IT is urbanizing, McDonald's gets it, but Woonsocket doesn’t (yet)
My favorite UK TV producer once had to sell his house in Wimbledon and move to an apartment in Central London just to get his two adult sons to finally leave home. Now something similar seems to be happening in American IT. Some people are calling it age discrimination. I’m not sure I’d go that far, but the strategy is clear: IT is urbanizing -- moving to city centers where the labor force is perceived as being younger and more agile.
The poster child for this tactic is McDonald’s, based for 47 years in Oak Brook, Illinois, but just this summer moved to a new Intergalactic HQ downtown in the Chicago Loop. Not everybody has left the old digs. McDonald’s has opened a software division at the new HQ specifically working on McDonald’s cloud offerings, which is to say working on the future of McDonald’s IT.
The old guys and gals are generally back in the burbs, while the new Dev/Ops Cloud folks are in the city. This is likely by design. McDonald’s techies can get their Cloud training online in either location, but if you are in the suburbs you can’t get the Cloud charge codes because you are not going to the meetings downtown. Move to the city if you want to work on Cloud. Charge codes are the way they starve old practices at McDonald’s.
I don’t see this change in IT structure as an accounting function. It is a sunk cost tire problem. The corporations are seeing the issue, they can’t get their older staff to adapt to the innovations. Clayton Christensen covered this in a number of books.
What has changed at the board level is companies like Ford realize now that they are a software company that makes cars. Liberty Mutual said as much. The Internet of Things, Cloud, IT Innovation, have all struck a chord, and CEOs are listening.
The issue is finding how to get your staff to adapt to change. The new answer is to move. Starve the older teams with fewer charge codes, give them all the training they want since that is very cheap now and all online. Reward them for training and make it apart of their MBO (Management by Objectives). The training courses are now free across many corporations, (SafariBooks, PluralSight, INE, etc.).
As an old IT guy it is possible for me to see this as age discrimination and a sneaky (if expensive) workaround for laws against that practice. But it’s really more a matter of innovation discrimination, since fogies like me who are willing to do the classes and make the accompanying physical move -- that is older workers who are eager for new experiences of all types -- are generally free to join the future.
Still, the COBOL crowd will be pissed when they figure out what’s happening.
When I started work on this column the poster child wasn’t McDonald’s, it was Aetna, the giant health insurer, which earlier this year announced it was moving from Hartford, Connecticut, where it had lived for more than a century, to New York, NY. Though the $9 million in subsidies Aetna was to receive for this $85 million move got a lot of press, I really doubt they were doing it for the tax savings.
Here’s the rationale I was hearing from inside Aetna:
Aetna needed to move into the 21st Century.
The existing Hartford staff is mainly baby boomers stuck in 1990.
The move discharges the baby boomers who will not take the move package.
The IT department got to move into a city that is the capital of FinTech.
The transition would transform Aetna tech with less risk than if they stayed in Hartford with old IT thinking.
Then something funny happened: CVS offered to buy Aetna for $69 billion (the deal has yet to close) and strongly suggested Aetna remain in Hartford, closer to CVS HQ in Woonsocket -- yes, Woonsocket -- Rhode Island. So Aetna cancelled its move to Manhattan, giving back the city’s $9 million, also forcing me to flip this column on its head.
Here’s where I am going to make a bold prediction. IF the deal closes (it looks likely) and CVS buys Aetna sometime in the next few months, a come-to-Jesus meeting will be held in Woonsocket after which the combined company will resume that move into New York City.
Here is why. I have been noticing that many developers my age don’t want to learn something new. Docker is new. Cloud Foundry changes everything in software development. That knocks down multiple monolithic structures. When you look at IT performance you see some baby boomers, some, Generation X’ers, but more and more Y and Z generation who have adopted new ways of seeing IT. This problem is at the core of IBM, HP, Dell, and others. Baby Boomers can’t quit: they are broke if they do. But they also can’t adjust, so they strangle innovation to stay on top.
Ultimately companies sell their homes in Wimbledon, so to speak, moving into the big urban tech centers, urbanizing to join the biggest corporate headquarters real estate boom in history -- a real estate boom ironically driven by virtualization.