The Best Bet for Unemployment: Infrastructure and Competency Hubs
By Carla Zilka
With the recent purchase of Burlington Northern Sante Fe (BNSF) by Warren Buffet for $34B, it is a fact that the future of the United States is based on Infrastructure growth. Railroads are not glamorous, but they do what needs to get done for being the biggest distribution channel for the “biggest hauler” of food products, like corn, or energy, like coal for electricity.
This industry grows when an economy is expanding, not typically when an economy is as bad as the one we are in.
But Warren Buffett put a huge bet on the industry. He claims he is looking for an investment that will reap rewards for many years in the future and isn’t too concerned about immediate gains.
This is a great sign of things to come. For Buffet to risk so much, tells me it may not be that risky. As I think about the competencies required for this type of work, it all makes sense why this seems very knowledgeable, and not at all risky.
What If: Buffett invests in technology, and BNSF becomes the first transportation company to execute the fastest train in the world in all aspects: Leisure, Food and Product Transport? Countries may actually BUY the technology and expertise for their own infrastructure projects.
Even more impactful is the number of jobs that would be needed for such an endeavor. Engineers, Mechanics, Customer Service, are all skills required to ensure a success outcome.
What If: The US had a coalition of competency hubs with just these skills?
What is a Competency Hub? Basically it is a Center of Excellence that is centered on one core activity. For the purpose of this point of view, we will focus on Infrastructure as a support to a business: Finance, HR, IT, Sourcing, Engineering, Customer Service, etc. The ideal model is that these are for profit companies with costs subsidized by the government based on the number of new jobs they create in the US. Thresholds would be set for number of jobs produced, and if a company reaches the threshold, they get a “bonus” or “abatement”. The more jobs they produce in the US, the more subsidies they receive.
This may seem unrealistic in this capitalistic world, but it’s just a thought. There are already companies that do these activities overseas, but the goal is to bring them back to the US.
But the real benefit isn’t their financial structure. it’s their value in bringing jobs back to the US that have traditionally been outsourced. The number of outsourcing deals in the last 5 years has soared, showing significant signs of growth in markets with competency hubs like technology in India and manufacturing in China.
Both of those industries are things the US does currently, just not on the scale the emerging markets have exploited. However, Silicon Valley is gaining great traction as the “Innovators” with Apple, Google, Intel, etc. An incredible opportunity to break away from the pack, and make the US “the” place to go for innovation.
You’re thinking, “a competency hub for Innovation? Yep, it’s the most basic thing companies will need in order to succeed, and as it becomes more and more about technology, it will be the vehicle for new product introduction. Learning to innovate is a process, and most companies don’t do it well, if at all. Providing this process at a reasonable rate, allows companies to spend more on investments on core work.
The theory behind a competency hub is that it is an activity that is standard in nature, with standard processes and templates that allow for quick and efficient output at a cost an individual company can’t replicate.
If you think about all the work every single corporation has to perform that is not necessarily their core, it looks like this:
1. Finance: Every company needs to track, and manage financial operations
2. Human Resources: For every corporation, Human Resources is required to manage the workforce
3. Sourcing: All companies buy products or services through a sourcing /purchasing departments
4. Legal: All companies require legal advice and actions
5. Technology: Every corporation uses technology to automate and improve processes
6. Innovation: As the foundation for “everything new”, this competency includes several sub hubs**.
a. Engineering
b. Design
c. Test
**A sub hub is competency that has verticals with different skill sets within.
For example, Engineering can be represented in Technology, Energy, Transportation, etc.
The key is to have career paths for these linked with the university curriculums in order to have pre-trained employees coming out of schools, decreasing the time before a new employee begins to add value to the organization. Or as I call it: the Period of Unproductively. Attached is a chart by Jim Collins on the productivity of a new employee. Imagine the savings and productivity that can be achieved by shorting the curve from 18 months before contributing, to 6 months? The training and on boarding costs alone would decline significantly.
With the recent purchase of Burlington Northern Sante Fe (BNSF) by Warren Buffet for $34B, it is a fact that the future of the United States is based on Infrastructure growth. Railroads are not glamorous, but they do what needs to get done for being the biggest distribution channel for the “biggest hauler” of food products, like corn, or energy, like coal for electricity.
This industry grows when an economy is expanding, not typically when an economy is as bad as the one we are in.
But Warren Buffett put a huge bet on the industry. He claims he is looking for an investment that will reap rewards for many years in the future and isn’t too concerned about immediate gains.
This is a great sign of things to come. For Buffet to risk so much, tells me it may not be that risky. As I think about the competencies required for this type of work, it all makes sense why this seems very knowledgeable, and not at all risky.
What If: Buffett invests in technology, and BNSF becomes the first transportation company to execute the fastest train in the world in all aspects: Leisure, Food and Product Transport? Countries may actually BUY the technology and expertise for their own infrastructure projects.
Even more impactful is the number of jobs that would be needed for such an endeavor. Engineers, Mechanics, Customer Service, are all skills required to ensure a success outcome.
What If: The US had a coalition of competency hubs with just these skills?
What is a Competency Hub? Basically it is a Center of Excellence that is centered on one core activity. For the purpose of this point of view, we will focus on Infrastructure as a support to a business: Finance, HR, IT, Sourcing, Engineering, Customer Service, etc. The ideal model is that these are for profit companies with costs subsidized by the government based on the number of new jobs they create in the US. Thresholds would be set for number of jobs produced, and if a company reaches the threshold, they get a “bonus” or “abatement”. The more jobs they produce in the US, the more subsidies they receive.
This may seem unrealistic in this capitalistic world, but it’s just a thought. There are already companies that do these activities overseas, but the goal is to bring them back to the US.
But the real benefit isn’t their financial structure. it’s their value in bringing jobs back to the US that have traditionally been outsourced. The number of outsourcing deals in the last 5 years has soared, showing significant signs of growth in markets with competency hubs like technology in India and manufacturing in China.
Both of those industries are things the US does currently, just not on the scale the emerging markets have exploited. However, Silicon Valley is gaining great traction as the “Innovators” with Apple, Google, Intel, etc. An incredible opportunity to break away from the pack, and make the US “the” place to go for innovation.
You’re thinking, “a competency hub for Innovation? Yep, it’s the most basic thing companies will need in order to succeed, and as it becomes more and more about technology, it will be the vehicle for new product introduction. Learning to innovate is a process, and most companies don’t do it well, if at all. Providing this process at a reasonable rate, allows companies to spend more on investments on core work.
The theory behind a competency hub is that it is an activity that is standard in nature, with standard processes and templates that allow for quick and efficient output at a cost an individual company can’t replicate.
If you think about all the work every single corporation has to perform that is not necessarily their core, it looks like this:
1. Finance: Every company needs to track, and manage financial operations
2. Human Resources: For every corporation, Human Resources is required to manage the workforce
3. Sourcing: All companies buy products or services through a sourcing /purchasing departments
4. Legal: All companies require legal advice and actions
5. Technology: Every corporation uses technology to automate and improve processes
6. Innovation: As the foundation for “everything new”, this competency includes several sub hubs**.
a. Engineering
b. Design
c. Test
**A sub hub is competency that has verticals with different skill sets within.
For example, Engineering can be represented in Technology, Energy, Transportation, etc.
The key is to have career paths for these linked with the university curriculums in order to have pre-trained employees coming out of schools, decreasing the time before a new employee begins to add value to the organization. Or as I call it: the Period of Unproductively. Attached is a chart by Jim Collins on the productivity of a new employee. Imagine the savings and productivity that can be achieved by shorting the curve from 18 months before contributing, to 6 months? The training and on boarding costs alone would decline significantly.
*Chart from Jim Collins: Good to Great, 2001
Not only do the competency hubs create long-term sustainability of employment for millions of American’s, but improves the businesses they support. When a business can focus on their core activities, and hire “experts” to do the work that is transactional, repetitive or unique in nature, but not part of their core, they win…in profit and revenue.
Also, this allows college students to focus on specific skills, and be sure of getting a job. Think of it as career paths” pre-defined.” This is a long-term strategic goal, and not something that happens overnight, but if we don’t start now, we won’t reap the benefits until it may be too late, and unemployment becomes the rule and not the exception.
Not only do the competency hubs create long-term sustainability of employment for millions of American’s, but improves the businesses they support. When a business can focus on their core activities, and hire “experts” to do the work that is transactional, repetitive or unique in nature, but not part of their core, they win…in profit and revenue.
Also, this allows college students to focus on specific skills, and be sure of getting a job. Think of it as career paths” pre-defined.” This is a long-term strategic goal, and not something that happens overnight, but if we don’t start now, we won’t reap the benefits until it may be too late, and unemployment becomes the rule and not the exception.
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