Business and Culture: Transatlantic Business Leaders Offer Advice, Wearing High Heels

Five business leaders walked onto the stage of the Texas-EU Summit to talk about managing transatlantic businesses. Two run European units based in the United States; two developed European units of U.S. practices; and one has done it all. Four wore stilettos.They didn’t have much time, and they had something to say. Not one wanted to be called out for her gender, and not one considered that remarkable.

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(L to R) Ana-Barbara Llorente, partner, Pendas International, moderator; Belen Marcos, president, Cintra US; Cristina Silingardi, Austin managing director, VCFO; Sharon Schweitzer, founder and principal, Access to Culture; and Liz Wiley, partner, Grable Martin Fulton PLLC and honorary consul of France

The hardest thing: Finding and keeping talent

Without question, the biggest challenge confronting a European company in the United States is finding and retaining talent. “Americans’ resumes look great, but you have to train them,” said Belen Marcos, president of Cintra US, one of the world’s largest private developers of infrastructure. Marcos, an engineer by training, noted that in Europe educational credentials are paramount. Americans job-hop more than European hires. They tend to specialize and resist working in areas outside their specialty.

“Europeans are generalists. They expect to do many different jobs.”

Belen Marcos, president, Cintra US

Navigating European statutory regulations

Disruptive business models challenge both business and cultural norms. Consider the vacation rentals that have turned many traditional neighborhoods into latchkey hotels. Cristina Silingardi, a Brazilian with deep finance experience, helped Austin-based HomeAway successfully navigate the sticky process of integrating acquisitions in both Spain and Brazil.

“Understand the statutory regulations before you do business … It went off without a hitch.”

Cristina Silingardi, Austin managing director, VCFO

“Contracts are part of the law in Europe,” said Liz Wiley, an attorney and partner, Grable Martin Fulton PLLC. who specializes in intellectual property.

“Very little if anything can be negotiated (in Europe). Expect negotiations to take much longer.”

Belen Marcos, president, Cintra US

Marcos knows a thing or two about the subject. Her company Cintra is part of the Spanish infrastructure provider Ferrovial. She and her team negotiate the construction and long-term management of roads, airports and concessions, many of which are public-private partnerships.

Belen Marcos (holding microphone), president of Cintra US, negotiates infrastructure contracts in Europe and the U.S.: “It takes longer in Europe because of statutory regulations.”

Codes vs. negotiation. Consider privacy.

Europe is not a monolith. Both EU and country-specific regulations come into play when determining who owns what. For example, “the EU has the General Data Protection Regulation (GDPR), but France has its own data protection authority, the CNIL, which handles GDPR complains and defends the French position with GDPR-related issues,” said Wiley

“The United States is not a code country,” commented Wiley, “We make our own deals.”

Liz Wiley, partner, Grable Martin Fulton PLLC

Wiley, whose practice includes both French and American startups, recommends first filing for U.S. patent protection, then filing in other countries to ward off infringements.

Soft skills matter

“When in doubt, err on the side of formality,” advises Wiley. And in the hurley-burley world of entrepreneurs, she recommends oral presentation training for cautious French startups that compete in the winner-take-all American pitch culture.

Sharon Schweitzer, principal, Access to Culture

Sharon Schweitzer’s company, Access to Culture, cross trains business people to be effective in other cultures. Recounting an incident where two older Czechs silenced their giggling younger colleagues with a steely glare, Schweitzer said the significance of a seemingly minor incident caught her by surprise.

But do high heels also matter?

The specter of political change is everywhere. Here too, dress is brand. This year’s Yellow Vest protests revealed the deep divide between France’s privileged class and rest of their country. As I’m writing this, on the other side of the world, young people in Hong Kong wear black and mourn a man in a yellow raincoat.

Remember Mark Zuckerberg’s testifying before Congress, stripped of his signature t-shirt and uncomfortable in a blue suit? Melania Trump in a white pussy-bow blouse and sky-high heels? Dress is political, and high heels stand unrivaled as a symbol of gender and power. Flip flops may reign in U.S. youth and tech enclaves, but search “business women” and you’ll find women in power in wearing heels — because they choose to.

In another culture where talent and a diverse work force weigh heavily on its future competitiveness, Japanese women unsuccessfully petitioned their government to ban gender-based dress codes (#KuToo), and specifically high heels. My guess is there’s another shoe to drop there.

In 1869, men in the Wyoming Territory needed wives. Politicians in Washington needed more voters in the Western territories. So Wyoming gave women the vote. John Morris wrote to a national magazine promoting women’s suffrage:

It is a fact that all great reforms take place, not where they are most needed, but in places where opposition is weakest; and then they spread.

John Morris, following the Wyoming Territory’s decision to give women the vote

“To be sustainable, change takes time,” Wiley noted. Would this panel have happened 30 years ago? 20? Maybe.

With that thought, I’m pulling out my high heels to wear sometime soon.

Hats off to Ana-Barbara Llorente and Pendas International, for sponsoring the panel, and the World Affairs Council of Austin for hosting.

Austin, Texas: A Case Study in Managing Competitive Crises

Three things are clear about the future: technology will determine competitiveness; talent comes in all colors, nationalities and genders; and the problems are too big, too complex to solve in isolation.

The annual CULCON Symposium on U.S.-Japan Collaboration was held in Austin last week, the site where 30 years ago a rallying cry of “make America great again,” created SEMATECH, now a model of how government, industry and academic institutions can work together to manage competitive crises.

Today Japan, nestled precariously between North Korea and China, is doing something similar, boosting its competitiveness in science and technology by expanding university-industry partnerships and building a more inclusive work force.

Who owns the future? The electromagnetic spectrum and 5G

Bursts of “make Japan great again” thinking punctuated the session. In what was apparently a last minute change to his presentation, cybersecurity expert Dr. Motohiro Tsuchiya, pointed out that the United States owns Japan’s electromagnetic spectrum, the highway for next-generation 5G mobile technology, the internet of things (IoT), as well as x-rays, gamma rays and radio waves.

The electromagnetic spectrum hosts 5G technology, which will improve the reliability and reach of mobile internet communication. Illustration/ Children’s Health Defense

Thirty years ago, who would have thought something called the “electromagnetic spectrum” would become so essential to a single country’s competitiveness? But 5G technology has vast implications for not just cellphone upgrades, but but for medicine, business and national security. Case in point: Russia recently signed an agreement to allow Huawei, a lightening rod in the U.S.-China trade war, to develop the country’s next-generation wireless network, but since the Russian military owns their electromagnetic spectrum, there could be blips in its implementation.

This world and then the next

Dr. Takashi Tanaka, an expert in machine learning at the University of Texas and like the other panelists a product of international collaboration, pointed out that rocket technology can also be applied to missiles, a critical capability for an island nation with testy neighbors.

Space technology extends scientific inquiry to national security. Illustration/Nikkei-Asian Review

Proprietary rights in space? Dr. Moriba Jah, an expert on Space Domain Awareness, brought up the ever-controversial Elon Musk’s launch of 60 Starlink satellites into the crowded night sky, the first of a proposed fleet of 12,000 designated to provide global internet coverage.

Funding and talent

Innovation is all about funding and talent, which implies a partnership between the public and private sectors. The U.S. Department of Defense’s Defense Advanced Research Projects Agency (DARPA) provided the seed money for SEMATECH. The National Science Foundation funds emerging sectors like artificial intelligence where American leadership is increasingly challenged. Japan, a global leader in robotics, is stepping up its investment in other sectors as well.

“Last year (2018), the Council for Science, Technology and Innovation, the government’s science advisory body, announced a 7% rise in spending on science and technology (to 3.84 trillion yen), after years of stagnant funding. The government is considering another 100 billion yen for the upcoming fiscal year to pay for exploratory research aimed at achieving what The Mainichi newspaper calls “moonshot” results. The government is on track to hit a goal of spending 1% of GDP on science and technology in higher education by 2020.”

David Swinbanks, Nature, Nature 567, S9-S11 (2019)

Talent is increasingly collaborative. The CULCON panelists referenced cultural barriers in Japanese universities that inhibit the collaboration, from silo-ed departments to paying research assistants. But then again, perhaps the group’s of Austin as a meeting site was significant. The city is a case history in how a single successful experiment in public-private collaboration, SEMATECH, spawned a vital tech hub that continues to attract jobs and talent.

Stumbling from failure to failure with no loss of enthusiasm

I shared Churchill’s quote with my seatmate, Mr. Naoyuki Agawa, who asked a bedrock question of Austin’s assistant city manager, Ray Arellano: What do you say to people who have failed? Mr. Agawa teaches American constitutional law at Doshisha University in Kyoto, following a long career practicing law in New York and Washington and a stint as Japan’s Minister for Public Affairs.

His point was well taken. Without role models, without examples, without encouragement and social and financial support, failure is a hopeless quagmire.

I said I could do it, and I did it

Mykaela Dunn, Brooke Owns Fellow, University of Texas at Austin. Photo/The Daily Texan

Eureka! Beamed into the panel discussion on space technology was a Texas success story. Mykaela Dunn, a native of tiny Stafford, Texas and a recent aerospace engineering graduate from the University of Texas, has just started her internship in the California-based Stealth Space Company, courtesy of a Brooke Owens fellowship. Dunn encouraged the audience to consider more than grade point averages (GPAs) in evaluating talent, mentioning that she had to remind herself to do the same.

Well done, Mykaela!

Do Tariffs Make Us More Competitive?

David Firestein dropped by last week’s “World Spins” session to reassure us that at about $1 trillion, give or take a few million, the U.S.-China trade relationship is too big to fail. But he had some thoughts on where we’re taking it.

Firestein‘s credentials in U.S.-China relations are wide and deep — the State Department, EastWest Institute, and now, president and CEO of the George H.W. Bush Foundation for U.S.-China Relations — in addition to his role in academia launching the LBJ School of Public Affairs’ China Public Policy Center.

Perceptions of growing authoritarianism

“China’s rising authoritarianism colors U.S. views in a profound way.”

David Firestein

The Uighur minority and the telecom giant Huawei are the poster children of American perceptions of China, prompting national security concerns that have underpinned both the administration’s trade narrative and domestic regulatory actions. On the heels of watching China use facial recognition software to persecute the Uighur and other Muslim minorities, San Francisco banned the technology. Last week those same concerns spread to Washington, bubbling up at the House Committee on Oversight and Reform.

Blacklisted by the administration, Huawei typifies China’s state-supported hybrid economy. The telecom giant sits on a deepening Maginot Line between the Internet of the East and that of the West, drawing a line between American interests and increasingly, everyone else’s.

“In public and private statements, American intelligence officials and telecommunications executives and experts have begun to concede that the United Sates will be operating in a world where Huawei and other Chinese telecom companies most likely control 40 percent to 60 percent of the networks over which business, diplomats, spies and citizens do business.”

David Sanger, The New York Times

There’s a silver lining for Big Tech. Nothing unites like a common enemy, and China has provided Qualcomm, Facebook, Google et. al. with a new “America First” narrative to relieve regulatory threats.

The missing quid pro quo

“China is vastly more closed to us than we are to them,” Firestein said. “When someone from China gets off a plane in San Francisco, they have immediate access to their email through WhatsApp. But an American landing in Beijing can’t access their Gmail.”

David Firestein

For an administration determined to deliver on its “America First” campaign promises, protecting America from China is a top priority. Vice President Mike Pence’s watermark speech at the Hudson Institute frames the U.S. response to Chinese “economic aggression.”

With China, all silk roads lead to intellectual property. In the absence of any Chinese quid pro quo to American openness, in 2018 the administration has expanded its powers to protect domestic technology from foreign investment. The Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) began to block mergers and acquisitions considered a threat to national security. The Export Control Reform Act (ECRA) and the Foreign Investment Risk Review Modernization Act (FIRRMA) are charged with protecting tech sectors that map with its “Made in China 2025” strategy — advanced manufacturing, artificial intelligence, self-driving vehicles, semiconductors and telecommunications.

Applying worst-of-breed practices

Unintended consequences abound. The ban on Huawei network technology hits rural areas the hardest because the small network providers have to swap out cheaper Huawei equipment for more expensive offerings. And faced with its American supply chain being cut off, China will accelerate its build-your-own strategy, a trend that is already impacting U.S. tech companies’ stock prices.

Which brings us to where Firestein breaks rank. A trade strategy based almost exclusively on punitive tariffs has penalized American producers by eliminating lucrative markets, disrupted supply chains and cost consumers at check out.

“The United States is adopting “worst of breed” practices that are destructive to the economy … Our trade deficit with China is the largest good and services deficit dating back to 1776.”

David Firestein

Nowhere is the cost of the trade war more obvious than in the agricultural sector. Last week at a “hats on” event, President Trump announced a $16 billion farm aid package in a robbing Peter to pay Paul strategy to offset farmers’ losses with taxpayers’ dollars.

In fact, tariffs can make industries less competitive.

It breeds a kind of laziness here,” said Simon Lester, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute.  Tariffs are taxes on outside goods, so they inherently protect some U.S. businesses from foreign competition. “You don’t have to compete with the best in the world you can just relax you don’t have to work that hard and face any competition,” he says.

Marketplace, May 27, 2019

Despite the national security narrative, the relationship between China and the United States is not about military might. Certainly, the U.S. technology industry is rooted in federal defense funding, and the Department of Defense continues to fund innovation. But this is a 21st century struggle not a 20th century one. China’s goals are economic.

“Military interests are a function of power. China is building its military to define its power … But let me assure you, China has no interest in becoming the world’s policeman.”

David Firestein

Relationships make the world go round

The conversation closed with a reminder that relationships grease the wheels that make the world go round. Firestein brought up a flash point from his first few weeks in Austin when two U.S. Congressmen, a U.S. Senator, numerous professors and the University of Texas student newspaper protested an offer from the Confucius Institute to make a donation to the CPPC. Firestein noted, however, that the United States has similar practices, and that in the end:

“Relationship matters. We have to get it in sync.”

David Firestein

What does the future look like?

A year ago, Firestein cautioned that competing with China was like a no-holds barred cage fight in wrestling. China knows what it wants its future to look like. State control provides a longterm planning horizon. It has a clearly written industrial strategy, state funding and a non-interference strategy with its people. The United States operates from tweet to tweet. As for a strategy?

In the end, we’re going to have to step up and compete. China is not our enemy but it is our fiercest competitor.

David Firestein, in a May 2018 talk at the “World Spins”

In the not too distant future artificial intelligence, autonomous vehicles, advanced manufacturing, semiconductors, telecommunications will shape not just American competitiveness but what our world will become. Even the current administration, loathe to cooperate on much of anything, went so far as to endorse a set of international AI guidelines sketched out by the Organization for Economic Cooperation and Development. To echo a comment made by Senator Richard Burr at the University of Texas’ Fifth Annual Texas National Security Forum:

If we don’t create a framework for this technology, who will?

Senator Richard Burr, chairman, Senate Select Committee on Intelligence, Nov. 2018

China and Innovation: While You Were Tweeting, the Future Happened

David Firestein, the executive director of the University of Texas’ new China Public Policy Center headlined a recent session of our speaker series, The World Spins, with some advice about competing with China.

“In the end, we’re going to have to step up and compete.  China is not our enemy. But it is our most formidable national competitor.”

Firestein, an Austin native who spent 20 years in China with the State Department and another 10 as a senior vice president at the East-West Institute, has no illusions about what’s at stake.

“It’s like a cage match in wrestling,” he explained, where one wrestler, the United States,

David Firestein, Founding Executive Director, China Public Policy Center; Clinical Professor of Public Affairs
David FIrestein, executive director of the China Public Policy Center: “In the end, we’re going to have to step up and compete.”

follows the rules, and the other, China, uses any- and everything to win. And winning means becoming the first country in history to be a brutally market-oriented authoritarian dictatorship.

In a cage match, tweets and tariffs are a poor match against a singularly focused industrial policy and a bill of rights that says:  Citizen, you stay out of politics, and we, the government, will make you rich.

One battleground:  artificial intelligence and big data

If you’re not reading Jeff Ding’s ChinaAI Newsletter, you should be. Ding, who is a graduate student at Cambridge, shares translations of Chinese policy, strategy and technology. His most recent is a report from boutique private investment firm Rising Investments on China’s Civil-Military Fusion.  The report notes that although applications based on artificial intelligence (big data, internet) need time to developed.

  • AI military applications still need a lot of time: products for the military industry require “high reliability,” so emerging technology like AI will be used as reserves and not be applied until they are mature, and the related technologies for AI (big data, internet) also have a number of security issues.
  • Intelligent weaponry and intelligent robots will have a major impact on the strategy and the tactics of future wars.

China also plans to use the same public-private partnerships that built the American technology sector to achieve its goals.

  • China did not permit non-government capital to enter into national defense industries until 2005. They are still looking for the emergence of a 50-100bn military industry private corporation on the scale of say Lockheed Martin.
  • The goal is to have over 80% of defense industry information construction technology come from private enterprise. China hopes to reach the first wave of peak civil-military fusion in 3-5 years.

Will political turmoil stifle American innovation?

Without the Dept. of Defense we wouldn’t have the Internet or email, much less venture capital and private equity.  Read Andrew Ross Sorkin’s excellent article about the push back against defense contracts among the employees of Silicon Valley technology giants. Sorkin quotes Adam Grant, a professor at the Wharton School and a member of the Defense Innovation Board, an independent federal advisory committee set up under President Barack Obama, said he believed that the partisanship that was contributing to the debate would ultimately stifle innovation.

“I worry that it will stall progress,” said Grant. “Innovation has been fueled for decades by private-public partnerships. It smacks of cutting off your nose to spite your face.”

Meanwhile, Firestein reminded us, China is in that cage match, its eye on the long-term, even as American strategy changes with an election cycle, from tweet to tweet. It’s hard to win a cage match when it’s unclear what winning looks like.

“I think we’re at the beginning of a major transformation and a technology revolution that is, by an order of magnitude, more disruptive than the internet revolution 20 years ago,” Robert Manning, a senior fellow at the Atlantic Council recently told American Public Media’s Marketplace Report.

“If we don’t get wise to these trends that are reshaping our economy and are going to affect the way we work, live and everything else, the future is going to take us by surprise.”

 

 

 

 

 

 

 

 

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Policy Weirding: Climate Change and National Security

Will the military drive our national climate change agenda?  Dr. Joshua Busby dropped by a session of the World Spins for an update. Just last week, the Environmental Protection Agency announced that new regulations on toxic chemicals and soot are to be based on data and science generally available to the public (otherwise known as “pop science”). In the past six months, the EPA deleted climate change from its strategic initiatives. President Trump announced the United States’ intention to withdraw from the Paris Climate Accords, making it the only nation on earth unwilling to voluntarily reduce its carbon emissions, identified as the major contributor to global warming.

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A military weather-tracking station. Photo courtesy of the United Nations Climate Change report.

Whiplash contradiction over how to address changing weather patterns 

Over roughly the same time period, the National Defense Authorization Act identified climate change as a national security issue. The Center for Climate Change and Security published a chronology of over 12 separate concerns raised by senior Dept. of Defense officials, including:

I agree that the effects of a changing climate — such as increased maritime access to the Arctic, rising sea levels, desertification, among others — impact our security situation. I will ensure that the department continues to be prepared to conduct operations today and in the future, and that we are prepared to address the effects of a changing climate on our threat assessments, resources, and readiness.”

Secretary of Defense Jim Mattis

An associate professor at the University of Texas’ LBJ School of Public Policy and an internationally-recognized expert on climate change policy and national security, Busby remains unperturbed in the face of whiplash contradiction. A veteran of climate research and negotiation, he recommended substituting “climate weirding” for “climate change” to cultivate civil discussion — not so easy in a world where the weather is mentioned in the same breath as terrorism.

 “It’s (climate change) a super-wicked problem, characterized by greed, lots of actors and short-term actions.”

Dr. Joshua Busby

The military perspective: assess and plan for risk   

From a military perspective, the risks posed by climate change are unequivocal. They can be assigned a dollar figure. The 2017 hurricane season was the costliest in U.S. history. Damages topped $200 billion, not including cost of calling out the National Guard for the three most expensive hurricanes in recent history — Harvey, Irma and Maria.  Tasked with managing installations from Newport News to Africa and Antarctica, it must contend with rising sea levels, temperature and humidity; agricultural production; and  massive migration.

“In the Arctic, the combination of melting sea ice, thawing permafrost, and sea-level rise is eroding shorelines, which is damaging radar and communication installations, runways, seawalls, and training areas. In the Marshall Islands, an Air Force radar installation built on an atoll at a cost of $1,000,000,000 is projected to be underwater within two decades.”

The National Defense Authorization Act

Busby and his team are helping the military pinpoint trouble spots before they occur. Using a composite mapping tool, they identify the countries most vulnerable to a combination of weather, famine, poverty and weak government — India, Sri Lanka, Burma, Bangladesh. In this way, military can more effectively plan and direct help where it will be needed, as well as measure results over time.

Meanwhile in private sector, opportunity

While the military sees threats, the private sector sees opportunity. Rich Sorkin, CEO of Jupiter, a risk assessment firm recently profiled by NPR, raised $10 million and hired top scientists from the federal government in a bid to help businesses and property owners prepare for a changing climate.

“Hugely important, globally significant, gigantic economic problem, not currently being addressed.”

                                                    Rich Sorkin, CEO, Jupiter

And of course, defense contractor Raytheon forecasts a boon in weapon sales:   “Domestically, the effects of climate change could overwhelm disaster-response capabilities. Internationally, climate change may cause humanitarian disasters, contribute to political violence, and undermine weak governments.”

Want to learn more?

The Center for Climate and Security

Publications

Slides from the presentation

NOTE:  If you haven’t followed NPR and Frontline’s coverage of the economic devastation wrought be Hurricane Maria and the inadequacy of the federal response, I recommend reading/watching it here.  Maria, of course, was the third major hurricane that required federal aid in the fall of 2017.

 

 

 

Blockchain’s Promise: Trust

Pete Harris stopped by a session of the World Spins to share his take on blockchain, the software technology generally overshadowed by its trendier spawn, bitcoin and the Bitcoin network. Harris, who bears a striking resemblance to Bilbo Baggins, has a relationship to hype similar to mine with spreadsheets. That is, he is clear and takes  sticks to the facts as he sees them. Even so, it doesn’t take long to recognize blockchain’s promise. If it’s possible to transact business based on a series of permanent (i.e. they can’t be changed), transparent interactions, then our trust-starved world may have a chance of recovering its footing.

https_blogs-images.forbes.comjamiemoyfiles201802block-chain-2852998_1920-1200x534 (1)
The blockchain network: can it build trust?  Photo courtesy by Gerd Altmann via Pixabay, courtesy of Forbes

 

“We’ll have to wait and see” 

Harris’ blockchain CV dates from his Wall Street consulting days over a decade ago. These days, having sworn off airplanes, he spends much of his time with the Austin startup community where over 70 young cryptocompanies are  tackling data integrity issues where they find them — finance, healthcare, contracts.

I watched a handful present at Harris’ Monday night meetup. They ranged from Po.et, copyright/intellectual property protection, to GovernanceChain, an accounting network and CityShare, a digital shopping/hospitality network for member cities. Among the more visible is Wanchain, a Chinese nonprofit that’s figuring out to securely connect separate smart contracts, each with its own blockchain, a pivotal step in supporting a currency-agnostic global financial network. Interestingly, Wanchain’s technology is developed in China; the company’s U.S. headquarters is in Austin.

One of the best parts of these presentations is listening to company execs say, “I don’t know,” and “We’ll have to wait and see” — something I hear very often.  But I suppose that’s the beauty of a working with a nascent technology.

Privacy is implicit in the design

Speaking of wait-and-see, someone asked about blockchain’s impact on GDPR, the  European Union’s toughened privacy requirements known as the General Data Protection Rules. With the compliance deadline looming next month, that too is a wait-and-see. But since transactions are permanent, transparent and traceable, the blockchain ledger eliminates the need for centralized control. The integrity of the information is inherent in the software design.

A peek at a mobile citizenry in a digital world 

Today, 10% of the world’s GDP is in block chain. But it’s not all business. In the public sector, tiny Estonia has fashioned itself what the New Yorker magazine labelled a digital republic. Its citizens are free to live and work wherever they please while continuing to  vote, maintain their health, pay taxes using digital IDs.

Curious? Here in Austin, check out the: