With the start of the New Year there are lots of opinions and blog posts out there about how to deal with the global financial crisis and the economy today. I agree with Umair Haque that “… this year, those with the purpose, courage, and vision to get seriously radical will have the opportunity to reconceive and reinvent the global economy”.

What strikes me in all of the current discussion is how much corporate culture, and many of the solutions being proposed, continue to resemble the ideas and corporate culture of the 20th century – the same tired old ideas that caused the crisis in the first place.

One idea that needs to be revisited is globalization. The old way of globalization was to move labor-intensive work to developing economies to save costs and find less environmental restrictions, see the case of La Oroya here in Peru.

Here’s why and how globalization needs to be reinvented for the 21st century:

• Relationships matter. Too often the old way of globalization was to “get the deal done” and then get the heck out of this backwards place. The economy is truly global today, the developing world expects to be treated as an equal partner, future growth will undoubtedly be in the developing world – it’s not too late to start building real relationships, but start now.
• Contribute something. Just buying “cheap labor” is an unsustainable illusion, there has to be a balance, something of value added to the developing economies where you buy the labor. If not, the developing world ends up with a big pile of funny green printed paper and the developed world ends up with a ton of stuff we don’t need and a colossal credit crisis – newsflash: we’re there!
• So what can the developed world contribute, how can you rebalance globalization? Let’s open-source globalization: share your know-how, human resources and intellectual property. The developing world still needs a lot of improvements, from occupational safety to environmental protections and employee development – things we are good at.
• Forget about competitive advantage. My old bosses at GE would cringe… $30,000 on tuition reimbursement for business school and I dare say “forget about competitive advantage”? That’s right, globalization was all about gaining an advantage over organized labor, suppliers, etc. Problem is, for a sustainable enterprise you need a good workforce, reliable suppliers, distribution channels, etc. Trying to gain advantage over them is akin to destroying your own future.

There are a lot of opportunities in developing economies. Here in Peru, half of the population today is less than 26 years old and the country’s infrastructure is nowhere near ready for the economic growth that definitely will happen when these young people start their own lives and families.

In closing, consider the developing economies an equal partner. If you’re doing business overseas, you can contribute your ideas and expertise to the corporate culture there, as well as learn from your foreign partners. Globalization today should be about businesses in mature economies benefiting from a solid presence in the developing world while at the same time helping to improve the quality of life there.

Ward Welvaert