Work, business & professional services

The Return of the Paperless Office

Futurists predictions can be right if only you give them enough, or extra, time. In other words, they get ahead of themselves. Take, for example, the idea of the paperless office, which goes back to the early 1960s. The theory was that computerisation would render paper in offices obsolete. Unfortunately, what happened was the opposite. From about 1990 to 2001 paper consumption increased significantly, not least because people had more material to print and because printing was more convenient, and cheaper. However, since 2001 paper use has started to fall. Why? The reason is sociological not technological.

Generation Y, the generation born roughly at the same time as the Personal Computer, has started working in offices and these workers are comfortable reading things on screens and storing or retrieving information digitally. Moreover, digital information can be ‘tagged’, searched and stored in more than one place so Gen Y are fully aware of the advantages of digital paper.

So where does all this leave the paper industry? The industry will consolidate but demand won’t completely disappear. For one thing there is a counter trend towards the use of high-quality paper for printing images. There is also an emerging micro-trend for people handwriting notes on paper using ink. Crazy? Not at all. Handwritten notes stand out from their digital equivalents and there is an added sensory appeal. Takeaways? The first lesson is that predictions usually take longer than people expect to come true. The second lesson is that social, technological and other factors mean that ‘dead’ ideas can sometimes be resurrected.

What’s Wrong with Innovation?

Does the packaged consumer goods industry have a problem with innovation? According to Edward Baker, writing in Strategy + Business magazine, it does. The problem, according to Baker, is that FMCG companies such as Kraft and Sara Lee are in mature industries and investment in innovation generally generates low returns. Hence companies cut innovation budgets, thus reducing even further the likelihood of stumbling upon a breakthrough that competitors will find it hard to copy.

Another issue is that companies tend to think of innovation and R&D as non-strategic. Innovation is generally seen as a marketing function and R&D tends to be a service unit of the innovation department, meaning not enough advanced science. The fact that marketing tends to have the customer at the heart of everything they do also means that the focus is on incremental innovations such as flavour extensions that are easy to explain and immediately acceptable to focus groups.

So what’s the solution? According to Baker, R&D should be a strategic function that partners with marketing. Companies should also focus more on what’s possible from a product and technology perspective and should only involve the customer during the later stages, when they should be presented with multiple prototypes. Another interesting idea is that in instances where companies tend to produce evolutionary innovations, which are quickly copied by competitors, they should abandon first-mover strategy and focus instead on a fast-follower approach. Finally all ideas should be accompanied by a full business plan and departments should be free to sell or licence their ideas elsewhere if, ultimately, the company isn’t interested.

How Age Influences Innovation

According to Thomas Kuhn (the author of The Structure of Scientific Revolutions) youth is one of the three prerequisites for revolutionary innovation. This idea is certainly popular in the media, especially within places like Silicon Valley.
For example, Bill Gates was 20 when he started Microsoft. Similarly Mark Zuckergerg was 20 when he founded Facebook, the Google founders were both 25 and Chad Hurley, of YouTube fame, was 28. Clearly youth is critically important for Web start-ups. For one thing younger people are naive so they don’t know something is impossible. Secondly, they have less to lose. They tend not to have dependents and there is less ‘face’ or rank to lose if an idea fails. They also potentially have the ability to see things other, older people, can’t.

This is a great theory but it’s not totally true. A study by the Ewing Marion Kauffman Foundation looking at 652 US-born CEOs and Heads of Product Development that headed high-tech firms between 1995-2005, found that the average age of these people was actually 39. Furthermore, and here’s the good bit, young and old entrepreneurs tend to start different types of company. Younger people gravitate towards Internet-based start-ups that require little or no capital. Older people tend towards heavier industries and science-based innovation (for example, energy firms or bio-tech, which require significant amounts of capital and management experience). This is not a bad thing either, because many of the world’s thorniest current problems reside in the area of atoms, not computer code.

The Beginning of the End of Cheap Labour

You might think that economic woes mean that worker shortages would be a thing of the past but apparently not. True, companies are laying off staff but this tends to be low and semi-skilled workers. Skilled workers, especially ones that can work across industries or regions, are still very hard to find. Indeed, economic uncertainty means that these people are not moving jobs as frequently, so things could actually get worse. The situation is especially acute in China, where there has been a significant drop in the number of workers migrating from rural to urban areas. This is prompting some Chinese companies to move production facilities overseas to countries such as Vietnam, Brazil, Indonesia and Pakistan where labour is more plentiful (and sometimes cheaper).

Why is this important? The first thing to note is that we are entering a period where skilled labour will become much more scarce throughout most parts of the world. In parts of Asia, abundant low-wage labour is drying up, as is the flow of workers from rural areas to cities slows. This trend, known as the Lewisian Turning point, after the Nobel Laureate Arthur Lewis, states that once the low-wage surplus ends, wages grow, inflation rises and countries reach a tipping point in terms of economic growth. A lack of low-wage labour is clearly one problem but mass unemployment is another. What happens if large pools of unskilled workers in urban areas start to get angry due to rising prices and slowing economic growth? Trouble, that’s what.

The Slacker Generation

Generation Y workers (roughly people born in the 1980s and 1990s) in Japan are shunning promotions at work in favour of humdrum jobs with fewer responsibilities. Employment experts have called these workers Hodohodo Zoku (or ‘so-so folks’) and the trend has many employers in Japan worried. The issue seems to revolve around the fact that many younger workers have seen their parents throw themselves into work only to find that they have either been abandoned or face pay cuts and restructuring. Another issue is that the pay differential between mangers and rank-and-file employees has shrunk over the past ten years. Hence, why bother?

Interestingly, the phenomenon of young workers refusing promotion has caused a flurry of legal activity, with employers asking legal council whether it is legal to fire someone that refuses to be promoted. So far the answer is unclear but a bunch of companies are attempting to solve the problem by offering the people that they want to keep extra pay without extra responsibilities.