Work, business & professional services
The Backsourcing Trend
We’ve had a few decades of companies outsourcing production, back-office functions and customer service centres to low-cost countries to save money. Now the opposite seems to be gathering momentum, fuelled, in part, by innovation and corporate social responsibility. Companies are starting to bring various activities back home due to pressure from customers and other stakeholders to tighten up their social, ethical and environmental standards. The other reason is the silo effect – a feeling that physical distance is negatively impacting interaction between key customers, IT experts, designers and engineers.
NCR is a case in point. The company recently moved manufacturing for its top-end ATMs from China and India to South Carolina. Backsourcing started off as a US trend linked to politics and local employment issues, but it is gaining traction worldwide. Steif, the German toy company, is another example, moving factories back home from China. Another reason that this trend is important is that other key trends are starting to intersect, all of which favour localism over globalism. This is not to say that backsourcing (sometimes known as industrial repatriation or re-sourcing) trumps outsourcing but it is still highly significant. It is also a trend that is likely to grow due to higher oil prices and resources shortages impacting negatively on supply chains and logistics.
Ref: Strategy + Business (US), 25 January 2010, ‘The Case for Backshoring’, W. Holstein. www.strategy-business.com
Source integrity: *****
Search words: Outsourcing, backsourcing, nationalism
Trend tags: Localism
How Blue Ocean strategies and Five Forces fail
Words are more powerful than numbers according to Michael Jacobides, an Associate Professor at the London Business School. In an era of unprecedented change, he suggests, conventional strategy tools and processes aren’t cutting it. The current business landscape is dominated by globalisation, technology innovation, regulatory change, demographic shifts and climate change but our strategy tools assume static industry boundaries and an unchanging external environment. Moreover, attempting to project a fluid and rapidly changing external environment onto a series of graphs over-simplifies industry boundaries and neglects to describe how value is collaborately created. Blue Ocean strategies and the Five Forces also fail to capture the idea that new entrants can be more important than established players in a market, or that some companies can only compete by fundamentally changing the purpose or architecture of their business. This is an interesting thought, and one reason why I’m such a fan of Scenario Planning, which helps organisations consider multiple alternative futures. But according to Jacobides even Scenario Planning generates landscapes that are too static. I disagree with this, but I do concede that ‘words are more powerful and flexible that value curves’. What Jacobides is suggesting is that companies should formulate strategy based on playscripts. These are narrative plots and subplots that capture the motives and connections of all the key players and use storylines to link past, present and future. Jacobides claims that such playscripts are most useful for companies operating in industries where growth is evaporating, but nobody on the inside is quite sure of the reason why. If this idea interests you I suggest you check out the original article online or order a re-print of the article.
Publication date: Jan 01, 2010. Prod. #: R1001D-PDF-ENG
Ref: Harvard Business Review (US), January-February 2010, ‘Strategy Tools for a Shifting Landscape’, M. Jacobides. www.hbr.org
Source integrity: *****
Search words: Strategy, strategy tools, narrative
Trend tags: Uncertainty
Women in the Workforce
A few months ago women became the majority of the US labour force. Similar breakthroughs have been happening around the world and the trend is one of the most significant social shifts in recent history. Barely more than a generation ago women were largely absent in the workforce or were restricted to menial jobs. Furthermore, this revolution has taken place will relatively little friction. A few nations defy the trend (notably Arab countries and Japan) but skills shortages and ageing populations will almost certainly amplify the feminisation of workforces in the future.Nevertheless, women are still hugely underrepresented in large companies. In the US a mere 2% of CEOs and just 13% of board members of the largest companies are women. In Britain it’s not much better. Only 5% of CEOs are women. Admittedly there is residual sexism at work here but the main reason for this poor representation is biological not sociological. Put simply, motherhood sucks women out of the workforce.
Another reason for the shift is political, but a much stronger factor is the expansion of higher education. Technology is also a factor. Improvements in household cleaning and maintenance mean that there is less need for women to stay at home. The contraceptive pill has also allowed women to marry later and has made it financially attractive to invest in skills that will pay off much later in life. Another significant cause is the expansion of the service sector and the rise of part-time work, both of which are attractive to women trying to combine childcare and careers. Of course there are still problems. Affordable child-care is still largely absent in many countries and welfare states were built at a time when most women did not work. If nations are to reap the rewards of talented female workers much more still needs to be done.
Ref: The Economist (UK), 2 January 2010, ‘Female Power’, www.economist.com
Source integrity: *****
Search words: Women, work
Trend tags: -
Myths about China
What does the world commonly get wrong about China? Myth one is that China is a collectivist country. It isn’t. It’s individualist. Indeed, it is now the most aggressively individualistic nation on Earth. This is not to say that there isn’t an interest in community and the Chinese are good at working in groups, but when it comes to the individual China leaves even the US behind. Myth two is that China is focused on the future. The Harvard Business Review says it isn’t. I’m not so sure about this one. I agree that ad hoc and tactical policies tend to be executed flawlessly in China but, in my opinion, China nationally has its eye firmly set on a long-term prize. It is all about building something for the next generation. Myth three is that China is risk-averse. Again, not true. China is risk-tolerant. Commentators say that China’s appetite for risk is linked to growth, and so it is, but it is also linked to confidence and an economy that is growing at 10% + per year. Where the third myth might in part be true is that individuals in China tend to shy away from decisions unless senior people are present.
Ref: Harvard Business Review (US), January-February 2020, ‘China Myths, China Facts’, E. Meyer and E. Yi Shen. www.hbr.org
Search words: China, myths
Trend tags: Power shift Eastwards, BRICs
Legal Outsourcing Offers an Alternative Peek at the Future of Work
If you want a sneak peek of one possible future, visit the offices of a company called Pangea 3, a legal outsourcing company in Mumbai. The offices are filled with young graduates from India’s top law engineering and schools. There are banks of screens everywhere and hardly anyone is wearing a tie. What are these people doing? They are working on legal documents and researching information for many of North America’s and Europe’s top blue chip companies. In London graduates working at a top law firm might earn GB 60,000 pounds a year. In Mumbai it’s more likely to be 5,000 pounds. Why is this happening? Because law firms are under pressure to cut fees and because digitalisation means that what could once only be done locally can now be done globally.
Ref: The Australian (Aus), 19 February 2020, ‘India Outsourcing offers future vision’, R. Blakely and A. Spence. www.theaustralian.com.au
Source integrity: ****
Search words: Work, outsourcing
Trend tags: Digitalisation