Wednesday, June 4, 2014

Why China and America are Headed Toward a Catastrophic Clash

By Hugh White Professor of Strategic Studies, National University of Australia; author “The China Choice: Why We Should Share Power.”

This article also appears in The Interpreter, the journal of the Lowy Institute in Australia.

Many people find it hard to understand why China is acting the way it is in the East and South China Seas. What does Beijing hope to achieve by alienating its neighbors and undermining regional stability?

Let me suggest an answer: China is trying to build what President Xi Jinping calls "a new model of great power relations." To understand how this might be the aim of Beijing's actions, we have to recognize that under his "new model," Xi wants China to wield much more power and influence in Asia than it has for the past few centuries. These things are inherently zero-sum, so for China to have more power and influence, America must have less. This is what Xi and his colleagues are trying to achieve.

Their reasoning is simple enough. They know that America's position in Asia is built on its network of alliances and partnerships with many of China's neighbors. They believe that weakening these relationships is the easiest way to weaken U.S. regional power. And they know that, beneath the flowery diplomatic phrases, the bedrock of these alliances and partnerships is the confidence America's Asian friends have that America is able and willing to protect them from China's power.

So the easiest way for Beijing to weaken Washington's power in Asia is to undermine this confidence. And the easiest way to do that is for Beijing to press those friends and allies hard on issues in which America's own interests are not immediately engaged -- like a string of maritime disputes in which the U.S. has no direct stake.

By using direct armed pressure in these disputes, China makes its neighbors more eager for U.S. military support, and at the same time makes America less willing to give it, because of the clear risk of a direct U.S.-China clash. In other words, by confronting America's friends with force, China confronts America with the choice between deserting its friends and fighting China. Beijing is betting that, faced with this choice, America will back off and leave its allies and friends unsupported. This will weaken America's alliances and partnerships, undermine U.S. power in Asia, and enhance China's power.

This view of China's motives explains its recent conduct.

Ever since President Obama announced the "pivot," China has tested U.S. willingness to support its allies over the Scarborough Shoals and Senkaku/Daioyu disputes. Until his Asian trip last month, Obama seemed inclined to step back from America's commitments, but his bold words in Tokyo and Manila suggest he has recovered his resolve to stand firm.

Now we can expect China to test this newly-recovered resolve by applying more pressure in the same places or elsewhere. And that is what Beijing is doing today in the waters off Vietnam. It is calling Obama's bluff. Expect more pressure against Manila and Tokyo soon.

Of course this carries risks for China. It does not want to fight America, so it must be confident in the judgment that America will back down and desert its friends rather than engage in conflict with China, even if backing down badly weakens the U.S. position in Asia. This confidence reflects two key judgments by China's leaders.

First, they believe that China's new anti-access/area denial capabilities can deny America a quick and easy victory in an maritime clash in the East Asian littoral waters. They have been reassured by America's own Air-Sea Battle doctrine that the U.S. knows it cannot prevail in these waters without launching a major campaign of strikes against Chinese territory. Such strikes would obviously risk a major escalation which might not stop below the nuclear threshold. So China's leaders think their U.S. counterparts understand that a war with China today is one that America could not be confident of either winning or limiting.

Second, Beijing believes the balance of resolve is on China's side. Washington clearly wants to preserve its role in Asia, but Beijing is even more determined to win power at the U.S.' expense. China's conduct suggests that the leadership in Beijing believes Washington understands this imbalance of resolve. That makes the Chinese confident that U.S. leaders will not assume that China would back down first in a crisis.

The idea that China might believe these things comes as a surprise to many outside China, including, one suspects, many in Washington. U.S. policy towards China, including the pivot itself, is based on contrary assumptions. The consensus is that Beijing is not really serious about challenging U.S. leadership in Asia because it is simply not willing to risk a confrontation with America which Beijing's leaders must know they would lose, and they do not care enough about expanding China's role in Asia to take that risk.

If that's true, then China's conduct is clearly foolish. But before assuming that the Chinese leaders are fools, we would be wise to wonder whether they really do believe what Washington assumes they believe. I'm pretty sure they do not.

Asia today therefore carries the seeds of a truly catastrophic episode of mutual misperception. Both Washington and China are steadily upping the stakes in their rivalry as China's provocations of US friends and allies become more flagrant and America's commitments to support them become more categorical.

Both believe they can do this with impunity because both believe the other will back down to avoid a clash. There is a disconcertingly high chance that they are both wrong.

Someone needs to change the nature of the game to avert the risk of disaster.

Start with a Theory, Not a Strategy

by Todd Zenger

Well-crafted strategies are road maps to places that yield competitive advantage and generate value for the firm. But once you’ve arrived, they don’t take you anyplace else. That’s a problem for companies under continual pressure from investors to find new sources of competitive advantage.

I recently had lunch with the CEO of a large privately held corporation that illustrated this dilemma. After two decades of strong growth, he recognized that that his strategy had run its course. In the minds of his investors, his success was baked into his company’s current value and they wanted to know where he was going to find more.

He presented to me three broad options for growth: diversify into a rather distant, weakly-related industry; develop and sell new services desired by their somewhat narrow set of existing customers; or expand globally into the same services they provide domestically. He asked which I thought made the most sense.

Of course, I did not give him a straight answer. Instead, I suggested that what he needed was a theory about strategy: a mental model about how his company could create value that would help him assess his three options.

In science, a good theory reveals compelling hypotheses that subsequent experiments will validate. A good corporate theory similarly reveals likely hypotheses about how the firm can create most value. It has three components:

Foresight into the future evolution of their industry,
Insight into what is distinctive and uniquely valuable in the composition of assets and capabilities the company possesses; and
Cross-sight into how combinations of internal and external assets and opportunities can create value.
For a company that has a good corporate theory, selecting the right next strategy should not be a problem; the fact that this CEO and I were having such a conversation about such divergent options revealed the absence of a good theory about what strategies were right for his firm.

I’m not going to pretend that it’s easy to come up with a good corporate theory. And, if anything, companies that have comfortable market positions will find the exercise more challenging than most. Microsoft is a case in point. Although it attained a remarkable position almost decades ago, the company has struggled to find new sources of value creation.

In the long run, firms compete not on their strategies, but on the basis of their corporate theories. For the past several years I have asked students ranging from executives to undergraduates the simple question: If you were given $10,000 to invest in Google, Apple, Facebook, or Amazon, where would you invest?

While the pattern of responses varies, most students quickly recognize that their answers have less to do with assessments of current market positions, and more to do with assessments of each firm’s corporate theory.

Each firm is entrenched in a market position quite distant from the others. Apple makes consumer electronics unrivaled in their ease of use. Google offers a search engine unparalleled in its speed and breadth. Facebook supports a social network unmatched in its reach. Amazon features a web store without equal in scope. But each is guided by a very different corporate theory, distinctly crafted as a reflection of the beliefs and current assets of their firm, which informs how they will move beyond their established and fully valued positions.

These theories (ideally) provide a sense of coherence to the growth initiatives that have pushed these firms into quite disparate and increasingly overlapping market space. Indeed, their theories seem to suggest no limit to the potential for strategic collision. Future results of strategic actions will ultimately determine the worth and accuracy of each firm’s theory.

Bottom line, unlike a strategy, a well-crafted corporate theory can take you beyond the one position or advantage. This is not to say that your theory will necessarily be the best one, but at least it will not be dead on arrival.

(Sources -

Wearable Technology: The Coming Revolution in Healthcare

By Vala Afshar Chief Marketing Officer, Extreme Networks

The year 2014 may well go down as theyear of wearable technology. The impact of wearables is already being felt in education, communication, navigating, and entertainment; but perhaps the greatest potential lies in healthcare. Wearable technology has started to revolutionize healthcare by assisting doctors in the operating room and providing real timeaccess to electronic health records.
The full potential of wearable technology in healthcare, though, goes well beyond directly assisting doctors. Patients can now continuously monitor their own health. At the 2014 Consumer Electronics Show in Las Vegas, Sony, LG and Garmin introduced devices that track everything from heart rate and blood pressure to a patient's O2 saturation. By 2018, the overall number of wearable devices shipped to consumers is expected to reach 130 million. With such acceptance on the part of the public, wearables are perhaps the perfect application for healthcare.
To learn more about wearables in healthcare, I spoke with David Peterson, Chief Marketing Officer for Emdeon, a company well-experienced in linking healthcare payers, providers and vendors. David believes that the adoption of wearable healthcare-related devices could indeed be a significant step in patient engagement and improving population health -- two critical success factors driving today's increasingly complex healthcare environment. Specifically, wearable health technology brings three distinctly beneficial trends to the table -- connected information, community, and gamification. By harnessing this trifecta, healthcare leaders have new ways to build engagement and create accurate, far-reaching views of both personal and population health.
David Peterson - CMO Emdeon Inc.
Connected Information
Healthcare information has traditionally been extremely siloed. Finding ways to integrate, aggregate, and analyze disparate data can be difficult and costly, but is needed to move healthcare toward cost-effective, evidence-based treatments. Furthermore, privacy and security considerations, like HIPAA regulations, have presented technical challenges related to the exchange of healthcare data.
To successfully employ wearable health technologies, the industry must find a way to develop networks that allow information access and provide support on the back end. This is already being done on a small scale: think about users of Fitbit® and similar health and wellness tracking gear who view their personal data and compare it against data from other users.
Having a network or backbone that a much broader population base can seamlessly connect to will fuel more meaningful data comparisons and analysis and distill useful information. This may spur wearable health technology vendors to partner with organizations that have extensive national networks and access to a large volume of health claims and other patient data. Companies like Emdeon, which processes more than seven billion U.S. healthcare transactions annually, and programs like theDepartment of Veterans Affairs Blue Button initiative or the Health Data Consortiumcan play a key role. Such a network could then aggregate data from wearables with other health information -- data from across a certain geography or specific diagnosis, for example -- to create a more complete picture of group health.
Creating healthcare communities from which to collect data is a way to crowd source valuable healthcare information. By bringing together people with a common interest such as weight loss, wearables serve as a mechanism to build engagement and at the same time compile information. It is a logical approach: The more you know about a population's health, the more steps you can take to keep them healthy.
For instance, patient data entered into electronic health records at practices and hospitals could reveal allergies, health histories, and medication use. Combined with information collected through wearables, providers will have more complete and essentially real-time data to treat and manage the health of individual patients, as well as patient populations.
Gathering data this way is somewhat like microphilanthropy, where individual donors give small amounts to charity over a period of time. The real power comes from the cumulative sum of the donations from many individuals. In healthcare, the exponentially larger pool of data about a health condition or population could prove tremendously powerful.
With information networked and communities built, participation in wearable groups can be driven by gamifying healthcare and fitness apps. Most of us are competitors at heart, and we love a good game. Imagine the interest in competing not against three or four friends who are trying to lose weight or lower cholesterol levels, but rather against a larger group of individuals who are members of your health plan or who share a similar health condition.
Health plans might offer incentives to members willing to sign up for designated wearable health programs and join in the "game." The incentives build participation by making the competition more engaging for participants. Growing the volume of data collected has the potential to broadly improve population health.
The Future
Surprisingly enough, wearable technology dates back to the 1200s, when the first eyeglasses were made out of crystal. Fast forward a few hundred years, when Chinese artisans of the Qing Dynasty created an abacus worn as a finger ring. Today, wearable health technology comes in the form of smart clothes, including sneakers, glasses, watches, rings, and more. Regardless of what they look like or how they are worn, wearables will play an pivitol role in the future of healthcare.
As the accuracy and scope of data improve, wearables hold the potential to reduce healthcare costs by identifying trends and commonalities among certain populations -- thereby enabling better preventive care. In addition to engaging patients and aiding personal wellness, they can move healthcare beyond individual monitoring and treatment toward more effective population health management.
By engaging and empowering patients to take an active role in data collection, wearables can change the way data and analytics are used to improve health. It is fascinating to think about, just as the abacus ring must have captivated the ancient Chinese. Consider how this can become the healthcare equivalent of how Google Maps displays traffic; showing healthcare patterns based on real time reporting of anonymous data from healthcare wearable devices.
While technology may never completely replace the all-inclusive health record, a detailed diagnosis or a one-on-one dialogue between patient and provider; the data collected from these devices can provide a broader scope of information. Healthcare organizations can tap the power of that data to engage patients and develop more effective and more personalized approaches to care, thereby lowering the overall cost of care.

This post was co-authored by David Peterson, Chief Marketing Officer for Emdeon.