The different types of work and implications for cutting costs
As you consider how to cut costs, you can get a better handle on how to cut costs if you understand and categorize the different types of work. An analysis by McKinsey, reported on in a Special Report on the Future of Jobs in the September 10th, 2011 issue of the Economist gives details of their perspective on this issue. McKinsey has identified three different types of work: transformative, transactional and interactional.
Transformative work in McKinsey terms means physical work that transforms one state of materials to another. The key term here is physical. It is typified by manufacturing and construction. As we are all aware, these types of jobs have been moving from economies with more expensive labor to places with cheaper labor, which tend to be less developed economies. But it doesn’t stop once it has moved once. For example, garment manufacturing moved from the US Northeast, to the rural US South, to China and is now migrating to even less developed countries such as Vietnam and Thailand. So, overall, the future of this type of poor for developed economies. There are some trends that will counteract some of this – the strategic need for certain types of expertise within a certain geography, the transportation costs and time, and the degree of special expertise needed. There will always be some things that we need done close to where they are used or consumed, and investment in automation actually has the paradoxical effect of requiring a more educated and skilled workforce to use it, so there will always be some transformative jobs available in any economy. Market research jobs aren’t physical so they don’t fit in this category.
The next category of work McKinsey identified is transactional. This is routine repetitive work. For this category, think of call centers and sales clerks. This area is ripe for automation and outsourcing. Examples of automation replacing jobs are self checkouts in grocery stores (replacing cashiers) and automated phone trees (replacing receptionists and operators). We all know of the major call centers that have been opened in India, and know of the frustrations of talking to someone who doesn’t quite understand what we are asking because their version of English is slightly different than ours. This has customer service implications, so some companies have strategically pulled back their call centers from abroad and are using a different model of using a combination of automation and home based part time workers to increase customer satisfaction. Innovation and automation will continue so the long term outlook for this type of work in developed economies is poor. Some market research jobs fit in this category- I’ll get to those in a little bit.
The final category McKinsey identified in interactional. These are thinking jobs, intellectual jobs. Examples of this given by McKinsey are consulting and investment banking. The value this type of work provides is both from the high skill level combined with the ideas that they create from working with their customer – from the interaction. The outlook for this work is expected to be strong. Many aspects of Corporate Market Research are interactional.
So how does it help to know that Corporate market research is both transactional and interactional in nature? It gives clarity to the decisions on how to cut costs by identifying the appropriate tasks to consider automating and outsourcing (the transactional types of tasks) and where the focus should instead by on adding value and innovating.
Below is a chart classifying some transactional types of market research work versus interactional types. It’s not intended to be all inclusive or definitive, rather as start in figuring out which is which in your department. You may disagree with me, as well.
|Monthly reports on syndicated data||Identifying brand issues|
|Updating data on slides||Gaining agreement on plan of action|
|Creating data tables||Creating a annual budget|
|Approving invoices||Identifying alternative methodologies|
|Getting signatures/approvals on||Preparing RFPs|
|Generating RFPs||Creating slide decks/story flow|
|Ensuring projects meet deadlines||Anticipating and solving project problems|
|Developing insights and recommendations|
|Following up on recommendations|
|Identifying other ways in which research results can be applied.|
|Choosing the right methodology/vendor|
Note that I have items related to some types of jobs in both columns – with a slightly different take them such as RFPs and project deadlines. A project management system can create RFPs that can be sent out automatically to vendors you are considering – and if the project is routine, then that’s transactional and an appropriate use of automation. If however, you want supplier input into the design, if you want to explore alternative methodologies and brainstorm ideas (in other words, if you want the supplier to add value to the project), then those RFPs shouldn’t be automated, they require conversation and thought – clearly interactional in nature.
Another area which can be both transactional and interactional is meeting deadlines. It is relatively easy to set up reminders of when interim stages of project work are due – clearly a candidate for automation. Gantt charts may be too complicated for what is needed, but simpler software is available. But reminders stop being helpful when things go astray. Once a problem occurs, the skill of solving problems by working with the clients and suppliers is an interactional skill, one not able to be automated. Another deadline related interactional skill is anticipating issues that can lead to problems can keep a project on schedule.
Automation and Outsourcing
Automation and outsourcing are fertile areas for cutting costs for the transactional types of tasks. Some efforts which have already enabled a cut in costs are:
- Automatic feeds of syndicated market data into pivot tables to provide fast and automated market data
- Automated systems to create custom analyses of data, simple enough to be used by non-technologically savvy users
- Automated analysis using artificial intelligence which creates text which summarizes each custom analysis
- Automated and/or Outsourced updating of charts and graphs for management update decks
Systems have also been created to automate approvals of RFP and invoices – no longer does a person have to walk the proposals around to the various authorizing parties – it’s all done on line. New integrated systems from major software vendors have the ability to have invoices are entered automatically into the online system and then automatically approved if they fall within the payment schedule.
If you notice, these are mostly all routine and transaction based types of tasks. These are things that (over the years) Market Research Analysts have moaned and groaned about having to do, and seen them as a big time eater. But with that automation and outsourcing has come job losses. The IMS or IRI or Nielsen data analyst who was a wiz at pulling exactly the right data, who knew the standards for how the charts and graphs needed to look has been replaced – either by a machine or in another count
Consistent with the McKinsey classifications, I have heard that, experiments with outsourcing have not worked as well when they are non-routine assignments.
There is a phrase from the technology and engineering world that illustrates the trade off that happen when costs are being cut – “faster, better, cheaper – pick two”. Their conclusion is that you can’t have better if you are picking faster and cheaper- which is what is happening. Automation and outsourcing are giving us faster and/or cheaper, but not better. Better has to come from people who are interacting, and thinking. In the effort to cut costs, care has to be taken that what is cut doesn’t affect the ability to improve, to provide more value and to serve as a competitive advantage for the corporations that pay the salaries.