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Copyright © 2000, MCB UP Limited
Business strategy is FM a core concern?
Business strategy – is FM a core concern?
When I first thought about this special issue on "Business strategy and FM" I was particularly concerned that the view of FM being an outsourceable function may be one of the major reasons why business planners continue to overlook its strategic potential in overall business competitiveness. I felt that another aspect of the problem with FM being recognised more widely for a strategic role might originate from the industry's use of operational, facilities-oriented, measures of its contribution to business, which actually did not correspond to what business saw as its main drivers or key performance indicators. Hence, one of the aims behind this special issue was to discuss strategic dimensions of FM from a business viewpoint, and thereby to stimulate the debate on a range of issues including defining and measuring FM in accordance with the way business measures its own competitiveness.
Recent developments in business infrastructure occurring in the high street banking and insurance sectors have re-emphasised the value of business support as a component of overall competitiveness. Therefore, it seemed increasingly possible that this special issue could coincide with a more overt recognition by the business sector that operational property, the integration of IT into the business process (including virtual working), also the space implications of both, were their new strategic levers. If the result was acknowledgement of the need for resonance between business change and business support, so the era of strategic FM might arrive.
Eighteen months ago when the idea for the special issue was conceived, my opinion was tilted towards outsourcing being a cyclic phenomenon. My view then was that, as the pendulum of business opinion swung back towards preferring the strategic value of a close integration between a locked-in business support function and the business it was supporting, so the balance of arguments might shift away from outsourcing as a service delivery mechanism. My rationale for this hypothetical scenario was that, if business could not (or would not) recognise the strategic value of FM when it was external, it may be more likely to make this step with an "insourced" service. Hence there would be a re-balancing of pressures towards "insourcing" whilst a quickening pace of economic and market turbulence produced a shortening of business planning cycles. Combined, this would place more pressure on the adaptability and agility of business. Hence the marginal benefits of getting business and business support into strategic harmony would be the next source of major competitive differentiation. This would favour the surviving in-house FM organisations, which were also rich in cultural alignment with the business and had an intuitive understanding of their core processes and corporate mindset. These organisations would re-emerge as the more-favoured mechanism for delivering business support.
Continuing with this hypothetical scenario of a cycle of outsourcing having provided an opportunity for an interface-management role to grow at the boundary of the core and non-core business sectors, so facilities management at the border between the core business and the outsourced remainder would become increasingly strategically-articulated. The role would increasingly represent a merging and blurring of core business and business support. Meanwhile, the evolution of FM as a profession could mean that the leading facilities managers capable of taking on this role would be the first to have their role generally accepted for its strategic value.
This may still come, or not, but what I had not integrated into this scenario were some deeper and more pervasive, more macro-economic drivers of business arising with the growth in virtual working. These are fundamental drivers for which I think history will see the rise of virtual working as a mere symptom. I don't feel too guilty at missing them 18 months ago – I was in good company having missed them – but the pervasive nature of this phenomenon was brought home to me around the time I was due to prepare this editorial, near the end of May. This was when I was sent a review copy of Ian Angell's new book The New Barbarian Manifesto – How to Survive the Information Age. Angell's book provides a challenging and sometimes bleak perspective on the future of the business (and therefore its support needs). It made me think again about the strategic drivers of business and their relationship to FM, an association which Angell refers to directly in places. The book has a similar impact to Frances Cairncross' The Death of Distance.
Angell bases his case on the idea that competitiveness in the business world is in a technologically-driven phase, wherein organisations attempt to gain competitive edge by technologically adapting more rapidly or more profoundly than their rivals. This tactic may allow some economies or businesses to compete on new planes or in new geographic regions.
The visible manifestation of this is the use of rapid changes in process or physical location as a means of gaining market share, also the application of IT to allow remote working and easy re-sizing or relocating of some or all of the business. Either can occur without necessarily changing the core product or service. The core business does not necessarily alter and according to my understanding of FM that qualifies as a strategic use of the business support function for competitive differentiation.
Indeed, reading Angell's perspective made me wonder if FM (albeit defined in one of its broader, more generic, forms based on its procurement format) was about to gain the dubious credit as the stalking horse of globalisation and the restructuring of national economies worldwide. Sounds fantastic? Some more context, then. I approached Angell's book having recently read a few articles on the remote sourcing of professional services, and it had clearly occurred to several researchers that the rise of virtual working was re-defining the delivery of professional knowledge by virtue of its delivery from distance. The concept of making airline bookings which are actually being handled on another continent is well rehearsed now, but this may simply be analogous to remote data handling. A recent article in the Financial Times demonstrated that the outsourcing of professional services has started to occur in the area of software authoring. The figures were remarkable. Carlos Grande, writing in March 2000 in the FT cited an example of the purchase of bespoke software services. These services were procured virtually, delivered virtually, by a virtual IT company in Belarus, for 1/50th of the initial price quoted from the USA. That is a business driver. Bear in mind also that the product was the same in each case, the variables were business infrastructure, delivery, and the procurement by the customer.
The next piece of this jigsaw of ideas emerged from an intriguing paper by Christopher May, in which he analysed the outsourcing and virtual delivery of knowledge-based services as a driver of international and macro-economic dynamics. His model illustrated very lucidly how whole industry sectors, indeed nations, could be affected. He noted, for example, the scope to deliver – virtually – all types of service which had until recently been the professional preserve of construction professionals or IT professionals. May observed that the effect is that back office functions are going off-site, and are being separated geographically from their originating sites, a phenomenon well-known within FM of course. May went on to suggest that the consequence of this is that "there is little to keep them in the same state or even region, indeed overnight processing might be better carried out on the other side of the globe where the operatives are working during the day rather than the night". May proceeded to present evidence that this is not simply an accident of technological developments, but that for some developing regions it is a phase in a long-term macro-competitiveness strategy built on foresight-driven policies which include the emergence of communications technology and virtual working as a lever. He also noted that, whilst this new "electronic immigrant" still required localised support and coordination visits by managers of networks of these professionals, "support staff who used to be located either at the HQ of a company or nearby can now be located where the required services can be delivered most cost-effectively". Is this an FM perspective? Yes. Is it a strategic business driver? Yes. Are the two linked? I think so.
To return to Angell's book, and his view of the future consequences of the recent dynamics of global industrial markets. By page 34, Angell is considering the relevance of not having frontiers in the business sense, and how this contributes to his model for the rise of a new information-based society which will be characterised by the emergence of global (not national) organisations based in "smart regions" led by his New Barbarians, and underpinned by information technology: "New Barbarians see their first step to freedom down the road to the virtual enterprise, in so-called outsourcing or facilities management, the farming out of office and support jobs and peripheral production facilities, leaving the company to concentrate on core business… Once the company has made the decision to outsource, probably distributing the work around local suppliers, there is no turning back. It is only a small step in cyberspace to place these tasks elsewhere in the country. Why not elsewhere in the world? Head Office now becomes a mere focal point of executive control, and the company will move work to countries whose governments actively support and encourage their presence." Grande's example indicates how this sort of task mobility is occurring at the level of professional services.
Perhaps the extent of the phenomenon will be tempered by reactionary forces which will modify the effect of the technological change? Perhaps FM will itself prosper from task mobility? Either way, the idea of FM being the coordinator of the infrastructure of organisations that have transmuted into loose networks of real and virtual locations linked electronically is exciting and needs development. Furthermore, since this potential is not covered by traditional HRM, CREM, or IS Management – but is being associated with business competitiveness – is there a window of opportunity for FM here?.
So, to pull these diverse points into an editorial theme. If businesses are increasingly turning to the strategic use of novel business support mechanisms such as virtual working or IT-based operations and processes; if they are also looking at global space strategies as a means of underpinning global procurement and delivery vehicles to achieve competitiveness through superior organisational agility; then surely there is a case that the FM functions have "arrived" strategically? Notably, though, FM as a whole has not arrived strategically – the scale of the forces driving this competitiveness is rather larger than that of those usually associated with FM, yet the functions involved are fragments of FM. But this synergy which individual businesses are increasingly seeking, the linkage and strategic farsightedness that pervade their entire operation appear to be the essence of survival in the information age. And FM is the delivery mechanism for this strategic imperative, particularly in the case of the loose national organisation. Witness as evidence the large organisations left over from the manufacturing age struggling with what are frequently macro-economic or non-core support-related issues access to expertise, access to IT in a form which can be assimilated by existing organisational structures, process change, and access to the right-sized and globalised property portfolio for their immediate and future needs. Business infrastructure is a core concern today.
I think the strategic question for FM has to be what elements of the FM professional role are now recognised as strategic levers in core business restructuring. It is quicker to say which are not. May is clear about the role of novel business support mechanisms in business survival: "The removal of even small delays through technological advances will [be] likely [to] reinforce the tendencies towards task migration rather than alleviate them as the issue of distance will be almost completely discounted, leaving wage levels the key variable". In the UK the consequences of this have already been well-rehearsed in the press.
So, I and the authors of the papers in this special issue now invite you to think about some of these issues. Whether or not you agree with the hypothetical scenarios in the editorial, I hope you will concur that the underlying issues brought out here and by the other authors in this special issue warrant some consideration by facilities managers and FM researchers. In support of this, the enclosed contributions explore a diversity of strategic FM issues, issues that are increasingly becoming core concerns for business. To conclude by returning to my opening comments – are business planners actually overlooking the strategic potential of these issues for overall business competitiveness? Perhaps it is more a matter that they do not speak of them and FM in the same breath. Yet, without some change, we all remain locked within Norman Mailer's dialogue of the deaf: "But for the present the storm approaches its thunderhead, and it is apparent that the boat drifts ever closer to shore. So the blind lead the blind, and the deaf shout warnings until their voices are lost".
Dr John Hinks
1. Angell, I. (2000), The New Barbarian Manifesto – How to Survive the Information Age, Kogan Page, London, ISBN 0 7494 3151 2.
2. Cairncross, F. (1997), The Death of Distance, Orion Business Books.
3. Grande, C. (2000), "How to recruit abroad without leaving the (virtual) office", Financial Times, 5 April, p.5.
4. May, C. (2000), "Information, society, task mobility, and the end of work futures", Vol. 32, pp. 399-416.
5. Grimshaw, R., private communication.
6. Mailer, N. (1952), Barbary Shore, Jonathan Cape, London.