Feature Interview with Johnson Controls "WorkPlace Now"

WorkPlace Now | August 2011

Parag Khanna was recently named as one of Esquire magazine's 75 Most Influential People of the 21st Century, and top of Wired magazine's "Smart List." In June he provided his unique analysis of an increasingly complex world to the Johnson Controls Strategic Advisory Board in London.

He currently serves as Senior Research Fellow at the esteemed New America Foundation, where he leads the Global Governance Initiative and co-directs the Remapping the Global Economy Roundtable.

Parag, whose latest book is called How to Run the World, gave this exclusive interview to WorkPlace Now.

What is Total Globalization?

Total Globalization is the fifth stage of globalization – it’s the point at which things truly become global. Up until that point the world’s largest 20 economies had dominated trade, but now the other 180 economies are becoming far more active and the trade balance is shifting towards what were once regarded as non-core economies. This shift has enormous implications for all of us and is not driven by a single power. Total Globalization began in 1995 with the widespread availability of information technologies like the internet and mobiles.

What does that mean for companies?

It has huge implications in terms of who we trade with, who sets the terms of that trade, where we expect to see long-term investment in infrastructure, and where we will see the next leaps forward in terms of technology. In many cases it will be the same non-core markets. This new interconnected world means that opportunity for growth is widespread across the globe. The city, rather than the nation state, as a centre of power is becoming more significant.

Are there risks associated with such an interconnected world?

Because we are so interconnected, things are far more dynamic than they were. One example of such risk would be of disruptors, such as a natural disaster or terrorism. Six months ago the earthquake in Japan caused a tsunami that knocked out the Fukushima nuclear power station on the coast, but the effects were far reaching. One fact to arise from that disaster was that the German Green Party announced that it planned to close its nuclear plants, so this natural disaster in Asia directly affected how nuclear power will be used in Europe’s principal economy this century. Another example would be the protest of a Tunisian street vendor, which ultimately led to the world’s most powerful military alliance (NATO) declaring war on Libya. So there’s potential risk for companies from these chain reactions and it’s very hard to spot them.

How has the company’s role changed in terms of solving global issues?

Companies have shifted in terms of their values and not just from a corporate social responsibility perspective. Global corporations, like Johnson Controls, are active participants when it comes to economic growth, where they choose to invest in infrastructure and make products. This used to be described as having an impact on the “public good”, but I believe that this should just be described as “good”. Increasingly complex global issues will be tackled by public / private partnerships based on mutual benefit and technology. This is where companies play a key role in creating consequential value where they operate. Investment from public / private partnerships to tackle poverty is about five times larger than that provided by governments. Wal-Mart is the world’s 22nd largest economic entity, it’s larger than many advanced European nations, so what it does has a massive impact, particularly from an environmental perspective and the reduction of greenhouse gas emissions.

Where will innovation come from during the next decade?

The first part of the answer is conceptual in that innovation is created at the point of market need, but there’s no silver bullet to making it happen. There is a great deal of opportunity for innovation through public / private partnerships, but I also believe that there’s a difference between innovation and invention. For the West to continue to innovate, it has to become more integrated with what were non-core economies and use localized management to become immersed in the culture. The scale of investment is also very important. The vast majority of investment goes into capital cities, but to really develop new markets and to innovate you need scale.

Where do real estate / FM executives fit in with Total Globalization?

They sit at the intersection of a lot of the things that define globalization. They are looking for opportunities in new markets and to see how best to engage with population centers. They will have a key role to play in the development of the city and how people work in them. Witness how Cisco’s Urban Innovation Unit and Smart + Connected Communities Initiative are forging partnerships to create attractive and sustainable 21st century cities. I think there’s an opportunity for people to take advantage of the smart city phenomenon by investing in infrastructure.