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With the financial crisis of 2008 barely behind us, the wheels of globalization have slowed and, in fact, calls for protectionism are growing louder. However with the global integration of trade, capital, information and labor over the past decade, few people understand that our world is more tightly connected than ever before. In a highly inter-dependent environment, small mistakes can have large ramifications. Marketers, are you prepared for the next big global blow-up?

Leading up to World War I, it wasn’t uncommon for critical information to take hours if not days to reach its destination. Author Liaquat Ahamed cites in Lords of Finance that despite the advent of railroads, steamships and telephone, mail service was the norm for important dispatch, and it took a person five days to cross the Atlantic via ocean liner.

Oceans aren’t much of an obstruction anymore. With transoceanic internet cabling made possible through the birth and death of businesses, global markets are durably connected. Today, information flows at the speed of light across supply chains, and project work “follows the sun” shifting across various time zones. In addition, velocity is the new normal as the speed of decision making accelerates, and executives must analyze and act faster.

In a tightly connected world, there are the inter-dependencies we can see and document, and those not so transparent.

For example, Morgan Stanley Chief Economist, Stephen Roach, in his book The New Asia comments on how “this new connectivity (has) been amplified by increasingly complex financial instruments (such as derivatives).” Indeed, Roach cites Fed Chairman Alan Greenspan’s belief that the sub-prime contagion of 2005-2008 could be “walled off." Unfortunately, as Roach points out, it’s only now that the global economy is picking up the pieces from this misconception and economists now understand the deep linkages between the U.S. consumer and the rest of the world.

In a tightly connected world, we live in a complex system that is composed of multiple sub systems. While some may argue the world isn’t quite “chaotic," it is becoming clear that perturbations (even quite small) can cause quite a ripple in the global pond.

Take for instance, an event that happened nearly one hundred years ago: the powder keg eruption in Europe with the assassination of Arch Duke Ferdinand of the Austrian-Hungarian Empire. Indeed, this one event (momentous in the eyes of those in the Balkans) was thought to be “contained” by European and Asian powers. And it was—for a month. However the linkages and alliances among various countries sitting on the sidelines eventually brought major and minor global powers into the World War I.

Indeed, the world is more complex today than in the second decade of the 20th century. If it is to believed that one shot from Serbian nationalist Gavrilo Princip started a chain reaction leading to the loss of 37 million lives, it’s conceivable that in today’s more tightly coupled world, a single “spark” could have blinding consequences.

Author James Gleik reminds us, “(In complex systems) points of crisis are everywhere—small scales intertwine with the large.”

Today’s marketer is not immune to contagion. Events in the global market rarely happen in a vacuum anymore (much like this domino video). We must account and plan for the things we can control, and prepare for events we cannot.


• What is the next global flashpoint that could choke your sales and marketing forecasts?
• What small event—seemingly innocuous—could give rise to massive global turbulence?

Continue reading "The New Risk: Tight Interconnectivity" ... Read the full article

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Paul Barsch directs services marketing programs for Teradata, the world's largest data warehousing and analytics company. Previously, Paul was marketing director for HP Enterprise Services $1.3 billion healthcare industry and a senior marketing manager at global consultancy, BearingPoint. Paul is a senior contributor to MarketingProfs, a frequent columnist for MarketingProfs DailyFix, and has published over fifteen articles in marketing, management, technology and healthcare publications. Paul earned his Bachelors of Science in Business Administration from California Polytechnic State University, San Luis Obispo. He and his family reside in San Diego, CA.