In the course of my career, it has often amazed me how educated, tough-minded corporate executives with MBAs and lots of experience can get caught up in a business trend, just like lemmings in pin-striped suits, marching happily to the cliff’s edge. Over the years, business fads have included taking on a pile of unnecessary debt, merging with or acquiring another company, getting “lean and mean” by laying off employees and closing facilities, or offshoring production of their signature product line to a low-wage country. Maybe they read an article in Business Week, Fortune or The Wall Street Journal about the advantages of this new trend. Perhaps their boss or someone on the board heard about the trend and asks why American Industrial Widgets isn’t doing it. That gets the gears moving.
Jumping on the Express Train
Then these folks, trained in hard-nosed quantitative analysis, find a way to crunch those numbers so as to justify jumping on the express train of a hot new trend. It’s only human nature—who wants to be left behind? Who wants to be the Luddite trying to explain to the board and shareholders why he decided not to do what was clearly obvious to everyone else? When a person stops thinking and starts acting on emotion, though, things can go sideways big time.
Let’s take the old article first. “The Insourcing Boom” by Charles Fishman appeared in The Atlantic in November. It talks about how General Electric is bringing much of its appliance-manufacturing back home after many years of offshore production.
The article is long but it is well worth reading, possibly several times. It makes so many excellent points that I cannot even summarize them here, but the core of GE’s vision is what Mr. Fishman calls the “big room” approach to manufacturing. This puts design engineers and manufacturing engineers in the same room with staff from marketing and sales to solve a problem and, by doing so, create a better product. Mr. Fishman points out that there is, “no management-labor friction, just a group of people with different perspectives, tackling a crucial problem.”
In the case of General Electric, the result was a water heater that is better and smarter than the one they were building in China. It is also cheaper to manufacture because it uses fewer parts, can be built by fewer people, moves off the production line faster, and can be shipped to sales outlets in a fraction of the time. That means its price is nearly 20% lower.
At first blush, this might seem like a good thing for the American workforce because it would keep Indian companies from staffing their offices in the U.S. largely with “Indian expatriates, who earn significantly less than their American counterparts.” This approach would seem to help with the problem of foreign workers, “displacing qualified Americans from jobs,” especially in the IT sector.
But wait, there’s more. The large IT companies have jumped into the argument because they want to keep bringing in, “as much as 80% of their staff in the U.S.,” on H-1B and other visas. In short, these big American firms “are seeking to hire more foreign workers for high-skilled jobs but face a visa shortage because of competition with Indian firms.” The proposed cap on foreign workers would benefit U.S. companies by allowing them to hire more foreign workers at lower wages but force Indian companies to hire more U.S. workers. The U.S. firms claim they need these foreign workers because of a dearth of American computer graduates.
Willing to Work for Less
I know that companies like @Microsoft claim that they can’t find enough educated American workers to fill all the high-skilled jobs they are creating. But I can’t help thinking that they really can’t find enough Americans who are willing to work for “significantly less.” Maybe they could take the “big room” approach to filling those skilled jobs. After all, there are lots of highly trained people out there who can’t find work because they’re over 50. They got laid off because they made too much money and now can’t find another job because their hair is gray or they have been out of work too long. We’re talking people with Bachelor’s degrees as well a graduate-level education up to Ph. D.s.
Just last year on @SixtyMinutes, John Blackstone talked to a room in Silicon Valley filled with hundreds of such qualified, but unemployed, Americans. Ironically, this segment is introduced online by a Viagra commercial that says, “You’ve reached the age of knowing how to get things done.”
There’s a difference between whining and thinking. If General Electric can think beyond the obvious solution to make better water heaters, maybe Microsoft, @IBM, @CiscoSystems and other big IT companies should try thinking beyond H1-B visas for hardware and software.