The importance of “Real Engineering” over “Financial Engineering”. Arcus asked 1200 CEOs about the most important lessons they have learned in management and leadership. Over the past decade, the focus of most CEOs has been on outsourcing to cut costs and increase productivity. This agenda has been driven in no small part by leading consulting firms who encouraged governments and business leaders to invest in the “service economy” and “value added” innovation that was to be delivered by sectors that did not manufacture products by focused on design and service delivery. Contact Arcus for a presentation on best practices in innovation.
One of the challenges with this premise is that historically, countries that have invested in R&D linked to innovation in manufacturing have been more resilient and led growth. For example, Germany has seen a resurgence in growth, led by an increase in exports by its manufacturing sector.The government in Germany has focused on a collaborative approach to engage unions, business leaders and industry to look at ways to increase flexibility of the workforce and reduce layoffs.As a result of this strategy, German companies are emerging stronger and more flexible today than they were before the recession.
According to a recent Wall Street Journal interview Siemens CEO Peter Loscher, the U.S. should emulate Germany and stress “real engineering” over “financial engineering” in order to boost exports. Countries that invest in infrastructure such as water, energy and healthcare a focus on urban areas will see real growth potential in the U.S. and other markets.
Thomas Friedman wrote in the New York Times that “we need to get back to making stuff, based on real engineering not just financial engineering”. For example, the US has seen a dramatic drop in engineering graduations compared to financial graduates since the 1970s.This trend is worrying because it will have a direct impact on the US economy for several decades.