CONSTRUCTIVE CARNAGE – Part II

In a time of uncertainty and waning mistrust I must implore your trust that this is not going to be a ongoing saga of parts. This ‘part II’ was the result of insight inquires from past and current customers and a few who we have yet to serve. Firstly I am so glad that people are reading and they are choosing to not simply look for answers but are seeking perspectives.

Part II is the result of requests about the status of sourcing and ancillary support services (both of which will be covered shortly), and this lead to contemplate relating to causal effect.

• Pre-pandemic sourcing was in a status quo state. While interest and engagement continued there remained the ongoing business of renewals, renegotiation and service adjustments. Since the early days of sourcing onset risk was always a consideration and included the standard examination for stability, continuation, continuity and social interventions. Yet the question was asked several times, ‘how did the pandemic effect outsourcers?’. So this raises the question as to whether risk was adequately examined or whether the question is recognizing the extraordinary effect of the pandemic. Optimistically I will suggest it is the latter and not the result of improper consideration. Sourcing in the new normality (gosh I hate to be cliché) involves a critical re-examination of needs based on the changing topography of the new enterprise. Some functions will go away, others will be added (but because of newness may be kept close for control purposes) and some may be expanded (however slowly in keeping with recovery dynamics). If anything the fact that a decentralized, work-from-anywhere paradigm may encourage further growth in the sourcing sector. This of course will once again to our original early state position of labor arbitrage as a main objective. The adage of ‘what goes around will come around’ seems to fit this conditional renewal. But is there a sourcing pivot? Given an uptick of potential interest and subsequent engagement the sourcing industry must abandon the notion of savings via labor cost due largely to labor challenges in disruptive conditions. Therefore investments must be made in the areas of automated services involving low human intervention and remote service control. Some sourcers, especially those heavily dependent on people will become collateral damage. Others who have boasted their abilities are not being held to their claims and have lost trust as a result. They too will become collateral victims. This leads to strong focus on proof of concept and intense transparency into service operations by stakeholders that is beyond a dashboard but one that permits both intercession and pragmatic analytically driven intelligence (A-AI+).
• Ancillary Support Services was brought into question by a few who work in the real estate sector. Of apparent concern are those individuals who support the healthy well being of the facilities of enterprises.  This included janitors, maintenance staff and those responsible for facility support (staging, moving, packaging, catering, safety…). But the reach goes well beyond this an includes manufacturing support personnel, machine tool trades, resource exploration (eg. Wildcats) and similar roles that often get lumped into commercial category but are uniquely qualified elements.  These are all at risk and the livelihood driven by the decisions of enterprises. The speed or chance of recovery will have a direct and profound impact on them. As a result their pivot involves a reliance on their span of ability to adapt. I am optimistic in that they are most likely more adaptable than most enterprises. Primal skills have a way of being widely expansive meaning that a painter can also do maintenance work, machine toolers can do mechanical jobs and programmers can do robotic deployments. In short the job may change but the aptitudes and diverse skills will morph into opportunities available. Some may even chose to establish their own businesses to service a broader unserved set of enterprises.

This leads us to the question surrounding all of these observations and opinions as to the pervasive effects of the pandemic. I think of this like a string of dominos that with one tip will set off a chain reaction. The one tip was the disruptive effect of the global cataclysmic pandemic. It started a chain of events that is still unfolding. For example,

1.      Business is forced to close facilities and to work alternatively remote

2.      Employees attempt to transition and adapt

3.      Business realize that intervention is required at least until some sense of consistency can be maintained

4.      Consistency isn’t happening as fast as we hoped and therefore more time is needed for support intervention

5.      Employees continue to do the routine jobs but the question of purpose, value, isolated abilities, self-confidence, and external factors come into question

6.      Employees now become concerned, this leads to issues involving personal survival

7.      Enterprises are in a state of confusion. Some continue but with zero results (even offers of free engagement are going un-responded to), others are waiting (but with no sense of for what other than maybe a sale or some other external disruptive event), and some have decided to pivot (meaning to assess, address, alter and transition in anticipation of the future needs driven by the pandemic disruption.

8.      Enterprises realign resources as might be pertinent to their response conditions.

9.      Enterprises interact with customers to sustain a level of engagement and to validate choices that they may or may not have made.

10.  Enterprises engage with suppliers to realign their needs. This involving real estate, service suppliers, material distribution and ancillary support services. But it will now entail new suppliers to support technology changes, logistical delivery and retooling contractors for fixed based facility modifications.

11.  Financiers will be contacted to renegotiate debt. Sources of funds will be sought from private and public sources. Reformulation of financial and cash flow models must be undertaken. #11 also raises the flag of whether the enterprise continues to be a sound investment or whether it’s viability is questionable. The balance of support then must moderated by the degree of benevolence exercised (should be addressed in #7 or earlier).

12.  Negotiations must occur with those owing and those who you owe. Given the pervasive sever circumstances negotiation will be a necessity to avoid excesses. Creativity will be necessary to reshape these indebtedness situations to produce value, albeit in a completely different way. Barters, write-downs, deferrals, stock ownership trades, and debt-for-debt trades are but a few of the ideas that will be considered.

13.  New lines of credit and authorizations will be established to support the enterprise. This will inevitably touch upon present financial state and ability to pay. It will also grant privileges to some but in do so in a tightly controlled fashion. Most likely the use of digital technologies will be necessary to administer, monitor, report and elevate concerns as a result of a distanced state of operations

14.  Critical assessment of activities will be undertaken. Meeting held as a matter of continued normality (#2 & 3) come under scrutiny. Format, cost, value, approach, need and audience will receive close critical examination. The new normality presents the opportunity to reconsider acts of performance. This leaves, for some who are support collectives and team efforts in a bit of a concerned state. Some of their feels may have been abated as a result of remote distancing measure but still the notion of limited collectives will occur. This is largely because for many the notion of ‘team’ has been their only normal work experience. Now we are challenge to use when appropriate but only from the starting point of individual empowered efforts. Teams then become relegated to being a matter of supportive intelligence.

The domino effect touches everyone and well beyond your acknowledge reach of effect it is affecting others. Even something as simple as a pad of paper being bought is impacting industries outside your borders. The small business who sells a chain saw (which was produced by a foreign workforce using foreign materials), that sells it to a forester or cuts down a tree that gets replanted by a tree farmer, that places the log on a truck who sells it to a mill who turns it into paper who ships the paper to a distributor who then sells it to your company who then has it delivered to you via courier. All of which are surround by hundreds if not thousand of smaller and bigger enterprises.

The pandemic has raised the question of protectionism and become more self sufficient but how can this possibly be done given the global scale as we have endeared? As with most things, yes it can be done but not without gut-wrenching consequences. The quality, diversity and costs are dramatically affected when we remove contributor conditions outside of our national control. As we have seen and continue to see, nations who attempt to function in a restricted protectionist mode suffer the consequences. The new normality is forcing us to reconsider the global realignment of trade, this must be done intelligently and not as an act of reprisal or under the pretense of false benefits. The new normality can be a rebirth or the start of further cataclysmic disruption, it’s for us to decide.

Clarity Group Global is an intellectual decision validation institution dedicated to the support of leaders, companies and organizations that face challenging choices. Making right decisions that produce significant value equates to less disruption and chaos, "non-tradition made exceptional".