Perestroika for America.

• Author: Thurow, Lester C.

Perestroika For America Perestroika For America. George C. Lodge. Harvard Business School Press, $22.95. This book has a simple, and, I believe, true thesis. In the 21st century, comparative advantage will be man-made, based upon the invention and mastery of new product and process technologies. Europe, Japan, and North America will all want the same high value-added, high wage industries: micro-electronics, biotechnology, the new material science industries, robotics, civilian aviation, computer hardware and software, and telecommunications.

According to Lodge, to be successful, countries and industries, as well as individual business firms, must formulate and carry out the resulting strategies; business and government must work together. Individual initiative must be combined with a communitarian vision.

America needs perestroika because its standard operating procedures have not usually involved cooperation and planning. It needs a new structure to formulate a bottoms-up economic game plan and to find some institution to play quarterback--the role played by MITI in Japan and by the universal banks in Germany.

Lodge gives sensible advice on what it takes to form a successful consortium. It must be industry-led; participants must have clear, shared objectives; timing must be right, with a sense of urgency and agreed-upon deadlines; the key players must have top management support; substantial time must have been spent planning strategies; strongly motivated, competent people with career paths within and outside the consortium must be attracted and a common culture built. Government's role is as a legitimizer, a power broker to protect small companies from large ones, a provider of supplemental funds, a coordinator with other government policies, a socializer to spread the benefits to the community, an overseer to ensure that the project stays on track, and a defender of the clearly defined national interest that is to flow from the consortium's activities.

In the bulk of the book Lodge takes a random walk through the failures of American business firms to work together, to work with government, and to compete successfully against those in Europe or Japan who have learned to work together. We learn about the Japanese strategy for conquering robotics, information policies in Brazil, and about the problems the U.S. semiconductor industry is experiencing while the European semiconductor industry is still getting its act together. Our failures...