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GP13Aug03: Rounding the World Then and Now Breaking Away. At the start of Moby Dick, Ishmael frets that it’s time to be getting to sea again when, as he is walking down the street, he feels like plunging a knife into the back of the fellow just ahead of him. He must get away from his home and the crush of society to rid himself of impulses that issue from some dark part of the soul. In the 19th century, you would take a trip around the globe to escape the company of over-civilized men and to feel that you were doing something quite different, as you took in exotic places that bore no connection to where you’d been before. A classic in this regard is Captain Joshua Slocum’s Sailing Alone Around the World, where he achieves solitude, danger, and a special look at the world that was even more out of the ordinary than that enjoyed by the many explorers of his age. The Two Jims. Today you probably can’t get away from it all. A whole new travel literature of round-the-world trips has come to the fore recently in which we find that cars, neuroses, soldiers, menus, and bureaucracy in Timbuktu bear a striking resemblance to those we can find much closer to home. We have just been through Jim Rogers’ Adventure Capitalist and James Prosek’s Fly-Fishing the 41st: Around the World, in which we discover that these two world travelers simply do more of what they had already been doing before. Rogers, onetime associate of George Soros, who retired early from the Wall Street fray after he had made his pile, is a curious bystander who restlessly absorbs experience after experience, data point after data point, always quickly moving onto the next thing. And James Prosek, an abundantly talented young man who pens books about trout fishing that he himself illustrates, trots along the 41st parallel from his home in Connecticut to France, Turkey, Mongolia, and other points along the 41st in order to fish for trout around the world. Challenges Overcome. Jim Rogers here has sandwiched together at least two books and probably several more in this one volume. Sure there is a travel book here, but also a dissertation on the state of the world and of each country visited, larded with occasional investment insights. We probably liked best the first chapter called “A Yellow Mercedes.” There we learn of his complex preparations for getting underway: He persuaded Gerhard Steinle, a former Mercedes-Benz executive, to put together a couple of specially built Mercedes for the trip. The cars, no surprise to us, gave him a fair amount of grief along the way, for he was forever having work done on the underpinnings. In the same chapter, he and his then-fiancé-now-wife Paige Parker almost come a cropper in Iceland, the trip hardly having begun. “Not even at our most pessimistic had we thought we might die on our third day out.” So much for the best laid plans. There’s a lot of planning along the way, and a host of difficulties that are only surmounted by bribes, clever ruses, and improvisation. The Rogers book is a TV generation expedition, full of complication and equipment. Amusingly, it pretty much lets us know why he was successful on the Street: He never lets up on the task at hand, but is always tirelessly moving on to the next, and the next, making up his mind as he goes what spin he will put on what has transpired. Gone Fishing. Prosek just gets on a boat and goes. He will sleep along the way in the office of a close friend in the fraternity of fisherman. His knee gets badly infected in middle Europe, but he mainly cares for it by waiting for it to cure itself. In Asia he travels in a car of patched tires that are always blowing out, yet he finally gets to his destination, maybe a little more slowly than Mr. Rogers would. His account is not about endless experiences: He sticks to fishing folk and trout fishing, both of which he can find across the globe along the 41st. We visit a few places in depth. He is able to linger awhile. Particularly the tale is about his rambles with older trout fanatics who serve almost as mentors and become close friends. The best of this book is the end of the journey, in Colorado, where he visits with Robert Benke, a retired professor of fisheries and wildlife biology at the University of Colorado, Fort Collins who fishes well, cooks superbly, and still imbibes new scientific information about trout with the same avidity that he displayed at the start of his career. It’s clear that Prosek would not mind being something like Benke when it comes time for his own retirement. People Aplenty. These are not lonely explorers of the 19th century. There are plenty of people, and Prosek’s book is probably about friendship in the trout fraternity as much as anything. Increasingly, all these people everywhere are linked together by digital communications. Rogers notes: “Ulan Bator, the capital of Mongolia, is perhaps the most technologically up-to-date city in the world, totally digital.” Wired people increasingly share the same information, so you are close to home whether you are in Ulan Bator or Africa’s Gold Coast. Solitude has become a rare commodity. Easy access to money is another sign that every place has become like every other, each increasingly part of one world city. Rogers does not have to carry a lot of currency because “Visa, Master Card, Diners Club, and American Express were accepted everywhere … we could just march off to the nearest ATM and take out whatever cash we needed….” Global Convergence. We had a chat recently with Gail Fosler, the noted economist at the Conference Board in New York City, who has often topped her fellow dismal scientists in her forecasts of where the economy is headed. She gave us her usual upbeat predictions about things ahead. But what was most interesting is that she said Europe’s economy is waking up just as ours is on the mend. People used to think that different areas of the world would always find themselves in different stages of the business cycle, with one part up when another was down. This state of affairs was thought, as if by magic, to promote economic recovery in those countries where commerce was down in the dumps. At least in the case of the U.S. and Europe, this yin and yang concurrence no longer seems to obtain. Because of digital technology and other forces, the world, increasingly, is so knit together that economic cycles and other currents have begun to run in tandem. Likewise, there is a great deal of convergence in particular industries. What happens in one part of financial services, say insurance, spills over quickly into another part, say commercial banking. Media, broadly defined, are more knotted together—not just cable and TV, but magazines and newspapers, the Internet and advertising and education, movies and art. Boundaries are being eroded at every turn. The Days the World Turned Upside Down. In our Annual Report on Annual Reports 2003, which we have just published, we have said that companies and institutions are now branching out into strategies that are a complete break with their past, all born in a far different strategic environment. Global convergence, which began to be most evident a decade ago in financial markets, is now occurring in market after market, all about the globe. All this seems to have come to a head as we moved into the 21st century, although we do not hear the thinks tanks and futurists talking about it. Convergence, we think, is turning business upside down. Getting It Wrong. One of our favorite publications, the Economist, recently (June 28, 2003) published an essay on what the world needs now. The article is by Bill Emmott, its very bright editor who is just out with his own new book this year. The piece is “a polemical essay in favour of liberalism but also against the abuse of capitalism and of democracy….” In other words, the magazine is positing that the world just needs a further dose of liberal democratic capitalism with some tweaking to avoid occasional corruption, fudging of accounts, and other rough edges. We think not. Global convergence, we would say, is stressing out the laissez-faire system that has served us so well but that has now run its course. If economies and industries are so closely linked, and a little event in the U.S. or China can be a tipping point leading to unintended economic consequences around the globe, then the game has to change. The prior system was based on a world that was not so tightly synchronized. The practical consequences of the Economist view of things are not at all academic. If we are merely to patch up the existing system, then companies, institutions, and governments had better muddle along as they are, trying on some future clothing but not giving up on the past. It’s this stumble-along attitude that largely informs an article on corporate strategy that appeared in a recent issue (July 12, 2003, pp. 61-63). It gives mixed messages about how companies should proceed, since it and the management consultants who provided some of the thinking behind it do not have a clear view about the economic environment in which we now reside. But if the world economy is really light-years different from what we have experienced before, then companies and governments must adopt a whole new way of wrestling with markets so that they do not get flattened by this Age of Instantaneous Information. View from the Bicycle. If you look closely at everything, nothing seems quite the same this year, because, as the comedian Red Buttons put it several years ago, “Strange things are happening.” Recently during the Luz Ardiden segment of the Tour de France, Lance Armstrong took a spill but recovered enough to widen his lead quite a bit over the contender Jan Ullrich of Germany. At the same time Ben Curtis, a complete dark horse, overwhelmed all the standard golfing champions in the British Open at Royal St. George’s. All about us, the unexpected is happening as if some deus ex machina is having a little joke on everybody. After the race, Armstrong said: “This has been a crisis-filled Tour. There have been a lot of strange things happening, things I haven’t talked about. This is a Tour of too many problems—close calls, near misses. I wish it would stop. I wish I could have some uneventful days.” (See New York Times, July 22, 2003, p. C16). We submit that in a world that is too tightly knit together by less than rugged technology, lots of strange things are happening. Very vulnerable systems break down, and then have a negative domino effect on people across the country or around the globe. Obsolescence Is Rife. Global linkage would argue that the Clinton-Bush foreign policy has taken us to the edge of a cliff. Further, it commands even the smallest of businesses to think about their every move in global terms. One of the more innovative, small mortgage businesses we know, for instance, has made a calculated effort to sell off U.S. mortgages in India and Malta, having taken the view that true liquidity in this business must be achieved on a global basis. The old ways are simply outmoded. Looking ahead, we recommend an old article just reprinted in the Harvard Business Review entitled “The End of Corporate Imperialism” by C.K. Prahalad and Kenneth Lieberthal (see August, 2003, pp. 109-207). It tells multinationals to stop hawking first-world wares in the third world. Instead they must devise third-world products and distributions systems if they are not to miss out on some burgeoning markets. We would now also advise the authors that global linkage should compel such companies to overhaul their manufacturing and distribution for all markets, not just for Asia’s billions of underserved people. P.S. The Rogers family, by the way, had a most productive trip. Hilton Augusta Parker Rogers was born 30 May 2003, and we are told she already has her passport. |
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