& The Increasing Obsolescence of Brick and Mortar Facilities
The times, they are a changing. Since 2008, when the first iPhone was released to much skepticism, people have become connected faster than ever. With the ubiquitous integration of smart phones and data plans, people have more information and empowerment than ever before. And as this information and empowerment grows exponentially, we take it for granted, assume it’s always been there.
It’s almost as if the passage of time is adhering to Moore’s Law, which states that the overall processing power of a computer will double every two years, every year that has passed since the nation adopted smart phones contained twice as much time, took twice as long to pass. To the point that it feels like decades have passed since smart phones were publicly accepted, and centuries since the internet came out. This is not just an anecdotal observation, many businesses are struggling to thrive in this new technological marketplace. Some companies, like Ctrip, manage to make ends meet, but many organizations are learning the hard way that the economic environment we find ourselves in now is completely different that it was ten years ago.
2017 has been a tough year, especially for organizations that were unable to adapt to the newest iteration of the e-era. The informed and empowered consumer doesn’t go to the mall to “shop around” anymore. They track prices across competitors and check inventory and pay online via their smart phone before even showing up. Gone are the days of 2008, when the dominant social network was MySpace, and the most popular phones in America were the Motorola RAZR, the BlackBerry, and the SideKick.
2017 has been a tough year, with over 6,700 brick and mortar stores closing down, the worst year for closures in almost a decade. The last major shutdown was in 2008, when 6,163 business were forced to close their doors.[1] There are severe consequences for businesses that fail to adapt to the e-era. As more and more consumers shop online, file taxes, pay fines remotely, look up recipes or any other sort of research from the comfort of their own phones, more brick and mortar facilities are forced to close their doors. But as Alexander Graham Bell said, “When one door closes another door opens, but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.” Blockbuster, may you rest in piece; you should have purchased Netflix when you had the chance.
When recent economic pressure threatened to close Ctrip’s doors, James Liang, co-founder of the Chinese Travel Agency, did not forget to notice an opportunity. When a forced relocation was threatening to require terminating some of Ctrip’s faithful employees, Liang jumped at the chance to attempt to start up a division of telecommuters.[2] Rounding up volunteers from the staff, Liang suggested allowing people to work remotely, a proposal he had been pitching for months. Once necessity facilitated the traction, Liang’s experiment began moving forward. Liang theorized that employees that wanted to work remotely would be externally more motivated, and by removing the restrictions to their work hours and environment, hopefully the employees would be more productive, employing the very force that had been closing retail businesses left and right.
Using cell phones and wireless hot spots, his call center employees could field calls from anywhere they had cellular service. Not only did Liang’s voice join in on the assent of 2/3 of managers interviewed in a recent Forbe’s survey reporting on increased productivity in remote workers, but Ctrip discovered they saved over 1900 dollars per month, per employee that worked remotely.[3] That is huge, considering over 300 retailers filed for bankruptcy in the first half of 2017, according to Credit Suisse.[1] By adapting alongside the changes in his economic environment, Liang was able to save his valuable employees, and make his business more profit at the same time.
Businesses aren’t the only ones who benefit from a modular work force. The age for social security is always rising, and many of the elderly are not in any position to retire. In fact, 74% of older Americans want more flexibility in terms of employment, [2] and with rising commuting costs, everyone is looking for corners to cut. Especially in my state of Vermont. VPR reports that tens of thousands of Vermonters are working mulitple jobs, just to get by, and if given the chance to work remotely, tens of thousands more that otherwise couldn’t due to transportation or disability, would leap at the opportunity.
And there’s no reason they shouldn’t be given the chance. We live in an interconnected economy. Regions in America are figuratively closer than ever. Omnipresent internet has increased our sphere of empathy, with people reaching out or checking in, crisis after crisis, like the firestorms in California featured nightly on news feeds across the country, on every medium. Using this innate inter-connectivity we could deliver jobs all across the country. Parts of rural Alabama, inner cities in Detroit, Native American Reservations in Oklahoma, all are starving for any sort of economic stimulus. Instead of investing in infrastructure in the middle of nowhere, why not bring in jobs remotely. It is even feasible to use shipping companies to deliver product directly to the employees home for fabrication or manufacturing. Technology industries are not the only businesses able to thrive in this telecommuters paradise. An artists home studio could be included in an assembly line, where she could paint the final touches to a toy, or a machinist could use his garage to inspect and ensure that performance parts are up to specification. In the face of economic collapse, we should be looking towards any solution that can mitigate the potential for the loss of businesses.
What else can be done to face this looming threat? What about the information itself? It is easy to say the biggest challenge to future business is the increased risk of obsolescence in brick and mortar facilities. But even if you do downsize your facilities, and make your employees work from home, the second biggest challenge to future business would be the task of organizing and managing an army of remote employees. You need a home base. You need a safe location for your companies information. Even if you don’t need a brick and mortar facility for your business, you need one for your data center, your infrastructure, your records and receipts, right? Not necessarily.
Our textbook mentions Sun Microsystem’s Black Box.[4] A Black Box is a modular data center. 9,000 square feet of computers condensed into a storage container. By plugging it in to power and internet, you can host databases, websites, knowledge bases, virtual machines, employee records. It can work as an active directory, or file server, or web server, anything you require to survive in the e-era, weatherproofed. Moreover, by taking on the brunt of the costs upfront, you end up with a much higher profit margin, than you would by utilizing the traditional subscription based cloud services. By owning your own data center, you can easily facilitate remote work. And as your data center is modular, if ever you do decide to establish a brick and mortar facility, you can move your entire server farm on the back of a truck.
Though it’s not just tech companies. call center entrepreneurs, and the disenfranchised that respect the tao of working remotely. The FCC, in a policy shattering move, abolished the regulation requiring radio broadcasters and their sales and support team to be based out of their city of license.[5] In doing so, the FCC acknowledges the changes in the wind, brought on by the e-era, and that only by adapting can modern businesses expect to thrive. By repealing a rule that had existed over eighty years, the FCC changed principals that were fundamental to the philosophies behind public radio: Giving a voice to the local community, facilitating the transfer of information, be it for political campaigning, advertising your local business, or broadcasting the details of an emergency and the steps to take to preserve your safety. For over eighty years the FCC fought to protect large businesses from swooping in and taking over local radio, perverting the grass roots nature of the medium to project their own advertisements, news, and agendas. However, even the FCC has learned to bend before the prevailing winds of change, and in doing so recognizes the newfound utility in the internet, and appears confident enough in it’s reliability to inform and empower the community. So much so that they have removed the traditional regulations in favor of a new paradigm, one that eschews offices, and commutes, and over restrictive work hours, and instead cares only for progress, productivity, and the general well being of it’s employees. For the sake of the environment, the economy, and the mental well being of workers around the world, consider telecommuting.
Citations:
[1] A Record Amount of Brick and Mortar Stores Closed in 2017
Keshia Hannam - http://fortune.com/2017/10/26/a-record-amount-of-brick-and-mortar-stores-will-close-in-2017/
[2] Benefits Of Telecommuting For The Future Of Work
Andrea Loubier - https://www.forbes.com/sites/andrealoubier/2017/07/20/benefits-of-telecommuting-for-the-future-of-work/#391abbcb16c6
[3] Vermont Hustle: What It's Like To Work 3 Jobs
ANGELA EVANCIE, LIAM ELDER-CONNORS & LYNNE MCCREA & ERICA HEILMAN - http://digital.vpr.net/post/vermont-hustle-what-its-work-3-jobs#stream/0
[4] Essentials of Contemporary Management
Jones, Gareth R. and George, Jennifer M, McGraw Hill Education, Seventh Edition, 2015
[5] The FCC just ended a decades-old rule designed to keep TV and radio under local control
Brian Fung - https://www.washingtonpost.com/news/the-switch/wp/2017/10/24/the-fcc-just-ended-a-decades-old-rule-designed-to-keep-tv-and-radio-under-local-control/