Does a Healthy Economy Require Jobs?

January 28, 2013

At the IEDC Leadership Summit in Orlando this week, Jon Roberts will continue the conversation he began a year ago with his Future of Jobs Ignite presentation. The presentation discusses three perspectives (individual, firm, and policy) from which the term “job” can be defined to offer a historical context for our present conversation. In short, the term “job” as we understand it today suggests a specific employer-employee relationship that developed during the Industrial Revolution and has persisted over the last century.

Our notion of a “job,” however, assumes a relationship that is dissolving. Despite the gradual deconstruction of the employee-employer relationship, economic development professionals still use jobs as a metric for economic growth. If job creation is our objective, then whose job is it to create jobs? What roles should the public and private sectors play in job creation?

Jon argues that we are asking the wrong question. We should be asking: does a healthy economy even require jobs? No. Productivity is required, and that has been increasingly divorced from employment over the past 50 years. GDP per capita has more than doubled since 1960, while at the same time the share of the working age civilian population contributing to that GDP growth has increased only 4% overall in 50 years. Since 2000, the labor force participation rate has declined from its peak at 67.1% to its current rate of 63.7%.

If no one is responsible for creating jobs, and productivity is possible with fewer and fewer jobs over time, then we should ask: what are the conditions under which jobs are created? Or, more accurately, what are the conditions under which value is created? What does it mean for economic development organizations to support the creation of value? How should our evolving understanding of the labor market shape the practice of economic development?

Catch the Does a Healthy Economy Require Jobs? panel on Tuesday, January 29th, 11am-12:30pm.

Moderator: Raymond Gilley, Executive Counsel/Director, Thompson Wesley Wolfe, LLC, Orlando, FL
Maureen Collins-Williams, CDM, Director – Entrepreneurship Outreach and Regional Business Center, University of Northern Iowa, College of Business Administration, Cedar Falls, IA
Steve King, Partner, Emergent Research, Lafayette, CA
Heidi Pickman, Communications Director, California Association for Micro Enterprise Opportunity, San Francisco, CA
Jon M. Roberts, Managing Director, TIP Strategies, Inc., Austin, TX

High-Tech Factories Built to Be Engines of Innovation

December 27, 2012

By: Annie Lowrey
Via: The New York Times

High Tech Factory
SCHENECTADY, N.Y. — The Obama administration has long heralded the potential of American factories to offer good, stable middle-class jobs in an economy that desperately needs them. But experts say there might be another advantage to expanding manufacturing in the United States: a more innovative economy.

A growing chorus of economists, engineers and business leaders are warning that the evisceration of the manufacturing work force over the last 30 years might not have scarred just Detroit and the Rust Belt. It might have dimmed the country’s capacity to innovate and stunted the prospects for long-term growth.

“In sector after sector, we’ve lost our innovation edge because we don’t produce goods here anymore,” said Mitzi Montoya, dean of the college of technology and innovation at Arizona State University.

These experts say that in industries that produce complex, high-technology products — things like bioengineered tissues, not light bulbs — companies that keep their research and manufacturing employees close together might be more innovative than businesses that develop a schematic and send it overseas for low-wage workers to make. Moreover, clusters of manufacturers, where workers and ideas can naturally flow between companies, might prove more productive and innovative than the same businesses if they were spread across the country.

A General Electric facility in upstate New York provides a test case. In a custom-built facility the size of four football fields, workers are casting into thin tubes a kind of ceramic that G.E. invented. Those tubes get filled with a secret chemical “brownie mix,” packaged into batteries and shipped across the world.

The plant sits just a few miles down the road from the research campus where G.E. scientists developed the technology. That allows them to work out kinks on the assembly line, and test prototypes of and uses for the battery, the company’s scientists said.

“We’re not thinking about just one generation,” said Glen Merfeld of G.E.’s chemical energy systems laboratory, showing off a test battery his employees had run into exhaustion. “We’re working on the second, the third, the fourth, the fifth.”

The idea is to knit together manufacturing, design, prototyping and production, said Michael Idelchik, vice president for advanced technologies, who holds a dozen patents himself. “We believe that rather than a sequential process where you look at product design and then how to manufacture it, there is a simultaneous process,” Mr. Idelchik said. “We think it is key for sustaining our long-term competitive advantage.”

Economists and policy experts are now researching whether such strategies offer the same benefits for other businesses — and examining how those benefits might show up in national data on innovation, productivity and growth.

At the Massachusetts Institute of Technology, Suzanne Berger has helped to start the Production in the Innovation Economy project to study the subject. “It is something that’s very difficult to establish systematically,” said Professor Berger. “You really have to be willing to look at case-by-case evidence, qualitative evidence. That’s what we’re trying to do.”

Thus far, she said, the anecdotal evidence from about 200 companies has proved striking, with company after company detailing the advantages of keeping makers and thinkers together. That does not mean every business, she stressed. Companies with products early in their life cycle seemed to benefit more than ones with products on the market for years. So did companies making especially complicated or advanced goods, from new medicines to new machines.

“It’s the companies where the challenge of producing on a commercial scale requires levels of scientific activity that are just as complex as the original challenge of developing the technology,” Professor Berger said.

Economists said that while the link between making and innovating within individual businesses was not yet well established, the link between making and innovating between different companies was.

It is what they call a “spillover” effect: manufacturing companies near one another create a kind of commons. Workers exchange ideas over drinks and at baseball games. They switch jobs, taking their knowledge with them. They draw other companies, who compete to offer them goods and services. It all adds up to a more productive, more innovative economy.

For instance, the economist Michael Greenstone of M.I.T. analyzed what happened to towns after marquee manufacturing plants, like a BMW factory, moved in. Other factories in the town became more productive, he and his co-authors found. Wages rose, too. Such evidence has left many economists and other experts concerned about the overseas movement of manufacturing jobs and facilities over the past 30 years.

The bulk of those jobs, experts were keen to note, were jobs that the United States probably would not want back — like repetitive assembly positions. But many were more cerebral positions, where manufacturing workers were not simply following a schematic, but solving problems.

“Outsourcing has not stopped with low-value tasks like simple assembly or circuit-board stuffing,” wrote Willy C. Shih and Gary P. Pisano of Harvard Business School in the Harvard Business Review. “Sophisticated engineering and manufacturing capabilities that underpin innovation in a wide range of products have been rapidly leaving, too.”

That might have left the United States falling behind in some fast-growing areas of cutting-edge technology, like bioscience and nanotechnology.

“The manufacturing process itself is going through an innovation revolution,” said Stephen Hoover, chief executive of Xerox PARC. “It’s not four million people on an assembly line. It’s a small number of really highly skilled people.”

The White House has studied these arguments and evidence, and found itself convinced.

“A vibrant manufacturing sector is inextricably linked to our capacity as a nation to innovate,” concludes a White House report published this year. It has pushed for allocating billions of dollars to an array of policies to bring back manufacturing and keep it in the United States.

Experts and executives for manufacturing companies described the proposals as helpful, but too small to make a significant difference. When asked what might help rebuild the country’s manufacturing commons faster, they mentioned things like a larger immigration program for science, engineering and technology graduates; tripling government investment in basic research and development; hugely increasing export financing; and changing the country’s regulatory scheme.

“Other nations are competing intensely to create an attractive business and regulatory environment for manufacturing firms” said James Manyika, director of the McKinsey Global Institute, which recently published a report on manufacturing’s link with innovation. “The United States just hasn’t done this as aggressively as other countries have.”

Our Massive Impact On Earth, In Glowing Maps

December 21, 2012

By: Andrew Price
Via: Fast Company

Whether it’s building cities, railroads, or even power lines, our interconnected world has a heavy footprint on the rest of the environment. These mind-blowing renderings by the cartographers at Globaïa show the awe-inspiring power of human ingenuity.

Globaia Map
We’re a very young species in geological terms. Earth is about 4.5 billion years old. Homo sapiens didn’t show up until 2 million years ago. But in our short stint so far–and especially since the industrial revolution–humans have changed the planet’s ecosystem in profound ways. We’ve built sprawling megacities and transportation networks to connect them, altered the composition of the atmosphere and the ocean, and even–gulp–changed the climate.

Some scientists think this epoch of human influence deserves its own geologic name, like the Pliestocene or the Pliocene. In 2000, the Nobel Laureate Paul Crutzen proposed calling it the Anthropocene. Next summer, the International Commission on Stratigraphy may make that label official.

Meanwhile, Globaïa, an educational organization that aims, among other things, to promote “a better understanding of big history,” recently created a series of stunning maps to help us all wrap our heads around what this era looks like. Globaïa calls the project “A Cartography of the Anthropocene.”

An Interactive Infographic Maps The Future Of Emerging Technology

By: Patrick James
Via: Fast Company

When will you get your robot butler? When will we first set foot on Mars? These and countless other questions about the future are answered in this amazing chart of where technology is headed in the next 30 years.

Can speculation about the future of technology serve as a measuring stick for what we create today? That’s the idea behind Envisioning Technology’s massive infographic (PDF), which maps the future of emerging technologies on a loose timeline between now and 2040.

Envisioning Emerging Technology - Infographic
On it you’ll find predictions about everything from artificial intelligence and robotics to geoengineering and energy. Mouse over the entries for blurbs describing them and links to more information; you won’t find much more than a Wikipedia page explanation, but that’s plenty helpful for the uninitiated.

In 30 years, it will also be a great reference for where we thought we might end up. Did we really get interplanetary Internet in 2026? Did the Mars mission happen in 2034, or much earlier? The history of technology isn’t one so much of continued progress, but of sudden, unexpected advances. Which means that the predictions here will most likely be replaced by a reality we can’t even begin to fathom today. But it’s still an inspiring vision of the future (even if you’re scared about the robot swarms in 2031).

You can download a PDF for free, or–should you want to track our progress toward artificial photosynthesis and space-based solar power by X-ing out accomplishments on your wall–purchase a poster version here.

Mapping The Future Of Education Technology

By: Patrick James
Via: Fast Company

If it’s true that 65% of today’s grade school students will work in jobs that don’t exist yet, then we better get ready for some drastically different learning environments.

Add this massive infographic to the recent discussion of futuristic dorms and what education will look like in 2020–and beyond. Designed by Michell Zappa’s Envisioning Technology (which also created that fantastic interactive infographic mapping the future of technology), this chart maps innovations in education technology for the next few decades.

Envisioning the Future of Education Technology - Infographic
It illustrates a shift from a classroom-centered approach toward an increasingly virtual set of learning environments. Of course the most eye-popping statistic is the idea that 65% of today’s grade-school children will end up at jobs that haven’t been invented yet. Hence the need for looking forward to try to anticipate how technologies might evolve and how we should expect to incorporate them into our schools.

“Despite its inherently speculative nature,” the graphic’s creators write, “the driving trends behind the technologies can already be observed, meaning it’s a matter of time before these scenarios start panning out in learning environments around the world.”

A Wave of Start-Ups Helps Small Companies Outsource Their Tasks

December 19, 2012

By: Jessica Bruder
Via: The New York Times

Leah Busque (right) - founder of Task Rabbit
Small-business owners are like Swiss Army knives: expected to handle dozens of specialized tasks without falling apart. But even the sharpest entrepreneurs have it tough this time of year — inevitably, some will outsource part of their workload to other enterprising people.

CHALLENGE Your to-do list is crammed with tiny tasks. How can you delegate them cheaply?

ONE SOLUTION For $5 you could drink a large latte and work through the night. Or you could hire a minion at Fiverr, which bills itself as “the world’s largest marketplace for small services.” Starting at $5 apiece, tasks include designing business cards and letterheads, sending out handwritten cards, editing newsletters, making short commercial videos and throwing darts at a picture of your rival.

“Pretty much anything you imagine can be found on Fiverr,” said the company’s chief executive, Micha Kaufman, who set out in 2010 with Shai Wininger to build what Mr. Kaufman calls “an eBay for services.”

“It’s giving people the tools to do business with the entire world,” he added.

Fiverr, with headquarters in Tel Aviv and offices in New York and Amsterdam, has more than a million active buyers and sellers across 200 countries, Mr. Kaufman said. He would not disclose revenue or the number of sales his site has brokered so far. Fiverr has raised $20 million in financing and has 60 full-time staff members. The company collects a 20 percent commission on each sale.

THE COMPETITION Fiverr’s success has inspired an army of imitators, including Gig Me 5, Gigbucks, TenBux and Zeerk. Building and selling Fiverr copycat sites has also become a cottage industry for online software developers. Asked whether he took this as a compliment, Mr. Kaufman replied dryly, “One of my friends said, ‘It may be flattering, but it’s a very annoying way to flatter you.’ ”

CHALLENGE You want to delegate complex, highly specialized tasks, but it’s hard to find people whose expertise matches your needs.

ONE SOLUTION SkillPages connects skilled workers with those who want to hire them. The site showcases an array of specialists — beekeepers, tree surgeons, witches, clog dancers — along with professionals with more conventional business skills, like payroll administrators, social media marketers and typists.

Iain Mac Donald decided to start SkillPages after seeking a tree cutter online to do work in his yard. “This guy arrives with a huge truck, and he could have taken down a forest,” Mr. Mac Donald said. “He was going to charge me $3,000. It just wasn’t right.”

Mr. Mac Donald figured there had to be a way to help make better matches. To that end, SkillPages identifies specialists whom users’ families and friends may already know through social networks like Facebook, LinkedIn and Twitter. Users can also view work samples online and contact members directly.

Based in Ireland, SkillPages went live in 2011 and opened an office in Palo Alto, Calif., this year. The company’s 35 employees handle traffic from more than nine million users worldwide, 1.5 million of them in North America. The company has received $18.5 million in financing, said Mr. Mac Donald, the chief executive, declining to disclose sales figures.

SkillPages’ basic services are free. To make money, it sells advertising space and offers premium memberships with stand-alone Web sites for those offering services. Next year, Mr. Mac Donald plans to offer a paid matchmaking service for talent-seeking companies. He is also building a “targeted offers” program that will let niche vendors present deals on products and services to members with relevant expertise. The vendors will pay SkillPages a bounty for each sale.

THE COMPETITION Guru, oDesk and Elance also focus on skilled work. LinkedIn added a “skills” component to its profiles last year.

CHALLENGE You are overwhelmed by errands and other location-specific jobs that cannot be farmed out to the other side of the planet. You need an affordable gofer: competent, trustworthy, local.

ONE SOLUTION TaskRabbit is an on-demand service for handling quick jobs: assembling Ikea furniture, packing boxes, wrapping gifts, mailing invitations or even carrying awkward objects like Christmas trees. The company sends requests to a network of “rabbits” — errand-runners screened through video interviews and background checks — who bid for the work. Last month, 80 were hired to wait on Black Friday lines.

Leah Busque got the idea for TaskRabbit one night in 2008, when she was going out to dinner and realized she had no food in the house for Kobe, her yellow Labrador. Envisioning an online service for dispatching errand-runners, she quit her job as an I.B.M. software engineer to build it. A year later, she won a slot in Facebook’s now defunct incubator program and later moved her company, then called RunMyErrand, to San Francisco from Boston.

Now TaskRabbit has 60 employees at its headquarters and more than 4,000 freelancers wrangling tasks for customers in the Bay Area and Austin, Tex.; Boston; Chicago; Los Angeles; New York; Portland, Ore.; and San Antonio.

TaskRabbit has raised almost $40 million in financing, and revenue nearly quintupled this year, Ms. Busque said. She would not disclose sales figures but said the company typically charges users 18 percent on top of its freelancers’ fees. Small businesses, she said, are her fastest-growing group of customers.

THE COMPETITION Agent Anything, Exec., Fancy Hands, PAForADay and Zaarly.

CHALLENGE Your business moved. In days of yore, you would just update the address in the local Yellow Pages. But now that information appears on myriad Web sites like Yelp, Citysearch, Yahoo and Foursquare. How do you adjust them all?

ONE SOLUTION Yext gives business owners a single dashboard for updating directory information and posting special offers across 57 listing sites. After Hurricane Sandy, about 2,300 users logged on to post closings and other storm-related messages, according to Yext’s chief executive, Howard Lerman.

“My favorite was one guy who put up a 24-hour elevator rescue hot line,” he said.

Founded in 2006 in New York City, Yext, in its first incarnation, drove sales leads to other businesses on a pay-per-call basis. In August, Mr. Lerman sold that service, which he said was profitable and generating eight-figure revenue. He wanted to refocus on expanding Yext’s fledgling directory information product, which came out in 2011.

“I’m perfectly happy with the word ‘gamble,’ ” he said. “You should only take big bets in technology.”

Yext has raised $27 million in financing so far for its listings service, which passed the 100,000-subscriber mark this month and generates more than $30 million in annual revenue, according to Mr. Lerman. The full service costs $499, billed annually, and also notifies users when new reviews of their companies appear on listings sites.

“To go to all of those sites individually and try to manage your information or update stuff would take hours and hours and hours,” Mr. Lerman said. “Yext is all about businesses owning their own data.”

THE COMPETITION Localeze, Express Update and CityGrid.