Advancements in technology—especially those that have made the Internet, Voice Over Internet Protocol (VOIP), and supply chain management possible—have empowered consumers to shed the chains of proximity, and to search, locate and obtain goods and services virtually anywhere. No longer constrained by geography, consumers are now free to choose among the world’s most attractive offerings. In today’s era of globalization, the customer is king.

In turn, producers must compete with others not only across town, but around the world. Consequently, the consumer-led squeeze is demanding producers deliver greater value. For some, this may mean boosting quality, for others, lowering price.

Seeking the Right Solutions

To achieve these goals, producers are, for example, increasingly shifting manufacturing to China and outsourcing services to India. Done in haste, these actions could cause U.S. companies to perish. Globalization will favor more nimble, customer-focused producers.

Companies that dictate to customers will certainly lose. In contrast, those that listen, collaborate, and adapt to quickly changing needs of more powerful consumers will thrive. Importantly, companies that find specialized niches to serve will have access to larger customer bases.

It’s Just the Beginning

This chain of events does not stop here. As producers continue to shed non-core functions and focus more on core competencies, they are demanding higher-level skills from employees. In turn, “knowledge workers” are creating more advanced technologies.

These developments, however, are just part of what is happening. We are witnessing one of the greatest periods of transformation in history. Today, knowledge and information have become the new generator of competitive advantage. And in a world of empowered consumers, the smartest, most adaptable, and most responsive producers will emerge as the consumers’ choices.

This trend already is evident. Many of the largest corporations, which for decades dominated the economic landscape, are being pushed aside by leaner, more knowledge-intensive companies. And since knowledge and skill are infinite resources, obtainable by both large and small companies alike, smaller companies are not disadvantaged by their size.

As a result, a real, sustainable competitive advantage is the ability of a company’s workforce to learn, implement and deliver faster than the competition. Herein lies a primary advantage for American companies, as well as for smaller, entrepreneurial firms.

The U.S. shift from brawn power—use of muscle on the factory floor—to brainpower——is nearly complete. Today, self-directed workers operate in teams and apply more sophisticated skills to create and run new processes.

What is the Result?

U.S. manufacturing output continues to rise while the number of workers, as well as inflation-adjusted prices, continues to fall. In turn, the manufacturing contribution to U.S. gross domestic product is declining.

Looking forward, producers must compete less on price and more on product design, branding strategies, productivity, flexibility, quality, and responsiveness to customer needs. This puts a high premium on skills. Consequently, it’s no surprise that U.S. unemployment is higher among workers with lower levels of education.

A Shortage of Skilled Workers

According to a recent survey by the National Association of Manufacturers and Deloitte Consulting LLP., 81 percent of manufacturers questioned said they face “moderate” or “severe” shortages of qualified workers. And more than half said 10 percent or more of their positions are empty due to lack of candidates. Producers are demanding more from labor—but already are falling short.

This pattern is not without consequences. The previous shift from an agrarian society to an industrial economy compelled workers to leave farms in search of factory jobs. Workers were required to learn new skills. The skills demanded today, however, are far more sophisticated, and probably are creating even more fear and anxiety than before. This is causing a backlash most evident in anti-globalization and anti-free trade protests.

Fear of Change

Change, which is often accompanied by fear and disorganization, is not comfortable. Nevertheless, with change come new challenges and exciting opportunities. For companies and their employees to succeed well into the future, it is necessary for them to grasp today’s new economic realities, and adapt and embrace the challenges ahead.

This article appeared in Impact Analysis, March-April 2006.

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the, is a world-recognized speaker, author of several books, and a nationally syndicated columnist on global business, emerging risks and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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