During the last two weeks, I have been reading How to Measure your life by the seminal author Clay Christensen in which he used all his management theories over the years and tries to relate those theories into how one can lead a better life. Each chapter is a gem, but one chapter stood out amongst all the chapters because it was relatable to what I have seen in my personal life. It may also explain why developed countries need immigrants to keep the growth engine of its economy. Let me talk about a story first to understand the theory and then bring out parallels.
Growth of Dell’s Consumer Business
One of the biggest gainers of the PC revolution started by IBM in the 1980s was Dell, which pioneered some great manufacturing ideas to assemble PCs and ship them 48 hours later. As Dell was a listed company, they were continually looking at ways to improve their bottom line, so when ASUS came to them with a proposal to make PC components in Taiwan at 20% cheaper rates, they simply jumped at it. The Wall Street analysts keep a close watch on RONA (Return on Net Assets), so this proposal helped Dell get all the component related factories off their balance sheets and improve profitability. Wall Street loved this, and Dell kept outsourcing their processes to ASUS to an eventual point where they were making the complete PC. In its eagerness to increase RONA, it outsourced its core competence of building great PCs.
On the other hand, ASUS saw this as an opportunity to move up the value chain, from making components they graduated to own all the manufacturing processes. After a decade, they soon got into the consumer business selling PCs, which competed against Dell. Dell could not respond because they had outsourced all of the capabilities and forced to move to the higher end server business where they are still doing well. Dell lost out the consumer business because they lost sight of their core competence and allowed ASUS (other companies from China) to take away their consumer business. Dell was doing the right thing as it chased RONA and ASUS, which started at the lower end got a chance to become a consumer brand by learning the whole business from Dell. There is nothing wrong with the entire equation because each party thought they were doing the right thing, but the result was not what Dell would have anticipated.
Rearing Children then and now.
As a child from a lower-middle-class background, we lacked the resources to lead a super comfortable life. I would see that mom would walk 3kms to save money. She would make sweets, pickles, and other savories at home each year because it was a tradition, and she did not have extra money to buy those. As kids, we worked on household chores like visiting the shop, cleaning up the house, and helping neighbors shift their home. All these meant that we picked up useful skills by doing things for the first time. Doing these tasks taught us to apply ourselves and solve problems. We did not go to tuitions for subjects because we could not afford them, so we would learn the crucial skill of self-learning and then apply those skills to do our classwork. Like me, I am sure you would have picked up several valuable skills due to a lack of resources. We picked up these skills to make us a better person and beneficial in the job market.
Contrast that to how we are raising kids now. Growing prosperity has meant that we have outsourced many of these tasks to machines and servants. The kids are spoon-fed and not allowed to do basic jobs like repairing the old bike (because we buy a new one). The simple task of restoring an old bike shows us how to conserve resources by extending their utility.
We don’t allow our kids to go outside and play unsupervised, contrast this to our childhood, what has changed since then? Due to outsourcing, moms now have additional time to worry about risks that they may have ignored earlier. It robs kids of crucial social skills like how to fend for ourselves in the future.
We have also outsourced tasks like cleaning the home, making sweets, replacing them with other tasks like tuitions (for 1 st standard kids !!) or coding classes for kids, or music and dance classes. By doing this, we are hoping to provide kids with resources that we did not have. But this may mean that they may pick up different skills than what we pick up in our childhood.
Have we outsourced too much ?
Given that we impart them with different skills by exposing them to new things like tuitions, coding classes, and other classes, it should not come as a surprise to see that our kids think and approach life’s challenges differently. But I would like to bring awareness that providing more resources may have caused the kids to not pick up specific skills like problem-solving and handling things independently. An example of this is what I have experienced personally as a manager at work. I still see many of team members looking for instructions on what to do and are unable to execute tasks on their own. The lack of these skills could be related to the lack of opportunities for them to do things independently as children. There could be many such skills that we picked up due to lack of resources and these skills are valuable in the job market. By providing additional resources to our kids we may be we are depriving some learning opportunities.We need to be aware of them and plan to have our kids learning skills that will enable them to face the future.
These changes are bound to happen as we progress economically.Imagine this change in terms of outsourcing at the level of a country, and we will see why there is a need for immigrants in developed countries to keep up the growth. The next generation kids are less likely to develop skills like problem-solving, may lack motivation and drive to do well. So we need to be aware of what processes we are allowing our children to pick up by deliberately planning activities else they will default to taking the easy path.