Repatriating American Companies

By Douglas Rushkoff. Published in Hemispheres Magazine on 1 February 2014

I got a call from the CEO of what he called “an American television brand,” asking me to help him bring his company’s communications strategy into the 21st Century. “I want to get us on the social networks. Be less dependent on advertising and become a truly transparent company.” 

There were so many buzzwords gleaned off the pages of Wired and Fast Company, I wasn’t even sure where to begin. So I started with what little knowledge I had of the television industry: there are no major American television manufacturers. 

“So you make televisions?” I asked, already knowing the answer. 

“Well, no, we don’t actually make the televisions. Our manufacturing happens in China.”

“Do you design the televisions?” 

“We used to,” he told me. “Now that’s handled by a great new firm on the West Coast.” 

“So you are basically in charge of marketing the sets?”

“Well, we work with one of the agency networks for that. But we have oversight.” 

And on it went - supply chain, assembly, logistics, retail and direct sales, all implemented by one outside firm or another. I couldn’t contain myself any longer. “Well what is it you actually do?” I blurted out. “If you become transparent and actually let people see into your company, what will they find? A floor full of cubicles with people managing spreadsheets of the companies who are actually doing the work?”

Believe it or not, I did the consult. But instead of teaching this company how to manage social media channels, I helped them become a company worthy of social media channels. The big new thing they needed to integrate into their corporate DNA was not Facebook, Twitter, or even big data, but basic competency. 

Digital media are not mere extensions of branding, but the reversal of a six-hundred year trend. Branding, at its basis, was a way for newly industrialized companies to replace the human relationships that used to be at the center of commerce. Instead of buying oats from Joe at the mill as they always had, consumers were supposed to buy a plain brown box. The picture of the Quaker on the box - and the brand myth he represented - substituted for that human relationship. 

In essence, the brand served to shield consumers from the realities of labor and industrial processes, and replace it with pictures and ideas. Advertising in mass media helped embed this imagery with the values that reflected best on the product. 

This freed companies to do things however they wanted - which usually meant whatever cost the least. In Victorian times it meant using laborers in India to weave rugs on mechanical looms. Today, it means manufacturing TVs in China. 

As long as consumers are content to stay on the other side of the screen, that’s fine. But the Internet era’s focus on real information and social connection throws a wrench into this whole scheme. Consumers online don’t want to engage with a brand; they want information on the product’s attributes. How does it work? How long will it last? What is it’s carbon footprint? Who made it? 

Likewise, consumers on social networks don’t want to connect with a brand character; they want to connect with other real people - the people inside your company. What sort of culture is the consumer joining by purchasing your product? Is it a culture of technological innovation (Google), of industrial design (Apple), or dedication to the outdoors (REI)? The extent to which we love these companies depends on our belief that there are real people - experts and enthusiasts - living the culture that their products support. 

To offshore the core competencies of your enterprise is doomed - and in ways that even the bean counters can appreciate. A decade ago, I begged an American office equipment manufacturer not to go in with his biggest competitor on a shared factory in Vietnam. The single facility would churn out both brand’s products, saving them estimated tens of millions per annum on labor. What they weren’t taking into account was that their calculations were based on geopolitical relationships, commodities prices, and exchange rates over which they had no control. (Not to mention the fact that word would eventually get out, and both companies would lose any pretense of product superiority.) 

Worse, for every company thinking it can outsmart global capitalism by leveraging exchange rates and commodities futures, there are traders who know these markets better - and are already discounting the currencies and commodities involved. In the case of the shared factory, hedge funds neutralized the arbitrage before the factory was even finished. It was closed just a couple of years later, and written off as a loss. 

The smartest companies in America are already bringing their manufacturing back home. Apple, GM, and even FritoLays are celebrating domestic production the way that homespun brands like LL Bean and Ben and Jerry’s used to. Besides the halo it earns them from an employment-challenged population, it gives them an opportunity to build a culture from the inside out, and to focus on core competencies for the longterm rather than short-term balance sheet maneuvers. 

Most of all, the reason to repatriate your competencies is to stay close to the products and processes that are the lifeblood of your work. That smell of the factory floor on your way up to the office reminds you not just of where you came from, but what is at the heart of your work and your culture. Its what you do.