The Long Competition Just Got More Competitive

Ben Thompson from Stratechery wrote a seminal piece (paywall) on his blog October 8th about the conflict between the US and Chinese cultures, technology companies, and governments inspired by the “NBA incident.” He makes several key points:

  • China blocks US technology firms from operating in China while theirs operate globally and in the US.

  • The idea of engagement with China leading to a freer and more open China was a delusion.

  • China has moved from censoring content inside the Great Firewall to attempting and often succeeding (see Disney) in censoring content elsewhere for any company operating in China even if that company is American.

Thompson also points out the irony of getting mad at an NBA GM for saying relatively innocuous things on a social network, Twitter, that China also censors. How did everyone know to block access to the NBA without having read Twitter? One wonders.

The point is that this is a bit of a Sputnik moment but not in a technological sense but in a competition sense. US tech and other executives all over America should be waking up and asking if the NBA, Twitter, and TikTok are all problems, what isn’t going to be a problem? Is the price for accessing the Chinese market, losing the US one? I can’t imagine there wouldn’t have been a complete apocalypse if the NBA hadn’t smartly backed up its GM. It’s simply not tenable to play both sides anymore. I’d be rolling back those Chinese expansion plans and looking for new markets. It similar to the moment many Chinese executives must have had when Hauweii’s CFO was arrested at US behest in Canada.

Thompson concludes by saying why he is so hesitant to speak up against China. To some extent it is fear of retribution and being iced out of China-related tech stories. That is a well founded fear based on the actions of the Chinese to date. But he also makes another point, one that I hear echoed all over Washington, DC and East and West Coast elite bastions. There’s a sudden realization that the global citizen dream is dying and mostly already dead for Chinese and US citizens. Maybe Europeans can flit back and forth but the sides are being drawn and the long competition between China and the US has entered a new phase.

How Will the US-China Trade War Play Out?

An example of Chinese tech advancements at a 2018 conference. Source:

An example of Chinese tech advancements at a 2018 conference. Source:

The US-China Trade War is just an opening skirmish in a larger conflict--the Lexington and Concord of the Revolutionary War, if you will, but without the bullets. We are now in a Long Competition (link to 1st blog) with China for technological, economic, and military world leadership. We aren’t going back to “normal.”

In my mind, there are a few potential outcomes to this Long Competition: 

  • China rises and supersedes the US in technological, economic, and military power in the next few decades. The US response will be to form a balancing coalition with China’s neighbors seeking to contain China.

  • There’s a rough balance between the two powers. In this case, the US and China find a rough equilibrium where neither can dominate. The US will again form a balancing coalition, as in scenario one.

  • The US maintains supremacy. In this scenario, China’s debt burden, demographic issues, and inability to transform to a consumption based economy leads to a multi-decade stagnation. In this case, the US soon stops worrying about China and the urge to form a coalition diminishes.

No matter which scenario plays out, though, there are a few essential things that seem inevitable to me: 

First, the US must double down on investment in core future technology areas. Most of what makes an iPhone and a computer work were invented or funded by the government. The new economy will be based around 5G which will form the basic infrastructure for innovation. It is the national highway or electrical system for the 21st Century. 

Our nation has a long history of investing in this type of infrastructure and ensuring that disadvantaged and rural communities are given access. 5G is the basic infrastructure on which entrepreneurs can then innovate. So no matter what happens with China, we need to ramp up investment in 5G and beyond including artificial intelligence, other infrastructure, cloud technology, biomedical research, and the like. You get what you pay for--and we aren’t paying for enough.

Next, the US should resist a top down model. US innovation has traditionally focused on core infrastructure and basic research. We then allow entrepreneurs to innovate on top of these platforms. Keeping this model will maximize our investments and allow us to leapfrog into new technologies we haven’t even thought of yet.

And, there are a few essential things that will happen:

The Committee on Foreign Investment in the United States (CFIUS) will inevitably expand its reach and/or new regulations/legislation will do the job for it. Remember that military power is based on technological and economic supremacy*, so just as technology and communications are converging, so will what is considered a national security issue. Sure, we might let the Chinese buy movie theater chains--but any dynamic and growing advanced technology industry will eventually fall under scrutiny. 

Additionally, technologies are tending to converge. Cloud and AI seem to be in everything so how do you neatly sort out what is national security and what isn’t? My guess is we begin defaulting to national security.

Production will start to filter out of China--supply chains are going, going, gone! A new report claims Apple is among the companies that have instructed major suppliers to evaluate the cost implications of moving 15% to 30% of their production out of China. Apple is already moving on this with Foxconn, and everyone else will have to follow suit. 

We will have two economic blocks. My guess is that a growing China will continue to demand tight control over its communications systems. As mentioned above, communications is now at least a component of just about everything and the Chinese one party state can’t afford to lose control. The Great Internet Wall of China will grow and increasingly separate its technology infrastructure from the global infrastructure. In reality this will lead to at least two Internets: one comprised of the West and another centered around China and the Belt and Road countries. As future commerce and innovation take place on top of those two internets, they will become less compatible effectively creating two economic blocks.*

No matter what happens in our current trade spat with China, the long-term course is pretty clear. We are just beginning our Long Competition with no clear end in sight.

*You have to have dollars to pay for planes and tanks.

*My guess is there would be some non-aligned group of countries as well trying to create “APIs” to move back and forth between these systems.

What Set the Stage for the US-China Trade War: The Long Competition

Source:   , Chinese shipping containers in Tianjin, China

Source:, Chinese shipping containers in Tianjin, China

The trade war with China has dominated newspaper and investing headlines for months. I’ve heard many pundits opine on what the outcome will be; how it will affect markets and the economy; who will win and who will lose. None of us knows what the outcome of this situation will be. 

This is more than just a trade war. Even after some agreement is hammered out, we’ll still have ongoing tensions that will last for decades to come. But it isn’t a cold war, either. China and the US will continue trading in ways we never did with the Soviets. This is really a prolonged competition--like the seemingly endless Federer/Djokovic Wimbleton final, but with much higher stakes. 

Another misperception I see sometimes in the media is that this is a partisan issue. I disagree.  It’s clear that the trade war is a battle in a larger competition--one in which any Administration, Republican or Democrat, will be engaged.

To fully understand, though, we need to put it into context. What led us into this current trade war? 

3 Factors that Set the Trade War Stage

#1: US-China engagement. Our first response to China’s rise as an economic power was to welcome them. We helped usher them into international order, and then traded with them. Because of this, China became deeply intertwined with the world’s supply chains. The West got cheap goods and China built a manufacturing powerhouse, and started making real money. 

There were victims in that scenario (manufacturing jobs, low wage workers, etc.), but by and large the United States, the West, and China were happy with the arrangement. China lifted the greatest number of people out of poverty in the history of the world, and the West used the Chinese supply chain to maximize efficiency and build the cloud-based technology revolution that is currently disrupting every industry known to humans. Large amounts of US capital went from funding business with lots of assets to ones with almost none. In essence, moving production to China freed up capital to invest in the knowledge economy. Again, many regret the effects of this shift--but it has undeniably unleashed the Cloud economy.

#2: The Great Financial Crisis, combined with the “Cloud Tsunami.” Another effect of the engagement with China was the gusher of cash coming out of China that it sank into Treasury bills. This allowed interest rates to stay low along with the deflationary effects of reducing manufacturing costs. In the 2000s, many Americans funded their lifestyle out of home mortgage loans and appreciating real estate driven by these low interest rates. 

Of course, that came to a screeching to a halt during the crisis. At the same time, cloud computing and other technology advances began gutting low wage jobs, increasing the returns to intellectual capital, and generally deflating the cost of everything except the two things you need to live and get ahead: health care and education.

#3: China 2025. After the GFC, while the US accelerated its transition to a knowledge-based economy, further hollowing out blue collar and unskilled work, China began a different shift. The manufacturing boom that lifted people out of poverty began to peak. Labor costs were increasing and China’s ability to keep investing in core infrastructure productively was going down. For the Chinese, this meant several things, but most applicable to this argument is the focus on advanced manufacturing and general advanced technology. In other words, China was saying, “we don’t just want to assemble the iPhone; we want to design the iPhone.” 

This ambition is a direct threat to US dominance. China’s efforts to own the technologies of the future is a dagger pointed at the heart of what keeps the United States on top in the private and public sectors alike. This plan was enshrined in Made in China 2025, a roadmap for achieving global leadership in a series of key future technologies by 2025. We can speculate about the ability of the Chinese to deliver, but clearly the threat is there. 

At the same time, China’s economy kept growing and it went from “Who cares?” in the 2000s to “Wow! They are going to be bigger than us in 10 years,” in the mid to late 2010s. Let’s be clear: technological, economic, and military supremacy all flow from one another. The US should know--we’ve been doing it for over 100 years.

Looking Ahead

I see little prospect in China giving up its ambitions. They will inevitably seek to climb up the technology mountain, which will lead to a larger economy and more military prowess. And the US won’t willingly cede its place as king of the mountain, so we are left with a competition for that spot. 

As of now, the possibility of an actual war seems remote. The most likely outcome appears to be a protracted competition, in which each side marshalls its resources to pursue technological, economic, and military dominance. This will differ substantially from our conflict with the Soviets. China has a far more powerful economic engine that can generate real economic growth. At the same time, there are good reasons for both countries to trade and interact with each other, in ways the Soviet Bloc and West did not, so I don’t see it as a fully “cold” war. 

The best term I can come up with? The Long Competition.

Stay tuned for future CEO Corner posts on the US-China Trade War. Next up: How will the trade war play out?

Careers, Chutes, and Ladders


The children’s game Chutes and Ladders has a lot to say about careers in the modern world. Every time you work with an organization it is either a ladder going up or a chute going down. Often the same organization and the same job can be both for the same person. When you start a job it can be a ladder to a new opportunity and great things. Three years later the same job can become a chute down to complacency and dysfunction. 

At Corner Alliance, we spend a lot of time thinking about careers and our people. People are what we sell and how they develop and grow is our fundamental business (develop and grow are also two of our commitments to our employees). 

When people depart from an organization, it can feel like a loss or a rejection, so the relationship and communication tend to end there. It’s more like a bad break-up than a school graduation. We think of our organization as a family, rather than as a team. 

Over the years, I’ve come to reject this mindset. I take a school graduation viewpoint. When someone joins Corner Alliance, they are looking to grow, learn, and have new experiences. We work to provide those; and, in return, we provide amazing service for clients. At some point, the next growth opportunity might be in another field, or even with a competitor. 

A few people will stay with us for the long term. Their career goals and our company goals are aligned. That’s magic--but it doesn’t happen every day. For those that choose to pursue a different career or an additional education, we strive to ensure that Corner Alliance provided the fundamental skills they will use throughout their career. That’s success to us. 

The book that helped me cement my thinking about these concepts is The Alliance, by Reid Hoffman (former Linkedin CEO), Ben Casnocha, and Chris Yeh. It lays out a new framework where employees and employers operate in a transparent and mutually beneficial way, in keeping with the modern world. 

Specifically, the authors call for viewing employment as tours of duty, similar to the military. You might start in a position with a 2-3 year runway. At the 2-3 year mark, you have explicit conversations about your next step. Would you and the organization benefit from another tour of duty for you? If so, what is that tour and how long should it last? 

The crucial learning is that each tour is defined, has a timeline, and an assessment point. We hire you to start this division. It’ll probably take us 5 years to get it up and running. After it’s done, continuing to run that same division may or may not be the best decision. Maybe you should start something new, or take over a bigger division. Or, maybe you want to do something entirely different. The point is that there is no right answer, just an acknowledgement that we grow and change, and that our careers have to, as well.

That’s not to say that someone should leave an organization automatically at some arbitrary point, or that no one can spend decades in one company. There are people and places where that works--but we can’t assume it. 

It isn’t easy to operate in this way. At Corner Alliance, we’ve taken some haunting steps forward and are working towards a more defined career model in keeping with these principles. We’ll let you know how it turns out.

Interested in learning more about our company culture? Check out our culture page and follow CEO Alan Pentz on Twitter or follow him on LinkedIn

5 Ways For Leaders to Think About 5G

Image by    mohamed Hassan    from    Pixabay

Image by mohamed Hassan from Pixabay

How to work around our collective lack of imagination

There’s a lot of marketing and hype around 5G. There is no doubt that lower latency and speeds of 100 to 1000 times 4G are going to transform the world and how we live in it. The problem is that no one is very good at figuring out how the technology will do that.

5G is in effect a field of dreams: build it and they will come. People keep coming up with ways to chew up bandwidth, so I’m quite confident that they will come--but I’m disappointed in our ability to imagine what they’ll come for.

Beyond use cases like autonomous vehicles, remote surgery and maybe video conferencing, I get lost. As soon as the industry buzz words start coming out (live TV at scale, fog computing, massive machine to machine communication, etc.) my suspicion is that they are covering up a lack of imagination. Additionally, experts often cite technologies that will be enabled by 5G, but fail to tell me why I should care. Like VR/AR for non-gamers.

I’m left believing that 5G will transform the world but am unable to tell you how or why you should care. This is exactly why incumbent players usually lose out as technology evolves: it’s a failure of imagination.

Knowing this challenge, how should leaders proceed--as stewards of the federal government, and the private sector alike?

  1. You know nothing, Jon Snow: Accept the fact that you don’t know what’s going to happen. The use cases of the future don’t exist because the people that know the most have little incentive to do more than think incrementally. If you are dominant today, you don’t want to imagine a time when you’re scrambling for scraps.

  2. It’s not me, it’s you: Don’t fall into the trap of only focusing on the customer’s experience with your product. That’s too “you” centric. Try instead to focus on your customer’s experience with the problem you are trying to solve for them. For example, I was happy with cable, but the first time I streamed a video on Netflix, I knew it was the future and I just wanted more. Within a year I’d cut the cord. Any cable company, Disney, or other content provider could have seen this coming if they’d been able to think past their current product.

  3. Don’t laugh at the iPhone: Whatever the killer apps are for 5G they are sure to make current winners angry and uncomfortable. If existing players don’t want to tell you heatedly why you are wrong, then you aren’t thinking big enough. I always think about Steve Ballmer mocking the iPhone to remind myself of this one.

  4. Lots of experiments: Experimentation is the logical response to uncertainty but carries its own risks. Experiments tend to become permanent projects that divert resources and attention. Set up several small experiments with a process to review them quarterly or semi annually. Kill the ones that aren’t working.

  5. Prepare to pivot: Most likely you aren’t going to invent the next killer app, so prepare yourself and your organization to pivot. It’s a delicate balancing act to know when to put significant resources into something. The post Ballmer Microsoft is a good example. Ideally they would have moved to the cloud a few years sooner, but when they did pivot, they put everything they had behind it. It’s paid off well for them.

While we may not know where 5G technology will take us, we can only get there by taking the first steps in seeing what it can do. As leaders, the potential can be overwhelming but I feel confident that with new perspectives and some imagination, the future of 5G will assuredly rise to the hype.

Interested in learning more about government R&D and emerging trends and technologies? Follow CEO Alan Pentz onTwitter or follow him on LinkedIn.

The Value of Commitments

CEOBlogPicFinal .jpg

Values are the landlines of modern organizations. We think we should have them but can’t really articulate why. Maybe the power will go out and the people with values will win. Who knows?

Mostly we do it because that’s what we’ve always done or that’s what we’ve read in the latest leadership industrial complex self help book. At Corner Alliance, our experience with values has been mixed to say the least. Soon after the company was founded, we launched a participatory process with IdeaScale to identify which values we wanted to adopt for the company. The system allowed each employee to suggest values and then vote them up or down. After several weeks, we arrived at ten.

Some of them were often quoted, and even applied in our work. For instance, “Eat Our Own Dog Food,” was one we resonated with. The catchy title helped, but it also reminded us as management consultants to apply the same frameworks and methodologies used with clients to ourselves.

Writing this post, though, I can’t for the life of me remember many of the others values. So, our first problem was that there were too many values. It’s hard for even smart people to remember ten things.

The second problem: what to do with them. One of the values was boldness. What do I really do with that? Could I measure it? Is there a boldness scale? Maybe I could identify it when I saw it--but I mostly just forgot it was there. At best it became a call to action in a difficult situation, but I couldn’t understand how to operationalize it as part of our culture.

Despite the flaws with this first set of values, the firm survived and grew. At a certain point, with lots of new people coming on board, we felt we had outgrown them. We undertook another value creation exercise, this time without the software.

We got another set of values, but this time without the catchy titles. So we traded “Eat Your Own Dog Food,” for “Be Curious” and seven other similar concepts. There was nothing wrong with our new values--and we’d gone from 10 to 8, so that was progress. But over time it became clear that the new values had fallen flat.

What we had now was a set of bland values that once again no one could remember, and that we didn’t have a plan to operationalize. We made a valiant effort to promote the values by printing cool new posters and putting them on the website. It’s not that we disagreed with “be curious.” It represents an important characteristic of people who are successful at Corner Alliance. The problem was in what we were seeking to do with the values.

At base, we wanted to measure and run the firm as much as possible from the values. We wanted to be truly committed to them and that became the break through for us as a company. What we wanted weren’t values. What we wanted were commitments.

A commitment is a measurable attribute of what you will get when you work with or for us. We grouped those commitments into three parts: what the company is committed to delivering to our clients; what the company is committed to delivering to our employees; and what employees need to commit to the company. To institutionalize the commitments we ask each new employee to sign a commitments document on their first day of work and we kick off each client engagement with an overview of our commitments to them.

It was essential to us to be able to measure those commitments. We now have a quarterly process where we evaluate each employee on meeting her or his commitments to the company, and we ask him or her to, in turn, rate the company on how it is meeting its commitments to them. Additionally, we ask clients to rate the firm on how it is meeting its commitments to them.

The system is new, but it certainly feels better and provides our team with more actionable feedback on how we are doing. I’m sure the way we document and communicate our culture will continue to evolve, but commitments were a significant step in that evolution. We’ll check back in a year and see how it is going.

Why Broadband is so Important for Rural America

Source: Neil Tackaberry, CC licensed    Flickr    image

Source: Neil Tackaberry, CC licensed Flickr image

5G's in the news: we're locked in a fierce competition with China for dominance; US carriers aren't as far behind us we think; the government needs to create a national network.  No doubt 5G is a big deal for national competitiveness and for the economy. 4G/LTE launched the AWS and App Store business model, giving us Instagram, Netflix, podcasts, Yelp, Uber, and so on. 5g will launch the internet of things, artificial intelligence, autonomy, and machine learning.

One of the lesser told stories is how 5G will exacerbate an already large bandwidth divide between urban and rural areas. And, to go one step further, it will open a gap between wealthy urban areas and the less wealthy.

The Problem—and the Solution
The issue is driven by how 5G networks are built. Everyone has seen those huge cell towers that provide much of the traditional cellular coverage. They are tall and connect to your phone through airwaves (AKA spectrum) that travel for relatively long distances, penetrating most walls. As we connect more devices to the internet, we crowd that spectrum more and more, meaning we have higher bandwidth needs, too.  

One way to solve this problem is to use spectrum--and more spectrum.

5G, and beyond, brings in spectrum called millimeter wave, the same band used by security at the airport. This spectrum is above 30 GHz, as compared to the 2.5-5 GHz bands your home wifi likely uses. Those spectrum bands don’t travel very far and don’t penetrate buildings, but they can be very effective over short ranges. The difficulty becomes, though, building out the devices you need to effectively use these higher spectrum bands.

A Challenge Ahead
It is a huge cost to densely pack urban areas with new equipment. And the business case for private carriers doing this in rural areas is unconvincing, leaving rural areas with far less bandwidth.

As a result, we're not going to have just a difference in scale. We’re going to have a difference in the kind [of bandwidth]. It won’t be that your Netflix takes longer to download--it’s that your Netflix just won’t work. The applications that you’ll be able to use in dense urban areas are going to be a different type than in  rural areas.

Many future business models will be predicated on having access to mobile applications, which will likely be inaccessible in rural areas. Granted, we have no idea what those applications and technologies will be, just as we didn’t know about Uber, Yelp, or Instagram. But the unfortunate consequence will be that rural areas will lag behind economically, most likely losing even more population as their economies become less competitive.

Government Impact
It's absolutely essential that the government bridges as much of this gap as possible, so rural areas can remain economically competitive. We’re well on our way, with the FCC’s newly announced Rural Digital Opportunity Fund, but there’s admittedly a lot of infrastructure work to be done.

Just as the government supported  the electrification of rural areas in the 1930s, we now need to rural areas get to the highest broadband speeds we possibly can. This is not a matter of getting Netflix to download a little faster. It’s about the future of rural america’s businesses, and the economy that supports these regions.

Interested in learning more about government R&D and emerging trends and technologies? Follow CEO Alan Pentz onTwitter or onLinkedIn.

The Driverless Car Story: How Government R&D Can Create New Industries

From the 2005 Grand Challenge at the California Speedway. Source: CC licensed    Flickr    image.

From the 2005 Grand Challenge at the California Speedway. Source: CC licensed Flickr image.

I’ve been doing some research on the history of the Defense Advanced Research Projects Agency (DARPA) Driverless Car Challenge. Actually, it was officially called DARPA’s Grand Challenge for Autonomous Vehicles. The challenge took place in two stages: the first in March 2004 and the second in October 2005 (here’s an excellent oral history of the challenge from Wired).

In the first round, none of the 15 teams participating could complete the 142 mile desert course from Barstow, CA, to Primm, NV; thus, no one won the $1 million prize that DARPA was offering. From that failure, though, came astounding success. That $1 million has now spawned an industry that, in 2017, was worth $5 billion. It is estimated to grow to over $25 billion by 2024--and that’s mostly likely a low end estimate.

As part of this we will see huge disruptions to our transportation and logistics systems, with autonomous trucking, in addition to cars, drones, fire trucks(?), and a whole host of other autonomous vehicles.

This is the perfect example of the kind of market/industry creation story outlined in Mariana Mazzucato’s book The Entrepreneurial State. She sees government’s role as going beyond just correcting market failures (like the global financial crisis or monopolies) to creating industries.   The gist is that early investment and support from the government spurs additional private sector investment and commercialization.

In the case of DARPA’s Driverless Car Challenge, because government was willing to tolerate failure and bring non-traditional providers into the mix, it was able to create huge gains. I see at least four key reasons the program was a success.

  1. Accessing New Technologies and Non Traditional Participants: DoD had been working on autonomy through its traditional contractors and making little progress. The challenge allowed DoD to leapfrog traditional providers and bring new technologies and people unaffiliated with DoD to the table.

  2. Building the Human Capital: The team members that competed are a who's who of executives in autonomy today. Stanford’s team was led by Sebastian Thrun who started Google’s driverless project now a separate company called Waymo. The head of Ford’s driverless program competed. Other competitors have gone on to run autonomy research programs at university or founded companies to supply the key technologies and components.

  3. Grounding in a Requirements with a Deadline: The military had a goal to transform one third of it surface warfare fleet to autonomous vehicles by 2015 in an effort to reduce potential casualties. That requirement/mandate and timeline drove DARPA to get creative. Sure R&D can work on basic technologies that might not pay off for decades but a good portion of it has to be grounded in some fundamental need that has a big pay off if met.

  4. Leveraging the Government Brand: Winning a government sponsored contest, especially one from the agency that created the Internet is good PR. As you can see from the subsequent careers of those who participated, that PR gets attention. The promise of that stamp of approval attracts the best talent.

Interested in learning more about government R&D and emerging trends and technologies? Follow CEO Alan Pentz on Twitter or follow him on LinkedIn.