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The Big Shift – Managing resources in an uncertain world

March 16, 2009
tags:

chess

John Hagel III, John Seely Brown and Lang Davison have started an intriguing conversation at HBR regarding The Big Shift,

…discuss how the world is speeding up. Peter Drucker probably started the trend in 1968 with The Age of Discontinuity. The most persuasive might be Ray Kurzweil’s The Singularity is Near, which observes that information technology displays “exponential growth in the rate of exponential growth,” which in turn fuels faster-changing events, practices, and processes–while, over time, accelerating economic expansion.

Do yourself a favor and spend the next 23 minutes to watch this amazing video

In their most recent conversation they broached the issue of Managing Resources in an Uncertain World,

We’re moving from a world of push to a world of pull. Push programs operate on one key assumption – that it is possible to forecast future demand. When demand can be forecast, we can efficiently push resources to where they will be needed when they will be needed.

to which I add my limited contribution to the conversation;

JJL, you are absolutely right about the demand/pull – offer/push transformation. But this has been underway since the introduction of the internet which gave consumers/customers access to more information and choice options.

I question your suggestion that forecasting is somehow a driver for that change. If I were to somehow unleash an army of forecasters (lets say the quants at Wall Street ;-) and managed to come up with more robust forecasting techniques- do you really think the “Push vs Pull” dynamic would change or stop?

The dynamic is an evolutionary transformation that stretches back from the roots of central planned economies, to production driven corporations, to the customer responsive global corporation evolving still from a central to decentralized command/control system…to where value is created…the consumer.

I have always been amazed that corporations can predict their results as well as they do, when we as individuals can’t predict what we are going to eat tonight. I think there’s always been a certain hubris to forecasting, that somehow we were able to capture the DNA of profit inside a formula. Need more profit…run the formula. Need more (loyal) customers…incentivize purchase continuity.

It’s all a zero sum game unless you develop deeper, more personal connections with customers, which then opens up new possibilities for cooperation and collaboration all along the value chain and within the industry as co-opetiton becomes a strategic option. (see Moore: The Death of Competition, Nalebuff & Brandenburger: Co-opetition)

Technology has progressed to the the point that it enables us to listen, communicate and inevitably …..let go. This fear of ‘letting go’ is no different than a parent teaching their child to ride a bicycle, we feel the apprehension but the child only feels the excitement of their new found freedom. Giving customers more direct access to the levers of change ultimately fulfills the old prophesy of the “Customer is King”.

Your point about logistics/resource planning is powerful, but it is a ‘management constraint’ that can be eradicated whenever desired. As long as one is prepared to work with heightened speed, scale and adaptability ….the inventory cushion provides the means to the end. The enterprise can unleash the certainty of real-time purchase data via interconnected just-in-tine systems.

Unfortunately most production systems have a higher volume requirement for economic scale. And so the challenge isn’t buying into the heightened profitability of the demand-pull side of the equation as much as pushing down the cost scale of production/resourcing/logistics.

cheers

Miro

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