Delivering quality furniture to more than half a million homes and businesses in North America, Article is composed of engineers, journalists, painters, and other professionals. In corporate governance, the statutes of a company (AoA, called statutes in some jurisdictions) are a document that, together with the memorandum of association (where it exists) form the constitution of the company and define the responsibilities of the directors, the type of business to be undertaken and the means by which shareholders exercise control over the board of directors. Companies have been outsourcing manufacturing with the conviction that it had no competitive advantage, but this has been a disaster according to Harvard professors Pisano and Shih. This is because today's low-value manufacturing operations contain the seeds of tomorrow's innovative new products.
What these companies have been giving up are the country's industrial commons, that is, the collective operational capabilities that underpin the development of new products and processes in the United States. As a result, the US has lost not only the ability to develop and manufacture high-tech products such as televisions, memory chips and laptops, but also the experience to produce trendy emerging products such as the Kindle e-reader, high-end servers, solar panels and batteries that will power the next generation of cars. Restoring the ability of companies to develop and manufacture high-tech products in the US is the only way for the country to hope to pay for its huge deficits and raise its citizens' standard of living. What's even more worrying is that average real weekly wages have remained essentially stable since 1980, which means that the US economy has not been able to provide an increasing standard of living for most of its population.
This is one of the reasons why Americans have tried to borrow their way to prosperity - a strategy that is clearly no longer sustainable. These include components as critical as light-emitting diodes for the next generation of energy-efficient lighting; advanced displays for mobile phones and new consumer electronics such as Amazon's Kindle e-reader; batteries that power electric and hybrid cars; displays flat panels for TVs, computers and portable devices; and many of the carbon fiber components for the new Boeing 787 Dreamliner. The Kindle 2 e-reader was designed by Amazon's Lab126 unit in California. The vast majority of its components are manufactured in China, Taiwan and South Korea, and assembled in China - a center for this type of work.
A similar trend is undermining US competitiveness. Initially, companies outsourced only relatively mundane code writing projects to Indian companies to reduce software development costs. Over time, as Indian companies have developed their own software engineering capabilities, they have been able to win more complex jobs such as developing architectural specifications and writing sophisticated device drivers and firmware. Equally alarming is the case of US laptop brands - except Apple - which are now designed in Asia, as are most mobile phones and many other handheld electronic devices.
We've heard managers rationalize outsourcing decisions by saying they can always reverse course if quality isn't good enough or if cost savings prove short-lived or if supply chain complexities or risks are too great or if work turns out to be more strategic than originally thought. But this logic overlooks the lasting damage that outsourcing inflicts not only on a company's own capabilities but also on those of other companies serving its industry - including suppliers of materials, tools, production equipment and advanced components. We call these collective capacities industrial commons. Centuries ago “the commons” referred to land where animals belonging to people in a community grazed.
As its name implies, it didn't belong to any farmer - everyone was better off having access to it. A basis for innovation and competitiveness, a commons may include technical knowledge from R&D; development of advanced processes and engineering skills; and manufacturing competencies related to a specific technology. These resources can be integrated into a large number of companies and universities. Software knowledge and skills are vital to an extremely wide range of industries (machine tools, medical devices, earthmoving equipment, automobiles, aircrafts, computers, consumer electronics, defense).
Similarly capabilities related to thin film deposition processes are crucial for sophisticated optics; for electronic products such as semiconductors and disk drives; and for advanced industrial tools, packaging solar panels and displays. Knowledge skills and equipment related to development and production of advanced materials are common to industries as diverse as aerospace automobiles medical devices and consumer products. Biotechnology is a common good not only for medicines but also for agriculture and emerging alternative fuel industry.
