Work, business & professional services

In Praise of Breadth

In recent decades, life – and education and work in particular – have has tended to narrow. What do I mean by this? Simply that students are expected to develop particular specialisations very early and that this knowledge-narrowness (fuelled by curricula that are increasingly based on the vocational needs of employers) is carried through to the work environment. Once these ‘job-ready’ students are inside organisations they often narrow their thinking even further until they end up as intelligent idiots – people that know a lot about very little. This is a great shame. For instance, according to Howard Gardner, the Harvard psychologist and author, future high achievers can often be identified early by their love of topics, tasks and issues that are strictly non-core or non-essential. Equally, the teachers and leaders that inspire students and staff are often the ones that are irreverent storytellers and distracted mavericks. And of course most great innovations come not from specialists and industry incumbents but from cross-fertilisation between disciplines, accidents and wayward eccentrics.According to Garner, and others, breadth will be vital in the future. Computers will be expert at data acquisition and logical analysis so it will be the ability to think laterally and broadly and to synthesise large amounts of disparate information that with be the key to success.

Outsourcing Trends

Is outsourcing over? Not yet, but there are some rather interesting counter-trends developing. A few years ago I heard about two cases of outsourcing that many regarded as jokes. The first was the case of a US-based software programmer who outsourced his own job to India. This proved to be so profitable that he got another job and outsourced that too before he was caught. The second story concerned an Indian outsourcing company that was outsourcing its contracts to England. It now appears that they were simply ahead of their time. Infosys (an Indian company) last year spent US$250 million buying call centres based in Poland. Meanwhile, Wipro (another Indian company) has been buying up companies in the US and is now busy setting up divisions in places like Idaho, Virginia and Georgia because, according to Wipro’s Chairman, they are ‘less developed’. Even Tata, India’s largest company, has been setting up call centres in Britain. Why is this occurring? The reason is two emerging and rapidly converging trends that about to go global. The first is wage inflation. One firm in Bangalore has complained that it is now cheaper to hire programmers in California because Indian staff were asking for pay rises of up to 75%. The second trend is staff shortages. Last year Infosys hired 32,000 staff – a figure second only to Wal-Mart – and globally firms are experiencing similar problems in what’s been variously called the ‘skills crunch’ or ‘war for talent’. There’s a third reason for all this too. India is now exporting managerial talent and entrepreneurial ideas in the areas of outsourcing and technology services. This means that Eastern Europe, South America, Asia and even Africa are now regarded as talent pools.

New Urban Legions

By the year 2045, the global fertility rate will have declined to under the replacement level. Indeed, in 59 countries (which represent 44% of the world’s current population) it’s already happened. This trend is well documented although most observers and commentators tend to view the trend as a purely western or developed nation phenomenon. It isn’t. It’s happening almost everywhere and is particularly prevalent in cities, although, in the short- term, cities will continue to grow due to inward migration. So what are the implications of these shifts? Urbanisation is certainly nothing new. About 1.3 million new people descend on the world’s cities every week. In 1800 about 3% of the global population was urban. Sometime last year the figure passed 50% and by around 2050 it will be about 80%. What’s perhaps remarkable is how resilient cities have been to this growth. The oldest company in the world is either Stora Enso in Sweden (700 years old) or Sumitomo Group in Japan (about 400). The oldest University is about 1,000 years old and the oldest living religion is around 3,500 years old. In contrast, the oldest cities include Jerusalem (5,000) and Jericho (10,500). The reason for this longevity is flexibility. Cities are constantly being knocked down and re-built (by about 2% per year) and people are always coming and going, refreshing their energy and creativity. Cities like London, New York and Tokyo aren’t going away. Indeed, they are being remade and re-cast as city-states that are economically and culturally ahead of many countries. However, the real point is that many of the cities that will shape the future have hardly been built yet or, if they have, chances are you’ve never heard of them. You probably know about Lagos, Jakarta, Osaka, Dhaka and Karachi – some of which will be in the Top 10 Cities list by 2015 – but what about Nouakchott, Douala, Bamako, Ouagadougou, Temuco, Belem or Antananarivo? So what’s the takeaway here? Simply that these cities are where people will be in the future, which means they are not only markets but also sources of talent. Better log onto Google Earth or get that old atlas out, eh?

Conscious capitalism

According to various prediction pundits Caring or Karma Capitalism is the next big thing. Corporate Social Responsibility (CSR) and the Triple Bottom Line have gone mainstream and political and environmental correctness is the new order of the day. Organisations must now care for their customers, their staff, the local community and the environment in a holistic manner. But perhaps such good ideas and intensions are a superhighway to hell. Maybe trying to persuade or cajole profit-seeking organisations to behave properly within a social context is a misnomer in search of an oxymoron. Companies are meant to make money and the more of it they make the better. That is their purpose. They are at their best when they behave selfishly. Thus social activists are misleading themselves and society when they try to make companies behave responsibly. Making companies ‘good’ is the job of governments and activists should therefore focus their energy on politicians not companies. There is some truth in this viewpoint. Adding a page about CSR in the annual report looks as though the issue is being addressed when actually this gives companies almost carte blanche to behave exactly as they like. Moreover, there is next to no evidence to suggest that socially responsible companies are more profitable, at least in the short term. Even worse, adherence to CSR principles because it’s the fashionable thing to do (or planting a tree for every ten cans of sugary soft drink sold) avoids any meaningful change or reform. On the other hand, at least the issue is now being talked about and most debate is now about how, rather than why. Historically, of course, firms tended to be responsible and acted in a manner that dovetailed with the wishes of the local community. This may partly have been due to the prevalence of privately-owned firms that were ‘policed’ by the local community but, ironically, it may also have been due to the presence of long-term thinking oligopolies. These days, most large firms are publicly owned and are influenced by distant and seemingly anonymous global forces, which means that they are forced to think short term and are no longer as connected to a local community or constituency.

The New Flower Powers

The Netherlands’s has been involved with the export of flowers and bulbs for more than 500 years and approximately 50-60% of the world’s flowers still pass through the country – worth about Euro 5 billion to the Dutch economy excluding plant breeding, greenhouse construction and transport. Columbia is distant second place with 11% of global trade followed by Kenya and Ecuador with about 5% each. But this might be about to change. The problem is twofold. First, around 30% of Dutch floral exports actually come from other countries and only pass through the Netherlands for a mixture of historical and logistical reasons. Second, production is slowly shifting away from Europe to regions such as Africa and China where labour, raw materials and energy costs are all lower. For instance, China is already a major exporter of roses and the country is planning to launch 500 new types of rose at the Beijing Olympics this year. Equally, India’s flower market is growing very healthily and so too is Iran’s and Israel’s. However, the largest potential threat to Dutch floriculture comes from perhaps the most unlikely of places. In July 2006, the United Arab Emirates opened the Dubai Flower Centre. Dubai (with its tax free status) is very well placed to grow into a ‘flower superpower’ due to its position as a transportation hub. Distribution is a key factor with flowers due to their highly perishable nature and Dubai is planted neatly in-between major supply markets such as Africa and Asia and major demand markets such as Europe and Russia. So what is the Netherlands doing to react? The first response is to develop the area around Schiphol airport to grow perishable goods such as flowers.Second, Dutch flower-growing is going green. Various sustainable and low-energy and emission initiatives are underway, although one doubts just how competitive a relatively cold, dark, European nation with next to no energy reserves can be against a region that is warm, light and blessed with oil and gas reserves that will last at least another quarter-century. A more promising line of attack perhaps, is plant breeding, especially of premium plant varieties. After all, the results of flower breeding and biotech programs carry with them intellectual property that be can licensed to other growers and enforced, where necessary, through copyright legislation. In other words, when the going gets tough, innovate.