Wednesday, May 05, 2021

Why generalists will become more valuable

As we leave the COVID lockdown and the economy picks up steam again, I think many businesses will recognize a need for more generalists on their team.  That could pose a problem since so many people have structured themselves and their careers as specialists.  I'll start by admitting that I am a generalist, so in some ways this post may seem self-serving.  I'll present my case and let you be the judge.  

The case for specialization

For years, educational systems have focused on turning out students who are increasingly more and more specialized.  Not just an engineer, not just an electrical engineer, but a hardware specialist electrical engineer.  And the same goes for any number of degrees or areas of study.  And it gets worse the further you go in your education.  Pity the poor PhDs who try to find new areas of study to complete their research.

Businesses as well have contributed to the specialization trend.  As a focus on efficiency increases, gains in efficiency and reduction in uncertainty and variability are harder to achieve.  These fact lead to the need for ever-more specialized individuals who can shave smaller and smaller wins from a more and more efficient operation.  The increase in data and our ability to analyze data and turn it into insights and information also contributes to the increasing focus on specialization and minute changes to operation models.  Good data analysis may tell you than a small tweak in an offer or a manufacturing process can save pennies, but over a long production cycle that may create a significant win.  So we hone our data intelligence skills to find small wins, ignoring the larger patterns within the data.

Other factors driving specialization

There is also a time element to this idea.  In general, people who are working now in their 50s and 60s did not have as much of demand over their careers to be specialized, and to some degree have had more varied experiences.  Younger people have had more specialized training and businesses have gone through business process re-engineering, ERP and outsourcing to optimize practices, so younger workers have had less opportunity to cross corporate silos or gain broader expertise.

Finally, two external factors will have impact on this phenomenon as well.  COVID has reset the operating model for many businesses, sending many people to work from home, where they have less engagement with a broad assortment of people from different functions, so they tend to work primarily with their small work teams, again limiting experiences and breadth.  Digital transformation, simplifying rote work and automating tasks, will only accelerate this focus on specific knowledge and tasks.

Specialization works, until it doesn't

The good news about all this specialization is that it drives ever-increasing efficiency, reduces costs and drives profits.  That is, as long as the underlying conditions on which the models are built continue to operate.  If you can remember the housing meltdown in the late 2000s, there was a good example of this.  Collateralized Debt Obligations (CDOs) worked as a financial instrument as long as housing prices increased or were at least stable.  What the model did not take into consideration was a downward change in housing prices, which invalidated the model.  Decreasing prices didn't create a small problem for the model - decreasing home prices broke the CDO market, and eventually the stock market, because the model had a catastrophic flaw in it.

The interesting question is whether COVID, or digital transformation, or "as a service" changes or other shifts in market dynamics will change the underlying assumptions about a business, an industry or an economy.  If there is enough change, or even enough doubt, about how the models operate, then these highly efficient but relatively brittle models will fall apart.  And that's when the specialists, who know how to do one thing exceptionally well, will be in trouble.

Five things generalists do better

The opportunity for generalists is emerging and I think can be enormous.  A generalist is a person who is relatively good at a number of tasks, and generally enjoys doing different tasks more than specializing in one.  While using a generalist is less efficient, the generalist brings several things to bear that specialists often lack:

 - Bring experience or knowledge from other industries or functions - today, we can get a lot of learning from other people, functions, businesses or industries.  A bank can learn from a tool and die shop.  A high tech firm can learn from health care models.  If you don't have experience outside your function or industry, you will struggle to find these similar models and anecdotes.

 - Shapeshifting - generalists can take on more than one role or function, which makes them especially attractive to smaller firms or smaller teams within larger firms.  A generalist can participate across functions (marketing/sales/business development) because they have knowledge or experience or are simply adaptable and able to learn quickly.  As business models shift or customer demand change, being able to shift your model may require more people with more general and/or more adaptable skills.

 - Bridging silos and functions - specialists often speak only one language, and are hard for others who don't share their experience or passion to understand.  What I mean by this is that a deep data scientist may only be able to talk about data in a way that other data scientists understand, and not be able to place findings or insights into context for people who aren't data scientists.  Generalists can take insight or information from one source (say marketing) and help others in manufacturing understand what is being communicated and what it means.  Generalists can bridge the inevitable silos in the business - and this fact alone makes them valuable but unfortunately rare, because silos are strong and businesses do not value the bridging function.  Yet.

 - Thinking beyond the product - too many specialists are good at one thing - the tangible product, or the analysis of a spreadsheet, when customers and consumers want help with the whole solution - that is, the product, and the services that wrap around it, and the ecosystem that support it.  Generalists understand the value of the bigger picture and "get" why all of these things matter and should work together more seamlessly.

 - Demonstrating agility - specialists do one thing really well, and should be recognized and commended for that knowledge and experience.  However, when circumstances call for change, when the environment shifts, specialists can find it difficult to reconfigure their knowledge and skills.  A siloed organization full of specialists will find it exceptionally difficult to be nimble and agile.  Generalists, with broader experience and reach, will not suffer the same challenges when the need for agility and speed increase.

The CEOs chief complaints - communication, speed and inflexibility

The need for more generalists isn't a future problem - it is an existing problem only getting exacerbated by market conditions.  Most CEOs are frustrated with their company's lack of good communication, inflexibility, lack of innovation and slow response to change.  While there are a number of contributing factors to these issues, perhaps one of the biggest is that there is too much specialization which in turn hinders communication, speed and nimbleness.  

I think the need for generalists who are reasonably capable across a number of functions or disciplines will only increase as markets shift and the pace of change increases.

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posted by Jeffrey Phillips at 7:19 AM


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