Week 11: Instant Gratification, In and Out of Orgs and Biases

Stanford GSB Sloan Study Notes, Week 1, Autumn quarter

The gearshift to the fall quarter was quite a big one. Going from 13 to 19 units (full schedule here) means days starting at 8am and running straight to 5pm two days a week, leaving slightly more time for prep reading and writing on others. We have been assigned to new study groups (mostly for Strategy, where we need to pick a company and country none of us are familiar with and devise the plans for their entry to that market) and generally get to hang much less with other Sloans due to differing elective schedules.

Pardon for the longest notes yet below. I guess I should become more selective as the courseload goes up? Or maybe not, if the filter remains “write down interesting stuff and aha moments only”… If there is any comfort – there are videos, again.

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China Is Larger Than Germany

“Well, duh”, you might say, but actually until recently it was not. GDP-wise that is. Based on 2007 numbers, the top economies in the world were:

  1. the US of A, $13.8 trillion
  2. Japan, $4.38 trillion
  3. China, $3.38 trillion
  4. Germany, $3.32 trillion

Media coverage around this change has a lot of interesting facts, worth reading Bloomberg and Washington Post for example:

China’s economy is 70 times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free- market reforms in 1978.

China also has a big stake in the U.S. economy, holding $652.9 billion of U.S. Treasuries.

Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations

Global interests spanning African oilfields and South American mines are encouraging China to add to its military might.

And speaking of the future. If both China and US were both to keep their average growth rates, it would take 18 years to change the top spot. However, in the ongoing recession the curves will start changing:

China is one of the few major economies that is on track to have positive GDP growth this year. Merrill Lynch calculates that China will have a GDP growth of 8 percent as compared with a 2.8 percent decline for the United States, a 1.3 percent decline for Japan and a 0.6 percent decline for the European Union.

Under these circumstances, we’re rather talking about a decade?

If you are interested in this power play, I recommend reading the ChinAfrica post from last summer. Or even just see the foreign exchange reserves graph from there.


ChinAfrica

I very rarely have found myself spending several hours on a single magazine article, but Richard Behar‘s report on China in Africa from June issue of FastCompany is very much worth you invest that time too.

This illustration probably recaps the “what” part of the story:

The Race for Raw Materials

In a word, the chair you sit on and the computer you’re using to read this post more likely than not come from China, no surprise there. What we probably have noticed less as a trend as consumers is that the basic components for making these things, from timber to cadmium, increasingly get shipped to China from Africa.

But what is much more revealing, interesting and depressing in the same time is the “how”.

Post colonial times Europe and the US have kept investing in Africa attaching a lot of soft values to the cold hard cash as conditions: human rights, transparency, saving the environment, democratic values, public education, whatnot. (There is a lot of hypocrisy involved in that too – read part 5 on the US in Equatorial Guinea) Changing whole African societies towards this “western thinking” has slowed the inflow and efficiency of these investments down, feeding in many cases the NGO-s of the donor more than the target countries.

And now imagine that enters a player with a different valueset (communism!) and priorities (feed a double-digit economic growth of a billion+ citizens) and willingness to compromise (bribes, the Earth) … and with a wallet like this:

Beijing's Leverage

This report on what China has done in Africa over just 5 years should give you some food for thought on how the world will look like over next 50. Read it..


Possibility of Innovation In a (not The) Valley

Thomas L. Friedman wrote in the Herald Tribune a few years ago a column that acknowledged, and probably injected a lot of self confidence to innovators outside of the usual suspect American hightech hubs. Written from an angle of criticism towards the American high school system, I found his text much more useful read upside down – thinking about how the more remote areas previously known for their cheap labour and mass quantity low tech production are winning share on the global innovation arena. “In a flat world people can now innovate without having to emigrate,” as Friedman put it in rhyme.

Now in one of the recent issues of FastCompany, Richard Florida took a look back and found that the innovation world has not gone flat afterall. Highly recommended read as a whole, but I picked out a few interesting facts for myself:

  • Of the roughly 170,000 patents granted in 2003 in the United States–which gets applications for nearly all major inventions worldwide–nearly 80% went to Americans, Japanese, and Germans. The next 10 most innovative countries–the usual suspects in Europe, plus Taiwan, South Korea, Israel, and Canada–produced another 15%. The rest of the world accounted for only 5%, with India and China responsible for just 0.4%.
  • Indian and Chinese entrepreneurs founded or cofounded roughly 30% of all Silicon Valley startups in the late 1990s, generating $20 billion in annual revenue and about 70,000 jobs.
  • There are about 150 million (!) people in highly mobile, global creative class who migrate freely among the world’s leading cities–places such as London, New York, Paris, Tokyo, Hong Kong, Singapore, Chicago, Los Angeles, and San Francisco

What Friedman originally called for as producing a comprehensive U.S. response – encompassing immigration, intellectual property law and educational policy – is more valid than ever in this situation… but maybe even more so for the “receding valleys between spikes” as described by Florida. Umm… like Estonia?


私は東京を愛する!

A few more people
Spent a few days in Tokyo. Finally. This place is now officially number #1 in my World Cities toplist. And frankly – I was sort of expecting (or hoping?) this to happen.
The Skype Developer event I was attending there was a huge success with great turnout of interesting partners. Everything else in the counted few days before and after was just mind-blowing. I need to have the thoughts and emotions settle a bit to blog anything sensible. Until then, you have to live with the photoset.
My special thanks go out to German customs who were so happy to see me back in Europe that they decided to welcome me with some extra taxes + a 350 EUR fine, because tumbling off a 12 hour flight I did not voluntarily land in the red customs corridor while I had a certain new gadget in my bag with purchase value exceeding 175 EUR. Did you know that this extremely low threshold is applicable to “all other items not listed explicitly like alcohol and tobacco” in whole EU? I do now. Hier, nehmen Sie meine Kreditkarte.