altogether because they have a natural resource such as oil (Iran, Saudi Arabia). And some are so poor and isolated, with a government able to force people to accept being poor, that they can get away with dressing their people not in a Golden Straitjacket, but in a plain old straitjacket (North Korea, Cuba, Sudan, and Afghanistan). But over time, this Golden Straitjacket is becoming harder and harder for countries to avoid.”
Another interesting quote from the writer: “If you want to resist these changes; that is your business. And it should be your business. But if you think that you can resist these changes without paying an increasingly steep price, without building an increasingly high wall and without falling behind increasingly fast, then you are deluding yourself." Here is the reason why. The democratization of technology, finance, and information also gave birth to a new power source that is called by Friedman by the name of the Electronic Herd. Common people call it ‘Global Market’. We could say that The Electronics Herd loves The Golden Straitjacket since it embodied all the liberal free-market rules the herd want to see in the country.
The interaction between the Electronic Herd, the Golden Straitjacket, and the nation-states made the system what we called by globalization system nowadays. Moody’s Investor Service, Duff & Phelps Credit Rating Co. and Standard & Poor’s (S&P) are the guard dog for the Electronic Herd. They bark when they indicate any country is slipping out of the Golden Straitjacket. One example was the situation in mid 90’s when Canada’s Parliament had debate with a team from Moody’s. They just visited Ottawa and read the riot act to the Canadian Finance Ministry and legislators. The team mentioned if they didn’t get their deficit-to-GDP ratio in line with the international norm and expectation (since Canada become vulnerable due to the volatile sentiment of global market – foreign debt far bigger than size of economy), the Canada triple-A credit rating would be downgraded. Therefore, it implied higher interest rate to borrow abroad for Canada and every Canadian company.
What the hell is the Electronic Herd anyway? Why does it sound so terrifying that many nation-states could be enriched or intimidated by its work? The answer is in the next section.
7- The Electronic Herd (to be continued... )
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Second part of the note which will explain about how the system of globalization works will be published soon. One of the most interesting and also very important to note in this current world is being stated there: THE GOLDEN ARCHES THEORY OF CONFLICT PREVENTION.
Again, the writing is just to add one perspective for our mind to enter the global world. Whether you are a pro- or con- to globalization, that is not the issue here. At the end of the day, it all comes back to each of our own perspective.
So please, whenever and wherever we make any writing, discussion, or anything that has so much complexity and many dimensions, always remember this quote:
"A mind is like a parachute. It works best when it is opened" -Unknown
Inspired to write the summary after playing a game by the title of "Sid Meyer's Civilization"and thanks to Natacha Lucon for recommending me this great book.
