WCBN – Interactive Technology Interview – Part 2 of 2 – 2006 Dec 19

January 9, 2007 · Posted in abundance, economics, innovation · Comment 

Part 2 of a 2 part interview. I talked about abundance, ways for Detroit automobile industry to deal with China’s increasing manufacturing dominance, unemployment, how to make things free, information technology, new ways of looking at the world.


Where are the High Paying Jobs?

January 5, 2007 · Posted in economics, innovation · Comment 

The big complaint in all the industrialized nations is they’re losing high paying jobs. But where are those jobs going? The quick response is the high paying jobs are going overseas or foreigners are coming in and “stealing” jobs. This is an easy explanation but it’s totally false.

High paying jobs aren’t moving overseas or somehow being stolen. The high paying jobs are gone. No one is getting the old high paying jobs, those jobs don’t exist.

There is a fundamental rule of human nature. We always want More, Better, For Less, with Less Hassle. That continuous drive to get more for less has caused tremendous increases in productivity. 100 years ago it took thousands of people to do what one person does today.

As recently as 50 years ago telephone companies had operators manually connecting calls. This person’s job was to plug wires on a board of connectors to make the connection between telephones. It could take 15 minutes for a call to be connected across the country. Today a device that costs $100 can make thousands of connections a second. Only a few years ago telephone companies charged extra for long distance calls. Today almost every cellular plan offers free long distance.

The job of telephone operator wasn’t stolen, or shipped overseas. That job is gone. If someone did want to do that job today they wouldn’t get paid very much. Plugging and unplugging wires isn’t valuable. No one wants to pay for a manual telephone operator.

The creation of automated switches led to new high paying jobs managing the switches. As the switches became more reliable and easier to manage even those jobs went away. Now one person can manage thousands of switches that connect thousands of calls every second. Today one person can do the work of millions. That one person does have a high paying job. But that will go away as well. It will get easier and easier to do the job and it won’t require special training.

I don’t think anyone wants people to spend all day unplugging and plugging in wires to connect telephone calls. I don’t think anyone wants to go back to paying for long distance either.

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Disruptive Innovation, Not Here

December 6, 2006 · Posted in innovation, strategy · 1 Comment 

Innovation is the big buzz word these days. Christensen’s “Disruptive Innovation” books popularized systematic innovation. Growing up in the middle of the personal computer revolution I’ve experienced first hand repeated massively disruptive innovation.Perhaps because so much innovation has occurred in the high technology industry, people associate innovation with technology. My own experience has shown me that the mental technologies, the thoughts and ideas, concepts and procedures, values and perceptions have the most potential for disruptive innovation.

Let’s look at an example. My first paid programming job was creating software to apply statistical quality control. Our software was the first time a US automotive manufacturer used statistical process control. Our software was good; it saved work and provided answers that weren’t possible doing things by hand. But they weren’t doing it by hand. They weren’t doing it at all. The big impact wasn’t the technology being used; it was that they were using it. This was the first time the US auto industry consistently measured quality and applied the results toward improving.

Today it might seem obvious to measure quality. We constantly hear about quality surveys, crash tests and measurements of all kinds and all sorts. But in the early 1980’s that was basically unheard of. Only lab coat scientists took samples and used statistical models.

Affordable computers and the software I and others created made it possible to measure like never before but the biggest step was in seeing the value and doing it. As obvious as it seems today the US auto industry simply saw no value in measuring quality. But in the 1980’s the Japanese were starting to take over and it was all because of statistical process control.

The statistical process control movement was started by Deming. Oddly enough he had gone to the US Auto Makers first. He showed them this great new technique.

Deming showed that if you measure every part you make you can learn how your process works. Once you understand your process you can predict quality problems before they happen, thus avoiding the problem and produce higher quality more reliably and efficiently. For example if you’re drilling holes your drill bit wears down. After a while it stops making the holes to the proper size and shape. But if you know how long it takes for the bit to wear out you can replace it before it starts making bad parts. So you always make good parts. There is a lot more to it than that but that is the basic concept.

When the US auto makers heard Deming’s technique they rejected it outright. They said, “Measuring everything will cost too much. Your idea sounds great but we don’t need it. We don”t have a problem with quality. We could slap chrome on a turd and customers would buy it.” The truth was they had huge problems with quality but they weren’t yet feeling the effects. Maybe in the 1950’s and 1960’s a chromed turd would sell but that would change. A huge disruptive innovation was about to take place, and they chose to ignore it.

See after World War II Japan was destroyed. They were starting from scratch. By the 1960’s Japan’s industry was functioning again but they were thought of as the low cost low quality manufacturer of “cheap” things. Today in 2006 we often apply that label to Chinese products, remember that. China is now considered the same way that we once considered Japan. So how did Japan come from being the maker of cheap junk to being the recognized leader in hi-tech and hi-quality? It was through an attitude.

After being laughed at in the US, Deming went to Japan. The Japanese realized they needed something to help them, so they were open to change. That is the first most important element of innovation. All innovation starts and ends with people. Technology is a tool; innovation is the tool in action.

The Japanese took Deming’s statistical process control and turned it into a lifestyle. So in the 1980’s when I was implementing the first SPC system at a US auto plant, the Japanese had grown past it. They weren’t just 1 step ahead they were now 2 steps ahead and starting to capture the automotive market and building new markets they owned.

The Japanese accepted that they could do better. They used this new technique then they applied technology to maximize the effectiveness.

I’ve only scratched the surface of innovation. I’ll cover more about this in future articles. I’ll explore this more when I cover the following: Google, Copyrights, Democracy and Terrorism.

Action Items:

  • Make a list of tasks you regularly perform.
  • List 5 ways you can improve each of those tasks. Ex.: faster, cheaper, easier, more options, for more people.
  • Estimate a value of having those improvements.
  • Estimate the potential loss if your competitor made that improvement and you didn’t.

Request a FREE copy of What Makes an Innovation System Complete.

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