For half a century, the United States has sat at the center of the global economic system, and Western-style capitalism has dominated. Now, it's no secret that the center of gravity is shifting. The advanced economies that in 2000 consumed 75 percent of the world's output will, by 2050, consume just 32 percent. Meanwhile, the emerging economies of the world—Brazil, India, China, and others—will surge forward. As these fast-growing, low-income economies mature, they will they adopt and create the next prevailing version of capitalism, according to Chris Meyer, Innovator and Founder, Monitor Talent. That, he says, will create new opportunities for consulting firms around the world. Myer will dive deeper into this new paradigm as part of his provocative presentation—“Capitalism’s Next Evolution—How Will It Impact the Profession?”—at the Consulting Summit Nov. 9 at the Union League Club in New York. Meyer sat down with Consulting One-on-One to discuss capitalism’s next evolution and his presentation, based on the findings on his forthcoming book Standing on the Sun, which is due out on Feb. 12.

Consulting: What is capitalism’s next evolution?

Meyer: Many of the ideas around capitalism’s next evolution come from my next book, which is called Standing on the Sun. It’s called that because a physicist once said to me: ‘For Copernicus to understand how the solar system worked, he had to be standing on the sun.’ Copernicus said that we had put the wrong thing in the middle of the solar system. The sun is not revolving around the Earth; the Earth is revolving around the sun. So, the idea with this book is that we’ve also put the wrong thing in the center of capitalism all these years—financial return. Now, that doesn’t mean that financial return is meaningless, but it does mean that what people value is much broader than that. That’s going to a big, radical shot between the eyes for most people.

Consulting: So, can you expand a bit on that?

Meyer: This is not just capitalism as we know it and practice it splitting into the emerging economy. This is more like a species migrating across a land bridge and finding itself in a new environment and changing to fit that new environment. The first inkling we get of this is this so-called “reverse innovation” where global companies are looking to innovations that happen in a lower income part of the world and global markets say ‘we could use that ourselves.’ For example, General Electric has developed an EKG machine in India that costs about 10 percent of what the advanced U.S. model costs. Well, it turns out people in Europe think the 10 percent cost is a very interesting trade-off for many of the other implications of the product. Now, 40 percent of this Indian product is being sold in Western Europe. So, the first idea is this reverse innovation idea. We’re not just exporting our know-how or sourcing cheap resources. We are learning from these markets. The big shift will come when we say we are not just learning about product design, we’re learning about how the economic system, and everything that goes along with it, works.

Consulting: How about competition? I’ve heard you speak about that in the past.

Meyer: There could be big changes there, as well. In the U.S., give competition a very central role. You can defend nearly any decision you make with “competitiveness.” But the fact is that a lot of what we call competition is 'pseudo competition.' Look at Bharti Airtel, the Indian telco company, and the business model it has pioneered whereby it collaborates with all the other cell phone companies on infrastructure and acquisition of software etc. They are sleeping with the enemy, so to speak, but the result is that they are able to expand the market by hundreds of millions of subscribers a month because they can get the price down to what Indians can afford. Meanwhile, Verizon and AT&T spend twice as much per customer per year on advertising than the average Indian subscriber pays for the whole service. This is what I call 'pseudo competition,' there's more and more non-priced collaboration going on in the economy. And this also applies to what gets measured.

Consulting: How so?

Meyer: I think we are at a dawn of a development of a new set of measurement yardsticks. Most people don’t realize that most of our financial measurements only stem from the Great Depression. Until the 1930s, nobody bothered with economic statistics until we had a depression and then people started asking 'what had happened?' And nobody could answer the question so we developed the beginnings of our economic measurements. This new dawn of measurement we’re entering, I think, will provide an opportunity for those in the consulting business to help define the yardsticks, to help people understand what they mean, and to help people use them and build processes around them.

Consulting: What should the profession be doing to ensure they are ahead of the curve on these changes?

Meyer: One, they can be part of the solution not part of the problem. They can keep up with the literature and keep looking for examples that clients can connect with. So, when you see Coca-Cola worried about its impact on the water table in India, for example, you can see the real sea change taking place here. Companies are being more responsible and view this as an obligation they have to the society in which they do business. The second thing they can do is look for the pieces that make this real rather than philosophical. An 'externality audit' is my best candidate for that. I would really be pushing hard for consultants to tell clients that there's a need corporations have—whether they know it or not—to understand what their overall impact is on the community where they do business. Companies, in general, are not thinking this way. I think somebody that could explain what an externality audit is to corporate America would have a very sale-able product.


For additional information on the Consulting Summit, Chris Meyer’s presentation or to register for the event, please visit www.ConsultingSummit.com.