Tag: HBR

Good OM Reading: The History and Future of Operations

hbrProf. Marco Iansiti’s new article in Harvard Business Review (July, 2015), declares: “It’s time to rethink what we mean when talk about operations.  Operations is and has always been what gives an organization the power to act: to create value for its customers; to capture value for its shareholders; and to share value with its ecosystem. In the era of ubiquitous digital technologies, operations empowers an increasing variety of organizations.”

Growing out of the industrial revolution of the late 1800s, OM field took off as the modern economy emerged from the new phenomenon of volume manufacturing. Popular notions of “interchangeable parts” were first applied to the design of muskets and enabled a new breed of industrialists to invent a modular system of production, in which individual components could be manufactured independently and at scale. This gradually led to the concepts of logistics, supply chains, and assembly lines, and formed the foundations of the “American System of Manufacturing,” which grew during the first half of the 20th century and peaked during the 1950s. (In fact, at one time Harvard Business School offered practical classroom demonstrations on the use of lathes and milling machines). The 1960s saw the development of a broad variety of analytical methods to analyze and optimize the flow of goods and information not only in manufacturing systems, but in a wide variety of service contexts.

What is different now? Digital technology and its exploding range of applications in web services, mobile, and now the internet of things means that the development and delivery of software services is transforming the fabric of operating environments. If the essence of OM is providing economic agents with “the power to act,” digital technology is transforming the nature by which that power is defined and delivered, with new operating models that are increasingly open, distributed, and shared across thousands of organizations and contributors. These new models have enabled close to 9 million independent developers to contribute apps to mobile platforms. And they’ve enabled WhatsApp to grow to over 450,000 users with fewer than 30 employees. As such, the design of development tools, operating system APIs, and the user onboarding process for apps have become as crucial to OM excellence as production planning or inventory theory.

 

Good OM Reading: Robots Probably Won’t Steal Jobs

hbr“There is no shortage of angst about the relentless advance of digital technology and what it means for the work force, if not humanity,” writes The New York Times (June 8, 2015). Dire warnings have come from no less than Elon Musk, Stephen Hawking and Bill Gates. So, to paraphrase many recent headlines, “will robots eat our jobs?”

Not necessarily, according to two new entries to the debate. One is a lengthy cover article in The Harvard Business Review (June, 2015), “Beyond Automation: Strategies for Remaining Gainfully Employed in an Era of Very Smart Machines.” The other is a new McKinsey study, “A Labor Market That Works: Connecting Talent With Opportunity in the Digital Age.”

The McKinsey study analyzes and forecasts the potential impact of so-called digital talent platforms. The report looks at three types of such platforms: job-finding and employee-seeking websites (such as Monster.com and LinkedIn); marketplaces for services (Uber and Upwork, for example); and data-driven talent discovery tools (like Evolv and Knack). By 2025, McKinsey estimates, these digital talent platforms could add $2.7 trillion a year to global gross domestic product–and companies that make efficient use of the digital platforms can increase their productivity by up to 9%.

The HBR article concedes the advance of automation, but adds: “Instead of seeing work as a zero-sum game with machines taking an ever greater share, we might see growing possibilities for employment. In an era of innovation, the emphasis has to be on the upside of people. They will always be the source of next-generation ideas and the element of operations that is hardest for competitors to replicate.” Competitive advantage will be lost by those organizations infatuated with technology alone. Automation, the article states, is often useful but rarely a game winner for most companies. “That realization will dawn as it becomes increasingly clear that enterprise success depends much more on constant innovation than on cost efficiency.”