Connectography: A Growing Force for Driving Opportunity
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Episode 68 Transcript:
Chris Curran: Growth Igniters Radio with Pam Harper and Scott Harper− Episode 68: Connectography, a Growing Force For Driving Opportunity.
This episode is brought to you by Business Advancement Incorporated − enabling successful leaders and companies to accelerate to their next level of success. On the web at BusinessAdvance.com. And now, here’s Pam and Scott.
Pam Harper: Thanks, Chris. I’m Pam Harper, Founding Partner and CEO of Business Advancement Incorporated. And right across from me is my husband and business partner, Scott Harper. Hi, Scott.
Scott Harper: Hi, Pam. It is always a pleasure to join you for yet another episode of Growth Igniters Radio. As you know, our purpose is to spark new insights, inspiration, and immediately useful ideas of visionary leaders like you − and your company − to accelerate to your next level of success. So Pam, what’s our focus for today?
Pam Harper: Redefining what’s possible to change the game for us, our companies, and our industries − in this case, through the growing force of what our guest today calls “connectography.”
This is something that has been getting a lot of attention in the media, and it has tremendous strategic and practical implications for businesses of every size, in every industry. It impacts everything from defining our markets and customers, and the products and services we offer, to the jobs we create and the employees we hire. The more we understand about the opportunity, the better decisions we can make on the journey from big idea to big results.
Scott Harper: Connectivity is a really big thing, and it’s getting bigger.
Pam Harper: Absolutely. That is why we are pleased to be speaking today with Parag Khanna, a leading global strategist, world traveler, and bestselling author of numerous books. His latest bestselling book, published in 2016, is Connectography: Mapping the Future of Global Civilization.
Now, among Parag’s many accomplishments − which I’ve condensed a bit here − is that he is a CNN Global Contributor and Senior Research fellow in the Center on Asia and Globalization at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is also the managing partner of Hybrid Reality, a boutique geo-strategic advisory firm, and co-founder and CEO of Factotum, a leading content branding agency. In 2008, Parag was named one of Esquire’s 75 Most Influential People of the 21st Century and featured in Wired Magazine’s Smart List.
He has been a fellow at the New America Foundation and Brookings Institution, advised the US National Intelligence Council, and worked in Iraq and Afghanistan as a senior geo-political advisor to US special operations forces.
Parag holds undergraduate and graduate degrees from the School of Foreign Service at Georgetown University and a PhD from the London School of Economics. He serves on numerous governmental and corporate advisory boards, and is a counselor of the American Geographical Society, a trustee of the New Cities Foundation, and a young global leader of the World Economic Forum.
His articles have appeared in major international publications such as the Wall Street Journal, Financial Times, Washington Post, Harvard Business Review, and so many more. He appears frequently in a variety of media around the world such as BBC, CNBC, NPR, and other international broadcasters. He is also an active blogger and was host of Interview on MTV from 2008 to 2009. And perhaps many of you caught his Ted Talk, which was in February of this year − also Ted Global in 2009, and he was a guest host of Ted Global in 2012.
Scott Harper: All right! Well, that’s all the time we have for today. Thanks, Parag… [laughter]
Pam Harper: Parag, welcome to Growth Igniters Radio.
Parag Khanna: Thank you so much, Pam and Scott. It’s great to be with you.
Pam Harper: Yes, we are so glad you can join us. This book of yours is fascinating; the concept is fascinating. Tell us a bit about the story. What inspired you to write it?
Parag Khanna: This is actually the completion of a trilogy of books about the future of world order, of globalization. Really this fits into the globalization genre, and I am particularly motivated to have published it right now because you have a lot of anti-globalization kinds of movements, whether it is in our politics where politicians want to put up borders, or whether it is negative perceptions about the fate of the world economy where people are saying that things are slowing down, capital is retrenching, these kinds of things. Whereas, the fact − and this is something that I have tried to demonstrate over the course of all three of these books − is that globalization is an ever-expanding process, so much so that this connectivity that embodies it is really wrapping the whole world.
I had to coin a new word, “connectography,” to actually capture the extent to which connectivity has triumphed over many of the forces of nationalism and of boundaries.
Scott Harper: “Connectography” − new word. What is the meaning of that, and the implication?
Parag Khanna: Yes; that is a great question. Connectivity − we tend to think of as just digital connectivity, life, the internet, and mobile phones − but in fact, connectivity is all these categories of infrastructures like transportation, roads and railways, energy, pipelines, and electricity grids, and then also communications like internet cables and so forth. Communications infrastructure is really just the third layer in this century’s long process of building greater and greater infrastructural connectivity all over the world, and linking all of the major economic centers of the world together into this grid, if you will − a matrix really, I would call it − of these dynamic, thriving cities that are driving the entire world economy.
When you look at the world from that point of view, not from the standpoint of how are commodities markets doing today, what are interest rates in the US, what is the growth rate right now, but instead look at this big picture, you would find enormous reasons to be optimistic.
Scott Harper: You have a huge web of not only communication − and digital communication, which is new − you have people moving, you have goods moving all over the place, back and forth. It’s mind-boggling. How can business leaders wrap their heads around this and really get a handle on what the opportunities, as well as the challenges, are?
Parag Khanna: Right. The number one thing is to appreciate that just because markets may be slow in one place or the US − recovery may be slow, which of course it is − that does not mean that the rest of the world is necessarily operating in lock step. We are accustomed to thinking of ourselves, in the US, as the consumer of last resort, the driver of monetary policy, and so forth.
Some of that is still true, but when it comes to consumption and the growth of the global middle class, that is happening all over the world, and particularly in Asia. If you are not exposed to those growth markets or the trade across those markets − the trade between China and Africa has grown by 1800% in the last 15 years − you may be lulled into thinking these are just going to be tough and slow times. The problem is, that means that you are just not sufficiently connected to where the flows are happening, where the business is happening, where the transactions are happening.
Companies have to truly be more global today if they want to capture the markets. Indeed, most of the Fortune 500 now earns more revenue from abroad than from within the United States, so clearly companies are realizing that there are no substitutes for being a global company.
Pam Harper: In fact, every company really is a global company, when you stop and think about it. Even the smallest firms are connected through the Internet. They source their materials through the Internet, and so on. There is no way to not be a global company.
Scott Harper: We outsource projects ourselves, outside the US. We have colleagues outside the US. In fact, one of our most interesting projects was in China, and we actually, physically, never left the United States, but we did the work in China.
Pam Harper: It’s true.
Scott Harper: It’s a huge web.
Pam Harper: It is true. Of course, as you mentioned before, it’s an election year in the US. There are a lot of people on both sides of the spectrum who are somewhat against global trade, to put it mildly. But you are still optimistic about connectivity, correct?
Parag Khanna: Without a doubt. Again, there are the short-term blips and the long-term trends. By the way, there is a lot of statistical slight of hand. You will hear economists say that there is a deceleration of trade growth, right? That is a fancy way of saying that things are, in fact, still growing, they are just not growing at the astronomical rates that they were before, right?
The same can be said about the Chinese economy. You can phrase it in such a way that there is going to be a hard landing and a crash. That is not at all what is happening of course, because in reality, when China reaches a GDP that is almost as large as the United States, of course it cannot continue to grow at that tremendous pace. However, when you are adding 5% to an 18 trillion dollar economy every year, you are still adding several hundred billions of dollars a year to the world economy. You may not be adding 600 billion dollars, but you are still adding 400 billion dollars a year to the world economy. It is really unfortunate that people do not see the big picture and the enormous potential in further integrating the world economy.
Pam Harper: We are here to bring out some of these issues, for sure. We are going to take a quick break. When we come back, we will speak more with Parag Khanna, author of Connectography, about misconceptions, and opportunities that our growing connectivity presents. Stay with us…
Scott Harper: You are listening to Growth Igniters Radio with Pam Harper and Scott Harper, brought to you by Business Advancement Incorporated on the web at BusinessAdvance.com. We enable visionary leaders and their companies to accelerate to their next level of growth and success. And just a reminder − check out our show notes at GrowthIgnitersRadio.com, episode 68. You can download resources for today’s conversation, download Parag Khanna’s bio, and you can share on social media so that more people can find us. You can also sign up for our weekly alert of upcoming episodes, so you’ll always be up-to-date.
Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper − that’s me − and Scott Harper. Scott and I are talking today with Parag Khanna, author of the book Connectography, about the challenges and constraints posed by the explosion of global connectivity. Parag, how can people find you?
Parag Khanna: Like most people, I am an online citizen as well as a global citizen, so online is always the best place − www.ParagKhanna.com. I am travelling every single day, basically, whether in the United States or in the world. I am one of the chief beneficiaries of this growing connectivity in which we can almost get between any two major cities in the world on a non-stop flight. I operate globally all of the time.
Pam Harper: You can also go to GrowthIgnitersRadio.com, episode 68. Scroll down under “Resources,” and you’ll find links.
Let’s go back to the conversation. We were talking about some of the misconceptions that people have about connectivity. Let’s talk about this; what is the biggest misconception that people have that you’d like to set straight?
Parag Khanna: The biggest misconception is that it is a zero sum game, right? That one person’s gain or one economy’s gain is another’s loss. That is not the way connectivity works. We have 250 years of data and multiple Nobel prizes in economics awarded to research that shows very clearly that the reason the world economy has grown at all beyond the one percent or zero percent growth of the previous 2000 years, was because we began to trade with each other, because we began to build infrastructural connectivity, because we began to optimize land, labor, capital, and production.
Today when people think of globalization as zero-sum, when they think of it only in terms of “We lost 5000 jobs from this plant to China. We lost 10000 jobs from this plant to Mexico,” they are not understanding, as painful as that is − and I acknowledge that. However, not all of us are farmers the way we were hundreds of years ago either. We are evolving, and globalization is part of that evolution. It creates a lot more opportunities than it creates harm. That’s the biggest misconception − is to blame globalization for small sorts of consequences, rather than appreciating the utilitarian and overall benefits to society as a whole.
Scott Harper: Agreed completely; however, the thing is though, that if I am suffering because something has happened to my company − they have outsourced, they have gone out of business − I am suffering or my company is not doing as well as it used to. What are some of the major opportunities that people can leverage through connectivity that can remedy some of that real − some of those real issues, that are not necessarily being fully recognized and realized today?
Parag Khanna: Sure; I’ll give you some real examples. First of all, it’s about people. This is a story about people. The economy is about people. Our society is about people. People move. People move in search of opportunity all of the time. We now have 300 million people living outside of their country of origin. In fact, 9 million Americans live outside of America − the greatest number than ever before. People have to be willing to move where the jobs are, move to the thriving cities. The American history is the story of a population that is re-sorting itself in search of opportunity. The westward migrations, the gold rush, escaping the dust bowl in the great depression… the growing and swelling populations of Texas and the Southwest are all people moving in search of opportunity.
Being mobile is very important. Being near big cities. Big cities are thriving places that are much more resilient to financial crisis or to export collapses as we have experienced recently, so being near cities, being mobile are extremely important.
For businesses, using the Internet and e-commerce to serve customers around the world [is a huge advantage]. The percentage of international sales on e-commerce for Americans − American businesses that use e-commerce − has grown into double digits. For many businesses on eBay today, 25 or 30% of their sales will be international. Without those really good logistics and other kinds of networks that connect us to the rest of the world, those businesses would not be well off the way they are today.
Pam Harper: We tend not to realize all of the things that go into the business, and these are the hidden opportunities in a sense, aren’t they?
Parag Khanna: Without a doubt. Again, the more investments that we, as a society or as a government, are making in connectivity, the better. Right now, in our political discussions, we are barely skimming the surface of the deep issues.
For example, the National Infrastructure Bank is an idea that Congress has been playing with for ten years. Of course, it should have implemented it twenty years ago. We have not actually done it yet. Just one other example of the kinds of systems that we have to overhaul internally so that we can be more efficient, more productive, and more competitive.
Pam Harper: We’re seeing a lot of different things that are rising up, almost it seems, in isolation − like bit coin, for example. That comes up, and there is something else over here. What I hear you saying is that there is a lot more to connecting all of this when people can actually see it and understand it, and see how it all works together, more people − and that is where the real opportunity is.
Parag Khanna: Yes, and I certainly wish, not only that more people saw it, but of course that our politicians would explain things better. Because they mostly just focus on those populations in the states that have a lot of delegates like Ohio, and so forth, where there has been job loss due to outsourcing. But they do not explain how the other factories that are thriving, and the businesses that are surging in technology and services, are benefiting from the fact that by exporting jobs or by investing in foreign countries, you help those people earn more money, have higher salaries, and join the middle class… and therefore consume more American goods. There is an absolutely demonstrable and enormous net benefit to America’s investments overseas. What I just said only took fifteen seconds; I don’t know why our politicians can’t say the same things.
Pam Harper: That is an interesting point. It sounds like there have to be so many more conversations that take place, that have not been happening between business leaders, between business leaders and politicians. Obviously there are many, but the right ones have to come up so that people are seeing that opportunity, and hey are not threatened.
Parag Khanna: Remember that ten years ago, fifteen years ago even − when all advanced Western societies were witnessing jobs being outsourced and rising competition from Asia, some of them − like Germany or Switzerland or South Korea − they did something about it. They said, “You know what? Let’s get our companies to team up with universities and with vocational schools to train workers in new areas of the economy that are higher skilled, that cannot be outsourced just yet. Let’s figure out how to support those industries through federal programs, and let’s really boost our export competitiveness.”
Other countries did do that. We, in this country, are pretending like everyone is in the same boat, but that is not true. We have been dropping the ball on this issue for almost fifteen years.
Scott Harper: It’s a real opportunity.
Pam Harper: Exactly. And we’re going to talk more about what we can do to leverage that opportunity, but we are going to take another quick break right now. And when we come back, we will talk more with Parag Khanna, author of Connectography. Stay with us.
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Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper and Scott Harper. Over the last two segments, Scott and I have been talking with Parag Khanna, author of the book Connectography, about the growing force of connectivity, and the opportunities that it presents.
Parag, can you tell us again how people can find your book?
Parag Khanna: Absolutely. I am on Amazon right now with Connectography: Mapping the Future of Global Civilization. There are lots of order options on my website, www.ParagKhanna.com.
Pam Harper: Okay. This is the part of Growth Igniters Radio where we talk about immediately useful ideas, because our listeners are travelling all over the world. They are connected. We want to help them to take advantage of the opportunities that you are talking about.
Let’s start out by, for example, strategically… what could somebody do with the issue of developing a new market.
Scott Harper: Something immediate and practical − right now.
Pam Harper: Right. What would you suggest?
Parag Khanna: Right. That’s a great question, a great place to start. A lot of people find it daunting to operate in a place like China or India. What they need to understand − and this is something that I flesh out at great length in my work − is to think about cities. You need to look at cities − and this is data that you can find on your computer or in my book, without having to travel or invest in that sort of market development just yet − but understand what your business is and how it relates to these huge growth markets around the world, and then look at the cities.
What are the best performing cities in those countries? That is where you need to be. What I map out in the book is the fifty major mega-cities, demographic hubs, economic drivers around the world. Not just in North America, but in all continents, and those are going to be the major economic hubs for literally the next 25 to 30 years. If you want to really plan ahead for your global expansion, you need to be looking at that map and saying, “What are the cities that I can comfortably get to and start to explore opportunities and joint ventures, collaborations, sales, exports, marketing, and so forth.” That is really the best way to start − is to pick the right city.
Scott Harper: The key to expanding any business anywhere is really tapping into unmet customer needs. For instance, I’m a company in Minnesota − I identify a city somewhere else, in a different country. How do I understand what needs are not being met there that I can actually fulfill?
Parag Khanna: Generally speaking, what is happening in emerging markets is that they are urbanizing very quickly, but their infrastructure is very poor. There’s an enormous need for architecture, for design, for buildings, for construction, but there’s also a huge need for digital, right? Mobile services, telephony, apps… you know.
All of the technology stuff and digital connectivity, and then a huge need for services. Poor quality education, poor quality health care… all of these nuts and bolts and basics and consumer goods are needed. The reason consumer goods companies are thriving, even in downturns, is − take Proctor & Gamble and Unilever − is because these are things that people absolutely must spend on… the staple items. You find that as people urbanize, they finally get the chance to invest in these basics and lead a decent quality of life. Companies that provide those basics around the world are doing extremely well right now.
Pam Harper: That sounds like a lot of opportunity. Now, going along with that, obviously we have supply chains that we’re looking at expanding. We are part of a supply chain, and also managing that supply chain, where are the opportunities there?
Parag Khanna: Yes, well I view the world as being fundamentally reorganized away from nations and borders, towards infrastructure and supply chains. To me, supply and demand is the most powerful principle in the history of the world. I actually use that principle throughout the book to explain just about everything that is happening in the world today is driven by supply and demand. The demand is growing so quickly in these emerging markets where the populations are so large, and people are urbanizing, and there is a great need for labor productivity. Participating in the supply chain − servicing the supply chain − just getting into and operating and owning a link of the supply chain in an emerging market, is hugely profitable.
Logistics companies are another example I mentioned. Previously sectors like telecommunications and infrastructure, logistics is massively growing in these countries for exactly the same reasons.
Pam Harper: What is also interesting in your book, is that you talk at length about how we really need to have a better understanding of our supply chain, and as our companies and the companies we depend upon are outsourcing themselves, you just don’t know where some of the materials that go into what you are eating come from or what you are making. Can you talk a little bit about that? Something that you can immediately do to get a better understanding?
Scott Harper: How can we not only understand our suppliers, but their suppliers as well?
Parag Khanna: Absolutely − and that was a great set of questions. This was a very intriguing area to investigate in my research, to look at how the more you trace a supply chain, the more you realize that everything is made everywhere. Just about anything… goods and services, has a conceptual phase, a design phase, a prototyping phase, a production phase, a distribution phase, a sales phase, and an after sales services phase, and so on, and so on. That applies to goods and services, and you find that there is a global dimension to every one of those things, so tracing a supply chain becomes increasingly complicated. It even becomes a moral issue, because we have found that there are minerals from North Korea in Hewlett-Packard laptops. That is not supposed to happen from a legal standpoint, but it does. We found that with the collapse of a garment factory in Bangladesh several years ago, that major Western retail brands like Zara and H&M, and others, were having some of their clothing made there.
I think there is, again, a huge opportunity here, because we have tried for decades to reform and to improve, and to modernize countries through the World Bank and the United Nations and multi-lateral kinds of structures, but those do not penetrate countries the way supply chains do. Improving the governance of the supply chain, improving the standards of the supply chain, the labor codes, the environmental protections and so forth, that is how you actually wind up affecting real lives for billions of people, actually.
Pam Harper: This is a really important piece to understand and to commit to understanding to start out with. Now, third area is having to do with the digital workforce. I know that you talk about that quite a bit in your book.
Parag Khanna: Yes. The digital workforce is, to me, something absolutely fascinating. It is the notion that even when you do not physically move, you have this access to a real global, digital market. I look at companies like Task Rabbit and so forth, Odesk, for example, online marketplaces…
Scott Harper: Upwork…
Parag Khanna: Yes, Upwork. Exactly… that are these huge… they are really becoming the largest employers in the whole world. They do not employ people per se, but they facilitate employment. I have hired many people on a project basis off of these platforms, all over the world.
It is a system that has a lot of transparency ,because people are ranked according to their past performance on projects, and so forth. Sort of like books on Amazon, if you will. There is an eagerness; there is a smoothness to working with people through these platforms that facilitate all of the contracting and payments and so forth. We are creating these efficient digital marketplaces for people all over the world who have never met, and never even spoken, to work with each other.
This is what some people call peer-to-peer capitalism, and that thriving peer-to-peer capitalism is an enormous step forward in terms of empowering people with various skill sets, wherever they may be in the world.
Pam Harper: Okay. This is just the tip of the iceberg here, but the time has gone by. Any final thoughts on the topic of the opportunities that are out there with regard to connectography?
Parag Khanna: We have to be very cautious not to throw the baby out with the bathwater right now, the way our politics are going. We have to remember that America is the architect of the world trading system, the world financial system. It is still the most connected superpower. It has so much to offer the world in terms of technology, finance, security, energy. America is a leader in all of these areas. America, as a whole, is much better off if it is more connected, and we need to continue to invest in that, not just as a government, but as businesses and as citizens. I believe there is a strategy that governments and companies and people can pursue if they follow a checklist in thinking about what their skills are, how connected they are geographically, technologically, and so forth, to fast growing markets − never lose sight of what is out there.
Pam Harper: Excellent points. Parag, thank you so much for being our guest today on Growth Igniters Radio.
Parag Khanna: Thank you. It was such a pleasure. Thank you.
Scott Harper: Thanks, Parag. To get show notes and resource links for this week’s episode, go to GrowthIgnitersRadio.com, episode 68.
Pam Harper: Until next time, this is Pam Harper…
Scott Harper: … and Scott Harper.
Pam Harper: Wishing you continued success, and leaving you with this question to discuss with your team…
Scott Harper: What opportunities in the expanding web of global connectivity can we find and start acting on − today?
