Today I attended Professor Michael E. Porter’s lecture, The Looming Challenge to U.S. Competitiveness. Professor Porter is the Bishop William Lawrence University Professor at the Harvard Business School. Professor Porter spoke about the core foundations of what U.S. businesses should do to restore US competitiveness. Although his lecture dealt specifically with U.S. competitiveness, Professor Porter emphasized that the ideas he shared had application in any country. Here is my summary of the lecture.
What is competitiveness?
A country is competitive to the extent that firms operating there can compete successfully in the global economy while supporting high and rising living standards for the average citizen. A competitive location produces prosperity for both companies and citizens. Competitiveness is not a zero-sum game.
First and foremost, managers must run their operations well, vigorously pursuing productivity and profitability within the rules set by society. In part, this means positioning country-based activities to draw on unique country strengths. Running country operations well does not always mean staying at home. Going overseas often improves a country’s competitiveness by allowing the company to better penetrate foreign markets through better customer support, adapting products to local needs, and more efficient logistics.
Build the commons and the business
By narrowly thinking about the potential impact of their communities on their own success, many companies overlook the opportunity to build the environment in the communities where they operate, or the “commons.” Local conditions are critical for a company’s productivity and growth. Partnering with educational institutions, providing curricular guidance and mentoring to ensure that schools produce graduates the companies would love to hire and supporting the supply chain through enterprise development are examples of companies investing in the commons.
Reign in self-interest
Stop self-interested actions that weaken the commons. Self-interest efforts by one company makes others feel they must do the same. Examples of self-interest include seeking special permits, tax breaks or regulatory exceptions. These actions distort competition and raise regulatory complexity.