About Time – How time differences affect global business
Daylight Saving Time (short DST) brings us here in Germany and most other European countries a satisfying extra-hour of sleep in October or an awkward missed breakfast date in March. The European Union has been re-evaluating this concept and found out in a survey of the citizens of its member states that the majority would like the bi-annual time-change to be abolished. Yet, a draft proposal has still not been presented. The switch between summer and winter time makes us aware of just how artificial a construct our measurement of time really is. Did you ever wonder who decides what time it is and why we have different time zones today? How this impacts our increasingly global trade and business relations? Let’s talk about time!
A short history of time
The importance of time in developing human societies increased with the invention of new ways of tracking it. Whilst most of us are probably familiar with Quartz clocks or have heard about the Atomic Clock, time has been measured for millennia, eg. by tracking sunlight or with the help of water drops. The passage of time was at first relevant for social coordination or for guidance at sea. But with an increasing connectivity of places further and further apart, notably with the rise of railways, a unification of time measurement across countries and the world became inevitable. To be able to better coordinate the network and avoid crashes, the British Great Western Railway imposed London time across its network in 1840 and it soon became a standard for the whole of Britain, with the rest of the world following suit. But why the need for ever more accurate timekeeping, when even the Quartz clock from 1920 would only be one mere second off in three years? Without getting into the technicalities of atomic, cesium or optical clocks (which this article beautifully does), the need for accuracy increases with the speed of transportation that needs to be coordinated. And that’s not just high-speed trains or planes, but today most importantly the speed of data transmissions. Electricity grids, GPS satellites or financial markets – vital data pieces cross hundreds of kilometres within a split second and increasingly accurate timestamps are crucial.
Origins of time zones
With the aforementioned advent of railroads and faster train travel as well as telecommunications across distances, it became more and more noticeable that solar time differed from location to location. In the United States, every train station had its own standard, which resulted in over 300 different time standards. To make coordination easier, this was first decreased to 100 railroad time zones and on November 18th, 1883 four standard time zones for the continental United States were introduced.
Due to Britain’s naval predominance, the majority of ships already used the Greenwich Meridian for navigation, and so in October 1884, the International Meridian Conference adopted Greenwich Mean Time (GMT) as the international standard and laid the groundwork for the 24-hour time zone system.
An obstacle to international business?
Anyone who ever had to work with a colleague or business partner on the other side of the globe will know how difficult coordination can be. Vastly improved communication technology largely eliminated the need for physical presence during every single meeting, but that is exactly why we now notice the time difference more than ever. Direct meetings can only occur during a very slim timeframe in which the working hours of both locations overlap. Issues that would be resolved in a matter of minutes can take hours or even days to even be addressed by the counterpart across the globe. Not only is coordination difficult, the differences also incur significant costs of around $206 billion in the US for extended hours, lost productivity and so on.
While it certainly involves a lot of organizational work to do business beyond one’s local time zone, the time differences can also be useful in ensuring some level of continuity.
A company with offices in several time zones can, if coordinated well, have one office hand off unfinished tasks at the end of the day to another office that is just starting its workday. In theory that would allow operations to run 24 hours and potentially make continuous support available to an international customer base. Naturally, this only benefits certain industries, as for example manufacturing work can not physically be handed off to the other side of the world.
However, night and daytime (and with them productive hours in different locations) will always, by nature, split the globe, and at least time zones do provide us with a certain amount of orientation. Certain habits, like sleeping and waking time, working hours, opening times, and meal times follow roughly similar patterns virtually everywhere in the world. Of course, they’re variable by a few hours in different countries or cultures, but productive time usually occurs during daytime, sleeping time at night, and so on. Just the way that the assignment of hours is usually similar: mornings are usually between around six, seven, eight, nine, ten o’clock, whilst noon is around the 12 o’clock mark, etc. Time zones are very straightforward guides as to what period of the day that office in Canada you’re supposed to call is in right now. Put everyone on the same clock and you will need more elaborate guidelines for what region or country works, sleeps, eats, etc. around what hour on the universal clock. As long as there is no possibility to synchronize day and night time around the world or to convince one half of the globe to do their work at night, we will be stuck with time zones. All we can do for now is trying to find creative ways of leveraging their effects!