Stay globally competitive: Be like Google

How can America compete against competitors who offer cheaper goods? Through creativity and innovation. The second in Fortune's three-part series on the nature of power.

By Peter Georgescu, Fortune

(Fortune Magazine) -- The war between consumers and producers is over. Consumers won. For decades the economic world order was dominated by excess demand. Scarce resources, including capital, were the differentiators between winners and losers.

But by the beginning of this decade consumers began to see, in almost every category, a plethora of products and services that looked, felt, and performed alike. Goods that were once hard to get became readily available and affordable, putting the decision-making power firmly in the hands of the consumer.

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Peter Georgescu is chairman emeritus of Young & Rubicam, where he was CEO from 1994 until 2000. He is the author of The Source of Success.

While this shift is good for consumers, it is leaving producers scrambling. Commoditization - what I see as the cancer of 21st-century commerce - has fueled ferocious price competition, leading to lower prices, margins, and profits for businesses. With price as the only real differentiator, producers are left with a challenge: They must find a way to stand out in the crowd.

Unless you offer consumers something unique, the low-cost producers will win the battle every time. Brand America is no exception. As we look at the rise of India and China, or even a reinvigorated Europe, we must ask ourselves how America will compete in coming decades against powerful new forces, probably bigger than us and capable of producing goods and services at significantly lower prices.

There's only one way to avoid the commodity quagmire, and it's not easy: It's through creativity.

The good news is that at their best, American business minds excel at putting creativity to work. In the past half-century, Americans created everything from the Post-it note to the artificial heart to the Internet. Today Steve Jobs and nearly everyone employed at Google let their imaginations loose as a matter of course.

Something new, it seems, is born at Google (Charts, Fortune 500) every week, making it the creative factory of this century and a model other companies should study carefully. It is a culture where innovation is not only nurtured but also expected and rewarded. (You probably haven't even heard of Google's Gadget Ads, a new option that allows advertisers to create interactive ads within widgets, or Google Shared Stuff, a feature that lets you share your favorite bookmarks with others. Both functions were added in recent weeks.)

But if creativity is to be the differentiator of the decade, the larger question is, Can creativity be learned? Absolutely. Google need not be the exception; it should become the norm. In my 30-plus years in the advertising business, I witnessed good writers become great, art directors turn into geniuses. I've seen midsized consulting companies teach top CEOs breakthrough management techniques that are in reality courses in creativity.

When I was working as an account manager on the United Negro College Fund campaign during the 1970s, I witnessed a young copy supervisor transition from a decent writer to a brilliant adman. After digesting the research material and developing a strong understanding of the market he was trying to reach, he came up with a slogan that continues to resonate today: "A mind is a terrible thing to waste." Over three decades later, it's still used by the organization.

All these examples show that creativity can be taught or developed in the right environment. The hard part, of course, is actually teaching it. Creativity is almost never a logical process. Great ideas come from everywhere - from the lowest rungs on the corporate ladder to the chairman of the board. But a company needs to be organized in a manner whereby it can hear, capture, and develop fresh ideas when they are hatched.

It's not easy becoming the next Google - or GE, or 3M, or name your favorite powerhouse of imagination. But for anyone trying to compete in the coming decades, creativity is one process that can't be left for later.

Peter Georgescu is chairman emeritus of Young & Rubicam, where he was CEO from 1994 until 2000. He is the author of The Source of Success. He can be reached at peter.georgescu@yr.com.  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.