The north-south divide

Note: This is the third part of a longer series on how social media is affecting management. You can find the earlier posts – The future of (knowledge) work and Knowledge Workers in the British Raj – and subsequent posts – Working in Hollywood, World of Warcraft in the workplace and Problems and the people who solve them – elsewhere on this blog.

Developing and manufacturing a product, and delivering it to the waiting customer, has historically been a significant expedition. We would establish a series of camps – departments, containing the tools and skills needed – along the route from start to finish to support us as we ferried the materials we needed from their source to where they were required. However, the assumptions that drove this behaviour are no longer true. Where previously materials, skills and tools were all in short supply, today we can usually find what we need lying on the ground near where we stand. Developments such Strategic Sourcing{{2}}, Business Process Outsourcing{{3}} (BPO), and Social Media have removed the need for us to carry what we need with us, and has been the trigger for us to start dismantling those departments that we no longer need.

[[2]]Strategic Sourcing defined at Wikipedia[[2]]
[[3]]Business Process Outsourcing defined at Wikipedia[[3]]

The large bureaucracies companies have traditionally required are slowly being collapsed, hollowed out, as we find that we can achieve the same result more efficiently with smaller and more agile organisations. Companies are starting to use a more alpine style{{4}} of operation, leveraging a small carefully, chosen team with more flexible tooling, and relying their own wits to survive in a rapidly changing and uncertain environment. This shift is pushing us to rethink the nature and organisation of our businesses, setting aside many of the specialised departments and resources we relied on in the past to find a new organising principle. The impact will be both subtle and dramatic, with business continuing to do what business does (constrained, as it is, by government and market regulation) while the roles we all play as individuals change dramatically in response.

[[4]]Alpine style climbing defined at Explore Himalaya[[4]]

An interesting thought experiment is to compare the companies we work in to the societies we inhabit. After all, companies are really just small (and some not so small) societies, with all the dynamics and politics of a community of a similar size. The nature of both societies and companies is largely determined by the tools they use{{5}}, as it is these tools that determine how the community functions. Agriculture, for example, requires a society to be stationary and drove the creation of property ownership, while the telegraph enabled the creation of new business models by separating, for the first time, the transmission of information from the carriage of goods, and gave the world Reuters{{6}}. The tools and technologies we use determine the nature of the societies and companies we inhabit.

[[5]]Timothy Taylor (2010), The Artificial Ape: How technology created humans, Palgrave Macmillan[[5]]
[[6]]The history of Thomson Reuters[[6]]

Historically, societies can be broken into two rough technological groups: equatorial and seasonal. Equatorial societies exist somewhere near the equator, living in a climate that varies little throughout the year, other than in the amount of rainfall they receive. Seasonal societies live some distance from the equator in a more temperate climate, a climate that provides them with distinct seasons over the length of the year. The further north or south you go from the equator, the more seasonal the climate becomes.

The climate a society lives in has a strong influence on the type and nature of technologies that it uses. The orthodox strategy in a seasonal climate is to tailor specific toolkits to the challenges faced in each season of the yearly cycle; jackets in winter and shorts in summer. When it becomes extremely cold, it’s wise to bring along the sleds, snowshoes and heavy clothing. However, when it’s warm these the tools in this toolkit are somewhat less useful. Many tools fulfil a specific, and important need at one point in the seasonal cycle, but this also means that we have little use for the tool in the remainder of the year.

Societies in more tropical climates typically adopt a different strategy. Their focus is on creating a single toolkit that has a smaller number of simpler, but more flexible tools. They have little need for specialised tools, as the climate they live in is relatively stable over the year, which means that their success (or failure) depends on their ability to adapt to unanticipated disturbances or unexpected opportunities as they present themselves. While they are not concerned about stockpiling food to survive through a cold winter, they do need to be able to adapt to the sudden appearance of a cyclone. When a cyclone strikes you rarely have time to go and grab a cyclone proof shelter, and you need to be ready to pick up and use the fallen coconuts once the wind had passed. You must to make do with what you have.

In the former, seasonal societies, the emphasis is on the gear. If the gear fails then you do too, often with fatal consequences. This drives you to invest a significant amount of your time and effort into ensuring that the gear can’t fail, striving to add enough nines to the end of that reliability measure to ensure that you’re not left out in the cold. The technologies you develop are complex and highly entailed, addressing specific needs and requiring a long a sophisticated chain of skills, materials and tools to manufacture.

In the latter, equatorial societies, the emphasis is on skill. Your fate is determined by your ability to adapt the resources and tools found in the immediate vicinity to the problem at hand. The tools you need are simple and flexible, either lightweight and compact enough to carry with you or based on technologies which enable you to manufacture them from whatever materials you have at hand. These technologies are only lightly entailed, addressing general needs and requiring a relatively short chain of skills, materials and tools to manufacture.

Companies have traditionally been organised along similar lines to the seasonal societies. The pulse of business beat slowly, and our main concern was to address the specific challenges that existed in each season of this regular cycle. These challenges were also complex and highly entailed, requiring large toolboxes with specialised tools and skills that are highly interdependent. Success depended on the quality of our assets and processes, and our focus was on mobilising enough people and technology to create and staff the processes we needed.

Take, for example, LEO (the Lyons Electronic Office), which may well be the first business computer. Unable to buy a beige box from the local electronics shop, the team at Lyons had to build their computer from scratch, requiring a large team with a number of specific and specialised skills, and three years of effort. I wouldn’t be surprised if they were forced to blow their own vacuum tubes. The result was a machine that, in 1953, could calculate a person’s pay in 1.5 seconds, rather than the eight minutes taken by an experienced clerk. LEO was a long and highly entailed investment.

LEO, the Lyon's Electronic Office, in 1951

LEO, the Lyon's Electronic Office, in 1951

However, since then the pulse of business has increased dramatically. Over the last few decades we’ve gone from worrying about decades to years, and more recently to months and weeks. Soon we might even be worrying about days. The seasons in business are changing so quickly that we are finding it difficult to keep up{{7}}. Our business environment is, in fact, starting to look more like the environment the equatorial societies inhabit rather than the more temperate climes of old: a relatively stable progression over the year, but with a pressing need to adapt to the unexpected disturbances and opportunities as they present themselves.

[[7]]Why we can’t keep up @ PEG[[7]]

At the same time, the nature of the environment our businesses function in has changed dramatically. Many of the skills and tools we fought hard to obtain can now be easily picked up where we stand. From global logistics providers and contract manufactures, through outsourcing, the various consultancies and software as a service, most of what we require can be easily picked off the ground when we need it. LEO doesn’t hold a candle to many of the bureau and SaaS payroll solutions that we can use on demand.

What we need is a more equatorial approach to organising our business, one more in line with reality of the business environment we operate in today. This means stocking our organisation with a small collection of flexible, but potent, people that can rapidly adapt to our changing needs, people who can use a small set of flexible tools to respond to the challenges and opportunities presented to us. It involves pulling down our highly entailed bureaucracies and connecting the C-level with the team at the front line. Overhead functions such as IT and HR will be torn down. (After all, if all our IT exists in the cloud and our company is hollowed out, removing the bulk of our bureaucracy, then we don’t need these departments anymore.) The old value producing functions (manufacturing and so on) will be externalised and bought as a service. More than anything, our success will depend on our ability to mobilise – both as an organisation and as individuals – and adapt the resources and tools in the immediate vicinity to the problem at hand.

This requires a huge shift in how we think about staffing our organisations. Deep specialisation is no longer the benefit it was in the past. While specialisation brings knowledge and insight, it also (typically) reduces flexibility and adaptability. Someone with a decade or more invested in being an IT architect, sales manager, change agent, human capital management expert, process wizard or (even a) social media guru, needs to protect that investment. Their value is in their specialisation; they will defend the status quo and resist being pulled away from what makes them valuable{{8}}. The people we need are sun-shaped{{9}}. They’re highly skilled (though not highly specialised), focused on solving a problem we have, and bring with them a diverse toolkit of simple but flexible tools.

[[8]]From doctrine to dogma @ PEG[[8]]
[[9]]The sun-shaped individual @ PEG[[9]]

Continued in Working in Hollywood.

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