Technology: The Central Issue in the Election

It's the morning after. The people have spoken and the people say they can't agree on either who should lead them or on what the real issues are.  By a narrow slice of the popular vote (but a strong majority in the electoral vote), President Obama returns to the White House for a second term. But looking at the Red State - Blue State map of the country shows just how differently people feel in broad swaths of the country.

The drumbeat of this last election was jobs and the middle class - the economy.  But that is only the symptom. One cause of our distress is the unstoppable forward flow of technology.  Technology gives us our prosperity but (reflecting the economist Joseph Schumpeter's famous phrase) it also brings creative destruction.  The unemployed (and worse, the unemployable) might argue that destruction is never creative.

Technology raises our standard of living. We enjoy the benefits of the technology every day of our lives. Most of us love new technology. We are willing to stand in line for hours to get the newest iPhone or iPad. We love our DVRs, our internet, our reliable cars, and our ATMs.  We notice the loss immediately when there is a temporary power blackout. When a big natural disaster occurs, as just happened with Hurricane Sandy, we are literally off the grid. We can no longer function without the technologies that support us.

Technology, like time, moves in only one direction: forward. Older technologies are replaced with better versions or are made entirely obsolete by new technologies.  It is that change that brings so much disruption.  People whose skills are based on an old technology lose their jobs. They don't have the skills for the economy enabled by the new technology. It is not that they need to somehow just get retrained to do the same job using a little newer technology. The old job is gone forever, replaced by technology. It's the same story whether you think of a manufacturing job now automated by robotics or a bank teller replaced by a computer-enabled ATM.  The bank teller can't take a computer class and compete with the ATM. Technology has simply wiped out the need for the human teller.

And so this election which seemed on the surface to be about jobs and the economy is really about how to cope with changing technology. How do people find work in the new economy when they lack the skills needed? The answer is always the same: re-education.  People need to get themselves retooled just as their former workplaces have been retooled.  This is by no means easy. Most people have mortgages, children to support, bills to pay. How do you they gain new skills when they can barely put food on the table?  I believe this is one of the most important issues we face in the coming decades. Because technology isn't going to take a breather. It isn't going to stop at this point and say in effect, "Time-out to catch up." The engine of creative destruction will continue to inexorably plow forward. The single skill that everyone should learn is the ability to continually re-educate ourselves. Obsolescence is not a theoretical discussion. It is critical to putting food on the table.

Technology contributed to this election in more subtle ways than simply displacing workers with automation. The very nature of new, computerized technology allowed financial institutions to play fast and loose with our money in unprecedented new ways. The result was the financial meltdown.  But that same technology provides the ability to attract foreign investments and allows more effective competition in global markets. But if you just lost your home to a mortgage foreclosure, foreign investments seem irrelevant. It feels like an economic problem, not a technology issue.

So where do we look for relief from problems that are enabled by new technology? Still newer technology will bring some relief but also new problems.  We will need everyone to understand these issues more clearly. We will need the means to continually redevelop job skills. We will need better schools for our children that prepare them for this exponentially-changing world. We will need more ways to retool in mid-life. We will need the leadership at every level - business, government, community - that helps us to manage the inevitable changes ahead.

While I might sound naively utopian, I believe that it can be done. Why? Because we have done this over and over again in our history. Think of the changes that occurred when manufacturing was first industrialized in the 19th century. Think of the impact of electrification, the automobile, and the internet. All these have made our lives immeasurably better. But they made many skills obsolete. We don't need telegraph operators or buggy whip makers. We have managed our way somehow through the changes. We will continue to do so. It has never been easy. But I believe in technology and I believe even more, I believe in people's ability to adapt.

That Should Still Be Us

I saw an article in our local paper, the Raleigh News and Observer, entitled, Industries Fear New Wage Rules. The article was exploring the new wage rules that are being imposed by the Department of Labor on industries that hire immigrant workers on H2-B, temporary work visas.  Wages are projected to increase, on average, almost 50 percent - from $7.43 an hour to $11.18 an hour under the new rules. The higher wage is in line with the minimum wage paid in most regions. The reporter interviewed a number of small industry owners such as oyster processors, reforestation services, and even hotel owners for the impact of the upcoming change in the law. Not surprisingly, the owners are not happy, feeling that the increase in the wages they will have to pay will drive many of them out of business. Not a good deal.

But what struck me in the story was a couple of paragraphs in the article:

Employers say that they rely on foreign workers for the dirty, back-breaking tasks that Americans aren't willing to do - even with the current high unemployment rate.  And, they stress, they're required to document their efforts to hire Americans before the government permits them to hire foreign workers.

Further on, the article states:

Susan Pentz, 60, who along with her husband owns the 18-room Harborside Motel on Ocracoke Island, has been bringing in two housekeepers each tourist season for the past decade. She turned to foreign workers, she said, after struggling to hire locals and discovering that those she was able to hire soon quit or showed up only when they felt like it. "The bottom line is, I ended up cleaning the rooms because... no wanted to do that kind of manual labor," Perez said.

I read this article just after I finished reading Tom Friedman's and Michael Mandelbaum's new book, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back. The authors of the book are trying to get us to focus on the multiple forces are in play that are causing us to slide from the leadership position we have enjoyed since at least the end of World War II.



The Big Challenges in their minds are:

1. Globalization and  the Information Technology Revolution
2. The Return of Strong Middle Class Jobs
3. Rising National Debt and the Deficit
4. The Need for Green and Clean Energy

They spend quite a bit of time documenting each of these areas in what amounts to a rehash of other news articles and their own past opinion pieces. Still, the case is compelling that these are. indeed, major issues that need to be addressed.

To address these issues, they outline what they call the Five Pillars of Prosperity:

1. Providing much better public education for more and more Americans
2. Continuing to build and modernize our infrastructure
3. Keeping America's doors open to immigration
4. Government support for basic R&D
5. Implementing limited but necessary regulation on private economic activity

The authors make the case that we basically got fat and happy when we won the Cold War.  At just that moment, we should have been redoubling our efforts to compete in a global economy. Instead, we borrowed our way to an unsustainable way of life.  But the bills have now come due on both a personal and national level. Worse, the current political system is so broken as to prevent any meaningful action to address the Big Challenges. 

Their solution? They think we need a strong, centrist, third-party Presidential candidate. They acknowledge from the outset that the candidate most likely won't win. But the candidate could force whoever does win to take note of their more centrist platforms. They even suggest three past third-party candidates who did just that - Theodore Roosevelt and his Bull Moose candidacy to continue to build Progressive reforms in 1912, George Wallace in 1968 who forced Washington to pay attention to the South, and Ross Perot in his 1992 bid to address national budget deficits (they didn't mention Ralph Nader).  Each of these candidates caused the incoming President to enact reforms that the Third-Party candidate strongly campaigned to bring to the nation's attention. The authors call this strategy political Shock Therapy. 

And what does all this have to do with the history of technology? Everything. This country was built on the backs of immigrant labor manning the steel mills and garment sweatshops. The entrepreneurs who built American business developed countless new technologies that changed our way of life. Think telephones, automobiles, televisions, personal computers, and cell phones. To make all of these objects that we now take for granted required more and more skilled labor in the factories. A Middle Class with rising expectations that their lives would be better, and their children's lives better yet, was born, at least in part from a strong public education system. By comparison, for the last decade, data indicates that the Middle Class has not advanced economically one dime. In fact, they may be worse off than they were ten years ago.

Technology and democracy have always played key roles in making the United States a place where people wanted to live. For many in the Third World, it still holds that attraction. But I agree with Friedman and Mandelbaum - something needs to change and change fast. We are well past the dithering stage. 

The immigrant workers who come to North Carolina to take temporary jobs are looking for a better life, just as millions of immigrants did before them. They are willing to do what Americans are not, and I'm not just talking about the menial jobs they do. They are willing to leave their home country and families to try to make a little better living than they can at home. How many of our own, even highly-educated people, are willing to leave their country for better opportunities in China or India?  Not as many as those who come the other way for poor wages and lousy living conditions. 

Let's try to get technology back to producing the jobs we need to help all of us be in the position where we can look forward to a better future.  We are still the best hope for a brighter world. 

Grand Challenges: Keys to Future Training

How do you know when a new technology is becoming mainstream?  Conversely, what trends can you afford to ignore?  Where are the signals that suggest permanence - or at least a long run?  I wouldn't put my money on media hype.  The New-New can very quickly be about as appetizing as yesterday's oatmeal.

One sure indicator of a technology that is here to say is the emergence of training programs.    When employers are looking for skilled people, it is safe bet that the early risks of new technologies have passed.

If you look back at technology history, you can see the pattern.  In the late 1400s, the craft of printing exploded.  Printing was taught as a legitimate craft complete with guilds and master craftsmen.  In the 19th century, engineering emerged as a recognized discipline that was capable of far more than what had been the domain of the earlier military engineers.  Huge public works like the Erie Canal were built in the early 1800s by self-taught surveyors.  By the latter half of the century engineering, lead by civil engineering, was a mainstay at many larger colleges.  Specialty schools were founded which focused solely on science and engineering (e.g., MIT, CalTech, RPI, etc.).  In the last thirty years the emergence of the discipline of computer science has attracted students who wanted to work on the cutting edge of technology.

So what are the new training programs that are emerging that foretell the next wave of mainstream technology?  A quick scan of leading technology universities hints at some directions but one organization that cuts across many of the leading institutions is the National Academy of Engineering.  The leadership of the NAE has pulled together a list of what it calls Grand Challenges that represent some of the major issues facing our global society.  Here's the list:

1. Make solar energy economical
2. Provide energy from fusion
3. develop carbon sequestration methods
4. Manage the nitrogen cycle
5. Provide access to clean water
6. Restore and improve urban infrastructure
7. Advance health informatics
8. Engineer better medicines
9. Reverse-engineer the brain
10. Prevent nuclear terror
11. Secure cyberspace
12. Enhance virtual reality
13. Advance personalized learning
14. Engineer the tools for scientific discovery

When I looked over the list, it didn't seem to me that all these challenges were defined from the same altitude.  Some are very broad (e.g., prevent nuclear terror), while others are down in the trenches (enhance virtual reality).  But some broad themes emerge and these would be good bets for training for the future.  I would categorize the themes as energy, the environment, better health care, security, and retooling learning.

Energy and the environment are no brainers.  If we don't start to take these seriously, we will be in a world of hurt. The trick is to move mega-issues like these down into actionable projects which demand trained people.  There is, however, the little matter of who will write the paychecks?  The most sustainable solution is for private enterprise to emerge as a leader but at this stage it will take a public-private partnership to prime the pump.

Better health care is not new but two forces are coming into play to change the game.  The first is the diminishing viability of the old health care model.  This encompasses everything from HMOs to the pharmaceutical drug discovery model (which, as they say, is busted).  The cost increases in the current model are just not sustainable.  But help may be on the way in the form of sophisticated heath informatics to outline better and more cost-effective treatment protocols.  Bioinformatics is at the core of genomic medicine.  Computational power will have even higher leverage in health care in the future.

Another theme in the Grand Challenges is retooling learning.  Again, forces are in direct collision.  The current public education system in this country is failing miserably.  Government initiatives that demand uniform testing may be of some help but the bigger problem is that society, and particularly the family, are being redefined in the Age of Globalization.  On the positive side, virtually every college in the country now has so-called distance learning.  If you don't care about college credit, they even give away courses for free on the web.  The Gates Foundation is focusing billions on improving public education as they research new tools and techniques.  In the end, however, education takes individual concentration and effort.  No amount of technology replaces the desire to learn.

If I were going to college today, choosing a path from the Grand Challenges list would be a good place to start.  In the end, however, it is good to remember that every training and college program is willed into being by a demand for people with particular skills - skills where the demand outstrips the supply. We need to do all we can to make sure the demand is there.  The supply will follow naturally.

TBTI (Too Big To Innovate)

TBTF  The acronym, TBTF (Too Big To Fail), is everywhere these days.  It describes in a nutshell the problem with companies, especially banks, that are so large that their failure would wreck the economy.  Fearing that a number of banks fit this category, the Fed and the Treasury bailed them out last fall.  It is puzzling to me how banks that were considered TBTF then could be allowed to continue without restructuring now.  Why would we do nothing to restructure these institutions to bring them down to a scale where they are not TBTF?  No business should be allowed to grow so large that its very size should make it a candidate for a Federal bailout - or threaten the economy as a whole.

TBTI These mega-banks make me wonder about many other U.S. companies that may not be TBTF but are TBTI (Too Big To Inovate).  What do I mean by TBTI?  General Motors is a great example.  GM grew to such a massive size that it was no longer in touch with the market.  The senior executives of GM felt that they set the market.  What was good for GM was good for the country.  The arrogance that comes with size is a classic symptom of companies that have become TBTI.  Innovation died at the hands of finance MBAs who drove the company to make bigger and fancier SUVs, who decried any new approach such as the EV-1 (electric car) in favor of the Hummer.  Who tried to fend off the Japanese automakers with tariffs rather than increase their own quality. Who spouted the corporate line about "increasing shareholder value."  In a nutshell, GM quit listening.  The executives were into complete entitlement - corporate jets, country club memberships, and golden parachutes.  But who would want to bail out?  It was so much cozier inside the corporate tower where reality could be blithely ignored.

But my comments are not limited to General Motors.  Many highly-respected Fortune 500 companies have moved beyond the glory of their growth years and into TBTI.  To be fair, there is a lot of lip service provided on the topic of innovation but most of it is just that.  Whether you think of GM or a host of other American icons, the sad fact is that most of them have become far more interested in "protecting the corporation" than in innovating.  Scale does that to you.  When you are big enough to become a target for significant lawsuit awards, you can't help but develop a hunker-down mentality that keeps you away from anything that might be construed as risky (aka, innovative).  When you become that large, you can't help but develop a bureaucracy and middle management that is more interested in the competition for self-advancement within the company than in serving the customer.  You can't help but develop an organizational structure that walls off departments and makes customer responsiveness way too limited.  You can't help but develop a senior management that wants to hold onto the reins of control in an ever tighter manner lest someone lower in the organization take an unwarranted risk.

TBTI comes most easily when you forget what made you large in the first place.  Growth came from customers who found the company's product or service to be worth the money and better than the competitions'.  Dollars to doughnuts, innovation played a part in that early growth phase.  After the struggle to survive subsided and the first long march to profitability had been completed, management turned its attention to a different task: making more of the stuff that sold so well and making it more efficiently in order to make more profit.  After a long struggle, it is natural to want to take the easy road for awhile.  The trouble comes when you think that the easy road is the only road, when the hard work of innovation becomes too risky, when today's profit is better than next year's growth.  At this point, companies become TBTI.

What to do about companies that are TBTI?  I would suggest a similar therapy to those who are TBTF:  get smaller.   But the kind of getting smaller is quite different between these two corporate pathologies.  For companies that are TBTF, the goal is breaking the corporation up into autonomous pieces that are able to survive independently - and below the TBTF threshold.  The goal for companies that have become TBTI is slightly different.  The corporation as a whole doesn't need to be broken up but the business units within the company need to be segmented down to a size and given enough autonomy that decisions once again happen more at the business unit level than the corporate level.  Innovation is unleashed by giving it oxygen in the case of business units, resources and autonomy.  Businesses that are close to the street will know what is needed to please their customers.  Corporate headquarters will remain largely clueless.  This will, of course, take guts on the part of the senior management team.  It will mean trusting their business unit management teams once again.  It will mean being willing to not have a knee-jerk reaction to protect the corporation first.  It will mean keeping the business units small enough (usually less than 300 people) that the players know each other by first name and know what each is capable of without doing an HR Performance Appraisal.

The irony of radical surgery on the TBTF banks and automakers is that they are likely to become more innovative.  Not in the smoke-and-mirrors innovation of derivatives and CDOs but true innovation that adds value to their customers and not just the management team's bonuses.  I think E.F. Schumaker was right, small is beautiful (not to mention functional, innovative, exciting to work for, and growing).  I don't know about you but I have had enough of Big for awhile. Let's hear it for Small.

The Fire of Genius

The patent system... added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.
Abraham Lincoln, Second Lecture on Discoveries and Inventions (Feb. 11, 1859)

This year, the focus of President’s Day falls especially brightly on Abraham Lincoln as we celebrate the 200th anniversary of his birth on February 12, 1809. By one reckoning, over 16,000 books have been written about him. Lincoln was indeed a great man and arguably our greatest president.

Great presidents are often defined by the challenges of their times. Theodore Roosevelt, himself a great president, was quoted as saying of Lincoln:

If there is not the war, you don't get the great general; if there is not a great occasion, you don't get a great statesman; if Lincoln had lived in a time of peace, no one would have known his name.

That may not do justice to Lincoln for clearly there is more than circumstances that define a great president. I think one of the defining characteristics is a deep intellectual curiosity coupled to an inclination towards practical action. Washington was a trained surveyor, a military leader, and a statesman. Jefferson was a true intellectual who read widely in virtually every field of knowledge. He loved novelty and invention and he was a man who was deeply engaged in the events of his day. Theodore Roosevelt was a writer and historian before he was President, but he also was a military commander, a cowboy, and an adventurer. Franklin Roosevelt invented many advances in the treatment of polio when he formed the Warm Springs Clinic in the 1920’s.

But back to Lincoln. He is the only President to hold a patent (Patent No. 6469 for the invention of a means to lift steamboats over shallow river snags). Lincoln was always curious about new technology. He studied virtually every new machine he came in contact with and was the first President to use the power of instant communications (the telegraph) to direct a military campaign. During the Civil War, he haunted the local telegraph office and eventually had a telegraph installed in the White House. U.S. News and World Report has an interesting article about Lincoln in the current issue that says that if Lincoln were alive today he would fight just as hard as Obama did to keep his Blackberry. The point is not that Lincoln or any other great president was a geek but rather that each had a wide and deep curiosity and intellect and embraced the new and the novel. They recognized the value of the “fire of genius”. That is surely part of what made them great. The advance of technology depends on our leaders as much as it does on great inventors and innovators.

J. Robert Oppenheimer: Great Leaders Are Made, Not Born

Recently, I watched a riveting documentary on the life of J. Robert Oppenheimer on Public Television's American Experience. The program covered the span of Oppenheimer's life but focused in particular on what the film-maker termed the Security Clearance Trial in 1954. Oppenheimer's reputation and sense of self-worth were destroyed by the verdict of that trial (really more a hearing than a true trial). But the program made clear that the verdict had been decided in advance by Oppenheimer's enemies. In particular, Lewis Strauss, a powerful industrialist and head of the Atomic Energy Commission who wanted to silence Oppenheimer for taking positions that Strauss opposed. Strauss believed in power, the power over men and the power over nations. He wanted a nuclear arsenal so vast that the Soviets would never dare use their own nuclear weapons. As a result of the resulting arms race, the U.S. went from possessing a few hundred atomic weapons in the 1950's to over 70,000 thermo-nuclear weapons at the peak of the arms race in the 1980's. Oppenheimer was arguing for limitations on these weapons which clearly had the power to destroy humanity.

While Oppenheimer was the victim of the vendetta to destroy his reputation, the film makes it clear that he was at best a difficult person to live with. Brilliant and introverted, he used his intellect to brow-beat his students and other physicists who didn't measure up to his standards. Both before World War II and after the war, he was arrogant and aloof, a person who was never comfortable with himself and covered up that lack of self-esteem through his arrogance.

But during World War II, Oppenheimer, who had never managed anything, not even an academic department, was given the job of leading the scientific team of the Manhattan Project. He absolutely excelled in this herculean management task. How was that possible? How could someone who could barely get along with people, who was disliked and who distanced himself from others change almost completely into a team player, a cheerleader, a man who could add good suggestions to solving almost any problem, a man who even the academic prima donnas (excepting Edward Teller) could work for?

The film doesn't answer that question but it gives some hints at the answer. Oppenheimer knew that the Manhattan Project and his role in it were going to change the course of history. His idealism called forth his best qualities to lead a team to produce an atomic bomb before the Germans did so. He was the intellectual equal of the brilliant people whom he managed - and they knew it.

Some time ago, I read an interesting book by Warren Bennis and Patricia Ward Biederman entitled Organizing Genius: The Secrets of Creative Collaboration. Bennis and Biederman identified what they called Great Groups, teams of people that came together and accomplished extraordinary things. The original Apple Computer team was one example. So was the Skunkworks at Lockheed Aircraft. Another of their examples was the Manhattan Project. Here are the distilled take-home lessons from the book:

1. Greatness starts with superb people.
2. Great Groups and great leaders create each other.
3. Every Great Group has a strong leader.
4. The leaders of Great Groups love talent and know where to find it.
5. Great Groups are full of talented people who can work together.
6. Great Groups think they are on a mission of such importance it is almost a mission from God.
7. Every Great Group is an island – but an island with a bridge to the mainland.
8. Great Groups see themselves as winning underdogs. They believe they are up against either a real or imagined establishment.
9. Great Groups always have an enemy. The enemy may be imaginary but it builds a sense of cohesion within the group.
10. People in Great Groups have blinders on.
11. Great Groups are optimistic, not realistic.
12. In Great Groups the right person has the right job.
13. The leaders of Great Groups give them what they need and free them from the rest.
14. Great Groups accomplish what they set out to do.

Perhaps the biggest lesson that Bennis and Biederman outlined was that great work is its own reward. The authors also highlight the fact that by their very nature Great Groups are time limited. When the job is done, the group has no choice but to fragment and the people move on.

What does this have to do with the film on Oppenheimer? I think it reinforces some of the messages from the book. Oppenheimer was a superb intellect. His own capacity as a great leader was created even as he himself created the Project.

The real leader of the Manhatten Project was General Leslie Groves. He especially embodied principle number 13: he gave Oppenheimer and his team what they needed and got everything else out of the way for them.

Maybe the bottom line on this for me is that you can never really be certain what someone is capable of doing. The circumstances, the other members of the team, the mission of the group all interact to produce sometimes surprising and, more rarely, astounding results. I take some comfort from this. Maybe in the right circumstances, the rest of us can also rise to greatness.