[EAS] Hollow Center?

pjk pjk at design.eng.yale.edu
Sun Feb 6 23:42:34 EST 2005

Subject:   Hollow Center?

(from INNOVATION, 2 February 2005)

      When you order fast food from a drive through lane, you
probably  assume that the person you're talking to is just inside
the building. But  that may be changing -- Hardee's is experimenting
with remote order-taking,  using high-speed communications to link
employees in Anaheim, Calif., to  customers two time zones away. The
move is part of a broader trend in the  industry to migrate some
duties from in-store workers to off-site proxies.  Restaurateurs say
the shift should enable them to process orders quicker  more quickly
and accurately, while at the same time eliminating  communications
problems such as heavy accents that sometimes can lead to 
misunderstandings. In addition to the Hardee's trial and a similar
effort  by McDonald's, Pizza Hut and Chuck E. Cheese have begun
routing restaurant  calls to call centers. From a business
standpoint it makes sense, freeing  up in-restaurant workers to
handle in-house matters, says Jon Rice,  marketing VP for Chuck E.
Cheese. "Have you ever tried to call a restaurant  during lunch or
dinner? We want to keep our staff members focused on the  guests at
the restaurant and not answering the phones." Meanwhile, software 
supplier Craig Tengler, who supplied the software for McDonald's 
remote-ordering system, says his program can shave 13 seconds off
the  average transaction time -- a significant drop in the world of
fast food  competition, where only 6.8 seconds separate the
speediest chain (Wendy's)  from No. 2 Checker's. (Dallas Morning
News/Kansas City Star 25 Jan 2005)

      Outsourcing isn't just for manufacturing or for call centers
-- it's  for R&D. By outsourcing R&D offshore, original equipment
manufacturers (OEMs) can freeze a portion of their R&D budgets
while expanding their product offerings. Information technology has
accelerated the outsourcing trend in electronics because it allows
OEMs to monitor the processes they give up, such as manufacturing
and design. Mark Bernstein, president and  irector of PARC, the
former Xerox think tank that now operates as an independent
subsidiary, says R&D will be dominated by cooperative global 
arrangements: "The breadth of research required to master a market
these  days is pretty significant. You're going to see a lot more
partnering." Do these trends signal the demise of America's lead in
technology innovation?  Not at all, says Hewlett-Packards executive
Jack Faber. Noting that HP's newer 64-bit servers are examples of
products that are largely conceived and designed in the U.S., he
says, "When I first came here 20 years ago, we  had our own
factories for sheet metal and screws and everyone thought we had to
keep them. As we outsource, we just keep focusing on higher 
value-added work." (CIO 15 Jan 2005)

      When it comes time to execute a strategy, many companies find 
themselves stymied. They carefully identify the opportunities within
their reach, then wonder why results fall short of expectations.
The problem? New strategies and initiatives demand leadership, but
many companies fail to recognize that fact. So the innovations are
doomed from the start. McKinsey consultants Tsun-yan Hsieh and Sara
Yik take it one step further. They believe that leadership is the
starting point of strategy. So what is "leadership"? While good
managers deliver predictable results, leaders generate performance
breakthroughs. Leaders create something that didn't exist before:
they launch new products, enter new markets, boost performance
while lowering costs. A company's leadership reaches well beyond a
few good men and women at the top. It typically includes 3-5% of an
organizations employees. Strategy and leadership go hand in hand;
it's tough to implement one without the other. Strategy cannot
succeed in a void, and leadership often makes the difference
between reaching for great opportunities and actually achieving
them. Top managers must assess their company's leadership gaps and
find ways to close them -- over the short, medium, and long term.
Better still, they should integrate leadership with strategy
development and thoughtfully match their portfolio of leaders with 
opportunities. Thinking about leadership now can affect the
direction, path, and actual outcome of future strategies. (McKinsey
Quarterly 2005 No. 1)

Charles Handy, my favorite writer on business matters (favorite
because people and their satisfaction with their working lives
always matter most to him) wrote "The Future of Work" in 1985 and
the "Age of Unreason" in 1989. (That's the original British edition
I read. The later American edition had a typically tamer title.) In
those books he introduced me to "outsourcing" and to unbundling the
organization so that only its "core" functions remained centralized.
His "outsourcing" ideas weren't so much international as drawing on
regional subcontractors, part-time labor and work from home
(including early forms of telecommuting when the subject had not
even begun to appear in the US business literature). Innovation, and
the education necessary for it, were always paramount.
Unbundling and outsourcing have now in some cases progressed to the
point of there being "nobody home" at the corporate center, a little
like that train in the Buster Keaton movie that gets progressively
dismantled to stoke the engine with the pieces of the carriages. Or
maybe the analogy should be that of an atoll, with a habitable
fringe and nothing in the middle. Worse actually. If you read any
book about actually living on a Pacific atoll (like Maarten Troost's
delightful "Sex Lives of Cannibals", 2004), the central logoon is
where the garbage accumulates.  --PJK

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