OM in the News: China, High-Tech, and the 996 Schedule

“Crazy Work Hours and Lots of Cameras: Silicon Valley Goes to China,” is the title of the New York Times article (Nov. 6, 2018), describing the visit by US high tech execs to China.

A Chinese voice-controlled A.I.-powered family robot

The Silicon Valley natives were introduced to the Chinese concept of 996: Work from 9 a.m. to 9 p.m., 6 days a week. One Chinese technology executive said he worked 14-15 hours a day at least 6 days a week. Another said he worked every waking hour. The reaction from a group of Silicon Valley executives: Wow! “We’re so lazy in the U.S.!” blurted a venture capital investor.

Chinese technology executives, they found, were even more driven and more willing to do whatever it takes to win. But punishing work schedules are only the beginning. They found Chinese tech executives to be less reflective about the social impact and potential misuse of their technologies, a worrisome quality in a country with loosely enforced privacy laws, strict government censorship and a powerful domestic surveillance.

The Americans got upfront lessons on how quickly China embraced mobile phones, electronic payments and video streaming, and how intensely it has pursued artificial intelligence. (For example,  mobile payments are almost ubiquitous in the biggest Chinese cities, but setting up an account requires a local mobile number and a Chinese bank account). In addition, everything seemed to be moving at an extraordinary speed. While Silicon Valley start-ups raise funding every 18 to 24 months on average, the most successful Chinese companies do it every 6 months. They also found that everybody working in the firms visited is Chinese. Even in its early days, Google had employees from 39 nationalities speaking 40-plus languages.

Classroom discussion questions:

  1. Compare the U.S. to Chinese high-tech work styles.
  2. Would the 996 concept work in the U.S or Europe?

 

OM in the News: Office Layout in Silicon Valley

Throughout Silicon Valley, cash-rich technology firms are building bold, futuristic headquarters that convey their brands to employees and customers. Uber, for example, is designing an entirely see-through HQ. It is expected to have some interior areas, as well as a park, that will be open to the public. The very newest buildings, such as Apple’s, are highly innovative in their internal layout. Some of that is because of fierce competition within the tech industry for the best talent: firms are particularly keen to come up with attractive, productive environments. “But these new office spaces will also signal how work is likely to evolve,” writes The Economist (April 29, 2017).

The big idea championed by the industry is the concept of working in various spaces around an office rather than at a fixed workstation. Employees may still have an assigned desk but they are not expected to be there, and they routinely go to different places to do various tasks. There are “libraries” where they can work quietly, as well as cafés and outdoor spaces for meetings and phone calls. The top floors of Salesforce Tower, for example, will be used not as executive corner offices but as an airy lounge for employees where they can work communally.

A fluid working environment is meant to allow for more chance encounters, which could spur new ideas and spark unexpected collaborations. Facebook has the world’s largest open-plan office, designed to encourage employees to bump into one another in its common spaces and garden. Amazon aims to make communal areas into “living-room-like spaces.” The lack of fixed workstations shrinks the amount of expensive real estate given to employees without leaving them feeling too squeezed. Tech firms devote around 15 square yards to each employee, 1/4 less than other industries.

Young workers are thought to be more productive in these varied environments, which are reminiscent of the way people study and live at university. One drawback, however, is that finding colleagues can be difficult.

Classroom discussion questions:

  1. Are these layouts likely to permeate other industries?
  2. Will everyone be pleased with the new designs?

OM in the News: Move Over, Silicon Valley

In Chapter 8, Location Analysis, we discuss the interesting topic of clustering (see Table 8.3). Clustering is basically locating near competitors so as to take advantage of major resources found in that area. The perfect example is how software and high-tech firms head to Silicon Valley, Boston’s Route 123, and Bangalore (India). Our colleague, David Greenberg, just emailed from India that Tel Aviv belongs near the top of the list and sent the adjacent graphic. He adds: “Aside from Israel as No 2, what I found interesting is that Waterloo, Ontario is on the list. There’s an implication here that a single successful startup (Blackberry, Microsoft) is enough to build a cluster (Waterloo, Seattle)”.

Like the U.S., Israel puts entrepreneurs, successful or not, on pedestals, which allows them to attract the best minds to work with. Some Israeli high-tech innovations:  voice mail (1984), multislice CD scanners and cardiac stents (1992), ICQ instant messaging and VoIP “voice over internet” (1995), USB flash drives and computer vision software for road navigation (1999), the pillcam (2001), and Intel mobile technology (2003). More than 90 Israeli firms are listed on NASDAQ–2nd only to the U.S.

Israel high techClassroom discussion questions:
1. What ecosystem is needed for success in high-tech?

2. Name several other clusters that are not high-tech.

OM in the News: Solar–Will the U.S. Lose Out to China?

A few days ago, our blog gave the good news that BMW and Mercedes were expanding their manufacturing in the US. For our nation’s standard of living to rise, we indeed need to make things. And such jobs pay well and provide a path for middle class success.

But the New York Times headline (Oct.13,2010), “In the Future, Already Behind” brought me back to reality with a thud. The story is about Silicon Valley and its commitment to transforming the economics of solar panel production. Firms like Solyndra, Nanasolar, and MiaSole bet the farm that their “thin film” technology would make them the Intels and Apples of the exploding global solar industry.

But just as Solyndra flipped the switch on its new $733 million California  factory last month, everything changed. The Chinese, using vast economies of scale and government subsidies, sent the price of panels plunging 40%  and grabbed 40% of the vast California market. They also took the bulk of the European market. What looked like a chance for US manufacturing to dominate a critical growing market has crumbled to the realities of globalization.

“How do you fight against enormous subsidies, low-interest loans, cheap labor and scale, and a government strategy to make you no.1 in solar?”, asks an American CEO.

New technologies (see Ch.7), meant to be cheaper, must get there faster is one lesson we learn here.

Discussion questions:

1. What are the dangers of ceding this industry to the Chinese?

2. How can the US firms counter this threat (see Ch.2 for a strategy discussion)?

3. Should the US provide the same benefits that China does to new companies?