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The Contradictions That Drive Toyota's Success
Hirotaka Takeuchi, Emi Osono, Norihiko Shimizu
Reprint #R0806F

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http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?ml_action=get-article&ml_issueid=BR0806&articleID=R0806F&pageNumber=1&ml_subscriber=true&uid=24485505&aid=R0806F&rid=24567727&eom=1

Division of labor

The main focus of Adam Smith's The Wealth of Nations lies in the concept of economic growth. Growth, according to Smith, is rooted in the increasing division of labor. This idea relates primarily to the specialization of the labor force, essentially the breaking down of large jobs into many tiny components. Under this regime each worker becomes an expert in one isolated area of production, thus increasing his efficiency. The fact that laborers do not have to switch tasks during the day further saves time and money. Of course, this is exactly what allowed Victorian factories to grow throughout the nineteenth century. Assembly line technology made it necessary for a worker to focus his or her attention on one small part of the production process.

During my economics classes in school, I remember that one of the disadvantages of such a labor specialization is the inability to look at or gain expertise in anything else. Being a jack of all trades may not be the best thing to happen, but being unemployable does no good either. This article focuses on how the concept is prevalent in today’s corporate world.

When a project is in an initial stage with just a few members, it becomes imperative for each to know the integration points of the other. That’s because there are unknown regions that everyone has to explore, and drive the project to its completion. The organization may face such a situation when it is starting up, it has labor shortages or just that it wants to save cost. In such a scenario, an individual is expected to take up multiple roles. The downside is that this model is not scaleable. With the increase of complexity and size, it becomes important to develop expertise by restricting individuals into their own regions of expertise. And the organization as a whole benefits since they can produce outputs more efficiently and by using lesser overall resources.

For the individual, things might get different. If she takes up multiple roles, the experience widens, and so does her value in the market. It is definitely much more difficult jugging multiple tasks at the same time; but the scope of learning is immense. On the other hand, in a large setup, the individual is lost, has limited expertise; and she might even find herself being unemployable in the market (since the limited experience is not valued enough). Diversifying one’s experience always makes sense for those who want to grow.

One needs to have an insight of the larger picture and the future prospects. Decisions are dependent on the individual’s priorities. If one wants to be valuable, it makes sense to get others do the repetitive tasks, while she learns something new..Call it politics?

I have learnt it the hard way.


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Bol India bol

The TV ad of reliance infocom takes us through the history of telecom in india. There was a time when trunk calls were the order of the day, it was followed by STD, booths, queues and then to expensive calling rates of the cellular phones. Even the constant reduction of the calling rates to 1 Re / min doesn’t seem to be good enough. And so Reliance came out with free unlimited STD to another reliance mobile in the country.

What does this mean to us? I don’t know many people who use 93 numbers, and I don’t think I will benefit by taking the scheme. But who will? Cant discount the long lost lovers who cant get with more of talking. I can even suggest it to some of my friends. Perhaps reliance is trying to woo some GSM customers as well, since Tata Indicom has been offering it for quite some time now.

Why this sudden surge of low margin propositions? This is an indicator that the industry has matured, and can be treated as an FMCG. There is a clear lack of innovation or differentiation in the services offered by the many operators. This morning I read that around 25% of the Indian population is already connected. The growth from here is not expected to be exponential anyway. The original high costs were fallout of initial investments in towers and other infrastructure (which are capital intensive). Now that the golden years are over, the multitude of players can only compete on costs.

3G has not taken off very well in India, primarily due to high costs of usage. Till wireless broadband gains popularity, people will have to make do with GPRS data packets only.

For the heavy talkers, there is good news. Falling rates implies they can talk even more. Bol India bol!!

Business standard article