March 2007 - Who wants to be a commodity?
You are unique. I don’t need to outline the fundamentals
of Darwin’s theory of evolution to find agreement
here. It is, as Jane Austen once wrote when making a far
more pointed observation about single men with money, “a
truth that is universally acknowledged.”
But you may be forgiven when looking at your daily workload
if there are times when you consider yourself less than
unique. This is because most of us, even those who are working
in what we believe to be high level technical jobs, are
facing a constant competitive urge within our industries
Commoditisation has been one of the most significant influences
on the development of working practices for centuries. Arguably,
it was the force that drove the industrial revolution as
factory-based machines, operated by semi-skilled workers,
undermined the relative prosperity that had been enjoyed
by craft-based artisan weavers and croppers.
It happened again in engineering when Frederick Winslow
Taylor distilled work in to its constituent parts to break
down the artisan monopoly enjoyed by lathe makers.
Now these same processes are transforming the white collar
industries as technological innovation and the proliferation
of standard operating procedures erode the once marketable
skills and pay rates enjoyed by information technology and
other knowledge workers.
Once an IT job becomes replicable in all its forms, then
it can be transferred to a part of the world where there
are people willing and able to do it more cheaply. In some
cases jobs are automated. How many software packages, for
example, have circumvented the need to write pages of HTML
Andrew Holmes, an author, It professional and a founding
partner of a management consultancy called Paricint, believes
that few areas of work are safe from the forces of commoditisation.
“Even project management can be boiled down in to
processes that leave companies competing on price,”
“At one time it had a bit of mystery to it and not
everyone could do it. But as soon as the work becomes codified
and made more transparent it becomes sensitive to price
and pay rates start to fall.”
His choice of language is interesting because the word
“mystery” derives from the Latin word, misterium,
that referred to a professional skill and was once used
as an alternative word for a guild. It was the guild system
in medieval times that governed and protected many forms
of skilled work.
Some this protection was condemned as restrictive practices.
On the other hand, through long apprenticeships, guilds
did ensure a dedicated line of progression from journeyman
to craftsman. Excellence was achieved through commitment
and through learning passed on by the existing masters of
Some of these masters differentiated themselves within
their craft. If you bought a piece of furniture made by
Robert Thompson, a Yorkshire-born woodworker, who specialised
in oak furniture and panelling, you would have found a little
wooden mouse carved in to the finished piece. The Kilburn-based
workshop he founded maintains the tradition today but even
here there has been some commoditisation because the mouse
is now carved by various craftspeople.
The mouse has become a trademark and like all the best
trademarks or brands, it is supposed to stand for something.
Thompson was part of the English arts and crafts movement
that flourished across Europe and the US in the late 19th
and early 20th centuries where practitioners consciously
rejected the forces of mass production.
These forces - mechanisation, the factory system, the development
of interchangeable parts and management processes such as
work study, moving assembly and divisional administration
- transformed society, making thousands of goods accessible
to an ever broadening marketplace.
But for all the good it achieved, commoditisation and all
that it represented, had a negative influence once fulfilling
work that had been intrinsically rewarding into cheerless,
repetitive jobs in which the very language of work became
associated with something no longer desirable.
In a forthcoming book, Commoditization and the Strategic
Response, to be published by Gower later this year, Mr Holmes
portrays a future of commoditisation that through technological
advance and process development will not only continue to
eliminate low level work but will have soon worked its way
through the mid-level tiers and in to higher level employment.
He forecasts “the emergence of the extreme worker
at one end and the disenfranchised jobber at the other and
the inevitable rise of a wider labour war which will no
longer be focused on just the most talented in the workforce.”
These forces, he believes, could lead to a widening gap
between winners and losers within the workplace creating
implications for health and well being, even for some apparent
winners since their skills will be so much in demand that
they will have little time to enjoy the financial rewards
attached to their work.
What kind of jobs will be safe in an increasingly commoditised
society? Well, not that many, it seems, and certainly not
those in management. He notes that one of India’s
largest information technology companies, Infosys Technologies,
based in Bangalore, pays its chairman and chief executive
salaries of about $100,000 each and their highest performing
executive about $250,000.
“Not bad,” he writes, “But when you consider
that Accenture pays their top executive $6.1m and EDS $8.7m
and their share prices are doing significantly worse than
Infosys one has to ask: where is the return on management?
“There are those that believe that firms such as
EDS and Accenture could save as much by sending 100 top
management positions to India as by eliminating 10,000 staff.”
Whether this would actually happen is a different matter,
he writes. I would agree. The generals, governments and
ruling royal families could have fought out the First World
War between themselves with pistols at dawn. But this is
not the system of self-preservation and conquest favoured
Unfortunately elites have a poor record of intervention
when faced with commoditisation, other than to ring fence
their own interests even as they sacrifice those of their
employees in the struggle to maintain competitiveness.
Mr Holmes warns of dangers inherent in what he calls a
“vicious cycle” of lower prices supported by
low-wage polices that must beat a benchmark “China
price” representing the cost of labour in emerging
He writes: “In the late 1960s the biggest employer
in the United States was General Motors and they paid their
staff on average $29,000 (in today’s terms) together
with generous pension contributions, healthcare and other
benefits. Today Wal-Mart is the biggest employer and they
pay their staff $17,000 on average with few if any benefits.”
This forces Wal-Mart employees to shop at the company’s
own stores or those of other retailers who chase the lowest
cost option. The “China price” influence is
spreading elsewhere as China and India move in to high-technology
and high-skilled sectors. “Having spent two decades
hollowing out the West’s manufacturing industry, China
now wants to spend the next two moving from “made
in China”, to “invented in China,” writes
The upshot could be a return to protectionism that may
preserve incomes for a while. Bt could it succeed those
industries built around the internet which has demonstrated
an ability to defy national intervention.
In time I believe that globalisation and increasing wealth
in emerging economies will create the tide that “lifts
all boats” once more across labour markets. But in
the interim it is important that individuals do as much
as they can to differentiate themselves, either through
multi-skilling, the development of ultra niche services,
personal branding or the honing of a rare talent. If differentiation
can work for companies it can work for people too.
See also one of my previous columns: Workers
find their voice on the internet