I saw this great article on the shift of General Electric's manufacturing back to the US: http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/?single_page=true
And "a funny thing happened to the GeoSpring on the way from the cheap Chinese factory to the expensive Kentucky factory: The material cost went down. The labor required to make it went down. The quality went up. Even the energy efficiency went up."
"What we had wrong was the idea that anybody can screw together a dishwasher,” says Lenzi. “We thought, ‘We’ll do the engineering, we’ll do the marketing, and the manufacturing becomes a black box.’ But there is an inherent understanding that moves out when you move the manufacturing out. And you never get it back.”
"It happens slowly. When you first send the toaster or the water heater to an overseas factory, you know how it’s made. You were just making it—yesterday, last month, last quarter. But as products change, as technologies evolve, as years pass, as you change factories to chase lower labor costs, the gap between the people imagining the products and the people making them becomes as wide as the Pacific."
Those of us who have been living in the SF Bay Area and following Google's serendipity-fostering HR and infrastructure decisions, and John Hagel / The Center for the Edge's thinking on the "Power of Pull" and the importance of place, will not be surprised to hear that the corporation is finally evolving in the same direction.
But US firms were not wrong to send their commodity assembly and manufacturing offshore in the previous cycle. The discrepancy in labor costs between the US and China at the contemporaneous labor productivity levels was too dramatic to ignore. Companies who flouted the offshoring trend went out of business. But economics change, the bases of competititon shift, labor costs converge, and products transform.
And now we're moving back to a place where organizational learning and agility drive competitive advantage; where the ability of an organization to build a knowledge-sharing infrastructure, invest in long-term relationships, attract super-talent at all levels, and generate broad-based trust are core enablers; and -- somewhat controversially, the people who think need to be the people that do.
We like to put people into boxes - the executive, the creative, the engineer, the marketing guy. "It's not fair to ask a project manager to come up with the ideas." "We want to make sure they're successful." "We need to bring someone in from the outside - an agency type." "We don't have that skillset here." "He writes books, he's not in the market knocking on doors." These statements may all be true at the time they're said, but they're also used to pigeonhole people - because it's cognitively easier and cheaper to think of turn people into caricatures rather than think of them as whole, complex persons with myriad capacities that often go untapped. We use the term "resources" to refer to people, because managers are trained to optimize among pools of resources - just like in videogames.
But people are not commodities like coal and oil, or base structures and drones. Someone can be both engineer and artist, creative and project manager, and excel at both. There's no natural tradeoff, the tradeoff here is one of time - how do they spend their time? What do they learn to master? And how does that mastery compete in the marketplace?
It comes down to the pendulum swing of specialization vs. integration. Just like with General Electric, there is no timelessly right or wrong answer. The pendulum will continue to swing back and forth, and firms will continue to race to stay ahead of it.
And the argument now, in this time, is that knowledge-sharing, connectedness, being in the same near-physical place as your colleagues, mashing up ideas on the whiteboard, speaking the same language, sanding away any fear or friction around surfacing new thoughts, sharing similar norms and values, feeling like you're in a fast-paced relay flash-mob race of learning - and that the people who think are the same folks as those who do - these are the current sources of competitive advantage. Just like the gap widened over time between the "designers" and the "workers" in General Electric, the gap will tend to widen over time across all distributed knowledge-based endeavors that don't design their interactions in a high-protocol fashion. There's a reason why Marissa Mayer enacted the controversial decision to limit working from home at Yahoo.
It's a sea change for creatives who have gotten used to throwing ideas out for someone else to implement, for authors who have gotten accustomed to aggregating the labwork of others, for "thought leaders" who have achieved fame by pointing out patterns and telling some good stories, for consultants who only do strategy and leave execution to the "stakeholders", for MBAs who want to launch a tech startup without a technical co-founder or knowing how to code, for managers who see talented staff as resources and foster a fear-driven and fiercely competitive environment, for anyone that doesn't want to risk themselves in the field of action.
I spent a lot of time asking questions and listening over my career, and it's been a humbling journey to find out how little I know about anything. The ins and outs of wastewater management, the nuances of the precision valve industry, the scale of airplane manufacturing, the complexity of our military-industrial complex, what it takes to run an Amazon-like distribution operation, the challenges of picking and packing orders for delivery, the incredible and inspirational talent in India, the back-and-forth of app design and development - you have to roll up your sleeves and get your hands dirty to really know about these things. You can't just read a blog and take a site tour. For every inch I progress my knowledge in these areas, I uncover a football field of terrain. There are so few experts in this world, I sometimes wonder how we keep this civilization together at all. I always laugh when I hear the term "due diligence."
Everyone with just a hammer will find that the nails are turning into Rubik's cubes that are protagonists in a role-playing game where the rules of engagement are the dynamically derived outcomes of a different role-playing game enacted a world away.
Can we ever win? Maybe that's the wrong question. From the children's book Cheaper by the Dozen, after the authors' father and time-saving operations expert Frank Gilbert had died of a heart attack:
"Someone once asked Dad:
“But what do you want to save time for? What are you going to do with
it?”
“For work, if you love that best,” said Dad. “For education, for beauty, for art, for pleasure.” He looked over the top of his pince-nez, “For mumblety-peg if that's where your heart lies."
And "a funny thing happened to the GeoSpring on the way from the cheap Chinese factory to the expensive Kentucky factory: The material cost went down. The labor required to make it went down. The quality went up. Even the energy efficiency went up."
"What we had wrong was the idea that anybody can screw together a dishwasher,” says Lenzi. “We thought, ‘We’ll do the engineering, we’ll do the marketing, and the manufacturing becomes a black box.’ But there is an inherent understanding that moves out when you move the manufacturing out. And you never get it back.”
"It happens slowly. When you first send the toaster or the water heater to an overseas factory, you know how it’s made. You were just making it—yesterday, last month, last quarter. But as products change, as technologies evolve, as years pass, as you change factories to chase lower labor costs, the gap between the people imagining the products and the people making them becomes as wide as the Pacific."
Those of us who have been living in the SF Bay Area and following Google's serendipity-fostering HR and infrastructure decisions, and John Hagel / The Center for the Edge's thinking on the "Power of Pull" and the importance of place, will not be surprised to hear that the corporation is finally evolving in the same direction.
But US firms were not wrong to send their commodity assembly and manufacturing offshore in the previous cycle. The discrepancy in labor costs between the US and China at the contemporaneous labor productivity levels was too dramatic to ignore. Companies who flouted the offshoring trend went out of business. But economics change, the bases of competititon shift, labor costs converge, and products transform.
And now we're moving back to a place where organizational learning and agility drive competitive advantage; where the ability of an organization to build a knowledge-sharing infrastructure, invest in long-term relationships, attract super-talent at all levels, and generate broad-based trust are core enablers; and -- somewhat controversially, the people who think need to be the people that do.
We like to put people into boxes - the executive, the creative, the engineer, the marketing guy. "It's not fair to ask a project manager to come up with the ideas." "We want to make sure they're successful." "We need to bring someone in from the outside - an agency type." "We don't have that skillset here." "He writes books, he's not in the market knocking on doors." These statements may all be true at the time they're said, but they're also used to pigeonhole people - because it's cognitively easier and cheaper to think of turn people into caricatures rather than think of them as whole, complex persons with myriad capacities that often go untapped. We use the term "resources" to refer to people, because managers are trained to optimize among pools of resources - just like in videogames.
But people are not commodities like coal and oil, or base structures and drones. Someone can be both engineer and artist, creative and project manager, and excel at both. There's no natural tradeoff, the tradeoff here is one of time - how do they spend their time? What do they learn to master? And how does that mastery compete in the marketplace?
It comes down to the pendulum swing of specialization vs. integration. Just like with General Electric, there is no timelessly right or wrong answer. The pendulum will continue to swing back and forth, and firms will continue to race to stay ahead of it.
And the argument now, in this time, is that knowledge-sharing, connectedness, being in the same near-physical place as your colleagues, mashing up ideas on the whiteboard, speaking the same language, sanding away any fear or friction around surfacing new thoughts, sharing similar norms and values, feeling like you're in a fast-paced relay flash-mob race of learning - and that the people who think are the same folks as those who do - these are the current sources of competitive advantage. Just like the gap widened over time between the "designers" and the "workers" in General Electric, the gap will tend to widen over time across all distributed knowledge-based endeavors that don't design their interactions in a high-protocol fashion. There's a reason why Marissa Mayer enacted the controversial decision to limit working from home at Yahoo.
It's a sea change for creatives who have gotten used to throwing ideas out for someone else to implement, for authors who have gotten accustomed to aggregating the labwork of others, for "thought leaders" who have achieved fame by pointing out patterns and telling some good stories, for consultants who only do strategy and leave execution to the "stakeholders", for MBAs who want to launch a tech startup without a technical co-founder or knowing how to code, for managers who see talented staff as resources and foster a fear-driven and fiercely competitive environment, for anyone that doesn't want to risk themselves in the field of action.
I spent a lot of time asking questions and listening over my career, and it's been a humbling journey to find out how little I know about anything. The ins and outs of wastewater management, the nuances of the precision valve industry, the scale of airplane manufacturing, the complexity of our military-industrial complex, what it takes to run an Amazon-like distribution operation, the challenges of picking and packing orders for delivery, the incredible and inspirational talent in India, the back-and-forth of app design and development - you have to roll up your sleeves and get your hands dirty to really know about these things. You can't just read a blog and take a site tour. For every inch I progress my knowledge in these areas, I uncover a football field of terrain. There are so few experts in this world, I sometimes wonder how we keep this civilization together at all. I always laugh when I hear the term "due diligence."
Everyone with just a hammer will find that the nails are turning into Rubik's cubes that are protagonists in a role-playing game where the rules of engagement are the dynamically derived outcomes of a different role-playing game enacted a world away.
Can we ever win? Maybe that's the wrong question. From the children's book Cheaper by the Dozen, after the authors' father and time-saving operations expert Frank Gilbert had died of a heart attack:
"Someone once asked Dad:
“But what do you want to save time for? What are you going to do with
it?”
“For work, if you love that best,” said Dad. “For education, for beauty, for art, for pleasure.” He looked over the top of his pince-nez, “For mumblety-peg if that's where your heart lies."
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