ENTERPRISE SUMMIT 2005

We don't do economic development for the sake of it. It must always be for a purpose: the increase the international competitiveness, the social cohesion and the environmental sustainability of UK plc.

Gordon Brown's Enterprise Summit 2005 held on February 4th provided powerful additional ammunition for economic development practitioners in terms of the global competitive challenge. The summit had a stellar cast list - the heads of the Bank of England, the European Central Bank, the American Federal Reserve and the Chinese Central Bank, as well as the Indian Minister of Finance, several UK Cabinet Ministers and a phalanx of global corporate CEOs and chairmen, including Tesco's Leahy, Diageo's Walsh, EMI's Nicoli, Standard Chartered's Davies, BA's Eddington, Vodafone's Sarin, BP's Browne, Jean-Pierre Garnier (GSK), Jeff Immelt (GE), Sir John Rose (Rolls Royce), Sir Tom McKillop (AstraZeneca), and Simon Woodroffe (Yo! Sushi). Plus ebay's CEO Meg Whitman on video.

The particular focus was the rise of India and China. Both are growing fast. Jeff Imelt talked about a shift in GE so that instead of 80% of GE's growth coming from the industrialised world, it would soon be 60% from the developing nations like India and China. 25 years ago, his predecessor had advised ambitious young managers to study Japan - now it would be India and China. "GE's Six Sigma factories in India and China can stand toe to toe with the best GE factories anywhere in the world." "If," Immelt added, "you haven't been to India and China and you want to be a global business person, you'd better go there quickly…China and India are unstoppable."

Rod Eddington reflected ruefully that China is currently building 50 new airports - and that he had more confidence that they would all be built than that Heathrow will get a third runway! Vodafone's Arun Sarin noted that there are now 1.8 billion mobile phone users around the world - shortly to rise to 2 billion - with perhaps 3 billion in 5-7 years time. China already has 300 million mobile phone customers - and Sarin believes that will be 500-600 million soon. . "Prepare yourself to grow in this new global marketplace!" counselled Sarin.

Add to that the growth in Internet users from 60 million in 1996 to 600m million in 2002 to nearly a billion this year - and you have an unprecedented degree of global connectivity - speeding still further the spread of information, ideas, fashions - and campaigns. Over 4 million new items are posted daily on e-bay according to the company's CEO Meg Whitman. Tesco's Terry Leahy explained that Tesco (which now has 20 million shoppers every week around the globe) now uses the latest techniques in film animation like Shrek to e-mail virtual samples backwards and forwards between designers and buyers in the UK and manufacturers six thousand miles away - eliminating the 4 week delay for physical movement of clothing samples backwards and forwards.

India's Finance Minister talked about the phenomenal growth of India in sectors like IT and film-making- and added only half-jokingly - that he could foresee a time when American children would ask their parents: "Hollywood? Is that an offshoot of Bollywood?!" The world's third and fifth largest Stock Exchanges are now in India.

Both India and China have their strengths and their weakneses: India is seen to have effective micro-economy but weak infrastructure; China an ineffective micro-economy but strong infrastructure - but each is tackling their weak spots.

Shortly after the summit, the UN published a report forecasting that India's population will overtake China's earlier than previously expected - now sometime around 2030.

CEO after CEO emphasised the speed and extent of change through which they have to navigate. Standard Chartered's Mervyn Davies spoke of more change for his bank in the last 5 years than in the previous 150 years of their existence. He suggested that the next wave in international business will be Indian and Chinese businesses globalising. "Cross-border mergers and acquisitions by Indian and Chinese businesses are going to grow exponentially." He saw this as "inevitable," and talked about India's success in pharmaceuticals and other sectors and described call-centres and outsourcing as "yesterday's story."

The quality of Indian and Chinese undergraduates he described as "staggering" - "that's the competition we've got." All a painful contrast with the UK's one million young people who are NEETs (Not in education, employment or training)!

Perhaps not surprisingly, The Financial Times writer Martin Wolf -who has just published an authoritative book on globalisation referred to the "return of Asia and that the European blip is over…we should get used to a very different world."

Astra Xeneca's CEO Tom McKillop concluded that the real competitive challenge now was between small businesses in (say) the South East or the North West of England - and their counterparts in India and China.

It was fascinating to hear so many positive references to responsible business as a given for successful businesses. It was treated as axiomatic. As Adrian Hodges and I stressed in Corporate Social Opportunity , a lot of the CEOs made the link back to individual and organisational values - and that having this strong values-based corporate culture is vital for being able to manage global businesses where over-centralisation is incompatible with the need for speed. The need to be nimble was picked up by several CEOs. Jean-Pierre Garnier: "responsiveness trumps size every day"

Here are just a few of the sound-bites I noted:

• Lord Browne: "Corporate Responsibility is just another part of doing business - not separate and apart...adhere to a set of values...I don't know how you can run a global business if you have different sets of rules around the world...it doesn't work
• Jean-Pierre Garnier "if you don't do it (CR), the activists and the NGOs will really hurt the reputation of your business"
• Standard Chartered's Davies: "in 56 markets...totally dependent on strong local management...need strong set of values...
• Rod Eddington - "clear business imperative on the environment..if we don't tackle, customers won't fly with us..if you get it wrong, people won't do business with you...unless your are seen to be a good corporate citizen, the good people won't want to come and work for us"
• Arun Sarin: "to be an important business in the future, we have to be responsible whether on carbon emissions or the supply chain...much more so than even 10 years ago..4 core values embedded in the culture and organisation
For economic development practitioners this emphasis is important because of the work now going on with Yorkshire Forward, EMDA and the NW RDA, with Accountability, Business in the Community and others, to explore whether having a source of responsible businesses (pursuing environmental, social and community responsibility) is a source of actual / potential competitive advantage for regions and cities.

David Grayson is a director of Business in the Community and Principal of BLU - the virtual corporate university for small business development professionals.
www.davidgrayson.net