Flat World, Flat Clouds
I was thinking on some of the issues raised in Thomas Friedman’s book “The World is Flat” and what it means to the consulting world and the midsize business world. If you haven’t read this book a link to a summary is provided here. His book is actually divided into two general parts. The first part contains his observations on a globalized economy, social factors, technology and the development of several third world countries. The second part contains his social/political recommendations for the future. I think the first part is very useful. The second part, not so much (big government and big taxes aren’t my cup of tea). This post is directed at U.S. located companies. For those of you not located in the U.S., the logic is much the same.
My concern is the management of intellectual property and projects amid the proliferation of sources of skilled service labor, such as consultants, managers, engineers and software developers. For example, your company may need to develop a new product. If your company is a midsize manufacturing company, it may not have sufficient resources to execute all aspects of converting a good business idea into a mature, profitable production facility. Your company will probably look outside to various sources, both familiar and new, for help and advice. If you apply the observations from “The World is Flat” to all the companies involved with your project, the result can be a complex, interdependent web of knowledge and judgment sources.
Certainly companies deal with that situation today. However, the complexity of such arrangements will grow in the future. Now is the time to plan for how to handle that dilemma. I don’t presume to offer a solution in this short blog post. I can only try to frame the questions and offer some ideas. At least, I hope to get you thinking about this topic.
I need to define the types of service labor and regions that will be relevant to this discussion. First, I categorize service labor into three basic groups, shown in the table below. The table also includes some of the major attributes of each category. The key differentiation between each 
category is the tightness of the bond between the company and each group. That is determined by the level of involvement in core business processes. The “coreness” of a business process is defined by how integral it is to the value proposition of the company. “Direct” labor will always be direct employees of the company. “Close” labor may not be employees of the company but they will probably seem to be employees to an outside observer. “Packaged” employees will obviously not be employees of the company although their contributions will be considered very valuable. Other categories could also be defined for various levels of closeness to the company but these three will be sufficient to make my point.
There is also a need to define the notion of proximity. Direct labor will mainly be located at one of the company’s locations or a location sanctioned by the company, such as an employee’s home office. Close service labor may be located at the same locations as Direct labor or their employer’s locations. Packaged labor will typically be remote to the company’s locations but available when needed. This type of labor can be located anywhere in the world. Typically they will be located in one of the areas on the global map above colored in red (Note that the color red does not have a political significance, only an ease of visibility significance).
There are also some other terms of significance. You will also need definitions for “outsourcing“, “insourcing“, “offshoring” and “onshoring“. To save time and words, those definitions are provided by their corresponding links. All of these terms apply to the location and accessibility of service labor resources. For example, it is entirely reasonable to talk about outsourcing a business process to a domestic (onshoring) contractor. That service may require “Packaged” service labor requiring a well defined scope of work and contract.
Projects, such as the types discussed above, can require a traditionally managed approach or use a lean, timeboxed approach. For example, if using the lean approach, a timeboxed part of a larger project could be outsourced to an offshore provider of Packaged engineering resources. The customer must then provide a home for all of the intellectual property being generated as the deliverables. A well defined policy and content management system are essential requirements. Fortunately, various tools are already available to fill these needs and more are on the way.
In summary, every company needs to be developing policies and tools for managing the intellectual property produced from multiple, smaller and networked service providers. These providers of skilled service labor can be located almost anywhere in the world. They may be close at hand or at arm’s length. I want to strongly encourage readers from midsized companies to not view this as a problem only for large, multinational corporations. If not now, it will also be your problem in the near future. In future posts, I’ll drill down into these broad ideas and suggest some specific actions. Hopefully, I’ve raised the awareness of those of you who haven’t been thinking about these ideas before now.
Thanks for stopping by. Stay tuned for more…
