Read an Excerpt
C H A P T E R 2
The Three Major Business Challenges:
Costs, Labor, and Innovation
No one can sketch the business world of the future with any accuracy, but one thing is certain—it will be as different from its predecessors as the factory was from the farm. And although the great drivers of change in the past century—globalization, the diffusion of technology, and shifting demographics—
may not have combined to create a world that is truly flat, the playing field is unquestionably far more level than it once was.
The flow of manufacturing jobs from the traditional centers of production in Europe, North America, and the Pacific Rim to the developing economies of China, India, Central America, and South America has been well documented.
But while the economic giants of the twentieth century have been able to soften the blow of that loss through the realignment of their labor forces, the long-term consequences of the transformation have not yet been fully understood. At the very least, companies with decades-long reliance on traditional product lines—whether they be automobiles, electronics, or pharmaceuticals—have begun to realize that it is not only production that has fled their shores. Accompanying those jobs, it seems, was the culture of education and innovation upon which the West was founded. As a result a forward-thinking corporate managers have been forced to rethink cost structures a management priorities, market strategies, and product development.
The workplace programs of today will age just as surely as the workforce will. It is only by continually reviewing market conditions, reexamining corporate strategies, and reallocating resources accordingly that businesses can prosper in a volatile and unpredictable global economy. Accordingly, the three major challenges facing businesses today are:
1. Reducing fixed operating costs
2. Confronting the coming talent shortage
3. Institutionalizing innovation
Of these three, the most important core function is the institutionalization of innovation. The case studies introduced in the first chapter—The Sprint
Powered Workplace, H-P’s Workplace Transformation, and Jones Lang La-
Salle’s Workplace Strategies—are textbook examples of forward thinking in action, and we will get back to them later in this book. As successful as they have been, however, they are but products themselves of institutionalized innovation. The key to ongoing success lies in integrating innovation into every aspect of the company.
In the pages that follow, we will address each of these challenges in turn a citing research, discussing the best practices of industry thought leaders, and featuring case studies from Future of Work members past and present.
We will also describe in some detail the management tools and methodologies we’ve developed at the Work Design Collaborative, in collaboration with members of the Future of Work community. Those experiences have reinforced our belief that corporate agility can be achieved only through the continuous, collaborative management of HR, IT, and CRE. We call this approach collaborative strategic management, or CSM for short.
That said, collaborative strategic management involves much more than the simple integration of those traditionally separate functions. CSM means putting processes and practices in place that will allow HR, IT, and CRE
managers to create a unified approach to the organization’s business imperatives a and to resolve them while respecting a core of shared corporate values.
Seen from this perspective, CSM is as much about the why of strategy as it is the how, affecting not only strategic decision making but also plans made in the larger pursuit of corporate agility.
CSM is meant to ensure that HR, IT, and CRE work together toward common goals. It does not demand that the boundaries and differences among these three professional disciplines be eliminated. Rather, it recognizes and values those differences, and the unique contributions to the business that each of them make. It further requires that those contributions be made within a context of mutual respect, and with the understanding that all three perspectives are needed to produce an effective, sustainable, agile, organization.
CSM is strategic in the sense that it anticipates—in fact, even expects—
continual change in the broader business environment. In that sense, it is about management over time, because continuous environmental change demands continuous organizational and managerial change. CSM, then, is the dynamic and ongoing process of internal decision making that is the essence of corporate agility.
Let’s return now to the three major business challenges of the twentyfirst century. There are various options for reducing fixed operating costs. We
will examine the following:
■ Corporate real estate (CRE) issues
■ Nontraditional business (government agencies, nonprofit, etc.)
■ Green building
■ Variable-cost labor
■ Employee turnover
Next, we will address the shortage of human talent—the difficulties corporations are now experiencing recruiting and retaining qualified, engaged employees. Under this heading we will examine the following:
■ Shifting global demographics
■ Changing attitudes in the workforce
■ Benefits crunch
■ Educational trends
■ Politics and immigration
Finally, we will turn to the institutionalization of innovation, or the ways in which corporations must not only react to changing business conditions but also build innovation into their corporate structures, ensuring that today’s solutions do not become tomorrow’s problems. We will look at these case studies:
■ Herman Miller
■ Johnson Controls
■ Jones Lang LaSalle
For now, however, let’s turn to a topic that keeps the CFOs of the world awake every night—the reduction of fixed operating costs. This is the subject of Chapter 3.