Avatar 2 and Uncertain Futures: Are we surrendering the knowledge advantage?

James Cameron has annoyed me, not going to lie and I am not sure why it is him that has annoyed me in particular, but he, if nothing else, is the straw that has broken my proverbial camel’s back!

You see, James Cameron wants to move production of Avatar 2, 3 and, if we can take any more of it, 4 to China.

Why?

Because the skills, the critical knowledge needed to ensure a successful project outcome are in China?

No.

Pure and simple, it’s about making more money, as if the original Avatar didn’t make enough!

The potential consequence, aside from Cameron’s burgeoning bank account?  More critical knowledge being transferred offshore.  More local competitive advantage being eroded.  More variety being sucked out of one ecosystem to stimulate another.  I’m singling out James Cameron, but its not really him, it’s the short-termist attitude of decision-makers as a whole that has me concerned – and I’m sure James Cameron won’t lose any sleep over my criticism anyway.  He did get me thinking though…

Is short-termism, a drive for profit today, undermining tomorrow’s competitive advantage for society as a whole?  Are decision-makers considering what is best for the public good?

When does making money become making too much money; where’s the tipping point between an acceptable return on investment (beyond ethical standards) and gluttony?  In my opinion it’s when the drive to make money, or protect profit, impacts the longer term competitive advantage of the society that enabled the initial success in the first place.  Don’t get me wrong, I understand organisations looking offshore to avoid extinction events, but, more often than not, the argument seems to be about efficiency or Return on Assets/Investment (profit for today) and here, I believe,  too many decision-makers are getting it critically wrong.  Knowledge is the lifeblood of society, but all too often decision-makers don’t see the wood for the trees and today, as organisations savage their own natural resources, their people, I would argue that ‘Western’ competitive advantage has the potential to go the way of the Amazon.

The perimeter of the old establishment is being challenged by market seeking societies, such as the BRIC nations.  The question is, how will we respond to that disturbance; will we see it as an opportunity to improve revenue generation, or do we see it as a threat, friction, that requires a response?  If we don’t recognise the friction, the threat, then I wonder how many Western-based organisations will truly be ‘Western’, except in name, in the next 10 to 15 years?

Look at the trends surfacing in reports such as The Economist Intelligence Unit, the ACCA, Deloite (both the Talent Management and Shift Index reports), The Economic and Social Research Council and Bain & Associates; the message is always the same – efficiency driven processes are not working and the future will be built upon the networking, problem solving and communication abilities of the individual.  The biggest challenge for organisations, across sectors, is the identification and retention of their most valuable talent, usually the most passionate, networked and skilled members of staff.  These people create the flows that bring about a knowledge advantage, a concept that strikes fear into Lean/Six-Sigma programmed management teams – oh the enlightenment that must come when the weight of the black belt is released from their waists .

For years decision-makers have focused on revenue optimisation, driven by bottom line figures, the task masters of Return On Asset or Return On Investment.  The problem, in the main, is that the ROA/ROI trajectory is decaying and  has been for years; and no black belt mega-dan has managed to resolve that challenge .  This goes against all thee Lean/Six Sigma specialists know.  How do they respond?  They go into survival mode, looking to preserve profit without heed nor warning of the unintended consequences for the future. The response?  Layoffs, offshoring and outsourcing.  The consequence: the variety, the knowledge that could accelerate recovery, is no longer within the realms of the organisation’s control.  Perhaps, given digital flows, their links to knowledge flows and the empowerment of the individual, they never were in the first place.  Perhaps the position of management, of control, was merely an illusion in the first place.  Perhaps they mistaking believe that open flows will enable the organisaton to tap into the knowledge flows that once resided within their domain.  Either way, they have mismanaged their key resource, their talent, their people, and mortgaged their future for snake oil.

Here’s the rub, without the opportunity to practice, to develop knowledge and expertise, skills begin to perish and society slips into decay; without jobs, what opportunity is there to solve problems, to network, to collaborate, to develop new knowledge, to innovate?  Every redundancy, every job moved offshore, takes an element of variety out of the organisation’s local ecosystem.  How does that approach aid recovery?  To compound the problem we are scaling the knowledge capacity of the competition, and, when it comes to knowledge advantage, anywhere can become the competition.  The opportunity to practice, to grow skills, to solve problems, to develop knowledge, it is being wrapped up and gifted to societies that are using low cost as a stimulus for their own local knowledge economy.  They have the population, the policies and the hunger to succeed.  It’s time to face up to the fact that anyone, anywhere in the world, can become a resource, an asset or the competition and we need to stop stripping away the variety that fuels our own ecosystem.

BRIC nations are already hungry and are fast becoming more competitive when it comes to high-value knowledge driven work.  Is short term profit protection really worth it?  Is the drive for short term gain, which isn’t even working, worth the risk to our society tomorrow?

Are we losing the knowledge advantage?

Have we risk assessed the cost of that?

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  • http://www.doz.net Ted Zaleski

    I agree with you 100%. We are being short sighted by the allure of more profit. This is one reason that unemployment is as highas it is in the U S.

  • Glenn Behenna

    Hi David,

    Thanks for yet another interesting and thought provoking post.

    My attention was particularly taken by the section copied below:

    ‘Look at the trends surfacing in reports such as The Economist Intelligence Unit, the ACCA, Deloite (both the Talent Management and Shift Index reports), The Economic and Social Research Council and Bain & Associates; the message is always the same – efficiency driven processes are not working and the future will be built upon the networking, problem solving and communication abilities of the individual. The biggest challenge for organisations, across sectors, is the identification and retention of their most valuable talent, usually the most passionate, networked and skilled members of staff.’

    This struck a chord with me in the light of a recent assignment I set my university students i.e. ‘A discussion of the productivity paradox in IT and the challenges this presents to organisations, particularly in the context of information and the development of knowledge within organisations.’ Not surprisingly this was a challenging concept for them, but they came up with some interesting views.

    It’s good to see that we share the view that efficiency driven processes have been largely addressed and are not in themselves an answer. Rather that, as you nicely put it, ‘the future will be built upon the networking, problem solving and communication abilities of the individual………’

    I can now go back to my students with greater confidence and stretch them even further.

    Best wishes,
    Glenn

    • http://knowcademy.com David Griffiths

      Glenn,

      Good to hear form you, as always – we need to get together and deliver a round table with students sometime…would be really interesting. let me know if you are ever interested.

  • Ros Smart

    Do we still have a knowledge advantage? I’ve always thought of ‘knowledge’ and ‘knowing’ as relative terms. It seems to me that the Chinese possibly already have sufficient “knowledge” or Cameron wouldn’t consider shifting his work to China. To me what is the greatest issue is that the ‘westerners’ have priced themselves out of the market. The value-add is no longer there when compared with off-shore markets. Sorry, but the doors have been flung open and the real competition has begun.

    • http://knowcademy.com David Griffiths

      Hi Ros,

      I agree – knowledge competition can come form anywhere and we in the ‘West’ have to react to that friction – that means business leaders, policy makers and educators making a concerted effort to respond. However, it doesn’t help when corporations prioritise profit protection over societal good – we still need to be able to practice in order to evolve, don’t you think?

  • guy rogers

    I don’t believe Cameron is making Avatar 2 in China in order to make more money. The quality of the product and marketing determines how much the sequel grosses. And the quality of a Jim Cameron effects extravaganza depends on how far one can stretch a pre negotiated production budget. You get more bang for your buck in China. A movie like Avatar can have up to 10 000 people on the payroll over a 4 yr production. The cheaper currency translates into more man hours and greater production resources which translates into more bang for your buck right there up on the screen. Nothing wrong with that. Cameron’s reason for shooting in China is all about maximizing the quality of the of the film. Of course, the better the film, the more ambitious and spectacular, the better the box office return. However, as an artist, his concern lies squarely with the quality of his work, Everything else after that takes care of itself.

    *most of the work on the first Avatar was done in New Zealand*

    • http://knowcademy.com David Griffiths

      Hi Guy,

      Good to hear from you again…

      I would buy into artistic reasons, if that was the case, but this is about revenue; this is from the Economist article:

      “The economic advantage he [Cameron] has in mind would be on the tail end, when the box office takings are divvied up. Mr Cameron does not need funding assistance for his films (a common reason for other foreigners in search of Chinese partners), but he would like China to share more of its blockbuster revenues with him.”

      Also, Avatar was the most profitable movie of all time, without having to move production to China

      Budget: $237,000,000
      Worldwide gross: $2,783,918,982
      Profit: $1,154,959,491

      James Cameron is an example, but my main point is more about the variety being taken out of the system and the implications for future societal competitive advantage.