Posts from — December 2007

Throughout this year, but also for some time before that, I have been wondering about the ongoing discussions regarding the success China as a nation and an economy is having. In the beginning it was seen as a fluke and maybe the sign of a few factors in world economic development coming together.

Remember the times when all China was seen as was a place for very cheap production of very simple things. After more than a decade of double digit growth, nobody denies any longer that China is for real. The development comes with high cost in some areas, like the environment, and the gap forming between the newly rich, the middle class, and the poor. Some amazing figures can drive the point home.

The United States currently has about 300 million people, give or take a few. The middle class in China, measured by western standards, also has about 300 million people. I believe it will not take much longer before the internal market in China will become a significant part of the economy. It will probably never reach the 67% point the US has, but it will become a cornerstone. At the same time this internal market becomes an opportunity for all global companies to sell to.

This leads to the question of toady’s post. China is one example and it is sometimes forgotten that a 10% increase in economic size means that it doubles every seven years. Sustaining that growth therefore gets harder and harder to achieve, and if actually accomplished, makes it that much more impressive.

A similar situation has developed in Russia. We have been reading a lot about the recent elections and the maneuvering of President Putin to remain in a powerful position. Some people in the West seem to indicate that these nations don’t offer enough freedom economically nor for their public.

I wonder if more freedom would have allowed for the growth we all have seen. If China and Russia wouldn’t be under a controlled system, I wonder how much planning and channeled growth would have been possible.

From my coaching and teachings, I like to bring in something I frequently use. It is the understanding of the difference between real independence versus false independence.

Real Independence is characterized by highly developed Ambition and Confidence drivers. Conversely, False Independence is characterized by overdevelopment of the Controlling and the Skeptical driver. Individuals with Real Independence analyze a situation and provide a measured response. On the other hand, individuals with False Independence typically have snap reactions to situations they didn’t create and feel they need to control and suppress.

For the development of leadership in emerging markets, I believe this means that we need a good balance between real ambition and confidence, which both Russia and China don’t lack, and a relatively low level of control and skepticism. Those latter two components are still in place in both countries. What we have seen is that each of the areas that is flourishing is being converted from high control to lower control and from high skepticism to more openness and experimentation.

I believe to have a smooth development, control needs to be relinquished steadily and with thoughtful goal setting and analysis of the possible outcomes in mind. An aspect not found in the performance coaching but applicable in economics is the need to diversify. As the market grows more and more aspects need to be kept in mind and influence each other. For those growth areas awareness has to replace skepticism to achieve success.

In summary, total freedom from the start is not likely to lead to success. It has been tried for about 10 years in Russia and lead to much corruption. Though I agree that the methods used during the last elections and the maneuvers to keep Putin in power are questionable, for these countries and their leadership to continue to prosper, a balance of control and ambition needs to be found and maintained until the system becomes self-sustaining.

In that sense total freedom would not be healthy for leadership, especially for emerging countries in desperate need of good leadership.

Axel Meierhoefer, AMC LLC