21st Century Logistics Symposium
Private Sector: TDL For Competitive Advantage
September 16, 2003
Before coming here, I spoke at length with Fred Kuglin and Doug Fisher. They are both advisors to our fund and Indiana University graduates who left the state of Indiana to pursue careers in TDL. I want to thank both of them for their thoughts and insights which I have incorporated into my comments over the next few minutes.
I would like to read 2 paragraphs from the Lilly Endowment 2001 Annual Report, because I believe it summarizes best why we are all here today.
“It is a “given” that education is the indispensable key to a better future for individuals, communities, states and nations. Thus, we have been especially troubled in Indiana by the disheartening statistics that place our state near the bottom on the list of 50 states and the District of Columbia in the percentage of adults with a baccalaureate degree and in the percentage of its workforce in professional positions or specialty occupations.
A…study from the Indiana Fiscal Policy Institute indicates that from 1965 to 2000 Indiana’s per capita income ranking fell from 17th to 33rd place, the largest drop of any state in the country. The economic well-being of the state is in jeopardy.”
How does Indiana become a magnate for growth? How does the state of Indiana gain a sustainable competitive advantage? The kind of long term advantage that comes from a focused thoughtful effort and not from short term fixes. How do we attract the best and the brightest? How do we retain our college graduates and their children and their children’s children?
Let me give you two examples where private enterprise took the bull by the horns so to speak and created a new market for themselves.
First, there is a small region in the northern sector of Italy. It is the industrial region north of Milan. Certainly smaller than Indiana. This region went from being the world’s largest producer of fine woolen goods, mostly sweaters, to becoming the world’s largest producers of ski equipment. I don’t mean skis, but helmets and such.
How did they do it? They did it with a remarkable intellectual infrastructure. It was a group of smallish entrepreneurs getting together and asking the question—What is the market looking for that we can address? Our skills and our work ethic are our competitive advantage. We’re very good, but that isn’t in itself addressing any particular market.
Ok. What are all the complementary skills to transportation, distribution and logistics? Well certainly you need superb communications. What is the market looking for? I’m not suggesting this be approached in a collusive way, but rather a collaborative way. You have an empty factory and we have some capacity and skilled people. What can we do with that?
Let me give you a second example. In the forests of Finland was a forest products company. That in itself was no longer a competitive advantage. In fact, where sustainability is critical and lumber is always a commodity that is not a good business. They would end up inventing NOKIA.
How did they do it? They said what are all the skills we have? We have really really good designers and engineers. We have clever people at understanding world markets. You have to if you are going to sell lumber. They concluded that the cell phone business was going to be a big market. All the providers were getting old and tired and showed it—Motorola, Siemens and Erickson. They saw that the markets were going to be in Asia. They said what kind of cool things could leap frog what was currently in the market. This is called “Going from benchmarking where you are to future marketing where you want to be.”
Indiana has a great competitive advantage in its Universities—IU, Purdue and others. To the degree you connect your future planning to the intellectual capacity, and then people will come to be part of that. That’s what made Silicon Valley.