In yesterday’s post I asked what is the next breakthrough? The prevailing idea in my mind for months is green technologies. A few breakthroughs in that area of energy will turn the world on its head. My reasoning is that until this happens the US economy will not really grow effectively again. As we are seeing now, the last growth period was really a growth of the upper class and a slight shrinking of the middle class economy.
But my vision is too narrow. There are billions of people now that have entrepreneurship concepts as their base. These same people also have no ties to current infrastructure establishments. They get to skip the foundational technologies and ride on the backs of others who are trying to lower the cost of the purchase and implementation in the first place. And it doesn’t matter where any of this is located. What is important now is the knowledge and application of that knowledge.
In the current issue of the New Yorker (1-28-08), James Surowiecki writes about Tata Motors. Tata Motors is part of the Tata Group; a company in India. This company has risen to high levels of success by selling to their people. The US didn’t really help build this company except for some consulting services. But what is important is that this company built themselves by meeting the needs of their own people and western companies didn’t beat them to it.
As we see a downturn in the US economy, companies like Tata Group are flush with cash to buy in. But they aren’t buying in necessarily to get into the US market like US companies do when they make a global acquisition. They are buying in to get the expertise that they lack. Once they get that know how, they can serve their current base even better and at higher margins than they did before. The return on their investments with US companies is simply gravy.