Future Trend: Co-Locating Teams vs. Dispersed Teams

Written in Golden Gate Park on Friday, December 13, 2012 

Thought of the day: it does take more than one person to screw in a light bulb!

Just read an article in The Atlantic Monthly, which is quickly becoming one of my favorite magazines.

It focused on how some manufacturing might be returning to the States. It touched on GE’s leaner approach in its Appliance Park Campus in Louisville, Ky. This is where they manufacturer GE Dishwashers. Historically, it had the teams, such as Marketing and Engineering, spread out across the world. It’s new approach is now to co-locate everyone working on a specific product, such as a dishwasher.

This in-sourcing approach definitely  is U-Turn for manufacturers. As the article states:

What has happened? Just five years ago, not to mention 10 or 20 years ago, the unchallenged logic of the global economy was that you couldn’t manufacture much besides a fast-food hamburger in the United States. Now the CEO of America’s leading industrial manufacturing company says it’s not Appliance Park that’s obsolete—it’s off-shoring that is.

Having the a cross-functional team working in one place creates all sorts of synergies as well as reduce the complexity and the costs of shipping parts or products from China to the United States.

In recent years/decades, companies have focused on dispersing their team to different parts of the world based on expertise and labor costs. As we  can see with the Boeing’s 787 Dreamliner numerous problems, this approach is not working too well.

Outsourcing might be outdated as a business model for Fortune 500 companies. Even Apple is experimenting with bringing some of its production back to the States.

It isn’t just manufacturing that is coming home. I recently worked with a major software company that outsourced the human part of its social media monitoring to Hungry, only to realize (two years later) that it wasn’t working because there are certain nuances of of the English language and of the Internet World that a non-native speaker might have a problem with. At Intuit, we often had discussions about why were outsourced our call centers to India even though it was impacting our overall customer satisfaction and NetPromotion scores. Although I am not a 100% sure what the company is doing today, I hope they have decided to bring some of their call center operations back home.

This is not just because of people’s negative knee jerk reactions to hearing a foreigner on the phone. From a company perspective, it is extremely valuable to place  individuals on the front line (customer service) closer to the marketers.

Wouldn’t it be nice if those two groups talked every day. : )

All of this is in line with the popular Lean concept, which my team practiced during my days at Intuit, when we focused on:

  • Cross-functional representation: Get people from all different parts of the company involved early on and on a weekly basis.
  • Start with one product or niche: Don’t go broad and throw a lot of stuff against the way and put a stake in the ground and focus on one or two segments, and if your product doesn’t sell well to them, try another group; the point being put a 100% of your effort on one group vs. 50% on two groups.
  • Launch and learn approach: I hate the word launch because it implies a fixed moment in time, and prefer to get something into market and focus on continuous improvements.
  • Betting on small incremental improvements: Similar to the previous statement, but just want to restate that you don’t have to build the Stealth Bomber day one, and instead can improve over time even if it is in small increments.
  • Clear milestones (reinforced with ongoing toll-gates, where the team checks in with one another): Have weekly goals of what you want to accomplish and learn and assign owners to present them.
  • Customer Involvement (yes, I invite them to my staff meetings): I often hear that we did a focus group at launch. Like my statement about a launch, I believe in continuous integration of customers into my team and business practices
  • Consistent measurement: Does this need explanation other than don’t try and measure the ocean, and instead focus on the critical few — less than 10 items, probably closer to 5.

I am consulting to a small company now that has been struggling for a few years because it breaks almost all of the above rules. It doesn’t have a clear target audience and spends most of its time focusing on technological improvements.

Just remember, it does take more than one person to screw in a light bulb!



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