How Crisis Shapes the Corporate Model is an interesting article in the March 28, 2009 New York Times. It gives some history of how past economic shifts have affect the structure and nature of corporations and speculates on what may be to come. Many interesting historical examples are given.
John Hagel III, the co-director of the Deloitte Center for Edge Innovation, is quote as saying that we may see “an unbundling of the corporation” to achieve greater efficiency and profitability. It sounds like another word for outsourcing and offshoring, if examples given in logistics (Federal Express and U.P.S), call centers (Convergy) and contract manufacturing (Flextronics) are indicators of “unbundling”. Disconnecting processes and stretching out the value stream doesn’t seem like a smart thing to do, even in the name of cost savings.
The article also makes a passing reference to lean manufacturing and just in time strategies, and then a contrary view that high fuel prices may in fact bring more manufacturing sourcing decisions closer to the point of consumption instead of in what are currently low cost countries overseas. Out of altruism or the need for survival, manufacturing corporations are presenting themselves as “social organizations, whose obligations extend well beyond Wall Street” according to Rakesh Khurana, a professor at Harvard Business School. As an example, the embattled U.S. automakers are portraying themselves as “pillars of their communities and pillars of American manufacturing, not purely economic entities” according to the article.
The article’s author may also be confusing correlation with causation when he talks of how technology made it more possible to monitor and manage large, complex corporations – something that doesn’t seem to have direct line to the Depression or other economic shifts highlighted in the article. It may have been an enabler of change in the corporate model, but only one of many. Whether technology is a greater catalyst of chance in the corporate model or whether economic factors are a greater catalyst is an interesting though hardly testable question.
And do you agree or disagree with the emphasized portion of this quote from the article?
Innovation in management, after all, is adaptive. Management is not a science, like physics, with immutable laws and testable theories. Instead, management, at its best, is an intelligent response to outside forces, often disruptive ones.
Can management not be a science and also be adaptive, and yet possess immutable laws, testable theories, and respond intelligently to outside forces?
The photograph of the Flextronix factory in Hungary (photo credit Bela Doka/Anzenberger, for The New York Times) is a good one for practicing the “stand in the circle” exercise. Pretend you are in the factory, standing in the Ohno circle. Your task is to identify 30 small problems or improvement ideas in the next 30 minutes. As a company Flextronics is known for having some fairly lean sites, and this factory appears to be clean and organized. In addition, the fact that you cannot see people moving makes it slightly more challenging. On the other hand it allows you to observe a single moment in time more deeply. I found 18 possible improvement areas in 12 minutes before it got really hard. What will you find? Add your observations in the comments below.
Click here to open or download a document of my 18 observations: Observations from Ohno Circle Exercise – Flextronics Hungary.doc