How to fix the Dubai credit crisis: Create Real Value

Dubai World vs. Innovation?

Let’s get past the credit issues of Dubai, which will get cleared up, and look at what the Emirate can do to create a long-term, viable future of providing real  value. Up front, it won’t be about tall buildings or unique landscaping — it’s about global problem solving. These ideas apply to any company, anywhere.

As background Dubai has been working for years now to create a global center of trade motivated primarily by its diminishing oil deposits. Rather than wait for its oil to dry up, the monarchy determined to turn Dubai into something unusual — a cross between a trading and shipping port and a theme park. The purpose was to create an area so attractive to global businesses that Dubai would become the place to transact business and enjoy a premium lifestyle.

When Dubai’s incredible ambitions were publicized the reaction was frenetic and near frantic: Dubai was the new “It. ” And if you weren’t a part of It you would be left behind. Dubai, viewing the nearly insane response, borrowed and built to keep up with what appeared to be a global onslaught of demand.

Unfortunately the truth was that the hype being generated for Dubai (not by Dubai) was self-feeding and not solidly connected to reality. Like a snake eating its own tail, eventually the hype could not sustain itself and died.

So in viewing Dubai as a company, it was literally duped by artificial indications of demand that lead to massive over-production. Whether we’re talking about over-building of warehouses in Phoenix, AZ who believed it would become the Southwest’s hub of transportation and storage, or warehouses full of over-production of products that never sold, the error is not unique and as old as business itself.

Hindsight is always 20/20, so now what can the Emirate do to get past the hype and allow them to realize their dreams of non-dependence on oil revenue?

Address Needs and Create Value

Architectural and geographical novelty is good for hype but not much beyond that. Bragging rights buy you momentary enthusiasm but little else. You can see this time after time in companies that push features or specifications that are amazing — and totally irrelevant to their buyers. Dubai is working on the tallest building in the world — but will that truly satisfy any business need other than ego? And one lesson that is hard learned but always proven to be true: ego plays are always short-lived. In every challenging time, ego plays are the first to go.

International CXT--the largest production pickup truck. More than hype?

But don’t blame Dubai for thinking that bigger — even outlandishly bigger — is going to solve anything. Just look at U.S. manufacturer International’s decision to make the biggest pickup truck in the world. It too generated a great deal of hype — Hollywood stars would buy it, it would be the new It. But at the end of the day, did it solve any real needs?

What Dubai needs to create is real value. A real, legitimate reason for business to be there beyond “everyone who’s anyone will be there.” And that will take more than hotels, clever architectural and landscape layouts and other novelty approaches.

What does the world need right now? Real, true innovation. New ideas, new approaches. New technologies and new methodologies. If Dubai is smart they will turn their Emirate into an innovation nexus, bringing together brilliant minds from Asia, the Middle East, Europe, and throughout the world. Use some of that amazing housing to motivate the world’s best people to work, develop, design, and innovate in Dubai. Not for the indoor skiing, but for the opportunity to create something great in a work culture like no other in the world.

I’m not talking about the various technical centers already in place — the need is for a unique innovation nexus that spans all sciences, mathematics and technologies so they literally cannot be pigeon-holed into Internet, Media, or Studio Cities (free economic zones). With a completely new approach to designing an omni- and cross-disciplined innovation nexus with “discipline diversity” and an entirely commercial orientation, there would be little need to fear about oil — or hotel — revenue. The Middle East needs a center like that to compete with centers in the West and emerging centers in the Far East.

Over the next perhaps 100 years — and truly indefinitely — there will be an increasing need for innovation to solve problems at the individual, community, national and global levels. By assembling a cross-section of the world’s brightest seasoned and new minds, enormous heights can be reached. And that will be most profitable indeed.

Oil will run out, and hotel rooms will be empty as the next “hot” region comes into play. But building Dubai into an innovation nexus is something that would feed and grow itself — without eating its own tail. All while creating fortunes for those involved.

For International, they knew enough to pull the biggest production pickup truck from the market when the hype passed and the energy crisis made the truck obscene. Likewise, the tallest building will never be the real draw Dubai needs now that the global downturn has changed perceptions of what is “reasonable.” This recession is rather unique whereby the super-wealthy have seriously cut back — devastating for any ultra-premium location.

The Spotlight is Just as Bright — It’s Focus is Different

There is an amazing opportunity here for Dubai — but like any company, they will have to focus on need and value. Only that will build the Emirate — and any company — into all it can and should be.

If Dubai is smart they can turn this mess — a mess which will turn into a catastrophe for them if things aren’t changed — into a success that will create the true jewel of the Middle East. And I do believe they are very smart indeed.

This same logic applies to any company now that is willing to look beyond old plans and see where they can change themselves, change their plans, and change the world.

I’m ready for a dialog — are you?