‘Tis the season I suppose……

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Just like the awards season in the entertainment industry, this is also the season for the really smart people to summon the masses and issue their proclamations for the upcoming year.  And I must admit, it is a fun exercise and at minimum it makes you think about some issues that typically don’t get as much attention like 3D printing.  This year is no exception – except a big glaring one!!  One of the groups of really smart people who get paid lots of money to issue proclamations like this (Gartner) for IT executives had this to say:

By 2020, the labor reduction effect of digitalization will cause social unrest and a quest for new economic models in several mature economies.

This is remarkable in many ways.  An IT consulting company is telling IT executives that one of the planning assumptions that they must make is social unrest!!  Having done work with many senior executive including many CIOs, I can assure you that this is nowhere on their agenda.

The gist of the argument is that the increase in productivity is accompanied by a loss in employment leading to a loss in demand – which then becomes a vicious cycle.  A shift in wealth from labor to capital is occurring.  They go on to predict ”a larger scale version of an Occupy Wall Street type movement”(let them eat cake??).  This is just fascinating stuff – whether you agree with it or not.  CIOs are supposed to be tracking populist, socialist (not my labels) movements and include that in their planning assumptions?  How do you incorporate that into your risk model? 

And if you thought that wasn’t enough, here’s some more:” a sustainable model will no longer be about winning; it will be about participating, and enjoying the journey, instead of the destination…… Executives and nonexecutive board members need to start thinking in terms of participating instead of winning, giving the idea of sustainability a whole new meaning”.  It almost sounds mystical.

However, this was the Strategic Planning Assumption that made the most sense and one that demands attention.  The relentless drive to lower costs has some very serious unintended consequences-namely a loss of consumers.  And continued digitization will mean continued disruption in the economic model leading to more and more economic inequality and thus major social unrest.  This has serious implications for our community.  Shifting “costs” in our supply chain is about a “winning” strategy but according to Gartner, ultimately a losing strategy.  Eliminating “costs” in our supply chain is a collaborative strategy and the actual winning strategy going forward?  Many of you who have worked with us know that we have been preaching this for many, many years.  Many of you who have been through negotiations training with us will recognize that we strongly urge clients to identify mutual value and focus on that.  The competencies that we push hardest are the strategic competencies of collaboration, relationship management, persuasion etc. etc. and these are what will help drive these new required behaviors.

Old economic metrics (better, faster, cheaper) are counterproductive!!  WOW!  DOUBLE WOW!!  Imagine walking into your boss and having that discussion.  Imagine having to revisit your sourcing decisions and having to include “sustainability” of your entire supply chain (supplier’s, their supplier’s, their suppliers) instead of extracting the most from your suppliers to satisfy this year’s metrics.  I would encourage you to take a look at this prediction and at least start having a meaningful discussion on the topic.  If you are perceived as one of those companies (especially if you are in the technology world) that is making “unsustainable” decisions and causing these labor effects…you may face severe economic backlash.  All you have to do is to take a look at recent headlines about Papa Johns, Walmart, McDonalds etc. etc. and see that because of their labor compensation practices, they are facing massive backlash.

 

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Dalip Raheja
Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.
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