Strategy & Culture: Flexible Specialization

Barry Wellman meets John Hagel at the Fourth Turning (note William Stauss and Neil Howe)

Concept:

Global localization and open flow are at the intersection of post-Fordisnm and specialization. We are witnessing an economic and cultural transition from the third turn to a forth: the emergence of a renaissance.

Impact: 

Product specialization, technology, personal expression, social media, alternative conformity, content segmentation, on time marketing and product availability, partisan politics and instant gratification.

Result:

The changes in production with the shift from Fordism to post-Fordism were accompanied by changes in the economy, politics, and prominent ideologies. In the economic realm, post-Fordism brought the decline of regulation and production by the nation-state and the rise of global markets and corporations. Mass marketing was replaced by flexible specialization, and organizations began to emphasize communication more than command. The workforce changed with an increase in internal marketing, franchising, and subcontracting and a rise in part-time, temp, self-employed, and home workers.

Politically, class-based political parties declined and social movements based on region, gender, or race increased. Mass unions began to vanish and were instead replaced by localized plant-based bargaining. Cultural and ideological changes included the rise in individualist modes of thought and behavior and a culture of entrepreneurialism. Following the shift in production and acknowledging the need for more knowledge-based workers, education became less standardized and more specialized. Prominent ideologies that arose included fragmentation and pluralism in values, post-modern eclecticism, and populist approaches to culture.[7]

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Flexible Specialization

Proponents of the Flexible Specialization approach (also known as the neo-Smithian approach) to post-Fordism believe that fundamental changes in the international economy, especially in the early 1970s, forced firms to switch from mass production to a new tactic known as Flexible Specialization. Factors such as the oil shocks of 1973, increased competition from foreign markets (especially Southeast Asia) due to globalization, the end of the post-World War II boom, and increasing privatization made the old system of mass producing identical, cheap goods through division of labor uncompetitive.

Instead of producing generic goods, firms now found it more profitable to produce diverse product lines targeted at different groups of consumers, appealing to their sense of taste and fashion. Instead of investing huge amounts of money on the mass production of a single product, firms now needed to build intelligent systems of labor and machines that were flexible and could quickly respond to the whims of the market. The technology originally associated with flexible production was the numerical controller, which was developed in the United States in the 1950s; however, the CNC, developed in Japan, later replaced it[2]. The development of the computer was very important to the technology of flexible specialization. Not only could the computer change characteristics of the goods being produced, but it could also analyze data to order supplies and produce goods in accordance with current demand[3]. These types of technology made adjustments simple and inexpensive, making smaller specialized production runs economically feasible. Flexibility and skill in the labor was also important.

The workforce was now divided into a skill-flexible core and a time-flexible periphery[4]. Flexibility and variety in the skills and knowledge of the core workers and the machines used for production allowed for the specialized production of goods. Modern just in time manufacturing is one example of a flexible approach to production.

Changes from Fordism to Post-Fordism

Post-Fordism brought on new ways of looking at consumption and production. The saturation of key markets brought on a turn against mass consumption and a pursuit of higher living standards.[3] This shift brought a change in how the market was viewed from a production standpoint. Rather than being viewed as a mass market to be served by mass production, the consumers began to be viewed as different groups pursuing different goals who could be better served with small batches of specialized goods[4] Mass markets became less important while markets for luxury, custom, or positional good became more significant.[5] Production became less homogeneous and standardized and more diverse and differentiated as organizations and economies of scale were replaced with organizations and economies of scope.[6]

source: Google Wikipedia

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