Life is full of cycles. Whether it’s the stock market, weather patterns, or even our own streaks of good and bad luck, cycles are everywhere. These cycles often stem from human nature, where our perceptions and reactions shape the highs and lows we experience. In the world of business, especially in IT, these cycles can be seen in the way companies approach centralization, decentralization, outsourcing, and insourcing. Understanding these patterns can help us navigate them more effectively, ensuring that we’re not just riding the wave but steering the ship.
The Nature of Cycles
The bad parts of a cycle often start when negative chatter about a topic begins to spread. As the conversation grows, concern escalates, and soon enough, the problem seems worse than it is. This spiral continues until something positive emerges, flipping the cycle into a good phase. The same process happens in reverse during the good times, where skepticism creeps in, leading to a downturn. This repetitive nature of cycles is something we hear about daily — whether it’s the stock market, the economy, or even the weather. But there’s more to these cycles than just the obvious ones; they also apply to longer business processes that aren’t typically seen as cyclical.
Centralization and Decentralization
One of the most significant cycles in business is the centralization and decentralization of operations, particularly in IT. You might not think of it as a cycle, but if you’ve been in business long enough, you’ve likely seen it play out more than once.
Companies often centralize operations to achieve economies of scale. But over time, the centralized system can start to show cracks — user complaints rise, and the perceived benefits diminish. Before long, the call for decentralization begins, and the cycle repeats itself. The same pattern emerges in the opposite direction when the downsides of decentralization become too apparent, leading to a push for centralization once again. It’s a never-ending merry-go-round.
Outsourcing and Insourcing
Another cycle that closely mirrors the centralization/decentralization dynamic is outsourcing versus insourcing, including its variations like offshoring and onshoring. Outsourcing is typically driven by the need to cut costs, but it often leads to a loss of flexibility and responsiveness. Eventually, complaints and business changes will push the cycle back towards insourcing.
Offshoring adds another layer to this cycle. While the cost savings are significant, they also make it harder for a company to bring operations back in-house. The cost differential is currently so large that it would take an enormous level of dissatisfaction to reverse the trend. However, this may not hold forever — though it might not change significantly within our lifetimes.
The “Jump at the Top” Career Strategy
Some professionals have even built their careers around these cycles, jumping from company to company at the peak of each cycle. For instance, someone might specialize in centralizing IT and move on as soon as the company starts to decentralize again. While this might seem like a smart move, it’s a short-sighted strategy. These individuals often lack the experience to implement changes that provide lasting benefits. They know how to initiate change but not how to manage its long-term impact.
If you’re considering following this strategy, think twice. It may offer short-term gains, but it doesn’t build the depth of experience needed to handle the full cycle of change within a company. And if you’re hiring, be cautious of candidates with this background — they may not have the staying power you need.
Recommendations for Navigating Business Cycles
Here’s how you can handle these inevitable cycles in business:
- Be Aware of the Cycles
Understand that there isn’t always a right or wrong way to do things — it often depends on where your business is within a particular cycle. - Leverage the Cycle
When the sentiment is shifting towards outsourcing, identify processes that could genuinely benefit from it and push for those changes. - Don’t Fight the Current
Resisting a strong cycle is like swimming upstream in a raging river — you’ll wear yourself out without making progress. Instead, swim with the current, using it to help achieve your goals. - Seek Compromises
If you’re in a centralized organization, consider decentralizing non-critical processes. Conversely, if you’re decentralized, centralize key functions that benefit from scale. The strongest strategies don’t resist the flow; they adapt and find balance.
Conclusion
Cycles are a natural part of the world and business. It can be frustrating to see your hard work challenged as the cycle turns, but it’s important to recognize that this is just part of human nature. We can hope that each iteration of the cycle brings us a little closer to improvement. In the meantime, try to enjoy the ride and use your understanding of these cycles to navigate more effectively.