Industrial Commons

Industrial Commons
Photo by Jonathan Borba / Unsplash

I recently came across a Harvard Business Review post from 2009 titled Restoring American Competitiveness. Gary Pisano & Willy Shah make a case for manufacturing being the only way to ease America's growing deficit and increase the standard of living of it's citizens.

Something that stood out from this article for me was the phrase industrial commons

We have heard managers rationalize outsourcing decisions by saying that they can always reverse course if the quality of the work isn’t good enough, if the anticipated cost savings prove ephemeral, if supply-chain complexities or risks are too great, or if the work turns out to be more strategic than they originally thought. But this logic overlooks the lasting damage that outsourcing inflicts not only on a firm’s own capabilities but also on those of other companies that serve its industry, including suppliers of advanced materials, tools, production equipment, and components. We call these collective capabilities the industrial commons.

I always knew this phenomenon but didn't know someone had coined a name for it. There's a corollary here as well : Every time you decide to outsource something, you should think really hard about losing control over all the related processes. For example, if you outsource your injection molding work from a local company to a remote one in China, you might not be able to check if they are using the right grade of plastics all the time.

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