Intellectual. Property.

Or, as our British friends would say, "intellectual (full stop) property." Management has subscribed to the term "intellectual property" to allow them to indulge in their fantasy that the company's "intellectual property" can be transferred readily to a "low cost labor region." If the "intellectual" part is embodied in employees, it is not very portable, which really balls up their plans to save money by transferring their "intellectual property" to "low cost labor regions."

I contend that intelligence is real and it does create property for companies, but the property (code, documentation, manufacturing, etc.) is an artifact of intelligence. It isn't intelligence itself and thus "intellectual property" is a jarring discord. Toner on paper does not have any ability to be intelligent. Bits on a disk do not have any ability to be intelligent.

The property half is held inside the company walls, but the intelligence half walks out the door every evening.

Management can talk all they want about the company's "intellectual property", but disks full of bits have only a residual value without the human intelligence that understands what those bits mean.

As an aside, if the intelligence half did not walk in the company door some morning, it does not lessen the value of the property the company actually owns. Management is inappropriately taking credit for the intelligence that humans bring to the business.

Transferring "intellectual property" to "low cost labor regions" is an extremely short term and an extremely destructive strategy. The fundamental reason some areas are "low cost" is because the workforce there often is inexperienced in general and always is inexperienced in the problem domain of the "intellectual property." By the time the "low cost labor region" workforce has gained the domain knowledge to effectively use the "property" part (the bits on the hard drives), they will no longer be low cost. Aggravating this, there is a substantial risk that the intrinsic value of the the bits on the hard drives will have decayed to a level that no amount of added intelligence can restore the value back to its original level.

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As a concrete example, how much better are the "big three" domestic automakers doing after transferring their "intellectual property" (knowledge of how to build automobiles) to "low cost labor regions?" I contend it nearly killed them. Maybe it has killed them and what we now see is their death throes.

In an article on IBM layoffs, Robert E. Kennedy, a professor at the University of Michigan's Ross School of Business states "GM is stuck with high-cost, medium-skilled engineers. That's one reason it takes GM seven yearsto go from concept to design to the showroom floor [to produce a new car model],whereas it takes Toyota only three years. If they were more into tapping into the best talent wherever it is in the world, GM would be in better shape today."

This is a completely specious argument. Toyota hasn't moved their engineering to "low cost labor regions." Instead, they have worked to make their engineers higher skilled and more efficient. Dr. Kennedy's quote cuts exactly opposite of what he intended to show: it states that offshoring is killing GM. The engineers that remain are the second rate ones... by implication, the best ones have all left.

My google searches indicate that Toyota created new technology centers in...

• Ann Arbor, MI - Detroit's back yard. Not a "low cost labor region." If there truly are no good engineers in Detroit, it would follow that they wouldn't be in Ann Arbor either.
  
• Cannes, France - one of the most expensive countries in the EU.
  
• Australia - I don't know how this compares, but it definitely isn't the low cost labor region in that region.