My Awakening

Although almost all the information I had about the company came from Goel himself, I knew his story had passed muster with the Singapore Entrepreneur of the Year judges, which gave me confidence in its accuracy. But I had mixed emotions about its implications. On the one hand, I couldn't help admiring the genius of the man who had created such a business model and who argued, with apparent justification, that it could be applied to almost any business involving the physical movement of goods. Equally admirable was his mission--to bridge the digital divide by putting affordable computers in the hands of people who would not otherwise be able to own them. From what I'd read, moreover, it appeared that he had developed a vibrant, entrepreneurial culture inside eSys and that he treated his people well, giving them responsibility, encouraging them to be creative in finding more efficient ways to operate, sharing the savings they achieved, managing by trust rather than fear, and spreading equity throughout the organization.

But Goel's model also made me uncomfortable. What if this really was the future? What if every company were able to set up operations globally so as to minimize expenses, including taxes? Where would governments get the money for essential functions? What would happen to standards of living around the world? The eSys model was clearly great for eSys, but what if everybody adopted it? Was this really something we wanted to encourage?

And I had more personal concerns in my capacity as CEO of Missouri-based SRC Holdings with responsibilities to my shareholders, who in our case also happen to be our employees. We've been in business for 24 years, growing from a single, money-losing remanufacturing plant into a profitable mini-conglomerate with holdings in businesses doing a combined $400 million in annual revenue. We've been able to accomplish this by developing the habit of looking ahead and asking the what-ifs. When I looked ahead from the perspective of Monte Carlo, I had to consider the possibility that we were going to see a lot more companies following Goel's path, and some of them might be our competitors. That was a future my company wasn't prepared for. I realized that my colleagues and I might have to consider making fundamental changes in our business after I returned.

To be sure, this wasn't the first time that developments in other countries had forced us to change the way we do business. In the 1970s and 1980s, the challenge had come from Japan. Back then, the media had labeled our part of the world the Rust Belt and suggested that our children's generation might be the first in American history to have a lower standard of living than their parents' generation. So we'd adopted Japanese techniques--just-in-time, quality circles, and so on--in an effort to become more competitive.

Then it was NAFTA and the challenge of competing with Mexico, where the fully loaded labor rate was $2 per hour. That was scary. To avoid being caught in a crunch, we tried to reduce our average labor cost by having some work done in Mexico. The quality was poor, however, and our people didn't like it. They viewed any manufacturing we did there as a threat to their jobs. So we stopped. But we learned that you can't wall yourself off from other countries. The world would close in on you when you weren't looking.

That lesson came home to me again two years ago as we were preparing for one of our board meetings. Out of curiosity, I had asked our purchasing people to tell me the number of countries we were buying parts from. The total turned out to be 56. I was stunned. I had no idea that we were depending on so many suppliers outside the United States. I had someone create a map showing where all of them were located. It blew people's minds. Here we were, minding our business in Springfield, Missouri, and suddenly we discover we've gone global. That's how it happens. You just wake up one day and realize the world has become your marketplace--not in some abstract way but directly, personally. In the end, you don't have much to say in the matter. The only question is: How are you going to deal with it?

Now my company is figuring out how to deal with a type of global competition that has received little attention in the United States. Entrepreneurs in Asia, Eastern Europe, and Latin America are vigorously supported by their governments, hailed by their media, and embraced by their cultures. Their companies are a source of national pride--and for good reason. They've provided jobs, created wealth, and helped lift entire economies. In many cases, they have contributed money, people, and time to addressing urgent social needs.

In Monte Carlo, I could see evidence of that pride wherever I looked. What left the greatest impression on me--aside from Vikas Goel--was the respect with which the foreign media treated the various Entrepreneurs of the Year gathered there. The contrast to the U.S. media's attitude was striking. While newspapers, magazines, and television stations from other countries provided extensive coverage of the conference and the judging, I didn't see a single representative from an American media outlet. For that matter, the U.S. Entrepreneur of the Year, one of the Home Depot (NYSE:HD) founders, didn't show up either, sending an assistant in his place--much to the displeasure of one judge, who grilled her mercilessly about her boss's absence. I don't know whether American lack of interest in other countries' entrepreneurs reflects arrogance, ignorance, or complacency, but I'm concerned that we will pay for it when we meet the Vikas Goels of the world in the marketplace. Of course, some U.S.-based companies--Dell (NASDAQ:DELL), Ingram Micro (NYSE:IM), and Tech Data (NASDAQ:TECD), to name three--have already met Vikas Goel in the marketplace and have had to deal with the consequences.

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