If you have ever been frustrated by endless plodding and reviewing and revising numbers or words for legal or auditing purposes, this myth resonates with you. Remember? It’s 10:00 pm; you’re still in the office. The lights are out; only the cleaning crew and you. But that report must be finished. And, it has to be finished before the team of lawyers and the team of accountants review it – earning those boxcar dollars per hour. And when they finish, it comes back to you for more edits before the ever approaching deadline.
If we could only work smarter, not harder. If we could only find a shortcut, a Cliff’s Notes or Something for Dummies to ease the pain of hard, thankless work. Let’s look at a few examples of companies and people who have tried the Work Smarter Not Harder approach.
The most widely used example of this myth at work is the mass exodus of manufacturing jobs from the US to China and other places that offer cheap labor. Analysis of cost and profit in manufactured goods quickly shows that raw materials, shipping and retailing are doing far better than human labor in terms of generating profit. The value of human labor has not kept pace with the advance of automation or any other key component of a manufactured product. For example, one study breaks down the component costs of oil this way (rounded): 53% raw material; 20% taxes; 18% refining; 9% distribution and marketing. Raw material suppliers are experiencing an upsurge in profit. Railroad and ocean shipping are doing well as finished goods now travel even farther to their destinations. Retailers are cashing in too. Laborers find automation and offshoring slicing their hourly wages.
Even inside the United States, cheap labor is the watchword of working smarter not harder. The foreign auto makers, actually hyphenated American companies, notably Toyota (TM) , Honda (HMC) and Volkswagen (VOW) push the Work Smarter Not Harder principle. Setting up their manufacturing operations in open shop states allows them to cut the labor cost that weighs down the profits of Detroit-based Ford (F) , GM (GM) and Chrysler. According to The New York Times, Nissan (NSANY) has invested $2 billion in its state-of-the-art plant in Canton, Mississippi, which also uses 1,200 robots. The advantage of cheap labor proves so overwhelming that even the Big Three hope to open more plants in Mississippi, Louisiana, Alabama and other open shop locales while pushing for cheaper labor around the globe.
In the famous confrontation between President Obama and Steve Jobs, the President asked what it would take to manufacture iPhones in the US. Jobs held firm to the made-in-China plan while Apple’s (AAPL) stock rose steadily thanks to the iPhone’s lower manufacturing cost and better technology.
So, is the work smarter not harder myth the proverbial slam dunk? Not really! A tidal wave of dissatisfaction is opening a new trend: Re-shoring in which companies return manufacturing to the US. Major advocates include Ford, Caterpillar (CAT) and GE (GE) . The reasons include,
Poor quality control
Difficulties with shipping and delivery
Time wasted communicating product details to manufacturers abroad
Many companies report that the amount of time spent explaining product details and resolving quality issues long distance more than outweighs the initial labor savings. Once that saving disappears, the rising cost of freight and materials eat into the presumed profit the work smart executives enjoy at the outset.
While Apple’s slippage from its recent perch on top of the world relates more to stiff competition, the massive advantage they enjoyed in the iPhone’s heyday is no longer pushing market capitalization to unheard of heights.
Maybe the real trick is to work smarter by working harder. Perhaps working smarter and working harder are not an either-or. Many who tout working smarter may only be cutting corners. Imagine the executive who faces poor quality in products manufactured in another country where he or she does not speak the language and only contacts them sporadically. This usually means working cheaper, not smarter. The lost clients and the herculean effort to correct mistakes means the work smarter executive is now working twice as hard to stay even. Not too smart!
Working less hard maintains considerable appeal, but not for long. Here is a more mundane example. Everyone is onto the tendency to copy material from Wikipedia and claim that the author – frequently a student -- wrote it. The tidal wave is so large, many colleges are banning students from using Wikipedia. But Wikipedia is so easy, generally ranking near the top in a Google (GOOG) search. We tried a few to test this theory: Insider Trading (Wikipedia, number 1), Wall Street (Wikipedia, number 2), Goldman Sachs (GS) (Wikipedia, number 3), Federal Reserve (Wikipedia, number 2), unethical plagiarism (Wikipedia, number 43). The last result is interesting; it carries a message!
This attempt to work smarter is also limited. Some Wikipedia material may be woefully out of date. For example, is Yahoo really a competitor of Google as Wikipedia states? Both have search engines but Google is a giant that has made many acquisitions while Yahoo is – a search engine. So is mamma.com, the Canadian search engine that led the government to charge Mark Cuban with insider trading. (No, I had never heard of mamma.com before the Cuban story broke either.) Mamma is not a Google competitor either. Wikipedia also defines Goldman Sachs as an investment company. Yes, it is an investment company, but it is also a bank holding company with a much broader mission than investments. What happens to people when they do not work harder? They do not work smarter either.
It appears that this clever turn of phrase, “Work Smarter Not Harder,” is starting to tremble under the Myth Buster’s glare. We have looked at several examples of working smarter, but they seem to last only a short time. Working hard is a quality difficult to surpass. The next article will continue our examination.
Michael McTague, Ph.D. is Executive Vice President at Able Global Partners in New York, a private equity firm.
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