From Gallup Business Journal: Dead Wrong ~ America's Economic Assumptions
The U.S. could go broke due to faulty leadership assumptions. Gallup's CEO offers three correct assumptions that, if acted on, would save the American economy.
During my 40 years at Gallup, I've observed that one of the main reasons very talented leaders fail is because their thinking failed them. Not their leadership or management skills, which in many cases are just fine, but their thinking. Specifically, failed leaders in business and politics are usually wrong about a core premise that drives all their strategies. Because they are so wrong about that premise, every subsequent decision they make is bad.
An innovation has zero value until a talented businessperson finds a customer for it.
Let me illustrate. Thirty years ago, I conducted a project in a Midwestern city for a group of talented investors and businesspeople. This was a time when McDonald's franchises were growing quickly, and these businesspeople wanted to emulate the fast-food chain's success. They came to the conclusion that McDonald's was soaring because of one key attribute: speed of service.
So these smart, talented people built everything around this one assumption, and they committed to delivering food faster. Pneumatic tubes shot the food to the customer, and the company touted its service as the fastest. They even named the chain "Chutes."
As I recall, they did get hamburgers and fries to their customers faster than McDonald's did. They achieved their goal. Yet they went broke because we discovered after the fact that the primary reason McDonald's was exploding was because customers loved the taste of their food -- especially the french fries. Speed was not the core reason McDonald's customers ate there; taste was. Chutes' core assumption was wrong, and they went broke.
I could share hundreds of examples like this. Here's another one with far greater implications for the world. Many people in the highest levels of U.S. government think that 1.5 billion Muslims are uncomfortable with the West because they "hate us for our freedom" and that "religion divides us." So, leaders build policy -- war, economic sanctions, and anti-terror campaigns -- around these assumptions. But Gallup World Poll data tell another story entirely.
The world's Muslims don't hate us because of our freedom or our way of life or because they're religious fanatics. Gallup finds that their discomfort comes predominantly from a hopelessness rooted in economic despair and joblessness. This is an economic problem, not a religious one. Yet too often, policies are created around these wrong assumptions.
When Tunisian food vendor Mohammed Bouazizi set himself on fire, thus igniting the Arab Spring, he didn't yell, "Death to America" or "Allahu akbar." He cried out, "I just want to work!"
In this article, I will review some faulty leadership assumptions that are causing the U.S. economy to stagnate and that may lead the country to go broke. More importantly, I will offer three correct assumptions that, if adopted by leaders and policymakers, could form the basis of an American economic resurgence.
Correct assumption No. 1: Entrepreneurship trumps innovation
Many thinkers and leaders in the U.S. and around the world have reviewed decades of America's global economic dominance and concluded that the country has been a colossus because of superior innovation. That is the global conventional wisdom, the core assumption. Thousands of conferences around the world have been organized around this assumption. Some countries are even building "innovation cities."
In my view, rooted in decades of Gallup research and our company's work with many multinational corporations and city and national governments, this assumption is dead wrong. And I believe that America has stopped growing because leaders are governing from this faulty premise.
The U.S. cannot innovate its way out of its stagnant growth. It must enterprise its way to prosperity. Simply put, when it comes to fostering long-term economic growth, entrepreneurship trumps innovation. Put another way: An innovative product or service has no commercial value until a talented businessperson finds a customer for it.
Thought leaders often ask me: Aren't innovation and entrepreneurship like the chicken and the egg? Which really comes first? My answer is: That's the wrong analogy. The right one is the cart and the horse. Entrepreneurship is the horse, and innovation is the cart.
The problem is that because America's economic premise is currently wrong, the country just keeps loading the cart with innovative ideas. What the U.S. needs instead is a team of horses to pull the best ideas into the marketplace. I'll say it again: An innovation has zero value until a talented businessperson finds a customer for it.
Almost nobody in Washington understands this. Innovation, discovery, breakthroughs, ideas, and creativity are wonderful -- we can't get enough of them. But they create little to no economic energy in and of themselves. The car, the light bulb, flight, or the Internet created little to no economic energy until each was successfully commercialized.
You might say, "Well, I see a lot of entrepreneurial activity in the country." Yes, the U.S. is probably the best in the world at encouraging and fostering entrepreneurship. But it's still not systematically built into our culture the way innovation, or intellectual development, is.