By Mark P. Damgelo
Taking a break from the GSE “conservatorship” discussion, let’s have our heads up and eyes forward. The signs are all around us that more than the weekend’s action will have an impact on our operations – if we just look for them. Last week it was revealed that Dell Computer’s once superior and efficient competitive distinction – their consumer- motivated JIT assembly lines and factories — were being sold off driven by new market realities. This once seemingly unrivaled, “advanced,” collaborative supply chain and product integration approach has succumbed to a greater and evolving global market force – orchestration. “So what?” you may ask, “Why should I care?” How can I leverage that today for profit?
The implication urgency lies in a market lesson learned that has problematical cross-industry implications for our daily operations. You see, the FS (financial services) and mortgage industries are more implicitly orchestrated than we realize. Whereas manufacturers deal with raw materials, distribution, and delivery, FS and mortgage organizations orchestrate ”instruments,” packaging, and segmentation of often intangible products and services surrounding a physical object (e.g., real estate). For our industries, we create, embellish, link, manage, and orchestrate knowledge in many forms and at aggregated and discrete levels – origination, servicing, compliance, securitization, valuations, and even repository management to name but a few.
More precisely, we often unknowingly act and internalize Knowledge Orchestration (KO) in its many forms depending upon our client base, our corporate mission, and the market’s acceptance of our current offerings. An illustrative, decomposition example of what typically encompasses KO is presented below.
Whereas the preceding graphic is complex and beyond the discussion parameters in this setting, the take away is that our operations are implicitly involved in KO in its numerous structures – similar to what Dell and other manufacturers are practicing. Knowledge Orchestration moves beyond the convenient and siloed discussions within the drawing and shifts the reality into a comprehensive or holistic approach. Whereas, the practice of Knowledge Orchestration is often practiced in piecemeal segments, its foundational reality can no longer be ignored as a passing management ideal or fancy — at this point, a few decades of proof should are ample enough.
So if the world is moving into proactive Knowledge Orchestration, is this why we are seeing extensive investments and M&A’s by service-driven operations snapping up product vendors? Is it merely cheap valuations, failed pure-play models, or is there something else? Is this why offshore outsourcing investments are being put up for sale? If you are evaluating high-value domestic sourcing in the American Midwest, is this not more about KO than traditional outsourcing?
As our organizations select vendors, conduct outsourcing endeavors, and rebalance the supply chain to meet a rapid unfolding marketplace, visionary leaders recognize the underlying and permanent shifts that are transpiring – they are starting to act with their models, new personnel, and expanded relationships. The critical components needed for sustainable success must be met with new techniques and methods that are designed for the “flat world” or more importantly the fourth iteration of globalization and the innovation it demands.
So with the markets still projected to realize another $500 billion in write-offs – approaching $1.3 trillion in total — KO looks forward to what the customers, secondary markets, executives, and investors are demanding both ST and LT. Outsourcers, servicers, specialty operations (compliance, fraud, et al), and product firms often fail to realize the missing pieces within KO and they don’t often believe that others are inherently needed for their lasting success. If you doubt this subtle conclusion, look at the manufacturers and the proven models that FS and mortgage leaders are beginning to appreciate. Remember, collaborators often think of partners or alliances to meet a client demand – one or two players – and not the orchestrated solution sets involving 3, 4, or more with some even being their competitors.
The genius of yesterday must relinquish its models to the reality of tomorrow. FS and mortgage leaders are faced with new challenges as they are pushed into roles and operations that have little resemblance to 24 month ago certainties. Stated another way, with changing responsibility and accountability, the practices of management, governance, and operational efficiency must also adapt or die. For many organizational leaders, they unwittingly have become conductors orchestrating their future – but the score within this credit meltdown is unwritten and they are not accustomed to the new world demands.
Are we facing a tragic opera or a peaceful symphony? Time will quickly tell if a “knock-out” blow will be brought forth using Knowledge Orchestration (KO).