Technology – Page 53 – artdiamondblog.com

Tom Peters: Over-the-Top Schumpeterian

Source of book image: http://www.amazon.com/gp/product/customer-reviews/078949647X/ref=cm_cr_dp_2_1/104-2835260-2878345?ie=UTF8&customer-reviews.sort%5Fby=-SubmissionDate&n=283155

Tom Peters became famous as the co-author of the business classic In Search of Excellence (1982). His Re-imagine! is exuberant, optimistic, exaggerated, and stylistically over-the-top. I find it fun, bracing, entertaining, and sometimes edifying. If you like the prose of The Cluetrain Manifesto and Gilder’s Telecosm, then you may also like Re-imagine!

Here is an early, very brief passage:

(p. 9) My overall vision, in brief: Business is cool. It’s about Creativity and Invention and Growth and Service. It’s about Adam Smith’s "hidden hand." And Nobel laureate Frederick Hayek’s "spontaneous discovery process." And economist Joseph Schumpeter’s "gales of creative destruction." At its best, it’s about building things that make life less burdensome than it was in medieval times. About getting us beyond—far, far, far beyond—the quasi-slavery of the Middle Ages, the indentured servitude of the first 150 years of the Industrial Revolution, and the cubicle slavery of the last three-quarters of a century.

Yes, business is cool.

(Or at least it can be.)

The citation to the book is:

Peters, Tom. Re-Imagine! London: DK, 2003.

(Note: the italics in the above passage appears that way in the original.)

Job Hopping May Aid Technological Experimentation

When employees jump from company to company, they take their knowledge with them. ”The innovation from one firm will tend to bleed over into other firms,” Professor Rebitzer explained. For a given company, ”it’s hard to capture the returns on your innovation,” he went on. ”From an economics perspective, that should hamper innovation.”

He found a possible answer to the puzzle in the work of two management scholars, Carliss Y. Baldwin and Kim B. Clark. In their book ”Design Rules: The Power of Modularity” (MIT Press, 2000), they argued that when there is a lot of technological uncertainty, the fastest way to find the best solution is to permit lots of independent experiments. That requires modular designs rather than tightly integrated systems.

”By having a lot of modular experimenters, you can take the best, which will be a lot better than the average,” Professor Rebitzer said. Employee mobility may encourage productive innovation, as people quickly move to whichever company comes up with the best new technology.

. . .

To Professor Rebitzer’s surprise (though not his co-authors’), it turns out that Silicon Valley employees really do move around more often than other people. The researchers looked at job changes by male college graduates from 1994 to 2001. During that period, an average of 2.41 percent of respondents changed jobs in any given month.

But, they write, ”living in Silicon Valley increases the rate of employer-to-employer job change by 0.8 percentage point.”

”This effect is both statistically and behaviorally significant — suggesting employer-to-employer mobility rates are 40 percent higher than the sample average.”

For the full commentary, see:

VIRGINIA POSTREL. "ECONOMIC SCENE; In Silicon Valley, Job Hopping Contributes to Innovation." The New York Times (Thursday, December 1, 2005): C4.

A PDF of the paper by Rebitzer and colleagues is downloadable at: http://www.federalreserve.gov/Pubs/feds/2005/200511/200511abs.html

The book Postrel praises, is:

Source of book image: http://www.amazon.com/gp/product/customer-reviews/0262024667/104-2835260-2878345?redirect=true

Gateway Features artdiamondblog.com

Source of graphic: online version of The Gateway article cited below.

The Gateway, the student newspaper at the University of Nebraska at Omaha, ran a nice feature article on artdiamondblog.com on July 18, 2006, as the first installment of a projected series on blogs created by members of the campus community.

If you click the citation below, you will arrive at the online version of the feature:

Reed, Charley. "Meet the Blogger: UNO Professor Art Diamond." The Gateway (Tues., July 18, 2006): 3.

For your convenience, the text of the feature also appears below.

Continue reading “Gateway Features artdiamondblog.com”

Internet Increases Variety of Goods, Services, and Culture

Source of book image: the WSJ review cited below.

According to Mr. Anderson, technology is not just accelerating the delivery of traditional pop culture but affecting the choices we make. The key to such change is a phenomenon he calls "the long tail."

In a traditional graph of sales and demand, there is a stratospheric swoop upward where hot products and services are tracked, and a long descending line tracing the less spectacular performance of low-volume also-rans. For years, these outliers fell off the edge of the market or held only a marginal position, with minimal profits. These days, though, technology has allowed such niche interests to thrive, finding steady customers and rising levels of interest.

For the full review, see:

STEVEN ZEITCHIK. "BOOKS; A Nichefied Mediaquake; Technology has revolutionized distribution, but doesn’t talent still matter?" The Wall Street Journal (Sat., July 8, 2006): P8.

Anderson’s book highlights an important result of the internet revolution: the increase in the variety. In an earlier academic article, that discusses and measures this effect, Erik Brynjolfsson and his co-authors (see below) looked at the effects of Amazon.com on consumers. They found a substantial benefit to consumers from lower book prices, due to more competition, and better information. But their surprising result was that they found a much larger benefit to consumers from the greater variety of books that Amazon.com makes readily available.

The darkened long tail in graph below roughly represents the books available through Amazon that would not be available in even the very largest ‘bricks-and-mortar’ book store.

There are important implications for both readers and writers. Readers are more likely to find the kinds of books they want. Writers are more likely to find a sufficient readership to be able to sustain themselves through their writing.

Source of graph is p. 1589 of: Brynjolfsson, Erik, Yu (Jeffrey) Hu, and Michael D. Smith. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers." Management Science 49, no. 11 (2003): 1580-96.

The citation for the Anderson book is:

Anderson, Chris. The Long Tail. Hyperion, 2006. (238 pages, $24.95)

Test That Showed No Life on Mars, Now Also Shows No Life on Earth, Either

One of the Viking landers on Mars. Source of photo: http://www.msss.com/mars/pictures/viking_lander/viking_lander.html

When scientists announced Monday that the search for life on Mars 30 years ago may not have been quite the bust it has long been portrayed, it didn’t mean that the mission had missed any microorganisms, let alone advanced life forms. But it did underline the growing sense that decades of assumptions about extraterrestrial life need serious re-examination.

In 1976, scientists studying data sent back by the Viking landers were quick to dismiss life on Mars. . . .

. . .

Some three decades later, more-sophisticated instruments have shown that the Vikings couldn’t have detected organic molecules even if any were present. When scientists fed soil from the Atacama Desert of Chile and Peru, and the Dry Valleys of Antarctica, experiments like those the Vikings conducted came up empty. Yet, new techniques show the samples contained 10 to 1,500 micrograms of carbon per gram.

"If we knew this 30 years ago, our interpretation of the Viking results would have been very different," says Rafael Navarro-González of Mexico’s National Autonomous University, who led the study published in Proceedings of the National Academy of Sciences.

For the full story, see:

SHARON BEGLEY. "SCIENCE JOURNAL; Scientists Revisit Data On Mars With Minds More Open to ‘Life’." The Wall Street Journal (Fri., October 27, 2006): B1.

Entrepreneur Risks His Money; Government Risks Yours

George B. Kaiser. Source of photo: http://www.forbes.com/finance/lists/10/2003/LIR.jhtml?passListId=10&passYear=2003&passListType=Person&uniqueId=OXNB&datatype=Person

(p. A1) In 2002, Kathleen Eisbrenner, then an executive at El Paso Corp., spent months trying in vain to find a buyer for the company’s novel technology for importing natural gas.

In February 2003, she left for a vacation in Cancun, convinced that El Paso would be forced to abandon the project. As she sat on the beach one afternoon, she got a call on her cellphone. A colleague had a message from an intermediary, who said he had an "interested buyer," identified only as a "Midwest billionaire."

"It’s Warren Buffett calling," she recalls telling her husband as they clinked pina colada glasses together in celebration. "I was absolutely sure."

But it wasn’t Mr. Buffett. It was another billionaire named George B. Kaiser.

. . .

(p. A6) . . . , Ms. Eisbrenner called Nicolas Saverys, the chief executive of Belgium-based Exmar NV. Exmar was building two of the new-style LNG vessels. Ms. Eisbrenner gushed that there was a wealthy buyer. Mr. Saverys was initially skeptical. He changed his mind in late February 2003 after meeting Mr. Kaiser in New York. "At last, I was talking to someone who was putting his own money at stake," he says.

Mr. Saverys sealed the relationship by presenting Mr. Kaiser with a box of pralines from Belgian chocolatier Pierre Marcolini at their second meeting. Mr. Kaiser, an avowed chocoholic, returned the favor a couple of weeks later in Tulsa, giving Mr. Saverys a box of candy made by Christine Joseph, a Tulsa chocolatier who also was born in Belgium.

Convinced that Energy Bridge could work, Mr. Kaiser agreed to take over the business, closing the deal last December. El Paso paid him $75 million; in return, he assumed a $120 million obligation to Exmar. El Paso also agreed to pay to install the underwater pipeline connection that carries the gas from the ship to existing pipelines in the Gulf of Mexico.

The bulk of the $660 million Mr. Kaiser invested went to modify three specially equipped tankers and to charter them for 20 years. If Energy Bridge opens on time in January, it will be at least two and a half years ahead of any new terminals being developed by other energy companies. In addition, civic leaders in Massachusetts and Rhode Island, eager to keep LNG terminals and tankers far from the mainland, are encouraging Mr. Kaiser to build an offshore tanker-based project along the Atlantic coast of the U.S.

Mr. Kaiser, who declined requests for an interview but answered some questions by e-mail, concedes he doesn’t like "taking a risk on an undemonstrated technology." But he says that the chance to import natural gas quickly was "such an obvious and alluring business opportunity" that he felt compelled to get Energy Bridge into operation. He’s betting that new LNG-export facilities expected to come online next year in Egypt, Trinidad and Nigeria will create enough extra supply to provide him with ample LNG.

. . .

He says he acquired Energy Bridge as a challenge. "I don’t gain much pleasure from personal expenditure or recognition," he wrote in an e-mail. "And any gains I make from the enterprise will accrue to charity. But I enjoy problem solving and I want to keep my brain active to forestall (or at least diminish) atrophy."

For the full story, see:

Russell Gold. "Liquid Assets: A Billionaire Takes a Gamble To Fix Natural-Gas Shortage; Mr. Kaiser Plans to Shift Processing Onto Tankers, Avoiding Terrorism Fears; A Deal Sealed With Sweets." The Wall Street Journal (Fri., July 23, 2004): A1 & A6.

(Note: ellipses added.)

Middle Class Living Standards Have Risen

(p. C1) ONE of the most influential political books of the last few years has been ”What’s the Matter With Kansas?” by Thomas Frank. Published during the 2004 campaign, it neatly captured the Republicans’ success in using social issues to attract blue-collar Kansans who don’t really benefit from Republican economic policies.

”All they have to show for their Republican loyalty,” Mr. Frank writes, ”are lower wages, more dangerous jobs, dirtier air, a new overlord class that comports itself like King Farouk,” and a culture in ”moral free fall.”

The book was a New York Times best seller for 35 weeks.

But close inspection uncovers a big problem with Mr. Frank’s economic analysis. Wages haven’t been falling in Kansas. Up and down the economic spectrum, they have been higher in the last few years than they were at any point in the 1980’s or 90’s, according to inflation-adjusted numbers from the Economic Policy Institute. The median Kansas worker made $13.43 an hour in 2004, 11 percent more than in 1979, which might help explain why many people don’t vote on bread-and-butter issues anymore.

Now, an 11 percent raise over the course of a generation — which is similar to the national increase — is (p. C10) not especially impressive. It’s certainly smaller than the increase workers received in the 25 years leading up to 1979, and for the last few years, wages have not risen at all. But they did rise during the 1990’s boom, and pretending otherwise does not jibe with most people’s experiences.

More to the point, some other improvements have accelerated recently. In just the last 15 years, the murder rate has been cut almost in half. Many big cities are far more vibrant places than they used to be. About 33 percent of young adults get a bachelor’s degree these days, up from 25 percent in the early 1990’s. The gap between men’s and women’s pay reached its lowest ever last year. The divorce rate has stopped rising.

Many luxuries of earlier generations — owning a three-bedroom house, flying across the country, calling relatives who live overseas — are staples of middle-class life. If all this doesn’t add up to a rise in living standards, I’m not sure what the phrase means.

For the full commentary, see:

DAVID LEONHARDT. "This Glass Is Half Full, Probably More." The New York Times (Wednesday, May 24, 2006): C1 & C10.

“What Digital Divide?”

"Jazmyn Johnson, 9, recently helped her mother, Barbara, use their high-speed DSL Intenet connection at their home in Duluth, Ga." Source of caption and photo: online version of NYT article cited below.

(p. A1) African-Americans are steadily gaining access to and ease with the Internet, signaling a remarkable closing of the "digital divide" that many experts had worried would be a crippling disadvantage in achieving success.

Civil rights leaders, educators and national policy makers warned for years that the Internet was bypassing blacks and some Hispanics as whites and Asian-Americans were rapidly increasing their use of it.

But the falling price of laptops, more computers in public schools and libraries and the newest generation of cellphones and hand-held devices that connect to the Internet have all contributed to closing the divide, Internet experts say.

Another powerful influence in attracting blacks and other minorities to the Internet has been the explosive evolution of the Internet itself, once mostly a tool used by researchers, which has become a cultural crossroad of work, play and social interaction.

. . .

"What digital divide?" Magic Johnson, the basketball legend, asked rhetorically in an interview about his new Internet campaign deal with the Ford Motor Company’s Lincoln Mercury division to use the Internet to promote cars to black prospective buyers.

For the full story, see:

MICHEL MARRIOTT. "Blacks Turn to Internet Highway, And Digital Divide Starts to Close." The New York Times (Fri., March 31, 2006): A1 & A15.

(Note: ellipsis added.)

Increases in Demand for Online Video, Stabilize Prices for Fiber-Optics Lines

Source of graphic: online version of WSJ article cited below.

(p. B1) At long last, the pipes are starting to fill up.

For years, the fiber-optic communications industry has been awash in spare capacity that sent prices for data transmission plunging. Now, thanks to continued growth in Internet traffic, demand is beginning to catch up with supply in many areas of the active global network.

Still, plenty of inactive fiber-optic lines remain — the majority of the lines put into the ground or underwater have gone unused for years and can be activated on short notice and relatively inexpensively. That means the glut has not come to a definitive end and consumer prices are unlikely to rise. But at the moment, prices for sending data traffic at least appear to be stabilizing, providing a welcome reprieve for companies that operate the so-called backbone of the world’s telecommunications infrastructure.

. . .

What’s behind the increased demand for network capacity? Industry executives and Prof. Odlyzko say video sent via the Internet is a key driver. That includes the increasing distribution of movies online, many sent illegally. On local (p. B4) phone networks that reach into most homes and offices there has never been excess capacity, and carriers like Verizon Communications Inc. are spending billions to beef up local connections to handle tasks like video.

. . .

Level 3 Chief Executive James Crowe admits "our crystal ball got cracked pretty badly there" during the tech boom, but says on Level 3’s network now "there’s every sign that inventory that was up on the shelf is being drawn down and in some areas even exhausted."

For the full story, see:

MARK HEINZL and SHAWN YOUNG. "With Rising Internet Traffic, Spare Fiber-Optic Lines Fill Up." The Wall Street Journal (Thurs., April 27, 2006): B1 & B4.

Economic Efficiency Arguments Mattered in Clearing Whirlpool to Acquire Maytag

A few weeks ago, the Justice Department cleared Whirlpool’s $1.7 billion acquisition of Maytag even though the new entity would have a dominating share of the marketplace, controlling about three-quarters of the market for some home appliances.

The department justified its decision by a combination of evidence and law. That included confidential commercial information that the department says it cannot make public; a very broad definition of the marketplace to include foreign companies, some of which have yet to make a bigger push in the United States; and an expansive reading of the economic efficiency defense for permitting such deals.

The decision demoralized the career ranks of the antitrust division at the Justice Department, officials there have said. And it left private antitrust practitioners in Washington wondering whether, in light of the decision and the flurry of corporate dealers, there are could really be any mergers that this administration would challenge.

For the full commentary, see:

Stephen Labaton. "STREET SCENE: LEGAL BEAT; New View of Antitrust Law: See No Evil, Hear No Evil." The New York Times (Friday, May 5, 2006): C5.

Container Ships Revolutionized Shipment of Goods

Source of book image: http://www.pupress.princeton.edu/titles/8131.html

Virginia Postrel’s periodic column in the New York Times over the past six years, was a beacon of optimism, clarity and fresh insights on how the economy works. The excerpt below is from her last column. Presumably she is moving on to other worthy challenges, but her column in the Times will be missed.

”Low transport costs help make it economically sensible for a factory in China to produce Barbie dolls with Japanese hair, Taiwanese plastics and American colorants, and ship them off to eager girls all over the world,” writes Marc Levinson in the new book ”The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” (Princeton University Press).

For consumers, this results in lower prices and more variety. ”People now just take it for granted that they have access to an enormous selection of goods from all over the world,” Mr. Levinson said in an interview. That selection, he said, ”was made possible by this technological change.”

. . .

The idea of containerization was simple: to move trailer-size loads of goods seamlessly among trucks, trains and ships, without breaking bulk. But turning that idea into real-life business practice required many additional innovations.

New equipment, from dockside cranes to the containers themselves, had to be developed. Carriers and shippers had to settle on standard container sizes. Ports had to strengthen their wharves, create connections to rail lines and highways, build places to store containers and strike new deals with their unions.

Along the way, even the most foresighted people made mistakes and lost millions. Malcom McLean himself bought fast fuel-guzzling ships right before the 1973 oil crisis and slow, economical ships just as fuel prices turned down. ”Almost everybody who was concerned with containerization in any way at some point got the story wrong,” Mr. Levinson said.

It is a classic tale of trial and error, and of creative destruction.

For the full commentary, see:

Virginia Postrel. "ECONOMIC SCENE; The Container That Changed the World." The New York Times (Thursday, March 23, 2006): C3.

The full reference to Levinson’s book is:

Levinson, Marc. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton University Press, 2006.