THE BASIC AND HARD TRUTH

This article is written from a historical perspective. THOSE WHO FORGET HISTORY ARE CONDEMNED TO REPEAT IT. Thousands of companies paid the price in past and is paying the price today because they ignored lessons from business history. This article is also a GIST of a recently published paper in FORESIGHT, a refereed academic strategy journal of Emerald publishers in January this year where it was talked about a concept termed as DEEP THINKING. This article also addresses an important question, that is bothering us all –

If the jobs are vanishing why they are vanishing

A host of reasons have been provided by experts, renowned leftist intellects who oppose the current government’s ideology, economists – all of them are right and provide partial answers. BUT ALL OF THEM (well almost!) MISS THE HISTORICAL PERSPECTIVE, because most of the companies are ignorant of history.

Technology never cause jobs to vanish – new technologies create new jobs and industries – re-skilling is required to work on new jobs demanding new skills, as Ginny Rometty of IBM remarked recently – “The age of Degrees is over, the age of Skills is on us”. Economic slowdowns happened in past and will keep happening, new political ideologies will come and go, Hitler had to go too. We delve into strategy, economics, politics, technology, but the HISTORICAL ANGLE IS IGNORED AND NEVER APPRECIATED. The fact that Business History plays a deeper and significant role in times of churning is always missed.

THE BASIC AND HARD TRUTH IS: – JOBS ARE VANISHING BECAUSE COMPANIES ARE VANISHING AND/OR ARE RUNNING OUT OF BUSINESS. This is my key hypothesis (is open to challenge and debate!).

Why so? In this article I provide the Historical Perspective.

Competition a hundred years back: – size, scale and cost

That’s when the mass production technologies triggered by the Ford Model-T’s success made hitherto expensive consumer goods available to the masses cheaply and abundantly. So, the car, which used to cost $ 3000 + was available to the masses at less than $ 500 by mid 20s. this triggered a consumer boom after WW II. The intervening period of 1920-1939 was marked by depression, increasing nationalism, raising of tariff barriers by European nations in retaliation to US trade tariffs (Do you see similarities today?) followed by six years of war. But this was also the period when the greatest of the management innovations of industrial capitalism were born. Such as brand management, management accounting and multi divisional organizations. Competition was all about embracing mass production technologies and size, scale and cost.

Competition in 1990s: – Size, scale, cost combined with quality and outsourcing, go global and think local, go to the Bottom of the pyramid

With laying down of under sea cables, the cost of communication fell rapidly and this triggered the outsourcing wave in late 80s and early 90s, cost of communication fell farther after mid 90s with advent of the mobile phone. The discovery of Toyota’s lean practices triggered the quality movement and zero defect (six sigma) paradigm. The rapidly falling cost of communication and the rise of the internet allowed companies to go global and this gave rise to a new breed of companies. whom Professor Sumantra Ghoshal termed as Transnational firms or TNCs. A TNC was different from an MNC in terms of strategic thinking. In an MNC the process of strategy formulation was heavily centralized in the company HQ. In a TNC it was localized. Professor C K Prahalad’s book, published in 2005 triggered a new wave of thought – how to discover the fortune at the lowest income strata of the society and this gave rise to the term – Bottom of the Pyramid.

However, and essentially the nature of competition didn’t change much from the Henry Ford’s Model-T days. It was still about scale, cost, quality and cheaper Me-Too Products.

Competition Today: THE AGE OF ME-TOOs ARE OVER! COMETH THE ERA OF DEEP THINKING.

From time to time, products have appeared in the course of business history in two centuries, that has left a permanent, deep and long-lasting impact on society and on our daily lives. It started with the steam engine, rail road and telegraph. The lift came in 1860s, without which multi storied buildings would have been impossible, Edison’s electric bulb came in 1890s and changed our lives forever, later came the aeroplane and the Model-T and once again human lives were changed forever. Even later came the Penicillin, the matrix organization, the Austin Mini (first small car of the world), the Sony Transistor, the Visa Credit card, the low-cost flying business model of S/W Airlines and the Sony Walkman. Each left a DEEP, PERMANENT AND LONG-LASTING IMPACT on human lives.

However, appearance of such products was infrequent in past and sporadic. MY KEY HYPOTHESIS: – The Age of such products have arrived, combined with advent of exponential technologies and automation of human labour. Which allows a manager to focus MORE ON THINKING AND LESS ON ROUTINE TASKS. This coupled with an increasing, well informed and aggressive customer base (which necessitates Design thinking) are compelling companies to launch products which will deeply (if not permanently) impact his/her daily life.

Hence the age of “ME-TOOs” are over and companies still trying to compete with 20th century mindset of scale-cost-quality will vanish AND ARE VANISHING, SO THE JOBS ARE VANISHING. No government in the world is competent to deal with this. Politicians will react with increasing tariff barriers and nationalism (as in 1930s) and this will further deepen the economic crisis at a global scale leading to conflicts –

HISTORY REPEATING ITSELF.

And those who ignore lessons of history are doomed. The era of DEEP THINKING is on us. I define DEEP THINKING as a thought process giving rise to products with a deep impact on people’s lives (as in my published paper). Today’s competition is all about such product with absolutely zero scope of “Me-Toos” competing on cost.

The strategic implications on companies: –

? “Me-Too” s is gone forever

? Increasing focus on human behaviour and cognitive science – leading to design thinking

? Changing organization practices and culture – leading to Agile thinking and Servant leadership

? Not one single and good strategy

? Often thinking counterintuitively – THE OPPOSITE MAY BE TRUE!

 The vanishing of jobs of course has very deep socio-economic implications. This is not within my competence to write on. I leave it to wiser people.