--> Gill Blog: December 2003

Gill Blog

Tuesday, December 30, 2003

Network of Space

This is interesting. Agilquest Corporation of Richmond, Virginia has posted the following document on its website that introduces the concept of the Network of Space. This concept has a familiar theme:
Facilities in major cities can be disrupted by disasters, both natural and man-made. Traditional real estate plans, typically involving large, single facilities under long-term leases do not match today's business realities...The "Network of Space" is a new way of thinking about real estate. Instead of a single concentrated facility or campus, the Network of Space consists of smaller, geographically disbursed facilities.
Although the model suggested is more easily articulated than executed (it involves logistical issues primarily involving scheduling), it does make the point that traditional facility models are becoming outdated, and facilities play a critical role in comprehensive business continuity planning.

Saturday, December 20, 2003

Coffee Fuels Information Exchange

As is my custom on Saturday mornings, I settle down with a couple of good magazines and my favorite coffee at the local Starbucks.

The Economist has an article that catches my attention: the internet in a cup.
Where do you go when you want to know the latest business news, follow commodity prices, keep up with political gossip, find out what others think of a new book, or stay abreast of the latest scientific and technological developments? Today, the answer is obvious: you log on to the internet. Three centuries ago, the answer was just as easy: you went to a coffee-house. There, for the price of a cup of coffee, you could read the latest pamphlets, catch up on news and gossip, attend scientific lectures, strike business deals, or chat with like-minded people about literature or politics.
I read in the New York Times that collaborating architects Daniel Libeskind and David Childs have presented plans and models for the monumental replacement of the World Trade Center, to be named Freedom Tower. The building will house 70 floors of office space topped by broadcast antennas, wind turbines and cables resembling a suspension bridge. The use of windmills in a tall building "is innovative and different and new and is something that will have to be designed carefully," said Ashok Gupta, director of the air and energy program at the Natural Resources Defense Council, who has been advising redevelopment officials on environmental issues. Freedom Tower will extend its reach of twisting framework and spire to a symbolic height of 1776 ft in recognition of the year of the Declaration of Independence of the United States of America. The allusion strains credulity.
One outspoken critic of the redevelopment at ground zero, John Lumea of the Phoenix Project, said, "The world's tallest building moniker is a shibboleth of feel-good boosterism perpetrated by rebuilding officials who have nothing else to offer the public but a P.R. campaign."

Never mind the Freedom Tower — you can get an argument today about just what is the world's tallest building, even after disallowing cable-supported broadcast towers and agreeing not to count rooftop antennas.

The CN Tower in Toronto unhesitatingly describes itself as the world's tallest building, at 1,815 feet. But some see it is as more of a mast, with a relatively small amount of occupied space. To the council [on Tall Buildings and Urban Habitat], it is the tallest free-standing structure in the world.
Originally constructed as a broadcast communications tower, the CN Tower remains the defining element of the Toronto skyline. But, as a building, it is an anachronism. Even as a communications tower, in the age of the Internet, it is essentially obsolete. At best, it has become a monumental theme park and a symbol of the thinking of the last century. Does it make Toronto the greatest city in the world? I doubt many Canadians, and even fewer Americans, would think so. Will the proposed Freedom Tower make New York City greater than it already is? I seriously doubt it.

Some might even ask, what freedom? Today, as in years gone by, freedom is not in the tallest structures in the world, but in small coffee shops on street corners where people gather to exchange information and ideas, to read a newspaper or magazine, or to connect to the Internet with laptop computers or wireless handheld devices to check their email and, perhaps, post notes to their websites on a Saturday morning.
A task force of leading building industry experts formed by the Council on Tall Buildings and Urban Habitat met on October 15, 2001 in Chicago and stated that there are several actions that can be taken to enhance the emergency performance of buildings including egress strategies, multiply-redundant building systems, integrated building control systems, performance-based design, education, and research.

The task force also concluded that it is not practical to design any building to withstand the maliciously directed impact of a large fuel-laden aircraft and that the towers of the World Trade Center performed heroically allowing more than 20,000 people to evacuate.
Reading David Sucher's City Comforts, there's much more to consider and discuss before we can view the Freedom Tower as anything more than an emotionally charged political response to terrorism.

And here in the New York Times, I see that:
Federal law enforcement officials said on Friday that they had issued new warnings to their counterparts in New York and other large American cities about the possibility that terrorists might try to strike during the holiday season.
I think I'll grab another coffee.

Tuesday, December 16, 2003

Oh No Canada

On Saturday, we commented on Canada's new Ministry of Public Safety and Emergency Preparedness, and Minister Anne McLellan's attempt to differentiate this department from the U.S. Department of Homeland Security. McLellan noted that this department is more sweeping than the U.S. counterpart, in the sense that it includes operations to handle health emergencies such as West Nile virus, mad-cow disease and SARS, with which Canadians have had unique experience recently.

Kudos to Ms. McLellan, not only for her committment to take a lead role in this effort, but to make good on a promise. In October, the National Advisory Committee on SARS and Public Health in Canada, and its author, Dr. David Naylor of The University of Toronto released a scathing 234-page report that accused federal health authorities of being practically invisible, and not properly delegating leadership roles that were required to properly manage the crisis. At the time, McLellan was Federal Health Minister and was quoted as saying:
I would like to move quite quickly…It's not possible to say the timeframe here. But I am very much committed to ensuring it is reviewed quickly and acted upon.
Quick action indeed. The structure of this ministry assures that in the event of a future health crisis, a federal infrastructure exists that can be deployed to manage the situation.

Dr. Naylor also suggested that better communication and coordination between federal and provincial authorities could more effectively combat such outbreaks in the future. Given this goal, it would seem logical that a similar authority be established on a provincial level. Just yesterday, recommendations were tabled by a committee in the Province of Ontario to establish just such an authority that would create some distance between "public health and the political process." This is all very good news and suggests that Canada is really stepping up to confront issues of public safety and emergency preparedness head on.

The success or failure of this program will be closely monitored by authorities south of the border. Although America is to be commended for being so proactive in establishing Homeland Security, senior policy makers have thus far failed to adequately incorporate health emergencies into its realm. Just two weeks ago, the Center for Disease Control (CDC) in Atlanta released a report stating that America is still ill equipped to battle a major outbreak of SARS, and last week a report funded by the Trust for America's Health came to the conclusion that most states are unprepared for a biochemical terrorist attack or other public health care emergency. On a state to state basis, the report found that only 9 or 50 states met more than half of the 10 preparedness targets, and none met more than seven.

The major problem here is not only the tendancy for these emergencies to receive 'yo-yo' funding at best (the bulk of this comes from the CDC), but the fact that key agencies that should be better coordinated in their efforts, still operate within distinct organizational cylinders. Clearly, there is still a great deal of "white space" that exists between CDC and Homeland Security, and only until this is better managed, will authorities be fully prepared.

Good luck to Anne McLellan and her Ministry - the effects of their collective efforts could very well have impacts not only within Canada but beyond.

Monday, December 15, 2003

Carnival of the Capitalists

Our recent screed about Lou Dobbs incessantly ranting "Exporting America" caught the attention of Rob Sama, who put together a very thoughtful and well organised Carnival of the Capitalists #11 this week. Check out the links to upcoming Carnival of the Capitalists, and see what CotC is all about, here.

Saturday, December 13, 2003

Hail to the Chief (Of Preparedness)

With the wave of a clasp of eagle feathers, and a wafting column of smoke, Paul Martin was officially sworn in as Canada’s 21st Prime Minister. Before the ceremony ended, a wholesale change of cabinet was also made giving a fresh start to a new administration. Mr. Martin’s most plumb appointment was reserved for Alberta MP Anne McLellan, who was appointed Deputy Prime Minister and Minister of Public Safety and Emergency Preparedness. As the Globe and Mail reported:
Deputy Prime Minister Anne McLellan, who takes responsibility for the new portfolio, now becomes the link with U.S. Homeland Security Secretary Tom Ridge, a role played until yesterday by outgoing deputy prime minister John Manley.

But as Ms. McLellan emphasized in an interview yesterday, her new ministry is not the mirror image of the one south of the border. It is less sweeping, in one sense, because it does not encompass any immigration functions, a reflection of Canadians' sensitivity about any suggestion that there might be a link between security problems and foreign-born residents. But it also is more sweeping, in the sense that it includes numerous operations to combat natural disasters.

In the wake of the emergencies caused by severe acute respiratory syndrome and bovine spongiform encephalopathy (mad-cow disease), it was felt that Ottawa needed to better co-ordinate its responses and its prevention efforts in health and safety, as well as against terrorism.
The fact that this ministry has been created reflects the acknowledgement that DR and BCP strategies need to be formulated at the highest level of government. This is significant because in the past, Canadians have been overly casual in matters concerning preparedness and continuity.

We needn’t look any further than an anecdote I heard this week regarding Hurricane Juan to hammer that point home. At an all-day workshop I attended at the University of Western Ontario, Dr. Jim Abraham, the Director at the Meteorological Research Service of Canada provided a first-hand account of the damage caused by Juan in Halifax. He also said that the number of deaths could have been magnified by a factor of 10 or even 100 had the storm struck at midday instead of midnight. Why? Because Haligonians were utterly ill-prepared for the storm and had made few if any preparations. This was in sharp contrast to the measures put in place by residents of the US eastern seaboard the week before in anticipation of Hurricane Isabel.

Post-Juan analysis suggested a change in attitude was definitely required, and today’s move reflects a strong commitment to move in that direction.

Thursday, December 11, 2003

Exporting America

Lou Dobbs continues nightly his vitriolic rant, Exporting America. "One of the loudest spokesmen for this emerging xenophobic populism" is the characterization of Lou Dobbs in a reasoned article titled Lou's Blues.

Lou's got a new schtick; he "names names" of companies accused of "exporting america" by outraged viewers, but only after confirmation of their guilt by CNN's crack staff of investigators. As the list grows to include seemingly every American company of any size, it becomes apparent that the United States of America benefits substantially from globalization. It's hard to single out any company by putting its name on a list of the who's who of American industry and commerce. The only one embarrassed in the end might be Lou Dobbs, as this list gets too long to recite in the attention span of his viewers. Already the credits stop rolling before Lou can recite them all. Maybe the list will grow into a permanent "crawl" at the bottom of the screen for the full hour of the program.

A fair and balanced view of the subject is presented by Greg Siskind in a newsletter to his clients, in which he writes, in part:
CNN's Lou Dobbs and many others are lumping all of these stories together and calling for an end of the "exporting of America." This is a backlash against an evolution toward globalization that has accelerated in recent decades as technological advances, the liberalization of economies and the reform of political systems around the world have created a truly global marketplace for goods, services and ideas. America has benefited from the changes more than most countries though you would hardly appreciate this if you only watched the news.
As Julian Sanchez says in Reason, "Dobbs, of course, is an educated fellow, and presumably familiar with these arguments. But providing a voice for those eager to blame a Dark Other for the world's ills can only be good for ratings. And that, at least, ensures that Lou gets to keep his job."

Wednesday, December 10, 2003

Change Management

I received an email from a colleague who was responding to the article we linked yesterday from Working Knowledge. Seemed as though that article hit home with her, too, as she had gone through a similar experience when the large multinational she worked for went through a period of pronounced change. Here's what my friend said (I've removed references to the specific company cited in the email):
What Cyndi Joyner talks about in the outsourcing article is spot on. I have experienced both the well planned change initiative as well as the flash cut. While working for [a multi-national company] where the largest proportion of employees had traditionally been in the loyalist camps, I had the daunting experience of guiding people through the flash cut. The results were devastating for most. It is further my view the [company] culture has never recouped that same kind of loyalty. Understanding the business needs and the value of change is important, but understanding the impact not only on those who lose their jobs but also the impact on those who are left behind to continue the core business is major. Many businesses underestimate this effect and pay double in the end for that they see as dealing with the pain quick and dirty.
Whether implementing a dispersal strategy, adopting more of a mobile workforce, or outsourcing - change managment plays a crucial role in facilitating the transformation of an organization. Managing change presents many challenges, and Mark Sanborn has identified ten reasons why organizational change often fails.

Tuesday, December 09, 2003

Real Estate Outsourcing

So, your organization has decided it should spread its real estate assets and operations around several locations - or has decided that contraction plays an important role in the real estate strategy. Can this reshuffling of the deck occur in a cost-effective manner? According to this article from Working Knowledge at the Harvard Business School, it can through real estate outsourcing, as shown in a case study involving GMAC.

By choosing to outsource this strategic function to an outside party, an organization can significantly reduce costs. Of course, the decision to undertake an outsourcing program can come at a cost as well, and this requires expertise in change management, a challenge the organization must be able to tackle head-on. In essence, it becomes an exercise that potentially fuses real estate strategy, outsourcing, change managment and business continuity planning - a fusion that Gill Advisors advocate.

Monday, December 08, 2003

My Passage to India

About two weeks ago, I was cozied up in a comfy armchair at a local Starbucks doing a little work on the computer, when I heard a voice question, "Tony Gill?" I looked up and remembered his face instantly. A few years ago, I had been working on a contract for a small financial services firm developing the real estate finance component of a web-based financial portal and he was my supervisor. I asked him to join me and shortly after taking a few sips on his "chai-tea latte", he began telling me about a new frontier I should start exploring - India (he had always been a coffee drinker, so this statement explained the switch to his new beverage of choice). He told me that I would be amazed by the amount of foreign investment, the skill levels of the workers, and the way the country had nicely co-mingled western culture with Indian culture. "You really have to start paying attention to India, Tony. It's just mind-boggling."

I remember the last time he and I met. The project I was working on was near completion and I had already put the finishing touches on my next gig - working for an India-based firm that was outsourcing IT applications in the medical field to India. When the time came to put in my notice, I had lunch with this guy and started talking about my next assignment. I recalled the two trips I made to India as a child, once when I was six and again at eleven. Each of these trips was for a month, and each made the same impression - the place was straight out of the pages of National Geographic in its otherness. Aside from the great people I met, there was nothing that was even remotely familiar - no television, limited phone service, and unreliable power. I had little interest in ever returning.

Then, in my late 20's, my parents who had travelled there again suggested I make a visit to India again to see it from a new business perspective. "You won't recognize the place," my Dad said. My mom continued, "You want to see a place that will explode economically over the next 10 years or so?" The idea was planted and curiosity got the best of me. In 1993, I made the trip and saw a country in the early stages of a radical transformation. The first thing that occurred to me was that this place was very much like America after the war, when pent up demand for consumer products exploded. My parents experienced that, and I had read about it. This felt very much the same. In the years since my last visit to India, all the predictions my folks began making in the late 80's have developed just the way they had predicted.

Major business publications are featuring stories touting India's emergence. Despite warnings from nay-sayers to offshoring, who warn of the negative effects on American jobs and the economy (especially as we are about to enter an election year). The current cover story in BusinessWeek contends that this trend actually enhances America's prospects:
Harnessing Indian brainpower will greatly boost American tech and services leadership by filling a big projected shortfall in skilled labor as baby boomers retire...companies…that are hiring in India say they aren't laying off any U.S. engineers. Instead, by augmenting their U.S. R&D teams...they can afford to throw many more brains at a task and speed up product launches, develop more prototypes, and upgrade quality.

Says Rajat Gupta, an IIT-Delhi grad and senior partner at consulting firm McKinsey & Co.: "Offshoring work will spur innovation, job creation, and dramatic increases in productivity that will be passed on to the consumer."
With all this growth, perceptions have a way of changing too. No longer is the value of India merely associated with IT "sweatshops" that pump out cheap code, but it is now finally being recognized for its brainpower. As the BusinessWeek article states:
If India can turn into a fast-growth economy, it will be the first developing nation that used its brainpower, not natural resources or the raw muscle of factory labor, as the catalyst.
It seems as though everyone's in on the action, including prominent US-based VCs such as Battery Ventures, Sequoia Capital and Bessemer. In fact the India received $550 M of venture capital funding in 2002.

Oh right, back to my encounter at Starbucks. I was telling my friend about all the things that were happening in India and that I wanted to experience it firsthand with my next consulting contract in India. "Why would you want to do that? Isn't that where that Union Carbide disaster happened?" I told him I think there are great opportunities between India and North America to exchange ideas about disaster management and real estate continuity, and to explore outsourcing solutions as part of a business continuity strategy. I'm comfortable on both continents, and can be helpful to clients looking to maximize the advantages that each economy has to offer the other.

The final lines of the BusinessWeek article present the challenge and the opportunity:
Adapting to the India effect will be traumatic, but there's no sign Corporate America is turning back. Yet the India challenge also presents an enormous opportunity for the U.S. If America can handle the transition right, the end result could be a brain gain that accelerates productivity and innovation. India and the U.S., nations that barely interacted 15 years ago, could turn out to be the ideal economic partners for the new century.
I must remember to send my old colleague a postcard from Starbucks in Mumbai.

Monday, December 01, 2003

Reader Email

As we recover from the annual Thanksgiving hangover (as well as all the typical non-turkey hallmarks of the holiday) we briefly turn our attention away from the items of the day and address some feedback issues. Recently, I received an email from a dedicated visitor who said the following:
“Although I commend you for the effort you have made in discussing a broad range of issues, I am a little confused by how some of your topics, namely business process outsourcing, are related to your core business; I thought this was all about bridging real estate strategy to business continuity planning – isn’t this a bit of a reach?.”
A good question, and I am glad that someone finally asked it. I started this business using the research I had conducted to propose that decentralization, whether it is executed on a small or a large scale will become an important strategic area that organizations will increasingly consider in the coming months and years.

This item, recently published in the Houston Business Journal confirms that multiple locations play a key role in contributing to a comprehensive business continuity plan. Whether those locations are situated in a nearby building to a far away continent depends on the complexity of the plan. In the process of creating redundancy, an organization can also yield tremendous savings in its overall cost structure.

The issues surrounding decentralization are broad indeed, and the range of topic as we move forward will only expand.