Industry Tranformations, Knowledge Development and Outsourcing

Industry Transformations:

There is no industry which has not undergone a drastic change since its inception: Horse Carriage Industry was took over by the automobile industry which witnessed the Ford's vision of mass-production in the first decade of 1900 followed by Japaneese process efficiency in 1970s and 1980s; Filtered Cigrattes in 1950s; Supermarkets in retailing during 1960s and 1970s; Mainframes to Minicomputers to PCs to laptops during the later half of the 20th century.. and these are just some examples of industry transformations

"Innovator's Dilemma" authored by Clayton Christensen shows examples from virtually every industry. He lays down the rules for these "disruptive technologies" - which eventually hit every industry

What is the common thing about these industry transformations: They are always followed by shake-outs. This is because the existing leaders in the industry fail to cope up with the transformation because they were busy doing the right thing for their existing customers. This leads to job losses and people to learn new skills. This brings us to the knowledge development aspect of today's industry environment

Knowledge Development:

GE is probably one of the first companies to start a university to teach their best people - to cope up with the rapidly-changing environment. That is followed by other companies - including Cisco

Cisco has developed "Cisco University" with the goal to develop the employees career. An important deviation from the GE model is that it is open for any and every Cisco employee. And this is based on the following thinking from John [Chambers]:

John believes that in a period of 5 years, most of us [the Cisco Employees] would be working on something different than what we are working now. It could be a:

• Technology shift like from Foundation Technologies (Routing and Switching) to Advanced Technologies like Security and Voice or
• Role shift like from sales management to channels management or to marketing; from Finanace to HR to general management etc

John believes that Cisco University holds a key position for employees to move on that path swiftly. This is an important aspect to survive this global transformation of Outsourcing - which has hit all the industries

Outsourcing:
Outsourcing (or Offshoring or whatever be the term used), like any other Industry Transformation, has characeterstics like:

• Industry leaders who try the transformation for the name sake e.g. perform outsourcing for the sake of meagre cost cutting without process transformations would ultimately not survive,
• There would be job losses and people would have to learn new skills etc

I have seen that not many people realize this powerful phenemenon of industry tranformation is undergoing. But rather most people tend to believe the hype created by the newspapers on its face value. If we were to understand this phenemenon by its roots and transform ourselves successfully, we would be better off than to fatally fight against it and/or delay it

Excerpts from Well-Accepted Resources:

This is a very interesting interview with the outgoing CEO for DHL, Uwe: http://www.usatoday.com/educate/college/careers/profile52.htm

He views Outsourcing in a similar manner and uses sentences like:
"Economies move up the skill curve continuously, and what was a high-skill job yesterday may have become a medium skill today and low skill tomorrow... For the USA, it's about staying ahead of the game by always adapting and keeping the highest value-added jobs in the country."
"Education does make us safe, but education is continuous. It's not enough to learn a trade for life."
"It is important to educate the public about the benefits of outsourcing..."

Research from McKinsey to disprove the perceived notion that outsourcing was the cause of the job losses:
http://www.mckinseyquarterly.com/article_page.aspx?ar=1559&L2=19&L3=67

At Cisco:
For multiple years now, we execute on the goal of "Cisco being synonymous with increasing productivity" using Technology Improvements through networking with appropruate Business Transformations. Couple of quarters back, John presented us with his perspective of what he sees happening in the industry:
Productivity imrprovements in 1970s and earlier were driven by focus on production; in 1980s and 1990s, productivity improvements were driven by focus on transactions; over this and the next decade, productivity improvements would be driven by focus on interactions:
http://newsroom.cisco.com/dlls/tln/exec_team/chambers/perspectives.html
This change in the way business value-add would be perceived needs a change in the employees skill-sets and the education