The U.S.'s Strength Is Leadership: The Innovators

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- At the recent Clinton Global Initiative, Andrew Liveris, Dow Chemical's ( DOW) CEO cautioned that America will lose its technology leadership position if it does not produce more engineers.

We have heard such warnings for decades now, but still today, eight out of 10 of the world's largest tech companies (by market cap) and nine out of nine of Fortune's Most Admired Global 500 technology companies are in the U.S.

How can this be? It's because the U.S. does not compete on engineering capabilities; it competes on leadership and innovation. A country succeeds when it understands and leverages its unique competitive advantage.

Switzerland is a country that does this. It's strength is global management. A landlocked country with fewer people than the greater Houston area and few natural resources, Switzerland maintains powerful global positions in insurance, banking, watches, pharmaceuticals and chemicals. The country's extraordinary global management capabilities enable it to locate units in talent-rich locations.

By contrast, Japan's competitive advantage is high-quality manufacturing. Quality is deeply ingrained in the Japanese culture. In many high-rise apartment buildings in downtown Tokyo, building maintenance will use a rug shampoo machine to "shampoo" the parking garage floor. No one can beat Japan in quality.

The U.S.'s competitive advantage is leadership and innovation.

Let's focus on leadership. Here are the facts: All of the top 20 companies in Fortune's Most Admired Global Companies are American. And American companies dominate global service industries -- managing services is a more difficult leadership task than managing manufacturing.

Maybe the U.S. should strengthen its strengths by producing better and more global leaders. The U.S. offers its youth many leadership opportunities: Boy and Girl Scouts, 4H, student council, school club leadership, sports teams, etc. But for many people, leadership opportunities dry up once they leave high school.

Clayton Christensen, a Harvard Business School professor and an authority on innovation, recently co-authored a book with Henry Eyring, a senior administrator at Brigham Young University - Idaho.

Their book, The Innovative University, arrives at a time when many parents are no longer able to pay exorbitant tuitions and states are cutting back funding. Education, one of the most change-resistant professions, needs to change.

So how does an innovative university operate? Brigham Young University - Idaho (BYU-I) is a case example cited throughout the book. BYU-I sees one of its core missions as producing leaders. It defines leadership as "aligning and moving a group of people whether or not you are their formal leader" and call it, "Leadership with a small l." Here's how the school does it:
  • Leadership Transcripts. A leadership transcript is similar to an academic transcript; however, it records on-campus leadership achievements. BYU-I sponsors more than 200 intramural sports and student clubs, and all are run by students. If any student wants to create a new club or sport, she is free to do so as long as he or she follows the formal certification process -- great training for future entrepreneurs.

    One intramural sport is swimming. BYU-I has swimming leagues for students of all skill levels. A student can join a team as a swimmer and try to be promoted to assistant coach. From there, he can go on to be a head coach of one of the teams. If he is particularly ambitious, he may become the swimming league organizer, who runs the entire sport. The organizer needs to build and staff the organization with volunteers -- one of the most challenging leadership tasks.
  • Internships Required. Hiring managers often complain that college graduates have few practical skills. At BYU-I, students in virtually all majors are required to complete one or two school-approved internships. This is a challenging task in today's economy that requires a creative solution.

    Closing a factory for one-quarter of the year would be an unthinkable misuse of assets, yet most universities close down for the summer every year. BYU-I has three semesters that together make up the whole year. Students are assigned to two contiguous semesters so that the population stays balanced.

    One benefit is that "summer vacation" occurs at three different times of the year. This makes finding internships much easier. Further support is given by retired volunteers in 12 U.S. hub cities who work with local companies to arrange student internships. And every internship ends with a formal performance appraisal.
  • Transformed Teaching Model. BYU-I's president is Kim Clark, the former dean of Harvard Business School. Undergraduate classes use an approach similar to Harvard's case-study method. Students must be fully prepared before coming to class. Class time is a discussion where students teach students. Students keep journals to learn through reflection. Students learn that in life learning is not possible without reflection.
  • Learning to Manage Conflict. BYU-I classes include many team projects where students learn to be good leaders and good followers. Students are also taught how to have difficult conversations with each other. One example is confronting a teammate who has not delivered on his or her commitments.

Will the U.S. lose its technology leadership position if it does not produce more trained engineers? More engineers would be great, but the U.S. will never outproduce Asian countries. A McKinsey & Company study found that Asia's growth is limited by leadership: China has 5,000 capable multinational leaders but needs 75,000.

Maybe America should strengthen its strength: more and better global leaders. We teach our children science and math. How would America's competitiveness change if we spent equal time teaching leadership?

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Hall is managing director of Human Capital Systems (www.humancapitalsystems.com), a firm that designs systems for improving workforce performance. He is also an instructor in Duke Corporate Education's teaching network and author of The New Human Capital Strategy. Hall was formerly a senior vice president at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness. During his tenure, IBM was twice ranked No. 1 in the world in Hewitt/Chief Executive magazine's "Top Company for Leaders." Hall completed his Ph.D in industrial-organizational psychology at Tulane University, with a dissertation on people management practices of Japanese corporations.

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