In Defense of Steve Jobs

It seems that everyone with any sort of digital soapbox has felt the need to write about Steve Jobs.  I was particularly interested to read a couple of articles that tried to either make or dispel the idea that his impact on society equalled that of Thomas Edison or Henry Ford.

I think Walter Mossberg of the Wall Street Journal might have started the comparison in a very personal article he wrote about the thoughtful and personal side of Steve Jobs.  Rick Newman at US News and World Report picked up on the theme but threw mostly cold water on the comparison of Jobs to either Edison or Ford. Even the Christian Science Monitor got into the act with a followup article to Newman's.  At this particular moment in time, the loss of a leader in any field is felt acutely and the loss of someone with as many proven leadership skills as Steve Jobs is perhaps all the more strongly felt amongst the rest of us.

Of course, only history will be able to sort out the contributions of Mr. Jobs. But it seems safe to at least question some of the aspersions that Rick Newman made in his piece. Mr. Newman writes of Edison:

By the late 1800s, Thomas Edison developed an electric-lighting system that literally turned darkness to light and ushered in sweeping second- and third-order changes, from the improvement of working conditions in factories everywhere to safer homes no longer lit by candles.

Thomas Edison was a persistent, egocentric, dynamic leader of highly skilled technologists whom he employed to help create his vision for new products. (Sounds kind of like Steve Jobs to me.)  He never pursued anything without thinking about its likely commercial impact. He was a master of managing his image in the media. His work on the incandescent light was innovative not because he found a filament that could endure long durations of being heated, but because he envisioned that to make lighting successful he would have to build the whole system. This included the dynamos, the distribution wiring, the switching, and the end appliance - the electric light. That he pulled it off was a testament to his determination and persistence in the face of many, many hurdles.

Having said that, Edison didn't get it right when it came to extending his vision. He defended his direct current (DC) approach in the face of Tesla's clearly better alternative of alternating current (AC). AC power could be distributed without losses over much greater distances than could DC power. Edison even went so far as to mount a public relations campaign against AC power as being much more dangerous than DC. To prove his point, he was instrumental in the development of the electric chair for executing criminals. In the end, it took another generation of innovators beyond Edison and Tesla to make commercial lighting a reality for most people. Samuel Insull, who made commercial electricity a reality in Chicago, was the first of many of these innovators who built large electric distribution systems to bring power to the people.

Edison didn't get candles out of the home. Most people in the late 19th century were lighting there homes with either piped in gas or with kerosene. Factories were often lit by simply more windows or if night work was required, lighting was provided by arc lamps which predated Edison's invention of the lightbulb.

So who gets the credit?  Edison for the first embodiment of an electric lighting system or Tesla or Insull?  The answer is, of course, all of them, not just Edison alone.  If Edison hadn't developed his system, someone else would have done it within the next five to ten years. It was the focus of too many innovators who wanted to be first to show the new power of electricity.

Henry Ford is a different case but he also shares many similarities to Steve Jobs. Ford was neither a particularly talented machinist or even all that literate. What he did have in spades was the ability to envision a new type of automobile and the charisma and passion which attracted really good engineers to work with him to make it a reality. His first focus was not on a car for the masses but on racing cars (which were the earliest means of demonstrating automotive technology and reliability). He was a partial-founder of two automobile companies that failed to achieve his vision. It was only when he decided to be the founder of his own company - where he controlled the vision - that he began to succeed.

His first cars were not particularly different from scores of other startup auto companies. Everyone was selling to a customer who had the means to spend several thousand dollars on a car. Ford's genius was to see that if the cost of the car could be reduced dramatically, a mass market could emerge for the automobile for the first time. Ford not only hired great engineers, he hired a great business manager, James Cousins, to manage the finances of his company. Ford didn't invent the assembly line. That idea emerged from his engineers touring the disassembly lines of the Chicago meat packing plants. Ford provided the single-minded focus to pursue the dream of a mass market car when everyone else told him he was crazy. The result was the introduction of the Model T in 1908 (This was not his first model. There had already been Models A through S before the T came along).

Ford was a true innovator. He was the first to recognize the value of vertical integration in the automotive industry - owning everything from the iron mines to the steel mills to the final assembly plants in the giant River Rouge complex. Ford pioneered the five dollar day for his workers - not just to have them earn enough money to be able to afford a Model T but to get them to not quit (employee turnover on those first assembly lines was in the hundreds of percents).  Ford's vision proved to be correct and his company dominated the industry. But unlike Steve Jobs, Henry Ford did not die young. He lived long enough to have his initial vision become an impediment to Ford Motor Company's future. He would not give up on the Model T even when it was outdated and sales were plummeting. He micromanaged his son, Edsel's, period of running the company after Henry ostensibly retired. It would take Ford's grandson, Henry II, to put the company back on track.

So the traits that seem to recur in these three men of different eras and different industries are incredible vision, an awe-inspiring sense of determination, dictatorial decision-making, charisma, passion, and an ability to hire the best and the brightest and give them the environment to create. Each had the ability to see a future, not a future that others couldn't see, but a future which was holistic - one that went further than just one product to see what was needed to make it valuable to millions of people.

So in defense of Steve Jobs, I think he will, indeed, go down in history as being in the same league as Thomas Edison, Henry Ford, and a host of other visionaries who have helped to create the world we live in.  His legacy will be felt for generations in the digital devices that are the offspring of the iPods, iPhones, and iPads.  His legacy will be felt in the digital animation studios that come after Pixar.  His sense of what the market needed was truly remarkable. But even more remarkable was his willingness to bet the company on his vision - not once but over and over again.   Steve Jobs was the quintessential American Innovator.  Even though I never met the man, I will miss him.

(Disclaimer: I have been a longtime user of Apple products. I am typing this on my iMac desktop computer.)

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. 

Outside the Box

Ships have been with us for a long time. We all know what they look like - a long rectangular box with a pointed bow and rounded stern. A few structures somewhere on the top of the long box to provide a place for the crew to live and to operate the ship.  A smokestack sticks up somewhere - usually towards the rear of the ship.  What could be more ordinary?  But why does it have to be that way? Why not think, if you allow me the little pun, outside the box?

Take a look at the ship in the picture below.  Something just looks... well... different about this ship, doesn't it?  Whose slightly delirious dream was this?

Steamer A.D. Thompson
Library of Congress Collections

The ship in the picture is the A.D. Thompson and it is a class of ship known affectionately to those who sailed them as a whaleback.  Whalebacks were never used for whaling.  Most of them (but not all) sailed on the Great Lakes.  The name (nickname, really) came from the shape of the hull which looked like a whale's back sitting low in the water when the ship was fully loaded.  The name was intended to be descriptive, even complimentary.  If you look at the way the bow comes to a little flat point, you can immediately understand the origin of the other, more derogatory nickname - the pigboat.

The whaleback design was the brainchild of ship's master, serial-entrepreneur, and inventor, Alexander McDougall. McDougall was born in Scotland in 1845.  His parents emigrated to the Lake Huron region of Ontario when he was a young boy.  His father died when McDougall was only ten and he took up a variety of odd jobs to help feed his family. By his late teen years, he had signed on as a deckhand on a Great Lakes freighter.  Being talented and hardworking, he rose rapidly and got his ship master's license when he was just 25, one of the youngest captains on the Great Lakes.

In the latter decades of the 19th century, the Great Lakes were the Northern highway for bulk freight traffic as lumber, iron ore, and grain were shipped from the western regions to the population centers in the East. The Great Lakes were home to hundreds of ships.  At first, these were schooners and other forms of sailing ships, but steam engines rapidly took over as the means to power these ships.  The size of the ships wasn't initially limited by the steam engines, it was limited by the small canals, channels, and locks that the ships had to navigate.  To increase the amount of tonnage that could be hauled on each trip, smaller ships began towing small barges (sometimes called consorts). McDougall was an experienced captain and he knew the difficulties of pulling these unpowered hulls, often through large waves and high winds.  Towing a barge could be a decidedly tricky task, more-so as the weather got bad.

McDougall began thinking about how to design a better barge. He wanted the most volume for the least perimeter, the least resistance to winds and waves, and a shallow-draft design that could be moored at docks with only a limited depth of water.  His innovation was his patented hull design, later dubbed the whaleback.  McDougall built his first consort, named simply Hull No. 101, over the winter of 1887-1888.  It was a technical success. But when McDougall tried to raise capital to build more consorts using his novel design, he was met with derision by the experienced businessmen around the Great Lakes.  Undaunted, he headed to New York where he enlisted the financial backing of several Eastern capitalists including John D. Rockefeller.

Two whaleback consorts in tow out of Poe Lock
Sault Ste. Marie, Michigan
Library of Congress Collections

McDougall founded the American Steel Barge Company in 1889 and began building his cheap, efficient barges in Duluth, Minnesota. After he had built five whaleback consort vessels, McDougall moved his entire shipbuilding operation next door to Superior, Wisconsin.  In 1890, McDougall built his first self-powered whaleback steamer, the Colgate Hoyt (named for one of his first financial backers).  This ship cost just a little more than twice the cost of one of his unpowered barges and could steam at 16 knots - very respectable for its day.

In 1893, McDougall built his only whaleback passenger ship, the Christopher Columbus.  The ship was used to ferry passengers from downtown Chicago, six miles south to the World's Columbian Exposition.  Following the Exposition, the passenger ship was placed in regular service between Cleveland and Chicago.

S.S. Christopher Columbus
Only Whaleback Passenger Ship Ever Built

While McDougall's innovative vessels proved themselves to be workable, the design never caught on.  Whalebacks suffered from a few practical limitations: the curve of the hull made the hatch openings smaller than on conventional ships and barges. This also made the hatches more prone to being bent in the loading and unloading process.  The hatches were expensive to repair. The design also lacked a protected passageway below decks from the front to the back of the ship making it difficult for the crew to communicate in rough weather (remember that this was before radio was invented).  Mostly though, the design just didn't look good to the more established shipping company owners.  The American Steel Barge Company was eventually absorbed into the American Ship Building Company in the late 1890s.

McDougall, ever the entrepreneur, didn't limit himself to ship design.  He operated a company that managed over a thousand stevedores on various Great Lakes docks. He owned an insurance company that wrote policies on Great Lakes shipping. He sat on the board of directors of several electric companies. And in 1899, after selling the whaleback company, he bought the Collingwood (Ontario) Shipbuilding Company, reorganized it, and ran it successfully for many more years building conventional ships.

McDougall died in 1924.  While his vision of a new type of hull did not have the impact that he had hoped for, he was able to demonstrate that his technical ideas were highly workable.  The whaleback ships were gradually scrapped out over the years.  One, the Thomas Wilson, lies at the bottom of Lake Michigan just outside the Milwaukee harbor entrance and is a popular diving destination.

Now, only one whaleback remains in existence.  The S.S. Meteor has been slowly rusting away as a museum ship in Superior, Wisconsin, where it was built in 1896.  When she's gone, none of these daring and innovative ships will remain.  But the old photos still tell the tale of the days when the whalebacks were the talk of the Lakes.

S.S. Meteor
Superior, Wisconsin

Technology's Impact on the Land

We just returned from a week's trip to the Maine coast. This morning, we drove down the Hudson River Valley from Fishkill, New York, past the Manhattan skyline, and down the New Jersey Turnpike (it's always best to do this on a Sunday morning).

Coincidentally, I have been reading T.J. Stiles' recent biography of Cornelius Vanderbilt, "The First Tycoon."  Vanderbilt made his first fortune in steamboats and his second in railroads.  Vanderbilt first operated ferries that plied the waters between his home on Staten Island and the docks of Manhattan.  To say he led a colorful life would be an understatement.

When young Vanderbilt lived in the same environs that we drove through today, New York City had a rapidly-growing population of 40,000 people.  Staten Island was a farming community that sent produce to market across the river to New York City.  Getting from Manhattan to Philadelphia was an arduous journey that required a steam ferry, a long stagecoach ride across New Jersey, and a second steamboat trip down the Delaware. It took 12 hours... on a good day.

As I looked at the acres of freeways, the towering skeletons of ship gantries on the shores of Staten Island, the smokestacks of chemical plants and oil refineries, and the miles of dilapidated housing, I couldn't help wondering if the rise of technology has been worth it?  Have we lost our way somewhere and raced right past the Point of No Return as we built our cities and industries?

What would Vanderbilt have thought if he could see his old haunts today?  I'm not sure. Maybe he would have been fine with it.  He was first and foremost a ruthless businessman.  Vanderbilt had no problem spoiling the natural beauty and resources of his own day to make a buck.   But I wonder if the sheer scale of the change would set even Commodore Vanderbilt back a bit?  Would he see this as some scene out of a future run amok, even for someone as rapacious as he was himself?

Cornelius Vanderbilt

T.J. Stiles relates a very interesting moment in Vanderbilt's life. When Vanderbilt was middle-aged, he became desperately ill with what was thought was either pneumonia or pleurisy.  His doctor told him point blank that he should get his affairs in order because he wouldn't survive.  Vanderbilt called his family together and spoke to them from what he thought was his death bed.  One of his family later recalled his words:  "Don't be too anxious to make money, there is enough for all of you."  When the chips were down, Vanderbilt could see that the pursuit of wealth was not the most important thing even in his life.

Miraculously, Vanderbilt recovered from his pneumonia. Deathbed insights don't always stick.  He went on to become an even more hardened and calloused tycoon who took the greatest pleasure in crushing all who stood in his path.    Vanderbilt's world, the world centered on New York City, was changing forever.  It keeps on changing, of course.  Maybe the changes that come in the future will actually be more positive because there is nothing left to build on unless the old and the ugly is torn down first.  I hope that the result is not only functional and profitable, but also something that doesn't deaden the soul to look upon.

Vanderbilt lived in the days when most Americans believed in unlimited natural resources.  Thomas Jefferson thought it would take centuries to exploit all the riches of the continent. Instead, it took just over one.  We seem to learn most lessons, even the lesson of blighting the land, the hard way.  I would like to think we are at least gaining a little wisdom as we continue to mature as a nation.

When Google and Apple Are as Passe as Ford

Virtually every list of the most innovative companies in the world list Google and Apple in the top two or three slots.  Both companies are there for a reason - their products and services are cutting edge and customers can't get enough of them.   Look at the lines out the door at the Apple Store when the iPad and the iPhone4 were introduced. Look at the ever-increasing reach of Google.  From search engines, it has branched out into operating systems for cellphones (Android), web browsers (Google Chrome), and online office suites (Google Docs), not to mention Gmail, Google Books, Google Maps, Google Earth, Google News, YouTube... you get the idea.

But that edge in the cutting edge moves.  What was the cutting edge one hundred years ago now brings a yawn.  While Google and Apple bask in the warm glow of innovation accolades today, in a hundred years they will most likely be history.  I was reminded of this as I was reading Douglass Brinkley's book, "Wheels for the World: Henry Ford, His Company, and a Century of Progress."  Brinkley writes of the heady days of early Model T production when Ford couldn't build their cars fast enough:

The astounding pace of change at Ford Motor Company in 1914 made it the most glamorous, most widely discussed company in America, if not the world. It was not merely that Ford was trying so many things in so many arenas, nor even that it was succeeding with most of them.  What attracted the admiration and envy of outsiders was the brimming confidence Ford Motor exuded. The public's fascination with Henry Ford's maverick role lay in part in his overt image as an iconoclastic, oddly nineteenth-century presence in the twentieth century's most up-to-date business. It seemed that through modern industry Ford had reopened the American frontier.  His company was more than a profit-making enterprise; it was a pioneer's domain, where old assumptions about business were cast off in favor of new notions.  As on any frontier, money did not make for heroes, and Ford Motor had started with very little money.  The company did not rely on established connections, either, remaining as stubbornly independent as it had on the day it was founded. Ford Motor proved that creating a fresh new world out of the industrial domain rested on only two crucial qualities: competence and confidence. (p. 180)

If you changed Ford Motor to Google or Apple in the above quote, you would have a pretty good description of what makes these companies great today. Henry Ford reminds me most of all of Steve Jobs.  Ford was a megalomaniac with his vision of the car for the masses.  He alienated almost everyone around him including those who helped him form the company.  He began to believe that he alone was the arbiter of automobile innovation.

Maybe it takes that kind of drive and vision to have the absolutely phenomenal results that innovative companies create.  Within ten years of Ford Motor Company's founding in 1903, Henry Ford was second in personal wealth to only John D. Rockefeller.  Ford sold more cars in 1914 than the next ten producers combined!  The Model T changed the face of America as surely as Apple and Google are changing it again today.

[Photo and logos from Wikipedia]

The Forces of Creative Destruction

Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. ... The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers, goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. ...The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation - if I may use that biological term-that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about  capitalism.  It is what capitalism consists in and what every capitalist concern has got to live in.

Joseph Schumpeter, Economist, 

Capitalism, Socialism, and Democracy, 1942

I can hardly pick up the newspaper or scan the news online without seeing an article about the stagnant economy, our so-called Great Recession.  Unemployment figures remain stuck at an official 9.5% with broad agreement that the real unemployment level is somewhere between 15 and 20 percent if you factor in people who have quit looking for work.  Unemployment benefits have just been extended to 99 weeks in recognition of the persistent lack of hiring by business.  The stock market is up as corporate profits recover but businesses remain cautious about adding back workers, preferring to sit on piles of cash to tide them over if another dip occurs. Many articles suggest that the displaced workers will never be called back to their old jobs.  What is going on?

I would suggest that we are in yet another significant phase of Schumpeter's Creative Destruction.  We are seeing one economy (call it the White Collar Economy) being dismantled before our eyes and a new, as yet undefined era beginning.  Creative Destruction is not new.  It has always been part and parcel of capitalism.  Newer, cheaper, more automated means of getting any job done will displace older, manual methods of production.  It doesn't matter if you are talking about making steel or producing business invoices.  If a task can be economically automated, it will be.  And the people who did those jobs will be gone, never to be recalled.  

This is not news.  To illustrate the point, I came across a video on the Internet Archives that was made back in the 1930s. It laments the closing of the old steel mills in favor of new, more automated mills.  The people in the steel town were the victims.  They lost their jobs as the factories and their skills became obsolete.  This little documentary (produced by the Economics Department of New York University) is interesting to watch.  If you can hang in there for the full 28 minutes of the film, you can even hear a pathetic song written about a housewife's lament when her husband remains persistently unemployed.  Corny, yes. But substitute office cubicle for old steel mill and the story still rings true.

Technology creates and newer technology destroys.  It goes on and on.  We are seeing the destruction of so many white collar jobs by newer technology.  Some of these are the straight automation of tasks that real people used to do - such as telephone answering machines replacing receptionists.  Others allow people to do jobs for themselves that once required another person's skills.  Word processing software basically made obsolete the secretary and the typing pool.  Now we have EZ Passes for tollroads displacing toll booth operators, automated phone trees displacing whole product support functions, and self-checkout at the grocery story displacing cash register clerks.  Bank tellers are becoming an endangered species.  Most people (unless they live in New Jersey) can't even remember gas station attendants.  Real estate is now almost entirely a web-based activity making real estate brokers another vulnerable occupation.

So what are the people who used to do these jobs supposed to do?  Where can they still get a good job?  For any one individual, it is a tough question.  For our society as a whole it is The Big Question.  How many options do ordinary workers really have? Most job training programs are now seen to be ineffective.  The curriculum usually covers a few basic computer skills and some tips on writing resumes.  But those aren't going to cut it for companies looking for specialized technology skills or in an economy where there are five applicants for every opening. Many people lack either the education or the aptitude for technology jobs.  I read a lot about the opportunities to create Green jobs but it seems to me that most of these jobs will require the same skills as other technology jobs.

There are no easy answers.  Major shifts caused by Creative Destruction almost always leave a generation or more of economic carnage in their wake. The sad truth is that many people will never recover their old jobs or incomes. But there is no going back even if we wanted to. Somehow, we have to improve our educational system and support the entrepreneurial companies that create half the new jobs in this country. People have an amazing ability to be creative and resilient.  We need to support ideas with every tool we have at our disposal and create new ones we haven't tried yet.  Why can't micro-loans be as useful in our economy as they have been in Third World countries?  Why can't we offer more mentoring by both working and retired entrepreneurs on how to start a business?  Why can't we teach people to use more advanced technology tools like computer-controlled machinery that might give them a shot at a job?  Why can't we create a web-based Suggestion Box or forum within communities where people can contribute their ideas on how to create employment?

Next time I pick up the newspaper, I would like to read about some new ideas for dealing with unemployment,  I would like to read where our elected leaders are doing something constructive to address the problem instead of bickering with each other over political ideology.  I would like to read about people who are finding ways to re-enter the workforce, or about employers hiring people again in jobs that work in the new economy.  

Creative Destruction.  We need more Creative and less Destruction.  We can do this.  We must do this. 




[Picture credit: Ludwig von Mises Institute]

Enabling a Revolution, Enabling Wealth

I saw a column by Rich Karlgaard this morning in Forbes entitled "How the Cheap Revolution Confuses Policymakers".  Karlgaard's title is a little misleading.  His article mostly focuses on how Moore's Law has driven down the cost of all things silicon and made the resulting products cheap.  (Moore’s Law refers to the fact that the number of transistor elements on a chip have doubled roughly every two years.) Making products cheap and affordable has made some people very, very rich.  Karlgaard tries to pull biotechnology advances into Moore's Law. But it is a bit of a stretch to say that biotechnology has made medicine cheap. 

Nonetheless, I subscribe to at least part of his thesis.  Some new technology platforms change everything.  They change how we live, how we work, who is rich, and who is poor.  Some technology platforms are so powerful that they can elevate nations to world leadership and relegate others to a has-been status.  Not all new technologies do this, of course  What sort of technology platforms can have such powerful effects?

The key is to be found in technologies with the broadest power to reach deeply into our world and change areas that would have never even occurred to the original developers. Here are a few examples that pop to mind:

The Printing Press - Gutenberg developed movable type so that he could print indulgences and bibles and make a few bucks. The printing press allowed for mass communication that changed the course of history.  Do you think Johannes could have foreseen the power and reach of his invention?  The Enlightment would never have happened, or happened much more slowly, without the printing press. 

Iron and Steel Processing - The Medieval world was one built of wood and stone. The discoveries (mostly) in England of how to smelt iron and later steel cheaply and in high volume had a dramatic impact that reached into every part of the lives of people in the 18th and 19th Centuries.  Without the ability to produce iron and steel cheaply, there would have been no steam engines, no railroads, no modern bridges, ships, or skyscrapers.  Those who controlled the steel mills became fabulously wealthy.  Those who worked in the mills had lives of misery.

The Automobile - This is an assemblage of inventions and materials (including the internal combustion engine, cheap fuel, steel, and rubber) that gave everyday people the ability to travel where they wanted, when they wanted at very low cost.  Whole industries were created to build and service automobiles and trucks. The highway system changed the face of the country just as suburbs changed the nature of our towns and cities.  Who was rich?  Auto and oil magnates, steel executives, and rubber company CEOs. 

The point I am trying to make is that some inventions have the ability to have very broad utility. They have uncounted ways of being exploited for products and services and hence for profits.  If there is a way to exploit one of these technologies, some entrepreneur will find it.

I would agree with Karlgaard on how pervasive the Silicon technology has been.  Look at who became wealthy.  The list includes chip company founders, personal computer execs, internet execs, venture capitalists, and social networking company founders. Less obviously but just as importantly, the wealth of bankers and financiers is tied directly to the enablement of silicon technology. Without computing, the world of instantaneous and complex finance would be impossible. 

What will be the next powerful technology platform?  If I knew, I would have my money there and I wouldn't be broadcasting my answer.  But I don't know.  I would hazard an educated guess, however.  It will be a new material.  I don't know if that will be a nano-material or a DNA-based, self-assembling material, but it will be some sort of material that opens doors that can't even be conceived of today.  My other prediction is that this next new material technology is a long way off and will take even longer to exploit.  Fundamental technologies are like that.  

Karlgaard writes of the Cheap Revolution but all powerful technologies have made things cheap.  But not all technologies have the capability to create such a profound impact.  That's why when we experience one, it is dubbed a "revolution".  We are still riding the Information Revolution.  Who knows what the next will be called?

[All pictures from Wikipedia]

The Chicago History Journal

I recently discovered a wonderful history website written by Sharon Williams called the Chicago History Journal. I have posted here in the past about George Pullman and his sleeping car empire.  Sharon very kindly asked if I could provide something for her website which you can find here.  Sharon also maintains the Chicago History theme on Facebook, Twitter, and YouTube.  Check them out and thank you, Sharon!

My earlier post on Pullman:

George M. Pullman: Force for Progress or Corporate Despot?

Image:

From Sharon William's Chicago History Journal

The Aging of Innovation in America

[Image of Edison's lightbulb from patent application of 1880]

As individuals, it is pretty easy to know when we have passed our prime.  If we are lucky, the first sign isn't that we read our obituary in the paper.  It shows up in little things: pants that seem to have shrunk, skin that seems to hang a little looser, difficulty in remembering what I had for dinner last night, stairs that seem to have gotten steeper.  We fight it or we deny it, but biology has the last word.  And everyone passes beyond their prime at some point.

How about an economy, or more specifically, the American economy?  Nations grow and decline like all things based on living systems.  Where's the United States on the curve?  What is the equivalent of a "sagging chin line" for an economy?  Three things come immediately to mind.  One is the rate of growth of the economy, with the operative word being "rate".  This is the good-old Gross Domestic Product, or GDP, statistic. A second is innovation, which is one of the key drivers of growth. This is a little trickier to measure objectively.  Patents might be a measure but most studies say they are not a good surrogate for innovation. The third is a steadily increasing personal income.  If people aren't finding themselves any better off over time, people catch on to that fact quickly.

I have seen a number of articles recently that make me seriously worry about where we are as far as the country's economic maturity is concerned.  We seem to be, more and more, rushing into a period of serious aging as though we had blown the diet and stopped going to they gym for a little toning. The most recent article I saw was Business Week's annual list of the 50 Most Innovative Companies.  In an accompanying article, the Business Week reporters, Michael Arndt and Bruce Einhorn,  wrote:

The shift [in U.S. innovativeness] is more apparent when this year's class is compared with the first ranking in 2005. Back then, only six of the Top 20 were headquartered outside the U.S., vs. 13 of 25 this year. In addition a third of 2005's American champs—such names as 3M, Starbucks, and eBay—no longer make the Top 50.

The article also reports that most management in Asian companies treat innovation as a high priority with over 90 percent stating that they plan to invest in increased innovation efforts.  U.S. managers, by comparison, are planning similar investments in only 48 percent of the companies interviewed.

It's nice to see that Apple, Google, Microsoft, and IBM are the top four on the 2010 list.  But this isn't nearly enough to offset the relative losses which show up not only in innovation rankings but in 2.4 million off-shored manufacturing jobs in the last decade.

Looking at my other two leading indicators, GDP in the U.S. has been decreasing for the past six years - well before the current recession began.  Personal income adjusted for inflation has been flat for a decade or more.

All in all, our Economic Report Card is definitely looking more like a C- than something that might get us into the National Honor Society.  But it is not enough to simply rant about needing more innovation (although venting can be useful at times).  I might have thought that the near total collapse of the auto, banking, and housing industries would raise some serious concerns about the viability of the economy and our competitiveness.  I wonder what it will really take to get us to pay attention?

In the past, the American economy grew not because there were calls from Washington or from editorials to be more innovative.  The economy grew and innovators had an impact because there were opportunities to exploit.  Innovators and entrepreneurs saw unmet needs and worked their tails off to fill the need.  It's still happening.  Apple, Google, Microsoft, and IBM all employ lots of very smart people.  The problem is that the rest of the economy, the manufacturing and service economy that pulled up the middle class has been farmed out to low-wage countries.  That's the gap that has to be filled.  How do we bring innovation to create jobs that pay decent wages for the people in the middle-class of a post-industrial society?  I don't know the answer but I think it is the right question.  That's at least a start.

Beach's Pneumatic Transit Company

In my last blog, I wrote about Rufus Porter, frustrated airship pioneer and founder of the magazine, Scientific American.  Porter founded the magazine in 1845 but by 1846 he had already sold it to Orson Desaix Munn and Alfred Ely Beach.  Munn and Beach continued to publish the Scientific American for the rest of their lives.  The magazine stayed in their families for generations.  Like Porter, Beach was also an inventor and a frustrated developer of new technology.  [Alfred Beach pictured from Wikipedia]

Scientific American's publishing offices were in New York City.  Traffic in the city was becoming unbearable in the years immediately following the Civil War.  The melee of horse-drawn carriages and trolleys mixed with pedestrian traffic made it difficult to get anywhere, especially at the morning and evening rush hours (sound familiar?).  Beach was a strong proponent of a subway system for the city.  He saw little future in talk of a steam-engine powered subway which would have all the attendant smoke and soot to contend with.  But he was very enamored with an idea that had begun in London to use pneumatic-powered tubes to move everything from mail to people.  Small tubes were being installed in stores and banks to move papers and money from one part of the building to another.  Intermediate tubes (about three feet in diameter) were being explored as a way to move packages and small freight.  Entrepreneurs in London had even proposed a pneumatic tube large enough to transport a subway car.

Beach picked up on this idea and tried to rally local officials to his cause.  Unfortunately, in the late 1860's , New York City was essentially owned by Boss William Tweed and his Tammany Hall ring.  Tweed received kickbacks from the horse-drawn trolley companies and a subway threatened that revenue stream.  Beach thought he could work around Tammany Hall by asking for a charter from the state to build two parallel intermediate-sized tubes to move letters and packages.  As this was no threat to Tweed, it was allowed to go through.  But Beech had other plans than what he was willing to put forth in his request to the state government.  

Unbeknownst to Tweed and his cronies, Beach planned from the beginning to build a demonstration subway using the pneumatic principle.  If challenged, he planned to tell people that he found it cheaper for his package test purposes to build one eight-foot diameter tunnel than two four-foot diameter tunnels.  Beach wanted as little visibility as possible for his project until it was complete.  He thought that if he could win over the public with the demonstration of a working prototype subway, he could overcome the political resistance from Tammany Hall.  He underestimated Tweed and the Machine.

Beach wanted to build his subway beneath Broadway, the main New York thoroughfare.  Beach rented the basement of the Devlin's Clothing Store building as a site to secretly begin excavating his subway.  The digging was done round the clock but the dirt was hauled out of the basement only at night.  It was placed in sacks and carried away in wagons with muffled wheels.  Beach's 21-year old son, Fred, was foreman for the digs.  Beach even invented and built a special tunneling shield to aid in the excavation.  The eight-foot diameter cast iron shield was moved forward by hydraulic jacks which could even be steered to allow the tunnel to turn corners.

After 56 days, the tunnel had been dug all the way under Broadway.  It was 312 feet long and ran from Warren Street to Murray Street.  Beach's single subway car ran on rails and was almost circular in cross-section to closely fit the circular walls of the tunnel.  It was plushly appointed and lit by on-board gas lamps.  Power came from a huge stationary fan system coupled to a steam engine.  The twin blades of the fan generated enough air velocity to briskly push the subway car through the entire length of the tunnel.  Reversing a valve on the fan system brought the car back again.  Beach even built an extravagant 120 foot-long lobby as a demonstration underground subway station. The station was ornamented with expensive furnishings, frescoes, an underground fountain, and even a grand piano.  The whole demonstration had cost Beach $350,000 out of his own pocket.

The subway was opened for public demonstrations on Feb 28, 1870 and it caused an immediate sensation.  People loved it - even if it didn't go anywhere.  Trying to capitalize on that enthusiasm, Beach applied for a charter from the state to build a longer subway system.  The resolution passed both houses but was vetoed by the governor - a Tammany Hall lackey.  But Beach didn't give up.  He was counting on public opinion and a change in his political fortunes to carry the day.  In 1872, it looked like he was going to get his break.  Tammany Hall had been exposed by the New York Times for its corruption and Boss Tweed was under indictment.  The Governor had been swept out of office in November of 1872 as a Tammany crony and the new Governor was much more favorable to Beach's ideas.  His charter granted, Beach formed The Beach Pneumatic Transit Company.

But when Beach tried to raise capital for the project, he ran into an entirely new opponent.  John Jacob Astor III owned much of the real estate along Broadway and he didn't like the idea of a subway tunnel that might cause structural problems under any of his property.  He stonewalled the project and got his friends to do the same.  Beach was by this time exhausted and out of funds.  He closed up his subway station and tunnel and abandoned the project.

Subways did not come to New York City until 1900.  In 1912, a work crew digging a new tunnel broke through into an old tunnel they hadn't known was there.  In it they found a perfectly intact subway car and a glorious underground station complete with water fountain.  Beach's subway was once again back in the limelight.  His pneumatic tunnel was mostly dug out for new construction but his efforts were recognized by a plaque that was placed in a local station.

Twice, publishers of the Scientific American had grand ideas and twice they had been thwarted from seeing their dreams realized.  Both ideas were ahead of their times.  Innovation demands viable technology, tenacity, and more than a little bit of good luck.  

Rufus Porter and the Dream of Flight

A few days ago, I stopped into the Friends of the Library Bookstore at the Sarasota Library.  I found a little book (51 pages) entitled, A Yankee Inventor's Flying Ship, which had been published in a very limited edition back in 1969.  In the book, the Minnesota Historical Society had re-published two pamphlets by Rufus Porter, which he originally published in 1849 and 1850.  I was intrigued to learn something about this man and his ideas.

People have yearned to fly for as long as they have watched the birds soaring in the breezes.  Leonardo da Vinci drew up a number of complex flying machine designs, although none of his concepts were ever built in his lifetime.  Recently (2005), a hang-glider he designed was constructed to his original specifications and it actually worked - although it was not very stable compared to modern designs.

Long before winged aircraft, balloons were the first vehicles used for manned flight.   In 1783, the Montgolfier Brothers developed hot-air balloons that were used for the first tethered and free-floating flights with people on board.  Almost immediately, there was a competing technology:  hydrogen-filled balloons.  The first successful human flight in a hydrogen balloon took place in December of 1783, only a couple of months after the Montgolfiers' flights.

Olympians and Innovators Share the Same Character Traits

I have to say it: these people are incredible.  They compete on the highest level.  They persevere through every trial and tribulation.  The new ones are constantly trying to find some sponsorships that will allow them to continue on.  They get virtually no attention for years and then they are in the spotlight and often as not, they fizzle. Olympic athletes?  You bet, but the same characteristics describe innovators and entrepreneurs.

As I am watching the Winter Olympics this week, I am struck by the personal characteristics that define people who have an all-encompassing passion to see their dreams materialize.  The Olympic athletes are constantly coming back from horrible injuries, putting in years of drudgery to perfect their abilities, and never, ever, giving up.  That kind of focus is the same thing that drives inventors, innovators, and entrepreneurs.  It is the old aphorism about being a "monomaniac with a mission."

Great athletic performances and great new innovations usually seem to burst on the scene, almost from nowhere.  Few of us see the years of dogged effort, the sweat, and the disappointment that precede that moment of glory.  Athletes that compete at the Olympic level have more than extraordinary self-discipline.  They have a natural gift of "physical intelligence" (body skills) that can be honed to a fine edge.  Innovators and entrepreneurs are also born with nascent talents that can be developed.  Levels of talent vary greatly, of course, in every endeavor.  But those blessed with great talent can do great things with their gifts.

There are talented people who are born into terrible circumstances and never get the chance to fulfill their promise.  One of the figure skaters from France had been adopted by a family after being found abandoned as an infant in the streets of Brazil.  What if he hadn't been abandoned?  Would his talents have been supported?  How many thousands or millions of others have their talents wasted?

When I think about the great innovators that I have studied, they almost always have persevered through one trial and tribulation after another to try to bring their ideas into the world.  John Fitch fought for years to see his idea for a steamboat become a reality.  Thomas Edison has reached almost mythological proportions in his search for the one right filament to make a practical electric lightbulb.  The list of innovators goes on and on.  But they all shared in the quality of perseverance.

Of course, having a single-minded focus is no guarantee of success.  Fitch, for example, finally gave up being rewarded for his steamboat innovations and died in despair and virtually penniless. The recognition he so much wanted came long after his death.  Edison was more fortunate, becoming famous in his own day. Without self-discipline, focus, and drive - the belief that it is possible to bring about real innovation - no great advances ever happen.  Most people dislike change, which gives the status quo tremendous inertia.  Moving that inertia takes smarts and a lot of hard work.

Every four years, as I watch the Winter Olympics, I get inspired all over again by the athletes' performances and their stories. It fills me with hope when I see what dedicated people can accomplish.  I think watching the Olympics should be required viewing for any would-be innovator or entrepreneur.  So should reading the stories of our past innovators and entrepreneurs.