--> Gill Blog: October 2003

Gill Blog

Friday, October 31, 2003

Finland: More than Pucks and Reindeer

Like many who live in North America, our geographic separation from far away lands often leads us to generalize about different peoples and places. Take Finland for example; for the longest time I simply associated the place with hockey and reindeer; others who have experienced the culture first hand have created detailed lists describing the essence of being a Finn. Regardless of its traditional perception, Finland is now adding another tag to its repertoire: economic powerhouse. In its annual rankings released yesterday, the World Economic Forum rated Finland number one in both growth and business competitiveness. One of the key drivers of Finland's success has been its position as an early adopter of wireless technologies as well as wireless' high penetration rates in Scandinavia (Denmark and Sweden are also included in the top five).

Those of us in the faraway hinterlands of North America, who haven't been keeping tabs on Finland lately are left to ask how it assumed center stage on the world wireless platform. Apart from deregulation and some very bright minds (some of whom ply their trades in America), I believe the two central success factors are attributable to infrastructure: firstly, wireless ubiquity is rooted in necessity, as Finland had very old buildings that were difficult to wire, thus adopting wireless was a quick and easy way to overcome this limitation; and secondly, its geographic size made it very easy to deploy a wireless network (through transmission towers, for instance) that provided complete national coverage. As soon as a network was rolled out, the shackles associated with conducting business in central locations were effectively removed.

The World Economic Forum’s rankings also coincide with a period where wireless technologies are in the process of making a major perceptual shift in categories from ‘wow, cool’ mode to ‘mission critical’ partly due to the medium’s performance during the August blackout. Although there were some flaws, the blackout showed the potential of wireless as a key component of a business continuity strategy (in the days that followed many organizations put this directive on the front burner). As encouraging as it may be that North Americans are keeping pace with the adoption and integration of wireless within their organizational cultures, one can’t help but wonder how much the losses associated with the blackout may have been mitigated had more organizations ramped up, and integrated varying degrees of business process fusion.

More than anything, these rankings demonstrate how quickly operational landscapes can change, as complacency breeds inaction which can ultimately compromise competitive advantage. This theory not only applies to countries, but to individual organizations as well. Even the biggest and most secure can falter if they don’t react to change in a timely fashion.

P.S. The latest update on the solar flare - perhaps not as benign as we thought.

Wednesday, October 29, 2003

Fire Storms

At 6:00 a.m. yesterday, a major solar outburst from the sun erupted and came hurtling toward earth. Almost immediately authorities began issuing warning bulletins advising of the potential effects these types of events can have on satellite communication systems as well as power grids (the effects of a solar flare caused a massive outage in Quebec in 1989). These early warnings prompted power grid operators to arrange for less switching and fewer large-scale power swaps, and many satellite operators put their satellites into hibernation mode to reduce the effects of the pronounced solar wind.

In effect, a massive business continuity plan was put into place prior to the interplanetary storm's arrival. When the flare actually arrived 17 hours later, it didn't turn out to be the solar superstorm it had initially been predicted to be, as its effects have thus far proven to be rather benign (although officials are carefully monitoring the situation). Still, the anticipation period was notable as it again demonstrated how dependent we are on technology (officials were warning, for example, how a loss of satellite connections could severely affect critical communication functions with the California wildfires). It also showed the extent to which we are all internalizing the familiar 'be prepared' mantra.

While on the topic of the wildfires, firefighters continue to battle the seemingly uncontrollable blaze that has gripped many parts of southern California. Under these circumstances, companies such as Ingram Micro are doing what they can to remain fully operational. The largest operational impediment is the increasing impassability of roads. If business as usual standards cannot be maintained, Ingram is prepared to put its business continuity plan into full operation, as shown in this article. When a distribution and supply chain network play a significant role in organizational operations, the business continuity plan has to comprehend alternative solutions (including alternative facility selection) to meet distribution commitments. Our thoughts are with the firefighters and the victims.

Monday, October 27, 2003

Of Peacocks and Skyscrapers

I vaguely remember studying the principles of Darwinism by reading about the reproductive patterns of peacocks. In this case Darwin’s principles were applied to the male’s colorful plume of tail feathers. Although the plume put on a heck of a show, it really served no other purpose than to attract the attention of the ladies. Despite the impracticality, the peacock continues to strut his stuff.

Experience in commercial real estate taught me although no two tenants were ever really alike, there were certain types of space categories any given tenant would inevitably choose. One of those categories was “ego space” – typically, beautifully built-out with high end finishes, often situated on the upper floors of gleaming office towers. Those who were inclined to choose such space recognized that although the high end look didn’t materially contribute to enhancing productivity, the space was chosen for its ability to “put on a good show”. A metaphoric set of peacock tail feathers if there ever was one.

In the wake of the terrorist attacks of 2001, the practicality of ego space was put under a microscope, as many commentators such as Leonard Gilroy and James Howard Kunstler predicted that the built environment would change forever. Although the passage of time returned people to a state of business-as-usual equilibrium, most learned a few new lessons along the way and incorporated them into their organizational cultures. Time’s a great healer and although many now agree that the city as we know it isn’t going anywhere (at least for the foreseeable future), our society is reevaluating the merits of concentrating people in tall skyscrapers. In fact, we have used this forum to rationally discuss why change seems inevitable. Along the way we’ve interviewed experts, looked at occupancy trends, studied the inefficiencies of energy consumption of tall buildings, discussed outsourcing, and most recently cited insurance concerns. All these signals indicate that from a price and practicality standpoint, new development plans for enormous skyscrapers seems outdated. Although ego space might remain in some form, the tail feathers were going to get a serious trimming – at least, so we thought.

Help me out here for a moment, will you? What's the limit to our degree of short-sightedness? How quickly do we discard critical lessons learned and pretend that bad things have never happened? I ask this because I was taken aback by the following item I recently read about the opening of this monstrous sky-scraper in Taipei, and was even more disturbed to learn about that many countries in the far east are now waging the types of "who can build higher" competitions that were waged in America in the mid to late 20th century. As shocking as this may have initially appeared to me, I was able to reconcile this with the fact these nations have only recently created economies that have existed in the west for years. Any developed nation that has gone through this cycle previously, has got the urge to build such monuments out of its system. Right? Think again.

Driven by greed and ego, development plans for enormous skyscrapers seem to continue unabated by the lessons learned. This recent news item officially took the wrapping off the plan for a new mega-skyscraper in Chicago. The force behind this project? None other than celebrity-developer Donald Trump, who seems to use this status to lull the media into forgetting that new skyscraper developments placed in the densely populated urban cores run totally contrary to inevitable changes in facility usage patterns, employment trends, and the forces of globalization.

I can’t help but wonder what drives Trump to flout the evidence and continue with his "my way or the highway" approach. I got it -- it's the plume! I now see the connection point that links everything together – the peacock strut is alive and well.

Sunday, October 26, 2003

You Can Observe A Lot By Watching

The Florida Marlins winning the World Series is a fish story that's hard to believe. But it's a great story that was largely overlooked in the media frenzy surrounding the fabled Chicago Cubs and the legendary Boston Red Sox. On the day after the final game of the 2003 World Series, the media is still catching up on the stories they should have been writing about the Florida Marlins.

While most sports writers toss out their drafts about an expected Yankee win in Game 7 tonight, and search for words that explain the Marlins' unexpected win last night, it was nice to find this feature article about obscure World Series Trivia that has all but been forgotten.

And, as the media anticipates the changes in Yankee management, a play about a former Yankee manager called Nobody Don't Like Yogi opens off-Broadway today. Life goes on in the Big Apple.

Wednesday, October 22, 2003

Insurance Uncertainty No Laughing Matter

I couldn’t help but get a little nostalgic recently when I noticed my four-year-old daughter taking a break from her usual diet of modern children's programs on PBS Kids (Barney, Dragon Tales, Dora et al) and trying to make sense of an old Warner Brothers cartoon. She was watching Daffy Duck as a slippery insurance salesman who was using every hard-sell tactic imaginable to sway Porky Pig into purchasing an insurance policy. Despite all best efforts, Porky finally relented and signed on the dotted line, at which point he heard the particulars of the policy’s fine print stating a claim could only be triggered if a concurrent series of events occur, including among other things, a herd of stampeding elephants running through the living room. Although we didn’t realize it when we were kids, the short was making a point about the realities of the grown-up world (not surprising, given the fact these shorts were originally targeted to adults and shown in movie theaters before the featured attraction). Those little screen gems were often as business savvy as any White Paper.

Getting back to work, I recently read this paper about the insurance fallout associated with the August 14th blackout, which was recently published by Marsh & McLennan. I recommend it to any organization currently assessing their insurance coverage as well as their general state of preparedness for such an event. It presents a useful overview of the insurance nuances that need to be considered. The paper points out that the number of blackout-related claims filed has been low, as many businesses are still waiting to find out the cause of the blackout. Indeed, most claims will not be able to be addressed until a precise cause is pinpointed, and even after this is determined, the question of who should be compensated will be addressed on a case by case basis -- the issues are quite mind-boggling. That paper is timely not only because of the blackout, but also because the insurance industry today finds itself at a crossroads.

Set against this backdrop, today we are releasing an abstract and multimedia presentation of our fourth paper: The Rippling Effects of Insurance Uncertainty on Commercial Real Estate. The thesis of our paper is that events over the past two years have thrown a wrench into the way insurance policies are written, and this has a direct effect on occupancy costs. Although the Bush Administration signed TRIA into law in late 2002 that provides the industry some relief, it is only a temporary measure.

Ultimately, insurance uncertainty is another area that contributes to a movement toward decentralization. The complexity of what does or does not constitute the basis for a claim, and how this in turn is affecting occupancy trends in the future, makes this a very important area for us to focus on. Given the complexity of the prevailing insurance environment in the new normal, Warner Brothers' stampede of elephants seems to be a fair metaphor for what might be a risk.

Tuesday, October 21, 2003

Sho 'nuf

Starting off this week's special feature, America's Bright Future on CNN's Lou Dobbs Tonight, Lou was beaming as he proudly presented Sho Yano, the 12 year old American prodigy.

Born in Portland, Oregon, Sho has an IQ over 200, and is a musical prodigy. He graduated in three years from Chicago's Loyola University, summa cum laude. And, at the age of 12 years, he's now in his first year of med school. For Sho, going to school is about learning as much as he can. If he weren't also getting his PhD along with his medical degree — thus, pushing his age at graduation to 19 or 20 — he'd also be on course to become the youngest person to graduate from any medical school. Sho spent most of his early years in California, where his father, Katsura, an immigrant from Japan, now runs the American subsidiary of a Japanese shipping company. Sho lives in the university's family housing with his mother, who originally came to the United States from Korea to study art history, and his 7-year-old sister, Sayuri, a talented student in her own right who wants to be a cardiologist. Sho says he chose medicine because he wants to help people. "I wish I could find a big step," he says, his eyes widening slightly, "like a treatment for cancer."

Lou Dobbs' "thought" for tonight was dedicated to Sho and the rest of us, "Men who are occupied in the restoration of health to other men, by the joint exertion of skill and humanity, are above all the great of the earth. They even partake of divinity, since to preserve and renew is almost as noble as to create."
- Voltaire (1694-1778)

Lou beamed, his avuncular grin so proud of America's bright future, as he wrapped the piece contemplating a potential cure for cancer being discovered by this young American medical scientist. This was, indeed, an interesting segue from the past few weeks of Dobbs' ranting and raving about jobs lost to foreigners, jobs lost to immigrants, and the influx of foreign students on visas getting American university educations; sucking the life out of the American economy. Sho's parents met in America, while they were at university on student visas. Like many student immigrants, the Japanese met the Korean in the United States, fell in love, married, and had American children who are now a part of the American dream. Not just their American dream, but the dream of all Americans. Sho 'nuf, he's our boy!

Monday, October 20, 2003

A Little Controversy is Good

I was once involved in a great organization called Toastmasters. Not only was it a fantastic place to hone the art of public speaking, but it also worked wonders in sharpening one's debating skills. Get a little Toastmasters training under your belt, and you could debate anybody. The underlying assumption, of course was that such debate would occur face to face. Wouldn't you know it, this little thing called the Internet came along and threw all the old rules out the window! All is not lost, however, as we now we have these amazing little forums called weblogs. Although my intention is to stay entirely focussed on the emerging world of real estate continuity (unless, of course, I am distracted by the sight of pigs in flight), I'm going to shift gears for a moment and transform the platform into a soap box so I can put my debating hat on. Now where the heck is that Toastmasters cheat sheet...ah yes, right here...

Last Thursday, one of our favorite weblogs, Rob's, mentioned my "Outsourcing Scapegoats" note (October 14). That caught the attention of Jim of, who takes a dissenting view on the whole issue of outsourcing and offshoring in this post, probably because the phenomenon has affected him more directly than perhaps it has affected me. (By the way, if you were ever thinking about setting up a weblog of your own, Jim's site is clearly one of the best laid out blogs in cyberspace.)

Jim suggests that before forwarding my position, I should come up with a viable solution for displaced friends and neighbors. His solution, and the one continually put forth by Mr. Dobbs, is to protect ourselves from the blight of cheap foreign labor and, in effect, prepare ourselves to start paying $100 for a bunch of grapes we purchase at the supermarket. My solution: let friends and neighbors labor market hear the truth about what the markets are really telling us about the future, and act accordingly.

The negative consequences of government restrictions on outsourcing are worse than simply higher priced goods and services. Besides distorting basic pricing signals which underly the efficient functioning of economies in general, "protectionist" policies would artificially keep workers in the dark about the need to adapt to rapid shifts in the global economy underway. Jim's position seems to suggest that what you don't know can't hurt you. I say be prepared, for days of reckoning that are coming right at us.

Friday, October 17, 2003

Bambino's Curse

I was worried about Edward Cossette. How would he handle last night's disaster? So, it was with more than a little trepidation that I read Bambino's Curse this morning. Ed's all right. I'm not so sure about the editors at the New York Post, who should have yanked this before going to print today.

Thursday, October 16, 2003

Curses! They lost again.

In October of 1945, the Chicago Cubs were hosting the Detroit Tigers in the World Series. A tavern owner named Billy Sianis was one lucky guy. He had scored tickets to the big game. When we get great tickets to a ballgame, one of the first things that comes to mind is who might we treat to a day at the park. A spouse? A business associate? A best friend? A kid? Sianis chose to take his pet goat. Amazingly, he was denied admission to Wrigley Field and, so, he put a curse on the team.

Since that year, the curse seems to have had its effect on the Cubs. In '69 they blew a 9 1/2 game lead to the Mets, who went on to win the Series; in '79 they squandered a 21-9 lead to the Phillies and lost 23-22; and in '84 they couldn't hold onto a 6-3 lead in the seventh inning of the seventh game of the NLCS against the Padres, when first baseman Leon Durham made a crucial error. Last night, after squandering a 3 games to 1 lead in this year's NLCS, the Cubs once again seemed cursed. The goat this year? A cubbies fan who tried to catch a foul ball that was heading for his seat. You've seen the replay. The curse continues to be part of Chicago lore and, in fact, an important part of the Cubs brand. For now, the Cubs brand as the perpetual underdog seems intact...but there is always next year.

The development and nurturing of brand is a cornerstone of organizational policy. It's often been said that it can take years to develop a brand and seconds to seriously damage or destroy it altogether (Enron, Arthur Andersen, Martha Stewart). So, protection of brand has become an important element in business continuity. When I attended the 13th World Conference on Disaster Management in June, I heard a very interesting discussion led by Bill Patterson of Reputation Management Associates, where he stressed the importance of preserving brand through strategic media communications. In many senses, the media response to a particular event can spell the difference between triumph and disaster.

Let's get back to game six. As hard as Wrigley officials tried to conceal the identity of the fan who happened to be in the wrong place at the wrong time, the Sun Times not only identified him as 26-year old Steve Bartman, but disclosed where he worked -- Hewitt Associates. The media doesn't always play fair. It is interesting to note that in the article a spokeperson for Hewitt provided a very measured and carefully-worded statement to the press about their employee. Given the firm's Chicago roots, it was important for Hewitt to address the situation immediately, and prevent it from becoming an event that could take on a life of its own for the company.

Patterson was right. Whether the disaster is an act of God, a man-made screwup, or just a curse, be prepared to manage the media and protect your company brand.

Tuesday, October 14, 2003

Outsourcing Scapegoats

Some media pundits are looking for scapegoats for the current state of the U.S. economy. As an increasing number of companies decentralize operations offshore, one of the most popular targets of the media is outsourcing to India. Lou Dobbs has recently used his program on CNN as a forum to portray the people who work in Indian data centers as the equivalents of scab labor, and culprits in the "Exporting of America". This is a simplistic view of an issue that is much more complicated than the way Dobbs describes it for his audience. The issue has much more to do with a global marketplace where different regions possess certain areas of competitive advantage. India has a competitive advantage in data center operations, just as China has a competitive advantage in manufacturing.

In today's Globe and Mail, John Saunders writes an article that sorts it out quite well, and explains in detail why this phenomenon is occurring and how outsourcing (or "offshoring") plays an important part in creating a decentralized facility strategy. Although veteran outsourcing consultant Robert Fabian is quoted in the article as saying that if he were a white collar worker he wouldn't be too happy with what's going on, he seems to acknowledge that the movement to IT outsourcing seems inevitable.

All of this talk about outsourcing has prompted me to post this paper I wrote two years ago describing how the medical industry in the United States has increasingly been decentralizing medical transcription services to data centers in India. Because media reports on "offshoring" often depict outsourcing in macro terms, I thought it might be interesting to provide a snapshot of the micro aspects that exist within a particular field where we have recent experience.

P.S. Corporate Real Estate Industry Stays Put

A survey just released by CoreNet Global at their annual summit revealed corporate real estate executives' strong reluctance to outsource jobs overseas. You can read the details here.

Friday, October 10, 2003

Small Town Broadband

Ten years ago, I was at a seminar hosted by Apple, which showed a glimpse into the future of a technology-enabled landscape. They showed a video presentation, set in the near future, of a corporate executive who had traded in his pinstripe suit for a comfy sweater, and his corner office in a gleaming office tower for a cozy chalet in the mountains. In the video, he’s shown grabbing a steaming cup of joe, sitting down in nicely worked-in leather chair/ottoman combo, and opening up this inconceivably small computer that folds in half. Within minutes of turning it on, he is in the midst of a video conference with seven other participants, each with their own video feeds. (I think at this point, they had a mountain goat nudge up to the window, just for effect.) They chat, work on spreadsheets, and solve all the world's problems. If this was what our future could be, I wanted in. Well, that future has arrived, and I am in! Just take a look at Dave Chalk's video presentation describing the new Sony wireless PDA to see what I'm talking about.

Much of that decentralized vision of the workplace has become reality. But there are still a few hurdles that need to be overcome. Case in point: broadband. As the internet boom of the 90's chugged along, many envisioned a totally wired world that extended to small towns. Then reality set in. The bubble burst, and within no time the promise for broadband in outlying areas seemed unattainable – popular media outlets, in fact, began bemoaning promises that went unfulfilled. The primary limitation preventing broadband’s expansion to outlying areas was private companies’ inability to find a way to make small town broadband economically feasible.

What happens, however, when financing for such projects shifts from the private sector profit model to the public sector development model? Ask Michael Curri, the 34 year old economist and founder of Strategic Networks Group. His groundbreaking study, providing the economic rationale for local municipalities to finance the installation of broadband, is the first of its kind in the world. This article, written by David Ticoll, appeared in yesterday's Globe and Mail and provides an overview of the initial project in Canada and its impact in the UK.

As we're working on a paper that puts the whole small town broadband discussion into context, and demonstrates ubiquitous broadband as a major component in a comprehensive decentralization strategy, I thought the article was timely news.

Wednesday, October 08, 2003

Is India Losing Jobs to the US?

BusinessPundit, a great business weblog we've recently added to the Gill blogroll of blogs we like, effectively grabbed our attention yesterday with this provocative headline and a clever post that makes an interesting point, tongue in cheek, as Rob draws our attention to BusinessWeek's cover story about India's "Tech King" Azim Premji, who is expanding his global reach to the USA.

This story provides an important backgrounder to an ongoing discussion we'll be having with our clients in the coming months about outsourcing to India. Over the past decade, more organizations have made the strategic decision to concentrate on their core business and outsource more and more of the operationally associated functions to third party providers. Increasingly, many of these functions are being carried out in India. Why India? English-speaking, highly educated, significantly lower labor costs, as well as a legal system based on the principles of common law.

In the months ahead, we will explore in greater detail the nuances associated with outsourced dispersal strategies such as those to India. This article provides an interesting anecdote from India explaining that establishing operations in secondary locations is a growing trend within that country, as well as beyond. Seems as though our central theme of dispersal is becoming one that is taking on global proportions.

We are in the process of expanding our Advisors network to include an organization that specializes in business process outsourcing issues, so if you've got any professional advice or recommendations to offer in that area please send us an email or give us a call. We'd love to hear from you.

Thursday, October 02, 2003

48 hour Internet Outage Plunges Nation Into Productivity

According to an article in The Onion, today, an Internet worm that disabled networks across the U.S. Monday and Tuesday temporarily thrust the nation into its most severe maelstrom of productivity since 1992. This is an interesting article that is worth dropping whatever you're doing at work now, and having a good read.

I was on a business trip in Ottawa during the Internet outage and completely missed the surge in productivity back at the office.