Technology and the global economy
When teaching in Asia last month, I told students that in this global economy, technology is the driving force for everything. Regardless types of business, all companies need to use technology to increase efficiency and profits. It is no longer enough for companies to have good products or services but every company must grow quickly, else it will be eliminated. And the only way to grow fast is to increase its responsiveness to the market by building better relationship with its customers. All of these things involve having the ability to use technology to collect information about the market, the competitors and the customers.
A student asked: “But I do not see it happens in my country. Things are slow here; business is the same as usual. Nobody think about the global economy or even knows what it is. Why do we need to learn something that does not apply to us?” I explained: “Change is happening at different pace; some countries are slow to adapt and some are faster. But it will happen, so you can learn it now or wait until things happen then learn it. You can be the leaders or the followers and that is your choice. The same thing will also happen in business. Companies that are quick to use technology will have advantage over the slow ones as they will become leader in the business, seize opportunities and capture the market. In this global economy, it is not big companies that win but small companies who are flexible and change faster will win. As technology students, do you want to work for fast growing company or established big company? If you can go back to the past with your knowledge now, do you want to work for Apple or IBM? Do you want to work for Google or Microsoft? Do you want to work for Facebook or Yahoo? As students, you can should forward and learn something and knowing that your skills will be needed by the time you graduate or you can wait until companies are looking for certain skills then learn them later. Since you know what already happened in other countries, what skills are needed there so it is just a matter of time, it will happen in your country. You can seize the opportunity or you can wait, it is your choice.”
A student asked: “But why do companies need to grow? Why can they just doing what they have been doing well? I explained: “In this global economy, competition is fierce. If a company does not grow fast, others will catch up and competition will be fierce. Let us look at Amazon, it starts as a small company that sell books on line then it sells music, CDs and DVDs. In the beginning most physical books stores do not pay attention to Amazon, as they do not see the competition. A bookstore owner said: “People prefer to go to bookstores to look around and buy whatever they like. No one go online to buy books.” However, within ten years, Amazon has grown into a giant bookstore and put most physical bookstores out of business. Today people around the world are buying books from Amazon and it is predicted that most physical bookstores will disappear within the next ten years. Of course, Amazon can stay with just selling books and CDs, DVDs but the owner, Jeff Bezos has bigger vision. From a small bookstore company, he has expanded it into a global “Selling everything store” that completely changed the way people in the world shops. Currently Amazon employs more than 165,000 workers and makes about $90 billion dollars in 2014. If he only sells books and CDs, he probably makes less than a billion dollars a year. The company is the largest online retailer in the U.S. where it sell everything from electronics, TV, computers to clothing, furniture, food, toys and jewelry. Amazon is expanding to the UK, Ireland, France, Canada, Germany, Italy, Spain, Australia, Brazil, Japan, India, and China. Wherever it goes, physical retail stores are closing, as most cannot compete with this giant store. Amazon is not just expanding the retail business; it also produces devices such as Kindle e-book readers, Fire tablets, Fire TV and Fire Phone. It does not just stop there, as Amazon is now the world's largest provider of cloud computing services where it makes more than $5 billion dollars a year. And it is still growing into other new businesses. Do you know what distinguish Amazon from other online retails stores? The heart of Amazon's business is the big data analytic engine where it collects data from customers, knowing what they want, and offer products or services that meet customers' needs. Today Amazon is NOT a retail company anymore but it has transformed into a giant technology company where its business does well because it knows what customers want because customers is its top priority. Amazon invests in all types of technology, because it is the key strategy of everything it does. Even in the beginning, Amazon recognizes the important of technology as the key driver of its business and that is why the company is so successful. Currently Amazon is testing the delivery of products to customers by drones, which is faster than the post office. It also considers getting into the aerospace business of putting satellites in space and building spaceship in the near future. One Wall Street analyst wrote: “Nothing can stop this company to move forward. It has the vision, the technology, the knowledge, the skills, and the money to do whatever it wants. This is the model for company to do business in this information age.”
Today technology is the essence of the global economy. Almost everything is driven by technology. Forty years ago Apple was a small personal computer company but today it is the largest company in the world, bigger, better and richer than all the oil companies like Exxon or British Petroleum. A Wall Street analyst explained: “The time of investment in natural resource companies is over. Today it is technology where investors must pay attention. Because asset is no longer natural resources but knowledge. Soon cars will be self-driven, mostly robots will operate manufacturing and energy will come from the sun. The war for land and natural resources that happened during most of the 19th and 20th century has changed into the talent war where countries steal skilled workers from others. People may not see it clearly yet, but if they pay more attention, they should see that new wars are happening on a daily basis: The immigration of talented people who left their own countries for better jobs elsewhere and the cyber wars where countries are stealing technologies from others. Company owners must understand that technology is the key factor and quickly adapt it or facing the risk of being eliminated from the market. A senior executive declared: “Be ready to change as it is inevitable. Regardless what business you are in, change is happening fast. The old way of doing business does not work in this global economy. You can change now in order to survive or wait your turn to close your business.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
