Saturday, June 5, 2010

Cost of Labor in China

In the past two weeks there have been two stories about major pay increases for laborers in China. The first was Honda, whose workers held a strike and gained a 35% pay increase. The second was Foxconn (parent company is Hon Hai) who makes electronic parts for Apple, Dell, Sony, Motorola and HP. Foxconn raised its wages by 30%. Walmart has offered an 8% increase and Chinese unions are pushing KFC (Yum Brands) for a 5% increase.

These pay raises are well above inflation rates and may indicate a rapid leveling of salaries between US and other international manufacturers.

I noted that pay rates in India have also gone through a similar increase for certain types of labor. It now costs over $20 per hour to hire help through Brickworks, an outsourcing firm made public in Timothy Ferriss' book The 4-Hour Work-week.

While these rates, even with 30%+ increases are well below US rates of pay, we have seen a downward pressure on US pay rates.

A friend recently shared that she placed an ad for hard labor at $10 per hour in Craig's List here in Boulder and received over forty responses in less than an hour. Many of those responders had years of experience and/or college degrees.

What are the implications of a more rapid than expected leveling of labor costs in Asia and the US? Which industries are most likely to be impacted? What opportunities present themselves and at what rates of parity in wages?

Thursday, May 27, 2010

The Art of the Future

There's something that I really like about art. Specifically visual art, and how it enhances our awareness of everyday perception.

When we see a "thing" in the world, we immediately categorize that thing and label it. We see a "chair". Done. End of conversation.

When we see a painting of a chair, on the other hand, that categorization process is stalled. We stop for a moment. Maybe something's just a little wrong. The perspective twists things around a bit.

In that split-second between seeing and understanding something is where aesthetic perception takes place. This is the split-second in which the perceiver is every bit as much an artist as the person who spent hours or days painting the painting in the first place.

The more we experience aesthetic perception in this way, the more we can apply it in every day situations where things are not painted, things are not "art". But, with practice, we can make anything into art by the way that we perceive it. It's a wonderful thing to be able to see art in a paperclip, an ant, a wadded up piece of paper, or a landscape.

So what does this have to do with the future?

We view the future through the same sort of categorizing lenses that we view the present. We have preconceptions and mental models which form our opinions about the future and the forces that drive it.

Let's say that we want to build a model of what the future will look like. There are a lot of ways to do that. Most obviously, we would extrapolate from the present. We look at trends. What is going up, what is going down? We project.

But there is much more that goes into those projections than the mathematical models that we often create to model the future. There is this aesthetic perception. There is this split second in which we are projecting our beliefs, preconceptions and prejudices upon the future. Normally, that's not a bad thing. That's called learning from experience. We have prejudice (pre-judging) because we have had experiences of the same sort over and over and each time they have been similar. We judge the future based on these experiences.

The problem is that many of these prejudices are not transparent to us. They lurk in the background, sometimes clarifying and other times clouding our decision making process.

Effective futurists must be able to bracket their prejudices and preconceptions. They do not need to be eliminated necessarily, but they need to be understood and seen clearly for what they are. We may find that our mental models are based on outdated experiences or on a limited scope that makes them dangerous when making important decisions about the future. In other cases, we may decide that they have been built out of many years of experience in a broad range of environments and that they will serve as relatively reliable guides to the future.

So, just as we can stall aesthetic perception when looking at a painting, and we can come to change how we view the present, we can also create exercises that allow us to freeze our preconceptions of the future, for even just a second, and to ask deeper, more probing questions about how we perceive the future and how we make decisions in an inherently indeterminate environment.

Welcome to Futurata

Hello,
The purpose of this blog is to talk about the future.

Some of the discussions will be about trends and their implications for the future. Others will be about process. Processes that can be used by strategic planners and others, not to predict, but to prepare for and to create the future.

Hope it all works out.

Peter